It was Alpharius!
The Widening Gyre: The Great War and the Remaking of Europe
- Thread starter Curby
- Start date
- Timeline Post-1900
Curby
recovering analytic philosopher, still sensitive
- Location
- Most Serene Republic of Unwashed Brooklyn
- Pronouns
- He/They
the capitalists, the jews, the masons, the germans, the british, the japanese, woodrow wilson, southern segregationists, etc...
It actually is one of these! It will eventually be revealed, sometime in the 1950s.
- Pronouns
- They/Them
In my heart, I want to believe that it's Woodrow Wilson.
My money is on the segregationists.
- Pronouns
- They/Them
He wasn't really that anti-Segregation? Bryan wound up kinda accepting things there.
King Washington
Semi-Depressed Lurker
- Location
- Indiana
RIP Bryan. At least he was kind of trying to do the right thing
WaltzinBrunhilda
She who remembers
- Location
- The Soviet Socialist Republic in lutruwita
- Pronouns
- She/Her
Long live the Butcher Wilson who in spite of himself creates the condition for proletarian revolution.
QueenOfRoses
Athena Promachos
- Location
- Department of Motor Vehicles
- Pronouns
- She/Her
You did a very good job of writing the speeches, you have a good sense for the writing and oratorical style of the times.
Bryan's genuine commitment to peace was good although the fact that kept veering into denouncing "parasitic elements" could've easily ended up in some very bad places. Although in fairness the British do appear to have legitimately been plotting against him.
Bryan's genuine commitment to peace was good although the fact that kept veering into denouncing "parasitic elements" could've easily ended up in some very bad places. Although in fairness the British do appear to have legitimately been plotting against him.
- Pronouns
- They/Them
The good news is that Winston Churchill is now in charge and will hopefully have his reputation and his entire career wrecked and destroyed over the next few years of failures/etc.
So to game this out...
I'm going to assume that the Jews and Masons aren't behind this for obvious reasons.
I also am not inclined to think that someone outside the American political system did this. The Germans don't have the motive and while the Japanese and British do, its the same issue I have with the Kennedy assassination theories - do any of these actors actually have sufficiently bad grievances with Bryan that they would be willing to risk assassinating a sitting US president? (Discovery of such a plot would inevitably lead to war, almost regardless of who is actually in charge of the US at this point.) The only thing that makes me hesitate is that Churchill is running the British Empire and whatever else you can say about Churchill, you can't say that he was a cautious man. In addition, the segment from 1962 pretty strongly implies that the culprit was not a foreign power, at least by my reading.
My hunch is that the culprit was some combination of the southern segregationists, capitalists and Wilson, with the last one as the point man in case something went wrong...
Great timeline by the way, keep up the good work.
- Location
- US
J. Edgar "Prince of Terror" Hoover looking around like "....Am I seriously not on the list of suspects?.....Damn I'm good. That deserves an early lunch of whiskey and cigars."
- Pronouns
- They/Them
Hoover wasn't that big of a deal this early? Like, at this point he'd be in his early twenties, and while OTL he did become the head of a small division designed to attack the enemies of the nation (because god does Wilson kinda suck), since the US hasn't gone to war I'm assuming he's still a junior clerk in the Justice Department.
The Wages of Destruction: An Economic History of the Great War
Curby
recovering analytic philosopher, still sensitive
- Location
- Most Serene Republic of Unwashed Brooklyn
- Pronouns
- He/They
A writeup on the economic crisis of 1919 below. I do want to preface this one by underlining that this is very much representative of the viewpoint of American historiography. In a future post, which will be on the dynamics and development of the socialist labor movement, I'm hoping to include the perspectives of individuals from the Luxemburgist, Bolshevik, and Italian schools.
__________________________________________________________________________________________________________
The Great War was not simply a battle of soldiers, but also a struggle to mobilize industrial and financial resources. All of the warring powers abandoned the liberalism of the 19th century, employing extensive state intervention to reshape their national economies and regulate labor relations. Most recent research has concluded that, despite often comical local inefficiencies, the war economies as a whole were competently run. The sharp contraction of Global GDP in 1919 was a consequence of the inevitable fiscal and economic pressures arising from a half-decade of total war, as well as the arrival of the Yankee Flu in Europe. Before discussing these, let us briefly survey the state of the national economies in 1918.
A Brief Survey of National Economies, 1914-1918
The Great War pitted two opposing coalitions of unequal strength against each other. By most standard measurements, the allies possessed orders of magnitude more wealth, population, and territory than the Central Powers. If the war was decided solely by the resource base of the rival factions, the Entente should have emerged victorious in the first year.
Part of the gap between the Entente superiority in resources and their comparatively poor battlefield performance is accounted for by the underdevelopment of vast swathes of their territory. The exploited colonies of Britain could contribute to Britain's GDP through trade, but it was exceedingly difficult for Britain to mobilize colonial manpower to its full extent without tearing away subsistence farmers from their livelihood and causing famine (something which they admittedly did not show much compunction about).
