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The Depression & the Rise of Extremist Groups (i.e. Fascists and Nazis)

The Depression & the Rise of Extremist Groups

The crash of the United States stock market on October 29, 1929 triggered a global depression in which extremist groups such as fascists and Nazis were allowed to thrive. Between the years of 1929 and 1933 prices would fall, output shrank, and unemployment soared as the world economy collapsed. The U.S. market lost two-thirds of its value, the British market one-fifth, and the German an astounding one-half.

Unemployment in the U.S. had gone from only 3.2 percent in 1929 to 25 percent in 1933; similarly, it reached 16 percent in the United Kingdom and nearly 30 percent in Germany. [1]

In Italy, the rise of fascism resulted as a response to the Versailles Treaty of 1919 and the Great Depression. Benito Mussolini created the Fasci Italiana di Combattimento (Italian Combat Squadron), which called for two things: 1) a totalitarian form of government and 2) a heightened focus on national unity, militarism, social Darwinism, and loyalty to the state. [2] Mussolini quickly transformed the nation into a single party state while removing all restraints on his power.

In Germany, the costs of reparations from World War I, coupled with a severe banking crisis in July 1931 and the fear of communism, made for the perfect breeding grounds for Adolf Hitler’s National Socialist German Worker’s Party with its promise of a “New Germany” to come to power.

Mussolini and Hitler, 1940
Mussolini and Hitler, 1940

Inspired by Mussolini’s “March on Rome,” Hitler originally attempted a coup on the German government on November 8, 1923. Known as the Beer Hall Putsch, the rebellion failed and its participants tried for treason, with Hitler receiving a 10-year sentence (though he served less than one). [3]

While in prison, Hitler realized that he would have to appeal to the general public in order to reach his objectives. Thus, he played down his anti-Semitism and racist nationalism while trying to grow his party. Moreover, the anti-capitalist elements of the party were understated and the negligence of the current government in dealing with the Great Depression, along with the fight against communism, was brought to the forefront.

By the start of 1933, the Nazi party was the largest in German legislature and President Paul von Hindenburg had no choice but to appoint Hitler as Chancellor on January 30, 1933. [3] The domination of the Nazi party at the German elections in early March of that year further cemented Hitler’s position and power. The Enabling Act was passed, allowing Hitler free reign to make any and all laws for the next four years. From then on, events spiraled out of control:

  • Germany caused a commotion when they withdrew from the League of Nations in October 1933;
  • The 1935 Nuremberg Laws deprived Jews of German citizenship and the rights thereof;
  • Military units were sent into the Rhineland on the border with France in 1936; and
  • Austria was finally invaded in March 1938, on the pretense that Germany was seeking to “reunite” ethnic Germans within the borders of one country [2]

Interestingly, in practice, communism and fascism had similar political and social goals and systems but differed in that communism was based on economic equality for all while the underlying ideology of fascism called for a powerful few and distinct classes.

Following the loss of territories to Poland after WWI and denial to the League of Nations, Germany and communist Russia were allied upon the construction of the Rapallo Treaty of 1922. Yet, when Hitler took power, he revoked the treaty and signed one with the Soviet Union’s “bitterest enemy,” Poland, in order to advance his power across Europe. [4]

Even among nations of the same dogma, issues occurred. “It was Mussolini’s Italy – not the democracies of Britain, France, or the USA – that initially led the most vigorous attempts to contain the aggression of Hitler’s Germany.” [4]

However, appeasement by other powers eventually caused Mussolini to realign Italy as an ally of Germany. This type of fragmentation across the continent accentuated the severity of the global economic situation and precipitated World War II.


[1] Hugh Rockoff, “Great Depression,” in International Encyclopedia of the Social Sciences, edited by William A. Darity, Jr., Vol 3, 2nd ed (Detroit: Macmillan Reference USA, 2008): 367-371.

[2] Scott P. Corbett et al., U.S. History (Houston: OpenStax, 2017).

[3] Larry E. Gates, Jr., ed., “Hitler and National Socialism,” in Advanced Placement European History,

[4] Russel Tarr, “The Foreign Policies of Hitler and Mussolini,” History Review, no. 65 (2009): 44.

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