Second World War, The

by Corrigan, Gordon

  The Italian economy, kept running at full speed during the war, went into recession after it as contracts for war materials stopped. Soon 10 per cent of the workforce was unemployed and this was made worse by the arrival of 4 million demobilized soldiers on to the labour market. Prices rose, wages could not keep up and the government, saddled with massive war debts, faced long delays before it could begin to pay war pensions to the disabled and the families of the dead. There were strikes, riots, army mutinies and general disorder. Using the old ploy of blaming someone else, the Italian government soon began to blame the Allies. Italy had gone to war to expand her territory at the expense of the Central Powers. She got Trieste, part of the Tyrol, part of modern Slovenia and Istria at the head of the Adriatic (including large numbers of Germans and Slavs who lived there too), but what about German colonies in Africa, and what about the Italian position in the Middle East? Those German colonies and the Italian position in Eritrea had not been specifically promised in the negotiations that brought Italy into the war, but the French and the British had agreed Italy’s claim to part of Dalmatia. This arrangement was not, however, agreed by the Americans, who in 1915 had been neutral and therefore not involved in the discussions. At Versailles, President Woodrow Wilson refused to recognize the London pact and took the side of Slav self-determination, thus vetoing any suggestion of an Italian Dalmatia. The erstwhile allies had therefore cheated Italy of her due rewards for all her dead, and all her problems could be blamed on them.

  In the uncertainty of post-war Italy, communism began to take hold amongst the have-nots, and the inevitable counter was the rise of the extreme right. Fascism, its principles originally enunciated by Gabriele D’Annunzio, an extreme nationalist writer and son of a hero of the struggle for Italian independence, but taken up by Benito Mussolini, was the counter to communism. Both sides drew their foot soldiers from much the same pool but, while communism focused on the working classes and had an international dimension, fascism focused on the state. Mussolini, a journalist and political activist before the war (and, like many eventual fascists, originally a socialist), was conscripted into the Italian Army, became a sergeant and was invalided out with injuries sustained in training. His charismatic rhetoric, espousing patriotism and pride in race, authoritarian order, anti-corruption, elitism and economic self-sufficiency, all wrapped up in the symbolism of the Roman Empire, was a heady mix for Italians disillusioned by the failure of the war to resolve all social ills, and attracted the landowners, industrialists and Catholics terrified by the prospect of communism. In the summer of 1922 a strike called by the Socialist Party was a failure, and those services that were affected were kept running by fascist volunteers. In October 1922 Mussolini ordered a ‘March on Rome’, supposedly a demonstration of the Fascist Party’s loyalty to the king, but in reality intended to intimidate the government into accepting the fascists into a coalition, and, when the Liberal President of the Council (prime minister) asked the king, Victor Emmanuel III, for special powers to deal with the march, the king refused, the prime minister resigned and the king appointed Mussolini as prime minister.

  In the April 1924 general election Mussolini’s fascists received 65 per cent of the votes cast, and even without the undoubted intimidation and vote-rigging they would have got a large majority. Mussolini managed to escape, albeit narrowly, the political backlash after the murder of a socialist leader, Giacomo Matteotti, widely believed to have been at the instigation of Mussolini (although this was never proved), and by 1926 he was able to give up all pretence of democracy and rule by decree. Once all political parties except the fascists were abolished, Mussolini was able to bring all the organs of state under fascist control and introduce a planned economy, encourage a rise in the birth rate and undertake a (half-hearted) pruning of a swollen civil service. The Italian currency, the lira, was revalued (in fact, grossly over-valued) from one seventh of its pre-1914 value to one third, and food production was increased.11 Mussolini really did drain the Pontine Marshes, something that no Roman emperor had been able to manage, and he did make the trains run on time. In 1925–26 Italy managed to secure a promise of loans from the United States, which, it was hoped, would stabilize the economy and allow staged repayments of war loans to Britain. Mussolini also solved the Roman Question – the relationship between the state and the Vatican – which had eluded Italian politicians (and the anti-clerical king) so far.* That this meant withdrawing all copies of Mussolini’s pre-war pamphlet God Does Not Exist, the banning of freemasonry,† laws banning contraceptives and ‘lewd behaviour’ during Lent, and considerable financial concessions made to the Church mattered not a jot. Pope Pius XI – a man just as autocratic as Mussolini – declared that the Church now recognized the fascist state and this brought huge domestic and international prestige.

