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If only the U.S. had stayed out of WWI

by David A. Stockman

The Globalist

The first big wave of embracing a liberal international economic order — relatively free trade, rising international capital flows and rapidly growing global economic integration — resulted in something remarkable.

Between 1870 and 1914, there was a 45-year span of rising living standards, stable prices, massive capital investment and prolific technological progress. In terms of overall progress, these four-plus decades have never been equaled — either before or since.

Then came the Great War. It involved a scale of total industrial mobilization and financial mayhem that was unlike any that had gone before. In the case of Great Britain, for example, its national debt increased 14-fold.

In addition, England’s price level doubled, its capital stock was depleted, most offshore investments were liquidated and universal wartime conscription left it with a massive overhang of human and financial liabilities.

Despite all that, England still stood out as the least devastated of the major European countries. In France, the price level inflated by 300 percent, its extensive Russian investments were confiscated by the Bolsheviks and its debts in New York and London catapulted to more than 100 percent of GDP.

Among the defeated powers, currencies emerged nearly worthless. The German mark was only worth five cents on the prewar dollar, while the country’s wartime debts — especially after the Carthaginian peace of Versailles which John Maynard Keynes skewered so brilliantly — soared to crushing, unrepayable heights. In short, the wave of debt, currency inflation and financial disorder from the Great War was immense and unprecedented.

With all that in mind, one important question only rises in importance: Was the United States’ intervention in April 1917 warranted or not?

And did it only end up prolonging the European slaughter?

Never mind that it resulted in a cockamamie peace, which gave rise to totalitarianism among the defeated powers. Even conventional historians like Niall Ferguson admit as much.

Had President Woodrow Wilson not misled the U.S. on a messianic crusade, Europe’s Great War would have ended in mutual exhaustion in 1917.

Both sides would have gone home battered and bankrupt — but would not have presented any danger to the rest of mankind.

Indeed, absent Wilson’s crusade, there would have been no allied victory, no punitive peace — and no war reparations. Nor would there have been a Leninist coup in Petrograd — or later on, the emergence of Stalin’s barbaric regime.

Likewise, there would have been no Hitler, no Nazi dystopia, no Munich, no Sudetenland and Danzig corridor crises, no need for a British war to save Poland, no final solution and Holocaust, no global war against Germany and Japan — and, finally, no incineration of 200,000 civilians at Hiroshima and Nagasaki.

Nor would all of these events have been followed by a Cold War with the Soviets or CIA-sponsored coups and assassinations in Iran, Guatemala, Indonesia, Brazil, Chile and the Congo, to name just a few.

Surely, there would have been no CIA plot to assassinate Castro, or Russian missiles in Cuba or a crisis that took the world to the brink of annihilation.

There would have been no Dulles brothers, no domino theory and no Vietnam slaughter, either. Nor would the U.S. have launched a war in Afghanistan’s mountain valleys to arouse the mujaheddin from their slumber — and hence train the future al-Qaida.

Likewise, in Iran there would have been no shah and his Savak terror, no Khomeini-led Islamic counter-revolution, no U.S. aid to enable Iraqi President Saddam Hussein’s gas attacks on Iranian boy soldiers in the 1980s.

Nor would there have been an American invasion of Arabia in 1991 to stop our erstwhile ally Saddam from looting the equally contemptible emir of Kuwait’s ill-gotten oil plunder — or, alas, the horrific 9/11 blow-back a decade later.

Most surely, the axis of evil — that is, the Washington-based Cheney-Rumsfeld-neocon axis — would not have arisen, nor would it have foisted a near-$1 trillion warfare state budget on the 21st-century U.S.

The real point of that Great War, in terms of the annals of U.S. economic history, is that it enabled the already-rising U.S. economy to boom for the better part of 15 years after the onset of the war.

In the first stage, the U.S. became the granary and arsenal to the European allies. This triggered an eruption of domestic investment and production that transformed the nation into a massive global creditor and powerhouse exporter, virtually overnight.

