The Weimer Republic was to pay large amounts of compensation money to the victorious allied nations by the Treaty of Versailles. During the unstable economical situation of the 1920s and 1930s, Germany would not at all be possible to pay for the price of the war.

The great stock market crash of 1929 caused high unemployment and inflation thoughtout the world. Adolf Hitler's National Socialists party promised to rebuild Germany's economy and to restore it's national pride. In 1933, Hitler was elected Chancellor of the republic. One year later, after Reichs President Von Hindenburg had died, he declared himself Führer of the German people. Parliament granted him the power to enforce laws which were in violation with the constitution.

In the United States, around the same time, the Democrat Franklin D. Roosevelt was elected president. His New Deal of economical and social politics would rebuild the United States' economy, and would guarantee social benefits for those unemployed.

As Hitler had established himself Führer, he began to make territorial demands in Europe, to provide living space for the Aryan race. Both the allied nations and the League of Nations followed a policy of appeasement to avoid war at any cost. Nazi Germany annexed Austria, Sudetenland and Czechoslovakia, but it was not until the invasion of Poland in 1939 that Great-Britain and France declared war on Germany.

During the depression, Europe had witness the rise of two totalitarian dictatorships: Hitler in Nazi Germany and Stalin in Soviet Russia. Once set on the courge of unlimited expansion of their personal political powers, these giants of political will inevitably looked to the rest of western Europe to expand their political experiments, as Hitler annexed Austria, Sudetenland, Czechoslovakia and Poland. The residue of liberal Europe (largely Britain and France) tried to put up resistance, but they offered mostly just a bluff, as their policy of appeasement failed.

In September of 1939, Nazi Germany and Soviet Russia challenged that bluff - quickly discovering how enfeebled France was and how indecisive England was (until Churchill appeared on the scene after the war had started). Then in 1941, with liberal Europe either out of the way or on the defensive, Hitler and Stalin inevitably turned their ambitions on each other. When the giants clashed the heavens shook.

When late in 1941 Hitler's ally in Asia, Japan, bombed the American naval station at Pearl Harbor, America awoke like a sleeping giant. Until then, the United States had been sitting out this widening European-Asian conflict, having been burned by its brief participation in the earlier Great War. Now on the counterattack,  America's industrial system swung into full operation - behind the protection of the great walls of the Atlantic and Pacific Oceans. While the war demolished the industrial foundations of the two formerly greatest industrial giants, Germany and Britain, it served in the United States only to put incredible muscle into the American industrial economy. America came out of the war not only on the winning side - but so far ahead of any other country industrially and financially that it seemed literally to possess fully half of the world's wealth within its own borders.

When World War Two ended in 1945, Britain was physically devastated, France emotionally devastated, and Germany almost non-existent. The rest of Europe had also been dragged into the war and likewise was physically and emotionally wasted.

Russia had come through the war crippled physically - but not emotionally. Hitler's attack had pushed it into a strange alliance with the American-led liberal democracies, that is, on the side that ultimately emerged as victors. In fact at the war's end in 1945, Russian troops sat in occupation of the entire eastern half of Europe - with Stalin still very much in control throughout the whole region. Stalin's intentions were to rebuild the destroyed industrial base of Russia with the industrial plunder of Eastern Europe, and to hold the area as a buffer against any other intruders like Hitler's Nazi Germany. At the same time troops of the American-led western alliance were fully in control of life in the western half of Europe.