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Posted (edited)

Evening,

 

I've just been reading about the financial costs of the war on those involved. I'm wondering why the cost to the UK was so much higher than that of France. $35,000,000,000 to $24,000,000,000. Is it simply due to us fighting on numerous continents? 

 

Cheers

 

Dan

Edited by Bean tool
Posted

Naval expenditure would have accounted for some of it. In addition, Britain supplied funds and material to (Imperial) Russia, as well as supplying other allies (including the USA) with material.

 

Fighting on several fronts would also have been a factor. The French were involved with the British in Macedonia and Italy, and to a much lesser extent in Gallipoli, with a nominal presence in Egypt, but otherwise the so-called "sideshows" were almost exclusively British.

 

Ron

Posted

Thanks Ron. Do you know if these funds and material costs were ever paid back? Maybe a different point but someone somewhere made a lot of money from the war. Ive seen references to a banking family backing different sides until the winner became obvious then switching money around. Siblings if I remember correctly. 

 

Cheers 

 

Dan

Posted

There is  a fine book, by  a Dutch author 'Debts without redemption-Cultural differences in First World War Finance.'

Very briefly, it shows that the French & Germans did not take financing the War seriously for some time-it was going to be short & the losers would pay! The British govt. , unusually, did raise taxes significantly- and not just on war profits  like some others. Massive war loans were raised by the belligerents, from their own populations, and allies like us.

The Americans made a lot of  money out of the War before they joined it. Many governments then ended up owing vast sums to the USA to pay for munitions or reconstruction. The French reduced what they believed they owed the USA by charging import duty retrospectively! The Russian czarist govt., by going 'dry' for the duration, lost serious income from the tax on vodka & then the Communists defaulted on all their borrowings. Britain tried to pay its overseas debts, but had to give up during the Great Depression. In 2015  the British govt. finally paid off a War Loan raised from the British people in 1917! The value of German war loan repayments to their population was wiped out by hyperinflation. The French had inflation and national debt problems, in spite of getting what they could in reparations from Germany. The Americans never did get back much of what they had loaned. The only nation that did pay up in full was Finland!

The essential problem was that the War cost so much, there was no way it was going to be readily paid for. A number of statesmen at the time knew perfectly well that Germany could never pay the sums set for reparations, but felt they had to take account of contemporary public opinion. 

Michael

Posted

   An amble through Mr. Google's Apparatus will throw up various lists of what the war "cost".  "Cost" for most  statements relating to the Great War relates only to it's measurement in financial terms-and there is a distinct lack of unanimity about accounting and banking rules between each country - there is no historical equivalent, say, of the OECD, which would take each country's statistics and grind out standardised figures  to allow real comparisons.

     In traditional terms of financing, there is a sensible book  by Francis W.Hirst entitled "Costs of the War to Great Britain" published by Oxford in the late 1930s as part of Carnegie Endowment series on the Economic and Social History of the World War. I believe that the Hirst volume was the last of the British series, if not all series anywhere. Hirst was a Victorian Liberal, biographer of Gladstone, a Free Trader and sometime editor of "The Economist"  His work reads well and presents a balanced view of the costs of the war- but only if one was,say, a Liberal reader of "The Economist" pre-1914.    

     In any listing of what the war cost, then it is good to try and track what is included and why. Without making a political point about the world of today, governments have plenty of scope for changing  rules and deciding what is and what is not included. An interesting and easily available piece on the finances of the war-war loans- by the BBC reporter Hugh Pym, then a BBC economic reporter-is easily available from the BBC site-and jolly interesting it is too.Bet you didn't know there is £2 billion or so of British Government war loan stock still kicking around on the markets because the British Government retrospectively changed the rules of repayment and gave itself the power to postpone repaying the capital element.  

      The most significant caveat about all the literature of the war is the lack of any real attempt to total the  "cost", expressed in monetary terms, of the loss of life and damage caused by the war. The measurement of the productive and tax-paying capacity of the manpower losses of the war are a good example-  The State lost a lifetime of productive capacity from,say, a man killed at the age of 25- but merely to factor in the "costs" of benefits by way of pension paid to dependents gives an accurate financial figure (the total pension paid over time) but ignores the  what an actuary might calculate as the "real" loss when all is factored in.

