World trade without WW2 and Bretton Woods?

  • Thread starter Deleted member 1487
  • Start date

Deleted member 1487

Without the creation of the currency system at Bretton Woods in 1944 and the establishment of the US as leader of said system, what would world trade look like if WW2 never happened and Europe and Asia aren't knocked out of their global positions?
https://en.wikipedia.org/wiki/Bretton_Woods_system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western Europe, Australia and Japan in the mid-20th century. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states. The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate (± 1 per cent) by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments. Also, there was a need to address the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well.
 
Two things affect the US economy w/o WWII:

First: the US industrial base is not rebuilt & vastly expanded. From 1938 through 1945 there was a massive reconstruction of the US industrial base, financed at extremely low interest rates. Close to 25% of the railways were completely rebuilt & over 80% refurbished or upgraded by 1945. The aircraft industry went from perhaps 4,000 airframes per year to well over 100,000 during 1944. Along with this went four years of OJT experience for the labor force, including management, and a crash course in formal schooling. When the shooting ending in 1945 The US had well prepared work force and a full state of the art tool kit.

Second: OTL the competition was essentially burned to the ground. Britian was the only other industrial power that survived with its industrial plant close to intact. After that is was small players like Sweden, Argentinia, Australia, or S Africa . The US had close to a decade before Europe or anyone in Asia were competitive.

Absent all that US recovery from the Depression drags on through the 1940s. & the industrial plant of 1945 or 1950 is in no way comparable to that of OTL.
 
Last edited:

Deleted member 1487

Two things affect the US economy w/o WWII:

First: the US industrial base is not rebuilt & vastly expanded. From 1938 through 1945 there was a massive reconstruction of the US industrial base, financed at extremely low interest rates. Close to 25% of the railways were completely rebuilt & over 80% refurbished or upgraded by 1945. The aircraft industry went from perhaps 4,000 airframes per year to well over 100,000 during 1944. Along with this went four years of OJT experuinece for the labor force, including management, and a crash course in formal schooling. When the shooting ending in 1945 The US had well prepared work force and a full state of the art tool kit.

Second: OTL the competition was essentially burned to the ground. Britian was the only other industrial power that survived with its industrial plant close to intact. After that is was small players like Sweden, Argentinia, Australia, or S Africa . The US had close to a decade before Europe or anyone in Asia were competitive.

Absent all that US recovery from the Depression drags on through the 1940s. & the industrial plant of 1945 or 1950 is in no way comparable to that of OTL.

At the same time their trade partners in Europe and Asia aren't destroyed. Japan probably does their thing in China, which drags on but the US doesn't get the final sanction regime in response to the Japanese moving on Indochina (not happening without the Fall of France), so trade still remains there. So while US domestic markets and production don't reach OTL levels, they do have a lot more opportunity for trade around the world in the 1940s-50s, plus no Cold War. Not sure that that offsets the boons of WW2 for the US, but it would mitigate the downside a bit. I'd image the US would still do some military build up due to Japanese aggression in Asia, which would help even if there is no war in the end.
 

Deleted member 1487

WO Bretton Woods, Germany would have AGAIN massively inflated its currency to pay war reparations.
How so if there is no WW2? Without WW2 Germany is not continuing on an armaments program so had the trade network set up by the later 1930s in the absence of unsustainable military spending to raise money and start paying on their OTL defaulted loans (done in 1934 IIRC). By 1932 reparations were put on hold and effectively cancelled when Hitler started rearmament and no one was going to bring it back, even if something happened that Germany doesn't go to war in Europe. The only debts then were defaulted foreign loans mostly owed to the US and Britain, which they could pay if they stopped military spending.
 
This is a very interesting question and a very difficult one.

It does depend significantly on what happens instead of WW2 and the subsequent postwar settlement.

However, I must say that the more I've read into the economic problems in the interwar period, the less I am inclined to think that they would go away on their own. WW2 caused structural changes (in both victorious and defeated powers) that I can't see happening any other ways - and for the most part those structural changes were good (for example, education in the US became much more widely available to their great advantage). Similarly, due to the trauma of war and the power of the US to dictate the terms to everyone else if arguments caused some initiative to get stuck, the countries of Europe, America and Asia were interested in and able to construct an international system that tore down a slew of barriers.

Without all that, the economic problems of the interwar period continue, trade increases at a much slower pace, trade between developed states is smaller, even in relative terms as the interconnections between imperialist states and their colonies are stronger, science and technology is probably at roughly the same level by the end of the 20th century (but with more examples of re-invention of the same things).

