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

by Adam Tooze

Hitler and Trotsky recognized the same reality that Churchill did. They too believed that World War I had opened a new phase of ‘world organization’. But whereas Churchill took this new reality as cause for celebration, for a communist revolutionary like Trotsky or a national socialist such as Hitler it threatened nothing less than historical oblivion. Superficially, the peace settlements of 1919 might seem to advance the logic of sovereign self-determination that originated in European history in the late Middle Ages.

7 The Great War weakened all the European combatants irreversibly, even the strongest amongst them and even the victors. In 1919 the French Republic may have celebrated its triumph over Germany at Versailles, in the palace of the Sun King, but this could not disguise the fact that World War I confirmed the end of France’s claim to be a power of global rank. For the smaller nation states created over the previous century, the experience of the war was even more traumatic. Between 1914 and 1919, Belgium, Bulgaria, Romania, Hungary and Serbia had all faced national extinction as the fortunes of war swung back and forth.

If there was a European victor it was Britain, hence Churchill’s rather sunny assessment. However, Britain had prevailed not as a European power but as the head of a global empire. To contemporaries the sense that the British Empire had done relatively less badly out of the war only confirmed the conclusion that the age of European power had come to an end. In an age of world power, Europe’s position in political, military and economic terms was irreversibly provincialized.8

The one nation that emerged apparently unscathed and vastly more powerful from the war was the United States.

As we shall see, Britain’s governments in the 1920s again and again found themselves confronting the painful fact that the United States was a power unlike any other. It had emerged, quite suddenly, as a novel kind of ‘super-state’, exercising a veto over the financial and security concerns of the other major states of the world.

Getting this history right matters because we need to understand the origins of the Pax Americana that still defines our world today. It is crucial too, however, to understanding the huge second spasm of the ‘second Thirty Years War’ that Churchill would look back upon from 1945.12 The spectacular escalation of violence unleashed in the 1930s and the 1940s was a testament to the kind of force that the insurgents believed themselves to be up against. It was precisely the looming potential, the future dominance of American capitalist democracy, that was the common factor impelling Hitler, Stalin, the Italian Fascists and their Japanese counterparts to such radical action.

Whatever comforting, domesticated fantasies their followers may have projected onto them, the leaders of Fascist Italy, National Socialist Germany, Imperial Japan and the Soviet Union all saw themselves as radical insurgents against an oppressive and powerful world order. For all the braggadocio of the 1930s their basic view of the Western Powers was not that they were weak, but that they were lazy and hypocritical. Behind a veneer of morality and panglossian optimism the Western Powers disguised the massive force that had crushed Imperial Germany and that threatened to enshrine a permanent status quo.

But what if, as a German historian put it in the 1920s, one were to find oneself amongst the disenfranchised, amongst the lower breeds in the new order, as ‘fellaheen’ amidst the pyramids of peace?18

What reared its ugly head with this politicization of international affairs was the kind of irreconcilable conflict of values that had made the religious wars of the seventeenth century or the revolutionary struggles at the end of the eighteenth century so lethally violent. Given the horrors of World War I there must either be perpetual peace, or a war even more radical than the last.

On the third anniversary of the Armistice, in November 1921, an exclusive club of leaders gathered for the first time in Washington DC to accept a global order defined by America in unprecedentedly stark terms.

The rations of geostrategic power were fixed in the ratio of 10:10:6:3:3. At the head stood Britain and the United States, who were accorded equal status as the only truly global powers with a naval presence throughout the high seas. Japan was granted third spot as a one-ocean power confined to the Pacific. France and Italy were relegated to the Atlantic littoral and the Mediterranean. Beyond these five, no other state reckoned in the balance. Germany and Russia were not even considered as conference participants. This it seemed was the outcome of World War I: an all-encompassing global order, in which strategic power was more tightly held than nuclear weapons are today. It was a turn in international affairs, Trotsky remarked, analogous to Copernicus’s rewriting of the cosmology of the Middle Ages.24

Economics was the pre-eminent medium of American power, military force was a by-product.

