USA doesn't join WW1 but Germany still loses?

[Lucius Verus]

Something of an exaggeration.

Of five US merchantmen sunk in March 1917, only two, the Vigilancia and the Healdton, involved any loss of life. Similarly, in April, of nine US vessels sunk, only the Aztec and Vacuum involved any deaths. [1]

The Germans landed themselves in war with te US for the sake of sinking a small handful of ships, using torpedoes which could equally well have been used on an equivalent number of British or other Entente vessels. They torpedoed themselves in the foot.

[1] For full details see http://www.usmm.org/ww1merchant.html

And Americans can't be passengers or workers? Is there a number I get to kill for free? The declaration of war singled out USW as a cause, let me know how that's changed.

Lookup the Yarrowdale, they took Americans specifically as POWs despite the neutrality. I genuinely think you underestimate sinking the ships of a great power at any time in history, while killing its citizens, and taking others as POWs will be seen as a campaign of aggression.

Are you seriously debating the number? At any time in history incidents like this are seen as acts of aggression, no matter how much the Germans justify it to themselves.

 

[cjc]

Claims not sources. Of course it'll be different, what I disagree with is the response as a simple slider from Entente<--------->Central Powers and the lack of an Entente response. The broad strokes was still against the Central Powers, now let's look at the details.

Where did you get 8 billion from, the amount at the end of the war that they paid off steadily over a hundred years in 2015? Long-term loans were much easier to service being essentially on British credit and spread out over decades. The short-term loans was 1.4 billion over the period and the actual challenge. Looking into it, I'd agree with you, they floated a 500million loan in 1916 through JP Morgan and withdrew another 400million in unsecured loans; which Wilson put a pause on because he thought he can force a settlement. This is well within his power, plays to his personal glory-seeking impulses, and avoids his habit of ignoring congress. This is of course the same Wilson that declared war a year later in response to unrestricted submarine warfare (USW).

For one, its hard to see how the US stays neutral with USW and Americans die by the week; without getting into a POD replacing the Wilson administration the same pressures are there for war and its up to Germany to scale back on USW. There would be less economic and material pressure from few ships sunk; a requirement for American-belligerency instead of war.

"economic orthodoxy was that its international standing was linked to its gold reserves, which were set to run out in early 1917; technically, Great Britain was facing bankruptcy"
Strachan, Hew: Financing the First World War, Oxford 2004, pp. 59-60.

Yet as we know today and as the British found out, value isn't about gold but confidence. The Central Powers would love it that their major concern was the lack of bullion, a matter of confidence as opposed to real material deficits causing inflation and starvation. Given the choice between losing and inflation they will inflate away and as the Germans, Russians and Austrians show they can get a good 2-3 years out of inflation. They knew this will come with hard, possibly permanent damage to British financial domination post-war but it is depth they can use. Much like the central powers should they choose, they can prioritize military nitrates instead of fertilizer; slaughter breeding flocks; cut back on pesticides just like the Central powers did three years earlier with similar effects down the road in 1919-1920; they'd start to starve by then yet the Germans would be long-gone.

Exports was a factor; one the Entente didn't like but should Wilson play hardball with loans they can do it by dialing back offensives and war production. The Central powers in contrast would love the ability to export surpluses and trade, yet they're just stuck with the imbalances.

"The Treasury did not know how many American dollar securities were held in Britain. Obtaining them raised uncomfortable questions for a liberal state at war. Initially the Treasury borrowed securities from holders on a volunteer basis. It was not until 1917 that American dollar securities were sequestrated. Over the life of the scheme, 1915-19, the American Dollar Securities Committee bought or borrowed bonds and shares worth $1,423 million."

Wormell, The Management of the National Debt 2000, p. 180.

Understandable as a democracy with rule of law and a financial center, Britain really didn't want to confiscate American assets from its citizens, yet it was an option and can cover a majority of the 1.4 billion short-term loans.

At the same time, they can sell valuable real-estate like Bermuda or the Caribbean islands, it'd be a hit to imperial prestige; but no where as much of a hit as losing the Great War.

Source: Broadberry and Harrison (2005: 7-10).
Let's subtract Russia, which is soon to be out with its at around 700-800$ per capita and 91 million; and you'd end up with 168 million French and Brits at around 530 billion: the imperial cores alone were still twice the size of the Central Powers economies. It also comes with some hidden advantages; higher personal incomes allow for greater taxation before they hit the impoverishing bottom like Germany. Higher personal income from efficiency and mechanization also means more men to mobilize.

