The Great Depression and 1930s Tensions

How an economic crisis became an international crisis

During the 1920s, international agreements and the League of Nations had offered ways for countries to settle disputes through co-operation. The worldwide economic depression undermined this approach. Governments faced unemployment and poverty at home, while aggressive leaders promised that national strength and expansion would provide solutions.

The Wall Street Crash of October 1929 was a collapse in share prices on the New York stock market. It helped trigger a much wider economic depression: businesses struggled, production and trade fell, and people lost their jobs. Its importance for international relations lay not simply in events in America, but in the financial connections between countries.

Germany’s recovery had depended heavily on American lending. The Dawes Plan of 1924 and Young Plan of 1929 had helped connect German recovery and reparations payments to American finance. When American lenders recalled loans and lending dried up, Germany became particularly vulnerable. Economic difficulties therefore spread across borders rather than remaining an American problem.

Governments also tried to protect jobs by encouraging people to buy goods made at home and increasing tariffs on imports. A tariff makes foreign goods more expensive, which can help domestic producers compete. However, when countries restrict imports, other countries lose export markets. Falling trade then makes their economic problems worse. Policies intended to protect individual economies helped weaken the international economy as a whole.

Why hardship encouraged a retreat to nationalism

Unemployment and poverty damaged confidence in existing governments. Extremist movements offered radical alternatives and blamed established leaders for failing to protect their populations. In Germany, the Nazi Party promised to restore prosperity and national pride and reverse the Treaty of Versailles. Economic hardship helped these promises attract support; Hitler became Chancellor in 1933.

The Depression did not create every dictatorship or every grievance. Mussolini had already come to power in Italy in 1922, and resentment of Versailles predated the crash. Instead, economic crisis strengthened movements and policies that challenged international co-operation.

Militarism offered leaders several apparent benefits. Rearmament created work in industries producing weapons and aircraft, while displays of military strength encouraged national pride. Expansion could also be presented as a way to obtain raw materials and reduce dependence on foreign suppliers. In Japan, economic difficulties strengthened support for military expansion to secure resources. In Italy, Mussolini sought a larger empire in Africa and the Mediterranean.

These were leaders’ proposed solutions, not proof that conquest would bring lasting prosperity. Their international effect was to make military power and national advantage more important than negotiated agreement.

Why the League became less able to resist aggression

The League’s system of collective security depended on countries acting together against an aggressor. Condemnation alone was unlikely to stop a government determined to use force: members also needed to support effective economic pressure or be prepared to take stronger action.

The Depression weakened that willingness. Britain and France were concerned about their own economic recovery and reluctant to spend money confronting aggression abroad. Countries prioritised domestic employment and national security over international obligations. Economic difficulties also reduced the funding available for the League’s humanitarian work, including health, labour and refugee activities.

Meanwhile, militarism increased the demands placed on the League. It had to restrain governments with growing armed forces, yet could not draw on the military strength of the United States, which was outside the organisation. Britain and France’s reluctance to act therefore mattered greatly.

The Depression intensified existing weaknesses rather than creating them from nothing. The Corfu dispute in 1923 had already exposed the difficulty of enforcing decisions against a powerful country such as Italy. In the 1930s, more aggressive challenges combined with less willingness to confront them.

Manchuria: investigation could not stop conquest

Manchuria was a resource-rich region of north-east China where Japan already had railway and business interests. The Depression increased the attraction of controlling its resources as a way to strengthen Japan’s economy. This linked economic hardship to expansion, although Japan’s interests in the region existed before the crisis.

On 18 September 1931, an explosion damaged a Japanese-owned railway near Mukden. The Japanese army blamed Chinese nationalists and used the incident as a pretext to invade Manchuria. Within months, Japanese forces had overrun the region. In 1932, Japan established Manchukuo, presented as an independent state but actually controlled by the Japanese army.

China appealed to the League of Nations. The League sent a commission led by Lord Lytton to investigate, but its response was much slower than Japan’s military advance. By the time the League considered and adopted the Lytton Report in February 1933, around 18 months had passed since the invasion. The report rejected recognition of Manchukuo because its creation violated China’s territorial integrity. Japan rejected the judgement and announced its withdrawal from the League in 1933.

Britain and France were unwilling to enforce the League’s decision through military action or effective economic sanctions. They feared conflict with Japan and damage to their trade and imperial interests in the Far East. The Depression made governments especially reluctant to disrupt trade. The United States, a major trading partner of Japan, was not a League member. It refused to recognise territorial changes imposed by force, but this did not reverse the conquest.

Japan remained in control of Manchuria. The central lesson was the gap between investigation and enforcement: the League could establish that aggression had occurred, but its members would not take the action needed to undo it. Although the crisis happened in Asia, it damaged collective security worldwide and encouraged European aggressors to doubt that the League would stop them.