These figures were speculative. But what no one disputed was that at the time of the Washington Naval Conference in November 1921, the British government owed the American taxpayer $4.5 billion, whilst France owed America $3.5 billion and Italy owed $1.8 billion. Japan’s balance of payments was seriously deteriorating and it was anxiously looking for support from J. P. Morgan. At the same time, 10 million citizens of the Soviet Union were being kept alive by American famine relief. No other power had ever wielded such global economic dominance.

There has always been a temptation, particularly on the part of British authors, to narrate nineteenth- and twentieth-century history as a story of succession, in which the United States inherited the mantle of British hegemony.27 This is flattering to Britain, but it is misleading in suggesting a continuity in the problems of global order and the means for addressing them.

But, on the other side of the balance sheet, American economic power was of a different quantity and quality from that which Britain had ever deployed.

In 1914, just over fifty years on, the American political class consisted of men whose childhoods were deeply scarred by that bloodshed. What was at stake in the peace policy of Woodrow Wilson’s White House can only be understood if we recognize that the twenty-eighth President of the United States headed the first cabinet of Southern Democrats to govern the country since the Secession. They saw their own ascent as vindication of the reconciliation of White America and the refounding of the American nation state.30 At a terrible cost America had forged itself into something unprecedented. This was no longer the voraciously expansive empire of the westward movement. But nor was it Thomas Jefferson’s neo-classical ideal of a ‘city on a hill’. It was something judged impossible by classical political theory. It was a consolidated federal republic of continental scale, a super-sized nation state. Between 1865 and 1914, profiting from the markets, transport and communications networks of Britain’s world system, the US national economy grew faster than any economy had ever grown before.

To describe the United States as the inheritor of Britain’s hegemonic mantle is to adopt the vantage point of those who in 1908 insisted on referring to Henry Ford’s Model T as a ‘horseless carriage’. The label was not so much wrong, as vainly anachronistic.

This book will have much to say about Woodrow Wilson and his successors. But the most elementary point is easily stated. Having formed itself as a nation state of global reach through a process of expansion that was aggressive and continental in scope but had avoided conflict with other major powers, America’s strategic outlook was different from either that of the old power states like Britain and France or their newly arrived competitors – Germany, Japan and Italy. As it emerged onto the world stage at the end of the nineteenth century, America quickly realized its interest in ending the intense international rivalry which since the 1870s had defined a new age of global imperialism.

The true logic of American power was articulated between 1899 and 1902 in the three ‘Notes’ in which Secretary of State John Hay first outlined the so-called ‘Open Door’ policy. As the basis for a new international order these ‘Notes’ proposed one deceptively simple but far-reaching principle: equality of access for goods and capital.32 It is important to be clear what this was not. The Open Door was not an appeal for free trade. Amongst the large economies, the United States was the most protectionist. Nor did the US welcome competition for its own sake. Once the door was opened, it confidently expected American exporters and bankers to sweep all their rivals aside. In the long run the Open Door would thus undermine the Europeans’ exclusive imperial domains.

What American strategy was emphatically directed towards suppressing was imperialism, understood not as productive colonial expansion nor the racial rule of white over coloured people, but as the ‘selfish’ and violent rivalry of France, Britain, Germany, Italy, Russia and Japan that threatened to divide one world into segmented spheres of interest.

Wilson wanted international arbitration, freedom of the seas and non-discrimination in trade policy. He wanted the League of Nations to put an end to inter-imperialist rivalry. It was an anti-militarist, post-imperialist agenda for a country convinced of the global influence that it would exercise at arm’s length through the means of soft power – economics and ideology.

What is not sufficiently appreciated, however, is how far Wilson was willing to push this agenda of American hegemony against all shades of European and Japanese imperialism. As this book will show in its opening chapters, as Wilson drove America to the forefront of world politics in 1916, his mission was to ensure not that the ‘right’ side won in World War I, but that no side did.

Only a peace without victory, the goal that he announced in an unprecedented speech to the Senate in January 1917, could ensure that the United States emerged as the truly undisputed arbiter of world affairs. This book will argue that despite the fiasco of that policy already in the spring of 1917, despite America’s reluctant engagement in World War I, this would remain the basic objective of Wilson and his successors right down to the 1930s. And it is this which holds the key to answering the question that follows. If the United States was bent on instituting an Open Door world and had formidable resources at its disposal to achieve that goal, why did things go so badly awry?

