So there were a couple interesting posts over in this thread:
So let's assume that things go as per OTL up to the point where the US decided to enter, and in TTL, the US stays out. Let's say there's no Zimmerman Telegram and that this is enough to make Wilson do his utmost to keep his promises to stay out.
Let us further presume that this allows the CPs to win (not unreasonable, I feel, but I know we could argue this, so let's not).
What happens to all the US banks that have been loaning heavily to Britain and France? Does this derail the rise of the US as a financial hub for long? What impact would this have on the rest of the world economy?
fasquardon
Unfortunately that is not the case. The House of Morgan had hugely invested in the Entente war effort. Source: https://encyclopedia.1914-1918-onli...morgan#The_House_of_Morgan_during_World_War_I
Likewise, the banking consortium Morgan set up would be bankrupt in the case of CP victory. Whether we like it or not, the people who owned the US economy were invested in taking their money back and become the dominant financial cast in the globe. If there was substantial trade with the CP and the Americans hoped to obtain their assets, only then the situation would be different. Wilson indeed didn't want to participate in the war but what about those who had the actual power?
In general, France was able to increase their fiscal resources from 7,846 billion francs in 1918 to 12,515 billion in 1919. It is important to state that this increase came from indirect taxes and monopolies ( post office, matches, tobacco, powder, telephone and telegraph, etc). Indeed in spring 1917 the foreign assets of France were running short. However, the gold and silver reserves remained in France.
Too bad for Morgan he was a Republican and Wilson a Democrat. He had zero pull in the White House. Plus Morgan had his collateral and the Fed had warned banks making loans they were on their own in the case of default. The banks involved with the Entente didn't have any power left, given that they were heavily leveraged; you know the expression "If I owe you a million dollars I have a problem, if I owe you a billion dollars YOU have a problem". They made a bad bet and lost and Wilson didn't care because they weren't his donors/constituents anyway. Plus they tried to unseat him in 1916 and lost, so missed their shot.
So let's assume that things go as per OTL up to the point where the US decided to enter, and in TTL, the US stays out. Let's say there's no Zimmerman Telegram and that this is enough to make Wilson do his utmost to keep his promises to stay out.
Let us further presume that this allows the CPs to win (not unreasonable, I feel, but I know we could argue this, so let's not).
What happens to all the US banks that have been loaning heavily to Britain and France? Does this derail the rise of the US as a financial hub for long? What impact would this have on the rest of the world economy?
fasquardon