The Economic Consequences of the Peace · Chapter
Organization explained
This chapter describes the intricate economic organization of pre-war Europe, centered on Germany's industrial dominance and the interdependence of European nations through trade, currency stability, and capital flows.
What happens
This chapter describes the intricate economic organization of pre-war Europe, centered on Germany's industrial dominance and the interdependence of European nations through trade, currency stability, and capital flows. It highlights how Germany's growth supported its neighbors and how internal factors like minimal tariffs and secure property rights enabled this system, while also noting the reliance on external factors common to all of Europe.
Themes in this chapter
Economic Interdependence of Europe
The chapter details how Germany's economy was intertwined with its neighbors through trade, capital investment, and organization, making the whole European system dependent on German prosperity.
Instability of the Pre-War Economic Order
The description of the delicate organization and reliance on internal and external factors hints at the fragility of the pre-war system, which was disrupted by the war.
Characters to notice
- Germany
Central support of the European economic system; its coal output grew dramatically from 30 million tons in 1871 to 190 million tons in 1913; best customer of many neighbors and largest source of supply to many; invested heavily in Eastern Europe.
- Europe
The entire European system east of the Rhine fell into the German industrial orbit; internal factors of order, security, and uniformity prepared the way for industrial organization.
- The Allies
Implied as part of the European system; Great Britain sent more exports to Germany than to any other country except India, and bought more from Germany than from any other except the United States.
- Great Britain
Germany was its second best customer and second largest source of supply; trade with Germany was substantial.
- Germany
Germany was Russia's best customer and largest source of supply; Germany invested heavily in Russia.
- Germany
Germany was Austria-Hungary's best customer and largest source of supply; Germany invested in the region.
Key passages
“The interference of frontiers and of tariffs was reduced to a minimum, and not far short of three hundred millions of people lived within the three Empires of Russia, Germany, and Austria-Hungary.”
Borders and tariffs were minimal, allowing nearly 300 million people to live within the Russian, German, and Austro-Hungarian empires.
Describes the scale and openness of the pre-war European economic zone.
“Round Germany as a central support the rest of the European economic system grouped itself, and on the prosperity and enterprise of Germany the prosperity of the rest of the Continent mainly depended.”
Germany was the core around which the rest of Europe's economy revolved; the continent's prosperity relied on Germany's success.
Highlights Germany's central role in the European economic system.
“Germany was the best customer of Russia, Norway, Holland, Belgium, Switzerland, Italy, and Austria-Hungary; she was the second best customer of Great Britain, Sweden, and Denmark; and the third best customer of France.”
Germany was the top buyer for many European countries and a major buyer for others, including Great Britain and France.
Illustrates Germany's extensive trade relationships across Europe.
