My Review of Odd Arne Westad's "The Coming Storm: Power, Conflict......"

 War Clouds on the Horizon

In a previous blog I noted that we are living in a prewar era analogous to the runup to the start of World War II. (See: https://shulmaven.blogspot.com/2023/11/reliving-1930s-part-5.html ) Here Yale historian and global affairs professor Odd Arne Westad argues that a more appropriate analogy would be that of the prewar period approaching World War I. In many respects his argument parallels that of Graham Allison’s Thucydides Trap where the rise of China is inducing fear in the United States that has the potential to make war inevitable. ( See: https://shulmaven.blogspot.com/2017/08/my-amazon-review-of-graham-allisons.html ) Instead of the Balkans being the hotspot in the pre-1914 world, today we China-Taiwan, Israel-Palestine, Russia-Ukraine, and Pakistan-India. Anyone of which that could put the great powers in play.

 

In the pre-World War I era it was the rise of Germany that was threatening Britain, but Westad goes further by stating the bipolar world of the Cold War is over, and, in fact, we are now living in a multi-polar world with many strong regional actors such as India, Türkiye, Brazil and Iran.  He further analogizes that Russia is the Austria-Hungary of our day by being China’s junior partner. Similar to our time, the pre-World War I era was characterized by rising nationalism and a growing dissatisfaction with globalism. Fear and resentment were the motivating forces of the era. Sound familiar? 

 

My problem with Westad’s book is that he doesn’t offer real solutions, but who can, to the U.S.-China antagonism and for the regional hotspots. Because the book was written prior to the current Iran War, which has the potential for a great power conflict, Westad doesn’t have much to say.  There is also little discussion on the current revolution in military affairs involving drones and artificial intelligence which is greatly influencing the diplomatic chessboard. That said, if pre-World War I is the appropriate analog, we are in for trouble.

 

My Review of Per Hansen's "There Will be the Devil to Pay"

 The Mother of all Financial Crises

This is a book for economic history nerds, not for the typical lay reader. Danish business school professor Per Hansen takes us deep into the financial crisis of 1931 starting in May when the Credit Anstalt Bank of Vienna collapsed and ending in October in the aftermath of England going off the gold standard. Although the crisis has been covered before by Barry Eichengreen, Peter Temin, Liaquat Ahamed and Tobias Straumann (See: Shulmaven: My Amazon Review of Tobias Straumann's "1931:Debt, Crisis and the Rise of Hitler" ), Hansen’s account is the most detailed.

 

Instead of writing history after the fact, Hansen takes us into the minds of four key players in the crisis as they try to make sense of the enveloping collapse. His four players are Montague Norman, Governor of the Bank of England; George Harrison, President of the New York Fed; Francis Rodd, bank of England official on loan to the newly formed Bank for International Settlements; and Harry Siepmann, Advisor to Norman. They all, especially Rodd, took detailed notes. Hansen records many of them in full and he had access to the numerous telegrams that lit up the wires of Europe.

 

For all four of them the maintenance of the gold standard was the highest priority and as Eichengreen, Temin, and yes Keynes noted, it was the fetters of the gold standard that worsened the crisis. Hansen calls out the fact that the United States and France did not play by the rules of the gold standard by failing to ease credit sufficiently to staunch the inflow of gold coming from Germany and England. It was the gold outflow from Germany and England that forced upon them a deflationary spiral from which there was no recovery.

 

All four of them were operating under the lender of last resort rules proposed by Walter Bagehot in 1873. (See: Shulmaven: My Amazon Review of James Grant's "Bagehot: The Life and Times of the Greatest Victorian" )  Bagehot’s crisis rule called for central banks to lend freely, against good collateral at a penalty rate. That works if there is sufficient good collateral to lend against. In the case of Credit Anstalt, there was none. Indeed, Credit Anstalt was more a private equity fund controlling about 70% of Austrian industry, than a commercial bank. Simply put, it was funding long term equity with short term deposits. When the market recognized the bank’s assets were worth far less than was thought, a bank run ensued. What exacerbated the crisis was that Credit Anstalt was a highly prestigious Rothschild bank with a blue-ribbon board of directors. If it could happen to them, it could happen to any bank.

 

The crisis then moves to Germany in July when the Danat Bank failed triggering an internal and external drain on deposits. In an effort to maintain the gold standard, the Bruening government yet again adopts further austerity policies as a condition to receiving aid from the Bank of England, the Bank of

France and the New York Fed. Yes, George Harrison of the New York Fed was in up to his eyeballs in the European crisis. Although he formally needed approval from the Fed’s Board of Governors in Washington, that was a mere formality. As part of the crisis management a standstill agreement on withdrawing international deposits from Germany was put in place.

 

That standstill agreement kept England from withdrawing gold from Germany exacerbating a gold outflow that was already in train. To staunch the gold outflow the Bank of England recommended an austerity budget which triggered a naval mutiny over pay cuts. It was then only a matter of time before England left the gold standard and let the pound float.

 

The German crisis put such a strain on Montague Norman that he suffered a nervous breakdown and was out of action from mid-August to late September. However, there was not much he could have done. Hansen highlights the fact that origin of the European crisis was the after affects of World War I that left a legacy of inflation along with German reparations payments and an inter-allied debt to the United States. In June of 1930 President Hoover called for a one-year moratorium on all debt repayments, but that was scuttled by France. While England would have benefited because it received less reparations payments than what was owed the United States; for France it was the reverse.  

 

Thus, reparations and the inter-allied debts hung over Europe like a dark cloud until the June 1932 Lausanne Conference which suspended all payments. By then the depression was in full force and Hitler was well on the way to power.

