Is it true-No Allied victory no depression?

In several threads I've noticed a pattern, such as "What if Central Powers win, what happens to Hitler?" that people seem to think that if the Central Powers win then we don't have the Great Depression. I don't believe that's accurate thinking though. I don't believe the Treaty of Versailles itself can be the POD that keeps the Great Depression from happening. The Great Depression was a result of a correction of the Roaring 20s. Without government brakes on an economy you have huge ups, and then huge downs. The New Deal and government regulations didn't take us out of the Great Depression (WWII military spending did that, and more accurately taking huge numbers of men out of the workforce did the most good truly); but it did in fact keep us from having as severe recession as we would have had and the Great Recession we recently had only occurred once those regulations began to be deregulated in the securities, banking, loaning, and energy markets in particular.

So my question is- can someone give me a rationale for why a Central Powers victory SHOULD butterfly the Great Depression away? And if you can't truly butterfly it away... then Hitler can still become quite a force even in a victorious Germany, or at least in a Germany that didn't LOSE the war but instead went to a status quo or limited its wins for the benefit of keeping out the USA.
 

Deleted member 1487

No Allied victory implies no US involvement in WW1 beyond 1917. So that means there aren't the conditions set for the Roaring 20s. There will be a cyclical, but larger than normal correction after that period, but it won't be a Great Depression. The thing is no US involvement means the Democrats don't get wiped out after the war due to public backlash against involvement and the treaty, while no war probably means no Prohibition will all sorts of knock on effects, no major debt issue with Europe, no over-expansion of industry and deregulation by the GOP, not nearly as much capital accumulation by the US from Britain and France, no hobbled Germany causing major issues in Europe or Soviet Russia doing the same (weakened France and Russia are less of an issue). Frankly the conditions for a Depression like OTL wouldn't be present with the war ending early with German victory. Other issues would be there, just not one triggering a global depression that bad.
 
No Allied victory implies no US involvement in WW1 beyond 1917. So that means there aren't the conditions set for the Roaring 20s. There will be a cyclical, but larger than normal correction after that period, but it won't be a Great Depression. The thing is no US involvement means the Democrats don't get wiped out after the war due to public backlash against involvement and the treaty, while no war probably means no Prohibition will all sorts of knock on effects, no major debt issue with Europe, no over-expansion of industry and deregulation by the GOP, not nearly as much capital accumulation by the US from Britain and France, no hobbled Germany causing major issues in Europe or Soviet Russia doing the same (weakened France and Russia are less of an issue). Frankly the conditions for a Depression like OTL wouldn't be present with the war ending early with German victory. Other issues would be there, just not one triggering a global depression that bad.

There's some pretty far-fetched prediction going on here, but basically I agree. The ONLY way you can imagine a CP victory is to have the US stay out of the war. Most likely, this means the war ends in 1917 or probably earlier. While I don't see what Prohibition has to do with it, many of the economic and deregulatory factors that led to and helped worsen the 1929 Wall Street Crash which triggered the Great Depression might well not be present in a situation where Woodrow Wilson not only lived up to his 1916 election promise to"keep us out of the War", but possibly earned a Nobel Peace Prize for helping to negotiate an end to it. As Wiking noted, there probably would be the normal postwar economic corrections in Europe as countries revert to peacetime economies, but nothing as serious as the Great Depression.
 
No Allied victory implies no US involvement in WW1 beyond 1917. So that means there aren't the conditions set for the Roaring 20s. There will be a cyclical, but larger than normal correction after that period, but it won't be a Great Depression. The thing is no US involvement means the Democrats don't get wiped out after the war due to public backlash against involvement and the treaty, while no war probably means no Prohibition will all sorts of knock on effects, no major debt issue with Europe, no over-expansion of industry and deregulation by the GOP, not nearly as much capital accumulation by the US from Britain and France, no hobbled Germany causing major issues in Europe or Soviet Russia doing the same (weakened France and Russia are less of an issue). Frankly the conditions for a Depression like OTL wouldn't be present with the war ending early with German victory. Other issues would be there, just not one triggering a global depression that bad.

I can agree on everything and wonder if the 18th amendment on prohibition might be butterflied, could the 19th amendment be as well or at least delayed?
 