  All this had its positive aspects, but it also meant a savage deflation, higher taxes and, once the lira had been revalued and Italy returned to the gold standard in 1927, a drop in exports. The Wall Street Crash and the Great Depression hit Italy as it did the rest of the world, but Italy’s financial markets were far less sophisticated than those of America or Britain, and, even though the effects were exacerbated by the withdrawal of loans and the overpriced lira, Mussolini managed to avoid social unrest, although living standards fell and unemployment rose. Far from weakening the fascist position, the Depression – which could be blamed on the Anglo-Saxons and linked to the refusal to award Italy her rightful spoils from the Great War – only strengthened the appeal of order and strong government. Nevertheless, the inescapable fact remained that Italy was a poor – and,in many respects,backward – country and lacked the resources to posture as a great power. In due course she would pay the price of the overweening ambition of her leaders.

  2

  GET SET. . .

  If Britain and the countries of Europe were still in the recovery room following the Great War, then in the 1920s Germany was still on life support. The Versailles Treaty had apportioned the entire blame for the war, and all the damage and destruction thereof, to Germany and she was forced to accept that responsibility and agree to pay for it. This was only one of the shackles of Versailles but it was the one that was most obvious to the German man in the turnip patch. Germany in the 1920s and early 1930s had a flourishing chemical industry and many of her technical industries were world leaders, but she was far from being a fully industrialized and urban society in the way that Britain was. After unification in 1870, the German population grew from 24 million to 67 million by 1914, but by 1930, after war deaths and the loss of territory resulting from Versailles, it was 65 million, of which 15 million relied on subsistence agriculture. Germany had financed the Great War by raising loans rather than taxes, and as the country embarked painfully on the democratic experiment, with six coalition governments between 1919 and 1923, the wherewithal to repay the loans was not there. The Reichsmark declined from 20 to the pound sterling in 1914 to 250 in 1919, 500 in early 1921 and 1,000 at the end of that year, until it stood at 35,000 to the pound in 1922.12 The Weimar Republic was blamed for failing to live within its means, but the only way it could stave off collapse was by printing more and more money, leading to an even faster decline in the value of the currency. When Germany simply could not pay the reparations demanded and defaulted in 1923, the French, dragging the Belgians behind them, sent 60,000 troops into the Ruhr, Germany’s industrial heartland. Britain and America disapproved, but Raymond Poincaré had been president of France throughout the war and was still president, with no love for Germany or sympathy for her problems. This was the final blow to the German economy. Unemployment in Germany rose; hyperinflation set in; Berlin suspended all reparations payments and the value of the mark sank to 16 trillion (16,000,000,000,000) to the pound. Germans embarked on a policy of passive resistance and the only country with money to spare – the United States – was asked to help. The result was the Dawes Plan.

  Charles W. Dawes was an American banker who had mastermin
ded inter-Allied procurement during the First World War. Asked to produce a plan to stabilize the German currency and to rationalize reparations payments, Dawes, assisted by Owen Young, the chairman of General Electric, came up with a plan that seemed to satisfy everyone. Reparations payments would be consolidated and would gradually rise until the full instalments became due from 1928.The Reichsmark was restored to its pre-war level and inflation was checked by pegging it to the US dollar. A Reparations Office would supervise the German economy and take control of the German central bank with the authority to stop or reduce reparations if such payments would substantially damage the German economy. The Dawes Plan came into effect in 1924 and to everyone but the extreme nationalists (who objected to foreign control and the fact that reparations payments had not been reduced, only delayed) it seemed to meet all requirements: the wartime Allies would get their reparations in due course, the German economy would not be destroyed by inflation and the German currency was worth something once more. Germany could import and it seemed that the Weimar Republic would survive and could concentrate on economic growth rather than military adventures. Unemployment fell dramatically, to less than 1 million in January 1925, and fluctuated between 1 million and 3 million from then until autumn 1929, when it was only just under 1 million prior to the Wall Street Crash.13