U.S. farm exports quadrupled and farm income surged from $3 billion to $9 billion. Land prices soared, country banks proliferated and the same was true of industry. For example, steel production rose from 30 million tons annually to nearly 50 million tons.

Altogether, in six short years from 1914 to 1920, $40 billion of U.S. GDP turned into $92 billion — a sizzling 15 percent annual rate of gain.

The depression that could have been avoided

Needless to say, these figures reflected an inflationary, war-swollen economy. After all, the U.S. had loaned the Allies massive amounts of money — all to purchase grain, pork, wool, steel, munitions and ships from the U.S.

This transfer amounted to nearly 15 percent of GDP, or an equivalent of $2 trillion in today’s economy. It also represented a form of vendor finance that was destined to vanish at war’s end. As it happened, the U.S. did experience a brief but deep recession in 1920. But it was not a thoroughgoing end-of-war one that would “detox” the economy.

The day of reckoning was merely postponed. It finally arrived in 1933 when the depression hit with full force. The U.S. economy was cratering — and Germany embarked on its disastrous “recovery” experience under the leadership of Adolf Hitler.

These two events — along with so many of the above-listed offenses later on — could have been avoided if only the U.S. had shown the wisdom of staying out of World War I.

David A. Stockman is an author, former U.S. politician and businessman. He served as President Ronald Reagan’s budget director from 1981-1985. ©2014 The Globalist

  • Starviking

    It seems ridiculous to claim that a bonus of the US staying out of WWI would be the failure of all these subsequent bad events occuring. People find a way to do bad things, their historical names would have been different, that’s all.

  • Chris Butler-Stroud

    This is the most ‘creative’ bit of writing I have come across in years, and I do have a liking for alternative histories. However, to suggest that the Soviet Union would not have arisen and encroached on European countries, or that even Hitler would not have risen to power is preposterous. According to this model one could also surmise that Japan may actually have met a strong Russia in northern China during the1930s and been overrun itself and become a communist state by the 1940s. The Communist block may have dominated Asia and finally the world. But, like this article, my imagination runs away with me.

    Predictions such as these normally only have credence for maybe guessing what could have happened for maybe up to five years after 1917. Anymore and its pure guesswork.

    Also I don’t believe the article actually answers its own question of whether the US intervention was justified?, it just appears to go off one, condemning the US move in World War I as one of self-interest, and an inverted argument for self-isolationism. Very strange

  • Paul Johnny Lynn

    I’m not an author, current or former politician, businessman, nor have I ever served as a national budget director. So while I bow to the author’s impressive C.V., I have to agree that this alternative history is one hell of a stetch.

  • Yamatosenkan

    As others pointed out here, this article is mostly imagination, and the reason why historians usually avoid this is because there are so many variables in complex events such as the rise of communism, that it is impossible to say “what happened if X had not happened.”

    Having said that, I do think this is an interesting thesis. Reformulated, perhaps we can see a lot of events after America’s intervention in WW1 as “blowback”: unintended consequences of operations that hit home in unexpected ways. For example: the internationalization and strengthening of gangs after repatriating gang members from the US to Central America. 9/11 was probably an instance of blowback. Perhaps the rise of Nazism was a giant form of blowback resulting from the US intervention in WW1.

  • kagondocz

    Between 1870 and 1914 there were in the United States and Europe:
    The Panic of 1873,
    The Panic of 1893, and
    The Panic of 1907.
    Perhaps an alternative to history?

    • Blank Reg

      How long did those “panics” last? A year? Less? They were all “pre-Fed”, where natural market and monetary forces cleared out the toxicity relatively quickly. Compare that to the Great Depression (1930 – 1946), promulgated and prolonged by centralized Keynesian Fed policies.

  • Jamie Bakeridge

    Simplistic stuff.

  • http://VitaminDCouncil.org/ EinRand

    Another excellent article by Mr. Stockman. After reading The Great Deformation: The Corruption of Capitalism in America, my eyes have been opened to how much safer the world would be if governments were proscribed from plundering their citizenry via taxation and then other nations via wars.
    Had the US Southern Confederacy won the war of Secession as the Founders had Constitutionally arranged, how many future wars of plunder could have been averted.

