Economic Consequences of World War I

As we have seen, the Industrial Revolution, was the beginning of modern globalization. Because of it, roads, machinery, railroads made the world smaller. Entire countries, sold their goods in a scale never seen before. Credit, via the banks, made possible international transactions and at the same time, the world became more interdependent.

This was an era of what some have called the first true capitalist age of globalization, which saw intensified integration and interdependence between societies. But in spite of the economical boom not everybody was euphoric because of inequality. Great surpluses were produced, but they were very unevenly distributed within societies and between societies. Was fear that some of these economics crises could produce political ones. John Maynard Keynes worried about the precarious nature of things.

On the eve on July 28 1914 when WWI started, was distemper, disenchantment and some historians argue, the First War World ended this age of prosperity that brought down the first capitalist globalization. But, this did not destroy a world some might look upon nostalgically as a high watermark of civilization. This was a situation that had been in the making for a long time, already beset by anxieties, plagued by rivalries between regimens. Nothing prepared the world for what it will go through starting in the summer of 1914.

This was the first truly global conflict in a century that the world had plunged into since the Napoleonic wars with the invasion of Egypt. From India to Argentina had the world been swept by one single conflagration. This war that started in Europe went global because was a conflict between global empires, which locked in a fratricidal conflict with each other, are going to h...

... middle of paper ...

... was rampant. The British economy of 1919 was not even close to the one of 1900, it could not sustain the gold standard .But, in the 1920's was a boom. From 1922 to 1927 the value of gross external assets held by Americans, especially in Europe rose 400%. By 1928 United States had loaned one billion per annum and the biggest borrower was Germany.

But this house of cards, started to collapse. Were two important factors which brought down the earlier System of Globalization.. Capital, soon started to circulate back to the United States, this, then revealed the chasm for the rest of the world which was racking up big deficits. Germany and Austrian banks began to crack and along came the crash of Wall Street of 1929, this made things worst since they depended on USA acting as a lender. All of this began the process then of brining the financial system to its knees.