Allied War Economy During World War 1 I THE GREAT WAR Special

Allied War Economy During World War 1 I THE GREAT WAR Special


we’ve done specials on individual nations fighting this war and we have looked at micro economics especially that of the central powers and especially their failures in many regular episodes. But what was going on on a macro level? How, for example, did the allies finance their massive war economies? Let’s find out. I’m Indy Neidell, this is a great war special episode about the allied war economies in the first world war. Now before we start, this episode is sponsored by supremacy 1914. A world war one real time strategy browser game. War time economics can be a bit of an abstract topic, but supremacy 1914 is a great way to learn just how vital your economy is for victory. At the end of this video there will be a special offer for viewers of this channel. Anyhow, 1916, the year of battles, had shown the allies that the stalemate could not be broken by man power alone. It was the battles of the Somme and Verdun that kick started the western allies war economy. By war economy, I mean the total mobilization of industries and accumulation of resources to produce more shells, more guns, more planes, simply more of everything to beat the enemy through superior mechanical firepower. However, winning the war by out producing the central powers through economical superiority was a dangerous gamble. As it would strain the nations to the breaking point and expose their vulnerability to debt and over extension. In Britain, the control the British ministry of munitions had over material and supply was greatly expanded with David Lloyd George becoming first, secretary of state for war in June 1916, and then prime minister in December. The government built its own national shell factories and took full control of the rail and shipping systems. This, of course, restrained the private sector and the government further regulated the market by requisitioning resources like iron, fertilizer, glycerin, fax, and timber for the army. The nation also had to reorganize its agricultural output. Before the war Britain was far more reliant on imports of food than, say, Germany. And while theoretically it could have been starved by the German U-boat campaign, the agrarian economy was able to adapt and be filled with prisoners of war, while capital flowed through London. So by relying on on imports from the dominions and trade with the U.S. the mass production of armaments, on a scale never before seen in history, was possible. In the last week of September 1918, British artillery was battering the Germans with 3.4 million rounds a week. That was more than twice the opening barrage of the Somme, and there were hundreds of thousands of shells stock piled all over France. Guns lost to, say, the German spring offensive in 1918 were unimportant in the sense that there were plenty of reserves. If the war had lasted into 1919, tank, aircraft, and even gas production was to be easily doubled, tripled, or even quadrupled. However, economists were concerned. Just keeping the pound on the gold standard, was a battle in itself for the financiers of London. Conservative party leader Bonar Law said “our financial situation is was a source of great anxiety” because of the sheer costs of the war. By the end of 1917 Britain was buying for the whole entente, 75 million U.S. dollars worth of stuff a week. That’s nearly 1.5 billion in today’s money, per week, and Britain’s national debt was soaring. And the income tax rate, that had been doubled to 12 percent in late 1914, would hit 30 percent in 1918 and it really was the whole empire that had been economically mobilized. Indian wheat was shipped on mass to Italy, half the shells for the standard 18 pounder gun came from Canada. And yet, it was nowhere near enough, so dependency on the U.S. grew and grew. In 1916, 45 percent of the cost of the battle of the Somme had been paid for by American investors and by the end of that year a total of 2 billion dollars had financed the entente war effort under the auspices of Wall Street Mobil J.P. Morgan. In 1917 and 1918 these numbers would continue to grow enormously. But this was a dangerous gamble. It did allow Britain to feed it’s population while also expanding it’s arms production but the complex system of loans and the tremendous sums involved were making more and more dangerously real the possibility of ruining the empire, had the war dragged on into 1919 or 1920. But Wall Street was not only stabilizing the pound, it was doing the same to the Franc and Lira as France and Italy also transformed into war economies. The French had fully focused on armaments and maximized output and by mid 1918 they could produce over 1,400 rifles per day, a 1,000 planes a week, and 7 million shells for a 75 millimeter field gun a month. The mass production was really advocated from the summer of 1916 when Philippe Petain became chief of staff. He believed the only way to kick the Germans out of France was by superior accumulation and diversification of firepower. A huge program of factory construction and conversion was begun centered around Paris. And by mid 1918, the French had over 5,000 heavy and super heavy artillery pieces and an armada of bombers, tanks, and cars, and trucks. But, like with the British, this caused the national debt to skyrocket. With an all or nothing mindset the government embarked on massive deficit spending raising the income tax was nowhere near enough to cover this. Bond sales couldn’t cover the loans and important to note here, from the beginning France’s economy was at a disadvantage since the German occupation from the beginning of the war meant losing a huge percentage of coal and iron deposits. France had a man power disadvantage as well, compared to Germany and pressing ever more men into service forced a reliance on imports. I mean with all those men called up from the regular work french exports were down 70 percent. Two thirds of french farmers were called to the war so France became dependent on American wheat. And in the winter of 1917 – 1918 there was a shortage of food, oil and coal as exports from the U.S. suddenly bogged down. That lack of coal and oil meant real problems keeping the train network, France’s life line, running properly. Coal stocks were down a tenth of 1916 totals on some routes and had Germany been able to put pressure on for another winter the system may very well have collapsed. The same story holds in general for Italy who did make an impressive transition into a war economy. In terms of GDP Italy was , I guess you could say, a second class power compared to the allies. It’s arms industry though, was not, that was on par. For example, all the heavy artillery pieces lost at Caporetto in late 1917, they had all been replaced by August 1918 with better more modern ones. And throughout the war, Italy, could supply its whole army solely with Italian made weapons and ammunition. For this they could thank the million men and tens of thousands of women working in newly built privately owned factories controlled and funded through the industrial mobilization office. Problem is to pay for all of this Italian banks simply printed more currency so inflation grew and the value of the Lira fell. Also while steal, chemical, and automobile output grew as well the infrastructure was seriously weakened by constant use. On top of that the supply situation in the North grew serious when coal and food became scarce in late 1917. This was, partly, because of the loss at Caporetto that lost a lot of grain storage but also a bad harvest didn’t help and there were bread riots. The police even feared for a revolution if imports from overseas were somehow cut off. So the Italian economy, too, was at its absolute limit. The coal and food crisis that final winter of the war really showed how fragile the allied war economies actually were. Heck in Britain they issued food stamps because suddenly there was only enough wheat to supply the country for six weeks. The unrest in food lines was a politician’s nightmare, I mean, the specter of the Russian revolution sort of colored their imaginations. The mounting debt, the strain on national infrastructures, these brought the coalition closer to losing the war then is often perceived. Without the massive aid the U.S. brought across the Atlantic: food, fodder, copper, oil , and so on and without the loans of billions of dollars from American bankers , who were literally banking on victory, the war economies of the western European allies would not have been possible. And their overall economic situation may well have ended up much closer to that of the central powers. As I said in the beginning this episode was sponsored by supremacy 1914 If you think you have the strategic and economic finesse to take your nation to victory you should give this world war one, real time, strategy browser game a try. Supremacy will take you right into strategic depths of the first world war. With real time game play and against real player opposition on historically accurate maps. You might be playing, not for years, but maybe months. Forge alliances or back stab your neighbors and the best thing the game is getting a complete overhaul right now. And if you sign up through the link right now below the video your also guaranteed a 19 euro starter package to invest into your tank production. The registration is completely free though, so taking a look is definitely worth it. Now if you want to learn more about the impact of the naval blockade during and after the war you can click right here for our special episode about that. Do not forget to subscribe, see you next time.

