I have read that during the 1920s the LGBT community flourished in Europe with the opening of clubs such as Eldorado in Berlin and Le Monocle in Paris. Was this really the beginning of the acceptance of LGBT people, or were they still heavily persecuted? What was life like for them then? How did it change from the 1920s to the 1940s (did their persecution in the war must have seriously undermined any real beginnings of change)? How did LGBT life in Europe compare to that in the USA during the same time period?
I realise it's a pretty loaded question, so any books you could reference me would be extremely useful. Thank you so much!
I can provide neither a placeholder nor a claim to expertise -- I'm not an expert on 20th-century Germany, in short -- but as you do ask for references, you might try Robert Beachy's Gay Berlin. There was a review article on it in the New Yorker back in January this year, which was quite interesting -- it's obviously not referenced, but it does provide a good narrative run-through from what Beachy entitles as the 'German Invention of Homosexuality' in the late nineteenth century to the oppression under Hitler: http://www.newyorker.com/magazine/2015/01/26/berlin-story.
Here's a section relevant to the period you're interested in:
In the eighteen-eighties, a Berlin police commissioner gave up prosecuting gay bars and instead instituted a policy of bemused tolerance, going so far as to lead tours of a growing demimonde. In 1896, Der Eigene (“The Self-Owning”), the first gay magazine, began publication. The next year, the physician Magnus Hirschfeld founded the Scientific-Humanitarian Committee, the first gay-rights organization. By the beginning of the twentieth century, a canon of gay literature had emerged (one early advocate used the phrase “Staying silent is death,” nearly a century before AIDS activists coined the slogan “Silence = Death”); activists were bemoaning negative depictions of homosexuality (Thomas Mann’s “Death in Venice” was one target); there were debates over the ethics of outing; and a schism opened between an inclusive, mainstream faction and a more riotous, anarchistic wing. In the nineteen-twenties, with gay films and pop songs in circulation, a mass movement seemed at hand. In 1929, the Reichstag moved toward the decriminalization of homosexuality, although the chaos caused by that fall’s stock-market crash prevented a final vote. [...] The inclination to read German history as an extended prelude to Nazism—the “heading for Hitler” narrative—has tended to exclude countervailing progressive forces, especially those of the Wilhelmine period, from 1871 to 1918. The towering legacy of German idealism and Romanticism, which helps to explain why the gay-rights movement took root in Germany, has itself become somewhat obscure, especially outside the German school system.