PC: CP victory in early 1915 averts Depression?

Hypothetically, if a more efficient Schlieffen Plan succeeds, allowing a Central Powers victory in 1915, could the Great Depression have been avoided, or accelerated?
 
I don't think it could be so easily avoided simply because it wasn't unique - America had had financial panics slightly less than once a decade for a very long time, going back the first half of the 19th Century. There's no reason the timing couldn't have changed, of course, but a financial panic was inevitable, (just as they remain inevitable now) even if it might not have been as big as OTL's depression.
 
Hypothetically, if a more efficient Schlieffen Plan succeeds, allowing a Central Powers victory in 1915, could the Great Depression have been avoided, or accelerated?

It's quite possible, as it was the US entry into the War and the use of war bonds among other things that helped to engender the speculation bubbles of the 1920s. Recessions are cyclical and given the aftermath of the war was bound to cause some financial chaos, some sort of economic malaise was possible but it would occur nowhere near the extent we saw in OTL.
\
 
So, a recession rather than a Great Depression? I was just curious how this might affect the timing of the crisis as well as the power of said event.
 
The depression was not a result of the hyperinflation in Germany following the war. Basically, what happened was there was a lot of "loose" credit around with unsecured loans, very large margin permitted for stock trades etc. When a major bank failed in Austria due to this sort of poor practice, it started a cascade. Think of the home loan crisis/financial failures of the recent past but much worse since many of the safety procedures did not exist then - procedures accumulated over the years to keep things from snowballing totally out of control. The CP winning in 1915 produces huge butterflies, but the question is do they influence the banking/financial/credit practices of the mid-late 1920s enough to prevent this.

Prior bubbles and collapses had been regular occurrences, but world financial systems were not as interconnected as they were by the 1920s.
 
Honestly, I personally think that without an extended war, little to no debt to the United States would probably leave Europe largely unaffected by an inevitable (?) American bank crises, which was itself a result of unchecked credit purchases.

In all, a U.S. bank crisis probably was unavoidable, but it wouldn't have affected the rest of the world the way that it did post-WWI, right?
 
Actually the bank crisis started in Europe, and the crash was actually more European than American at the beginning - the US managed to make it worth with passage of severe protectionist tariffs.
 
Very complex situation leading up to Great Depression. An earlier end to the war would certainly have an effect through lower European indebtedness, fewer tariff barriers and less of an early 1920's depression through a glut on the market of shipping, aircraft and trucks (oh and small arms too).

A Russia continuing to industrialise and open to the world economy and not ravaged by a longer war, War Communism and Civil War is going to alter the timing of the end of the trade cycle as well. But don't get excited, only by about a year - crash of '31 or '32 rather than 1929. They are manufacturing their own goods as well as importing, and market saturation will hit them as well.

But some of the other big drivers aren't affected by a 1915/16 POD. The "Dustbowl" has been building up for over 30 years due to unsustainable and inappropriate farming practice. Without a much earlier POD which avoids ploughing up the buffalo grass on the Great Plains (better treatment of Indians? Much earlier introduction of buffalo ranching?) we are still going to see the Okies in the early thirties.

Another driver is that a major food and fuel crop (oats) have become much less profitable. By 1929 urban horses have largely been replaced by motor vehicles so the demand for fodder crops slumps and people are increasingly eating cold cereals rather than porridge for breakfast. Now OK, the latter use wheat, maize and rice too but there is an enormous displacement in the agricultural market. Tractors and combine harvesters are also making a huge contribution to increased productivity -and hence lower prices, law of supply and demand in operation. So, unless the pace of technological innovation slows massively (which is hugely unlikely with an early end to the Great War) there is going to be an agricultural Depression, largely unavoidable.

And industrially, post WW1 mass manufacturing techniques (many of them derived from wartime munitions manufacturing) bring affordable motor cars and electrical goods within the reach of a large sector of the economy. Now a shorter war would mean less war profits capital to kickstart some of this and some mass production techniques introduced more slowly without three additional years of munitions manufacturing, so again you could push the Depression a year or two down the road. Also without an impoverished Russia and Europe world markets are that little bit larger. But ultimately this market is going to reach saturation (everyone who can afford a car, radio, refrigerator has one and is only going to buy a new one if the old one breaks) and shrink/stabilise until the next generation of technology comes along. Which it will, but not usually just in time to avoid the downturn.