    • Bisley

      The only reason for “war of secession” was Lincoln. The southern states withdrew from the union, expecting to go about their business, and be left alone. Lincoln invaded and made war on the CSA, to force them to remain in a union they wanted no part of. This is the same problem we have today; the people in power want to force us to conform to their wishes (not the Constitution, or laws made in pursuance to it).

      • capitalist!!

        Yeah your dumb CSa were a bunch of racists who forced people who are different from them into slavery because they were a bunches of lazy asses who didnt know how to work for their own money so they forced them to work and then raped the women can you really sit there with a straight face and say your right and I’m wrong??

      • Bisley

        I’m right, you’re wrong. You’re a product of a politically-driven education system that teaches an inaccurate and incomplete version of history (and everything else). Read and educate yourself. There are many different versions of every story, and what is taught in schools is designed to support the viewpoint of whoever is in control, not necessarily the truth, or the whole truth.

  • Len Gomberg

    And if the snake hadn’t existed in the Garden of Eden, Adam and Eve wouldn’t have eaten an apple from the tree of knowledge, and we would all be blissfully ignorant to this very day, sort of like the author in his assessment of human behavior. Some would say God put the snake in the Garden of Eden to tempt us. Don’t be tempted into believing the nonsense spewed by this contemporary snake.

  • suji724

    Speculation is like day dreaming. Facing the realities/facts/truths of any situation is the only way to deal with it effectively, creatively, and eventually moving forward. I’ve never been much into fiction and the “if onlys…” because the “ifs” are usually big ones. Face the realities, deal with them, and move on..

  • CactusPatch

    The Founding Fathers warned us against becoming entangled in European affairs and gave us the Monroe Doctrine. If the U.S. hadn’t become engaged, it would have been a stalemate. There wouldn’t have been the reparations which set the stage for Hitler. There wouldn’t have been a WWII. Our culture was fundamentally altered by our involvement in the two wars. We ceased to be an agrarian society, became a world power and abandoned the fiscal disciplines which had allowed us to prosper. The Wilson Administration, which gave us WWI also gave us the Federal Reserve, the graduated income tax and a fundamentally weakened federal system (when it made U.S. Senators elected by popular vote rather than appointed by state legislatures.

    • capitalist!!

      Just so you know imperial Germany who fought in the actually took over most of Europe and was probable only a year or less of taking overcengland their would be no Europe only a giant German mega state and their would be no modern us we prob would still have been a ww2 but it would be from Russia they persecuted and des ruminated Jews just they same they just didnt put them in a giant over they put them in Gullags in the Siberia with anti communist forces the menshovics

  • earl hickey

    We can’t do anything about our past mistakes except to learn from them and try not to repeat them. Also we can stop glorifying these past mistakes and recognizing them for what they were : bad decisions made by idiots

  • warpten

    All too tragically, horrifically true. For more information, google the Balfour Declaration. Amazing how quiet historians tend to be about that treachery and the unimaginable violence it seeded. No mystery, of course, about why they’re mostly mum. Because it was an agreement between Zionists and the British: The British promised the Zionists Palestine if the Zionists would get the USA to join the war on Britain’s side. It was, of course, the Zionists who made the offer. And they followed through, mainly by way of Supreme Court Justice Brandeis and their other comrades in the US press.

    I know, I know – I am so unspeakably anti-Semitic, aren’t I? …Which explains perfectly why most historians will try and keep their mouths shut. But hey, what’s really at stake anyway? Who cares about America, except as a means to an end? Top priority is to let such special people get their way no matter what.

    • Len Gomberg

      Are you looking for confirmation? OK then, yes you are an anti-Semite. Your resentment toward the Jew, as expressed so lucidly in your last sentence, is the same resentment that has fueled Jew hate throughout the history of the world. But not to worry, you’re in good company. Anti-Semitism, taken down a notch just after the Holocaust, is thriving once again. And it has a modern partner, anti-Zionism. So now you and your Jew hating contemporaries have two convenient targets for your resentment. But you already knew that, of course, with your incisive summary of how those pesky Zionists sucked us into WWI in the first place.