     Similarly, the physical damage caused by the war must be expressed in monetary terms-in which case, France comes out as the heaviest loser by a country mile. OK, one can factor in the actuarial costs of the lives lost and France comes out in a similar order of magnitude to Germany. when weighted statistically for differing populations. . But there the comparison ends- for the simple fact that the war was fought predominantly on French soil and not on German. It left a devastated area as big as Holland which had to be rebuilt and repaired. Thus, the French financial costs figures are light unless the physical damage is costed.in the tally.

 

Posted

A very interesting subject that I have long failed to understand.

How did the economics of running an army in a foreign land work?

I assume the British had to pay for example for French coal, French foodstuffs and other French made material, to supply its armies even though we were in France fighting to help save France.

The Americans made a financial killing in both world wars supplying the same, but made damn sure that we paid for it, having only made the last payment for WW2 goods in the last few years.

Posted (edited)
52 minutes ago, Dai Bach y Sowldiwr said:

A very interesting subject that I have long failed to understand.

     

    Don't worry- I have an Economics degree from LSE and it is still a mystery to me too.   In broad terms, the means of payment were the same as for a mobile phone now- basically, either "on account" or  "pay as you go"

    Pay as you go" appears to be the rule at local level-say, for  battalion fresh milk from a local farmer.  The administrative costs of running a system other than cash for the basics at local level would be a nightmare.  "On Account" gives 2 basic ways of doing it-   high finance and purchasing missions/agreements. High finance is the obvious and "painless" -as all the main combatants had long experience of running their national economies in deficit and running "National Debt" operations

     Purchasing missions  and bulk contracts between allies are a bit of an unknown in both world wars.  Details  are buried away in the myriad  numbers of of these inter-allied agreements and commissions.

     An example of the  problem of who paid and how that intrigues me is the extensive British military presence in France well away from the Western Front-in particular the use of the south of France for transporting supplies and manpower both ways to and from the Western Front-as well as the extensive  medical arrangements there and further on in the Med. (Your territory, I believe, DBS)  

    Overall, the war was paid for by extending it's costs both backward and forward in time- Forward is the easy one to grasp- National Debt operations which borrow to pay the interest, rather than repay the principal, unless it is advantageous to do so-The Lend-Lease end payments you refer to were a good example of this-  Low long term interest rates meant it was cheaper to pay just that- the great incentive being, of course, that every passing year reduced the "real" burden of the debt through inflation. And a century of inflation has reduced the "real" crunch in the original capital debts to Bank of Toyland levels.Thus, you and I are still paying for the Great War as a goodly chunk of UK Government revenue each year goes on the operations of the National Debt Office and the operations of the Bank of England on the markets to manage our historic debts.

     The other payers for the Great War were the generations who made money in the century or so before the Great War. Great Britain was a wealthy country and taxation in wartime has a limit as far as taxes on income  or immediate consumption go. OK, it was famously Billy Pitt who introduced the Income Tax as a temporary expedient to finance  the Revolutionary and Napoleonic Wars. BUT modern wars almost immediately mean extra taxes on capital. -such as death duties (a tax on past accumulated income,in effect) . Which means that the finances of a state pre-war can be a good guide to how long that state would last in an extended war. Italy, for example, with a chaotic financial history (albeit with a strong industrial zone in the north) was not going to last long in any war, whatever the bravery or otherwise of it's armed forces.Thus, the successful businessmen and investors of the Nineteenth Century "paid" for the Great War, as their accumulated stock of capital held by the descendants was a great target to tax. Our current concerns about tax evasion/avoidance are,in one sense, a by-product of the Great War. The more governments look to tax capital (that is, retained money on which tax was paid contemporaneously when it was generated as income). the more folk seek to shelter or move their capital/wealth away from the taxman. Thus, -  tax dodgers-blame it on the war!!

     

Edited by Guest
Posted
52 minutes ago, Dai Bach y Sowldiwr said:

I assume the British had to pay for example for French coal, French foodstuffs and other French made material, to supply its armies even though we were in France fighting to help save France.

Coal is an interesting example. The British used coal from the Lens coalfield and paid for it by shipping replacement British coal from Newcastle to supply the French needs. It is possible that timber was dealt with similarly. Local food was obtained by requisitioning, the "seller" was given a note specifying what he was supplying, and told to present it for payment to a requisition office, which would pay him a compromise price in return.

 

There is, apparently, no truth in the widespread rumour that the French charged the British rent for their trenches!

