The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931

by Adam Tooze

In private conversation with his ambassador in Britain, Walter Hines Page, Wilson was blunter. The Kaiser’s U-boats were an outrage. But British ‘navalism’ was no lesser evil and posed a far greater strategic challenge for the United States.

The atrocious war was, Wilson believed, not a liberal crusade against German aggression, but a ‘quarrel to settle economic rivalries between Germany and England’.

I mean hes not entirely wrong

Even if 1916 had not been an election year and even if Morgan had not been one of the most prominent backers of the Republican Party, the enmeshing of a large part of the American economy on the side of the Entente at the behest of pro-British bankers would have posed a dramatic challenge to Wilson’s administration.

Since August 1914 the huge credit-fuelled boost in exports had driven up the cost of living. The much-vaunted purchasing power of American wages was melting away.40 It was the American worker who was paying for business war-profiteering. Over the summer Wilson approved moves by the populist wing in Congress to impose a tax on exports to Europe. In the last days of August 1916, in response to the threat of a general strike on the railway network, he intervened on the side of the unions, forcing Congress to concede the eight-hour day.

After this poisonous campaign that produced the biggest electoral turnout in American political history, the manner of Wilson’s victory did little to calm the savagely partisan mood. Though Wilson won a solid popular majority, in the Electoral College he prevailed only thanks to California by a margin of just 3,755 votes.

Sounds familiar

Wilson thus became the first Democrat to be re-elected as President for a second term since Andrew Jackson in the 1830s. As far as the Entente and their backers in America were concerned, it was a sobering outcome. A large part of the American public had declared its desire to stay outside the conflict.

With the German onslaught on Verdun reaching its horrific climax, the Entente decision to bring forward the first major British offensive on the Somme was taken on 24 May 1916, three days before Wilson first announced his vision of a new world order at the New Willard Hotel.42 Though the British offensive failed to achieve a breakthrough, it threw the Germans onto the defensive.

On 5 June 1916 the energetic cavalry commander General Brusilov hurled the cream of the Russian Army against the Austro-Hungarian lines in Galicia. In a remarkable few days of fighting, the Russians laid waste to Habsburg military power. But for an urgent injection of German troops and military leadership, the southern half of the Eastern Front would have collapsed.

On 27 August Romania finally abandoned its neutrality and declared war on the side of the Entente. Instead of the wagons of Romanian oil and grain, on which the Central Powers had come heavily to depend, a fresh enemy army of 800,000 drove westwards into Transylvania.

in August 1916 it was not President Wilson but Prime Minister Bratianu in Bucharest who appeared to hold the fate of the world in his hands.

In the event, Romania defied the odds in its favour. A German-led counter-attack turned defeat into victory.

it is this dramatic train of events that forms the essential backdrop to the confrontation between the Entente, Germany and Woodrow Wilson over the winter of 1916–17. Berlin’s path towards escalation was marked out at the end of August 1916 when the Kaiser replaced Erich von Falkenhayn, the discredited mastermind of Verdun, with Field Marshal Hindenburg and his chief of staff, Erich Ludendorff, as the Third Supreme Army Command (3. OHL).

Hindenburg and Ludendorff’s first move was to hunker down into a defensive posture. If they were to have any hope of matching the Entente’s globalized war effort, Germany would need a new mobilization of its own. Dubbed the ‘Hindenburg programme’, it was designed to double ammunition output within the year. Its targets were met, though at a huge cost to the home front. In the meantime, it was this same defensive rationale that led the 3. OHL to back the navy in calling for the U-boats to be unleashed.

The risks of escalating the U-boat war were obvious. Americans would be antagonized. But to continue to hold back was simply to play into British hands. In economic terms, North America was fully committed to the Entente in any case.

Nevertheless for Britain and France, even more than for the Germans, a negotiated peace was unattractive. After two years of war, Germany’s armies occupied Poland, Belgium, much of northern France and now Romania. Serbia had been erased from the map. In London in the autumn of 1916 it was the argument over strategic priorities in the third year of the war that brought down the Asquith government.

those who were most open to Wilson’s idea of a negotiated peace were those who were most suspicious of the long-term rise of American power.

