Does the Entente win if the USA doesn't enter WW1?

Who wins the war?


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This weirdly ignores the actual Federal Reserve document I have kindly posted a link to above

Well, yes, that's what happens when someone posts before you, in case you can't read the time stamps. Hard to respond to documents that haven't been brought up yet.

but further it is perhaps worth noting that most of the principal, depending on the date of the bond up to 70%, of the loans made by private organisations and persons was repaid prior to Chamberlain changing the bonds to 3.5% bonds (which is I agree a technical default) however once again the thirties were low inflation times and finding returns of 3.5% tricky and so by and large the creditors did get paid....more importantly on the macro scale the US economy got paid more than once...it had hoped of course to be paid several times but overall the US rather than individual investors did not lose out and individual investors did not take a complete haircut.

And all of that is from OTL, where the Entente won out and was able to repay at least some of the loans thanks to reparations from Germany. But supposing that they don't win (however impossible you may find that, it couldn't be foreseen for certain in 1917), don't gain reparations, and France possibly has to pay Germany instead, their ability to repay becomes even more questionable. The willingness of US investors to extend credit when default seems plausible is the question, and again gets more and more plausible the worse the war goes for them. And even if oil companies and arms manufacturers want loans extended anyways so they can sell, what good does that do the US economy if it just means defaults and bank runs five years down the line? See, this is why investors fear uncertainty, and there's nothing more uncertain than large-scale war.
 
Well, yes, that's what happens when someone posts before you, in case you can't read the time stamps. Hard to respond to documents that haven't been brought up yet.

The funny thing is you made the accusation then without reading the document, which was and is freely available without my agency, at all


And all of that is from OTL, where the Entente won out and was able to repay at least some of the loans thanks to reparations from Germany. But supposing that they don't win (however impossible you may find that, it couldn't be foreseen for certain in 1917), don't gain reparations, and France possibly has to pay Germany instead, their ability to repay becomes even more questionable. The willingness of US investors to extend credit when default seems plausible is the question, and again gets more and more plausible the worse the war goes for them. And even if oil companies and arms manufacturers want loans extended anyways so they can sell, what good does that do the US economy if it just means defaults and bank runs five years down the line? See, this is why investors fear uncertainty, and there's nothing more uncertain than large-scale war.

Note the date stamp on the Bulletin, this from before US entry into the War and thus before any point at which the Entente could be doing worse. The US will still have incentive to sell as long as the Entente can buy and that is likely to be a long time. The Germans thus are not likely to do any better than they did in the 1918 offensives of OTL which still leave them dramatically short of where they need to be. Also I would contend the driver to US entry into the war was USW and without USW the Entente payment and supply situation will be improved rather than worsened.
 

BooNZ

Banned
...

Source Federal Reserve Bulletin April 1917 p239 Foreign Loans

https://fraser.stlouisfed.org/files/docs/publications/FRB/1910s/frb_041917.pdf

Now I get you were confused, so were a lot of people so they felt they needed to set the record straight because they needed to loans to be made so people would go on buying US.

The USW was the key issue that dragged the US into the war. The April 1917 Fed statement was in response to both the German USW and the fact their earlier statement to avoid Entente unsecured debt (at the behest of Wilson) was unambiguous and almost the entire US investor base was avoiding Entente debt. The above Fed statement was not a clarification but a reversal of policy. It signaled the imminent entry of the US into the war.

...Of course you might also want to look into how much credit the Entente actually needed as the French for example preferred to pay for American goods in gold. Then again there is the fact that this brings a worse case scenario of the Entente being forced on the defensive in the west but then they still have the blockade and absent USW the Central Powers have not and USW means US entry into the war.

Do you have a reference on the French 'preferring' to pay for American goods in gold? I believe the first substantial American war loan to France was facilitated by the British and was in early 1915 and by late 1916 the French were in the same boat as the British - i.e. had little in the way of foreign exchange or collateral for credit. Everyone knew by 1916 that the Entente war effort was increasingly dependent on the US (except seemingly Lloyd George), so I would expect with no USW, the Entente 'blockade' would be on the table.
 