100 thoughts on “Allied War Economy During World War 1 I THE GREAT WAR Special

  1. if your going to make another out of the trenches video then here’s my question

    What was the french foreign legions role during the war? What battles did they fight in? Which fronts did they fight in? Basically i would like to know a summary of the french foreign legion in ww1. Thank you if you responded and thank you for this wonderful journey. I got really emotional in the november 11th video

  2. The British have only just finished paying back the Americans a couple of years ago with the appropriate interest of course.These loans include the first and Second World Wars,the Americans certainly made a pretty penny off the British.

  3. This wheat problem is going to cause major economic problems for US farmers in the 1920s, not to mention the land. This war took a lot of US iron ore. The next one drains the best iron ore deposits in the US.

  4. So in other words, had the U.S not entered the war and had Germany managed to keep it going until 1919 then they would have won?

  5. I get the feeling that this episode barely scratched the surface of wartime economics.

    Say what you will about France, it was the arsenal of the Entente in the Great War. My guess is that the French built about half the airplanes used in the Great War. Certainly French production dwarfed German and Austrian production combined.

  6. Blah blah blah… Like Kaiser Wilhelm II said, he opened a can of whoop-behind on Europe and would have them all being his female dogs and speaking German, if America did not join the war.

  7. yeah, the American bankers…. since the War Between the States and post-bellum boom, JP and the others floated bonds and other loans in England and France, and along with unrestricted emigration, that is, cheap labor, made America great. we had it, England and France borrowed it, so it made sense that America's bankers force us into the war to get their money back…. anyways…. what did it cost???

  8. I wish you had gone on to describe the economic situation of the European powers following the war. That's really what you need to understand when you get to the Naval Treaties.

  9. How much was the economic cost in total and for each of the warring nations in today's dollars? It might be interesting to know since there are news articles saying the current Global War On Terror (GWOT) is now supposedly $6 Trillion dollars. How does it compare to the Second World War and the Cold War? It is interesting to see the scale of these struggles.

