No Zimmermann Telegram, how soon does America join WW1 without it?

[ArtosStark]

The matter of the UK no more having the ability to buy, the overdraft they were not able to pay back, their governments thinking they could not go on after summer 17 has been sourced ad infinitum in the threads we had about this topic in the past couple of months.
So either how exactly does the UK pay for copper, oil, food and steel to keep the entente fighting or how do they continue with 75% less artillery shells?

On the overdraft issue, I may have found the post you were referring to. On the most recent discussion we have had on this topic (a little less than a year ago, my mistake):

Could The Entente Win Without America?

And some more lengthy posts about who started it who have no answer to the point who lost it without the USA.

www.alternatehistory.com

They let themself 'flow' into the direction of OTL ... mainly by postponing any decision ... and hoping for the best.
However, they asked veeery cautious and veeery politly Morgans if they might allow them some wee overdraft of their credit line for 'surly' only a short time.
... what eventually amounted to almost 400.000.000 $ (well above anything the british bankers and finance jugglers actally thought of necessary) in May/April 1917.
But by then the US was in the Entente camp

The post is by @NoMommsen.
Assuming I am reading this right, this is not the same as being in overdraft and unable to pay. This is agreeing on a level with JP Morgan that the British could exceed their payments, if they needed to. It’s similar to asking your bank for overdraft protection. It does not mean you owe them that much immediately, it means you have a certain amount they will allow you to be in the red without charging you interest.

And based on the quote, it was considered to be more than what the British financial leaders thought necessary and it was only considered after the US had already entered the war.

Perhaps I am interpreting this incorrectly and this was actually the amount that the British ended up owing JP Morgan by that time? That is not how it sounds on first read however.

 

[Comte de Dordogne]

Well thats your problem, I'm sure Goya is great on military matters but I wouldn't trust his economics.

It is your right not to trust what he says about his economy. However, I am within my rights in not wanting to believe someone on the Internet who does not give his sources.
Finally, I would like to remind you that Michel Goya's sentence on borrowing is only one line long and that the rest of his work dwells on the military (by the way, I don't hide the fact that the error may come from my translation). Why does this single line compromise the entirety of his reasoning?

American intrens into the war itself didn't give Britain the ability to pay, it was congress voting to back British loans whith us tax payers money, most banks wherent will to extend credit whithout it (thats what unbacked loans actually means in this context, banks would never willingly give out loans whithout some backing) this ended up being a non issue sense Britain didn't default after the war but if it had then the us would have had to pay Britain's debts incurred after the bill was passed, which is such a bad look that this bill at the height of jugoistic exuberance in the US was only passed by like 10 votes in the house.

Michel Goya points out that the United States, before entering the war, was already lending heavily to London and Paris. Therefore, according to Goya, there is no reason why American aid to the Entente's economy should abruptly come to an end, even if Washington did not enter the war.
Finally, Goya also insists that London and Paris, although in a bad position in 1917, still had many resources that could be mobilized and were not about to collapse. As my messages and others show, the situation of the Triple Alliance was far more catastrophic.
I would like to have the source of your remarks, I am ready to give them all my confidence if you are able to give them a reliable source.

 

[Asp]

Their supply situation was improving, not worsening when Germany had to tap out.
Absent American troops, there is no kaiserschlact, because they don't have to do that.
If George goes ahead instead say, then most likely the Brits are in a terrible position.
Or they hammer the Italians - that could snowball fast.

Not according to the German data. Malnutrition was rising dramatically, civilian deaths were rising, food riots were increasing. By whatever measure you care to look at, the German position with regard to food supply was in complete and utter disarray.



In which case, they starve.


If George goes ahead, given the impact the American troops had in OTL, it will be very little different to what happened OTL.


Logistics make that questionable. Troops without supply lines aren't that effective. Ask the German troops back at First Marne right at the start in 1914.

The German transport infrastructure was not in an ideal state come late 1917.


It's an underexplored area.

How much opportunity did the Germans have to exploit the food resources in the Brest-Litovsk ceded areas? I'm surprised that didn't help more.

