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Overview

"This volume offers a definitive new history of European economies at war from 1914 to 1918. It studies how European economies mobilised for war, how existing economic institutions stood up under the strain, how economic development influenced outcomes, and how wartime experience influenced postwar economic growth. Leading international experts provide the first systematic comparison of economies at war between 1914 and 1918 based on the best available data for Britain, Germany, France, Russia, the USA, Italy, Turkey, Austria-Hungary, and the Netherlands. The editors' overview draws some stark lessons about the role of economic development, the importance of markets, and the damage done by nationalism and protectionism." A companion volume to The Economics of World War II, this is a major contribution to our understanding of total war.
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Editorial Reviews

From the Publisher
"...a quite useful reference work, in addition to its importance as a description and analytical interpretation of the impact of warfare...all of the essays are written clearly, present considerable data, and are analytically sophisticated. This is a superb collection on a very important topic, and will repay reading by all economic historians."
- EH.NET, Stanley L. Engerman, University of Rochester

"...it is as a synthesis of the major economic statistics of the various powers of the war that the study is most valuable for understanding World War I. The amount of information about the economies of the states examined, for instance, is staggering and oftentimes fascinating. In addition, the book contains nearly 150 figures and tables that relate useful data, covering a wide range of subjects: GDP; battle and non-battle deaths; labor statistics; inflation; industrial and agricultural production—and a whole host of other interesting and important economic statistics."
- H-German, Nathan N. Orgill, Department of History, Duke University

"The editors' introduction is a valuable summary, and the country chapters provide consistent data for comparison and analysis." - Peter Temin, Massachusetts Institute of Technology

"The authors have succeeded admirably in offering a wide-ranging, empirically rich, and analytically informative comparison of economics at war between 1914 and 1918." - Larry Petereson, City University of New York The Historian

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Product Details

  • ISBN-13: 9780521107259
  • Publisher: Cambridge University Press
  • Publication date: 4/2/2009
  • Edition description: New Edition
  • Pages: 364
  • Product dimensions: 5.90 (w) x 9.00 (h) x 1.10 (d)

Meet the Author

Stephen Broadberry is Professor of Economics at the University of Warwick. His previous books include The Productivity Race: British Manufacturing in International Perspective (1997).

Mark Harrison writes about the history and economics of Russia, conflict, defence and security. He is a Professor of Economics at the University of Warwick. He is also a research fellow of the Centre for Russian and East European Studies at the University of Birmingham and of the Hoover Institution on War, Revolution and Peace at Stanford University.

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Read an Excerpt

Cambridge University Press
0521852129 - The Economics of World War I - Edited by Stephen Broadberry and Mark Harrison
Excerpt


Introduction

Stephen Broadberry and Mark Harrison

During the twentieth century the world experienced two deadly global wars followed by a 'cold war' of unparalleled expense and danger. World War I opened this brutal epoch. To many who took part the experience was little less than apocalyptic; it seemed like an end, not a beginning. They saw it as putting a stop to history, progress, and civilisation. They called it the 'Great War'. They did not know that it would be followed twenty years later by World War II and that the second war would be greater and more dreadful than the first.

This book brings together nine country studies of the economics of World War I: five Allies, three Central Powers, and a neutral country. Our book is the first, we believe, to offer such a systematic comparison of economies at war between 1914 and 1918, and it is certainly the first to include the Ottoman Empire in such a collection. These investigations suggest two themes that link economics with the study of war.

One theme is the contribution of economic factors to the outcome of the war. Our book suggests that the outcome of global war was primarily a matter of the levels of economic development of each side and the scale of resources that they wielded; in this respect our conclusion is similar to that of our previous study of World War II (Harrison, 1998). How well the resources were organised mattered greatly, but rich countries could usually organise themselves more efficiently than poor ones. The human factor mattered too: how well the people were motivated. Generally we find that, given superior resources, the richer countries could solve the motivation problems that defeated the poorer ones. Thus, organisation and motivation tended to be endogenous; to this extent they did not independently influence the outcome.

