How Did World Wars Affect The Economy

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World Wars and the Economy
“It was an industrial war where a country’s whole economic output was geared to war; a war of empires that pulled combatants from nations across the globe. It was a war of land, air and sea, a war of politics, espionage and also the Home Front…this was total war”
- Rupert Colley

Wars cause excessive disruptions to economies, generally impeding on economic development and prosperity (Mokyr 2003). They require national redirection of resources to wartime activities, being both human and capital. As a result, wars are increasingly expensive, causing severe shocks to the economies of countries involved. World War I was named the ‘Great War’ as it was the first time in history where so many nations were involved, who …show more content…

Britain being the most successful imperialist nation had occupied the largest amount of land, battling against Russia and France for more. With the emerging threat of Germany seeking to aggressively increase their influence outside of Europe (Grant 2013; Broadberry & Harrison 2005), Britain, France and Russia had formed an alliance (Ross 1997). The threats to British position and the ensuing tension between European nations had invariably led to conflict.

The Arms Race
“The accelerating arms race is transforming the armed peace into a crushing burden that weighs on all nations…[and] will lead to the very cataclysm is seeks to avert”
- Tsar Nicholas II

Many have contended that the Arms Race in Europe during the late 1800s would lead to war instead of preserving peace (Ross 1997; Grant 2013). In 1890, Germany attempted to combat the British world leading naval force by producing new warships - Britain in turn built bigger and more powerful ships and so on. This military escalation is what is believed to have made war inevitable (Keegan 1999). As one nation increased its military power, so too did their enemies to keep the balance of power. By the beginning of WWI, Britain, France, Germany, Russia, Italy and Austria-Hungary had spent over 398 million pounds on their militaries (Llewellyn, Southey & Thompson …show more content…

With concerns of their alliance causing further tension, British and French militaries began working together to defend their countries if there was a German resistance (Grant 2013). Militaries across these nations were preparing to mobilise their men if the time came (Ross 1997).


The Outbreak of War

On June 28, 1914, a young Serbian, Gavrilo Princip assassinated Archduke Franz Ferdinand, heir to the throne of the Austro-Hungarian Empire, and his wife (Ross 1997). Austria-Hungary gave Serbia an ultimatum which would ultimately secure Serbia as an Austrian-Hungarian nation (Dowling 2007). Serbia refused to accept all the clauses of the agreement, and so Austria-Hungary declared war on Serbia on 28 July 1914 (Ross 1997; Grant 2013). At this point, Russia declared war on Austria-Hungary

France (ally of Serbia) declares war on Austria-Hungary. England helped France, Germany helped Austria-Hungary.

Economic climate during wartime

Recovering from “the war to end all

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