Please enable JavaScript.
Coggle requires JavaScript to display documents.
8.1 World War I - Coggle Diagram
8.1 World War I
Outbreak Crisis
-
City of London was the centre of international capital markets. Paris, New York and Berlin were also major nodes
Developing industrial economies like Russia and Austria depended on FDI, everyone depended on each other
Sudden outbreak of war in the summer of 1914 led to a freeze in capital markets, and fractured the international payments network: makets cracked in two
This posed an existential danger for short-term money markets. Outstanding bills in London amounted to £350m
Run for money meant a credit crunch -> interest rates rise, refusal to roll over existing loans.
Run on gold, selling wave in stock exchanges
-
-
Legacy of the war
Economic cost of human losses, incl consumption and birth rate loss
Asset destruction. Defeated had almost toal loss of foreign assets. France lost at least 50% (mainly its Russian investments)
Initial reparation bill for Germany was 300% of its 1921 GDP, 26% of its exports for 42 years. German hyperinflation was mostly a political episode caused by an attempt to resist reparations (Ruhr Occupation 1923)
Reparation schedule altered in the 1924 Dawes Plan, which went along with heavy borrowing from the USA
-