Book contents
- Frontmatter
- Introduction
- PART ONE BASIC REFLECTIONS
- PART TWO THE CHANGING REALITIES OF WARFARE
- PART THREE WAR AGAINST NONCOMBATANTS
- PART FOUR POLITICIANS, SOLDIERS, AND THE PROBLEM OF UNLIMITED WARFARE
- PART FIVE MOBILIZING ECONOMIES AND FINANCE FOR WAR
- 18 War Aims, State Intervention, and Business Leadership in Germany
- 19 Lloyd George and the Management of the British War Economy
- 20 Better Late than Never
- 21 How (Not) to Pay for the War
- PART SIX SOCIETIES MOBILIZED FOR WAR
- Index
21 - How (Not) to Pay for the War
Traditional Finance and “Total” War
Published online by Cambridge University Press: 05 January 2013
- Frontmatter
- Introduction
- PART ONE BASIC REFLECTIONS
- PART TWO THE CHANGING REALITIES OF WARFARE
- PART THREE WAR AGAINST NONCOMBATANTS
- PART FOUR POLITICIANS, SOLDIERS, AND THE PROBLEM OF UNLIMITED WARFARE
- PART FIVE MOBILIZING ECONOMIES AND FINANCE FOR WAR
- 18 War Aims, State Intervention, and Business Leadership in Germany
- 19 Lloyd George and the Management of the British War Economy
- 20 Better Late than Never
- 21 How (Not) to Pay for the War
- PART SIX SOCIETIES MOBILIZED FOR WAR
- Index
Summary
Before 1914 it was sometimes asserted that the great European powers simply could not afford to go to war against one another. What Norman Angell called “the delicate interdependence of international finance” would either make war impossible, or, if war were attempted, would plunge Europe into such a deep economic crisis that it would quickly have to be abandoned. In 1899 the Polish banker and autodidact military expert Ivan Bloch described to his English translator what he believed would happen:
Suppose that the Triple Alliance and Dual Alliance mobilise their armies, we should have at once confronting us an expenditure for the mere maintenance of troops under arms of £4,000,0000 a day falling upon the five nations. . . . Could any of the five nations, even the richest, stand that strain? But could they not borrow and issue paper money?
They would try to do so, no doubt, but the immediate consequence of war would be to send securities all round down from 25 to 50 percent, and in such a tumbling market it would be difficult to float loans. Recourse would therefore have to be had to forced loans and unconvertible paper money . . . Prices . . . would go up enormously.
It was this vision of a financial crisis that the British Foreign Secretary Sir Edward Grey clearly had in mind when, invoking the memory of 1848, he warned his Russian counterpart in July 1914 of the dangers of a general conflagration. When war did break out, the immediate economic impact seemed to confirm these predictions. The Vienna stock exchange went first, slumping sharply as early as July 13, and within two weeks the crisis had spread to Berlin, Paris, and London. In London, the hub of the international monetary system, an acute liquidity crisis emanating from the acceptance houses threatened to force the Bank of England to suspend the convertibility of its bank notes into gold.
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- Great War, Total WarCombat and Mobilization on the Western Front, 1914–1918, pp. 409 - 434Publisher: Cambridge University PressPrint publication year: 2000
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