Economic War

Industrial Output and the First World War

The global competition has created new arenas for military action, and consequently, the study of Economic War. Economic war has been defined as a “type of war” in which countries attempt to gain an edge through non-military means. The United States has been engaged in economic warfare since the early days of the nation when it used tariff protection and trade wars to gain an economic advantage over Great Britain and its European counterparts. Today, a similar type of effort is being made against China.

 

The author examines

the development of economic war throughout the First World War. Two distinct aspects of this form of warfare are discussed: the use of force and the development of alternative sources of income. While there was no clear indication that the United States intended to utilize economic tactics in a manner meant to aggression, it appears that such was the goal. The author examines the various methods that the US pursued to maintain an economic advantage over Great Britain and Germany, two countries that claimed a dominant position in their respective markets.

 

The author contends

that it was World War I that created the conditions in which an unforeseen energy crisis developed in the world’s most populous nations. This crisis, coupled with the effects of the First World War, led to rapid growth in the rate of interest rates across the board. In response, Great Britain and Germany increased the price of imported goods, which in turn lead to a severe recession in Germany and Britain. These nations, after suffering severely during the First World War, were determined not to allow the same thing to happen again. To prevent another from occurring, they implemented several measures that would protect their industries from becoming devastated in what was known as the Great Depression.

 

The author provides historical documentation

showing that the Great Depression in the United States was felt by all sectors of society, including the banking industry. He also discusses how the British and German governments implemented protective trade barriers during the economic war. In essence, Great Britain and Germany were acting as each other to protect their industries from the effects of what was termed the “predatory competition” of the belligerent countries. Although the United States has never been involved in an economic war with any of the belligerent countries, the author makes a case that such an occurrence could have been prefigured had Great Britain and Germany not implemented protective trade measures.

 

Furthermore,

he argues that protectionist policies fostered by these two countries resulted in a decrease in the supply of raw materials to the civilian populations, which in turn, led to a rise in prices. This, in turn, meant that the people of these nations were able to buy less food than they otherwise would have needed. As a result, inflation set in, causing the British and German governments to turn to a currency speculator war, or monetarily interventionist policy. Between the effects of inflation and the decline in the availability of raw materials, a serious recession was suffered by the British and German economies, with the German economy is suffering the most because it relied more on capital goods such as steel and automobiles.

 

As a result,

Great Britain and Germany switched to an export-orientated policy, believing that the reduction in the number of raw materials available to them would force the belligerent countries to reduce their industrial production, forcing the former to reduce their industrial output and forcing the latter to increase their industrial production to meet the demands of the latter. In this way, the author claims, the First World War was fought over nothing more than the control of raw materials. On both sides, there were industrial victors and losers. Ultimately, it was not about classifying the belligerents as bad or good but about maintaining a level of stability in global trade that served both economic interests. Monetized industrial output was great for the economies of the Entire World as a whole, but this depended on how well each country handled its monetary system.

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