 

[Comte de Dordogne]

How much opportunity did the Germans have to exploit the food resources in the Brest-Litovsk ceded areas? I'm surprised that didn't help more.

I had read (in the same magazine as Michel Goya's article) that Brest-Litovsk, although it had freed up a lot of territory for Germany and partly breathed life into its economy, had been a double-edged victory. The occupation of the land was difficult and the repatriation of the troops to the west much longer because of the distance to overtake the troops.
But as I don't have the article directly with me, take this with a pinch of salt.

 

[Mikestone8]

How does Entente pay? By continuing to do what she has been doing all along.

She has been paying in very large part with money borrowed from the US.

However, the collateral needed to provide security for such loans was pretty well exhausted by the end of 1916. Any loans after that would have had to be *unsecured*, and the Federal Reserve (quite rightly, and with President Wilson's full approval) was warning imnvestors that such loans were unsafe.

Even *after* the DoW, takeup of the First Liberty Loan was poor at first, and had to be stimulated by a tremendous patriotic razmatazz which would have been impossible in a neutral US. And the British government still had to send Arthur Balfour over to convince a sceptical US Treasury of how urgent the financial position was.

 

[Mikestone8]

The value of US exports to the Entente had risen to 600 million per month by January 1917. Wilson was very anti-Wall Street, as were the majority of Democrats at the time. But the risk to the economy went substantially beyond finance, and indeed the core of the potential harm was to US farmers, workers,, etc. who had benefited from enhanced trade.

But there would be a recession anyway at war's end when the war orders would cease. Would it be any worse to have it in 1917, with the next election a safe distance off rather than in say 1919-20, in the run-up to the next Presidential race?

 

[David Flin]

How much opportunity did the Germans have to exploit the food resources in the Brest-Litovsk ceded areas? I'm surprised that didn't help more.

Their transport infrastructure was collapsed. There was food down there, but getting it up there was beyond the wit of the German logistical planners.

 

[Kingfish]

How much opportunity did the Germans have to exploit the food resources in the Brest-Litovsk ceded areas? I'm surprised that didn't help more.

The occupied lands just couldn't provide much anymore. The Germans, Russians and Austro-Hungarians took huge quantities of cattle and other foodstuffs in the first years of the war, and herds didn't have much time to recuperate. Many fields were ruined by fighting, Russia conscripted many men and evacuated large numbers of people before retreating, which left it difficult to cultivate them even if all the refugees managed to return. In addition, the harsh occupation measures (including forced labor for a pittance, requisitions and very small food rations) didn't endear Germany much to the people of Eastern Europe, especially in the Ober Ost. Their token measures to give Poles, Lithuanians etc. self-determination were generally seen for what they were: that is attempts to keep unrest under control, and often didn't change much of how the occupation worked in practice (for instance, in Lithuania, some workers were forced to contracts which de jure meant they weren't working under duress, but they essentially still were and their conditions didn't change). I really recommend the online WWI encyclopedia to have a look at occupation policies and many war-related subjects, it's very good, accessible and well-sourced: https://encyclopedia.1914-1918-online.net/home/

 

[ArtosStark]

She has been paying in very large part with money borrowed from the US.

Less than a fifth of the UK's national debt from the war was foreign debt. The vast majority was domestic borrowing. And of the foreign debt "only" 75% was from the US. That is certainly not nothing, but it is not as much as sometimes assumed. At the same time, the British had lent out more to their allies than they had taken in from other nations, both in total, and specifically in 1914, 1916 and 1917.

However, the collateral needed to provide security for such loans was pretty well exhausted by the end of 1916. Any loans after that would have had to be *unsecured*, and the Federal Reserve (quite rightly, and with President Wilson's full approval) was warning imnvestors that such loans were unsafe.

Actually the Fed Chairmen Benjamin Strong, was a strong supporter of support for the Entente. The move to restrict lending came from Wilson. He instructed the Fed to instruct Banks and private investors to halt foreign currency loans and purchases of foreign securities. This would certainly restrict Entente borrowing, but may not end it entirely if further American securities can be secured in Britain.

 

[ferdi254]

I recommend the threat started last year in July about the same topic which has all the sources in. What if the US never joined WW1.