 

Ron

Posted

Thanks gentlemen, most illuminating.

 

Posted

Money is the root of all evil. Call me a conspiracy theorist but I believe more was at play than just stopping the expanding central powers empire. 

 

Thanks for your contributions so far. Great read 

 

Dan

Posted

Was doing some more reading on the subject and found a quote that somes up what I mean by my last post.

 

"World events do not occur by accident. They are made to happen...most of them are staged and managed by those who hold the purse strings." Denis Healey, former British Defence Minister

Posted
24 minutes ago, Bean tool said:

Was doing some more reading on the subject and found a quote that somes up what I mean by my last post.

 

"World events do not occur by accident. They are made to happen...most of them are staged and managed by those who hold the purse strings." Denis Healey, former British Defence Minister

 

Your point is just as valid as the exact opposite, and I'm sure that you could find quotes from a variety of sources to support or disprove your theories.

Just be wary that the mods aren't too keen on allowing discussion of Modern Politics on the forum.

And Healy only died 2 years ago.

Posted (edited)

Evening Dai,

 

Please excuse my ignorance but I'm unsure as to what you mean by as valid as the exact opposite? 

 

To step away from the theories and move back to fact. The central powers were supplied in the large by neutral countries. A lot of whom got their materials from us. We knew this so why didn't we have tighter controls and regulations on this? 

 

Cheers 

 

Dan

Edited by Bean tool
Posted
9 minutes ago, Bean tool said:

Evening Dai,

 

Please excuse my ignorance but I'm unsure as to what you mean by as valid as the exact opposite?

 

Hi Dan,

Nothing profound.  I don't personally believe that money is the root of all evil. But just because lots of rich  and powerful psychopathic personality types do bad things particularly to poor and powerless people doesn't mean that the money is itself the primary cause of the problem. 

 

On the other hand I'm sure it can be the root of some good sometimes. Lots of philanthropers have done, and continue to do much good with money.

 

Posted

Ah I see what you mean Dai. I guess you are right. It's not the root of ALL evil. I do feel it played more than a major part in WW1 starting and lasting for as long as it did however. Which I find very, very sad. Cheers Dai

 

Dan

 

Posted
12 hours ago, Bean tool said:

Evening Dai,

 

Please excuse my ignorance but I'm unsure as to what you mean by as valid as the exact opposite? 

 

To step away from the theories and move back to fact. The central powers were supplied in the large by neutral countries. A lot of whom got their materials from us. We knew this so why didn't we have tighter controls and regulations on this? 

 

Cheers 

 

Dan

Hello again Dan

 

The British did in fact have a very tight control over materials shipped to the Central Powers, by means of the naval blockade, which was put in place within days of the outbreak of war. Neutral and enemy shipping was stopped on the high seas and searched, being escorted to Allied ports if necessary. Material which was clearly for war purposes such as guns and ammunition was seized immediately; materials such as steel were also liable to seizure. We had to be careful, though, not to upset some neutrals, in particular the USA, on whom we were also dependent.

 

The Germans undertook unrestricted submarine warfare against the Allies, and justified the sinking of the Lusitania, with the loss of almost 1200 lives, including 128 Americans, because they claimed she was carrying ammunition.

 

The war in the Middle East had a number of causes but one of the important ones was to protect Allied oil interests (the Anglo-Iranian Oil Company was to become BP) and to deny oil to the Central Powers.

 

An interesting book on the economics of the war is The Pity of War, by Niall Ferguson. On his own admission he is an economic historian rather than a military one, so you need to take some of his comments on the purely military side as less authoritative.

 

Incidentally, the Biblical quote in full is "The love of money is the root of all evil", emphasising that it is human greed which is often the driving cause.

 

Ron

Posted

Thank you Mr. C for  highlighting that important difference and showing how the mis-quotation often arises.

I deliberately didn't correct that point in earlier posts for fear of further complicating the issue.

 

However, now that it has arisen...

Those of us familiar with the Bishop Morgan 1588 version of 1 Timothy 6:10 in Welsh are protected from such grammatical mistakes in that a wonderful word "ariangarwch" is used, which means "moneylove". Thus, you can never just use the phrase   "...money is the root of all evil..." , instead, you must use "...the root of all evil is moneylove."

 

An elegant translation, and not from English or Latin, but from earlier Greek and Hebrew biblical texts.