Deleted member 1487

There's some pretty far-fetched prediction going on here, but basically I agree. The ONLY way you can imagine a CP victory is to have the US stay out of the war. Most likely, this means the war ends in 1917 or probably earlier. While I don't see what Prohibition has to do with it, many of the economic and deregulatory factors that led to and helped worsen the 1929 Wall Street Crash which triggered the Great Depression might well not be present in a situation where Woodrow Wilson not only lived up to his 1916 election promise to"keep us out of the War", but possibly earned a Nobel Peace Prize for helping to negotiate an end to it. As Wiking noted, there probably would be the normal postwar economic corrections in Europe as countries revert to peacetime economies, but nothing as serious as the Great Depression.
Prohibition was partly the result of anti-German sentiment and was near run enough to prevent its passing if there is no war and thus anti-German public campaigns; Prohibition created organized crime on a scale unknown in the US and created all sorts of underground economies that helped contribute to the general attitude of wild spending and economic excess. Kind of like cocaine and the 1980s.

I can agree on everything and wonder if the 18th amendment on prohibition might be butterflied, could the 19th amendment be as well or at least delayed?
IMHO yes the 19th would be delayed without women working in the war effort.

https://en.wikipedia.org/wiki/Nineteenth_Amendment_to_the_United_States_Constitution#Background
Carrie Chapman Catt was instrumental in the final push to gain ratification of the Nineteenth Amendment. In 1900, she succeeded Susan B. Anthony as the president of the National American Woman Suffrage Association (NAWSA). Starting in 1915, Catt revitalized NAWSA and led a successful campaign in New York to achieve state-level suffrage in 1917. When the U.S. entered World War I, Catt made the controversial decision to support the war effort, despite the widespread pacifist sentiment of many of her colleagues and supporters.[18] NAWSA women’s work to aid the war effort turned them into highly visible symbols of nationalism.
The republican work of NAWSA stood in contrast to the more radical and aggressive tactics of the National Woman's Party (NWP) led by Alice Paul and Lucy Burns. In 1917, the NWP staged controversial demonstrations in Washington, D.C. to draw attention away from the war and back to women’s suffrage. Catt was successful in turning NAWSA into a patriotic organization, entirely separate from the NWP, and was rewarded when President Wilson spoke out in favor of women’s suffrage in his 1918 State of the Union address before Congress.[19]
 
Prohibition won't be butterflied and neither will the depression. There's no reason for them to be. They weren't random events.
 
Prohibition won't be butterflied and neither will the depression. There's no reason for them to be. They weren't random events.

No one is saying they were random events, what people ARE saying is that the economic factors and governmental philosophies that caused and/or extended OTL's Great Depression might not exist (or be reduced in severity) if WW1 ended in 1916-17 with a CP victory (Who won is actually irrelevant, however).

My own view is that Prohibition wouldn't be butterflied since it was a combination of uniquely American religious zeal, puritanism, and early feminism that was not related to the Great War or attitudes about Germans. I also don't think Prohibition had any causal effect on the Wall Street crash.
 
Sorry but as a technicality can we stop calling the entente the allies.
WW1 was the entente vs the allies. The German side was the allies side.

Anyway. On topic economic history would of course take a different course in this scenario thus the depression as we know it would obviously be gone. There would however likely be troubles of a different kind.
It would be quite an interesting situation with the German settlement and investment in the east being a major development.
Though the destruction of british power... I have to say there's probably a depression in itself right there.
 
Sorry but as a technicality can we stop calling the entente the allies.
WW1 was the entente vs the allies. The German side was the allies side.

Anyway. On topic economic history would of course take a different course in this scenario thus the depression as we know it would obviously be gone. There would however likely be troubles of a different kind.
It would be quite an interesting situation with the German settlement and investment in the east being a major development.
Though the destruction of british power... I have to say there's probably a depression in itself right there.
Well on your technicality... The Allies were the Triple Entente before WW1, and the Central Powers were the Triple Alliance before WW1. Usually Entente is used to classify the Allies of WW1, so as to be able to more easily differentiate between the Triple Alliance, the WW1 Allies, and the WW2 Allies.

So going by Pre-War classifications, the war was the Triple Alliance vs the Triple Entente, however going by Post-War classifications, the war was the Allies vs the Central Powers.
 

tenthring

Banned
Some of the factors that led to the Depression are so big picture that I don't think anything butterflies them, but I'll deal with the pro-argument first.

