Economic Effects of WWI

1. Economic Effects of WWI

2. Economic Effects During WWI - Blockades • Both Britain and Germany relied heavily on imports to feed the population and supply the war industry • Soon after the breakout of war, Britain started a blockade of Germany • Since Britain had a superiority of naval vessels, Germany’s only chance to compete was through U-boats • They used unrestricted submarine warfare to sink any ships in the area of Britain • Both countries wanted to starve each other into submission

3. Economic Effects During WWI - Blockades • Effects of the blockade in Germany: • Turnip winter of 1916-17 (a premature frost killed potatoes) • Finely grained sawdust was used for flour • Heating fuels were lacking • Clothes were lacking • 750,000 German civilians died of starvation during and after the war • The blockade continued until June 1919 in order to force the Germans to sign the Versailles Treaty

4. Economic Effects During WWI – U.S. Enters the War • British had strongest ancestry ties to the U.S. • Sold war materials and loaned money to mainly France and Britain • Unrestricted submarine warfare • Lusitania – 128 Americans were killed • Zimmerman telegram – if Mexico were to join Germany in an alliance, they would get Texas and Arizona in return

5. Deaths • 9 million military deaths • Allies: 5 million • Central: Over 3 million • 6.6 million civilian deaths • 22 million wounded

6. Deaths • Russia • 3.7 million deaths; 5 million wounded • Germany • 2.5 million deaths; 4.2 million wounded

7. Devastation In Belgium • Trapped between the trench system and a British blockade, Belgium in the fall of 1914 faced starvation. It was dependent on imports for 80 percent of its food • Herbert Hoover ran the Commission for the Relief of Belgium (CRB) • The CRB became, in effect, an independent republic of relief, with its own flag, navy, factories, mills and railroads • Its $12 million a month budget was supplied by voluntary donations and government grants • The CRB saved ten million people from starvation

8. Devastation In France • Land and industry was destroyed • Population decreased • One in five French had been mobilized • 1.4 million died • 750,000 disabled • Few were available to work • Had to reconstruct war-torn regions

9. Devastation in the Balkans, Middle East, and Italy • Serbia was occupied by Austria-Hungary and Bulgaria in less than 1 month • Ottoman Empire threatened Russia’s oil-rich Caucuses, the British’s Suez Canal, and communications with India. They fought against Russia, Britain, Australia, Canada, India, Armenians, and Egypt for those areas • There was staunch fighting in Italy against the Germans and Austro-Hungarians

10. Devastation in Africa and the Pacific • British and French forces battled the Germans in colonies of Cameroon, Volta Region a part of Ghana close to Togo, Togo, South-West Africa (Namibia), and German East Africa (Tanzania, Burundi, and Rwanda) • Australia, New Zealand, Japan, and China seized Germany’s Pacific colonies (German New Guinea, Micronesia, German Samoa, etc.) within a few months • Most of these areas were either mandated or given to other countries after WWI

11. Rise of the United States • In Europe even the victorious powers were left economically exhausted by the war, and much of the European landscape was a mess • Europe, once the world creditor, now found itself borrowing from the U.S., which had been relatively untouched by the war and whose economy further benefited from the new lack of European competition

12. General Economic Effects During and After the War • At one end there were those who profited from the war and at the other end were those who suffered under the effects of inflation • The opportunities to make enormous amounts of money in war manufacture were plentiful. War profiteers were a public scandal • However, government rarely intervened in major firms

13. General Economic Effects During and After the War - Inflation • When resources became scarce, nonessential firms, which tended to be small, were simply closed down • Inflation was the greatest single economic factor because of massive: • War budgets • Demand, which caused shortages of many consumer goods • Virtually every able-bodied person was employed to keep up with the demand • This combination of high demand, scarcity, and full employment sent prices soaring, even in the best managed countries

14. General Economic Effects During and After the War - Inflation • Results of inflation were: • Value of money went down • The standard of life went down • People living on fixed incomes or small earnings were hurt the most • Had to plant gardens for food • Had to take odd jobs like repairing clothes

15. General Economic Effects During and After the War • To make matters worse some great fortunes were built during the wartime and postwar inflation • Those who were able to borrow large amounts of money could repay their debts in devalued currency from their war profit