by G. J. Meyer
“One of the most terrible of our sufferings was having to sit in the dark,” a German woman wrote of life during the blockade. “It became dark at four in winter. It was not light until eight. Even the children could not sleep all that time. One had to amuse them as best one could, fretful and pining as they were from under-feeding. And when they had gone to bed we were left shivering with the chill which comes from semi-starvation and which no additional clothing seems to alleviate, to sit thinking, thinking.” A German who was a schoolboy during the war would recall that “everybody seemed to be keeping rabbits because of the shortage of meat. They took us out in whole classes and sent us into the country to help the farmers. We liked that, but it meant we didn’t get much teaching. All the teachers were out as soldiers anyway, and generally the whole life of the country was becoming grimmer. There was a strong sense of people saying, ‘This war is lasting too long.’ Some became quite outspoken. The feeling was that the war was lasting too long and that Germany didn’t have much chance of winning it, because the conditions within the country were getting so very difficult.”
Even the expected bounty from the conquest of Romania made little difference, increasing the amount of grain available in Germany and Austria by barely six percent. In both countries once-prosperous city-dwellers were venturing out into the countryside to trade jewelry and prewar clothing made of authentic wool and cotton for whatever food they could find. In Vienna tens of thousands of women were trying to survive through prostitution. As governments repeatedly expanded the work week to increase factory output, strikes by workers not earning enough to feed their families grew in frequency, size, and violence. Mobs of women looted stores and government food depots.
This is the dark background against which, on the ninth day of 1917, Germany’s leaders met for a showdown over the question of submarine warfare. The kaiser was there, of course, still his empire’s All-High Warlord though increasingly passive and incapable of asserting himself. Hindenburg and Ludendorff were there as well, recently back from their inspection of the Western Front and freshly convinced that continued stalemate was the best Germany could hope for there in the coming year. Also present were the navy’s leaders, most notably Henning von Holtzendorff, chief of the navy’s general staff and a passionate advocate of the submarine as the only way of bringing Britain to its knees. Finally—last to arrive, because not invited until almost too late—was Chancellor Bethmann Hollweg.
In response to pressure from the United States, Germany had been keeping its submarine fleet in check since September 1915, when unrestricted operations were brought to an end. Bethmann had insisted on this measure, and though the kaiser supported him, most of the generals and admirals were furious at him for refusing to lift restrictions. Their estimates of what a renewed campaign could accomplish, however, had changed with the passage of time. At the beginning of 1915, in urging the removal of all restrictions, the admirals had said that such a step would put Britain in serious trouble within six weeks. Now, with the submarine fleet considerably expanded, Holtzendorff was saying that the job could be done in six months. Bethmann was horrified. He remained certain that what Holtzendorff was proposing would bring the United States into the war, and he dreaded the consequences. The kaiser asked Holtzendorff for his view. “I will give Your Majesty my word as an officer,” the admiral replied, “that not one American will land on the Continent.”
Ludendorff’s views on the subject were no secret to anyone. Two weeks earlier he had sent Bethmann a telegram stating that a U-boat campaign was “the only means of carrying the war to a rapid conclusion,” and that “the military position does not allow us to postpone.” Though Kaiser Wilhelm shared Bethmann’s fears, a far stronger ruler than he would have found it difficult to resist the demands of his officers. Virtually the entire German nation was clamoring for an end to restrictions on U-boat operations. Industry, the armed forces, the population at large—all were experiencing the ruinous effects of the blockade, and all had come to see submarine warfare not only as justified morally and legally but as absolutely necessary in practical terms. The Reichstag passed a series of resolutions opposing the limits that Bethmann was now nearly alone in trying to maintain.
The issue was quickly settled. Bethmann dutifully restated his reasons for opposing any change. But then, having done so, he withdrew his opposition. “I declared myself incompetent to criticize the judgment of the military experts who insisted that the war could not be won on land alone,” he wrote later. “In view of these facts and of the declared readiness of Headquarters to risk war with the United States, I could not advise His Majesty to do other than to accept the opinion of his military advisers.” In yielding as he did, Bethmann removed whatever basis the kaiser might still have had for resisting. He surrendered the last barrier to an unrestricted submarine campaign—very nearly the last barrier to America’s entry into the war. More than one fateful page was turned. Control of German policy passed conclusively out of the hands of the kaiser, out of the hands of the kaiser’s government, and into those of Erich Ludendorff.
The ultimate tragedy, from the German perspective, is that the decision taken on January 9 arose out of profoundly mistaken assumptions. Holtzendorff was wrong in his appraisal of the submarines’ effects, and of America’s military potential; this would become clear soon enough. Ludendorff was equally wrong in believing that Russia remained capable of offensive operations on the Eastern Front. If the U-boat decision had been deferred by just a few months, the truth about Russia’s collapse would have made it unnecessary. Washington’s principal grievance against Germany would have been removed.
