I’d been putting off trying to articulate my thoughts on Adam Tooze’s masterful analysis of global history from 1916-1931, The Deluge, because, being so ignorant about that era, I wasn’t sure what I could say other than ‘read it, it’ll educate ya’, for fear of drawing incorrect or misleading conclusions from this densely detailed and nuanced appraisal of the post-WW1 political order. I’ll confess it was a struggle, but a fascinating one. Mr. Tooze, if you ever read this, apologies :)
Anyway, I read an article this morning about academics giving that lunatic George Osborne a shoeing about his desire to enshrine budget surpluses in law. It brought home one of my big take-aways from Tooze’s thesis, in particular this comment from the article:
“77 of the best-known academic economists, including French economist Thomas Piketty and Cambridge professor Ha-Joon Chang, said the chancellor was turning a blind eye to the complexities of a 21st-century economy that demanded governments remain flexible and responsive to changing global events.”
The thing is, it isn’t a 21st-century problem. It was a problem back in 1916, and it’s been a problem ever since and it arguably caused World War II. What was so eye-opening about Adam Tooze’s book was the extent to which the world’s economies were and thus are interconnected, how decisions made by banks and governments in the US and the UK, then, tragically, Germany in 1929, rippled across the world and back again, fuelling nationalism, revolutionary and counter-revolutionary fervour, the Depression etc. Decisions politicians make about their own economies in isolation never truly affect those economies in isolation.
Because no economy, a hundred years ago or now, is in isolation, George.
Tooze, in his introduction, outlines a key plank of what he believes went wrong after the war that was meant to end all wars, and it begins during it:
(President Woodrow Wilson’s)”mission was to ensure not that the ‘right side’ won in World War I, but that no side did. He refused any overt association with the Entente. Only a peace without victory, the goal that he announced…to the Senate in 1917, could ensure that the United States emerged as the truly undisputed arbiter of world affairs. This book will argue that despite the fiasco of that policy already in the spring of 1917…this would remain the basic objective of Wilson and his successors right down to the 1930s.”
They did not see supporting Britain and France as supporting ‘good’ but supporting rampant imperialists, in that respect no better than Germany, and actually more of a threat.
What was interesting to read, later on, was Tooze’s belief that Wilson and the US in general was so scarred by its own civil war that it had a kind of genetic antipathy to the ‘imperialists’ of Great Britain, France and other powers on the ‘dark continent’. Arguably, the failures of the victorious powers to secure, with the US at their head, a lasting peace, lay in this antipathy residing in the world’s first superpower. For the first time in history, as Hitler, Churchill and Trotsky all realised fully, the US was bigger and stronger than any nation had ever been. They could no longer consider their place in the world without also considering their relationship to it. What rankled for at least Trotsky and anyone else that did not share its liberalism was that the US chose to exert its power through its economy and ideology, that it was using its power to establish a blueprint for the world’s social order and couldn’t be stopped from doing so. Yet insofar as it proposed to the world a desire to see it at peace such that free trade and liberalism could spread, and it had ample resources to achieve this, why did it fail?
In the early part of the book it was interesting to see how this played out as World War I reached 1916 and 1917, when formally the US government was preaching non-intervention while Wall Street was independently lending massive amounts to the Entente to fund their war effort. In 1916 JP Morgan, principle lender in all this, apparently lent almost all the money the Entente spent on its war effort that year. This lending, and its impact on the US economy via its exports began to have such a powerful effect that the US was being drawn into the conflict regardless, and it was becoming clear which side, but it had nothing to do with US foreign policy. However, the US was, at the time, equally concerned about the strength of the British Navy and its empire as it was the Germans. The counterfactuals over these two years come thick and fast, particularly how close the US might have been to supporting Germany if not for a disastrous decision on their part to increase U-Boat attacks on US shipping. Even with a number of its ships being sunk, it took time before they fell into line with the Entente and started sending troops and supplies over the Atlantic.
There are some fascinating minor facts that came out of this, such as some of the people involved in organising the allied supply infrastructures would later go on to inform what became the EU, for this was the first truly international logistics effort between European nations, alongside the US.
One of the early counterfactuals relates to how closely the call for ‘peace without victory’ might have gained the credence it needed to overcome an Entente opposition determined to get a decisive victory despite its crippling impact on the home economies. If Wilson had kept the US out of joining sides for just a few months, it would have been bolstered in its position by the Russians, whose revolution in 1917, almost at the same time, led to their own desire for a ‘peace without victory’, all the more stunning in its force because they had already lost hundreds of thousands in the war. For a country to effectively ‘write off’ its war dead for the sake of peace without victory, for a new world order, was a bold and progressive step, one unlikely to have been ignored in concert with the US position. The Russians were advocating abolition of the death penalty and removing restrictions on assembly and free speech. “It was making itself the most democratic country on earth.” It’s unbearably sad when, as someone so ignorant of history, I came across this, how pregnant with so much better possibility was the world’s future at certain critical points. The ennui with knowing how it would ultimately transpire was unexpectedly heartbreaking as I went along.