Something similar could be said of Russia's situation. The vast subsistence farming population meant that the government had a smaller tax base to draw on. Raising an army required paying for grain, but there was little incentive for peasants to cooperate in selling their produce to a state which employed artificial measures to keep its price down. Even assuming that the government secured sufficient loans to offer the peasants a palatable price, they would have little to actually spend their money on, since most civilian manufactories in Russia were shuttered in wartime.
The German economy, by contrast, had the largest manufacturing base of any of the belligerents, and a business structure which was highly cartelized, allowing for the state to easily coordinate the procurement of resources with private capitalists. The so-called Kriegsrohstoffabteilung (KRA) were established early in the year and tasked with ensuring a steady flow of raw materials to military industries. These bodies were staffed by the directors, executives, and owners of the relevant corporations, giving private industry partial control over the terms of their own contracts. This system did have its pitfalls. For the war's first few years, the KRA, War Ministry, and Army procurement offices lacked a unified chain of command, leading to collective action problems.
The most intractable weakness of the German Economy, however, was its large and inefficient agricultural sector. For a modern, industrialized economy, Germany employed a disproportionate share of its population in agriculture (above 30%). Years of protectionist trade policies, meant to benefit the East Elbian Junkers, had allowed a technologically backwards, labor-intensive agricultural sector to survive. Consequently, Germany ran consistent wheat and meat deficits despite its high share of agricultural workers. Much of Germany's agricultural consumption was sourced from Russia; at the outbreak of the war, Germany was forced to make up for this loss with imports from the United States and Austria. The mass conscription of its population meant that its own already parlous agricultural productivity declined as young men left the field and entered the trenches.
Germany's import strategy steadily degraded the Mark and increased inflationary pressures in the German economy. Yet Germany's fiscal situation was never fatally undermined by its deteriorating trade balance. Much more serious a threat to the war effort was the resumption of the British blockade in 1917, which reversed the growth of American imports and threatened Germany with a food crisis.
The table shows that the blockade caused a drastic decrease in Germany's ability to import food. In 1917, there were across-the-board reductions of food rations in Germany; the import of butter and meat were particularly hard hit, though Germany had accumulated a sufficiently large stock of grain to still provide industrial workers with sufficient calories to perform their backbreaking labor. In 1918, Germany managed to recover some of its lost imports through adroit trading with neutrals and the importation of Ukrainian foodstuffs. A trade deal reached with revolutionary Russia near the end of the year had important repercussions, but did not affect the availability of food in 1918. In real terms, the increase in grain and cattle imports and domestic improvements to distribution mechanisms allowed for Germany to continue fighting the war for another year, but was insufficient to markedly improve the desperate material conditions afflicting ever broader segments of German society. Due to inflation, increased availability did not always translate into lower prices.
Of all the powers, it was Britain which faced the most fiscal strain. As the financier for the allies, it was forced to raise money for France and Russia as well as itself. The ambitious program of army expansion took away workers from Britain's highly productive civilian industries, reducing the tax base and forcing the government to lean more on American loans. While the 1916 revenue act offered a temporary band aid by tapping the wealth of the British financial elite, this was not a device that could be repeated indefinitely.
England had determined to remain on the gold standard after the war. While it suspended the convertibility of treasury notes and some paper money, many bonds and other financial instruments could still be exchanged for gold. There was a widespread understanding that convertibility would return for all notes after the war. To maintain public faith in the gold standard, Britain was forced to buy French gold and limit its monetary expansion more than the other powers. This created fiscal bottlenecks that could only be made up with loans. Britain's efforts to raise this money through taxes and tariffs found some success, but soon ran into the headwind of popular discontent.
In 1918, the increasing costs of gold and ballooning army budgets forced Britain off the gold standard. Convertibility was suspended on remaining bills, and the gold reserves fully depleted. The Bank of England hiked up interest rates to an unprecedented 7% in response to rapid currency depreciation, and the government nationalized the merchant marine and created a board to set strict controls on imports. Ironically, the move toward autarky was buoyed by the German submarine campaign, which disincentivized the import of merchandise. High interest rates, declining trade, and domestic disinvestment did lead to a predictable contraction of the national GDP in 1918:
The relatively mild decline in pre-war GDP is not an accurate gauge of the decline in living standards and the future prospects of the British economy, which are better represented by metrics measuring consumption and investment as a share of the GDP.
British consumption fell by more than a quarter over the first four years of the war, a little closer to 30% if one accounts for the fall in absolute GDP. The stupendous growth of government spending represented money which was spent primarily on the military and naval budgets and resource procurement, and only secondarily on domestic welfare. Comparable patterns were present in other belligerents - in Germany, France, Austria-Hungary, and Italy, domestic consumption declined by similar or moderately larger amounts.
The Depression of 1919
Broadly speaking, the war's first four years represented a time of divergence, as the economic position of the United States, Italy, and United Kingdom improved relative to other powers. Although only the United States experienced net growth in this period, the dramatic fall in the Austrian, German, Russian, and French GDP meant that Britain and Italy's relative position also improved.