The decision having been made, the Germans had no time to waste. It seemed essential, in order to demonstrate that if the war continued the British would starve as Germany was starving, to cut off British imports before the 1917 harvest was brought in. This meant before August 1, which in turn meant—Holtzendorff having predicted that the U-boats would need six months—starting by February 1. These calculations were as sound as they were simple, but the conclusions drawn from them were pure wishful thinking. Holtzendorff estimated that the submarines could sink six hundred thousand tons of shipping monthly from February through May, four hundred thousand monthly thereafter. He believed that losses of this magnitude would discourage many neutral shippers from trying to reach Britain, whose ability to continue the war would thereby come to an end.
These forecasts were accurate enough in the near term. Even in January, while still allowing American merchantmen to pass by unharmed, the U-boats would sink one hundred and eighty thousand ships totaling more than three hundred thousand tons. The lifting of restrictions became effective on February 1, and in that month five hundred and forty thousand tons would be sunk—well over half of them British. This total was followed by five hundred and ninety-three thousand tons in March, eight hundred and eighty-one thousand in April, five hundred and ninety-six thousand in May, and six hundred and eighty-seven thousand in June.
Homeward bound
U-boats returning to port at the end of a North Atlantic hunting expedition.
The German public rejoiced over the start of the campaign and the deliverance that it seemed to offer. But there was no deliverance. Life became more difficult in Britain but never nearly as difficult as in Germany and Austria. The flow of imports slowed for a time but never came close to stopping. The British and Americans put into service many of the German freighters that they had impounded in ports around the world at the outbreak of the war. As they became more adept both at sinking German submarines and at eluding them, it became obvious that the U-boats were going to deliver none of the things that Holtzendorff had promised, and that American entry into the war was going to be anything but unimportant.
Holtzendorff, who had been so terribly wrong, would nevertheless keep his job. Ludendorff, who had supported Holtzendorff with every political weapon at his disposal, not only kept his job but became de facto autocrat of Germany. Only Bethmann
Hollweg would be purged.
Background: Consuming the Future
CONSUMING THE FUTURE
UNDER PRODDING FROM ERICH LUDENDORFF, THE REICHSTAG late in 1916 approved an Auxiliary Service Law that carried the concept of total war to a level previously unimagined. It put every German male between the ages of seventeen and sixty at the government’s disposal. Anyone not sent to the war could be assigned to a munitions factory, to agricultural labor, to a desk in the bureaucracy—to whatever the war ministry decided. Once in an assignment, no one could quit without permission. Those who disobeyed could be jailed for a year and fined.
At the same time, presumably because the law had made cheap labor plentiful, the government ordered massive increases in the manufacture of war matériel. Gunpowder and light artillery production quotas were doubled to twelve thousand tons and three thousand barrels per month respectively. The target for machine guns was tripled to seven thousand per month, and rifle production was boosted to one hundred and twenty-five thousand monthly.
The service law did not go as far as Ludendorff had wanted. He had proposed applying it to women, particularly to all the childless war widows who were, or so he complained, idling away their days. He had wanted to close the schools and universities. He had proposed these things in spite of the fact that unemployed women far outnumbered the available jobs, and every youth of sufficient age and fitness was already in uniform. But even in the limited form accepted by the Reichstag, the measure proved to be unenforceable, a bureaucratic nightmare that angered the workers and their unions while accomplishing little. It was soon abandoned.
The new production quotas likewise were often not met. But they were typical of what all the belligerent countries were trying to do as the war entered its third year. They were throwing everything they had—their people, their production capabilities, all the wealth accumulated over generations of industrial development—into the effort to destroy one another. The longer the war continued, the deeper they were willing to dig. Even as they weakened physically, with able-bodied men growing scarce and essential commodities even scarcer, their commitment to fighting on grew stronger. Almost no plausible measure was regarded as too extreme.
Which gives rise to a rather elemental question: where did the money come from? How did Germany and Austria-Hungary and Turkey and Bulgaria on one hand, Britain and France and Russia and Italy on the other, pay for such an immense and protracted struggle?
The answer, in a nutshell, is that they didn’t. None of them even tried. In addition to being the greatest bloodbath in the history of western Europe and the greatest in eastern Europe until the Second World War, the Great War was a process by which all the great powers, victors and vanquished alike, transformed themselves from bastions of prosperity into sinkholes of poverty and debt. Financially as in so many other ways, the war was a road to ruin.
