Western Civilization - History Of European Society

Europe in an Age of Dictatorship, 1919–39557

and Germany combined accounted for 25.7 percent.
Debt slowed the recovery. Governments had financed
the war by borrowing rather than taxing. The French
government, for example, had a total wartime income
of $5.1 billion but spent $32.9 billion. British and Ger-
man debts were even worse. Germany had contracted
loans totaling 98 billion gold marks (approximately
$25 billion) and that indebtedness still left a deficit
of nearly $8 billion. The combined effect of such
staggering debts plus the immensity of the reparations
payments led many economists to conclude, as
John Maynard Keynes did in The Economic Consequences
of the Peace,that Allied economic expectations were
unrealistic.
Postwar conditions worsened these problems.
Fighting the war on credit had led to runaway inflation.
Prices increased by 264 percent in Italy and by 302 per-

cent in Germany during the war, and the end of fight-

ing did not stabilize them. Germany endured another

162 percent increase in prices in 1920–21, and the

worst was yet to come: In 1922–23 inflation made the

German mark (valued at twenty-five cents in 1913) vir-

tually worthless (see illustration 28.2). The price of

bread went from 0.63 marks per loaf in 1918 to 250

marks in January 1923, then 3,465 marks in July, 1.5

million marks in September, and 201 billion marks for a

loaf in November. This inflation devastated German so-

ciety almost as badly as German arms had devastated

Belgium. Unemployment posed other problems. It had

stood at 3 percent before the war, but the demobiliza-

tion of armies left millions of veterans jobless. Unem-

ployment hit 15 percent in 1921 and stayed above 10

percent for years. Having seen the role of disgruntled

soldiers in the Bolshevik revolution, governments were

eager to remedy this situation. Many nations adopted

their first unemployment compensation laws because

conservatives wanted to help veterans; Italy did so in

1919, and Austria and Britain followed in 1920.

The Conservative Reaction

of the 1920s

One widely shared postwar mood was a desire to re-

cover the remembered tranquillity of antediluvian Eu-

rope. In an awkward American coinage, people wanted

a “return to normalcy.” This led to conservative elec-

toral victories in many countries. British voters dis-

missed their wartime leader, Lloyd George, and gave

the Tories a huge victory in 1924. The French sent

Clemenceau into retirement and elected a Chamber of

Deputies so full of veterans that it was called the “hori-

zon blue” assembly (because of their uniform color).

Conservative Catholic parties won landmark victories

in Belgian elections of 1919 and 1921 and in Austrian

elections of 1920 and 1923.

The conservative reaction typically encompassed

efforts to guard morality. This led to the prohibition of

alcoholic beverages in the United States and Bolshevik

Russia and to lesser restrictions on drink (commonly

the perpetuation of wartime regulations) around Eu-

rope. The French continued a ban on certain alcoholic

beverages, and the British strictly regulated the hours

when they could be sold (ending early and interrupting

sales during the day). Many countries imposed higher

taxes on alcohol, on the theory that people would

accept “sin taxes.” And most of Europe, which had

Illustration 28.2

The German Inflation of 1923.One of the worst inflation

crises in European history hit Germany in 1923. Prices skyrock-

eted and paper money lost its value overnight. Some businesses

started the day with a schedule of how prices would rise during

the day, and others charged people at the end of a service (such

as a movie or a bus ride) instead of at the start because the price

would be higher. This photo shows the nadir of a collapsing cur-

rency: A woman uses worthless paper money to light her stove.