On average, the three high-performers (the UK, USA, and Italy) experienced 25% less decline in wartime GDP from 1914-1918 than France, Germany, Austria, and Russia. Then, in the last year of the war, all the major powers experienced a drastic contraction in the size of their national economies, with the previous "high-performers" being hit somewhat harder. This led to a convergence, as all the economies slipped into depression.
Was this simultaneous contraction a mere coincidence, caused by different factors in each state? Such is the orthodox view of British economic historiography. In the standard account, the fall in Austrian and German GDP can be explained by domestic labor and ethnic unrest, while the Italian malaise is attributable to the chaos of southern land seizures, declining labor productivity, and punitive reparations payments to Austria. The over 10% drop in British GDP, meanwhile, can be accounted for by the replacement of skilled manpower with unskilled colonial and female labor, the continued decline of civilian manufacturing, and the November stock market crash.
Insofar as all the adduced factors are indeed unrelated, this account might appear convincing. But the pervasive character of the decline should warn us against adopting an unduly atomizing, national-level explanatory framework. By 1919, all of the warring powers were facing economic headwinds. For example, manpower shortages afflicted Germany, Britain, and France alike. There were few women or elderly workers left to replace drafted factory workers, and many skilled machinists, engineers, and miners could only be replaced by less productive, experienced labor. The decline of productivity led to further downward pressure on wages in the heavy-industrial and munitions sectors.
The most important macroeconomic trend in 1919 is a sharp reduction of consumption's share of the national economy in the three "core" warring powers whose armies were still fully mobilized (France, Germany, Britain). The turndown in consumption decimated the profitability of civilian industries and intermediate goods producers. In concrete terms, the decline in consumption caused the immiseration of a sizable portion of the middle-class, as shopkeepers, clerks, salesmen, and small factory owners found themselves not just unable to afford many prior amenities, but also out of work. Although it is beyond the scope of the present study, this dovetails with research arguing it was middle-class compliance, not working-class militancy, that was the most important factor in the success of the 1919 revolutions.
The decline in consumption can be explained in part by skyrocketing military budgets. After two years of austerity, stagnation, or mild increases, Germany, France, and Britain's military spending all increased by over 15%. This is attributable to ballooning expenditures in the research and development sector and the cost of mass producing new models of tanks and planes. The different powers all vested their hopes in technological innovation to win the war, sincerely believing that the latest aeroplane or artillery prototype would lead to a breakthrough. These programs were, on the whole, well-run, but having exhausted most sources of borrowing, governments opted to pay for them through inflationary measures that acted as a consumption tax.
The impact of the American financial crisis on the European powers is generally exaggerated. Estimates put the loss of British GDP by November 1st at 8%, a number very similar to that of Germany and Austria. Even America likely lost at least 6% of its GDP in 1919 before the actual market crash. Italy is more of a unique case, but even here, a large proportion of its economic contraction can be accounted for by the decline of its exports, certainly not a merely national phenomenon.
Why exactly did this decline in consumption have such a drastic effect on GDP? From 1914-1918, two of the three "High performers" (Britain and Italy) experienced sharp decreases in consumption without corresponding economic contractions, as military spending made good the loss in civilian goods production. The answer to this question has to do with the speed of the decline and the manner in which it impacted the economic choices of ordinary consumers. The previous downturns in consumption were spread evenly across services, nondurable goods (food, toiletries, lighter textiles), and the durable goods sector (furniture, household appliances). In 1919, consumption of durable goods fell on average by over 50%, while the other two sectors of the consumer economy declined by a little less than half of that. In Germany, nondurable goods consumption even ticked upwards slightly due to Russian reparations payments and the urge to stockpile food.
The drastic fall in durable goods spending can be partly explained by widespread impoverishment, which led a growing number of households to dedicate an increased share of their budget to food and other basic necessities. Yet this does not appear to be the whole story, for even wealthy households stopped purchasing furniture and household appliances, as well as longer-lasting nondurable goods such as clothes and fabrics. The most plausible explanation is psychological: living amid the uncertainty of an ever-expanding global war, people were having trouble envisioning a future, and shied away from investing in commodities with a longer lifespan. The crisis in durable goods spending was, above all, a crisis of trust in political elites to bring an end to the conflict and vouchsafe a worthy future for their citizens.
The predictable fall in durable goods production had a cascading effect on the rest of the economy. Enterprises employing a large share of middle-class workers and managers were particularly hard-hit, such as department stores and retail clothing shops. While many of these workers found new employment in the war industries, their overall spending power declined, further depressing the economy. The crisis of consumer demand may have previously been met through monetary infusion and financial subsidy, but most states were tentative to endorse such measures, worrying they would lead to further inflationary hikes in the price of basic goods. The exception here is Britain, which likely averted a much worse economic downturn through the fiscal policy of its central bank.