Another theme of our book concerns the effects of war on long-run economic development. It is sometimes claimed that war, however dreadful, may have positive 'spin-offs' for the nations that take part, whether they win or lose. In practice these are not easy to find. War is, in general, a negative-sum activity. If war was followed by recovery and accelerated development, this was usually no more than a making good of wartime delays and losses. If wartime activity had promoted new forms of technology or economic organisation that turned out to have peacetime applications too, then there would always have been some cheaper way of achieving the same result. A spin-off of World War I is that it destroyed several monarchies and imperial elites: the anciens régimes of Germany, Austria-Hungary, Italy, Russia, and the Ottoman Empire. This sounds as if it might have been for the best, but the destruction of states associated with the war led to the displacement of populations on a colossal scale (Mazower, 1998; Gatrell, 1999). Moreover, the war was followed in Russia by civil war, communism, and dictatorship; in Italy, Austria, and Hungary by fascism and dictatorship; and in Germany by fascism, dictatorship, war, and genocide.

The main lesson that has emerged from our study of the world wars of the twentieth century is that peace is better than war. The best that can be said for World War II is that a positive spin-off was a common understanding of this lesson. Because of this, the main participants in World War II cooperated after the war to promote recovery and trade. As a result, global economic growth in the half-century after World War II was much faster than in the half-century before it. In contrast, only some of the participants in World War I came away with this understanding. Others believed that the lesson of the war was to wage war again, only better. Hence World War II.

References

Gatrell, P. (1999), A Whole Empire Walking: Refugees in Russia During World War I, Bloomington, IN: Indiana University Press.

Harrison, M. (1998) (ed.), The Economics of World War II: Six Great Powers in International Comparison, Cambridge: Cambridge University Press.

Mazower, M. (1998), Dark Continent: Europe's Twentieth Century, London: Allen Lane.

1 The economics of World War I: an overview

Stephen Broadberry and Mark Harrison

Introduction

Globalisation has been under way for centuries. The modern wave of globalisation that dates from the early nineteenth century gave a significant boost to world trade, world capital flows, and worldwide migration, with great powers competing for colonial empires on a global scale. The Great War of 1914 to 1918 then interrupted and, for a time, set into reverse the process of globalisation.

How did globalisation lead to war? At first sight it was the competition for colonies that ran out of control. Britain and France, the established powers of 'old' Europe, had established a condominium over most of Africa and much of Asia; Germany, the rising power of 'new' Europe, had no colonies to speak of, wanted some, and expected to get them at the expense of the French and the British. Behind this lay a perception that world power was a zero-sum game. Since Adam Smith, the Anglo-Saxon liberals had argued that trade was a game from which all could benefit at once. But in the late nineteenth century liberalism was being challenged by a new nationalism that gave more weight to the control of territory and settlement than to trade and competition. When it came to territory, the supply was fixed and there was only so much to go round. Therefore, the new nationalists reasoned, it was worth Germany's while to break up world trade for a while in order to grab territory from the older powers.

In fact, the European powers did not fight World War I over colonies. The war took the form not of a naval struggle to control access to the peripheral territories of Asia or Africa, but of a struggle on land that was fought in the heart of the continental homeland. At first, it is true, Germany's desire for colonies stimulated a naval arms race, but the battle cruisers that were laid down on each side in the process played only a minor role in the war. More important was the fact that the quest for a German empire provoked an anti-German coalition, the Entente Cordiale between Britain and France (1904) to which Russia was also admitted in 1907. Germany was not without friends, having been allied with Russia since 1872, Austria-Hungary since 1879, and Italy since 1882, but Russia and Germany had drifted apart and Italy would prove an unreliable ally. The increasing polarisation of the continental powers shifted attention away from Germany's original aim, an adjustment of the boundaries of the British and French empires overseas, towards the balance of power in Europe itself. As a result, the war was largely fought on European soil for the control of Europe.

The events that led to the war in 1914 were the assassination of the crown prince of Austria-Hungary by a Serbian nationalist in Sarajevo on 28 June, an Austro-Hungarian ultimatum that Serbia rejected, and Russia's mobilisation in defence of Serbia which, in its turn, triggered a German attack on France and Belgium; this was followed by British entry into the war on the side of France. The German attack on France was motivated by a forward-looking calculation: once the coalitions on each side were fully engaged, Germany risked a war on two fronts, against Russia in the east and France in the west. Having identified the Russians as the less mobile enemy, the German plan was designed to avoid a war on two fronts at once by attacking France with a knock-out blow at the first sign of Russian mobilisation; thus, while the Russians completed their mobilisation the Germans would have time to defeat the French before turning their victorious armies to the east to defeat the Russians in their turn. Of course, this is not how things turned out.1

This book deals with two issues that then arise. First, what did economic factors contribute to victory and defeat in World War I? Second, how did the war affect postwar economic institutions and performance in the economies that took part or were most affected by the war?