Wilson found himself facing Lenin in a foreshadowing of the Cold War. The spectre of Communism in turn animated the extreme right. First in Italy and then across the continent, most lethally in Germany, fascism came to the fore. The violence and increasingly racialized and anti-Semitic discourse of the crisis period 1917–21 hauntingly foreshadowed the even greater horrors of the 1940s. For this disaster the old world had no one to blame but itself. Europe, with Japan figuring as its apt pupil, truly was the ‘Dark Continent’.

The Wilsonian construction of interwar history saturates the sources to such an extent that it requires a conscious and sustained effort to hold it at bay. This is what gives such a powerful corrective value to the testimony of the incongruous trio with whom we began – Churchill, Hitler and Trotsky. Their vision of the aftermath of the war was quite different. They were convinced that a fundamental change had come over world affairs. They were also agreed that the terms of this transition were being dictated by the United States, with Britain as its willing accessory. If there was a dialectic of radicalization operating behind the scenes that would throw open the door of history to extremist insurgency, as of 1929 it was obscure to both Trotsky and Hitler. It took a second dramatic crisis, the Great Depression, to unleash the avalanche of insurgency. Once the extremists were given their chance, it was precisely the sense that they faced mighty opponents that animated the violence and lethal energy of their assault on the post-war order.

It was explosive, dangerous, all-consuming, attritional, and in 1914 no more than a few decades old.47 Far from belonging in the lexicon of a venerable but corrupt ‘ancien régime’, the term ‘imperialism’ was a neologism that entered widespread use only around 1900. It encapsulated a novel perspective on a novel phenomenon – the remaking of the political structure of the entire globe under conditions of uninhibited military, economic, political and cultural competition. Both the Dark Continent and the hegemonic failure models are therefore based on a faulty premise. Modern global imperialism was a radical and novel force, not an old-world hangover.

Ultimately, in World War I the British-led Entente would prevail, but only by further intensifying its strategic entanglements and extending them around the world through the global reach of the British and French empires and across the Atlantic to the United States. The war thus bequeathed an unprecedented problem of global economic and political order, but no historical model of world hegemony with which to address it. From 1916 the British themselves would attempt feats of intervention, coordination and stabilization to which they had never aspired in the empire’s Victorian heyday. Never was British imperial history more closely entwined with world history and vice versa, an entanglement that continued perforce into the post-war period.

There was only one power, if any, that could fill this role – a new role, one that no nation had ever seriously attempted before – the United States.

The threat of Bolshevik revolution was certainly present in the minds of conservatives all over the world after 1918. But this was a fear of civil war and anarchic disorder and it was in large part a phantom menace. It was in no way comparable to the awesome military presence of Stalin’s Red Army in 1945, or even the strategic heft of Tsarist Russia before 1914. Lenin’s regime survived the revolution, defeat at the hands of Germany and civil war, but only by the skin of its teeth. Communism was throughout the 1920s fighting from the defensive. It is questionable whether the United States and the Soviet Union were on the same footing even in 1945. A generation earlier, to treat Wilson and Lenin as equivalent is to fail to acknowledge one of the truly defining features of the situation – the dramatic implosion of Russian power. In 1920 Russia appeared so weak that the Polish Republic, itself less than two years old, decided that this was the time to invade. The Red Army was strong enough to ward off that threat. But when the Soviets marched westwards they suffered a crushing defeat outside Warsaw. The contrast to the era of the Hitler–Stalin Pact and the Cold War could hardly be more stark.

Given the astonishing vacuum of power in Eurasia from Beijing to the Baltic, it is hardly surprising that the most aggressive exponents of imperialism in Japan, Germany, Britain and Italy sensed a heaven-sent opportunity for aggrandizement. The uninhibited ambitions of the arch-imperialists in Lloyd George’s cabinet, or General Ludendorff in Germany, or Goto Shinpei in Japan, provide ample material for the Dark Continent narrative.

Threatened in the 1850s by outright subordination to foreign power, facing Russia, Britain, China and the United States as potential antagonists, one Japanese response was to seize the initiative and to embark on a programme of domestic reform and external aggression. It was this course, pursued with great effectiveness and daring, that earned for Japan the sobriquet of the ‘Prussia of the East’. But what is too easily forgotten is that this was always counterbalanced by another tendency: the pursuit of security through imitation, alliance and cooperation, Japan’s tradition of new, Kasumigaseki diplomacy.54 This was achieved first through the partnership with Britain in 1902 and then through a strategic modus vivendi with the United States.

