International Turmoil — 1914–45

Abstract

World War I began as the result of a network of treaty obligations being called into operation following the assassination of Archduke Franz Ferdinand in Sarajevo on 28 June 1914.¹ Although few had anticipated the outbreak of war, its advent was greeted with a surprising amount of enthusiasm. Huge crowds turned out in Berlin, Paris, Petrograd (St Petersburg), London and Vienna, clamouring for military action.² By 1945, all such enthusiasm for war had been spent. Two ruinous conflicts had cost millions of lives, had caused untold damage, and had set back the advance of living standards by an incalculable amount. Not only, however, had immense human and physical damage been done during the periods of open warfare. In addition, the network of international trading and financial arrangements which had allowed the world economy to function reasonably smoothly during the nineteenth century, and the early years of the twentieth, was wrecked by the impact of World War I. The result was a period of great instability and lost opportunities between the wars, as fragile booms in the 1920s collapsed into the worldwide slump of the early 1930s. Thereafter there was a sharp divergence, as some economies continued to decline while others made remarkable recoveries.

‘A disordered currency is one of the greatest political evils.’

Daniel Webster