Deleted member 1487

I put CPs based on the financial issue that has been brought up on these forums time and time again. It doesn't mean an outright CP win, but rather a negotiated peace; since the CPs sat on Entente soil nearly exclusively (other than parts of Alsace and the colonies), the CPs will be able to negotiate very favorable terms to evacuate some captured territory and get back colonies or gain colonies. In effect it would create a CP win due to the balance of gains.

The central powers were collapsing due to a lack of food imports by the time America entered the war.
The Turnip Winter was the low point for CP food supply, it got better over the course of 1917 and into 1918.
 
I put CPs based on the financial issue that has been brought up on these forums time and time again. It doesn't mean an outright CP win, but rather a negotiated peace; since the CPs sat on Entente soil nearly exclusively (other than parts of Alsace and the colonies), the CPs will be able to negotiate very favorable terms to evacuate some captured territory and get back colonies or gain colonies. In effect it would create a CP win due to the balance of gains.


The Turnip Winter was the low point for CP food supply, it got better over the course of 1917 and into 1918.
Because of the capture of the Ukraine, correct?
 

Deleted member 1487

Because of the capture of the Ukraine, correct?
No, because they ended the Hindenburg Program. German food problems in the winter of 1916-17 were mostly self inflicted, as Ludendorff tried to build up production and used up resources for factories that were unable to produce anything because of the limited German resources. By diverting labor and rail assets, plus burning a bunch of resources making new factories Lundendorff created the Coal Crisis, as coal output dropped as all of the above was diverted from coal mining. That in turn created the Transportation Crisis, which mean there wasn't enough trains and coal to get food from the countryside to the cities. That in turn created the Turnip Winter. As they stopped the self destructive industrial expansions scheme coal production went up, there were enough trains available, and people got their rations back up to pre-Hindenburg Program levels. This despite the fact that US entry into the war created a drop in imports from neighboring neutrals, as the US government was able to bring it's considerable economic influence to bare to leverage neutrals and stop their own companies from trading with Germany via said neutrals (wasn't entirely successful, Switzerland, Sweden, and the Dutch were too dependent on German trade to stop and the Allies made allowances for that).
 
Do you have a reference on the French 'preferring' to pay for American goods in gold? I believe the first substantial American war loan to France was facilitated by the British and was in early 1915 and by late 1916 the French were in the same boat as the British - i.e. had little in the way of foreign exchange or collateral for credit. Everyone knew by 1916 that the Entente war effort was increasingly dependent on the US (except seemingly Lloyd George), so I would expect with no USW, the Entente 'blockade' would be on the table.


I'll keep on looking for the reference to French habits which is from the minutes of the British committee responsible for handling combined war finance.

The USW was the key issue that dragged the US into the war. The April 1917 Fed statement was in response to both the German USW and the fact their earlier statement to avoid Entente unsecured debt (at the behest of Wilson) was unambiguous and almost the entire US investor base was avoiding Entente debt. The above Fed statement was not a clarification but a reversal of policy. It signaled the imminent entry of the US into the war.

However while I agree that USW was the key ingredient that brought the US into the shooting war I would also wish to submit evidence that the US Government recognised the value of loans to the Entente to its own economy before that.

Washington, September 6, 1915

My Dear Mr. President:


Doubtless Secretary McAdoo has discussed with you the necessity of floating government loans for the belligerent nations, which are purchasing such great quantities of goods in this country, in order to avoid a serious financial situation which will not only affect them but this country as well.


Briefly, the situation, as I understand it, is this: Since December 1st, 1914, to June 30, 1915, our exports have exceeded our imports by nearly a billion dollars, and it is estimated that the excess will be from July 1st to December 1, 1915, a billion and three quarters. Thus for the year 1915 the excess will be approximately two and [a] half billions of dollars.


It is estimated that the European banks have about three and [a] half billions of dollars in gold in their vaults. To withdraw any considerable amount would disastrously affect the credit of the European nations, and the consequence would be a general state of bankruptcy.


If the European countries cannot find means to pay for the excess of goods sold to them over those purchased from them, they will have to stop buying and our present export trade will shrink proportionately. The result would be restriction of outputs, industrial depression, idle capital and idle labor, numerous failures, financial demoralization, and general unrest and suffering among the laboring classes.