Falling consumer spending in the core belligerent powers also impacted nations whose armies were not fully mobilized, like Austria and America. For Austria, the decline in the export trade with Germany prevented many of the demobilized soldiers from finding employment, with dramatic consequences for the social stability of the Danube Monarchy. In America, the fall in exports contributed to the process of deglobalization that accelerated with the financial crash.
Consequences
In the long-term, the economic crisis of 1919 initiated a global economic depression and the eventual division of the globe into competing economic blocs. Global trade fell more in the eight months preceding the financial crash than it did in all of 1920. It is not implausible to argue that the beginning of the thirty-years cold war began not with the revolutionary upheaval of November, but with the deglobalizing effects of the depression.
In the shorter-term, the economic crisis exacerbated the worldwide surge of insurrectionary activity. Already, there were warning signs for the European elites; the April protests were probably the last point at which a conciliation could be reached with the despairing middle classes. Most European governments made some effort to mollify the protests, but few carried out the structural reforms necessary to halt the slide toward immiseration. These would have likely required, at the very least, a ceasefire on the western front.
Ironically, the collapse of the civilian economy may have been a necessary evil for the munitions, tank, and aeroplane industries to continue functioning. The manpower crisis in the war economy would have been far more dire if there were not a continuous stream of unemployed salesmen, secretaries, and clerks to draw upon. By all accounts, these deskilled workers constituted some of the most enthusiastic vanguardists of the coming revolution.
Compared to the middle-classes, laborers did not lose as much in absolute terms, but their already precarious position meant that they were more sensitive to even minor increases in the price of necessities. In both Britain and Germany, food became more accessible to the working-class in 1919, but the price of other basic goods like textiles rose sharply. Conditions in most factories grew worse, as did the purchasing power of the average working-class wage. Pressured between government demands for lower prices and reduced labor productivity, companies extended the work-day, using the labor mobilization laws and military power as a backstop to suppress inevitable labor discontent. Yet in the walkouts and strikes of 1919, workers complained less of food rations, the workplace environment, and wages than they did of the war and the general lack of freedom under the draconian labor regime. In short, social-political matters displaced economic ones as the subject of protests, even as workers lived with the reality of wartime impoverishment.
The division of European societies into proletarians and industrial elites - and their eventual collapse - was not a product of the inherent dynamics of capitalism, but of the decisions of political elites bent on continuing a war which they could not afford. Even traditionally loyal segments of the population, such as peasants and independent farmers, were affected by the economic downturn. The labor unrest of the summer, frequently occurring under conditions of extreme repression, was a sign that consent was not only being withdrawn, but actively repudiated.
__________________________________________________________________________________________________________
The Wages of Destruction: An Economic History of the Great War
by John Kenneth Galbraith
by John Kenneth Galbraith
The Great War was not simply a battle of soldiers, but also a struggle to mobilize industrial and financial resources. All of the warring powers abandoned the liberalism of the 19th century, employing extensive state intervention to reshape their national economies and regulate labor relations. Most recent research has concluded that, despite often comical local inefficiencies, the war economies as a whole were competently run. The sharp contraction of Global GDP in 1919 was a consequence of the inevitable fiscal and economic pressures arising from a half-decade of total war, as well as the arrival of the Yankee Flu in Europe. Before discussing these, let us briefly survey the state of the national economies in 1918.
A Brief Survey of National Economies, 1914-1918
The Great War pitted two opposing coalitions of unequal strength against each other. By most standard measurements, the allies possessed orders of magnitude more wealth, population, and territory than the Central Powers. If the war was decided solely by the resource base of the rival factions, the Entente should have emerged victorious in the first year.
GDP At the Beginning of the War, Central Powers
GDP At the Beginning of the War, Entente
| Germany | Austria | Bulgaria | Turkey | CP Total | |
| GDP (Billion) | 244.3 | 100.5 | 7.4 | 25.3 | 383.9 |
| GDP Per Capita | 3,648 | 1,968 | 1,527 | 1,100 | 2,459 |
GDP At the Beginning of the War, Entente
| Britain | Russia | France | British Colonies | French Colonies | Entente Total | Entente Total w/o Colonies | |
| GDP | 226.4 | 257.7 | 138.7 | 257 | 31.5 | 1,096.5 | 622.8 |
| GDP Per Capita | 4,921 | 1,488 | 3,485 | 676 | 652 | 1,382 | 2,405 |
Part of the gap between the Entente superiority in resources and their comparatively poor battlefield performance is accounted for by the underdevelopment of vast swathes of their territory. The exploited colonies of Britain could contribute to Britain's GDP through trade, but it was exceedingly difficult for Britain to mobilize colonial manpower to its full extent without tearing away subsistence farmers from their livelihood and causing famine (something which they admittedly did not show much compunction about).
Something similar could be said of Russia's situation. The vast subsistence farming population meant that the government had a smaller tax base to draw on. Raising an army required paying for grain, but there was little incentive for peasants to cooperate in selling their produce to a state which employed artificial measures to keep its price down. Even assuming that the government secured sufficient loans to offer the peasants a palatable price, they would have little to actually spend their money on, since most civilian manufactories in Russia were shuttered in wartime.