As far as the first question is concerned, it is worth recalling that the German war plan for 1914 anticipated victory in the west within six weeks. The war was intended to be won by military, not economic means, and was to be finished off long before economic factors could be brought into play. It was only after this plan had failed, as the leaders on each side contemplated the ensuing stalemate, that belts began to be tightened and sleeves rolled up for the mobilisation of entire economies (Chickering and Förster, 2000).

Once plans were redrawn for a longer haul, a war of attrition developed in the west where the opposing forces of Germany, France, and Britain, each backed by large, rich, and successful economies, ground each other down with rising force levels and rising losses. In battles that were intended to be won by the last man left standing, resources counted for almost everything. The greater Allied capacity for taking risks, absorbing the cost of mistakes, replacing losses, and accumulating overwhelming quantitative superiority eventually turned the balance against Germany.

Eastern Europe, the Balkans, and the Near East formed the theatre of combat for the economically weaker powers: Russia, Italy, and the Austro-Hungarian and Ottoman empires. The British and Germans wished to be more involved there, but neither could withdraw significant forces from the western front. In the east, therefore, the immediate outcomes of battles were less determined by economic factors, at least in the short run. Over a period of years, however, the battles drained the weakest economy first, and this led to Russia's exit from the war in 1917. Then, the Central Powers' chance for victory in the east was destroyed by Germany's defeat in the west. Ultimately, economics determined the outcome.

Population, territory, and GDP

The economic advantage of the Allies over the Central Powers was substantial at the outbreak of war and rose steadily as the composition of the belligerents changed on each side. The most striking change was that during 1917 Russia was defeated and abandoned the Allies, but was replaced by the United States. Thus the richest great power stepped into the gap left by the poorest, and this led to a further increase in the Allied advantage.2

Size and development

What were the resources that were deployed on either side in the war? These are best measured by adding up the populations, territories, and gross domestic products of the territories at war. Populations limited the numbers of men and women available in each country for military service or war work. Territories limited the breadth and variety of natural resources available for agriculture and mining; the wider the territory, the more varied were the soil types and the minerals beneath the soil. GDPs limited the volume of weapons, machinery, fuel, and rations that could be made available to arm and feed the soldiers and sailors on the fighting front. The larger the population, territory, and GDP of a country, the easier it would be for that country to overwhelm the armed forces of an adversary.

In adding up the resources available to each country we also compute the territories and income available per head of the population. Most important was average GDP per head, which reflected the country's development level. A poor country might have a large population, but if most of the adults were engaged in low-productivity subsistence farming then there would be little real possibility of transferring many of them out of agriculture to the armed forces or war industry, since the remaining farmers would be unable to produce enough food to keep everyone alive. Equally, a poor country might have a large territory but, without a high level of development of roads and railways, would be unable to exploit it economically or defend it militarily. Finally, a poor country typically lacked efficient government and financial services of the kind necessary to account for resources and direct them into national priorities. Thus, a relatively high level of economic development was essential if territory and population were to count in war.

Table 1.1 adds up the resources on the Allied side at the outbreak of war and shows how the volume of resources changed; in this table and the next, countries are listed as far as possible in order of their entry into the war. In reality, of course, populations and outputs changed year by year. To assist with comparability the 1913 figures for each territory are the ones reported in the table. In the first phase of the war Russia, France, and the United Kingdom were joined together as the power of the Triple Entente. They brought with them their dependencies and colonies. Other countries joined in too: Serbia and the other Yugoslav states, the British Dominions, Liberia, and Japan with her colonies. During 1915/16 a second wave of countries joined the Allies: Italy, Portugal, and Romania. In the third wave of 1917/18 Russia dropped out but the United States joined in, bringing its own possessions, most of Central America and Brazil. Greece, Siam, and China also joined. By the end of this process governments representing 70 per cent of the world's prewar population and 64 per cent of its prewar output had declared war on the Allied side.