  10. This video really shows how the US's participation in The Great War went way beyond their contributions on the battlefield in 1917-1918. Without the US, the Entente would likely have lost the war before US combat troops ever saw battle.

  11. Deficit spending for a nation with its own sovereign capital currency, isn’t strictly speaking the issue. The real issue is the artificial constructs that the financial industry had created to rationalise sovereign debt, such as bonds and funds. The reality is that a nation state could continue to invest in its own economy ad infinitum, if sufficient measures are taken to control inflationary pressures. I appreciate that this wasn’t accepted theory at the time of the war, but I though it relevant to point out for reference, as the terminology has since changed it meaning if not the words.

  12. Supremacy 1914. Win wars with the power of your credit card!
    Feel the hyper realistic economic stress of deciding to ration real food to win virtual battles of attrition! Do you dare you push your own economy further to the edge than your foe? Will the crippling debt be worth paying verses the shame of defeat and the potential virtual war reparations?

  13. Sir:

    While J.P. Morgan Sr. built the empire, it was J.P. Morgan Jr. who made the tremendous loans to England, France, and even Russia during the Great War. Fun Fact, both Sr. and Jr. die at the age of 75, but Sr. died in 1913, a year before the war began.

  14. So, Woodrow Wilson and his cronies were just war profiteers, just like George Dubya and Haliburton nearly a century later.
    That's American capitalism for ya.

  15. 4:10 Indian weed? Well, now we understand how did the British staff plan their offensives in the Somme and in Paschendelle…

  16. To me as a strategy gamer words like a browser game and in depth in the same sentence make me very sad. This however seems a bit better than the most. edit : I actually started the game. More or less regular browser BS.

  17. The logistics of supplying a large army in the field is staggering. Roughly 1,000 metric tonnes per day for a division in the frontlines. (2 fully loaded standard trains).

    Now do this where everything is manually done. Loading rail wagons, unloading ~50km behind the front.

    Reload into light rail (If available), or horse & cart, or light trucks to ferry it forward to ~7km of the front & unload it again.

    Then the final ~7km load it onto pack horses, men, smaller horse & carts through the enemy artillery zone to smaller dumps for the men to carry it to the trenches. Trucks & horse carts were a max capacity of 1-2 tonnes typically, with some trucks up to 5t.

    Now, imagine 3 million shells weighing between 7kg up to 150kg that need to be brought forward to within 7-10km of the front (avg of 10kg for simple maths), that is 30,000 metric tonnes of shells alone that has to be moved by hand through several stages.

    This is a heck of a lot of pick up & put down and is the reason rail networks & Labour battalions were so important during the war.

  18. I have to be careful clicking on these because I have things to do and it is very easy to start binge watching. Suddenly I look up and it's 4:00 pm and I haven't left the house. Not today though! My fortitude is strong. Must….leave…house….and… accomplish…..responsibilities.
    It's a hard pull.

  19. Interesting to see how many of the allied countries basically become symbiotic and reliant upon the US for exports, finance, and support.

  20. I don't know if you're still going to do special episodes on people but could you do one on Pope Benedict XV? He became the Pope just a few days after the war broke out and served until 1922. I think it would be interesting to the see the Catholic Churche's views on the war and what Pope Benedict XV did as Pope while millions were fighting and dying all over the world

  21. I have believed that U.S., business interests "banking on an Entente victory," is truly what pushed the U.S. into the war. A loss or a draw for the Entente would be a financial disaster for U.S. business interests that would lead to political disaster in the U.S. All the tripe about the reasons for the U.S. entry into the war is nice, but mere window dressing. Monetary interests and those interests relating to wealth creation and loss were the underlying bedrock of why soldiers and sailors went abroad. I know the German use of unrestricted submarine warfare was a massive risk for them, but with so much war material being shipped across the Atlantic, they had to see the U.S. as a combatant.

  22. $1.5 billion a day, only ~$600 billion a year for the largest war in history.
    a pittance now, compared to multi-trillion dollar American war budget – when there's not even a war!

  23. The implication being, as has also been alleged about the next war too, had Germany early on put more effort and U boats into the embargo of England and France, it may have won.

  24. US Loans were not the main source of funding or even the main source of loans for the UK. Most UK debt was held domestically and the $2 billion in 1916 didn’t come anywhere near to the fact Britain spent 65% of estimated GDP on the war, around $1.2 Trillion. The USA was an important creditor, but not as important for the UK, especially shown by the relative mildness of the 1929-31 slump in the UK and the fact lowering interest rates lowered debt repayments more than a falling currency raised them

  25. This is a little of topic but how did the soldiers get the mud off their uniforms as sometimes they are covered in bud from a battle and after they look like it never happened? Did they just well clean them?

  26. Germany held out in the end a way. Germany, France, and Italys economies did collapse. Even Americas because of the war.

