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The first big wave of embracing a liberal international economic order - relatively free trade, rising international capital flows and rapidly growing global economic integration - resulted in something remarkable.
Between 1870 and 1914, there was a 45-year span of rising living standards, stable prices, massive capital investment and prolific technological progress. In terms of overall progress, these four-plus decades have never been equaled — either before or since.
Then came the Great War. It involved a scale of total industrial mobilization and financial mayhem that was unlike any that had gone before. In the case of Great Britain, for example, its national debt increased 14-fold.
In addition, England’s price level doubled, its capital stock was depleted, most offshore investments were liquidated and universal wartime conscription left it with a massive overhang of human and financial liabilities.
Despite all that, England still stood out as the least devastated of the major European countries.
With all that in mind, one important question only rises in importance: Was the United States’ intervention in April 1917 warranted or not?
And did it only end up prolonging the European slaughter?
Never mind that it resulted in a cockamamie peace, which gave rise to totalitarianism among the defeated powers. Even conventional historians like Niall Ferguson admit as much.
Had President Woodrow Wilson not misled the U.S. on a messianic crusade, Europe’s Great War would have ended in mutual exhaustion in 1917.
Both sides would have gone home battered and bankrupt — but would not have presented any danger to the rest of mankind.
Indeed, absent Wilson’s crusade, there would have been no allied victory, no punitive peace — and no war reparations. Nor would there have been a Leninist coup in Petrograd — or later on, the emergence of Stalin’s barbaric regime.
Altogether, in six short years from 1914 to 1920, $40 billion of U.S. GDP turned into $92 billion — a sizzling 15 percent annual rate of gain.
The depression that could have been avoided
Needless to say, these figures reflected an inflationary, war-swollen economy. After all, the U.S. had loaned the Allies massive amounts of money — all to purchase grain, pork, wool, steel, munitions and ships from the U.S.
This transfer amounted to nearly 15 percent of GDP, or an equivalent of $2 trillion in today’s economy. It also represented a form of vendor finance that was destined to vanish at war’s end. As it happened, the U.S. did experience a brief but deep recession in 1920. But it was not a thoroughgoing end-of-war one that would “detox” the economy.
The day of reckoning was merely postponed. It finally arrived in 1933 when the depression hit with full force. The U.S. economy was cratering — and Germany embarked on its disastrous “recovery” experience under the leadership of Adolf Hitler.
These two events — along with so many of the above-listed offenses later on — could have been avoided if only the U.S. had shown the wisdom of staying out of World War I.
originally posted by: Aliensun
a reply to: angelchemuel
If you also want to discount the direct and indirect aid that the US supplied to GB beyond the troops, then without a doubt you would be speaking German from that era onward. Your view is very popular especially about WWII and rears its head time and time again here on ATS. Wishful thinking I would call it.
originally posted by: ArnoldNonymous
Not looking at a financial standpoint, but on military strategy: if the US did not get involved most of Europe would be under German rule.
originally posted by: ArnoldNonymous
I do know the first Treaty of Versailles after the war was way too oppressive against Germany and it caused a massive depression in the country. It almost guaranteed ww2 would occur.
Thanks for your post, it's always nice to hear from people who know more about a specific topic.