Probably a billion and three quarters of the excess of European purchases can be taken care of by the sale of American securities held in Europe and by the transfer of trade balances of oriental countries, but that will leave three quarters of a billion to be met in some other way. Furthermore even if that is arranged, we will have to face a more serious situation in January, 1916, as the American securities held abroad will have been exhausted.


I believe that Secretary McAdoo is convinced and I agree with him that there is only one means of avoiding this situation which would so seriously affect economic conditions in the country, and that is the flotation of large bond issues by the belligerent governments. Our financial institutions have the money to loan and wish to do so. On account of the great balance of trade in our favor the proceeds of these loans would be expended here. The result would be a maintenance of the credit of the borrowing nations based on their gold reserve, a continuance of our commerce at its present volume and industrial activity with the consequent employment of capital and labor and national prosperity.


The difficulty is -- and this is what Secretary McAdoo came to see me about -- that the Government early in the war announced that it considered "war loans" to be contrary to "the true spirit of neutrality." A declaration to this effect was given to the press about August 15, 1914, by Secretary Bryan. The language is as follows: "In the judgment of this Government loans by American bankers to any foreign nation at war is inconsistent with the true spirit of neutrality."


In October, 1914, after a conference with you, I gave my "impressions" to certain New York bankers in reference to "credit loans," but the general statement remained unaffected In drafting the letter of January 20, 1915, to Senator Stone I sought to leave out a broad statement and to explain merely the reasons for distinguishing between "general loans and credit loans." However, Mr. Bryan thought it well to repeat the August declaration and it appears in the first sentence of division 13 of the letter, a copy of which I enclose.


On March 31, 1915, another press statement was given out from the Department which read as follows:

"The State Department has from time to time received information directly or indirectly to the effect that belligerent nations had arranged with Banks in the United States for credits in various sums. While loans to belligerents h ave been disapproved, this Government has not felt that it was justified in interposing objection to the credit arrangements which have been brought to its attention. It has neither approved these nor disapproved -- it has simply taken no action in the premises and expressed no opinion."


Manifestly the Government has committed itself to the policy of discouraging general loans to belligerent governments. The practical reasons for the policy at the time we adopted it were sound, but basing it on the ground that loans are "inconsistent with the true spirit of neutrality" is now a source of embarrassment. This latter ground is as strong today as it was a year ago, while the practical reasons for discouraging loans have largely disappeared. We have more money than we can use. Popular sympathy has become crystallized in favor of one or another of the belligerents to such an extent that the purchase of bonds would in no way increase the bitterness of partisanship or cause a possibly serious situation.


Now, on the other hand, we are face to face with what appears to be a critical economic situation, which can only be relieved apparently by the investment of American capital in foreign loans to be used in liquidating the enormous balance of trade in favor of the United States.


Can we afford to let a declaration as to our conception of "the true spirit of neutrality" made in the first days of the war stand in the way of our national interests which seem to be seriously threatened?


If we cannot afford to do this, how are we to explain away the declaration and maintain a semblance of consistency?


My opinion is that we ought to allow the loans to be made for our own good, and I have been seeking some means of harmonizing our policy, so unconditionally announced, with the flotation of general loans. As yet I have found no solution to the problem.


Secretary McAdoo considers that the situation is becoming acute and that something should be done at once to avoid the disastrous results which will follow a continuance of the present policy.

Faithfully yours,
Robert Lansing

https://wwi.lib.byu.edu/index.php/U.S._Policy_on_War_Loans_to_Belligerents
Now if you look at the early submissions of Bryan (also included in the above link) when he was Secretary of State he was very much against the allowance of loans but the course of policy which was merely, I would contend, reaffirmed by the Federal Bulletin of April 1917 following on the note of March 1917 to the same effect was actually begun much earlier.
 
I put CPs based on the financial issue that has been brought up on these forums time and time again. It doesn't mean an outright CP win, but rather a negotiated peace; since the CPs sat on Entente soil nearly exclusively (other than parts of Alsace and the colonies), the CPs will be able to negotiate very favorable terms to evacuate some captured territory and get back colonies or gain colonies. In effect it would create a CP win due to the balance of gains.

