WWI: The Great War (2024/2025) - PDF

The Great War Amatori-Colli, ch. 10 Economic history cl. 15 Ay 2024/2025 Sonia Schifano In this episode The First World War: is it still a relevant debate? Main characteristics of the Great War Changing the Global economy A.Y. 2024/2025 30067 - cl. 15...

The Great War Amatori-Colli, ch. 10 Economic history cl. 15 Ay 2024/2025 Sonia Schifano In this episode The First World War: is it still a relevant debate? Main characteristics of the Great War Changing the Global economy A.Y. 2024/2025 30067 - cl. 15 2 The disintegration of the international economy Major socio-economic changes normally occur over long periods of time: Changes in demography, availability of resources, and technology can spread over a period of years, decades or even centuries. Political changes can be abrupt and can lead to sudden and unexpected economic changes. World War I (= the Great War) destroyed the intricate (but fragile) international economic and trade system that had gradually developed during the 19th century. It brought an end to the ‘first globalisation’. A.Y. 2024/2025 30067 - cl. 15 3 WWI: a still relevant debate? Yes. It was the first global war, fought globally by soldiers of all nationalities It was the first modern war from an economic and technological point of view It marked the beginning of state planning in the economic field It brought about major geopolitical changes: end of the Old Empires (Austria-Hungary and Ottoman Empire) definitive affirmation of new non-European powers: US and Japan It determined the beginning of the communist experiment It led to the emergence of strong nationalism It had a strong cultural impact A.Y. 2024/2025 30067 - cl. 15 4 WWI: the origins of the conflict From a purely diplomatic perspective, the Great War broke out because of the Sarajevo bombing of 28 June 1914: a Serbian student shot Franz Ferdinand, the Crown Prince of the Habsburg Empire. Austria-Hungary went to war against Serbia, a traditional ally of Russia. In short, the whole of continental Europe, bound by pacts and alliances, was involved in the conflict. A.Y. 2024/2025 30067 - cl. 15 5 WWI: the origins of the conflict It is virtually impossible to identify a single factor as determining the outbreak of the First World War. The war broke out as a result of a process that had started in the mid-19th century for the conquest and partition of a significant part of the planet by European powers. Among the possible causes of the conflict, historian Fritz Fischer includes Germany's desire to conquer more space in Eastern Europe: The Balkans became an area of increasing conflict where the desire for hegemony among European powers clashed with the rising nationalisms of new nation-states (Serbia, Romania, Bulgaria). A.Y. 2024/2025 30067 - cl. 15 6 WWI: the origins of the conflict Among the macro categories of factors we can list: The breakdown of the old alliance system New nationalistic demands New geopolitical demands Economic competition Culture and ideology The role of science and technology A.Y. 2024/2025 30067 - cl. 15 7 WWI: the consequences of the conflict The Great War had profound political and economic consequences: Economic (industrial) mobilisation Strong state intervention Massive economic losses The beginning of an age of insecurity The Great War ended the first phase of globalisation by breaking down its main pillars: Trade and foreign investment Gold standard Mass migration Integration of financial markets A.Y. 2024/2025 30067 - cl. 15 8 A Technological Conflict The war led to a substantial reallocation of resources from the production of civilian goods to military use. Labour force, capital, and raw materials were primarily directed toward meeting the demand for war and were predominantly absorbed by metallurgical, shipbuilding, chemical, mechanical, and armament industries, etc. A.Y. 2024/2025 30067 - cl. 15 9 A.Y. 2024/2025 30067 - cl. 15 10 WWI: a taxonomy of the conflict, and beyond Industrial conversion Women at work Red cross Drivers Munitions Agriculture A.Y. 2024/2025 30067 - cl. 15 11 WWI: a taxonomy of the conflict State intervention In the countries involved in the conflict, the pressures resulting from the war pushed governments to act in ways previously unthinkable, both to supply the armies to deal with the problems of civilian populations. The main areas of intervention were: supply of raw materials food rationing industrial production the government of finance A.Y. 2024/2025 30067 - cl. 15 12 WWI: a taxonomy of the conflict State intervention In order to cope with the huge war requirements, governments set up departments and offices responsible above all for industrial mobilisation and the expansion of war production. In the German case, for instance, the Hindenburg Plan created the Kriegsamt (Supreme War Office) with the following objectives: doubling the industrial production total mobilisation of workers (even prisoners of war) complete eradication of industrial inefficiencies A.Y. 2024/2025 30067 - cl. 15 13 WWI: a taxonomy of the conflict State intervention The government’s role in the economy grew considerably: It became the main purchaser of goods and services It imposed controls on many areas: trade, transport, prices, production, supplies of raw materials and food, etc. This showed – both in Europe (everywhere, even in liberal England) and in America - that the state could assume extensive responsibilities in the co-ordination of economic activities. At the end of the war many controls were removed, but the liberal principle of the laissez-faire had been profoundly