Japan probably follows a similar development path to OTL's Soviet Union (the thing that really differentiated the two was that after WW2 the Japanese could not follow an autarkic development path, which allowed them to be much more efficient than the Soviets). America's economy follows a path more similar to Europe in OTL, with much higher levels of structural unemployment. Some sort of European economic integration occurs. Assuming no great power war, there are lots of smaller wars. The British Empire is doomed and at least downsizes significantly, both the Soviet Union and the Japanese Empire face some sort of crisis similar to the Soviet economic crisis of the 80s - the exact timing of the Japanese crisis depending on when exactly they hit "peak coal" for their empire. We may however see a continuing age of imperialism instead of OTLs cold war, with Empires changing in structure and the ranks of the colonial powers losing members and gaining new ones but with the overall relations between great powers and non-powers remaining much the same.

fasquardon
 

Deleted member 1487

This is a very interesting question and a very difficult one.

It does depend significantly on what happens instead of WW2 and the subsequent postwar settlement.

However, I must say that the more I've read into the economic problems in the interwar period, the less I am inclined to think that they would go away on their own. WW2 caused structural changes (in both victorious and defeated powers) that I can't see happening any other ways - and for the most part those structural changes were good (for example, education in the US became much more widely available to their great advantage). Similarly, due to the trauma of war and the power of the US to dictate the terms to everyone else if arguments caused some initiative to get stuck, the countries of Europe, America and Asia were interested in and able to construct an international system that tore down a slew of barriers.

Without all that, the economic problems of the interwar period continue, trade increases at a much slower pace, trade between developed states is smaller, even in relative terms as the interconnections between imperialist states and their colonies are stronger, science and technology is probably at roughly the same level by the end of the 20th century (but with more examples of re-invention of the same things).

Japan probably follows a similar development path to OTL's Soviet Union (the thing that really differentiated the two was that after WW2 the Japanese could not follow an autarkic development path, which allowed them to be much more efficient than the Soviets). America's economy follows a path more similar to Europe in OTL, with much higher levels of structural unemployment. Some sort of European economic integration occurs. Assuming no great power war, there are lots of smaller wars. The British Empire is doomed and at least downsizes significantly, both the Soviet Union and the Japanese Empire face some sort of crisis similar to the Soviet economic crisis of the 80s - the exact timing of the Japanese crisis depending on when exactly they hit "peak coal" for their empire. We may however see a continuing age of imperialism instead of OTLs cold war, with Empires changing in structure and the ranks of the colonial powers losing members and gaining new ones but with the overall relations between great powers and non-powers remaining much the same.

fasquardon
I think we can say that the downfall of the British, French, Belgian, and Dutch empires over time will generate a lot of OTL's trade, but perhaps later in some cases, perhaps sooner in others. China of course will be a huge mess in the long term, as will Japan. The USSR would actually be less of one, as due to the losses from WW2 the never recovered their rate of pre-1941 growth after the war, and would likely have filled the role that it was with Germany now: as a energy supplier and buyer of its technical exports, probably on a barter agreement.

As for a POD, let's say Hitler dies of natural causes after Anschluss, so Goering takes over after a power struggle and has to delegate some of the powers of the office of Führer and cannot continue on with Hitler's war plans. Instead Germany is forced to contend with their economic issues as Goering is less politically stable than Hitler and he dramatically tones down military spending to shore up its export markets. No more foreign adventures after the end of the Spanish Civil War. Maybe Hjalmar Schacht comes back and sets trade policy. The point is that trade takes over from military expansion and foreign adventures and the 'Grossraumoekonomie' is set up in the Balkans, while trade deals are worked out with the Soviets and maintained with Poland, plus of course the Spanish and Latin American deals, but trade with China drops off was China loses its ports to Japan.

I wonder whether if Japan isn't a threat in Europe whether the Europeans would join in with the US to embargo her and force her to back down under threat of military force from all the major navies of the world. In that case China then opens back up to world trade and the world benefits, while Japan avoids complete economic isolation and a ruinous war, but doesn't really get modernized during US occupation.
 
Last edited by a moderator:
I think we can say that the downfall of the British, French, Belgian, and Dutch empires over time will generate a lot of OTL's trade, but perhaps later in some cases, perhaps sooner in others. China of course will be a huge mess in the long term, as will Japan. The USSR would actually be less of one, as due to the losses from WW2 the never recovered their rate of pre-1941 growth after the war, and would likely have filled the role that it was with Germany now: as a energy supplier and buyer of its technical exports, probably on a barter agreement.