It might be hard to convince the average German worker let alone the SPD but certainly a negotiated settlement is not off the cards but you do need to define "very favorable terms". Though I would concede that getting better terms than Versailles should be on the cards if Germany does not fall into the trap of trying to outlast the Entente or beat them to death on the battlefield, now suggesting it might try that as a negotiating tactic is viable as long as it avoids making too large claims.
 

Deleted member 1487

It might be hard to convince the average German worker let alone the SPD but certainly a negotiated settlement is not off the cards but you do need to define "very favorable terms". Though I would concede that getting better terms than Versailles should be on the cards if Germany does not fall into the trap of trying to outlast the Entente or beat them to death on the battlefield, now suggesting it might try that as a negotiating tactic is viable as long as it avoids making too large claims.
Territorial gains, losing nothing worthwhile, politically destabilizing enemies (the public won't territorial losses in France and Russia well), smashing up their militaries and derailing their armaments expansion, leaving them with major territorial damages, perhaps negotiating post-war favorable trade deals as part of the arrangement, politically subordinating Vienna to Berlin, etc. It also creates problems within the Entente alliance system and puts them heavily in debt to one another and the US without as strong of means to pay them back. Germany mostly owes money to itself and it's allies own money to it. Germany fighting for total victory would likely lead to more trouble than it's worth.
 
Territorial gains, losing nothing worthwhile, politically destabilizing enemies (the public won't territorial losses in France and Russia well), smashing up their militaries and derailing their armaments expansion, leaving them with major territorial damages, perhaps negotiating post-war favorable trade deals as part of the arrangement, politically subordinating Vienna to Berlin, etc. It also creates problems within the Entente alliance system and puts them heavily in debt to one another and the US without as strong of means to pay them back. Germany mostly owes money to itself and it's allies own money to it. Germany fighting for total victory would likely lead to more trouble than it's worth.

That I don't think you'll see, I did wonder if you maybe meant something along the lines of the Reichstag proposals but you seem more Bethmann Hollweg or Ludendorff in your notions.

The trick for Kaiser Court, Cabinet and General-Staff is making the voters feel included in the decision making and then making the likely less than pleasing economic outcomes (resulting from forcing former markets to build up their own productive capacities or turn to US versions of German goods) post war seem the fault of the Socialists.

Edit: While lacking in territorial gains and the destruction overtly or by stealth of all your enemies were you actually German you might be more open to the idea that the war had been fought to punish Serbian terrorism (which was successful) and would have been a lot shorter and less costly if it were not for the intransigent Entente, even so the growing threat of Russia has been forestalled for the foreseeable thanks to the staunch resolve of the German people and their Kaiser.

No it is not a notion that would please every faction in the Reich but Germany lacked the means to fight on long enough to win pudding for everyone.
 
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Deleted member 1487

That I don't think you'll see, I did wonder if you maybe meant something along the lines of the Reichstag proposals but you seem more Bethmann Hollweg or Ludendorff in your notions.

The trick for Kaiser Court, Cabinet and General-Staff is making the voters feel included in the decision making and then making the likely less than pleasing economic outcomes (resulting from forcing former markets to build up their own productive capacities or turn to US versions of German goods) post war seem the fault of the Socialists.

Edit: While lacking in territorial gains and the destruction overtly or by stealth of all your enemies were you actually German you might be more open to the idea that the war had been fought to punish Serbian terrorism (which was successful) and would have been a lot shorter and less costly if it were not for the intransigent Entente, even so the growing threat of Russia has been forestalled for the foreseeable thanks to the staunch resolve of the German people and their Kaiser.

No it is not a notion that would please every faction in the Reich but Germany lacked the means to fight on long enough to win pudding for everyone.
In a negotiated peace in 1917 the Germans are stilling on Russia, French, and Belgian soil. All they've lost is colonies. What are the Entente going to give up to get peace, because as they've run out of collateral to secure loans and with that the ability to purchase from US companies, they cannot eject the Germans by military force. What are they negotiating with?
 
The short answer: No. There's going to be a mutual peace due to exhaustion.

