Book Review: 'The Deluge' by Adam Tooze - WSJ - 0 views
www.wsj.com/...eluge-by-adam-tooze-1416000347
Interwar international finance international relations international finance loan WWI wilson germany
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The American Century, contends the historian Adam Tooze, began in 1916
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In “The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931,” Mr. Tooze identifies those struggles as the crucial moment when the Allies ran out of funds. President Woodrow Wilson ordered the Federal Reserve to block additional loans by J.P. Morgan & Co. that would have kept the Allies going, because nothing, in his view, justified further slaughter.
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Perceiving minimal differences in the two sides’ war aims, Wilson first offered mediation and then called for “peace without victory.”
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He considers the president a hyper-nationalist, a hypocrite and a covert imperialist intoxicated by his own rhetoric. Wilson, he claims, aspired to global hegemony not militarily, as did Wilhelmine Germany, but through the imposition of a capitalist new order.
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His formulary included industrial pre-eminence, preferential finance, an Open Door policy for trade everywhere, and a backward-looking presumption of white supremacy. That felicitous combination would at once maintain the peace and perpetuate American advantage.
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Other nations, he believed, would necessarily shuffle along in an international “chain gang,” possessing the trappings but not the substance of sovereignty.
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he seeks to elaborate an integrated planetary history. Trained in economics as well as history, he illuminates the interconnections between politics and finance. His geographical purview seems limitless.
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Wilson’s assertion of moral supremacy, he contends, finds roots in a “distinctive vision of America’s historic destiny” to which statesmen of both parties subscribed. Mr. Tooze expresses as much impatience with “strong-arm nationalists of the Teddy Roosevelt variety” as with Wilson. In short, both Democrats and Republicans sought to transform America into a “de facto super-state.”
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The country’s failure to join the League of Nations after the war and its refusal to participate in European political affairs, even while it pulled the strings of international finance, made the “absent presence of US power” the defining characteristic of the 1920s
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Wilson never changed his objective. At the 1919 peace conference he aimed at “the collective humbling of all the European powers.”
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Mr. Tooze discerns an institutional problem here that goes deeper than the idiosyncrasies of politicians or voters’ naïveté. Americans clung to an obsolete Constitution, he maintains, a “vestigial thing” ill-suited to the modern world. Not until 1945 did the federal government acquire both the domestic tax resources and the power over international institutions necessary to properly exercise global hegemony.
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When the European nations stopped payment on their debts in 1933, Congress passed a law forbidding loans to defaulting governments.
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Once the U.S. joined the war, it lent to Great Britain, France and Italy some $10 billion (equivalent to $170 billion today) raised from U.S. citizens through the issue of “Liberty Bonds.” Britain had advanced a comparable sum but largely to czarist Russia and other polities unlikely to repay.
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Since it could never collect on its own credit extensions, the U.K. pushed successive schemes to write down debts all around. The U.S. Treasury offered a brief moratorium in 1919 but thereafter summoned the borrowers to settle. The U.S. Debt Commission proved relatively generous, given adverse sentiment in the heartland
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Mr. Tooze nonetheless considers the British debt settlement outrageous, comparing its size to that of the U.K.’s national education budget or the sum needed to clear the country’s slums.
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Mr. Tooze provides readers with additional graphic evidence of the subterranean animosity that characterized Anglo-American relations. He cites Wilson’s 1918 boast that if the British declined to limit their navy the U.S. would build a bigger one. In another bloody war, “England would be wiped off the face of the map.”
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He sympathizes with the difficulties that Berlin governments encountered in the early 1920s and considers the notion of stabilizing the depreciating paper mark a chimera. As a result of the 1918 revolution, organized labor held effective veto power over tax and social policy. Nor could Weimar’s fractured society tolerate the level of unemployment that deflation would have imposed.
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Under the circumstances, Mr. Tooze contends, the German government simply took the path of least resistance; it did not intentionally bring about the 1923 hyperinflation to undermine reparations.