  27. A major point that is often overlooked when talking about the macroeconomic scale of the war economies is not just the quantity of material produced, but also the quality of said material and its implementation, which was often appalling. For instance, popularly cited statistics state that of all of the shells fired at the Battle of the Somme in 1916 by British artillery, at least 50% failed to explode, often due to defective or poorly assembled fuses; British shells are still being dug out of Flanders' fields to this day on an almost daily basis. Likewise, although debated by armament historians in recent times, the French Chauchat light machinegun that was issued to American troops has long been notorious for its horrible manufacturing quality, with cited defects including the inability to interchange parts between guns due to poor build quality and cut-out magazines allowing dirt and grime to jam the firing mechanism.

    This poor quality also extends to Entente mobilization as well; the demands placed on the British and French transport networks, particularly their railways, stretched each nations' available resources to breaking point with every available vehicle that could roll being pressed into service, sadly including those that were woefully inadequate for the task at hand. The hundreds of lives lost in the railway collision at Quintinshill, UK, 1915, and in the runaway train disaster at Saint-Michel-d-Maurienne, France, 1917, were both directly linked to the usage of badly obsolete railway rolling stock that prior to the war had been destined for the scrapyards, but had been pressed into emergency service with ultimately fatal results. Likewise, the use of passenger ships to carry war material led to many disasters, not least being the sinking of the Lusitania in 1915. And the pressganging of older merchant ships and overloading them with dangerous materials, combined with the otherwise excellent idea of the convoy system, can be directly linked as causes of the Halifax Explosion of 1917.

  28. The fact that the entente was so straightened economically played a major role in between two wars societies and helps to explain the unpreparedness for the next war. People tend to mock France for her quick defeat, but instead should consider the effects of their extraordinary efforts in the Great war to achieve very little advantages. This turned people against politicians and their empty promises.

  29. Italian industry in the second world war is kind of impressive, too, and underestimated as well. I think that was the only German ally in Europe who supplied its army with its own effort, and fought war from Ethiopia through Lybia and Balkans to the Eastern Front.

  30. Since Indy can't promote it on this channel I will, because I will want to see people moving over to it.

    HE HAS BEGAN A SERIES ON WORLD WAR TWO CALLED 'WORLD WAR TWO' PLEASE SUBSCRIBE.

  31. Interesting and educational video that examines the economics of warring countries, and what could lead to economic collapse rather than defeat by another country.

  32. Açcording to 2 time Medal of Honor winner and Marine Corp. Major General Smedley Butler, the real reason for US involvement in the war was to protect Wall Street's investment in France, Britain, and Italy. I do not think any of the families of the dead and wounded received any dividends from JP Morgan for their "investment", nor did they foot the bill of the war for the US tax payer.

  33. Indy carfully avoids connecting the creration of the Fed Bank with the outbreak of the Great War six months later.  It's duration is the issue, with Britai n's gold reserves exhausled, then USA's entrance to "protect the debt".  Just what the Fed had in mind–BANKERS WIN EVERY WAR

  34. I like this video as it exposes all the penalties and punishments imposed on people for following leaders. There is an old saying that people get the kind of government they deserve. So, by voting for the political leaders, the people got WW I and WW II and before that they got The American Civil War and the Indian Wars and the Spanish-American War and then later the Korean, Vietnam and Iraq wars and the debacle in Afghanistan and Somalia and

  35. If Germany won the war by 1916 everyone would be happy. The British wouldn't have to take loans from the US, the US can industrialize a bit with the British money they got from 1914-1916. Russia won't fall to the Soviets, Germany be happy. The only losers would be France and Serbia but that wouldn't matter. Early on in the war Germany didn't want to dismember France maybe annex small border regions and some colonies but nothing else.

  36. If US economic aid in the forms of loans and leased manufacturing were keeping Britain and France in the war and able to fight, US intervention didn't hasten the ending of the war US intervention prolonged and worsened the war. If both the Central powers and Entente forces fought until their economies were collapsing then they would have forced each other into a treaty much sooner.
    Part of the reason Germany refused to let any form of peace take place come 1916 was that the allied peace terms demanded Germany cede territory they were now totally economically dependant on, and the Entente refused to budge because they realised they could win a war of attrition through economy. No Entente economic advantages would force them to make concessions in peace negotiations or be destroyed. The USA's war profiteering killed tens of millions of people.

  37. 5:38 How France managed to produce almost same numbers with Germany and even more aircraft and vehicles while they had so small industrial base compare Germany’s?Probably huge resources from British Empire and US made that possible.

  38. This is why germany was stabbed in the back
    They should have kept fighting. Germany had nobody on their flank. They could have fought for a long time to come. The US should have never got involved. Such bullshiy

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