The bare totals on the Allied side do not give any idea of their heterogeneity. The British Empire will do for illustration since it comprised some of the richest and poorest regions in the world. Britain itself had a prewar population of 46 million with an average income per head of nearly $5,000 (at 1990 prices). Its colonies, excluding the Dominions, had a prewar population of 380 million, mostly Indians, with an average income of less than $700. Thus a colonial population eight times that of Britain produced a similar volume of output. Moreover, this output was far less available than Britain's for fighting Germany for three reasons: it was hundreds or thousands of miles away from the theatre of war, the level of development of colonial government administration and financial services rendered it hard to track and control, and most of it was already committed to the subsistence needs of the colonial populations. In short, the mere possession of low-income territories was of little value to a great power in the war. If India helped Britain in the war it was to enable British trade and commerce rather than because Britain could mobilise Indian

Table 1.1. The world at war: Allied populations, territories, and GDPs in 1913

Territory Gross domestic product
  Population millions   million sq. km ha. per head   $ billion $ per head
First wave: Great powers, 1914
Russian Empire, except Finland 173.2 21.7 12.6 257.7 1,488
France 39.8 0.5 1.3 138.7 3,485
United Kingdom 46.0 0.3 0.7 226.4 4,921
Dependencies and colonies
Finland 3.2 0.4 11.7 6.6 2,050
French coloniesa 48.3 10.7 22.1 31.5 652
British coloniesb 380.2 13.5 3.6 257.0 676
Other powers
Yugoslav statesc 7.0 0.2 2.2 7.2 1,029
British Dominionsd 19.9 19.5 97.8 77.8 3,909
Liberia 1.5 0.1 6.7 0.9 585
Japan 55.1 0.4 0.7 76.5 1,387
Japanese coloniese 19.1 0.3 1.6 16.3 857
Second wave: 1915/16
Italy 35.6 0.3 0.8 91.3 2,564
Italian coloniesf 2.0 2.0 101.0 1.3 634
Portugal 6.0 0.1 1.5 7.4 1,244
Portuguese coloniesg 8.7 2.4 27.9 5.2 603
Romania 7.7 0.1 1.8 11.7 1,527
Third wave: 1917/18
United States 96.5 7.8 8.1 511.6 5,301
US dependencies and coloniesh 9.8 1.8 18.9 10.6 1,088
Central American statesi 9.0 0.6 6.4 10.6 1,184
Brazil 25.0 8.5 34.0 20.3 811
Greece 4.8 0.1 2.5 7.7 1,592
Siam 8.4 0.5 6.2 7.0 835
China 441.5 11.1 2.5 243.7 552
November 1914
Allies, total 793.3 67.5 8.5 1,096.5 1,382
UK, France, and Russia only 259.0 22.6 8.7 622.8 2,405
November 1916
Allies, total 853.3 72.5 8.5 1,213.4 1,422
UK, France, and Russia only 259.0 22.6 8.7 622.8 2,405
November 1918
Allies, total 1,271.7 80.8 6.4 1,760.5 1,384
Percentage of world 70% 61% - 64% -
UK, France, and USA only 182.3 8.7 4.8 876.6 4,809
Percentage of world 10% 7% - 32% -
World, 1913 1,810.3 133.5 7.4 2,733.9 1,510

Notes: Figures show populations, territories, and incomes for the year 1913. Currency units are international dollars at 1990 prices. Countries and territories are listed in approximate order of their entry into the war.

a Many countries in Africa, Asia, and Oceania. Algeria, French West Africa, and Indo-China together accounted for more than 70 per cent of the population and GDP but less than half of the territory of the French Empire.

b Many countries in Africa, Asia, and Oceania, including Anglo-French and Anglo-Egyptian territories. India accounted for more than four-fifths of the population and GDP but only one-third of the territory of the British Empire, not counting the Dominions.

c Serbia, Bosnia-Hercegovina, and Montenegro.

d Australia, Canada (including Labrador and Newfoundland), New Zealand, and Union of South Africa.

e Korea, Formosa, Kwantung, and Sakhalin.

f Eritrea, Libya, Somalia, the Aegean Islands, and Tientsin.

g Angola, Cape Verde Islands, Portuguese Guinea, Mozambique, São Tomé and Principe Islands, Portuguese India, Macao, and Timor and Cambing.

h Alaska, American Samoa, Guam, Hawaii, the Panama Canal Zone, and the Philippines.

i Costa Rica, Cuba, Guatemala, Haiti, Honduras, Nicaragua, and Panama.