This development was not unforeseen. As technological progress accelerated in the nineteenth century and fueled tremendous military expansion, the question of how much a general war would cost became one of the great imponderables facing the governments of Europe. In 1898 a Russian named Ivan Bloch produced a six-volume study, Future War, in which he postulated that armed conflict between the great powers would mean “not fighting, but famine, not the slaying of men but the bankruptcy of nations and the break-up of the whole social organization.” He predicted that any such war would be short because financially insupportable. Twelve years later a book titled The Great Illusion, by the Englishman Norman Angell, became an international best-seller by predicting that not even the winners could possibly benefit from a major war. Military power, Angell said, had become “socially and economically futile, and can have no relationship to the prosperity of the people exercising it.” Such a warning seemed credible: when Angell’s book appeared, all the great powers were spending scores and even hundreds of millions of dollars annually on their armies and navies. Such spending continued to increase through the last four years of peace, and much of the increase was made possible by borrowing. Only Britain, wealthiest of the European powers and the one with the smallest army, was balancing its budget.
What was not foreseen was the ability of the industrialized nations to go on fighting year after year even while devouring themselves financially. As astute an economist as John Maynard Keynes was a year into the Great War before he understood that total war would not cause total financial collapse. “As long as there are goods and labor in the country the government can buy them with banknotes,” he wrote in September 1915, “and if the people try to spend the notes, an increase in their real consumption is immediately checked by a corresponding rise of prices.” The truth, he concluded, was that bankruptcy would never force the great powers to stop fighting. They could be stopped only by the exhaustion of their manpower, their physical resources, or their will to continue. The next few years showed him to be entirely right.
With the start of the war, every one of the nations involved cast aside any semblance of financial restraint. As early as October 1914 Chancellor of the Exchequer David Lloyd George was admonishing the British war office not to come to him for approval before ordering whatever it thought it needed. It was the same in every capital: governments worried not about how much they were spending but about whether their military leaders were doing everything possible (which often meant buying everything possible) to outmatch the enemy. Budgets ceased to matter.
Great nations found themselves unable not only to pay their bills but even, in some cases, to pay the interest on what they were borrowing. By 1917 the German government’s expenditures amounted to 76 percent of net national product; they had been 18 percent just before the war. Tax revenues were covering only 8 percent of the spending. That same year Britain’s military spending was 70 percent of national output, and revenues were about a fourth of expenses. France’s military budget, thanks to heavy borrowing, was equal to or even more than total output.
On the home front
A French couple with what remains of their home.
The strategies adopted by the various countries for maintaining sources of credit varied greatly and were almost indescribably complicated. The problems were greatest for the least developed nations, Russia and Austria-Hungary in particular. The solution in both cases was reliance on stronger senior partners. Russia began borrowing from its allies as early as October 1914. Eventually it borrowed £568 million from London and three and a half billion francs from Paris—colossal sums for the time, equivalent to billions of dollars. Germany found it necessary to be similarly generous to Austria-Hungary, and later to Turkey and Bulgaria as well. The Russians had compounded their difficulties by shutting down the state monopoly on alcohol early in the war as a gesture of austerity, patriotism, and willingness to sacrifice. This accomplished nothing except cutting off a fourth of Petrograd’s revenues, creating a huge black market in vodka, and worsening inflation.
Not one country attempted to meet its expenses or even reduce its deficits through increased taxes. Where taxes were increased, the purpose was either to inhibit inflation by soaking up some of the wages flowing to workers or to maintain a flow of revenue sufficient to satisfy the credit markets. New taxes were sometimes imposed on profiteers, but more to maintain public morale (damaged everywhere by the spectacle of tycoons reaping fortunes while everyone else suffered) than to increase revenue. Tax systems became less rather than more progressive. Governments tried to limit the amounts of money available to working people for the pursuit of increasingly scarce goods while simultaneously helping the wealthy to retain their assets for investment in postwar rebuilding.
The situation first became serious for the Central Powers, which virtually from the first day of the war had lost their merchant fleets and access both to their own overseas investments and to global sources of credit. They had to do nearly all their borrowing internally, through loans from domestic financial institutions and the sale of bonds. They were surprisingly successful. Germany issu
ed war bonds twice annually. The many marks raised in this way covered two-thirds of its war costs.
The British and French were far more able than the Germans to repatriate money they had invested overseas, and because of the naval blockade only the Entente was able to buy and borrow from the United States. But gradually, inexorably, their treasuries were depleted. Questions arose in New York and Washington about their ability to make good on their debt. In November 1916 the U.S. Federal Reserve Board warned its member banks against continuing to buy foreign—which meant British and French—treasury bills. The result was a near-panic in which London retaliated by briefly ceasing to place orders in the United States and urged France to do likewise. By April 1917 the British were spending $75 million a week in the United States, were overdrawn on their American accounts by $358 million, and had only $490 million in securities and $87 million in gold to draw on to make good their debt. In short, they were only weeks away from insolvency.
But this was a crisis for the United States too. American manufacturers and farmers had become dependent on sales to the Entente, and American banks were owed immense amounts. A British and French financial collapse—never mind the outright defeat of the two nations—would have been a disaster for the U.S. economy. Thus the German submarines were not Washington’s only reason for wanting to save the Entente. In purely practical business terms, it became dangerous for the United States not to enter the war.
