"...general trend in historiography of the time to recount the late 1910s as an almost economic golden age that, along with the general peace across the continent, came to a crashing halt with the onset of the war. This is in some ways a recollection of the time through very rose-tinted glasses that is nostalgic for a time without the horrors of the conflict, but also a very narrow view that considers only the experiences of Germany and France and, to a lesser extent, Italy. It is true that few if any countries in Europe were seeing any kind of economic stagnation or decline by 1918, but the first half of the decade had seen a genuine economic shock that many economies by the conclusion of the decade were still recovering from. The secular economic depression of 1910-11 had been exacerbated severely by the imposition of the Imperial Preference system installed by the Haldane government, an echo that reverberated across Europe in ways that few anticipated.
[1]
At the root of the issue was that a number of European economies had, due to the liberal macroeconomic regime of the late 19th century, still not reconciled themselves to a nascent trend of protectionism in places like Germany, Russia, or France, or at the very least were not expecting Britain to withdraw behind a tariff system meant to benefit herself and her colonies. Imperial Preference, combined with major readjustments forced by the Great American War, had been a huge boon to Australia, South Africa and Canada; it had devastated trade-dependent markets such as Denmark, Belgium and Norway, and placed even some strain on Spain, the Netherlands, Italy, and Turkey, all countries with healthy and developed trade networks with Britain.
The end of the age of free trade with Imperial Preference's introduction coincided, perhaps not by accident, with the diplomatic withdrawal of Britain from Europe. At the time it was generally considered to be of a diplomatic manner - conflicts in Ireland in 1914 and India the year after were consuming a great amount of London's attention - but there was a financial dimension, as well. British banking's share of European investments had declined significantly since the early 1870s as Latin American and Asian markets had opened to British finance, and British banks were critical in the financing of the Great American War, as well. Imperial Preference also deepened the ties between the City's banks and the dominions; the boomtimes in Canada and Australia were very much underwritten by millions in British gold.
This left small, free-trading countries like Denmark exposed to their primary market evaporating for agricultural goods and a major source of financing eroding. Without Britain, countries like Denmark had two options - the Bourse of Paris, or Frankfurt and Hamburg's smaller banks in Germany. On paper, there was a great deal that made sense about an economy more integrated with that of Germany, from cultural similarities (Lutheranism in particular) to proximity. On the other hand, Copenhagen's merchants had considered Hamburg and other Hanseatic cities competitors since the Middle Ages.
Beyond that, Germany had no coordinated national strategy on coordinating finance as a tool of geopolitics. In this sense, it was somewhat like Britain, which viewed such interventionism as a bit gauche and simply relied on the City to "pursue her interests," though for Germany it was also that no concentrated banking system existed. The Reich's polycentric structure, and that Frankfurt would not develop into Europe's banking hub for decades to come, meant that even had Berlin wanted to use German banking as a tool of the Foreign Office, they would have struggled to do so effectively.
That left, essentially, France, and there Denmark was once again supine to the needs of the Iron Triangle they had agreed to join forty years prior. France had no qualms about regarding the Bourse, the Banque de France, or any of her major private financial institutions as arms of the state and sovereign loans as a tool of geostrategy. Denmark needed a lifeline in the wake of Imperial Preference, and a lifeline she received. As the economic depression of the mid-1910s ended in Denmark, the country's growth was thus more and more dependent on French investment and, in tandem with that, French profits in the Far East and hegemony in North Africa. In an eerie, dark parallel of France's increasing willingness to attach itself to Austria to recoup its military and financial interests, Denmark was unable to extricate itself from a situation which, in hindsight, made little sense for it to continue to pursue thanks to its yearslong dependence on French funding and trade..."
[2]
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The Central European War
[1] This update is inspired a bit by my reading of "8mm to the Left" by
@KaiserKatze in that I realized I hadn't really given enough thought to how Imperial Pref might effect Europe more broadly. And if you haven't read "8mm" yet please go do so - it's one of the most exciting new projects on this site since the launch of "Geronimo" three years ago
[2] Important to re-note the financial dependency of Belgium on France, too, which I touched on briefly in the last Belgium update. Paris sits at the center of a very important financial network in continental Europe...
