The Economic Impact
Although Germany had insisted that it would only enter into peace negotiations with the Fourteen Points as the basis for an agreement, the armistice terms they were given were very harsh. The Allies would only agree to an armistice if Germany disarmed, or had the majority of its weapons taken away, and drastically reduced the size of its army, in hopes that Germany could not resume fighting. Most of its weapons would be destroyed under Allied supervision.
In preparing for peace talks, Allied powers had to take into account the different ways in which Great Britain, France, Germany, and the United States had been impacted by the war. Consider each of the following accounts of the four main combatants:
- Great Britain—Great Britain’s economy grew moderately during the war. It paid for its own participation in the war and paid for Italy, France, and Russia to fight in the war as well. While civilians were spending less money on consumer goods, this decline was balanced by increased production of guns, artillery, and warplanes. The entire British Empire had been involved in the war effort, providing troops as well as raw materials and production.
- France—Much of the war on the Western Front took place inside France’s eastern border. Germany had occupied French territories, including one of France’s most important industrial regions, and taken materials and machinery for its own use. The French countryside was ruined. (Even today, French farmers are still plowing up World War I weaponry in their fields.)
- Germany—No foreign armies were in Germany when the war ended, and some German citizens were shocked to realize they had lost. By invading other countries, Germany had saved its own cities from any major physical damage. While Germany gained territory and industrial resources such as coal when it agreed to peace separately with Russia (the Treaty of Brest–Litovsk), the country had suffered from a British naval blockade. Germany had grown as an economic power before the war, and it was bound to lose this position as the war came to a close.
- United States—America emerged from the war in the strongest economic position. When the war began in 1914, the U.S. economy was in recession, and the country was a debtor nation, owing more money to other countries than was owed to it. But an economic boom followed. This was fueled at first by trade, with European nations on both sides of the war purchasing U.S. goods. The boom continued after the United States joined the fighting, and the country ended the war out of recession and as a creditor nation.
The Economic Impact of the Great War, 1914–1918
Read the following table, which summarizes the economic impact of the war on the four major combatants. Note below which countries suffered the greatest impact to their economies. Why do you think this occurred?
Britain |
France |
Germany |
United States |
|
Physical destruction |
Very little |
Significant |
Limited |
None |
Financial impact |
|
|
|
|