There is plenty Britain alone can tap into, so let's say they economize. This isn't the days of just in time shipping, supply shocks take time to propagate and stockpiles can be relied upon short-term it'd take months-a year to show and respond to. As this happens in April lots of things changes.

1. They can cut back on Romanian shipments, Romania stays out. Germany and AH goes hungrier without Romanian loot, its going to be a cold and hungry winter.
2. Would they still go with the Neville offensive knowing supply shocks a year from now? Probably yes, but it also means longer time to build-up for the next action probably in early 1919. If not then they tone it down, after all one of the basics of siege warfare is starvation and time isn't on the German-side; the defensive such a future shortage causes will be better for French causalities on the defensive. This isn't 1918 where the Entente figured out how to do proper mechanized pushes.
2.5 Should the disasters Neville offensive continue yeah morale will plummet, might be more than IOTL; unknown to the Central Powers wo are busy in the east. The French will need to recoup and be incapable of offensives for at-least a year; so what? Just like IOTL not willing to die attacking is a far cry from letting Germans advance, the French being democratic and capable of learning will put someone like Petain to restore morale. Not that the Germans can do much in the west with 127 German Divisions facing off 106 French, 56 British, and 6 Belgian divisions of similar quality.
3. Russia folds: while the Entente rushes supplies from Feb-Oct, the drain soon stops with the peace-making Bolsheviks.
4. Less men and material are sent to the Salonika front; not that the Bulgarians can do much against mountains anyways; yes they'd last a bit longer not that this imports a single calorie into Bulgaria.
5. They cut back on non-essentials: Britain was 40 % of American trade and it traded more than just war material; they can cut back and prioritize war materials at the expense of farming and consumer goods.

Once again I find it odd that the Entente, faced with different situations (whether finances or material) won't adapt by cutting back on consumption or offensives. That from a position of strength with more men, material, and control of trade can't just sit back on the defensive against an adversary that's deficient in food and material.

Read the TL in progress earlier in the thread if you want details on the food situation.

You do realize the inter reson anybody had any confidence in the British economy was because it didn't "inflate away". If they try that that's going to destroy any American confidence, same with sequestration of American assets especially sense by 1917 all British assets in the US could them selves be taken over do to there dept, this is gust makeing it far less likely America is going to give Britain any help. Especially sense you want America to buy British carabian colonys, wich isn't garintid ithere sense they have to sell them to congress, wich had a very big row over the Danish sale gust a few years before hand and this sale could be isaly seen by the isolationist in congress as supporting Britain, essay killing the deal, assuming Britain would even be willing to sell parts of its Empire as a posed starting Nagotiations with Germany.

 

[phil03]

The one with the USA continuing to deliver…

OTL the congress voted twice to no longer deliver if not paid in kind. Wilson made it clear there won‘t be any unsecured loans. They all changed their mind after the DOW but without that? So far my repeated requests to quote US politicians that were arguing to continue delivering has been met with a blank.

Which they could still get by private loans, even if the terms won't be great.

Main point still stands. The most massive POD possible in 17 and yet a lot of people argue it won’t change a thing until November 18.

That's not a fair depiction. There is a general aknowledgement that it will be far bloodier and harder on the Entente. People just disagree that not having the US in the war would be enough to get the CPs over the line or even a stalemate.

 

[NedStark]

A combination of starvation and Spanish flu saving the day perhaps - Germans would have been hit harder due to being on the verge of starvation, which means the average Germans would have less nutrition and thus weaker immune system.

 

[ferdi254]

Well, some say sometime 19 but a lot have come up with December 18, hardly any change to OTL.

Oh btw, i have put Lucius on ignore so it might be I miss a point made by him. Some time ago I decided to use this reaction if ad hominems are used instead of arguments.

 

[Mikestone8]

Are you seriously debating the number? At any time in history incidents like this are seen as acts of aggression, no matter how much the Germans justify it to themselves.

I was pointing out that the Germans were rather silly to do it. Avoiding a handful of US ships (and sinking an equivalent tonnage of Entente ones [1] )in lieu would have saved them a lot of bother.

[1] Or other neutral ones. Congress almost certainly wouldn't have declared war over the sinking of a Dutch or Norwegian vessel.

 

[Aber]

And?

Short overview of international finance and trade.

Before 1920, 90% of international borrowing was in £STG. This means in practice it was easy to use any financial instruments denominated in £, as you could swap them if you had no direct use yourself. Supplying the UK would give you assets in £, which you could trade with anybody who had liabilities/debts in £.