A major source of economic problems after WWI was the attempt to return the value of the British Pound to pre-war levels. This didn't reflect economic reality post war, and as such it mainly meant the USA keeping its currency weak and creating a credit bubble to do so. This is part of why there was such a large economic bubble. In a CP win scenario that flies out the window, so its possible the US pursues a different monetary policy in the 20s.
 
Part of the reason Prohibition passed was WWI - "mothers" concerned about morality of boys away in military (why Storyville was shut down in N.O. by the Navy) and also the fact that many of the voters who could apply influence of state legislators were away in the military. So absent WWI good odds no Prohibition.

The reasons behind the depression were multifocal - btw in a CP wins (or a white peace/USA neutral) WWI you'll still see a boom in the 1920s in the USA. As the only major power untouched by the war, they will be the engine of rebuilding Europe. This means the over-heated stock market, excess margin, etc may still be there.
 
Some sort of large-scale economic turmoil is very likely, that turmoil may take a different form than the Great Depression though.

With a PoD anytime after 1900, the US in the '20s would still be a major economy, would still be integrating more closely with the rest of the world and thus would still likely cause global economic crisis if she suffered an economic crisis.

There's also the downside of the CPs winning WW1 - Germany, Austria Hungary and the Ottoman Empire would be more important economically than they were in OTL. The banking and business classes in these Empires were just as able to mess up as the American, British or French banking and business classes were. It is easy to see the German central bank crashing the world economy by making a slightly wrong call in the same way that the American central bank crashed the world economy in OTL, even if different economic theories make it likely that the form of any mistake would look different.

fasquardon
 
Wouldn't a victorious Germany still have to deal with hyperinflation and the failure to establish a real war economy during the conflict? Plus whatever it costs to still field occupation armies in the east, if the empire decides to take on the early USSR.
 

Deleted member 1487

Wouldn't a victorious Germany still have to deal with hyperinflation and the failure to establish a real war economy during the conflict? Plus whatever it costs to still field occupation armies in the east, if the empire decides to take on the early USSR.
Inflation was an issue, hyperinflation was caused by Versailles payments and French looting of the Ruhr in 1923. So they would have issues, but in peace they would be able to be resolved within a few years.
 
Inflation was an issue, hyperinflation was caused by Versailles payments and French looting of the Ruhr in 1923. So they would have issues, but in peace they would be able to be resolved within a few years.

Hyperinflation began before Germany started making payments on the Versailles indemnity and before the French (and Belgians and Italians - let's not whitewash here) occupied the Ruhr. So while both of these are clearly contributory factors to how bad hyperinflation became, they are not the cause.

The real cause was that (a) the German government had more demands on its resources than it could cover from its income (mostly due to the fact that they'd just fought an enormous war against most of the world), (b) the German government was unwilling to raise taxes to meet its obligations, (c) the economic theories current in Germany (and Austria) at the time believed that more money in circulation in an economy was an unalloyed good, so the prominent economists of the time were actively encouraging the government to print money.

As such, I think Germany is highly predisposed to experience extremely high inflation in the post-war era, even if they win. It is likely that a victorious Germany would not experience inflation as bad as OTL's Germany though. If nothing else, the German government will command greater confidence.

That said, no hyperinflation isn't necessarily a good thing - OTL's hyperinflation essentially wiped out the German war debt, allowing Germany to start from a (relatively) clean slate, as compared to Britain, which had the least post-war inflation and never really recovered from WW1 or France, where post-war inflation was severe, but still left sufficient value in the war debts that French voters followed some truly suicidal strategies in order to cling on to the value remaining in their war bonds.

Of course, one can argue that by not ruining their middle classes via inflation, Britain and France both got political stability.

fasquardon
 

Deleted member 1487

Hyperinflation began before Germany started making payments on the Versailles indemnity and before the French (and Belgians and Italians - let's not whitewash here) occupied the Ruhr. So while both of these are clearly contributory factors to how bad hyperinflation became, they are not the cause.
No, inflation began during the war, hyperinflation began with the payment of the last German gold reserves in 1921:
https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic#Hyperinflation
The Treaty of Versailles further accelerated the decline in the value of the Mark, so that by the end of 1919 more than 32 paper Marks were required to buy one US dollar.[3]

