The Interwar Years were supposed to be a period of rebuilding, but instead became a mere breather in an ongoing European Long War the effects of which are still felt. The Great War truly destroyed the basic fabric of Europe.
Perhaps the greatest task after the war was to rebuild the international political system. Ever since the Congress of Vienna in 1815, balance of power had been the basis of international relations. Under the Congress system, war was taken to be a given of the international order. War occurred to settle political differences between states when their myriad of interests collided. Since states have many interests, and these conflict with others, then political conflict was constant and, when diplomacy failed, wars resulted to settle the issue.
Nearly all these disputes were over bits of territory, treatment of minorities, as well as over influence in Europe. The disputes were not over the very existence of states. As a result, wars tended to be limited in their scope and the settlements of the wars were also limited.
From the Crimean War to the Franco-Prussian war the wars were rather limited in size and the post-war settlements followed small exchanges of territory, reparations, and a fairly quick restoration of the international order with its conferences and congresses.
However, the Great War simply had too much at stake for this old system to work. The enormous loss of life in what was no less than a cataclysm made peace terms very harsh. The manipulation of enemy minority groups threatened the very existence of states. To lose such a war could mean the death of the state itself. With so much at stake the Europeans could not surrender until there was no ability to continue to fight.
What allowed this to change was the 14 Points of Woodrow Wilson. His ideas such as "peace without victory" and his idea that differences were over political leadership and not of peoples found a way out of the bloodletting. Now a state could admit of defeat, replace its government and then get a better peace deal than national destruction. With the collapse of Bulgaria in 1918, the Austrians simply began to disintegrate and the Germans realized all was lost. They asked for an armistice based on Wilson's 14 Points.
The victors met in Paris in 1919 to recreate Europe in a new image. This image would certainly not be the discredited balance of power. Paris 1919 was to be a better version of Vienna 1815. In the new Wilsonian worldview, war was no longer normal, but a criminal matter. In the future, disputes were to be solved peacefully with courts and arbitration. Wars could no longer be declared as they were now de facto illegal. Nations which broke the peace would be legally designated aggressors and the rest of the world would take action against the aggressor-state. All territorial, financial, and other conflicts were to be hashed out in conferences and finally decided by the League of Nations. There was no longer any reason for war. Territorial disputes would be based on "self-determination" in that the people in an area would decide by voting the issues of the day. Teams of experts would help the league decide territorial issues and, in tougher cases voting would make the final call.
In theory this made perfect sense, as it still does to this day. However, as they say, the devil is in the details, as well as in the human heart. Drawing proper boundaries in Europe was impossible due to the integrated and diverse nature of Europe at the time. In fact when the borders were finally finished in 1919, tens of millions of people were prevented from living with their ethnic brothers in nation-states. Germans in particular seemed to live almost everywhere in Europe in sizable minorities. Wilson said that this was a problem, but one that would be peacefully solved by the League at a future date.
Perhaps the worst problem was the simple matter of dealing with aggressor states. Diplomatic and economic sanctions were very difficult to agree upon in and of themselves. Military sanctions were practically impossible. Each state of the League decided if they would contribute troops or even follow diplomatic and economic sanctions. States become friendly to others and hardly base such decisions on Reason as Wilson thought they would. National interests did not go away after Paris 1919. States differed over just how guilty any nation was. They also could refuse to do anything about it anyway.
The United States almost immediately announced that it would not be bound to use troops to enforce League dictates. Britain was also very reluctant and almost immediately began to go back to opposing France in Europe to prevent French dominance of the continent. When France sent troops into the Rhineland in 1923 to collect reparations agreed to in 1919, Britain and the US roundly blamed French "aggressiveness," "greed," and "war mongering." France was rudely awakened to the reality that the League System was in deep trouble. Japan's invasion of Manchuria in 1931 resulted in practically no action taken against Japan. After all, which nations would contribute troops to evict Japan? In 1935 Mussolini sent troops into Abyssinia and was slapped with meaningless sanctions by the League as both Britain and France didn't want to offend WWI Ally Italy too much. Mussolini realized that the League was dead and quickly made a deal with Hitler. Soon Hitler was moving troops into the Rhineland and making very loud noises about how the Versailles Treaty had prevented millions of Germans from living in Germany. The Versailles Treaty undermined the basic principle of the Paris Peace conference and Hitler gained much territory by simply pointing out this obvious fact. France in particular was alarmed at growing German power (regardless of the morality of letting Germans live in Germany), but Britain was simply unwilling to fight a war to prevent Germans from living in Germany. To the British, Hitler was essentially right on this issue. The Munich Conference of 1938 drove home the point: Hitler had a right to territory peopled by majority Germans and Britain would not fight. France wanted to, but they were viewed as immoral balance-of-power types.
By the spring of 1939 the Paris System was essentially dead. It now relied on Hitler to simply not start a war. He had gotten nearly all the land he wanted within the system. However, Hitler made a critical mistake in sending his army into what was left of Czechoslovakia. This was clearly outside the Paris System and killed the system. Britain and France were flabbergasted at Hitler's illegal move. They now went back to Balance of Power policies. They officially gave up on the League when they entered into an alliance with Poland against Germany. They also began the process of getting Russia to help defeat a German attack on Poland. However, Britain and France were still somewhat in the league system and thus could not give Stalin what he wanted for his help: land. Instead the British and French offered platitudes about international peace. Hitler, however, wanted to destroy the Paris System and had no trouble offering Russia land in the Baltic, Poland and Rumania to get Russia to help Germany.
Stalin took Hitler's offer. The two dictators were out to permanently destroy the Paris system.
The Interwar Years began by trying to create a bright new future of international relations. Balance of power was disposed of and was replaced by international morality and legality. However, states were required to make it all work--and they chose not to. Japan and Italy got away with defying the Paris System. Hitler, on the other hand, had to behave more carefully. He decided to work within the system to regain people and territory. He was a violent-sounding loudmouth who actually worked within the system. Nevill Chamberlain of Britain though he could "tame" such a man. However, when Hitler later advanced his troops out of the German parts of Czechoslovakia and took the rest of the state, he had made clear that he had only used the Paris System for his own ends. Realizing this, Britain and France made an alliance with Poland but failed to buy off the land hungry Stalin. By September of 1939, Hitler had gained greatly by the Paris System and now had all the advantages in the newly-re-emerging Balance of Power system.
The wheel had come full-circle. Balance of Power had been replaced by the Paris System only to return by 1939. Soon, even the staunchly anti-Communist Winston Churchill and the United States were allied with mass-murderer Joseph Stalin. Wilson would have been horrified. The architects of the Congress of Vienna would have knowing smiles.