The UK was not short of cash in 1917. It was short of US$ cash because of the increased purchases; it had a lot of long-term assets in the USA. It had been raising US$ cash by issuing bonds in US$ secured on those US assets. It would have been possible to raise cash by issuing unsecured bonds ie backed only by a promise of the UK government.

If the US government insisted on secured bonds, the mitigations available to the UK included:
- reducing consumption of the items
- increasing production in the UK
- increasing purchases from the Empire
- increasing purchases from neutrals
- purchasing from the US in £, if they could find exporters prepared to take the risk
Proving that the UK would be forced to drop out of the war because its purchases in the USA would be reduced means providing evidence that each of those mitigations would not work.

The downside for the USA is that any significant reduction in Allied purchases would be a major setback for a rapidly growing US economy.

 

[ferdi254]

The funny thing is that the UK treasury thought they could not purchase anymore. I trust thise people somehow.

For steel, food cooper and fuel only reduction of consum would be a feasible solution as none could be bought elsewhere in any sufficient quantity and own production had already been maxed out. For food, possible, for the other materials hardly so in a war.

 

[TDM]

The funny thing is that the UK treasury thought they could not purchase anymore. I trust thise people somehow.

For steel, food cooper and fuel only reduction of consum would be a feasible solution as none could be bought elsewhere in any sufficient quantity and own production had already been maxed out. For food, possible, for the other materials hardly so in a war.

No they didn't (this get's claimed a lot but it's not true, or rather it cites treasury concerns but then ignores the rest of what could be done which the Treasury itself knew), what they knew was their previous preferred and more favorable options for buying were possibly going to be limited. Either through changes in US policy or through running out of USD.

This would force them to employ options that they would prefer not to, not remove all options full stop. See Aber's post for some of them. Plus there were others

Even then they actaully still had options for accessing more USD or USD based assets. It's just it would have taken more and more draconian direct actions that they didn't want to take. And while yes there was some moves being made by US congress to require direct underwriting you will see that this didn't act as a hard shut down. For instance JP Morgan's syndicate was actaully working on it's largest round of contracts just prior to the US entry into the war.

That's not to say the UK treasury was unconcerned, and the war was certainly eating through UK treasury options, and having to access less favorable options was not a good thing. But the situation was not UK can't buy stuff in 1917 if the US doesn't join the war and would be forced to capitulate as is often intimated in these threads.

Because the reality is the UK was a well established empire and financial hub in the world and had been building on that for a long time. The UK and Co had financial strength in depth when it came to how it could keep on financing the war. This is particularly relevant when it comes to an important comparison that often gets overlooked here, that with Germany's economic management of their war effort and economy in general.

Germany as a much newer and less internationally established economy had far fewer options available to it during the war and many of it's choices were limited by and directly exacerbated economic issues that not only bore fruit during the war, but after the war too. And it's not just funding international trade but the whole way the war economy was run. Now to be fair to Germany some of the limitations on the German economic choices here weren't self made but were driven by direct British and entente actions. But that again is a noteworthy point of comparison, Britain was far more able to directly effect the German economy than Germany was able to limit Britain's.

Or to put it another way there are reasons why the British economy grew by 7% during WW1, but the German economy shrank by 27%! Think about that for a second not only did they lose over one quarter of their economic output but they did so while mobilising their economy and fighting a total industrialised war and they didn't even lose territory while doing so. As further point of comparison France's GDP shrank by 24% so a smaller reduction than Germany, but Germany was sitting on 40% of France heavy industry, 14% of it industrial workers, 58% of it steel production and 40% of the coal (all pre war figs)

To reiterate Germany not only lost no territory but gained French* territory and gained control of 40% of France's heavy industry and yet it's economy shrank by more than France's did.

(US economic changes during WW1 is also interesting to look at)

Or if you prefer while the economic dilemma in the UK was 'damn we might have to do some things we'd rather not that might impact our long-term economic international position and standing so as to keep the flow of US goods coming in', vs. Germany where it's 'we need to put the population on 1,000 calories a day and hope there aren't too many more food riots'.

And that last is the key point. Economically WW1 cost Britain & Co immensely there is no doubt about that. It basically accelerated the end of UK's primacy in intentional finances and accelerated the USA taking that role**. And if the US hadn't entered the war in 1917 and offered very favorable financial options for the remainder that impact would have been no doubt worse. But in Germany it's not:

"oh oh , we might lose our position as No 1 international financial power if we don't win quickly",

it's

"our people might starve death if we can't win quickly"

In short, no British war funding of international trade was not about to stop in 1917 only saved by US entry, and more importantly because this war is a contest between opposing sides economically as well as militarily the fact that Britain's economic situation was better and had far more options then Germany's is what matters. Not some comparison to some ideal indefinitely available preferred options for the UK.