As he warned the cabinet, if they continued on their current course ‘I venture to say with certainty that by next June [1917] or earlier the President of the American Republic will be in a position, if he so wishes, to dictate his own terms to us.’48 McKenna’s desire to avoid falling further into dependence on America was the obverse of Wilson’s distaste for European politics.

In came Lloyd George at the head of a coalition dedicated to defeating Germany decisively. Ironically, though the posture of the coalition was fundamentally out of kilter with Wilson’s desire to end the war, it was the most Atlanticist in its basic commitments.

as Lloyd George had been arguing already since the summer of 1916, American loans established not simply Britain’s subordination to Wall Street, but a condition of mutual dependence. The more that Britain borrowed in America and the more it purchased, the harder it would be for Wilson to detach his country from the fate of the Entente.

As 1916 drew to a close, both blocs of European combatants were preparing to take huge risks on the assumption that the financial entanglement between America and the Entente would sooner or later force Washington to align itself on the side of the Entente.

In his exile in Zurich the Russian radical, Vladimir Ilyich Lenin, was in June 1916 putting the final touches to what was to be one of his most famous pamphlets, ‘Imperialism, the Highest Stage of Capitalism’.1 This cast commonplace assumptions about the necessity of American involvement into an iron-clad theoretical dogma.

What none of these speculations could account for, however, was the remarkable course of events between November 1916 and the spring of 1917. The American President, re-elected with a mandate to keep America out of the war, tried to do something far more ambitious. He attempted not just to preserve neutrality but to end the war on terms that would place Washington in a position of pre-eminent global leadership.

Lenin may have declared imperialism to be the highest stage of capitalism, but Wilson had other ideas.2 So, it turned out, did the combatants.

For their next season of campaigning, the Entente proposed to raise at least 1.5 billion dollars. Realizing the enormity of these sums, J. P. Morgan sought reassurance both from the Federal Reserve Board and from Wilson himself. None was forthcoming.

No shit

On 27 November 1916, four days before J. P. Morgan planned to launch the Anglo-French bond issue, the Federal Reserve Board issued instructions to all member banks. In the interest of the stability of the American financial system, the Fed announced that it no longer considered it desirable for American investors to increase their holdings of British and French securities. As Wall Street plunged and sterling was offloaded by speculators, J. P. Morgan and the UK Treasury were forced into emergency purchasing of sterling to prop up the British currency.

In Russia in the autumn of 1916 there was mounting resentment at the demand by Britain and France that it should ship its gold reserves to London to secure Allied borrowing. Without American assistance it was not just the patience of the financial markets but the Entente itself that would be put at risk.7 As the year ended, the war committee of the British cabinet concluded grimly that the only possible interpretation was that Wilson meant to force their hand and put an end to the war in a matter of weeks.

Given the huge demands made by the Entente on Wall Street in 1916, it is clear that opinion was already shifting against further massive loans to London and Paris ahead of the Fed’s announcement.8 But what the cabinet could not ignore was the open hostility of the American President.

Undaunted, on 18 December Wilson followed this with a ‘Peace Note’, calling on both sides to state what war aims could justify the continuation of the terrible slaughter.

On Wall Street the reaction was immediate. Armaments shares plunged and the German ambassador, Johann Heinrich von Bernstorff, and Wilson’s son-in-law, Treasury Secretary William Gibbs McAdoo, found themselves accused of making millions by betting against Entente-connected armaments stocks.

The London Times called for restraint but could not hide its dismay at Wilson’s refusal to distinguish between the two sides.

Yeah how dare they ask what the point of all this was

Austria was clearly close to the brink.13 When the Entente met for their war conference in Petrograd at the end of January 1917, the talk was of a new sequence of concentric offensives.

Wilson’s intervention was deeply embarrassing, but to the Entente’s relief the Central Powers took the initiative in rejecting the President’s offer of mediation. This freed the Entente to issue their own, carefully worded statement of war aims on 10 January.

To cover purchases in the US running at $75 million per week, in January 1917 Britain could muster no more than $215 million in assets in New York. Beyond that, it would be forced to draw down on the Bank of England’s last remaining gold reserves, which would cover no more than six weeks of procurement.

At 1 p.m. on 22 January 1917 Woodrow Wilson strode towards the rostrum of the US Senate.16 It was a dramatic occasion. News of the President’s intention to speak was only leaked to the senators over lunch. It was the first time that a President had directly addressed that august body since George Washington’s day.