      • warpten

        Ah, thank you for illustrating my point. Ruthless tactics like yours are exactly the reason why historians get silenced as effectively as a book burning.

        The Balfour Declaration is a well documented fact of history. And though it has nothing to do with Judaism, it has everything to do with Zionism. Zionism is a corruption of Judaism. To Judaism “Chosen” is a spiritual condition. To Zionism it is a state of racial and political superiority. There are still genuine, Judaic Rabbis alive in Israel today who lament the loss of a time when Muslim and Jewish families babysat for each other.

        So by your sick logic, no American has a right to object to or even talk about a scheme to pull his own country into the horrific violence of a world war as a means of serving the goals of Zionism? Though I am by no means anti-Semitic, you are without question both anti-American and anti-gentile.

      • Len Gomberg

        Individuals such as yourself who identify a “Jewish” or
        “Zionist” rationale to explain historical events and then degenerate into
        personal attacks when your rationale is called into question embody
        anti-Semitism at its ugliest. Jews who served proudly in the German military in
        World War I became enemies of the German state once anti-Semitism became
        national policy under Hitler. I served 20 years in the US Army, yet because I
        disagree with your interpretation of history, I am now without question
        anti-American and anti-Gentile. Talk about sick logic. That is the logic that
        invariably leads to genocide, and it is why your words and the logic behind
        your words need to be confronted. Anyone with even a superficial awareness of
        what led the United States into World War I understands that unrestricted
        submarine warfare by Germany, the Zimmerman letter, America’s economic
        investments in Britain and France, and President Wilson’s desire to spread
        democracy and fend off a political challenge by Theodore Roosevelt are much
        more viable explanations for America’s entry into World War I than the Balfour
        Declaration. Yet my tactics are meant to silence historians? What historians? Those
        who seek a “Jewish” or “Zionist” explanation for all the ills that have
        befallen America and the world? The reality is that I don’t want to shut up you
        or those who think like you. I want to expose you for the danger you represent
        to humanity, and for that I prefer that you keep on writing. Your hatred and
        bitterness will inevitably come out. You just can’t help yourself.

      • warpten

        In civil American society we are free to voice our opinions about WWI or anything else. Girlishly hysterical tactics of slander, however, fall far outside the realm of civil American debate. It creates a climate of threat and you just upped that threat to all readers here by the ludicrous charge that my belief that your threats are anti-American means I am potentially genocidal. Wow.

        You also ignored my clearly expressed and entirely reasonable objection to Zionism along with my words of respect for Judaism – trying once again to make your slander stick by keeping the two tied artificially together. That is utterly dishonest and despicable.

        Wilson was aware of the obvious fact that Germany did not want war with America, and the American people felt the same way about war with Germany. The Zimmerman telegram, as you know perfectly well, was not evidence of any real threat. Mexico was in no position to attack the US even if it were so inclined, which it wasn’t. Neither was Japan. It was great for stoking public opinion against Germany, though, and the press wrung it for every last drop of rage it could produce. US newspapers were flooded with racist cartoons of demonic Mexicans and Japanese. Meanwhile, Germany was literally starving, under siege by a very effective British blockade. Wilson dove into the fight anyway and over 250,000(!) Americans died.

        Needless to say, there is a lot more to this story, including the part played by one of Wilson’s closest advisors: a passionate zionist named Louis Brandeis. In short, the Balfour Declaration was a huge factor in pushing the US into that war. As such, it is a priceless and powerful lesson in history, an all too perfect example of what bloody havoc a foreign power can wreak upon the country by its manipulation of Washington and the media.