And the Depression is self reinforcing because as people lose their jobs or see their profit margins shrinking they spend less. So other people lose their jobs or see their profit margins shrinking and they spend less...

Now the changes I mention allow for some leeway and you could possibly have a timeline where the agricultural and industrial depressions don't coincide as closely and a more stable world order could push the industrial depression as much as three years further down the road. But I don't think you can avoid the Depression completely -partly down to the business cycle, partly down to inevitable disruptions of introductions of new technologies.
 
Very complex situation leading up to Great Depression. An earlier end to the war would certainly have an effect through lower European indebtedness, fewer tariff barriers and less of an early 1920's depression through a glut on the market of shipping, aircraft and trucks (oh and small arms too).

A Russia continuing to industrialise and open to the world economy and not ravaged by a longer war, War Communism and Civil War is going to alter the timing of the end of the trade cycle as well. But don't get excited, only by about a year - crash of '31 or '32 rather than 1929. They are manufacturing their own goods as well as importing, and market saturation will hit them as well.

But some of the other big drivers aren't affected by a 1915/16 POD. The "Dustbowl" has been building up for over 30 years due to unsustainable and inappropriate farming practice. Without a much earlier POD which avoids ploughing up the buffalo grass on the Great Plains (better treatment of Indians? Much earlier introduction of buffalo ranching?) we are still going to see the Okies in the early thirties.

Another driver is that a major food and fuel crop (oats) have become much less profitable. By 1929 urban horses have largely been replaced by motor vehicles so the demand for fodder crops slumps and people are increasingly eating cold cereals rather than porridge for breakfast. Now OK, the latter use wheat, maize and rice too but there is an enormous displacement in the agricultural market. Tractors and combine harvesters are also making a huge contribution to increased productivity -and hence lower prices, law of supply and demand in operation. So, unless the pace of technological innovation slows massively (which is hugely unlikely with an early end to the Great War) there is going to be an agricultural Depression, largely unavoidable.

And industrially, post WW1 mass manufacturing techniques (many of them derived from wartime munitions manufacturing) bring affordable motor cars and electrical goods within the reach of a large sector of the economy. Now a shorter war would mean less war profits capital to kickstart some of this and some mass production techniques introduced more slowly without three additional years of munitions manufacturing, so again you could push the Depression a year or two down the road. Also without an impoverished Russia and Europe world markets are that little bit larger. But ultimately this market is going to reach saturation (everyone who can afford a car, radio, refrigerator has one and is only going to buy a new one if the old one breaks) and shrink/stabilise until the next generation of technology comes along. Which it will, but not usually just in time to avoid the downturn.

And the Depression is self reinforcing because as people lose their jobs or see their profit margins shrinking they spend less. So other people lose their jobs or see their profit margins shrinking and they spend less...

Now the changes I mention allow for some leeway and you could possibly have a timeline where the agricultural and industrial depressions don't coincide as closely and a more stable world order could push the industrial depression as much as three years further down the road. But I don't think you can avoid the Depression completely -partly down to the business cycle, partly down to inevitable disruptions of introductions of new technologies.

This is really in-depth and helpful, thank you very much!
 
To add on to Shorts post. The 1920s - 30s were a era of change over for a large number of technologies. ie: Coal to oil fuels; railroad to automotive transport; piped natural gas to electrical. Ordinarily these change overs affect specific sectors but dont create major problems across the board. But, in the 1920s a large number of technology change overs occured together. The cumlative effect created large scale 'volatility' in capitol, returns on investment, labor employment. The banking system & business managers were wholly unprepared to cope with this scale of economic change.

Add in the problems of capitol dislocation from the Great War or the huge labor dislocation as agricultural labor was replaced by mechanization and a train wreck was became a collision of multiple trains.
 
Top