* and Belgian territory of course, plus the Belgian war contributions programme

**and of course that's a two sided thing, the US position in this context advanced 1914-18, and that is partly driven by the US being somewhat economically invested in entente victory even prior to their entry (even if some in the US establishment was worried by the risk that entailed, as well as seeing the for want of a better word a 'trap' of getting so economically entangled with one side).

 

[BELFAST]

Short overview of international finance and trade.

Before 1920, 90% of international borrowing was in £STG. This means in practice it was easy to use any financial instruments denominated in £, as you could swap them if you had no direct use yourself. Supplying the UK would give you assets in £, which you could trade with anybody who had liabilities/debts in £.

The UK was not short of cash in 1917. It was short of US$ cash because of the increased purchases; it had a lot of long-term assets in the USA. It had been raising US$ cash by issuing bonds in US$ secured on those US assets. It would have been possible to raise cash by issuing unsecured bonds ie backed only by a promise of the UK government.

If the US government insisted on secured bonds, the mitigations available to the UK included:
- reducing consumption of the items
- increasing production in the UK
- increasing purchases from the Empire
- increasing purchases from neutrals
- purchasing from the US in £, if they could find exporters prepared to take the risk
Proving that the UK would be forced to drop out of the war because its purchases in the USA would be reduced means providing evidence that each of those mitigations would not work.

The downside for the USA is that any significant reduction in Allied purchases would be a major setback for a rapidly growing US economy.

if debts are paid in pound sterling they could cash in those pounds for gold that this would strain the Uk gold reserves.

 

[ArtosStark]

He means total exports for the entire period from DOW to 1918, which is actually $8.6 billion.

Thing is, the Entente does not have to cut the entire import value to zero.

Ah, gotcha.

Looks like a rather stark cut in shipments to 'rest of Europe' in 1918.

Yep. Probably from a combination of factors. For one thing, after US Entry most American (and British) shipping was used for moving American troops to Europe and trying to supply them. But a part of it is also likely the extension of blockade enforcement to the US. The blockade was considerably more effective in Jan 1917 than it had been in 1915, but it was still more effective to control exports of war materials from the largest source.

Without the US in the war there will likely be more holes in the blockade through 1917-18. Not enough to fundamentally change Germany's position but possibly enough to slow the decent somewhat.

For the finances: The USA did not accept sterling if they do not nobody else will.

This has been mentioned by others, but this does not reflect the reality of the 1910's. At that point the US did not set what currency the rest of the world used. If anything, Britain did. The pound was acceptable to basically everyone, including the US. That said, US customers did prefer USD. Wilson's announcement in 1916 also (mostly) put the kibosh on buying foreign currency as well, so it was difficult (though not impossible) for the British to trade beyond their supply of Dollars.

You would have to go for Singapur, Hongkong and the likes to finance more than a week of the war. And before the UK does this they will accept a sqa peace easily.

While I think the chance of selling colonies is remote (This was generally not a measure that governments did for financing), Your provision of a week seems to indicate that most any colony other than HK, or Singapore would go for was about $67 million ($3.5 billion of exports in 1918 divided by 52). Which seems ridiculously low.

same with sequestration of American assets especially sense by 1917 all British assets in the US could them selves be taken over do to there dept

I think you misunderstand what we mean by sequestering American securities. These are not the property of American citizens. These are securities issued by American companies and owned by British citizens which the British government can then sell in the US to raise funds.

 

[ferdi254]

Artos if the USA had accepted pounds then the UK would have gladly used them. But the problem with using pounds is that they were backed up by gold so literally you had to move gold one day. If that does not exist game over.

And just going off the goldstandard would mean an immediate massive drop in the currency ratio. The USA, when they did this in the 70s were ok with that but a UK in the middle of a war droppping the goldstandard?
And for selling colonies? The only ones that the USA might actually be interested in and would not be seen as worse than a sqa peace with Germany were the Carribean ones. 67 mio USD is a good price for them.

 

[BELFAST]

Alright, here's the idea.

The USA manages to keep out as Zimmerman's telegram isn't intercepted. However, the British blockade works its magic and a starving and war weary Germany collapses in 1918-1919. What are the effects on the German people? What is the effect diplomatically? and would Germany even be able to paint this as a real loss or try for stab in the back myth?

