12 Post Great War PDF

The Great War Amatori-Colli, ch. 11 Economic history cl. 15 a.y. 2024/2025 Sonia Schifano 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...

The Great War Amatori-Colli, ch. 11 Economic history cl. 15 a.y. 2024/2025 Sonia Schifano 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 2 In this episode The consequences of peace The end of monetary stability The Reconstruction of the Payment System and the Roaring Twenties A.Y. 2024/2025 30067 - Cl. 15 3 WWI: the age of insecurity The United States rose to the rank of a new world power: they did not want to fully assume the international responsibilities of their economic supremacy they did not join the League of Nations The heaviest conditions were imposed on Germany: it was deprived of part of its national and colonial territory it had to surrender its navy, arms and munitions, locomotives, etc. The most ‘humiliating’ aspect was Article 231 by which Germany was made responsible for the war and had to pay reparations. A.Y. 2024/2025 30067 - Cl. 15 4 WWI: the age of insecurity Profound marks on the economies of many countries. The states that emerged from the dismemberment of the Habsburg Empire national character  economic self-sufficiency. Economic nationalism  Russia and other western countries, including England: tariffs introduced during the war were not removed several bilateral treaties were signed abandoning the principle of the MFN clause Many governments decided to adopt austerity policies restore balance and contain inflation. This made reconstruction even more difficult, and many became convinced that a return to the gold standard would be sufficient to resolve this unstable situation. A.Y. 2024/2025 30067 - Cl. 15 5 WWI: the end of monetary stability The issue of German reparations remained open, which amounted to 33 billion dollars (more than twice the German GDP) with prohibitive annual instalments. Despite the German difficulty in coping with payments: 1. France and England insisted on indemnity payments as well 2. In 1922, Germany suspended payments 3. In 1923 French and Belgian troops occupied the Ruhr taking control of the mines and railways A.Y. 2024/2025 30067 - Cl. 15 6 WWI: the end of monetary stability The result was hyperinflation, as Germany continued issuing money to pay its debts and to try to manage the economic turmoil still present in its territory. German mark collapsed to 0.02% of its pre-war value A.Y. 2024/2025 30067 - Cl. 15 7 A.Y. 2024/2025 30067 - Cl. 15 8 Inflation Today https://www.bbc.com/news/world-latin- america-45246409 A.Y. 2024/2025 30067 - Cl. 15 9 The reconstruction of the payment system Solution  return to the gold standard? Global monetary and financial imbalances on both sides of the Atlantic to solve It was essential for the US to grant credit to stabilise both its own and many other national currencies. The US was convinced to help Europe because: they feared total economic and monetary collapse they feared possible Soviet-style revolutions A.Y. 2024/2025 30067 - Cl. 15 10 The Dawes Plan The German inflation crisis induced the Allied powers to relax the conditions set at Versailles. In 1923 the French troops withdrew from the Ruhr and in 1924 an international commission launched the Dawes plan: redefine the terms of payment of war reparations linking them to the economic development of the country reorganise the operations of the Reichbank set up a loan in favour of Germany The American loan enabled Germany to resume payment of reparations and return to gold convertibility. Overall, the Dawes Plan enabled Germany to restart its economic reconstruction process A.Y. 2024/2025 30067 - Cl. 15 11 A.Y. 2024/2025 30067 - Cl. 15 12 Post-war monetary policy: what to do? Germany emerged from its difficulties Gradually all European countries were able to return to a path of economic growth (even if, sometimes, a full economic recovery was never realised). Britain returned to the gold standard in 1925 with an exchange rate equal to the pre-1914 rate. This led to a reduction in credit that led to: economic recession miners’ strike (1926) and rise in unemployment reduction in exports, increase in imports, and a trade balance crisis due to overvalued currency The overvalued pound left the field open to the dollar and the US. A.Y. 2024/2025 30067 - Cl. 15 13 Post-war monetary policy: what to do? A.Y. 2024/2025 30067 - Cl. 15 14 Post-war monetary policy: what to do? Instead, France decided to restore the gold standard with a parity lower than pre-war levels. The highly unstable French government wanted to avoid resorting the austerity policies necessary for stabilisation and therefore chose to go the devaluation route. The franc became convertible with gold at 20% of the pre-war parity This stimulated exports. Capital flowed into France Expectations of revaluation nurtured by financial operators Indirect taxes vs tax on property A.Y. 2024/2025 30067 - Cl. 15 15 A.Y. 2024/2025 30067 - Cl. 15 16 The Roaring Twenties From 1925 onwards, Western national economies recovered but there were considerable differences between Europe and North America. Between 1925 and 1928, European industrial production increased by 20%. The driving sectors were those of the Second Industrial Revolution, in particular electricity, automotive and chemical. The US were even more favoured Their involvement in the war had been brief Their territory had not been devastated They had not gone into debt but had granted loans to Europe. A.Y. 2024/2025 30067 - Cl. 15 17 The flying USA Economic prosperity reverberated throughout the US and led to vigorous growth in the housing market and industry. Wealth was also redistributed to American families, who were able to enjoy an unprecedented high material lifestyle: by the end of the 1920s, in the US there was One car for every 5 inhabitants, half of the population owned an iron 15% owned a washing machine, toaster and other household appliances The standard of living of the Americans increased considerably and various forms of entertainment increased, from cinema, dancing, sports to music. A.Y. 2024/2025 30067 - Cl. 15 18 A.Y. 2024/2025 30067 - Cl. 15 19 A.Y. 2024/2025 30067 - Cl. 15 20 A.Y. 2024/2025 30067 - Cl. 15 21 The flying USA In Europe, the myth of the American way of life was created, which corresponded to a standard of living characterised by a series of comforts unthinkable for the average European citizen. A.Y. 2024/2025 30067 - Cl. 15 22 A.Y. 2024/2025 30067 - Cl. 15 23