Actually, without WW2 I would lay good odds on the French being able to retain most of their Empire - Algeria is rather likely to achieve independence and Vietnam somewhat less so, but still likely. The rest, however, I can see staying in some sort of close political and economic union with France. The Dutch have reasonable odds of retaining their empire, Belgium... Yes, probably they'd lose the Congo (get rid of it, more likely, as they can't get away with the monstrous practices they used to strip wealth from the colony any more).

I think Italy has a pretty good shot at maintaining control over its empire, similarly with Spain and Portugal.

The problem for the USSR, as I touched on, is autarky. By the end of the 70s, the USSR was running out of easily accessible coal and oil. As a result, they were pouring vast amounts of resources into developing Siberian resources. I think a complete collapse of the USSR is unlikely (no WW2 means more competent managers surviving into the 80s!) But certainly the Soviet system is going to face a crisis at some point between 1970 and 1990.

As for a POD, let's say Hitler dies of natural causes after Anschluss, so Goering takes over after a power struggle and has to delegate some of the powers of the office of Führer and cannot continue on with Hitler's war plans. Instead Germany is forced to contend with their economic issues as Goering is less politically stable than Hitler and he dramatically tones down military spending to shore up its export markets. No more foreign adventures after the end of the Spanish Civil War. Maybe Hjalmar Schacht comes back and sets trade policy. The point is that trade takes over from military expansion and foreign adventures and the 'Grossraumoekonomie' is set up in the Balkans, while trade deals are worked out with the Soviets and maintained with Poland, plus of course the Spanish and Latin American deals, but trade with China drops off was China loses its ports to Japan.

Germany toning down its military spending after Anschluss means economic collapse - which is massively preferably to WW2 for Germany, but still has a good shot at ending the Nazi regime.

I agree that there will be more trade and German influence in Eastern Europe and the Balkans, in the long run.

I don't think that trade between Germany and South America will ever be on the same level as trade between Germany and Eastern Europe.

Also, in a scenario like this, you may see a sort of German colonial empire forming as Germany supports anti-colonial movements in hostile empires and, where those movements are successful, end up maintaining German-aligned regimes similar to cold war client states.

I wonder whether if Germany isn't a threat in Europe whether the Europeans would join in with the US to embargo her and force her to back down under threat of military force from all the major navies of the world.

If Germany isn't a threat, I don't see why the other powers would unite against her.

We may see a cold war situation develop on the continent if people got particularly paranoid, but I can't see more than that happening.

In that case China then opens back up to world trade and the world benefits, while Japan avoids complete economic isolation and a ruinous war, but doesn't really get modernized during US occupation.

The rise of China as we know it is highly unlikely in a TL without WW2. In OTL, China was assisted by massive technology transfer from the Soviet Union to China which would not happen without a Communist victory after the civil war and then followed by a smaller, but still significant transfer from the USA to China which would not happen without the Cold War. As such, in a TL with a Sino-Japanese war but without WW2 and a Cold War, China is likely to have a much slower rise.

Also, if Japan is less developed, that is bad for China - Japan was a very important export market for China (even at the height of the cold war).

fasquardon
 

Deleted member 1487

Germany toning down its military spending after Anschluss means economic collapse - which is massively preferably to WW2 for Germany, but still has a good shot at ending the Nazi regime.
The money gained from the Austrian central bank would be enough to start the shift away from armaments, plus they had an economy predicated on flexible production, not mass production, so had the ability to more rapidly retrain and shift production to export instead of military goods. Also there was a larger market for German weapons in the world IOTL, but export controls prevented weapons exports because they impeded rearmament, here they would export weapons to raise money to shift away from military production if needed.
Also Britain was offering bridge loans to Germany IOTL to get them to abandon rearmament after the Munich deal in 1939, Goering would just have to accept and end rearmament using bridge loans to convert production without major economic problems in the transition period.

I agree that there will be more trade and German influence in Eastern Europe and the Balkans, in the long run.

I don't think that trade between Germany and South America will ever be on the same level as trade between Germany and Eastern Europe.
Latin American trade actually was bigger than all Balkan trade combined and in fact Germany totally dominated the entire Latin American pharmaceutical market among other things. Schacht had worked out barter deals with Latin American countries in the mid-1930s, which were quite lucrative, so that trade was worthwhile. Of course its just one piece of the pie that included trade in Europe with Poland, the USSR, the Baltics, the Balkans, and really everyone.