The Russians could not surrender to Germany, despite such heavy defeats on that front, given successes in Turkey and the new nationalist fervour stoked by the revolution. Yet to engage in a truce with Germany would cut off the flow of credit and support from Britain, while allowing Germany to move its men fighting its eastern front to the west and likely deliver a victory as part of their massive counter-offensive, with the risk they would then turn back east anyway. The Entente would have struggled to endorse it because it might at least force the Russians into the German army, along with the considerable ‘food basket’ and coal that the Ukraine and Russia could supply. Yet the Russians had no desire to win the war for imperialist objectives. A peace without victory was needed.
So, because the Russians offered a peace formula, a large part of the German SPD party that supported the war to defend Germany against Tsarist aggression was now suing for peace itself, in April 1917. Indeed, at this point, an Entente victory was looking unlikely, after a joint British/French offensive failed to break through German lines. Some French divisions then mutinied, while at home some Liberal and Labour MPs clamoured for the acceptance of the ‘Petrograd’ peace formula. The U-boat blockade was bleeding the allied forces dry on the continent, and food supplies to Italy had almost run out, the country beginning to starve, leading to rioting. Yet it was the German government’s belief that despite all this, the Entente, presumably in part due to Britain’s widespread empire, were still able to get enough boats through that the blockade would ultimately be futile. This boosted their own calls for peace even more strongly internally. The German Chancellor was dismissed and the Reichstag voted for peace. It was all just a few months too late.
When the Petrograd peace formula came through, echoing Wilson’s own, it was too late for him to throw himself and the US behind it, though where his own peace without victory had failed, it would not just have become embarrassing to follow Russia’s lead and do a u-turn, but also because it would go counter to his own view that the US should lead the new world order. He saw Germany as dangerously imperialist and aggressive enough that a peace by force would be required, and had thus acted first.
As Tooze says, had the Americans not joined the war when they did, had the Germans not stepped up their U-boat campaign (against internal opposition), had the Entente been more ready to sue for peace though it would mean declaring the world’s worst war futile, there may have been peace with Germany and democracy in Russia from 1917 onwards. The Bolsheviks, and later, Stalin, might never have got started. The steps to their power, and Lenin’s subsequent naked aggression and usurpation of the fragile democracy that Russia was birthing, are followed in much the same fascinating and tragic vein through the ramifications of the ‘Brest Litovsk’ treaty. I’d be typing the book out if I carried on, but now I revisit it to refresh these points, I’m once again carried away by it. The Entente, concerned about a pact that forced Germany and Russia together, as well as the US, who foresaw a pan Eurasian counter to their own global power, supported the Czech army that was fighting both Russians and Germans. This forced Russia into Germany’s arms, yet led to deep civil unrest in Russia due to the former Tsarist connections. Lenin, to maintain control, effectively declared himself a dictator after being shot by leftists disappointed at the treaty. What comes across in this book is his and Trotsky’s ideological arrogance and the damage it ultimately did. In my notes I bolded ‘Lenin is a total dick’, which I’m sure sufficiently excoriates him in the eyes of the world…
Here, in a microcosm, is an illustration of how the decision making and economic ramifications of them played in and out of how these nations engaged with each other. They are bound no less by such relations in peace time, as the rest of the book goes on to amply demonstrate. It explores the failures of the Treaty of Versailles and the League of Nations, the rise of fascism and of Chinese nationalism and how the Russians saw a great opportunity to shape it into a communist regime.
Wilson was arguably right about the imperialist bent of Britain and France, from the Anglo-Iraq treaty of 1926 to the French bombing Syria and their Rhineland invasion in the late twenties, or the British occupying Istanbul and letting the Greeks assault Turkey’s interior. It was a view that even Hoover shared in his own way, with the US government time and again refusing to consider economic plans and security guarantees that could have altered the impact of the serious deflation of the early 20s and later the global economic collapse borne of the Great Depression.
