1919-1940 - Between Wars
The crisis was triggered immediately following the departure of the Germans. In Parliament, the representatives of the Left demanded the deposition of the dynasty. They reproached the sovereign for having entertained relations with the occupier during the war and for favouring the Right through intervening in political life. The motion was only just rejected. On an international level, the Luxembourg government also had to face criticism with regard to Grand Duchess Marie-Adélaïde. France and Belgium were carrying out secret negotiations, which risked having repercussions on the independence of Luxembourg.
On 9 January 1919, the volunteer corps (Luxembourg army) revolted and a committee of public safety declared Luxembourg a republic. These movements did not garner public support and were swiftly stifled by the intervention of French troops. But the position of Grand Duchess Marie-Adélaïde was definitely compromised. The sovereign decided to abdicate in favor of her younger sister Charlotte, who succeeded her without delay (15 January 1919).
To defuse the crisis, the Luxembourg government decided to organise a double referendum. The public was to be consulted on the form of the state (monarchy or republic) and the economic orientation of the country following the denunciation of the Zollverein. On the one hand, the voice of the population was intended to make an impression at the very moment the victors were gathered in Versailles to redraw the European map according to the Wilson principle of the right of nations to self-determination. On the other hand, the referendum was supposed to reinforce the legitimacy of the new grand duchess.
Voting for the first time under universal suffrage, on 28 September 1919, a large majority pronounced itself in favour of keeping the monarchy (80 %) and for an economic union with France (73 %). France, however, withdrew and advised the Luxembourg government to turn towards Belgium. Following harsh negotiations, the agreement establishing the Belgo-Luxembourg Economic Union was signed in 1921.
After the economic recovery of the 1920s, there followed the crisis of the thirties, from which Luxembourg was not to be spared and which triggered a world economic deceleration. Yet in the Grand Duchy, the unemployment rate remained relatively low, since layoffs affected in particular immigrant workers who, without work, were obliged to return to their country of origin. The economic crisis provided a certain impetus to the communist party. Revolutionary ideas gained in popularity among the laborers of the mineral basin, which did not fail to cause concern among conservative circles.
In 1937, the government tried to outlaw the communist party by means of a law aimed at "defending political and social order", branded a "muzzle law" by its opponents. In spite of a positive vote in Parliament, the majority of voters rejected this step in a referendum, considering it to be a violation of freedom of opinion.
On an international level, Luxembourg consolidated its position by playing an active role in the League of Nations in Geneva, while still maintaining its neutrality. With the establishment of the Nazi regime in Germany in 1933, however, an outside threat was once again looming on the horizon.
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