A lot depends on how badly the Germans lose.
Without US intervention you may not get the last-ditch offensive in 1918 so more troops to defend the western front.
The collapse will probably come because of food and other shortages in Germany.
A lot will depend on the terms of the treaty without America being involved. OTL German reparations to the US were in the form of patients, not cash so Germany may get to keep it's patients.
A war that lasted long might mean no British or French troops in the Russian civil war.

 

[marathag]

The USA, when they did this in the 70s were ok with that

but not resulting stagflation and then Price Controls used to halt it, that caused a host of other problems. Everyone needed to go off Gold. But the resulting pure fiat currency would have it's own issues once the Governments sees the allure of the Printing Press to solve perceived and real economic issues

 

[TDM]

if debts are paid in pound sterling they could cash in those pounds for gold that this would strain the Uk gold reserves.

True, but the point is there are options.

Something that is often ignored in these threads when the narrative that only the US entry into the war in 1917 saved the UK war effort from economic collapse (sorry not saying you are doing that!)

 

[ArtosStark]

Artos if the USA had accepted pounds then the UK would have gladly used them. But the problem with using pounds is that they were backed up by gold so literally you had to move gold one day. If that does not exist game over.

That is why the British did not use them. Because it was not advantageous. Not because the currency was not acceptable unless the US said so.

And just going off the goldstandard would mean an immediate massive drop in the currency ratio. The USA, when they did this in the 70s were ok with that but a UK in the middle of a war droppping the goldstandard?

They effectively did go off gold during the war .Legally convertibility was not suspended, but gold prices did not set the currency level as they did prior to the war. They spent a huge amount of money trying to maintain the currency as close as they could to prewar exchange rate, but the gold standard was not truly in effect.

 

[Aber]

Without US intervention you may not get the last-ditch offensive in 1918 so more troops to defend the western front.

Germany's problem from 1917 onwards is how to win:
Knocking out Russia is not sufficient as OTL shows
Knocking out the UK needs USW, with all the impact on the USA that involves, plus OTL proves it was not sufficient
Knocking out Italy will not be enough
Taking Paris and knocking out France might be enough
Sitting on the defensive risks their allies falling out through exhaustion - probably first the Ottomans, then Bulgaria, then disintegration of Austro-Hungary. Once the first 2 are gone, the Entente can at least deny Ukraine to the Germans, and threaten a Danube campaign

The 1918 offensive was almost certainly the best chance to win.

The alternative is to find the best "not lose" strategy, which is probably an early generous peace. Give up Alsace-Lorraine, most of the High Seas Fleet and offer to rebuild Belgium, and leave its allies reach what terms they could. Not palatable but difficult for the Entente to refuse.

 

[Wendell]

Germany losing A-L and most/all of its colonies while keeping the prewar borders everywhere else would be a German loss in the war, and one which likely prevents the second world war as we know it.

 

[Lucius Verus]

I was pointing out that the Germans were rather silly to do it. Avoiding a handful of US ships (and sinking an equivalent tonnage of Entente ones [1] )in lieu would have saved them a lot of bother.

[1] Or other neutral ones. Congress almost certainly wouldn't have declared war over the sinking of a Dutch or Norwegian vessel.

Well that's with hindsight and ignores the point of USW. The starving German public demanded retaliation, it was to fight despair in Germany as it was to intimidate outside of it, OHL announced it in hopes of cowing the British and Americans; the same as they've done throughout the war "We're stronger! And you aren't going to cave to our violence then more brutality it is, Rawr! Rawr!" the alternative is to sit hungry in Berlin with no plan to win.

They certainly didn't need to announce it, but grand-standing from strategic desperation and frustration was a feature of German diplomacy.

 

[avernite]

Germany's problem from 1917 onwards is how to win:
Knocking out Russia is not sufficient as OTL shows
Knocking out the UK needs USW, with all the impact on the USA that involves, plus OTL proves it was not sufficient
Knocking out Italy will not be enough
Taking Paris and knocking out France might be enough
Sitting on the defensive risks their allies falling out through exhaustion - probably first the Ottomans, then Bulgaria, then disintegration of Austro-Hungary. Once the first 2 are gone, the Entente can at least deny Ukraine to the Germans, and threaten a Danube campaign

The 1918 offensive was almost certainly the best chance to win.

The alternative is to find the best "not lose" strategy, which is probably an early generous peace. Give up Alsace-Lorraine, most of the High Seas Fleet and offer to rebuild Belgium, and leave its allies reach what terms they could. Not palatable but difficult for the Entente to refuse.

OTL shows knocking Russia is not enough with the USA in the war, though. Who knows what happens in an ATL where the US isn't in but Russia still wants to step out.