Now all roads lead to France and heavy is the tread
Of the living; but the dead returning lightly dance.
Edward Thomas, Roads

Monday, September 18, 2017

An Economic Rationale for America Entering the War

Editor's Note:  I've always been suspicious of economic arguments about the origins of the First World War, especially America's later entry.  This excerpt from a paper sent to me by the late Latin American specialist Professor Robert F. Smith, PhD, and  is the first such argument that seems credible to me.  

His argument:

By 1916, both Britain and Germany were still active in the region and Britain had begun planning for a postwar boom, foreseeing that military expenditures could be turned toward commercial endeavors.

French Commerce and Industry
Secretary Étienne Clémentel
Hosted the 1916 Paris Conference
The June 1916 Paris Economic Conference fueled American fears of a postwar European financial surge in Latin America.  Allied governments agreed to the conference out of a desire to plan a postwar economic order that included a crippled and subjugated Germany.  They wanted to coordinate a program that punished Germany economically for its warmongering and kept the nation from regaining its commercial preeminence when hostilities ceased.  The conference spoke of dividing the world into regional spheres of influence.  

To reach this goal, the Allies agreed to tighten their economic sanctions against Germany and continue those sanctions after the war.  Senator William Stone of Mississippi was alarmed by the Conference’s position, pointing out that while it was proposing commercial warfare against Germany, it was also planning a system that could easily be turned against the U.S.  Stone’s concern was validated by the fact that the U.S. was neither invited to the conference nor mentioned as part of the postwar economic order under discussion.  The magazine Iron Age editorialized that “even in the midst of war (the Allies) were planning for a new era of industrial expansion (and the U.S. was) doing nothing to prepare for this challenge.”   The Paris Conference made Americans realize just how vulnerable they were in foreign markets, especially Latin America.   Despite preoccupation with the war, Britain and France had not lost sight of their interests overseas.  Yet, while Americans were concerned with Allied financial activities, the U.S. ultimately declared war on Germany because Germany was the greater threat to wartime and postwar economic prosperity.  Latin America was not the focus of this concern, but it became a battleground.

Germany’s militarism, added to its control of critical industries, made that nation a greater threat to the U.S. than the Allies. Government analyst Thomas Norton wrote in 1915 that “the dominance of Germany in the dyestuffs production and commerce of the entire world is so marked and inherently of such potential might that it does not hesitate to make itself felt whenever and wherever an effort is made toward emancipation from its control.”   The German chemical trust owned over 4,500 chemical patents in the U.S. alone.  A German cartel also controlled the prices of copper in the world, which was a threat to American electrical interests. Wilson, and the U.S. in general, was feeling hemmed in by German commercial activities. German submarines also limited the safe travel of Americans.  While neutrality should have protected U.S. merchants from German attack, U-boat captains often destroyed a ship rather than risk surfacing to question that ship’s nationality.  American fear turned to anger when civilians on the ships Lusitania and Sussex were lost to German torpedoes.  

By 1917, random German U-boat attacks had become a policy of unrestricted submarine warfare. Wilson, and many Americans with him, began to believe that German militarism and commerce did not constitute a safe future for the world.  “An economically healthy Europe that was able to participate actively in world affairs,” wrote Historian Burton Kaufman, “was essential if President Wilson was to achieve a postwar community of nations predicated on the principles of liberal capitalism and peaceful commercial competition.” Germany did not fit into that model, and if victorious, would surely construct a new economic system with its allies to the detriment of the U.S. No matter who won the war, a huge postwar economic battle would ensue, with the US caught in the middle.  Action was needed, and unrestricted submarine warfare ensured that American actions were directed at the German Empire.

Cartoon Published Just Before the President's War Message

The protection of American financial interests and trade was a critical factor in leading Wilson to ask Congress for a declaration of war on Germany on 2 April 1917.  He reasoned that the “present German submarine warfare against commerce” was both “warfare against mankind” and “against the government and people of the United States...” Moreover, he said, “one of the things that has served to convince us that the Prussian autocracy was not and could never be our friend is that from the very outset of the present war it has filled our unsuspecting communities ...with...criminal intrigues...(in)...our industries and our commerce.” Though all of Europe was a threat to American interests in Latin America, Germany was the greater threat to American interests in general.  War, however, would give the U.S. an opportunity to promote its interests in that region specifically.

Source: "Capturing Commerce: America’s Great War Front in Latin America"


  1. Afraid that while it does raise some points it appears a pretty weak argument to me. The older argument that the US joined because otherwise it major loans to France and England would potentially be noncollectable in the event of a German victory, while also weak, made more sense.

  2. As I understand it, the French and British never did repay billions of dollars of WWI loans. So, in hindsight, the fear of not being repaid was a poor reason to get further involved.

  3. The author presents arguments suitable for arm chair salon discussions 100 years after the fact while ignoring the continuous pouring of good US money after bad into the Allied war effort. Take for example the ocean shipping industry with its ruinous u-boat losses. Ship owners would take a few losses on their nickle for King & Country but would demand insurance cover thereafter. Who was funding Lloyd's? I would venture: the House of Morgan...good money after bad. The Germans likewise knew it was a gamble to restart unrestricted submarine warfare in 1917 likely bringing in the Americans, but gambling the Yanks couldn't get there in time to sway the German tide.