Posted
19 minutes ago, Ron Clifton said:

Hello again Dan

 

The British did in fact have a very tight control over materials shipped to the Central Powers, by means of the naval blockade, which was put in place within days of the outbreak of war. Neutral and enemy shipping was stopped on the high seas and searched, being escorted to Allied ports if necessary. Material which was clearly for war purposes such as guns and ammunition was seized immediately; materials such as steel were also liable to seizure. We had to be careful, though, not to upset some neutrals, in particular the USA, on whom we were also dependent.

 

The Germans undertook unrestricted submarine warfare against the Allies, and justified the sinking of the Lusitania, with the loss of almost 1200 lives, including 128 Americans, because they claimed she was carrying ammunition.

 

The war in the Middle East had a number of causes but one of the important ones was to protect Allied oil interests (the Anglo-Iranian Oil Company was to become BP) and to deny oil to the Central Powers.

 

An interesting book on the economics of the war is The Pity of War, by Niall Ferguson. On his own admission he is an economic historian rather than a military one, so you need to take some of his comments on the purely military side as less authoritative.

 

Incidentally, the Biblical quote in full is "The love of money is the root of all evil", emphasising that it is human greed which is often the driving cause.

 

Ron

Morning Ron,

 

Thanks for your explanation, very interesting. It sounds like there was a very fine line between strangling the German economy, which in turn effects their war effort, and upsetting allies and neutrals! For example we supplied coal to Sweden who then transported ore to Germany using our coal. I will try to find out information relating to our imports and whether this trade off was in fact worth it. 

 

It's funny you mention the Lusitania as I was reading about this last night. When the Lusitania was sunk it was waiting for an escort ship from the Royal Navy. The navy could read the codes of the U boats and thus knew where they were at any given time. Apparently a U boat was in the area and so Churchill pulled the escort ship back in the hope that the ship would be sunk in order to bring the USA into the war. Have you read about this Ron?

 

Cheers 


Dan

Posted

Dan

 

No, that particular piece of info is new to me. One of the points made about Bletchley Park's work in WW2 was that they could not do anything which might lead the Germans to suspect that their codes (Enigma and others) had been broken, and an example of this is shown in the film The Imitation Game. I wonder if Churchill, or others at the Admiralty, had something similar in mind when the escort was pulled back, though somehow I doubt it. I think they were capable of sacrificing 1200 lives to bring the USA into the war, but there was no certainty that Lusitania would be attacked, let alone sunk.

 

Ron

Posted

Cloak and dagger stuff Ron. I think you're right they were capable. But maybe the escort ship was pulled back for its own protection and the admiralty thought that the Lusitania would be safer on its own. Do you know if the U boats were targeting passenger ships before this incident? The U boats and German navy must have known these passenger ships were going to be carrying more than passengers but would they have taken that risk of sinking one and provoking the USA? Unless they were 'told' it was full of ammo and not passengers.....

 

Dan

Posted

Certainly the Germans posted notices in the American press, warning passengers that ships might be at risk of being sunk without warning. It would have been difficult to try to argue that a famous passenger liner would not be carrying passengers, though.

 

A further point which has occurred to me is that most Atlantic liners were capable of relatively high speeds (Lusitania herself held the Blue Riband at one time) and the Admiralty may have reckoned that this would be her best defence against U-boat attack. She was actually sunk not far from the coast of Ireland, so they were nearly right!

 

Ron

Posted
1 minute ago, Ron Clifton said:

Certainly the Germans posted notices in the American press, warning passengers that ships might be at risk of being sunk without warning. It would have been difficult to try to argue that a famous passenger liner would not be carrying passengers, though.

 

A further point which has occurred to me is that most Atlantic liners were capable of relatively high speeds (Lusitania herself held the Blue Riband at one time) and the Admiralty may have reckoned that this would be her best defence against U-boat attack. She was actually sunk not far from the coast of Ireland, so they were nearly right!

 

Ron

Did they really, that's interesting. I wonder why they did this? Were they covering themselves in the eventuality of an accidental sinking of a passenger ship or were they planning on sinking anything that came across the Atlantic? 

 

I've since read that the escort ship that was pulled back was HMS Juno which wasn't well placed to take on a U boat. 

 

Dan

Posted (edited)

What a pity you missed my talk "Blood money: economics of the Great War" in December. It's now retired and I am unlikely to be doing it again.

 

 

Edited by Chris_Baker

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