Also, in a scenario like this, you may see a sort of German colonial empire forming as Germany supports anti-colonial movements in hostile empires and, where those movements are successful, end up maintaining German-aligned regimes similar to cold war client states.
Schacht was working on exactly that via barter deals and trade deals to build up a raw material supply base for the German economy via a capitalistic neo-colonialism that was quite effective before Hitler opted on war to throw it all away. There was a book recently about Schacht's attempts to build a shadow empire that could have provided Germany with exactly what it always wanted via exploiting the divisions in the world economic system during the 1930s and waiting on the collapse of the European empires to get into those markets with preferential trade deals.

If Germany isn't a threat, I don't see why the other powers would unite against her.

We may see a cold war situation develop on the continent if people got particularly paranoid, but I can't see more than that happening.
I mistyped and mean Japan, I fixed it in the original post.


The rise of China as we know it is highly unlikely in a TL without WW2. In OTL, China was assisted by massive technology transfer from the Soviet Union to China which would not happen without a Communist victory after the civil war and then followed by a smaller, but still significant transfer from the USA to China which would not happen without the Cold War. As such, in a TL with a Sino-Japanese war but without WW2 and a Cold War, China is likely to have a much slower rise.

Also, if Japan is less developed, that is bad for China - Japan was a very important export market for China (even at the height of the cold war).
Yeah a KMT China wouldn't have the benefit of ChiCom industrial development and all the draw backs of the corruption of the KMT. But the KMT did get a lot of industrial equipment and technology transfers from Germany pre-war which was highly beneficial to both, as China paid in raw materials for German products. That was before the US became their patron.
https://en.wikipedia.org/wiki/Sino-...il_1941#Germany_and_Chinese_industrialization

Germany in a lot of ways could end up being a major consumer of Chinese raw material exports and the seller of modern technology and expertise. Germany including China in its financial empire building by doing these technology transfers via contract, same with Iran. I don't see why they wouldn't try for India and Indonesia if they became independent. IOTL in the 1960s as African countries became independent West Germany did similar things.
 

Deleted member 1487

I'd be curious to know what people thought about how long it would take for the British colonies to go ITTL and what Britain's role in the world would be without a WW.
 
British empire without WW2

I'd be curious to know what people thought about how long it would take for the British colonies to go ITTL and what Britain's role in the world would be without a WW.
That's a very good question and fascinating topic.

Short form- The Empire could survive longer than OTL, how much longer is dependent on India and the global trends. Britain's global role would depend on the strength (economic, financial and lastly military) of the UK (and its ability to draw on the Empire) and on what the global environment was like.

Without the stresses of WW2 I think the "British Commonwealth and Empire" might have remained a successful economic zone with a defence pact and common currency. Sort of combination of the Eurozone and NATO. Retaining membership could seem a good idea for the Dominions. I would expect pressure for greater self-rule from colonies to lead to more becoming Dominions over time. But such decolonisation wouldn't automatically lead to newly independent states removing themselves also from the Imperial preference zone or ceasing to use the GBP.

First key issue IMHO is could India be persuaded to stay within the Imperial economic structures, whether as a Dominion or even as a completely independent Republic within the Commonwealth - its eventual status. I think that is just about feasible even with a POD in the late 1930s but would be easier with an earlier one. India's departure might both reduce the viability of the Sterling Zone/Customs Union and also encourage other ex-colonies to leave the informal empire.

IF India stayed, Canada I suspect would be the first to leave the British economic and financial zone even while remaining part of the Commonwealth for other purposes, given how important trade with the US was for it even in the 1930s. Although how and when would be uncertain, depending on how protectionist the US stayed without WW2.

Thus the second key is how world trade and capital flows developed in a less warlike 1940s. IF there was a move, however gradual, towards today's world of largely free trade and capital flows, then the economic rationale for Britain's empire eventually disappears also. There is no need for such a largely self-contained but territorially discontinuous zone once you can trade freely with neighbours. It could be replaced by Regional Free Trade zones, like NAFTA or the EEA. And with British industry deprived slowly of protected markets, the benefit to Britain of defending or subsidising colonies is minimal also, as is the rationale for fighting to suppress revolts or unrest.

Britain may well be relatively stronger militarily and economically than iOTL, so it could have a more important global role ITTL for some time. How it would exercise this isn't obvious to me without trying to construct an ATL for the geo-political and economic challenges it would face. :D
 
Top