 

[Mikestone8]

This would certainly restrict Entente borrowing, but may not end it entirely if further American securities can be secured in Britain.

What do you mean by "secured in Britain"?

If the collateral is not in America, how can the US seize it in the event of default?

 

[Mikey]

What do you mean by "secured in Britain"?

If the collateral is not in America, how can the US seize it in the event of default?

Well, we're talking about intangible assets - stocks and bonds issued by American companies. The certificates might be physically in Britain, but that's just the paperwork, if the borrower defaults, you can get a new certificate from the issuer.

The British government had been working for some time to buy or borrow American securities from British citizens (with Pounds), and then use them as collateral to borrow dollars to buy from American exporters. This well wasn't dry by 1916, but it was looking low.

 

[Julian]

Adding some additional context from Martin Horn's Britain, France, and the Financing of the First World War:

The allies’ principal sources of revenue in the United States were gold shipments, securities sales, and borrowing. Gold and securities had constituted more than $600 million of the $1 billion paid by the Treasury in the United States during the May– September period when Ribot had relied heavily on borrowing.12 The British delegates were pessimistic about a continued reliance on gold and securities. Their report emphasized that both of these sources were, if not completely exhausted, nearly so. The accuracy of this assertion is debatable. Sales of British-held American securities from May to September 1916 had yielded just over $300 million. The postwar report of the American Dollar Securities Committee placed total American securities garnered from British investors, whether by purchase or deposit, as of 12 August 1916 at £192,842,000. The sequestering of American dollar securities that occurred in 1917 swelled these amounts considerably. By the time the scheme was wound up in 1919, £216,644,000 had been purchased and a further £405,951,000 was on loan to the Treasury.13 These figures do not take into account British holdings of other attractive obligations, particularly South American securities. When the British delegates claimed that the potential revenue generated from securities “must be regarded as negligible for the future,” their statement was conditional. The condition was a continuance of the present policy, which avoided forcible seizure of securities.

And regarding gold:

Could Britain find more gold internally? Under questioning from Homberg, Reading admitted that the joint-stock banks had not been approached about surrendering their gold. It was, Reading asserted, a necessary element in their creditworthiness and, by implication, that of the British banking system. The discussion rapidly degenerated, with Homberg charging that while the British wanted France to use its gold, they were unwilling to employ theirs. Homberg had a point, for though Britain was still on the gold standard, internal convertibility no longer existed and the justification for the large clearing banks holding gold reserves was not apparent.

The French government also held substantial amounts of its gold and securities in reserve, insisting that it was necessary for maintaining confidence in the Franc despite the fact that France had already abandoned the gold standard during the war altogether:

Homberg and Sergent made it plain that no further deliveries of gold would be forthcoming from France. As the gold reserve of the Bank of France was in excess of £125 million, not counting gold held abroad at the end of December 1916, lack of gold was not the obstacle.15 The fear of currency depreciation and rampant inflation was strong. Despite the divorce between the gold reserve and the money supply embodied in the abandonment of convertibility, Ribot and Bank of France officials continued to insist that possession of a large gold reserve was essential for the stability of the franc.

The question on the convertibility of the pound sterling, in particular, is a complex problem which could have yielded substantial gains at the risk of increased inflation - and therefore declining domestic standards of living - and weaker British credit:

The questions of how far sterling would fall and where it would stabilize were and are unanswerable. Maintaining the sterling peg was consuming dollars and gold that could have been deployed to pay for American orders.67 It was possible to support sterling in New York and to leave the gold standard. The latter did not automatically mean the cessation of the former. Suspending convertibility offered the advantage of greater flexibility in the employment of gold: gold shipments might have been used as collateral for fresh borrowing instead of supporting the exchange. An additional benefit would have been the reduction of tensions with France. Freer access to French gold reserves might have followed.

Which emphasizes that the Allies financial difficulties were a matter of how far they were willing to go to raise additional dollars for purchases in the US than absolute limits reached. Horn is very clear that the Allies were rapidly running out of options within their current strategy in Spring 1917, but they had a suite of other options which they could pursue.