The German economy, by contrast, had the largest manufacturing base of any of the belligerents, and a business structure which was highly cartelized, allowing for the state to easily coordinate the procurement of resources with private capitalists. The so-called Kriegsrohstoffabteilung (KRA) were established early in the year and tasked with ensuring a steady flow of raw materials to military industries. These bodies were staffed by the directors, executives, and owners of the relevant corporations, giving private industry partial control over the terms of their own contracts. This system did have its pitfalls. For the war's first few years, the KRA, War Ministry, and Army procurement offices lacked a unified chain of command, leading to collective action problems.
The most intractable weakness of the German Economy, however, was its large and inefficient agricultural sector. For a modern, industrialized economy, Germany employed a disproportionate share of its population in agriculture (above 30%). Years of protectionist trade policies, meant to benefit the East Elbian Junkers, had allowed a technologically backwards, labor-intensive agricultural sector to survive. Consequently, Germany ran consistent wheat and meat deficits despite its high share of agricultural workers. Much of Germany's agricultural consumption was sourced from Russia; at the outbreak of the war, Germany was forced to make up for this loss with imports from the United States and Austria. The mass conscription of its population meant that its own already parlous agricultural productivity declined as young men left the field and entered the trenches.
Germany: Relative Agricultural Productivity, 1913-1918
| 1913 | 1914 | 1915 | 1916 | 1917 | 1918 | |
| Productivity | 100 | 88 | 83 | 78 | 66 | 59 |
Germany's import strategy steadily degraded the Mark and increased inflationary pressures in the German economy. Yet Germany's fiscal situation was never fatally undermined by its deteriorating trade balance. Much more serious a threat to the war effort was the resumption of the British blockade in 1917, which reversed the growth of American imports and threatened Germany with a food crisis.
German Food Imports in Metric Tons, 1916-1918
| 1916 | 1917 | 1918 | |
| Grains | 31,522 | 5,892 | 14,724 |
| Flour | 688 | 335 | 492 |
| Cattle | 42,523 | 15,205 | 26,523 |
| Meat | 8,415 | 2,944 | 842 |
| Butter | 14,925 | 6,515 | 6,412 |
The table shows that the blockade caused a drastic decrease in Germany's ability to import food. In 1917, there were across-the-board reductions of food rations in Germany; the import of butter and meat were particularly hard hit, though Germany had accumulated a sufficiently large stock of grain to still provide industrial workers with sufficient calories to perform their backbreaking labor. In 1918, Germany managed to recover some of its lost imports through adroit trading with neutrals and the importation of Ukrainian foodstuffs. A trade deal reached with revolutionary Russia near the end of the year had important repercussions, but did not affect the availability of food in 1918. In real terms, the increase in grain and cattle imports and domestic improvements to distribution mechanisms allowed for Germany to continue fighting the war for another year, but was insufficient to markedly improve the desperate material conditions afflicting ever broader segments of German society. Due to inflation, increased availability did not always translate into lower prices.
Of all the powers, it was Britain which faced the most fiscal strain. As the financier for the allies, it was forced to raise money for France and Russia as well as itself. The ambitious program of army expansion took away workers from Britain's highly productive civilian industries, reducing the tax base and forcing the government to lean more on American loans. While the 1916 revenue act offered a temporary band aid by tapping the wealth of the British financial elite, this was not a device that could be repeated indefinitely.
England had determined to remain on the gold standard after the war. While it suspended the convertibility of treasury notes and some paper money, many bonds and other financial instruments could still be exchanged for gold. There was a widespread understanding that convertibility would return for all notes after the war. To maintain public faith in the gold standard, Britain was forced to buy French gold and limit its monetary expansion more than the other powers. This created fiscal bottlenecks that could only be made up with loans. Britain's efforts to raise this money through taxes and tariffs found some success, but soon ran into the headwind of popular discontent.
In 1918, the increasing costs of gold and ballooning army budgets forced Britain off the gold standard. Convertibility was suspended on remaining bills, and the gold reserves fully depleted. The Bank of England hiked up interest rates to an unprecedented 7% in response to rapid currency depreciation, and the government nationalized the merchant marine and created a board to set strict controls on imports. Ironically, the move toward autarky was buoyed by the German submarine campaign, which disincentivized the import of merchandise. High interest rates, declining trade, and domestic disinvestment did lead to a predictable contraction of the national GDP in 1918:
UK Relative GDP, 1913-1918
| Year | UK Relative GDP |
| 1913 | 100 |
| 1914 | 100.9 |
| 1915 | 105.4 |
| 1916 | 107.2 |
| 1917 | 103.4 |
| 1918 | 97.6 |
The relatively mild decline in pre-war GDP is not an accurate gauge of the decline in living standards and the future prospects of the British economy, which are better represented by metrics measuring consumption and investment as a share of the GDP.