      • Len Gomberg

        Propagandists have a number of powerful tools at their disposal to try and convince an unwaryand often misinformed public that their nefarious claims are true. One of these
        tools is “Repeat the Lie”. Goebbels was a master of this methodology, and modern
        dictators, political campaign managers and even some of our own government
        bureaucrats, not to mention effective advertisers, utilize this method. Basically, if you repeat a claim often enough, people will start to believe it’s true, even if it doesn’t stand up under scrutiny. The problem is that most people cannot be bothered to do the research necessary to uncover the inaccuracies of the claim. What’s even better for the propagandist is if there is a small
        glimmer of truth that can then be used to gloss over the speciousness of the overall claim. In your case, the truth is that Louis Brandeis, whom President Wilson had appointed to the US Supreme Court and who had by then become an ardent Zionist, revised the Balfour Declaration that the British Government had sent President Wilson to endorse. Approximately a week after the declaration had been received and revised, President Wilson privately told his advisor, Colonel House, that he supported the intent of the declaration to create a national home for the Jewish people in Palestine. All this took place between October 7 and 13, 1917. The Balfour Declaration was then issued by Britain November 2, 1917. The lie, or should I say intentional misdirection of the facts, is that the Balfour Declaration was a “huge factor” in pushing the US into World War I. One simple fact undercuts your entire premise, and that is that President Wilson had gone before a joint session of Congress on April 2, 1917 to request a declaration of war against Germany. The Senate voted in support of the measure April 4, 1917 and the House followed April 6, 1917. I would like to know how the Balfour Declaration could have been such a huge factor in pushing the US into the war if Congress had declared war SIX MONTHS PRIOR to Wilson’s private affirmation of support for the declaration.
        Furthermore, when Wilson asked Congress to issue a declaration of war, he cited
        Germany’s violation of its pledge to suspend unrestricted submarine warfare and its attempts to entice Mexico into an alliance against the United States, the infamous Zimmerman telegraph which you dismissed as no real threat. Facts and an awareness of the historical timeline may be of no concern to propagandists like you, but if you think I’m going to be beaten into submission by your “Repeat the Lie” campaign, you’ve got something else coming. I will respond to your
        ludicrous statement that Zionism is a corruption of Judaism in a separate text.

      • warpten

        In a 1923 Cabinet memorandum, British Colonial Secretary Lord Cavendish wrote:

        “The object [of the Balfour Declaration] was to enlist the sympathies on the Allied side of influencial Jews and Jewish organizations all of over the world…[and] it is arguable that the negotiations with the Zionists…did in fact have considerable effect in advancing the date at which the United States government intervened in the war.”

        In a 1936 article in World Jewry, Samuel Landman, secretary of the World Zionist Organization, described a secret “gentleman’s agreement” made in 1916 between the British government and Zionist leaders:

        “After an understanding had been arrived at between Sir Mark Sykes and [Zionists] Weizmann and Sokolow, it was resolved to send a secret message to justice Brandeis that the British Cabinet would help the Jews to gain Palestine in return for active Jewish sympathy and for support in the USA for the Allied cause, so as to bring about radical pro-ally tendency in the United States.”

        Zionist historian Naomi Cohen writes:
        “A wartime measure, the [Balfour] declaration had been in the making ever since Turkey had entered the war on the side of Germany and Austria-Hungary [Oct, 1914]. Its immediate object was to capture Jewish sympathy, especially in the United States, for the Allies and to shore up England’s strategic interests in the Near East. Pushed by leading Zionists in England and by Brandeis, who intervened with President Wilson, the declaration, which was eventually recognized internationally, put the seal of legitimacy on political Zionism.”
        -The Americanization of Zionism

        In summary, the Balfour negotiations, in process for years, are referred to in various WWI documents leading up to the follow-through on both sides. That follow-through is what allowed the Balfour Agreement to be accepted and announced officially.