The long answer: The U.S. sent nearly two million troops to Europe between 1917-1918. It gave the Entente tons of food, supplies, weapons, oil, and unsecured loans. But most importantly (especially for the French), the American entry into the war was a significant morale booster. Take all of this stuff away and there's little chance that the Entente will have the heart (let alone the finances) to continue the war. Especially once Russia falls into anarchy.
 
In a negotiated peace in 1917 the Germans are stilling on Russia, French, and Belgian soil. All they've lost is colonies. What are the Entente going to give up to get peace, because as they've run out of collateral to secure loans and with that the ability to purchase from US companies, they cannot eject the Germans by military force. What are they negotiating with?

Except as pointed out above the US have a vested influence in continuing to sell, a misstatement no matter how many times repeated in the face of evidence to the contrary does not become the truth.

Further as to what they are negotiating with is the very same blockade that brought the German Commissioners to Versailles without further recourse in 1919.
 
I've always thought that the countries involved would come to terms some time late in 1918 or early 1919 due to mutual exhaustion.

What exactly does "mutual exhaustion" mean?

If hostilities cease with a cease-fire "in place" along the existing line of trenches, that's a win for the CP, since the Entente will come to the peace table with no bargaining chips except some worthless German colonies and two corners of the OE. If, OTOH, the Entente has drive Germany out of its conquests (something it has never managed to do even with Russia in the war, let alone without) that is equally clearly a win for the Entente. .


Another likely result would be revolutions in France and Germany.

Both simultaneously?

Any revolution is liable to result in military collapse of the nation concerned, leading to victory for the other - and a victorious power is far less likely to have a revolution.
 

Deleted member 1487

Except as pointed out above the US have a vested influence in continuing to sell, a misstatement no matter how many times repeated in the face of evidence to the contrary does not become the truth.

Further as to what they are negotiating with is the very same blockade that brought the German Commissioners to Versailles without further recourse in 1919.
"The US" isn't a unitary thing. The Government wasn't going to stop sales, just not secure uncollateralized loans. Business would have loved to have kept selling, but was only taking dollars as payment. Finance was too skittish about unsecured loans to keep selling. The Wilson Administration knew the war would end one day so the selling would end eventually, better let it die a natural death than hitch US foreign policy to Entente victory by securing their loans while a non-belligerent. Effectively the lack of US dollars or collateral to raise any is what financially dooms the Entente, not Wilson prohibiting unsecured loans, which he never did and never needed to to having the natural elements of finance divest from Entente loans. The Entente runs out of collateral and Wall Street stops loaning money based on that. So they are out of US supplies.

Germany could continue to supply themselves as the Entente also runs out of food, oil, steel, gun cotton, etc. so combat intensity really dies off, especially as the Italians, French, and Russians all have major political and supply troubles themselves. So the pressure on Germany actually lessens as time goes on, not increases. It wasn't the blockade of 1919 here, because the US isn't in the war enforcing it, while the British navy is running out of American oil to fuel themselves and no money to enforce the blacklist.
 
So in actual fact all you have is assertion, we have been over the oil question in other threads and the finance question before but it is noticeable that rather than citing this previous discussions you choose to rely on your assertions. There is of course a reason for that.

The Royal Navy's fuel supplies 1898-1939 : the transition from coal to oil


Chapters 5 and 6 being most relevant to the discussion.

Is a document I have submitted before and it does detail that certainly the Royal Navy did experience some squeaky bum times with its oil...but not coal supplies and since it was coal fired auxiliary cruisers not the oil fired Grand Fleet destroyer screen nor US that enforced the crucial part of the blockade that was still likely to be effective. I would concede the notion that the British Army might need to reduce the number of offensives it conducted in a given passage of time but again the main Entente weapon was the blockade and again that could be preserved. Further but you might like to examine the consequences of the lack of an unlimited submarine campaign as that is a vital perquisite for non-American entry but also relaxes a lot (though not all) of the Entente supply issues.

As to whether the Entente could continue to raise loans privately the evidence seems to be that they could which is why the US Government preferred to consolidate such lending in its own hands where it was more likely to be leverage for the US rather than a feared hold upon it (whether or not that fear would have held up).

Even in a cash only situation though the Entente armies still had more access to resources than the CP and even just Germany alone and by 1917 were equal and becoming more effective man for man than the German Imperial Army as evidenced by the shifting kill loss ratio in their favour.
 