UK: Components of expenditure on GDP at constant market prices (% of total)
| Consumption | Government | Investment | Net Exports | |
| 1913 | 77.2 | 8.1 | 7.6 | 7.1 |
| 1914 | 76.8 | 11.4 | 7.7 | 4.1 |
| 1915 | 67.9 | 32.1 | -2.2 | 1.2 |
| 1916 | 62.4 | 43.1 | -6.8 | 1.3 |
| 1917 | 57.8 | 43.4 | -3.1 | 1.9 |
| 1918 | 56.7 | 45.2 | -1.1 | -.8 |
British consumption fell by more than a quarter over the first four years of the war, a little closer to 30% if one accounts for the fall in absolute GDP. The stupendous growth of government spending represented money which was spent primarily on the military and naval budgets and resource procurement, and only secondarily on domestic welfare. Comparable patterns were present in other belligerents - in Germany, France, Austria-Hungary, and Italy, domestic consumption declined by similar or moderately larger amounts.
The Depression of 1919
Broadly speaking, the war's first four years represented a time of divergence, as the economic position of the United States, Italy, and United Kingdom improved relative to other powers. Although only the United States experienced net growth in this period, the dramatic fall in the Austrian, German, Russian, and French GDP meant that Britain and Italy's relative position also improved.
Relative change in Wartime GDP, 1913-1919, by country. (Note: Numbers for Italy, France, Germany, Austria only until Nov. 1919).
| UK | USA | Germany | Austria | Russia | France | Italy | |
| 1913 | 100 | 100 | 100 | 100 | 100 | 100 | 100.0 |
| 1914 | 100.9 | 100.7 | 85.6 | 86.9 | 93.8 | 92.1 | 99.9 |
| 1915 | 105.4 | 108.2 | 82.2 | 83.5 | 93.9 | 90.8 | 110.5 |
| 1916 | 107.2 | 108.1 | 82.1 | 82.1 | 76.9 | 91.2 | 122.4 |
| 1917 | 103.4 | 106.7 | 82.5 | 78.8 | 64.2 | 77.2 | 129.1 |
| 1918 | 97.6 | 103.2 | 82.5 | 77.3 | - | 54.4 | 109.5 |
| 1919 | 85.7 | 88.4 | 74.6 | 72.1 | - | 48.1 | 96.4 |
On average, the three high-performers (the UK, USA, and Italy) experienced 25% less decline in wartime GDP from 1914-1918 than France, Germany, Austria, and Russia. Then, in the last year of the war, all the major powers experienced a drastic contraction in the size of their national economies, with the previous "high-performers" being hit somewhat harder. This led to a convergence, as all the economies slipped into depression.
Was this simultaneous contraction a mere coincidence, caused by different factors in each state? Such is the orthodox view of British economic historiography. In the standard account, the fall in Austrian and German GDP can be explained by domestic labor and ethnic unrest, while the Italian malaise is attributable to the chaos of southern land seizures, declining labor productivity, and punitive reparations payments to Austria. The over 10% drop in British GDP, meanwhile, can be accounted for by the replacement of skilled manpower with unskilled colonial and female labor, the continued decline of civilian manufacturing, and the November stock market crash.
Insofar as all the adduced factors are indeed unrelated, this account might appear convincing. But the pervasive character of the decline should warn us against adopting an unduly atomizing, national-level explanatory framework. By 1919, all of the warring powers were facing economic headwinds. For example, manpower shortages afflicted Germany, Britain, and France alike. There were few women or elderly workers left to replace drafted factory workers, and many skilled machinists, engineers, and miners could only be replaced by less productive, experienced labor. The decline of productivity led to further downward pressure on wages in the heavy-industrial and munitions sectors.
The most important macroeconomic trend in 1919 is a sharp reduction of consumption's share of the national economy in the three "core" warring powers whose armies were still fully mobilized (France, Germany, Britain). The turndown in consumption decimated the profitability of civilian industries and intermediate goods producers. In concrete terms, the decline in consumption caused the immiseration of a sizable portion of the middle-class, as shopkeepers, clerks, salesmen, and small factory owners found themselves not just unable to afford many prior amenities, but also out of work. Although it is beyond the scope of the present study, this dovetails with research arguing it was middle-class compliance, not working-class militancy, that was the most important factor in the success of the 1919 revolutions.
The decline in consumption can be explained in part by skyrocketing military budgets. After two years of austerity, stagnation, or mild increases, Germany, France, and Britain's military spending all increased by over 15%. This is attributable to ballooning expenditures in the research and development sector and the cost of mass producing new models of tanks and planes. The different powers all vested their hopes in technological innovation to win the war, sincerely believing that the latest aeroplane or artillery prototype would lead to a breakthrough. These programs were, on the whole, well-run, but having exhausted most sources of borrowing, governments opted to pay for them through inflationary measures that acted as a consumption tax.