But during and after World War I, Japan’s emerging system of multi-party parliamentary politics acted as a substantial check on the military leadership.

So long as the Western Powers could hold the ring in the world economy and secure peace in East Asia, it was the Japanese liberals who held the upper hand. If that military, economic and political framework was to come apart, it would be the advocates of imperialist aggression who would seize their opportunity.

What the war gave rise to was a multisided, polycentric search for strategies of pacification and appeasement. And in that quest the calculations of all the great powers pivoted on one key factor, the United States. It was this conformism that filled Hitler and Trotsky with such gloom. Both of them hoped that the British Empire might emerge as a challenger to the United States. Trotsky foresaw a new inter-imperialist war.55 Hitler already in Mein Kampf had made clear his desire for an Anglo-German alliance against America and the dark forces of the world Jewish conspiracy.56 But despite much bluster from the Tory governments of the 1920s, there was little prospect of an Anglo-American confrontation. In a strategic concession of extraordinary significance, Britain peacefully ceded primacy to the United States.

Why did the Western Powers lose their grip in such spectacular fashion? When all is said and done, the answer must be sought in the failure of the United States to cooperate with the efforts of the French, British, Germans and the Japanese to stabilize a viable world economy and to establish new institutions of collective security. A joint solution to these twin problems of economics and security was clearly necessary to escape the impasse of the age of imperialist rivalry.

How is America’s reluctance to face the challenges posed by the aftermath of World War I to be explained? This is the point at which the synthesis of the ‘Dark Continent’ and hegemonic failure interpretations must be completed. The path to a true synthesis lies not only in recognizing that the problems of global leadership faced by the United States after World War I were radically new and that the other powers too were motivated to search for a new order beyond imperialism. The third key point to establish is that America’s own entry into modernity, presumed in such a simple way by most accounts of twentieth-century international politics, was every bit as violent, unsettling and ambiguous as that of any of the other states in the world system.

Indeed, given the underlying fissures within a formerly colonial society, originating in the triangular Atlantic slave trade, expanded by means of the violent appropriation of the West, peopled by a mass migration from Europe, often under traumatic circumstances, and then kept in perpetual motion by the surging force of capitalist development, America’s problems with modernity were profound.

But what was remarkable in the wake of World War I was the degree to which American exceptionalism emerged strengthened and more vocal than ever, precisely at the moment when all the other major states of the world were coming to acknowledge their condition as one of interdependence and relativity. What we see, if we look closely at the rhetoric of Wilson and other American statesmen of the period, is that the ‘primary source of Progressive internationalism . . . was nationalism itself’.59 It was their sense of America’s God-given, exemplary role that they sought to impose on the world.

What we are pushed towards is a conclusion that is hauntingly reminiscent of a question that still faces us today. It is commonplace, particularly in European histories, to narrate the early twentieth century as an eruption of American modernity onto a world stage.60 But novelty and dynamism existed side by side, this book will insist, with a deep and abiding conservatism.61 In the face of truly radical change, Americans clung to a constitution that by the late nineteenth century was already the oldest Republican edifice in operation.

Something had to be done to insulate Washington from the alarming rise in militancy that threatened not only the domestic order but America’s international standing. This was one of the principal missions both of Wilson’s administration and its Republican predecessors early in the twentieth century.64 But whereas Teddy Roosevelt and his ilk saw military power and war as powerful vectors of progressive state construction, Wilson resisted this well-trodden, ‘old world’ path. The peace policy that he pursued up to the spring of 1917 was a desperate effort to insulate his domestic reform programme from the violent political passions and the wrenching social and economic dislocation of the war. It was in vain. The calamitous conclusion to Wilson’s second term in 1919–21 saw the coming apart of this first great twentieth-century effort to remake American federal government.