In the end, the Allies may have to make do with reduced purchasing from the US in the long term if similar restrictions on credit continue. If the scale isn't so vast, they could substitute with greater imports of food/raw materials from other sources. If restrictions on purchasing cause significant economic pains in the US, Wilson will face substantial pressure from an already Entente-friendly public to provide some form of relief.

We should recall that even a 20% drop in Allied munitions production in 1917-18 would still have than outshooting Germany 1.5-2:1, and Germany's allies are living on borrowed time come Fall 1918. In the end, the balance of attrition still favors the side with access to the greater balance of the world's raw materials. Even if the Allies finish the war in Spring 1919 limping to the finish line on whatever they have left, Germany will be starving, its munitions production collapsing, and it will be fighting completely alone with a wide open Italian and Balkan front.

 

[ferdi254]

Julian if the material from the USA gets reduced only by 40%, which would be not that much short of a miracle it means the following:

50% less shells for Italy.
30% less shells for the UK and France.
UK and France both on turnip winter rations
30% less activity of the airforce
25% less activity of the RN

Just to name the most important points. Most likely Russia without the money from the USA is out in July latest, freeing up German forces considerably earlier.

And no, importing from other places is not possible. As in physically impossible. There were no more sources of steel, copper, oil and food that were not already tapped. Only insignificant amounts were available but even if they had been the Entente did not have the shipping.

And then there is the fact that Germany was sinking above 400 k tons of allied shipping per month even under cruiser rules. So the Entente will have serious trouble to keep up even that deliveries come March 18. And with reduced fuel it will be hard for the RN to keep up the ASW.

 

[ferdi254]

In this thread a couple of people have assumed the USA would continue sales even if loans were unsecured.

Fact is, knowing how much stop of sales would hurt the economy and knowing that this moment would come soon a law was passed that made unsecured loans illegal.

So anybody claiming the USA would have delivered against unsecured loans is just arguing against a fact. To make the argument fly one would have to quote actual politicians that in March 17 argued to abolish that law. If no such quotes can be found then why would the same politicians who passed a law that no unsecured loans are allowed suddenly change their opinion? Speculation is a nice thing but here it is speculation against a fact.

 

[Comte de Dordogne]

Julian if the material from the USA gets reduced only by 40%, which would be not that much short of a miracle it means the following:

50% less shells for Italy.
30% less shells for the UK and France.
UK and France both on turnip winter rations
30% less activity of the airforce
25% less activity of the RN

Just to name the most important points. Most likely Russia without the money from the USA is out in July latest, freeing up German forces considerably earlier.

And no, importing from other places is not possible. As in physically impossible. There were no more sources of steel, copper, oil and food that were not already tapped. Only insignificant amounts were available but even if they had been the Entente did not have the shipping.

The question I ask you again is why the absence of the entry of the United States into the war causes a decrease in imports with the United States for the Entente?
I have reread all your messages, but at no time do you explain this.
Moreover I am still curious to know where your sources come from, I did not find the older thread you mention. It would be easier if you brought the link here, or even better, the direct sources.

And then there is the fact that Germany was sinking above 400 k tons of allied shipping per month even under cruiser rules. So the Entente will have serious trouble to keep up even that deliveries come March 18. And with reduced fuel it will be hard for the RN to keep up the ASW.

The question I have is how do the Germans continue to sink so many ships without causing Washington to go to war (Zimmerman's telegram or not) ?
Michel Goya, for the credibility of his scenario, assumed that Germany would not engage in full-scale submarine warfare. Is this unrealistic? Possibly, but not as unrealistic as the United States, which let their ships sink without flinching.

In this thread a couple of people have assumed the USA would continue sales even if loans were unsecured.

Fact is, knowing how much stop of sales would hurt the economy and knowing that this moment would come soon a law was passed that made unsecured loans illegal.

The question I ask is why would the loans no longer be guaranteed if the United States did not go to war?
You still haven't explained it. Moreover, other people who know more about economics than I do have shown that the Entente was not short of funds to finance the war. As Goya (and those who have brought more detailed sources after me) says, the American entry into the war partly relieved the war effort of France and the UK, not replaced it entirely.
Without Washington the Entente's victory would have been more difficult but by no means impossible.