The impact of the American financial crisis on the European powers is generally exaggerated. Estimates put the loss of British GDP by November 1st at 8%, a number very similar to that of Germany and Austria. Even America likely lost at least 6% of its GDP in 1919 before the actual market crash. Italy is more of a unique case, but even here, a large proportion of its economic contraction can be accounted for by the decline of its exports, certainly not a merely national phenomenon.
Why exactly did this decline in consumption have such a drastic effect on GDP? From 1914-1918, two of the three "High performers" (Britain and Italy) experienced sharp decreases in consumption without corresponding economic contractions, as military spending made good the loss in civilian goods production. The answer to this question has to do with the speed of the decline and the manner in which it impacted the economic choices of ordinary consumers. The previous downturns in consumption were spread evenly across services, nondurable goods (food, toiletries, lighter textiles), and the durable goods sector (furniture, household appliances). In 1919, consumption of durable goods fell on average by over 50%, while the other two sectors of the consumer economy declined by a little less than half of that. In Germany, nondurable goods consumption even ticked upwards slightly due to Russian reparations payments and the urge to stockpile food.
The drastic fall in durable goods spending can be partly explained by widespread impoverishment, which led a growing number of households to dedicate an increased share of their budget to food and other basic necessities. Yet this does not appear to be the whole story, for even wealthy households stopped purchasing furniture and household appliances, as well as longer-lasting nondurable goods such as clothes and fabrics. The most plausible explanation is psychological: living amid the uncertainty of an ever-expanding global war, people were having trouble envisioning a future, and shied away from investing in commodities with a longer lifespan. The crisis in durable goods spending was, above all, a crisis of trust in political elites to bring an end to the conflict and vouchsafe a worthy future for their citizens.
The predictable fall in durable goods production had a cascading effect on the rest of the economy. Enterprises employing a large share of middle-class workers and managers were particularly hard-hit, such as department stores and retail clothing shops. While many of these workers found new employment in the war industries, their overall spending power declined, further depressing the economy. The crisis of consumer demand may have previously been met through monetary infusion and financial subsidy, but most states were tentative to endorse such measures, worrying they would lead to further inflationary hikes in the price of basic goods. The exception here is Britain, which likely averted a much worse economic downturn through the fiscal policy of its central bank.
Falling consumer spending in the core belligerent powers also impacted nations whose armies were not fully mobilized, like Austria and America. For Austria, the decline in the export trade with Germany prevented many of the demobilized soldiers from finding employment, with dramatic consequences for the social stability of the Danube Monarchy. In America, the fall in exports contributed to the process of deglobalization that accelerated with the financial crash.
Consequences
In the long-term, the economic crisis of 1919 initiated a global economic depression and the eventual division of the globe into competing economic blocs. Global trade fell more in the eight months preceding the financial crash than it did in all of 1920. It is not implausible to argue that the beginning of the thirty-years cold war began not with the revolutionary upheaval of November, but with the deglobalizing effects of the depression.
In the shorter-term, the economic crisis exacerbated the worldwide surge of insurrectionary activity. Already, there were warning signs for the European elites; the April protests were probably the last point at which a conciliation could be reached with the despairing middle classes. Most European governments made some effort to mollify the protests, but few carried out the structural reforms necessary to halt the slide toward immiseration. These would have likely required, at the very least, a ceasefire on the western front.
Ironically, the collapse of the civilian economy may have been a necessary evil for the munitions, tank, and aeroplane industries to continue functioning. The manpower crisis in the war economy would have been far more dire if there were not a continuous stream of unemployed salesmen, secretaries, and clerks to draw upon. By all accounts, these deskilled workers constituted some of the most enthusiastic vanguardists of the coming revolution.
Compared to the middle-classes, laborers did not lose as much in absolute terms, but their already precarious position meant that they were more sensitive to even minor increases in the price of necessities. In both Britain and Germany, food became more accessible to the working-class in 1919, but the price of other basic goods like textiles rose sharply. Conditions in most factories grew worse, as did the purchasing power of the average working-class wage. Pressured between government demands for lower prices and reduced labor productivity, companies extended the work-day, using the labor mobilization laws and military power as a backstop to suppress inevitable labor discontent. Yet in the walkouts and strikes of 1919, workers complained less of food rations, the workplace environment, and wages than they did of the war and the general lack of freedom under the draconian labor regime. In short, social-political matters displaced economic ones as the subject of protests, even as workers lived with the reality of wartime impoverishment.
The division of European societies into proletarians and industrial elites - and their eventual collapse - was not a product of the inherent dynamics of capitalism, but of the decisions of political elites bent on continuing a war which they could not afford. Even traditionally loyal segments of the population, such as peasants and independent farmers, were affected by the economic downturn. The labor unrest of the summer, frequently occurring under conditions of extreme repression, was a sign that consent was not only being withdrawn, but actively repudiated.
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- Location
- Fort Worth, TX
Questions:
1. How hard did the various European powers lean on their colonies for raw materials and manpower? We saw famine conditions in British India but did similar events happen in other colonies?