Sources: Populations and territories are from League of Nations (1927: 10-16). GDPs per head are from Maddison (2001); where the country or territory is not listed, the appropriate regional average is used.

resources in any meaningful sense. And the trade that really mattered to the British economy in the war was with rich America and Canada, not with poor India.

Table 1.2 adds up the resources of the Central Powers. This is a much shorter story with a smaller bottom line. Austria-Hungary began the war, joined immediately by Germany and soon by the Ottoman Empire. In 1915 the Central Powers were joined by Bulgaria, although not by Italy, which went back on its prewar treaty obligations. At its maximum extent the alliance of the Central Powers comprised little more than 150 million people, but their relative lack of success in accumulating low-income colonies made them relatively well off, with an average income per head of less than $2,500, roughly comparable to that of Italy on the Allied side.

Allied superiority

Table 1.3 allows us to compare the resources on each side at three benchmark dates: November 1914, 1916, and 1918. This table offers comparisons for each alliance as a whole, and also counts great powers only. The rationale for the latter is very simple: if low-income colonies did not count much, how do the figures look if we do not count them at all? There is some imprecision here, of course. For example, Russia is included as a great power, but much of its territory was little more developed than that of India which is excluded as a colony; also excluded are the British Dominions, which were much richer than Russia. Still, singling out the great powers has the merit of simplicity.

The table shows something very striking: in terms of the resources on either side the Central Powers do not seem to have had much hope. If Germany could not win the war for the Central Powers in the first six weeks, using surprise in the west and an army with superior military qualities, then the chances of victory could only diminish over a longer span of time in which economies would be mobilised on each side and the balance of resources would count for more and more.

Even in the first stage of the war the Allies had access to five times the population, eleven times the territory, and three times the output of the Central Powers. This access was limited by relatively low average incomes across the colonial empires of Britain and France, and low incomes in Russia; we see that the average level of GDP per head on the Allied side in 1914 was not much more than half that of the Central Powers. If we consider great powers only, then the Allied advantages in population and output shrink to twice; the Allied advantage in territory actually increases, reflecting the German and Turkish propensities to colonise sandy deserts in Africa and the Middle East.

Table 1.2. The Central Powers' populations, territories, and GDPs in 1913

Territory Gross domestic product
  Population,
millions
  million sq. km ha. per head   $ billion $ per head
First wave: Great powers, 1914
Austria-Hungary 50.6 0.6 1.2 100.5 1,986
Germany 67.0 0.5 0.8 244.3 3,648
German colonies, etc.a 10.7 3.0 27.5 6.4 601
Other powers
Ottoman Empireb 23.0 1.8 7.7 25.3 1,100
Second wave: 1915
Bulgaria 4.8 0.1 2.3 7.4 1,527
November 1914
Central Powers, total 151.3 5.9 3.9 376.6 2,489
Germany and Austria-Hungary only 117.6 1.2 1.0 344.8 2,933
November 1915
Central Powers, total 156.1 6.0 3.8 383.9 2,459

Notes: Figures show populations, territories, and incomes for the year 1913. Currency units are international dollars at 1990 prices. Countries and territories are listed in approximate order of their entry into the war.

a Cameroon, Caroline Islands, German East Africa, German South West Africa, Klau-Chau, New Guinea, Samoa, and Togoland.

b Turkey within its present-day boundaries plus Syria and Palestine, Iraq, and parts of the Arabian peninsula.

Sources: Populations and territories are from League of Nations (1927: 10-16), except Austria-Hungary (taken from chapter 3) and the Ottoman Empire (from chapter 4). GDPs per head, except the Austro-Hungarian and Ottoman Empires, are from Maddison (2001); where the country or territory is not listed, the appropriate regional average is used.

© Cambridge University Press

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Table of Contents

Introduction 1
1 The economics of World War I : an overview 3
2 The pity of peace : Germany's economy at war, 1914-1918 and beyond 41
3 Austria-Hungary's economy in World War I 77
4 The Ottoman economy in World War I 112
5 Between the devil and the deep blue sea : the Dutch economy during World War I 137
6 Was the great war a watershed? : the economics of World War I in France 169
7 The United Kingdom during World War I : business as usual? 206
8 Poor Russia, poor show : mobilising a backward economy for war, 1914-1917 235
9 Italy at war, 1915-1918 276
10 Until it's over, over there : the US economy in World War I 310
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