      • Len Gomberg

        Your points are well taken, though they will not suffice to convince me that Zionists had such an influence over President Wilson and the US Congress as to
        convince them the United States should enter World War I. I still maintain the factors I mentioned in previous posts were far more influential in the
        President’s decision to ask Congress for a declaration of war. I realize the two of us will never agree on that point, and that’s fine. I also know we will never agree on what for me is a false schism between Judaism and Zionism. Yes, there were Jews prior to the establishment of Israel in 1948 who did not believe a Jewish state should exist and were very vocal in their assertion of that position. Yes, there are Jews who maintain that position today, mostly from the religious belief that the land of the Jewish people should be spiritual and not have secular or non-Jewish influences. Part of the difficulty is what Israel and by extension Zionism has come to represent for those who hate it, namely a militaristic imperial power that occupies and murders Palestinians, dictates standards of Judaism to Diaspora Jews, and wields enormous political influence over other countries, particularly the United States, often against those countries’ best interests. I do not abide by that characterization, which I believe is not only a distortion of reality but part of a propaganda war against Israel and Zionism whose goal is to discredit and ultimately bring about the elimination of both. I believe Zionism exists to encourage Jewish people living outside Israel to emigrate there and to make a strong case throughout
        the world for the political support of Israel and against anti-Semitism. Anti-Zionists may argue with my conception of Zionism, but one thing is inescapable. A Jewish state now exists and the vast majority of the Jewish population throughout the world supports it, despite its faults. Don’t believe that? Then how about this. Most Israelis yearn for peace and most Jews yearn for acceptance by the non-Jewish majority. Both statements are true, but I’m guessing you would argue
        to the contrary. Good. I’m glad, because if it weren’t for the anti-Semites and anti-Zionists, Jews would have it too easy and not look out for their own best interests. When they’re accepted, they assimilate, intermarry and often forget their Jewish heritage. The Jewish population dwindles and Jews lose their connection to God. Anti-Semitism and anti-Zionism serve as necessary corrections to this unfortunate tendency, a metaphoric slap in the face to awaken the Jewish people to the reality that they will never be fully
        accepted where they are a minority, and Israel will never be accepted as an equal among the nations. So please maintain and express your beliefs. You are
        doing what God intended, to help ensure that the Jewish people and Israel will exist for all time. And with that, I bring my commentary here to a close. Please don’t expect a response to whatever further you may write. I’m done.

      • warpten

        Clearly, you have very strong feelings of loyalty for Israel above all else. That wouldn’t be a problem, except for one detail: You’re an American citizen living and functioning in America.

        If Israel were simply a religious organization, again, there would be no problem. In fact, there would be many things to celebrate. Take the institution of marriage. Israel outlaws gay marriage and values marriage as a religious institution by law. Assuming you wanted the same for your own country, your religious identity as an Israeli would be a net positive for the US.

        Unfortunately, Israel is also a country unto itself — a country with a very keen interest in using America’s government along with its populace in service to its own needs. By any standard of common sense concern for America and its future, that makes the input of its Zionist citizens alarming in the extreme.

  • satta

    Actions have consequences. Whether you agree with Stockman or not, the inescapable conclusion is that events are connected. Instead of simply protecting our nationalistic egos and blindly defending past policy, we should be willing to look critically for lessons that could be applied in the present in order to minimize the costs – to the people – of bad foreign policy decisions. Of course, it’s possible that the political class couldn’t care less about the effects of its decisions on average citizens. The evidence shows that this could be a distinct possibility throughout history.

  • Bisley

    There was no good reason for the US to interfere, but then there was no good reason for any of the participants to go to war. Some of them thought they might gain some of what they coveted, on the cheap; it didn’t work that way. Things would have worked out differently for Europe, without US involvement, but there is no way to tell what the results would have been (maybe better, maybe worse). It would have been better to have a negotiated end to the war that maintained the pre-war social, political and economic systems of Europe, but that might not have been possible after the changes wrought by several years of war.

    It would have certainly been better for the US not to have wasted so many lives and so much money, in a war without reason, but any other effects are unknowable. All the things Stockman cites wouldn’t have happened exactly in the way they did, and maybe not with the same people involved, but similar things might well have happened, and with consequences just as bad, or worse.

  • Mark Caplan

    On Jan. 31, 1917, Germany declared unrestricted submarine warfare on the ships of neutral countries, including American passenger and cargo ships. In addition, the intercepted Zimmerman telegram revealed a conspiracy between Germany and Mexico. The Germans promised military aid to Mexico to reconquer America’s Southwest. In a foreshadowing of the calamitous decision of the Japanese in World War II, the German high command knew they would be triggering an American intervention in the war, but gambled they could defeat the Allies before America could enter in force.