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N°33 I quarterly I april 2014 Focus | 23 the country,” explains Isabelle Davion, from the IRICE2 laboratory. Whether to fund the war effort, repay debts, finance reconstruction, compensate those entitled to damages or pensions or, in the case of Germany, pay reparations, the European countries, whose gold reserves were depleted, resorted to printing money. They began producing currencies that had virtually no intrinsic value and depended solely on the confidence of the economic agents that used them. Inflation swept across Europe and gained momentum, reaching its climax in Germany, where in November 1923, one US dollar was valued at 4.2 trillion marks. The trauma of this period of hyperinflation would haunt the German collective memory for years to come. Canada , ESTIMATED MILITARY PERSONNEL KILLED, BY NATION To put an end to this devastating spiral and stabilize the currencies, each country devised its own solution—with varying success. In 1925, Britain restored the pound to its pre-war parity, in other words a fixed weight in gold, and paid the price for it. Its products became more expensive, which hindered exports, and the country’s austerity policy inflicted hardship on the lower classes. France devalued the Franc by 80% in 1928, a tough measure for savers who had placed their gold in government loans or national defense bonds, and were henceforth paid back in depreciated currency. Germany and Austria created the Reichsmark and the Austrian schilling in 1924, two new currencies whose value was pegged partly to gold and partly to the US dollar and the pound sterling. Russian Empire Impervious to the monetary turmoil, the US, which had lent some $10 billion to the Allies and was Europe’s biggest creditor, now emerged as the world economic leader. London was no longer the center of capitalism. New York, the emblem of a thriving and booming country, became the “capital of capital.” Japan, by selling goods to the Allies, had seen its industrial production rocket by 72% between 1914 and 1919. But the Japanese economy, although still prosperous, began to suffer from the effects of global competition in 1921, when ,, European products were re-introduced on the Asian market. The rise of authoritarianism The heritage of WWI was also political: European monarchies were swept away by the winds of defeat, along with the great dynasties that embodied them (Habsburg, Hohenzollern, Romanov, etc.). The German, Austro-Hungarian, Russian, and Ottoman empires collapsed. A host of republics (German, Austrian, Polish, Hungarian, Baltic)—some only short-lived—and new states (including Yugoslavia, Czechoslovakia, and Turkey) rose from the ashes of the old aristocratic structures, redrawing the political frontiers of a continent where minority rights were guaranteed by peace treaties. A new geopolitical order, founded on the basic principles of liberal democracy, emerged in Europe. It promoted the idea that countries should resolve their conflicts peacefully, as advocated by the League of Nations established by the Treaty of Versailles. Signed in 1919 by Germany and the Allies, this treaty, the most important post-war peace agreement, included clauses designed to reduce Germany’s power in all areas—military, economic, geopolitical—for the sake of establishing a more balanced Europe and meeting France’s legitimate demands for greater national security. Yet this was easier said than done. The absence of the US from the League of Kingdom of Greece , Belgium , Austro- Hungarian Empire ,, Bulgaria , German Empire ,, Ottoman Empire , Montenegro Kingdom of Romania , United Kingdom , Kingdom of Serbia , Kingdom of Italy , Union of South Africa Portugal Newfoundland United-States , Japan France ,, British India , Australia , New Zealand , Allied Powers Nearly million deaths Central Powers More than million deaths © wedoda ta pour cnrslejournal.fr Source: Jay Winter, The Great War and the British People, featured in the Encyclopédie de la Grande Guerre (Fayard, 2014). From the 1914 War to the 1929 Crash On October 24, 1929, the New York Stock Exchange, whose values had reached speculative heights bearing no relation to economic reality, faltered and crashed. The financial plague spread rapidly around the world. Was it a distant ripple of World War I? “The crash of 1929 was caused by the combination of a set of factors that triggered a slowdown of the European economies to which the US stock market was the first to react,” observes Isabelle Davion. “While it can be seen as a crisis specifically tied to adapting capitalism to mass production, certain deep-seated causes were indirectly linked to World War I, which had made Wall Street the world’s leading stock market at a time when it was still struggling to regulate the international monetary system.” 06 06 On October 30, 1929, the unlucky Wall Street speculator Walter Thornton puts his car for sale. Nearly 10 million soldiers killed © Ullstein Bild/Roger-Viollet


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