Abyssinia: collective security gave way to national interests

In October 1935, Mussolini’s Italy invaded Abyssinia, now Ethiopia, an independent country in north-east Africa. Mussolini wanted to expand Italy’s empire, gain raw materials and restore national prestige after Italy’s defeat by Abyssinia in 1896. The crisis showed how nationalist ambitions could challenge the League directly.

Abyssinia appealed to the League, which condemned the invasion and imposed economic sanctions. However, these did not include oil, an important resource for warfare. The United States continued selling oil to Italy, illustrating the difficulty of enforcing economic pressure without the participation of a major non-member. Italy continued its invasion despite the sanctions.

Britain and France also left the Suez Canal open, allowing Italy continued sea access towards Abyssinia. Their priorities extended beyond protecting the victim of aggression. In 1935, they had joined Italy in the Stresa Front, an agreement against Nazi Germany. They feared losing Italian support against Hitler and were concerned about their own imperial interests.

The Hoare–Laval proposal aimed to satisfy Mussolini through territorial concessions at Abyssinia’s expense. This undermined the principle that League members should defend an attacked state rather than reward its attacker. Britain and France’s competing priorities made their response inconsistent: they condemned aggression but avoided measures that might bring a confrontation with Italy.

Italian forces captured Addis Ababa, Abyssinia’s capital, in May 1936, completing the conquest. The League lifted its sanctions in July 1936. An independent League member had been conquered, and the economic measures intended to protect it were abandoned without reversing the invasion. This made the failure of collective security especially clear to smaller countries relying on the League for protection.

Britain and France’s approach did not secure a lasting partnership with Mussolini. Italy and Germany formed the Rome–Berlin Axis in 1936, and Italy left the League in 1937. The Abyssinian crisis damaged confidence in collective security and helped alter the balance of relationships in Europe, even though the invasion itself took place in Africa. The League continued to exist and carry out humanitarian work, but its credibility as a barrier to aggression was severely weakened.

German rearmament and the challenge to Versailles

Hitler’s ambition to overturn Versailles was another major source of European tension. The treaty had restricted Germany’s armed forces, while France and Germany’s other neighbours regarded those restrictions as protection against renewed German aggression.

Germany left the League of Nations in 1933 amid disagreements over disarmament. Hitler demanded equality with other powers while already secretly rearming. Withdrawal reduced Germany’s involvement in the international framework intended to settle disputes and limit military competition.

By 1935, Germany had openly reintroduced compulsory military service and developed the Luftwaffe, its air force, in defiance of the treaty’s restrictions. Rearmament strengthened Germany’s ability to pursue an aggressive foreign policy and increased its neighbours’ insecurity. Some people in Britain considered the restrictions on Germany unfair, making agreement on a firm response more difficult.

The Saar’s return to Germany in 1935 was different. Its plebiscite followed the timetable established by Versailles and was a legal settlement supervised by the League. It benefited Hitler politically and gave Germany access to useful industrial resources, but it was not itself a breach of the treaty. The League could still oversee a peaceful settlement even while its wider authority was weakening.

The Rhineland and the consequences of inaction

In 1936, Hitler sent troops into the Rhineland. This was German territory, but the peace settlement required it to remain demilitarised to help protect France. Remilitarisation therefore broke the settlement without adding new territory to Germany.

Britain and France did not take military action to reverse it. Their reluctance to risk war, combined with disagreement about how far German demands were justified, allowed Hitler to succeed. Germany could strengthen its defences along the French border, while Hitler gained confidence that further challenges might also meet little resistance.

By the mid-1930s, European tension reflected several connected developments: economic hardship had weakened co-operation, aggressive nationalism had gained strength, Germany was challenging Versailles, and the League’s response to aggression had lost credibility. The Depression was an important enabling cause, but leaders’ ambitions and the choices of Britain and France determined how those pressures developed.

Depression → international tension

• October 1929: Wall Street Crash helped trigger worldwide depression.
• American loan withdrawals damaged Germany’s recovery.
• Tariffs and falling trade deepened economic problems.
• Unemployment increased support for extremist promises; national interests displaced co-operation.
• Rearmament offered jobs and prestige but increased insecurity abroad.

Why collective security weakened

• Britain and France prioritised economic recovery and avoiding war.
• The USA remained outside the League.
• Aggressive governments challenged decisions that members were unwilling to enforce.
• The Depression worsened weaknesses already visible before 1929.

Manchuria, 1931–1933

• 18 September 1931: railway explosion at Mukden used as a pretext for Japan’s invasion.
• 1932: Manchukuo established under Japanese control.
• February 1933: League adopted the Lytton Report, rejecting recognition of Manchukuo; Japan announced withdrawal from the League in 1933.