Economics of WWI

RedemptionJon Nacionales

Overview of the WarO Please don’t ask me what WWI was

because then I’ll be pretty disappointed. We studied the background in the social science packet. If you still don’t know anything read the Social Science packet and DemiDec and go to this really cool website that has information all about WWI:

O https://www.google.com

Total War

Total War

Medical

Production

Military

GAINS vs. LOSSES

AMERICABRITAIN

EVERYONEELSE

*Most

O Established naval blockade of Germany, effectively stopping ALL* American trade with the Central Powers.

O Germany use U-Boats in effort to isolate Britain

British Economic Warfare

Britain

Before WWI Britain has a lot of ££££

Britain uses 40% of

economic output for WWI. They

produce war stuff.

Entente win and Britain is

13% more richer

• STEEL OUTPUT• Rose by 25%

• MUNITIONS OUTPUT• Slowly at first but the fast because of Ministry of

Munitions (1915)

• COAL OUTPUT• Dropped. Where did all the miners go? War.

FranceO “France suffered the greatest cost,

the most extensive physical damage, and the most significant economic disruptions.”

O Army of 5 million men (most came from private industry)

O 1913 government spending raises by 10%

O 1918 government spending raises by 53.5%

ItalyO Italy had a relatively underdeveloped economy

to begin with=limited mobilizationO Supreme Committee of Ministers & Under-

Secretariat for Arms and Munitions took over private factories and forced private firms for war benefit.

O The mechanical and engineering industries and hydroelectricity experience greatest gains. Automotive industry : FIAT

O “the output increases in war- related sectors were obtained largely at the cost of running down stock elsewhere”

RussiaO “Backwards economy”O 1914—Income per capita was 11-

30% of United StatesO August 1914-December 1917—24%

in annual national income goes to war

O Russia leaves in 1917 and America enters=limited consequences

More RussiaResource

s Problems

EFFECTIVELY

ORGANIZE

CANNOT

PEOPLE

LAND

1917—Enter AmericaO Lusitania—May 17, 1915O Sussex—1916O Sussex Pledge—March 1917O Zimmerman—March 1, 1917O America Enters—April 6, 1917

American MobilizationO America faces same production goals as

Europe + Atlantic OceanO 24.2M men register, 2.8 fightO men received 6 mo. training prior and 2

mo. afterO America sent 7.5 million tons of cargo,

only 200,000 was lostO How to transport men? ½ British Ships

+ ½ Emergency Fleet Corporation = 2M tons of ships

The War Industries Board (WIB) Est. July 1917

O In charge of the government’s procurement of war goods

O Set very high prices on goods (Price Fixing Committee aka PFC)

O Bulk-line pricing systemO “Under such a pricing strategy, the

government would decide what fraction of an industry’s total output it needed for the war effort, and it would set a price just high enough to reach that level of output.”

Bulk Line PricingO Demand was more than

supply=ShortagesO In free market prices would increaseO War market prices are fixedO Government sets priority system

(AA, A, B, C, D)

Parts WIBO Price Fixing CommitteeO The Food AdministrationO The Railroad AdministrationO The Fuel Administration

The Food Administratrion

O Lever Food and Fuel Act in August 1917—Herbert Hoover

O NO food rationing and price controlO YES volunteer

O Meatless MondaysO Wheatless daysO Porkless days

O Food licensingO No volunteers? No license.

The Railroad Administration

O President Wilson nationalized the railway system from 1917-1920

O “unable to earn net income sufficient for them to maintain their credit and to attract new capital for needed enlargements and improvements in facilities...”

O Make railroads more efficient for transporting war goods and TROOPS.

O 610,000 troops every monthO 13,912 trains over 800 miles

The Fuel Administration

O Created by President Wilson from August 1917-1919

O Set coal pricesO Work with Railroad Administration to

deliver coal and fuel.

Costs of WarO Net cost = Gross cost –

“advances”/loans to AlliancesO Total cost = indirect + directO Total cost = $338,850,000,000

Indirect CostsO opportunity costsO property losses, shipping and cargo

losses, lost production, war relief, and the capitalized value of civilian and soldier deaths

O what they could’ve earned