Manifest Destiny is Expensive
America’s financial position was by far the strongest of the wartime Allies, but the post-war period still produced some nasty shocks. The monies spent on the armaments programme following the declaration of war had been almost entirely wasted; within 8 months the war was over, long before any of the new factories, shipyards or training facilities produced anything useful. In addition, millions had been spent on British and French equipment to help equip the American Expeditionary Force. In the months after the armistice, a vast amount of this equipment was delivered, and it was entirely useless.
Brand-new aircraft were sold to French furniture makers for the price of the wood they contained. Local farmers, and even American troops on their way home were offered unfired rifles for a few Dollars each, and everything from tanks to tents was either given away or burned. None of it was worth the cost of transport back to the States.
Around two million American volunteer soldiers had benefitted from a year or so of steady pay, regular meals and training courtesy of Uncle Sam. To many of the poorer, or less educated recruits it had been a boon, but its effects were short-lived as demobilisation proceeded rapidly through 1918.
After the war, America was owed vast sums by the other allies, most of which were secured against good collateral. In theory, she had little to worry about, however by the winter of 1919, the global post-war boom was losing steam. At that time, the British government decided that Dollar-denominated debt repayments would only be made at the pre-war exchange rate of $4.87 to the Pound, rather than the de-facto current rate of between $3.50-$4.00. As almost all the Allies’ credit had been arranged through London, the decision also benefitted France and Italy, who therefore swiftly joined Britain in supporting the measure.
This created a tremendous ruckus among the money men in Washington and New York, but it also had the paradoxical effect of strengthening Sterling, as governments around the world saw that the decision improved the state of British finances. Technically, there was little that the American financiers could do; the Allies were not dishonouring the debts, the collateral was still there, and there was no such thing as a fixed exchange rate.
The more radical among the Irish and German immigrant communities attempted to whip up anti-British feeling over this ‘short changing of America’, but the American public were largely unaffected by these financial machinations. Many more Americans felt satisfied that the country had avoided a long and bloody war, while jingoistic sentiments that ‘Germany surrendered the moment America showed up’ had at least some basis in fact.
However, there was also a general feeling that America had spent and loaned vast sums, and that she should be free to enjoy the benefits of peace. That did not necessarily include spending money on large armaments programmes, and so as the 1920 budget was being prepared, there was much debate within the US government over the future of America's naval program.
Currently funded construction would deliver a fleet of 25 dreadnought battleships and 2 battlecruisers by the end of 1922. Eight of these ships were equipped with 12" guns, and therefore had to be regarded as second-rate vessels. A further eight ships had been authorised, but funds had not yet been appropriated for their construction.
By contrast the Royal Navy either had, or was building, 42 capital ships; a significant margin over 27. Twelve of these were 12" gun vessels, but the Navy Department took note of the rumours that Britain seemed to be keeping some of her older vessels in commission as ‘second class’ battleships - effectively a replacement for the armoured cruisers that had been used before the war on foreign stations.
Given the financial burdens of the war and the greatly increased size of modern ships, American naval strategists assumed that Britain would scale back her building programme to no more than two ships per year, probably starting in 1920. If so, by 1925 the RN might have as many as 48 capital ships, with four to six more under construction.
Meanwhile, it was predicted that by 1925, Japan might have 17-19 such ships, with 4-8 more under construction.
Making the US Navy ‘the single greatest fleet in the world’ would probably require funding for an additional 20 vessels by 1925, while attempting to reach a dominant ‘two power’ standard would require an immense level of construction (the completion of 50-60 capital ships by 1930). Attempting to out-build Britain to such a degree would be a dangerous and provocative tactic that would certainly provoke a response. Given the British record of building ships remarkably quickly, reasoned analysis suggested that even America’s industrial power could not guarantee success for a generation.
On the other hand, adopting a ‘Risk Fleet’ theory with respect any other power was seen as equally dangerous. The strategy hadn’t worked for Germany before or during the war, as it hadn’t allowed them to override the superiority of the British Fleet, with consequent impacts on German wartime trade.
If America were to build such a ‘Defensive Fleet’ (perhaps 70% that of Britain), it would mean accepting British control of global maritime trade for the foreseeable future. Although the USA had ultimately come down on Britain’s side, the realities of war had still been a shock; American trade went only where the Royal Navy allowed it to go.
As the advocates of ‘Dominant Fleet’, ‘Equal Fleet’ or ‘Defensive Fleet’ continued to put their cases to each other, and to the legislature, the capital ships of the 1916 Bill continued to be funded at the typical pre-war rate of two-per-year. The Navy argued that it should have a pair of battleships plus one of the battlecruisers, but Congress wouldn’t budge and told the Navy to choose – either two battleships, or one of each type.
Just as funds for the 1920 ships, Saratoga and Montana, were being passed through Congress, the US Navy received a nasty shock.