Instead of the neat stage theories projected by nineteenth-century theorists, history took the form of what Trotsky would call ‘uneven and combined development’, a loosely articulated web of events, actors and processes developing at different speeds, whose individual courses were interconnected in labyrinthine ways.66 ‘Uneven and combined development’ is not an elegant phrase. But it well encapsulates the history we tell here, both of international relations and of interconnected national political development, stretching around the northern hemisphere from the United States to China by way of Eurasia. For Trotsky, it defined a method both of historical analysis and of political action. It expressed his dogged belief that whilst history offered no guarantees, it was not without logic. Success depended on sharpening one’s historical intelligence so as to recognize and seize unique moments of opportunity. For Lenin, similarly, a key task of the revolutionary theorist was to identify and attack the weakest links in the ‘chain’ of imperialist powers.67

The rising economic power of America had been evident from the 1890s, but it was the Entente’s battle with the Central Powers that abruptly shifted the centre of global financial leadership across the Atlantic.10 In so doing, it redefined not only the locus of financial leadership, but what that leadership actually meant.

Before the war billions had been lent by private lenders in London and Paris, the rich core of Imperial Europe, to private and public borrowers in peripheral nations.15 As of 1915, not only had the source of lending shifted to Wall Street, it was no longer railways in Russia or diamond prospectors in South Africa queuing up for credit. The most powerful states of Europe were now borrowing from private citizens in the United States and anyone else who would provide credit. Lending of this kind, by private investors in one rich country to the governments of other rich developed countries, in a currency not controlled by the government borrower, was unlike anything seen in the heyday of late Victorian globalization.

The most powerful states in Europe became dependent on foreign creditors. Those creditors in turn extended their confidence to the Entente. By the end of 1916, American investors had wagered two billion dollars on an Entente victory. The vehicle for this transatlantic operation, once London took charge in 1915, was a single private bank, the dominant Wall Street house of J. P. Morgan, which had deep historic ties to the City of London.

Through the private business contacts of J. P. Morgan, supported by the business and political elite of the American Northeast, the Entente was carrying out a mobilization of a large part of the US economy, entirely without the say-so of the Wilson administration. Potentially, the Entente’s dependence on loans from America gave the American President huge leverage over their war effort. But would Wilson actually be able to exercise that power? Was Wall Street too independent? Did the Federal government have the means to control the activities of J. P. Morgan?

In London, at least until the end of 1916, there were voices calling for Britain to escape dependence on American loans. But they were by the same token calling for a negotiated peace. They were overridden by the advent of the Lloyd George coalition government in December 1916 committed to delivering a ‘knock-out blow’. What no one seriously contemplated was continuing the war at full force without relying on supplies and credit from the United States. From 1916, once the Allies had taken up their first billion dollars in credit in their first major effort to break the Central Powers through concentric assaults, the momentum was cumulative. The assumption behind all subsequent offensive planning was that it would be sustained by substantial transatlantic supplies. And this then reinforced the dependence. As the billions piled up, maintaining payments on the outstanding debts, avoiding the humiliation of a default, became overriding preoccupations both during the war itself and even more in its aftermath.

But we should be careful in projecting this identification of America with an alluring synthesis of capitalist prosperity and democracy too far back into the early twentieth century. The speed with which the United States claimed pre-eminent political leadership was as sudden as the emergence of its naval and financial power. It was a product of the Great War itself.

As the western frontier closed, the continent was unified. The Spanish-American War of 1898 and America’s conquest of the Philippines in 1902 added swagger. The industrial dynamism of the United States was unprecedented. Its agricultural exports brought abundance to the world. But, among the progressive reformers of the gilded age, America’s self-image was ambiguous. America was a byword for urban graft, mismanagement and greed-fuelled politics, as much as for growth, production and profit. In search of models of modern government, it was to the cities of Imperial Germany that American experts made pilgrimage, not the other way around.

On both sides of the front line, soldiers were above all motivated to defend the systems of rights, property and national identity in which they felt themselves to have a profound stake. The French fought to defend the Republic against a hereditary foe. The British volunteered to do their bit to defend international civilization and put down the German menace. The Germans and Austrians fought to defend themselves against French resentment, Italian treachery, the overbearing demands of British imperialism and the worst menace of all, Tsarist Russia.

Before he was hailed as a world-famous liberal internationalist, Woodrow Wilson rose to prominence as one of the great bards of American national history.31 As a professor at Princeton University and the author of best-selling popular histories, he had helped to craft for a nation still reeling from the Civil War a reconciled vision of its violent past.