  Of course, somebody had to pay for all this. The German currency’s peg to the dollar had to be backed by monetary reserves in Germany, and this was provided by loans. The largest was $100m raised on Wall Street, where it was hugely over-subscribed. In a genuine act of philanthropy, the US government had put its own credibility behind the loan, and, as interest rates in Germany were higher than those in the United States, there was no shortage of banks and private investors to participate. Other loans followed. Germany was now able to begin to pay her reparations to Britain and France with money borrowed from America, and Britain and France could use that to repay their American wartime loans. This led to a mounting burden of international debt for Germany, but, as long as America seemed happy to lend, then the merry-go-round could continue – and it did lead to pressure from America to reduce reparations in order to ensure that Germany could repay her loans, hence the Young Plan of spring 1929.

  Owen Young, who had been very much part of the Dawes Plan, now produced a restructuring that reduced the total amount of reparations by about 75 per cent, and extended the repayments until 1988. All the involved governments signed up to it, partly because something was better than nothing, and partly because they realized that, unless they did, the Weimar Republic could not survive. For the democratic parties in Germany, the Young Plan meant stability and peace, while the nationalists once again criticized it and the president of the Reichsbank, Hjalmar Schacht, resigned in protest, throwing his influence behind Hitler, who had asked, not unreasonably, why generations as yet unborn should be saddled with the debts of their parents. The plan’s details had been widely leaked and known, but in the May 1928 elections Germans had gone for economic stability first and Hitler’s NSDAP* obtained but 2.5 per cent of the vote and twelve seats. The largest party was the Social Democrats, the SPD (liberals, in British terms), with 153 seats, and the communists came fourth with 54.

  Then came the Wall Street Crash, and America had no more money to lend, or, if she had, she would not do so in the face of a collapse of international trade, and loans began to be called in. In Germany, the only way to maintain the stability of the currency when unemployment was rising again was to deflate with compulsory cuts in wages and increased taxes (including a poll tax), many of these measures being forced through by emergency decree. In fact, unemployment increased from under 1 million just before the crash to over 3 million in January 1930, and in the general election of September 1930 the NSDAP obtained 18.5 per cent of the popular vote and became the second-largest party in the Reichstag with 107 seats; the SPD had 143 and the communists 77. President Hoover’s moratorium on foreign debts in the summer of 1931 – by which time Germany owed 8.5bn Reichsmarks to the USA and 13bn to European and British lenders – came too late and, in any case, if this was to apply to Britain and France too, as indeed it was, then it was to proceed in tandem with Hoover’s other plank of policy, that of disarmament. (As it turned out, American efforts to establish a global framework of arms limitation were a failure, the World Disarmament Conference of 1932–34 ending without agreement.)

  It is hardly surprising that at times of political, financial and social uncertainty people will turn to those who can, or claim they can, impose stability and order. If this involves giving up a certain amount of personal liberty, then so be it, and anyway the inhabitants of much of Europe had never enjoyed a great deal of personal liberty. In Germany, National Socialism was attractive because it seemed to provide an answer to all the nation’s problems: it was against the Young Plan, it would bring down unemployment, boost trade, look after the farmers and repudiate Versailles. Above all, it seemed the only safeguard against communism. The 1930s was a time of instability all over Europe: parliamentary democracy had failed, economies were collapsing, unemployment was rising, wages were going down in real terms and it was not only in Germany that authoritarian regimes obtained power – mostly by consent. Indeed, Yugoslavia, Estonia, Hungary, Bulgaria, Poland, Greece and Spain all rejected democratic parties in favour of fascist or semi-fascist governments, and Italy had been fascist since 1922.