German currency was relatively stable at about 90 Marks per US Dollar during the first half of 1921.[4] Because the Western theatre warfare was mostly in France and Belgium, Germany had come out of the war with most of its industrial power intact, a healthy economy, and in a better position to become the dominant force on the European continent.[5] However the "London ultimatum" in May 1921 demanded reparations in gold or foreign currency to be paid in annual installments of 2,000,000,000 (2 billion) goldmarks plus 26 percent of the value of Germany's exports.[6]


The first payment was made when due in June 1921.[7] That was the beginning of an increasingly rapid devaluation of the Mark which fell to less than one third of a cent by November 1921 (approx. 330 Marks per US Dollar). The total reparations demanded was 132,000,000,000 (132 billion) gold marks, of which Germany only had to pay 50 billion marks (a sum less than what they had offered to pay).[citation needed]
Because reparations were required to be repaid in hard currency and not the rapidly depreciating Papiermark, one strategy Germany employed was the mass printing of bank notes to buy foreign currency which was in turn used to pay reparations. This greatly exacerbated the inflation rates of the paper mark.[8][9]

During the first half of 1922, the Mark stabilized at about 320 Marks per Dollar. This was accompanied by international reparations conferences, including one in June 1922 organized by U.S. investment banker J. P. Morgan, Jr.[10] When these meetings produced no workable solution, the inflation changed to hyperinflation and the Mark fell to 800 Marks per Dollar by December 1922. The cost-of-living index was 41 in June 1922 and 685 in December, a 15-fold increase.
In January 1923 French and Belgian troops occupied the Ruhr, the industrial region of Germany in the Ruhr valley to ensure that the reparations were paid in goods, such as coal from the Ruhr and other industrial zones of Germany. Because the Mark was practically worthless, it became impossible for Germany to buy foreign exchange or gold using paper Marks. Instead, reparations were paid in goods. Inflation was exacerbated when workers in the Ruhr went on a general strike, and the German government printed more money in order to continue paying them for "passively resisting."[11]


By November 1923, the American dollar was worth 4,210,500,000,000 German marks.[12]

The real cause was that (a) the German government had more demands on its resources than it could cover from its income (mostly due to the fact that they'd just fought an enormous war against most of the world), (b) the German government was unwilling to raise taxes to meet its obligations, (c) the economic theories current in Germany (and Austria) at the time believed that more money in circulation in an economy was an unalloyed good, so the prominent economists of the time were actively encouraging the government to print money.
See above by the time the war ended inflation stabilized and the economy was under control provided they didn't have to pay reparations; if they got out of that they could roll back inflation within a few years. The currency was gold backed, so it comes down to accumulating gold to balance out the paper currency supply, which France did post-war.

As such, I think Germany is highly predisposed to experience extremely high inflation in the post-war era, even if they win. It is likely that a victorious Germany would not experience inflation as bad as OTL's Germany though. If nothing else, the German government will command greater confidence.
Why? They could buy up gold after the war and resolve inflation because they had a gold backed currency; experience with inflation during the war already proved that it needed to be resolved, it was just a matter of getting access to world markets again and a gold supply they could buy up.


That said, no hyperinflation isn't necessarily a good thing - OTL's hyperinflation essentially wiped out the German war debt, allowing Germany to start from a (relatively) clean slate, as compared to Britain, which had the least post-war inflation and never really recovered from WW1 or France, where post-war inflation was severe, but still left sufficient value in the war debts that French voters followed some truly suicidal strategies in order to cling on to the value remaining in their war bonds.

Of course, one can argue that by not ruining their middle classes via inflation, Britain and France both got political stability.

fasquardon
Germany didn't really have war debt externally, it was all internal and not an issue if they inflated a bit more, which they could have with a bit of discomfort before stabilizing the currency via gold accumulation. Germany can pay off its debts much more readily than Britain or France due to its greater export/industrial economy, as Britain suffered from the fact that it gave away its position as a financial capital to New York and the US, while France was still stuck in the luxury/finished goods economy. Germany had a much stronger economic base to recover from the war, especially in victory, so the war debt would be a non-issue really.
 
Eh... I would say there might be a Great Depression, it's just that the causes behind it might be rather different. It is rather dependent on both the nature of the CP victories and the butterflies afterwards.
 

CalBear

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Economic down cycles are inevitible. The Depression was the worst in "modern times" mainly because it hit at a point when most of the world was still clawing back from the War and its debts. The Central Powers winning won't alter that reality.
 
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