Off the back of this depression, Heinrich Brüning, the German Chancellor in 1930, began a train of events that, with another miserably missed alternate universe, led to Hitler’s Nationalist Socialists gaining power. Aristide Briand and Gustave Stresemann, a Frenchman and a German (both of whom would win the Nobel Peace Prize) advocated, in response to America’s intransigence on inter-allied war debts and reparations that were seen as damaging to European sovereignty, the idea of a European Union, but it collapsed. Brüning was looking to overturn the Versailles Treaty and, perhaps fuelled by the challenges of the negotiations around the Young Plan, which was an attempt to review and decide reparations for the war, his foreign minister, replacing the recently deceased peacemaker Stresemann, with a strengthening economy exporting to Russia and developing ties with Italy, decided to embark on negotiations with Austria for a customs union. So what, eh?
It broke at least three post-war peace treaties while simultaneously being rather suicidal in the face of Briand’s proposals for a stronger Europe overall which would have given Germany a bigger export market. Instead the move, on the back of deflationary economic adjustments, led to an increase in domestic and international pressure, and Tooze views it as a sop to the far right. In Tooze’s view the French had opened their money markets to Berlin as a reward for its compliance/adherence to the Gold Standard for its currency. The US and Britain appeared not to care a great deal about the union, with the US view being this would surely only help consolidation of European states and reduce their fragility. But this antagonisation of the money markets and Brüning’s scathing view of the reparations payments was made because he was aware that with the US as a key debtor, and Wall Street wanting to see its creditors ensure they got theirs before the allied nations, Germany could reduce its reparations obligations. When Germany’s economy went into freefall, it soon became clear to Hoover and the allies that something had to be done to shore it up, and the US put forward a plan to suspend Germany’s war debt commitments, a plan ratified by everyone but France. I infer from the text, because of their 25% holding of the entire world’s gold reserve at that time, that they just didn’t want to, having been particularly sore about German reparations enough to invade Rhineland, at great cost to their own international credibility. This decision to ignore Hoover’s rescue plan incensed the international community, yet France could argue that it had made round after round of reparations concessions that weren’t matched by the US. In addition to the financial reparations:
“Again and again France had called for an international security system to replace the provisions agreed at Versailles. But this had been vetoed by Washington…With the stabilisation of the franc in 1926, the agreement to the Young Plan and the Mellon-Berenger war-debt deal in 1929 it had paid the price. Now, as a result of a crisis the Germans had brought upon themselves, America was unilaterally asserting its right to declare an emergency and overturn the rules of its own game.”
By the time France agreed to the Hoover moratorium Germany’s financial system had collapsed and its banks were closed. Brüning’s reduction in reparations was achieved, but everything else was a catastrophe. With the disaster in Germany this apparently put pressure on the British financial system that ultimately led to its dropping out of the gold standard as it deflated its own currency to protect the British economy from huge cuts in government spending and support for a nation still recovering from the war. Once this happened, sterling and London in general being a key global currency and financial hub, the impact was felt all over the world, bad enough it caused banks to fail in the US (as a measure of its former influence this is quite shocking). The plunge in sterling and subsequent adoption of protectionist trade measures to protect the domestic economy was disastrous for its trading partners. With the pressure now gone internationally to conform to the gold standard and the strictures it imposed on its economy, Japan’s government came under increasing pressure to start spending on its military to counter the growing spending of China and Russia. Back in Germany, without currency reserves to stop runs on the mark, it could not sensibly, with the British deflating, expect to keep competitive in its export market and came under increasing pressure to leave the gold standard as well, but it could not do so because of the foreign debts, in particular the dollar debts to Wall Street creditors. As unemployment rose and its industry was hit hard, the German government lost an election on the back of Hitler’s pro-jobs rhetoric, sweeping him into power.
As you can no doubt see, Germany’s financial decisions, ties to Italy and Japan’s massively increased military spending are all jigsaw pieces required for 1939.
Why have I regurgitated all this from Tooze’s book? I could have been playing Bioshock instead. I want to impart, to anyone bothering to get this far, through the examples at the beginning and the end of the period examined in The Deluge, what a profound effect it’s had on my view of Europe and the US and that it is worth reading if you want to understand the importance of staying in the EU, and of extending the United Nations, of trying to make these institutions work rather than denigrating and ignoring them.
I hadn’t expected it to be this gripping, to watch with horror as time and again peace was snatched away at the brink of treaties, how those who won the war ended up no better off than those who lost it, how they were all, anyway, bound up together. Tooze sees the peacemakers, these internationalists like Briand and Stresemann, J.M. Keynes and even Lloyd George at one point, not as idealists, but, given how interconnected the world is, the ‘higher realists’. It’s a lovely phrase, reclaiming away from cynics the ongoing and very real value of speaking nation unto nation.