Volume 56, Issue 2

During the 1960s and 1970s the war economy of World War I was a major field of interest. Its main focus was, however, the governance of the war economy and the relationship between business and politics. From then on the economic history of World War I came out of style and despite the 100th anniversary of its outbreak a recovery is out of sight. In contrast to previous research the following contributions focus on the reaction of (mainly) private business towards the unexpected and exceptional situation of a total war.

The First World War was a disaster for German industry but one it could not avoid. Once war had begun, the modern war of supplies developed a fatal dynamic. On the one hand, it destroyed or restricted civilian markets: on the other, it forced companies - as the price for their future existence - into becoming part of, or at least cooperating with the armaments industry in order to secure the reserves which seemed necessary for the return to a peacetime economy. The military and political policy thus cannibalized capitalist mass production without which the war of supplies could not have been waged. In the process they became dependent on the readiness of companies to cooperate and as a result the weight of private interests increased greatly during the war. Research has focused on this aspect for far too long: what appeared to be a kind of profit logic within the war economy was in fact the reflection of a situation in which companies had little choice but to participate in the war economy in order to secure their own future existence. Therefore the war was not driven by the greed for profits but it was the war with all its catastrophic social consequences that pushed the economy and society into ruin. If it had been the decision of business and industry, the war would not have taken place.

The First World War was not only a military conflict but also an economic war. In all belligerent countries, labour and resources were shifted from civil production to military production. Factory workers, miners and farmers produced a steady flow of supplies for the frontlines. Financial mobilization provided the money for arms, ammunition, and other supplies. In contemporary understanding “financial mobilization” comprised all fiscal and monetary instruments that were necessary to finance the war. The aim of this paper is to discuss the interaction between the government and the central bank in Germany in financing the First World War. Aspects include the pre-war plans for financial mobilization, the fiscal and monetary policies of the war years and their inflationary consequences, the financing of foreign trade and financial demobilization during the transition from war to peace.

At the beginning of the First World War a number of new financial institutions were founded in Germany due to troubles on the German financial market in the summer and autumn of 1914. These institutions, known as the Kriegskreditbanken, were to play a prominent role beside the existing banks. So many of them were founded on the initiative of industrialists as well as of bankers, who believed that the existing financial institutions were not able to provide industry and trade with the financial means necessary in a war economy. During the war, however, it became obvious that the German economy did not suffer from financial restrictions. As the restrictions of the gold standard were lifted, liquidity was no problem. As a result the importance of the Kriegskreditbanken was reduced step by step. At the end of the war most of them were liquidated. The existence of the Kriegskreditbanken remained a short experiment of cooperation between banks, industrialists and local authorities under the specific conditions of the war economy.

The German war economy suffered from resource shortages during WWI because the Allies were able to block imports with its naval blockade. Coal was more or less the only natural resource relevant to the war economy which was available domestically and in abundance. Therefore, authorities were hardly concerned with the supply of coal when the war broke out. As the war lasted longer than expected, even the coal ran short. This article examines the measures adopted by the authorities to secure the supply of energy for the military, the war economy and households. On the one hand, the authorities relied on the syndicated marketing organization of the coal cartels. On the other hand, the Prussian state was itself a major coal producer in the Ruhr which was not part of the Ruhr Coal Syndicate and competed with the cartelized privately owned mining companies.

State intervention was characteristic of most industries after the outbreak of WWI. This contribution draws attention to the contractual effects of state intervention in the coal industries of Germany and the Netherlands. While Germany, foremost with the Coal Syndicate, was an exporter of coal, the Netherlands were traditionally dependent on German coal imports. Although both states intervened in the structure of their coal industries, the outcomes of intervention were unexpected and clearly deviated from the objectives defined by the states. As a result, the close relationship between the Coal-Syndicate and its Dutch Trading Association allowed advantages to be taken from state intervention in terms of their own profit.

The supply of the dual-use resource nitrogen became an existential problem for Germany during World War I. This article discusses how the German war economy attempted to solve the supply problem and how successful it was in doing so. The supply of nitrogen from their neutral neighbour Switzerland is discussed in order to show that Swiss companies produced nitrogen compounds in Switzerland itself, while at the same time also exporting intermediate products and resources to Germany for the manufacture of nitrogen compounds. Swiss companies also built factories on German soil that were part of the German nitrogen industry and were in some cases even operated with Swiss resources and labour.

During the First World War, warfare became more totalitarian and was backed by an economic conflict waged with increasingly harsh methods. In the combatant nations munitions rapidly became an essential “raw material”, with the increasing demand being met either by the expanding domestic arms industry or by munitions imports from neutral countries. The Swiss watch, metal and engineering industries enjoyed a strong international reputation and had a strong focus on exports: by the end of 1914 they began manufacturing precision detonators for artillery projectiles, and rising quantities of these products were sold to both sides. This paper examines what volume Swiss munitions exports assumed during the First World War, how this was compatible with Swiss neutrality and looks at the arguments used to criticise or justify this trade over the course of the war.

In the spring of 1917 the United States entered the First World War. Switzerland and the other neutral European countries came under increasing pressure as the US wanted to embargo their economies. Switzerland had to adapt quickly to the new political order and sent a diplomatic mission to the United States to secure its food and commodity supply. Even though an agreement with the US authorities could be concluded, the policy outcome was strongly influenced by the economic and political agenda of the belligerents. Thus the scope for Swiss foreign policy was limited. The Swiss case shows the increasing influence of the United States and sheds light on the politics of neutrality during the First World War.

As most other industrialized countries, Germany experienced three major changes in its energy mix in the last two centuries, namely the respective transitions to coal, oil, and nuclear power. This paper discusses the reasons and consequences of these changes with respect to energy consumption, energy prices, and growth. One major finding is that each energy transition led to a devaluation of traditional locational advantages such as the existence of local sources of water power or coal beds. Another important observation is that most of the energy transitions were accompanied by significant government subsidies aiming at either promoting new energy sources or reducing the social hardship associated with the decline of traditional power industries.