Domestic politics also offered reason to hope. During the occupation of the Ruhr and the great inflation, republican government in Germany had appeared on the verge of collapse. In 1923 Communists momentarily entered provincial governments, and in November an obscure politician named Adolf Hitler leaped onto a table in a beer hall in Munich and proclaimed a “national socialist revolution.” But the young republican government easily crushed Hitler’s plot to seize control, and he was sentenced to prison. In the late 1920s liberal democracy seemed to take root in Weimar Germany. Elections were held regularly, and republican democracy appeared to have growing support among a majority of Germans. A new currency was established, and the economy stabilized. The moderate businessmen who tended to dominate the various German coalition governments were convinced that economic prosperity demanded good relations with the Western powers, and they supported parliamentary government at home.

Sharp political divisions remained, however. Throughout the 1920s Hitler’s Nazi Party attracted support from fanatical anti-Semites, ultranationalists, and disgruntled ex-servicemen. Many unrepentant nationalists and monarchists populated the right and the army. On the left, members of Germany’s recently formed Communist Party were noisy and active. The Communists, directed from Moscow, reserved their greatest hatred and sharpest barbs for their cousins the Social Democrats, whom they accused of betraying the revolution. Though the working class was divided, a majority supported the nonrevolutionary Social Democrats.

The situation in France was similar to that in Germany. Communists and Socialists battled for workers’ support. After 1924 the democratically elected government rested mainly in the hands of coalitions of moderates, with business interests well represented. France’s great accomplishment was the rapid rebuilding of its war-torn northeastern region. The expense of this undertaking led, however, to a large deficit and substantial inflation. By early 1926 the franc had fallen to 10 percent of its prewar value, causing a severe crisis. Poincaré was recalled to office, while Briand remained minister for foreign affairs. Poincaré slashed spending and raised taxes, restoring confidence in the economy. The franc was stabilized at about one-fifth of its prewar value, and the economy remained fairly stable until 1930.

Britain, too, faced challenges after 1920. The great problem was unemployment. In June 1921 almost 2.2 million people — or 23 percent of the labor force — were out of work, and throughout the 1920s unemployment hovered around 12 percent, leading to a massive general strike in 1926. Yet the state provided unemployment benefits and supplemented the payments with subsidized housing, medical aid, and increased old-age pensions. These and other measures kept living standards from seriously declining, helped moderate class tensions, and pointed the way toward the welfare state Britain would establish after World War II.

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Relative social harmony was accompanied by the rise of the Labour Party as a determined champion of the working class and of greater social equality. Committed to the kind of moderate revisionist socialism that had emerged before World War I (see Chapter 23), the Labour Party replaced the Liberal Party as the main opposition to the Conservatives. This shift reflected the decline of old liberal ideals of competitive capitalism, limited government control, and individual responsibility. In 1924 and from 1929 to 1931, the Labour Party under Ramsay MacDonald (1866–1937) governed the country with the support of the smaller Liberal Party. Yet Labour moved toward socialism gradually and democratically, so as not to antagonize the middle classes.

The British Conservatives showed the same compromising spirit on social issues. In 1922 Britain granted southern, Catholic, Ireland full autonomy after a bitter guerrilla war, thereby removing a key source of prewar friction. Despite conflicts such as the 1926 strike by hard-pressed coal miners, which led to an unsuccessful general strike, social unrest in Britain was limited in the 1920s and 1930s. Developments in both international relations and the domestic politics of the leading democracies across western Europe gave cause for optimism in the late 1920s.