Europe and the countries within it were drastically changed by World War I (Source: segonku.unl.edu)
For Latvia the Interwar Period, and their first time in their entire history being independent, lasted from 1920 to 1940. Shortly after the peace treaty was signed with the Soviet Union the Latvian Parliament began working, and they ratified their constitution on February 15th, 1922. Latvia was able to join the international community, and was a member of the League of Nations, the precursor to the UN.
A meeting of the League of Nations (Source: teara.govt.nz)
However, their economy was hurt by Great Depression along with many other European countries, which began in the US with the stock market crash in 1929, and quickly spread around the world. While it was a democratic country for the first years of its independence, Latvia eventually, like many other European countries at the time, became an autocratic regime under Karlis Ulmanis, who was one the founders of Latvia and a powerfuol politician. In 1934 Ulmanis carried out a bloodless coup and took control of the government. While Ulmanis was in total control and created a cult of personality, it was not a fascist regime, nor was it very harsh compared to some of the more notorious dictatorships in Europe.
A propaganda poster showing Ulmanis (Source: latvianhistory.com)
While the Ulmanis government was able to stay in control within Latvia they were not very effective at foreign affairs, with Latvia being drawn closer and closer to the Soviet Union despite their attempts to stay neutral. The Soviet Union considered the Baltics to be their sphere of influence, and on August 23rd, 1939, Nazi Germany and the USSR signed the Molotov-Ribbentrop Pact, a non-aggression pact which also divided Eastern Europe between them, with Latvia going to the USSR, along with the other Baltics and eastern Poland. The Soviets then pressured and threatened Latvia, along with Estonia and Lithuania, into signing a mutual-assistance treaty that would let them build bases in Latvian territory. In June 1940 the USSR completely occupied Latvia, sent Ulmanis to a prison camp where he would later die, and put a communist puppet government in control. On August 5th the communist government voted to officially join the Soviet Union, ending Latvia's twenty short years of independence.