By the end of 1930 the precarious international order established at Versailles had begun to totter and crumble. In western Europe, the German Foreign Minister Stresemann's successors were being driven by unemployment and the rocketing growth of the Nazi party to abandon his policy of gradual revision of Versailles for a policy of adventurism from weakness. In south-east Europe and the Mediterranean, Franco-Italian amity was breaking on France's refusal to consider the Italian position on disarmament and in the Balkans. In eastern Europe, the Soviet drive for collectivisation had weakened the vital link with Germany without providing the Soviets with any alternative way out of their isolation. And in the Pacific, by the terms of the London Naval treaty of 1930, Britain and the United States had driven the extreme Japanese nationalists in the army and elsewhere to plot external adventure against China in Manchuria and internal revolution as the only alternatives to what they saw as national humiliation.

These largely political issues were linked and made more extreme by the steady spread of the economic crisis. Europe's recovery after the war and the disastrous German inflation of 1923 rested on a precarious but little-understood system of international trade which, being rigidly anchored to gold, had inadequate reserves of liquidity and was burdened with the extra task of handling the immense transfers of funds involved in the payment of reparations by Germany to the victors and of war-debts by the victor countries to the United States.