The finance and hope were what kept the entente in the war after the US entry. They knew that they could hold on until their tactical proficiency approached that of Germany so that their strategic superiority would yeild a result on the battlefield. Without US entry buying that time German tactical superiority would yeild a favourable results.

Just as an aside the merchant uboats allowed trade in high value items between the US and Germany to begin again not long before the US DoW. If the US do not enter the war this programme will continue and counter to a small but significant extent the trade imbalance of the belligerents and give Germany a small political hook into the US.
 

Deleted member 1487

So in actual fact all you have is assertion, we have been over the oil question in other threads and the finance question before but it is noticeable that rather than citing this previous discussions you choose to rely on your assertions. There is of course a reason for that.

The Royal Navy's fuel supplies 1898-1939 : the transition from coal to oil


Chapters 5 and 6 being most relevant to the discussion.

Is a document I have submitted before and it does detail that certainly the Royal Navy did experience some squeaky bum times with its oil...but not coal supplies and since it was coal fired auxiliary cruisers not the oil fired Grand Fleet destroyer screen nor US that enforced the crucial part of the blockade that was still likely to be effective. I would concede the notion that the British Army might need to reduce the number of offensives it conducted in a given passage of time but again the main Entente weapon was the blockade and again that could be preserved. Further but you might like to examine the consequences of the lack of an unlimited submarine campaign as that is a vital perquisite for non-American entry but also relaxes a lot (though not all) of the Entente supply issues.

As to whether the Entente could continue to raise loans privately the evidence seems to be that they could which is why the US Government preferred to consolidate such lending in its own hands where it was more likely to be leverage for the US rather than a feared hold upon it (whether or not that fear would have held up).

Even in a cash only situation though the Entente armies still had more access to resources than the CP and even just Germany alone and by 1917 were equal and becoming more effective man for man than the German Imperial Army as evidenced by the shifting kill loss ratio in their favour.
Most of the blockade was enforced by the blacklist, not cruisers. Auxiliary cruisers were armed merchantmen, who did not enforce the blockade either. Either way the blockade will have a lot more holes than IOTL by 1917 rather than becoming air tight, while British, French, and Italian food supplies become critical. What evidence is there that they could continue to raise loans without collateral? JP Morgan was the only one still loaning them money by March 1917 and they were increasingly skittish about doing so and the amounts they were offering were not fully sufficient either. More than likely their money dries up as Entente prospects to win go out the window and the Russian Revolution happens. The non-resumption of USW does eliminate the convoy system, keeping actual tonnage coming in higher...but also does nothing about the lack of money to buy thing to actually ship across the seas, while still let Germans restricted submarine warfare have a target rich environment to operate in with an monthly average of something like 300k tons sunk per month! No convoys actually means more British ships are sunk in the long term, while they have less money to buy things with.


Just as an aside the merchant uboats allowed trade in high value items between the US and Germany to begin again not long before the US DoW. If the US do not enter the war this programme will continue and counter to a small but significant extent the trade imbalance of the belligerents and give Germany a small political hook into the US.
And it would let the Germans export very high value items like medicines only produced in Germany, which would help raise major funds for continue trade and purchasing of high value items.
 
Most of the blockade was enforced by the blacklist, not cruisers. Auxiliary cruisers were armed merchantmen, who did not enforce the blockade either. Either way the blockade will have a lot more holes than IOTL by 1917 rather than becoming air tight, while British, French, and Italian food supplies become critical. What evidence is there that they could continue to raise loans without collateral? JP Morgan was the only one still loaning them money by March 1917 and they were increasingly skittish about doing so and the amounts they were offering were not fully sufficient either. More than likely their money dries up as Entente prospects to win go out the window and the Russian Revolution happens. The non-resumption of USW does eliminate the convoy system, keeping actual tonnage coming in higher...but also does nothing about the lack of money to buy thing to actually ship across the seas, while still let Germans restricted submarine warfare have a target rich environment to operate in with an monthly average of something like 300k tons sunk per month! No convoys actually means more British ships are sunk in the long term, while they have less money to buy things with.

Well I have submitted documentation in support of my contentions...
 
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