Commonly, Wilson’s emergence as a leader of global stature is dated a year later to January 1918 and his enunciation of the so-called ‘14 Points’. But it was in fact in January 1917 that the American President first staked an explicit claim to world leadership.

As in the 14 Points speech, on 22 January Wilson would call for a new international order based on a League of Nations, disarmament and the freedom of the seas. But whereas the 14 Points were a wartime manifesto that fit snugly into a mid-century narrative of American global leadership, the speech that Wilson delivered on 22 January is a great deal harder to assimilate.

The first dramatic assertion of American leadership in the twentieth century was not directed towards ensuring that the ‘right’ side won, but that no side did.17 The only kind of peace with any prospect of securing the cooperation of all the major world powers was one that was accepted by all sides. All parties to the Great War must acknowledge the conflict’s deep futility. That meant that the war could have only one outcome: ‘peace without victory’.

For America to ride to the assistance of Britain, France and the Entente would certainly ensure their victory. But in so doing America would be perpetuating the old world’s horrible cycle of violence. It would, Wilson insisted in private conversation, be nothing less than a ‘crime against civilization’.

What he called for in January 1917 was a ‘peace made secure by the organized major force of mankind’. If the war ended in a world divided between victors and vanquished, the force necessary to sustain it would be immense. But what Wilson aspired to was disarmament.

It was precisely to create the necessary conditions for a peace that could be upheld without a costly international security system that Wilson in January 1917 was calling for an end to the war. The exhaustion of the warlike spirits of all the powers, the demonstration by example that war had lost its utility, would make the League self-supporting.

Wilson is famous as the great internationalist amongst American presidents. However, the world he wanted to create was one in which the exceptional position of America at the head of world civilization would be inscribed on the gravestone of European power.

Wilson’s vision was neither one of gutless idealism nor a plan to subordinate US sovereignty to international authority. He was in fact making an exorbitant claim to American moral supremacy, rooted in a distinctive vision of America’s historic destiny.

Unlike the response to the 14 Points in 1918, the reaction to Wilson’s call for a ‘peace without victory’ in January 1917 was distinctly mixed.22 In the US the President was cheered by his progressive and left-wing supporters. By contrast much of the Republican Party reacted with fury to what they understood as an unprecedented partisan intervention by the executive branch.

Another member of the audience was left with the impression that Wilson ‘thinks he is the President of the world’.

Not wrong

That Wilson meant to bankrupt them was precisely what the Entente feared. For Paris and London the questions raised by Wilson’s speech went beyond constitutional niceties. His vision threatened to drive a wedge into the solidarity of the Allied home front that had so far enabled the war to be continued in large part on a volunteer basis without draconian domestic repression. What was even more alarming was that Wilson was entirely aware of what he was doing.

It was here that the true import of Wilson’s address became clear. The American President was calling into question the representative legitimacy of all of the combatant governments.

As Wilson spoke on 22 January the British Labour movement was meeting in Manchester – 700 delegates, including a minister in Lloyd George’s new government, representing two and a quarter million members, more than four times the number at their first meeting in 1901.25 The general tone of the discussion was patriotic. But at the mention of Wilson’s name the anti-war faction organized in the Independent Labour Party burst into a well-orchestrated ovation.

All of this ought to have presented a truly historic opportunity for Germany. The American President had weighed the war in the balance and had refused to take the Entente’s side. When the blockade revealed what Britain’s command of the seaways meant for global trade, Wilson had responded with an unprecedented naval programme of his own. He seemed bent on blocking any further mobilization of the American economy. He had called for peace talks whilst Germany still had the upper hand. He was not deterred by the fact that Bethmann Hollweg had gone first. Now he was speaking quite openly to the population of Britain, France and Italy, over the heads of their governments, demanding an end to the war.

In December the ambassador sought to bring home to Berlin the importance of Wilson’s intervention in the financial markets, which would be a far less dangerous way of throttling the Entente than an all-out U-boat campaign. Above all, Bernstorff understood Wilson’s ambition. If he could bring the war to an end he would claim for the American presidency the ‘glory of being the premier political personage on the world’s stage’.

such appeals were not enough to halt the logic of escalation that had been set in motion by the Entente’s near breakthrough in the late summer of 1916.