So anybody claiming the USA would have delivered against unsecured loans is just arguing against a fact. To make the argument fly one would have to quote actual politicians that in March 17 argued to abolish that law. If no such quotes can be found then why would the same politicians who passed a law that no unsecured loans are allowed suddenly change their opinion? Speculation is a nice thing but here it is speculation against a fact.

How ironic, asking for quotes from your interlocutors when you are the only one not giving any in the discussion.
I ask you again: where are your sources?
Moreover, what do you have to say to the numerous objections that I and others have made to your comments?

 

[kham_coc]

Just to name the most important points. Most likely Russia without the money from the USA is out in July latest, freeing up German forces considerably earlier.

And this is probably the most important - With no US in the war, there is no way the UK could prop Russia up by itself.
And then it doesn't really matter if more money could have been secured.
The reality is that the US provided a vital injection of Morale, Money, and Manpower.
The UK may have been able to scrounge up more money.
The UK and France might have been able to scrounge up more colonial manpower.
But the Russians would have been out without the money and the morale boost of the US.
Then things snowball.

 

[ArtosStark]

What do you mean by "secured in Britain"?

If the collateral is not in America, how can the US seize it in the event of default?

It seemed to me that Mikey and Julian had answered the question better than I could have, so I initially did not answer. It seemed rude to leave it hanging though, so I will back up what they have said. I was referring to American issued securities held by British Citizens.

Julian if the material from the USA gets reduced only by 40%, which would be not that much short of a miracle it means the following:

50% less shells for Italy.
30% less shells for the UK and France.
UK and France both on turnip winter rations
30% less activity of the airforce
25% less activity of the RN

Just to name the most important points. Most likely Russia without the money from the USA is out in July latest, freeing up German forces considerably earlier.

May I ask what this is based on? The turnip winter in particular I am curious about. Britain only instituted rationing in 1918. If they had instituted it earlier, they may have actually been better off. In comparisons between British economic management of WW1 and WW2 it is notable that despite both wars causing the money supply to double, inflation was much better controlled during WW2, partially due to the institution of rationing and price fixes which the WW1 government was reluctant to put in place.

And then there is the fact that Germany was sinking above 400 k tons of allied shipping per month even under cruiser rules. So the Entente will have serious trouble to keep up even that deliveries come March 18. And with reduced fuel it will be hard for the RN to keep up the ASW.

Prior to USW monthly losses were generally well below 200kt which was considered a sustainable loss rate. In some ways I suppose we have drifted off the OP now as we are assuming USW does not occur in addition to the ZT. If just the ZT is butterflied it seems unlikely much changes from OTL. For tangible results USW also has to be butterflied, which means merchant losses remain at their Pre-USW levels.

 

[ArtosStark]

And this is probably the most important - With no US in the war, there is no way the UK could prop Russia up by itself.
And then it doesn't really matter if more money could have been secured.
The reality is that the US provided a vital injection of Morale, Money, and Manpower.
The UK may have been able to scrounge up more money.
The UK and France might have been able to scrounge up more colonial manpower.
But the Russians would have been out without the money and the morale boost of the US.
Then things snowball.

The US loaned very little money to Russia. Of the Russian debt defaulted by the Soviets 80% was held by France while 14% was held by Britain. During the War, the British Government loaned out more money to its Allies (1.741 billion Pounds, About 10% to Empire countries, 32.6% to Russia, 25% to France and 23.7% to Italy) than it took in (1.365 Billion Pounds, 75% from the US, 9.9% from Canada, 2.1% from Japan, 1.4% from Argentina, and 0.9% from Norway).

Its true that American loans helped the British and French feel comfortable enough to continue such loans to Russia, but it was British and French loans that kept the Russians going, not American.

 

[ferdi254]

Artos stark that is based on the fact that 50% of the food that the UK was eating was imported. If you reduce that by 40% it comes to 20% less which was the level of the turnip winter.
All the other figures are based on actual imports.

And one thing here. You made the claim about the 200k tons already once. It is factually wrong. The sinkings in the last 5 months before USW was declared were on average 400k tons plus.
And the British amirality was absolutely desperate about the situation.