16 - Finance

Summary

This chapter focuses on war finance in the two principal allies of the Central Powers, Germany and Austria-Hungary, the two financial powerhouses of the Entente, Great Britain and France, and two neutral countries, the United States and the Netherlands. It discusses the impact of mobilisation on national finances, financing the industrial war effort, demobilisation and impossible return to the pre-war financial order, and the financial legacy of the Great War. Mobilisation for war transformed the peacetime financial systems of the European powers. Financial demobilisation in Germany through inflation and stabilisation put an end to war finance, made reconstruction easier and reduced debt. Financial demobilisation following the Great War led to uncertain and therefore temporary stabilization of social policy and the political system itself. The weakness of parliamentary governments, and the attractiveness of totalitarian alternatives, arose in part out of the exigencies and consequences of war finance.