World War One – Part II

“The War to End All Wars”

In conjunction with our WWI exhibit, we will be publishing a short brochure on the causes and history of WWI.  The text is from American Political and Social History by Harold Underwood Faulkner, published May 1937, F.S. Crofts & Co., New York


Amazed at the blundering diplomacy that had made possible such a war, and confused as to the issues, the United States, following a century-old tradition, took an official position of neutrality.  In an appeal to the American people, “drawn from many nations, and chiefly from the nations at war,” President Wilson urged neutrality “in fact as well as in name during these days that try men’s souls.”

But the world was too small for this to be more than a pious hope.  At least four major influences were at work eventually to break down neutrality: (1) the heterogeneous character of the American population, (2) the increasing economic interest of the United States in the war, (3) the superior propaganda facilities of the allied Powers, and (4) the violations of neutral rights by the belligerents.

Of particular interest to politicians, propagandists, and national leaders was the reaction of the foreign-born population to the war.  While the older stock had emanated largely from the British Isles, at least 9,000,000 of the American population had been born in Germany or had one parent born there.  About one third of our population was foreign-born or of foreign-born parentage.

Of greater significance was the increasing economic stake of this country in the Allied cause.  The most pronounced early effect of the war upon America was a tremendous economic stimulation.

This is of particular importance because the nation, in the spring and summer of 1913, appeared to be sinking into the downward swing of an economic cycle, a trend that was quickly reversed by the European war.  Just as during the Napoleonic wars a hundred years earlier, Europe was too busily engaged in destruction to provide sufficient raw materials, and the United States became a source of all types of commodities, particularly foodstuffs and munitions.

The value of wheat exports, for example, rose from $39,000,000 in 1913, to $300,000,000 in 1917, and the value of munition exports from $5,000,000 to $803,000,000.  Production of cotton, foodstuffs, and minerals jumped forward, while the value of the exports of domestic merchandise almost tripled.

The excess value of exports over imports for the year ending June 30, 1914, was $435,800,000; for that ending in 1917, $3,567,800,000.  All this meant a sudden and widespread prosperity.  The United States profited enormously during the early years of the war, and her profits came almost entirely from the Allied Powers.

As Great Britain tightened the blockade around Germany and extended the contraband list, it became increasingly difficult to export to the Central Powers.  While American exports gravitated inevitably to Britain and her allies, these exports, owing to the diminutive size of the American merchant marine and the fact that Germany’s great merchant marine had been driven from the seas, were more than ever dependent upon British ships.

In another important way American economic life was changed by the World War and her interests tied more closely with those of the Triple Entente.  To finance the large-scale purchases, Europe shipped during the war close to a billion dollars in gold to the United States, and private citizens in Europe disposed of American securities to the value of two billion dollars.  When the war broke out, foreign investments in the United States were estimated at over $5,000,000,000, while American investments abroad amounted to at least $2,500,000,000, leaving the country a debtor to Europe by over 2,500,000,000.

Although Secretary of State, Bryan, held to the view that “money is the worst of all contrabands” and that loans to belligerent powers were “inconsistent with the spirit of neutrality,” the administration very early conveyed the impression that it would not oppose short-term credits that American bankers might extend to the belligerents, and a year later (August, 1915) that it would not oppose loans floated here.  The charge has often been made that this attitude was influenced by the desire to maintain economic prosperity in the United States, but the position of the administration was perfectly legal and in line with every precedent of international law.  Any other position at the time was hardly to be expected.

Beginning with the Anglo-French loan in October, 1915, private loans to the Entente Powers were floated here to the extent of some $1,500,000,000.  After we entered the war, the United States government extended credits to European governments amounting to over $10,500,000,000.  From a debtor nation, the United States almost overnight emerged as the great creditor nation of the world.  It is of more than passing significance that while the Allies floated here $1,500,000,000 in loans, Germany borrowed but $35,000,000, of which only $27,000,000 was outstanding when we entered the war.