Post by grinningcat on Jul 28, 2014 13:52:24 GMT
At 11:10 a.m. on July 28, 1914 — 100 years ago this Monday—Austria-Hungary dispatched a telegraph message to Serbia. After a month of absurdist international diplomacy and internal bickering following the assassination of the empire’s Archduke Franz Ferdinand in Sarajevo, the Imperial and Royal Government said it had no choice but to resort to the force of arms. “Austria Hungary consequently considers herself henceforth in a state of war with Serbia.”
Within days, Russia ordered general mobilization (July 31), Germany declared war on Russia (August 1), Germany declared war on France and France on Germany (August 3) and Britain declared war on Germany (August 4).
In many ways, the world economy has never fully recovered from that week of military madness. It was a moment, however, that did not escape the attention of Vladimir Lenin, then lingering in Polish Galicia plotting communist revolution. On the outbreak of war, Lenin sent a tweet-like message to his mistress via postcard: “My dear and dearest friend! Best greetings on the commencement of the revolution in Russia.”
Before the war ended in 1918, as Lenin predicted, the Russian Tsar Nicholas II had been overthrown, his downfall brought on by a catastrophic conflict he had in part personally initiated. Installed in the monarchy’s place was the world’s first “workers’ state” that would set Russia on a long road to extreme economic decline and stagnation.
The economic stagnation following the First World War spread far beyond Russia almost instantly. On July 31, 1914, the New York Stock Exchange began a four-month shutdown, forcing trading onto a black-market exchange on New Street, a back lane off Wall Street, to supply at least some liquidity to the market.
Well beyond eventually unleashing the spread of economically calamitous communism across Eastern Europe and onto Asia and the Americas, the war triggered throughout much of the world, including Canada, a sudden and major reversal of key beneficial economic trends and the adoption of policies that crippled growth. Recovery from the economic catastrophe created by the First World War did not seriously begin until the 1950s.
Most of the flood of new histories and stories marking the anniversary of the First World War — tied to the June 28th anniversary of the Sarajevo assassination — have sought to explain the war’s causes and revisit the grotesque incompetence of Europe’s political and military leaders. Also revisited is the unconscionable human horror they perpetrated: the trench warfare, the bursts of nationalism, the millions dead, and the global political shakeups that stretched from the Middle East to Asia that are now familiar to most of us.
In the end, though, the search for cause seems futile. In her new book, The War That Ended Peace, Margaret MacMillan concludes that the causes of the war will never be fully understood. What we do know, with greater certainty, is that the First World War delivered economic devastation that took decades to rebuild. It was, in many ways, The War That Ended Growth.
To understand how destructive the war was to growth and economic development, it’s useful to know how dazzling the pre-war decades had been. The war ended a 100-year economic boom. The sources of that 19th-century boom were essentially the principles of capitalism: globalization, relatively free trade, private development, low taxes, limited government intervention, and sound monetary policies based on the gold standard.
They were replaced by what became known as “deglobalization.” Inflation became hyperinflation, government spending soared, growth collapsed.
Within days, Russia ordered general mobilization (July 31), Germany declared war on Russia (August 1), Germany declared war on France and France on Germany (August 3) and Britain declared war on Germany (August 4).
In many ways, the world economy has never fully recovered from that week of military madness. It was a moment, however, that did not escape the attention of Vladimir Lenin, then lingering in Polish Galicia plotting communist revolution. On the outbreak of war, Lenin sent a tweet-like message to his mistress via postcard: “My dear and dearest friend! Best greetings on the commencement of the revolution in Russia.”
Before the war ended in 1918, as Lenin predicted, the Russian Tsar Nicholas II had been overthrown, his downfall brought on by a catastrophic conflict he had in part personally initiated. Installed in the monarchy’s place was the world’s first “workers’ state” that would set Russia on a long road to extreme economic decline and stagnation.
The economic stagnation following the First World War spread far beyond Russia almost instantly. On July 31, 1914, the New York Stock Exchange began a four-month shutdown, forcing trading onto a black-market exchange on New Street, a back lane off Wall Street, to supply at least some liquidity to the market.
Well beyond eventually unleashing the spread of economically calamitous communism across Eastern Europe and onto Asia and the Americas, the war triggered throughout much of the world, including Canada, a sudden and major reversal of key beneficial economic trends and the adoption of policies that crippled growth. Recovery from the economic catastrophe created by the First World War did not seriously begin until the 1950s.
Most of the flood of new histories and stories marking the anniversary of the First World War — tied to the June 28th anniversary of the Sarajevo assassination — have sought to explain the war’s causes and revisit the grotesque incompetence of Europe’s political and military leaders. Also revisited is the unconscionable human horror they perpetrated: the trench warfare, the bursts of nationalism, the millions dead, and the global political shakeups that stretched from the Middle East to Asia that are now familiar to most of us.
In the end, though, the search for cause seems futile. In her new book, The War That Ended Peace, Margaret MacMillan concludes that the causes of the war will never be fully understood. What we do know, with greater certainty, is that the First World War delivered economic devastation that took decades to rebuild. It was, in many ways, The War That Ended Growth.
To understand how destructive the war was to growth and economic development, it’s useful to know how dazzling the pre-war decades had been. The war ended a 100-year economic boom. The sources of that 19th-century boom were essentially the principles of capitalism: globalization, relatively free trade, private development, low taxes, limited government intervention, and sound monetary policies based on the gold standard.
They were replaced by what became known as “deglobalization.” Inflation became hyperinflation, government spending soared, growth collapsed.
It's amazing to think that 100 years ago today, the world was tense with the possibility of war. It's also amazing to think that at this point, everyone thought the war would be over by Christmas.
This time period is one that I have spent so much time researching. Everyone researched the battles, but the homefront and how it was affected by the war is rarely covered. I find the financial aspects fascinating, so this is an interesting view on the this first day of war.
If only this had truly been the "war to end all wars".