shaken. A.Y. 2024/2025 30067 - cl. 15 14 WWI: a taxonomy of the conflict State intervention The state financed public spending through increased taxation (resulting in a depression of household consumption), but mainly through domestic and foreign borrowing, an increase in the money supply -> the printing of banknotes. The total public debt of the countries involved in the conflict rose from 26 billion dollars before the war to 225 billion dollars in 1920. The contribution of different sources of financing varied from country to country and so did the levels of inflation, determined by the increase in circulating money: this represented a heavy legacy to manage at the end of the conflict. A.Y. 2024/2025 30067 - cl. 15 15 A.Y. 2024/2025 30067 - cl. 15 16 A.Y. 2024/2025 30067 - cl. 15 17 WWI: a taxonomy of the conflict Economic consequences The economic losses were considerable and included: Material destruction Disruption of economic relations Disruption of foreign trade Loss of foreign markets Loss of profits from foreign investments New global agricultural balances A.Y. 2024/2025 30067 - cl. 15 18 WWI: a taxonomy of the conflict Economic consequences In terms of material destruction, the situation at the end of the conflict was dramatic: the total cost of the war, between estimated losses and actual expenditure amounted to some 400 billion dollars (1914 purchasing power). Buildings, plants, industrial machinery, mines, agricultural machinery, livestock, transport and communication infrastructure were destroyed. A.Y. 2024/2025 30067 - cl. 15 19 WWI: a taxonomy of the conflict Economic consequences In the long run, even more harmful to the economy was the disruption and disorganisation of normal economic relations between countries: the negative effects did not cease at the end of the conflict but continued into the 1920s and 1930s. During the war, the governments of the belligerent states (and even the neutral ones) imposed direct controls on prices, production, and the distribution of the workforce. These controls artificially stimulated certain sectors while depressing others. Although these controls were later lifted at the end of the conflict, pre-war relations did not quickly or easily return to normal. A.Y. 2024/2025 30067 - cl. 15 20 WWI: a taxonomy of the conflict A more serious problem was the disruption of foreign trade and various forms of economic warfare, particularly between Germany and Britain, involving submarine warfare. In 1917, this led the United States to intervene in the conflict Another problem was the loss of foreign markets. With Europe blockaded, many overseas countries decided to either produce goods on their own or purchase them from non-European countries, which they had previously imported from Europe. Latin American and Asian countries established manufacturing industries. America and Japan captured new markets that were previously controlled by Europeans. A.Y. 2024/2025 30067 - cl. 15 21 WWI: a taxonomy of the conflict Economic consequences In the agricultural sector, the war stimulated production in economically established countries like the United States and in "virgin" territories like Latin America. In the 1920s, the result was overproduction and a collapse of prices. In the maritime transport sector, England lost its primacy to the United States (which benefited from their neutrality). A.Y. 2024/2025 30067 - cl. 15 22  Exports of selected countries, 1910-1925 Current prices, 1913 borders (Millons US $) 9000 8000 7000 6000 Millions of US $ 5000 4000 3000 2000 1000 0 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 Year Japan France Germany/Zollverein Russia/USSR United Kingdom Canada United states Source: Federico, Giovanni; Tena Junguito, Antonio, 2018, «Federico-Tena World Trade Historical Database» A.Y. 2024/2025 30067 - cl. 15 23 WWI: a taxonomy of the conflict Economic consequences On the front of foreign investments, Britain and France had to divest a portion of their investments to finance the purchase of war materials. German investments were confiscated and later used as reparations. Finally, the most serious consequence of the conflict, the loss of lives The dead soldiers numbered approximately 10 million, and other 20 million were maimed and disabled. To these were added 6 million civilian casualties and a birth deficit estimated at 13 million. The losses due to the war, combined with those induced by the Spanish flu epidemic in the winter of 1918-1919 produced serious consequences in terms of labour supply. A.Y. 2024/2025 30067 - cl. 15 24 A.Y. 2024/2025 30067 - cl. 15 25 WWI: a taxonomy of the conflict, and beyond Industrial reconversion After the war, there was the urgent need to reconvert industrial production towards civil production. There was a widespread fear that leaving the growing demand for civil goods unsatisfied would cause inflation. However, this process was not easy: the return of the soldiers from the front push up unemployment rates waves of strikes occurred everywhere in Europe and in the United States due to discontent over difficult living conditions A.Y. 2024/2025 30067 - cl. 15 26 WWI: the consequences of peace The American intervention changed the fate of the war: in November 1918 Austria-Hungary and Germany signed the armistice. The Treaty of Versailles in 1919 officially ended the conflict after a laborious peace process. A number of punitive impositions and debts were imposed on Germany. Two major problems emerged from the peace treaty: growth of economic nationalism monetary and financial instability A.Y. 2024/2025 30067 - cl. 15 27