2. Did any neutral powers benefit from trade and investment during the war?
1. How hard did the various European powers lean on their colonies for raw materials and manpower? We saw famine conditions in British India but did similar events happen in other colonies?
2. Did any neutral powers benefit from trade and investment during the war?
Curby
recovering analytic philosopher, still sensitive
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- Most Serene Republic of Unwashed Brooklyn
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- He/They
1. France and Britain both lean very heavily on the colonies for raw materials, moreso than IOTL due to a less friendly America and the need to maintain exchange rates. Manpower is a more complicated issue. Though Britain and France do have over double the amount of colonial troops active in the west and have employed a lot more colonial labor, they are running into some bottlenecks at the moment. There's a lot of domestic discontent with the importation of colonial workers, most of it racist in character. There are pretty widespread race-riots in 1919 that I haven't discussed yet. The colonies also aren't happy about the conscripting of labor, and both Britain and France are have slowed down the imperial labor programs because of that.
2. Yes. I've already discussed Spain and South America, which benefit primarily from trade (not investment). Forthcoming posts will cover The Netherlands and Sweden. The Netherlands is going to be a particular beneficiary - with the less stringest British blockade, it's by far the most important neutral. Most American trade goes through Dutch ports. Many contraband goods do as well, at least in the first half of the war. Britain and Germany wage an ongoing war of influence in the Netherlands, and the Dutch know how to use this to their own benefit.
Of course, the blockade is going to hurt the Dutch badly, as will the submarine campaign, so I am not sure we can say that the Dutch "benefit" from the war. While the country's prestige and importance is undoubtedly enhanced, the position of the average Dutch citizen doesn't improve very much, in line with what occurred IOTL.
I've already teased this, but the Netherlands will join the war in 1919. This will be discussed in further detail in a future entry on military operations.
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| Meat | 8,415 | 2,944 | 842 |
seems like a comma is missing for the 1918 column.
Bisexual-Mart
Far from the shallow ground
- Location
- The Great State of Warshington
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- He/Him
Fun fact: Passports were not developed until World War I. I wonder if we're going to see similar developments ITTL.
grommile
nasty-minded old cynic
- Location
- NERV-Mercia
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- Traditional/Animate
Internationally standardized passports as we know them today, anyway.
The Westminster state has been issuing passports in one form or another since the 16th century.
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- They/Them
Also obviously it's definitely not caused by the inherent dynamics of capitalism... definitely and totally and absolutely.
- Location
- Fort Worth, TX
Wait until those deported workers and soldiers are sent back to the colonies with all kinds of ideas and skills.
Curby
recovering analytic philosopher, still sensitive
- Location
- Most Serene Republic of Unwashed Brooklyn
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- He/They
This brings to mind an extraordinarily prescient quote from Engels in 1887:
A world war of never before seen intensity, if the system of mutual outbidding in armament, carried to the extreme, finally bears its natural fruits. . . eight to ten million soldiers will slaughter each other and strip Europe bare as no swarm of locusts has ever done before. The devastations of the Thirty Years War condensed into three or four years and spread all over the continent: famine, epidemics, general barbarization of armies and masses, provoked by sheer desperation; utter chaos in our trade, industry and commerce, ending in general bankruptcy; collapse of the old states and their traditional wisdom in such a way that the crowns will roll in the gutter by the dozens and there will be nobody to pick them up; absolute impossibility to foresee how all this will end and who will be victors in that struggle; only one result was absolutely certain: general exhaustion and the creation of circumstances for the final victory of the working class.
Having quoted Engels, I will say that I think there are some important defects in the way that Orthodox Marxists have thought about the war, arising mainly from the tendency to treat states and political institutions as mere epiphenomena of economic relations. While it's certainly true that the "inherent dynamics of capitalism" created the conditions necessary for the war, I think there is some validity to the notion that the decision to continue it owed more to the independent causal power of ideology, nationalism, and the seemingly self-perpetuating growth of state power than it did to mere bourgeoisie self-interest. Even IOTL, the national bourgeoisie of Europe would have been better off if a peace was signed in 1915 or 1916. I think that one of the abiding contradictions of modern capitalism is its strange, janus-faced relationship with the state; far from acting as its mere puppet-masters, the 20th century bourgeois has frequently endorsed and aided states which clearly do not serve their interest.
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- They/Them
I think to a certain extent hypocritical or self-defeating elements are... well, literally what people mean when they talk about the contradictions of capitalism. This is just a very specific sort of manifestation of it.
PrognosticHannya
Far Too Enthusiastic About Etymology
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- She/Her
Curby
recovering analytic philosopher, still sensitive
- Location
- Most Serene Republic of Unwashed Brooklyn
- Pronouns
- He/They
What a nightmare! Thank you for alerting me to this. Just fixed it...forum formatting can be finicky sometimes.
- Location
- US
Will anarchists make more an appearance in the future? I understand that the necessity of the united front would have anarchists working together with syndicalists, vanguardists, etc, but will there be an attempt at realizing the anarchist dream? Possibly something that isn't immediately crushed.