  National Socialism was a rather woolly mixture of racial theory, misunderstood genetics, Nietzschean philosophy and unashamed nationalism. While today one would get into all sorts of trouble for implying that any race was in any way superior to any other, it must be remembered that Social Darwinism – a belief that if individual species were as they were as the result of natural selection, a process whereby only those features that helped the organism to survive were passed on and those that were inhibitive were discarded, then the same could be applied to races, only the ‘fittest’ of which would survive – was considered to be a perfectly tenable, if somewhat eccentric, theory between the wars. It was a widely held view in the most respectable of circles that the European races were of higher intelligence and operated on a higher moral plane than, say, the savages of Africa or the Australian aborigines. In Britain the Eugenics Society believed in positive measures to improve the race by selective breeding, and suggested ways of ensuring that defective genes were not transmitted to future generations. The aims of the Eugenics Society stopped well short of genocide, but its members did lobby for compulsory sterilization of those considered unfit to breed. Many countries and legislatures passed laws to permit compulsory sterilization (including Sweden and some states of the USA), although in the UK the move was defeated by an alliance of the Roman Catholic Church, liberals and the Labour Party. Believers in and supporters of Social Darwinism and eugenics in Britain included the writers and intellectuals Thomas Huxley, J. B. Priestley, George Bernard Shaw, D. H. Lawrence, W. B. Yeats and H. G. Wells, the politicians Arthur Balfour and William Beveridge (the author of the report that led to the creation of the National Health Service), the birth-control advocate Marie Stopes, Bishop Barnes of Birmingham and numerous medical authorities.

  Much of what the believers in Social Darwinism and eugenics said in the 1920s and 1930s may now have been scientifically discredited, but it seemed perfectly logical at the time.What the NSDAP did was take it to extremes, with the claim that the Aryan race was superior to all others and destined to rule the world – and indeed, if it did not seize the advantage in the immediate future, then it was fated to be subsumed by the mongrel races of the East, which of course included Soviet communists. That there was (and is) considerable doubt as to exactly what the Aryan race (as opposed to the Aryan language group) is was irrelevant: as far as the NSDAP was concerned, the true Aryan was tall, blonde and blue-eyed, Teutonic and Scandinavian, a definition which included not only the Germans but also the British, the Dutch, some of the French and the Flemish Belgians. The fact that Hitler and most of his s
enior henchmen did not come anywhere near that description, and that Germany had its share of the short, fat and dark, mattered not. To underwrite the theory of the new creed, the National Socialists hijacked the ideas of Friedrich Nietzsche (1844–1900), a vastly overrated German philosopher who was barking mad for most of his life. Nietzsche’s ideas revolved around the concept of the Übermensch, the superman or superior man, who would by right dominate the inferior races. That Nietzsche in his rare moments of lucidity had opposed militarism and despised anti-Semitism was conveniently forgotten.

  Where the leaders of the NSDAP were clever was in their ability to appeal to all classes, or at least to obtain their tacit approval. The industrialists were promised a massive programme of public works on the table and rearmament under it, the workers full employment (not yet, of course, but in time) and the farmers an increase in domestic food production. The middle classes were promised stabilization of the currency and the traditional elites – the aristocracy, the great landowners, the army – the negation of Versailles and the restoration of Germany to her rightful place among the Great Powers. In particular, the intention to rebut the ‘War Guilt Lie’ was attractive to all. Of course, many Germans found Hitler and his acolytes vulgar and hysterical but presumed that the realities of power would temper their more extreme policies. Abroad there were those, including many in Britain and America, who thought that only firm government could sort out the German economy and, most important of all, act as a bulwark against communism, which was a threat to everything the West held dear. Very few people in 1930, in Germany or elsewhere, thought that National Socialism was evil. It might have been coarse, noisy, rabble-rousing, silly even, but it was not evil.