 

As someone who read the front page of every New York Times from August 1929 to March 1933 I have to sympathize with the four bankers and others who Hansen portrays. They were living day-to-day in a continual crisis doing the best they can under the circumstances. Hansen takes us into the weeds, which at times makes it difficult for the reader, it is well worth it. They did not know how the movie would end and were forced to make sense out of the situation as they went along. I had the same feeling about the Great Financial Crisis and the COVID crisis. In case of the latter, the Fed threw out the Bagehot playbook, by lending on questionable collateral. It worked, but along with a too aggressive fiscal policy it left a great inflation in its wake.

 

 

My Amazon Review of Robert Kagan's "The Ghost at the Feast: America and the Collapse................."

 America Comes of Age in Fits and Starts

 

Robert Kagan, a senior fellow at the Brookings Institution, has written a sequel to his “Dangerous Nation” Japan to cover American foreign policy from 1900-1941. In 1900 fresh after defeating Spain in 1898 the U.S. had the largest economy in the world and was viewed as a non-entity as far as the great powers of Europe were concerned. Domestically there was a strong anti-imperialist lobby against the American occupation of the Philippines, but Kagan reminds us that the freeing Cuba from Spanish colonialism was highly popular across the political spectrum. Using terms of today, it was viewed as a “humanitarian intervention.” Further the takeover of the Philippines was accidental in that Admiral George Dewey was following a decade old plan to steam to Manila to engage the Spanish fleet where he won a resounding victory. Kagan argues that absent the U.S. intervention, sooner or later the Philippines would have been taken over by either Germany or Japan.

 

Kagan covers the Platt Amendment to the Monroe Doctrine which unilaterally granted the U.S. the right to intervene in Latin America which it does many times. Initially to keep the Europeans out and to maintain the peace, but later with less than benign motives. He spends less than time than he should have around the politics of building the Panama Canal and President Roosevelt’s arbitration of the Russo-Japanese War. By 1914 the U.S. has no army to speak of and has modern, but small Navy.

 

When the war in Europe broke out the U.S. position was to stay out of it, despite strong support from banking interests to weigh in on the side of the allies. There was great support for the Central Powers coming from Irish, German and Jewish Americans for their own unique reasons. Despite the sinking of the Lusitania, President Woodrow Wilson, though indirectly supporting the allies, struggles to keep the U.S. out of the war. The pressure for U.S. entry  is led by former president Theodore Roosevelt. Ultimately as Germany resorts to unrestricted submarine warfare the U.S. enters the war as an associated power with an inflated sense of morality coming from “peace without victory” and his Fourteen Points.

 

Wilson enters the Versailles negotiations as a giant. American power is supreme, yet he gets sucked into the vortex of European power politics doing whatever he can to bring forth the League of Nations. However, while in Paris, the once internationalist Republican Party, does a 180-degree shift. The party once lead by Elihu Root, Henry Stimson and Charles Evans Hughes is now lead by the anti-league Theodore Roosevelt and Senate foreign relations chair Henry Cabot Lodge. They are backed up by “the irreconcilables” led by Senator’s William Borah and Hiram Johnson. When Wilson fails to seek a compromise, the League fails and the U.S. returns to its pre-war isolation. In a footnote three young idealist, William Bullitt, John Maynard Keynes, and Walter Lippmann become disillusioned on the shoals of European reality.

 

It is here where Kagan argues that the U.S. should have stayed in the game. Without U.S. backing both France and Britain became paranoid about future German power and therefore were less willing to compromise on reparations, something that would plague the continent for a decade. In the terms of the British diplomat Harold Nicholson, the U.S. became “the ghost at the feast.” To be sure the U.S. was present financially with both the Dawes and Young Plans, it was not really in the game.

 

With the onset of the Great Depression the world order begins to collapse, first economically and the politically. Japan invades Manchuria making a mockery of the League. Further, its naval build-up threatens the American presence in the Pacific and we have the rise of Hitler.

 

What is the newly elected President Roosevelt’s response to the deteriorating international situation? More isolation. Kagan, in my opinion underplays Roosevelt’s blowing up the July 1933 World Economic Conference where it is understood in no uncertain terms the U.S. will focus on domestic recovery. This did not go unnoticed by Mussolini and Hitler. To me one failing of the book is that is lacks an economic context, particularly on the role of the gold standard and the collapse in world trade.

 

Later in the decade Roosevelt has to fight off the isolationists to deal with the growing challenges coming from Japan and Germany. He highlights the trigger for the change as the September 1938 Munich Conference and the November 1938 Kristallnacht explosion in Germany. Kagan reasons, correctly in my opinion, that the reason France and Germany caved into Hitler is that they rightfully believed that the U.S. did not have their backs. Thus had the U.S. been more involved with Europe in the 1930’s the horrors to come might just have been avoided. And if the war in Europe did not start, Japan might not have embarked on its aggression in Southeast Asia.

 

Kagan’s conclusion is that there is a straight line from America’s holiday from international affairs in the 1920’s and 1930’s to the agony of the 1940’s. It is a lesson that should be remembered by those today who see few reasons for America’s involvement on the world stage.

For the full Amazon URL see: America Comes of Age in Fits and Starts (amazon.com)

My Amazon Review of Robert Gerwarth's "November 1918: The German Revolution"

The Socialist Center Holds

University College of Dublin historian Robert Gerwarth has written an important book on the creation of the Weimar Republic that rose out of the ashes of Hohenzollern Empire in 1918. Although many historians have viewed the new republic as doomed from the start, Gerwarth rightly believes it had a fighting chance to succeed. His history is largely written through the lens of the MSPD (Majority Social Democratic Party) and its leader Friedrich Ebert.

His story begins in 1914 with the start of World War I with the Social Democratic Party unified save for Karl Liebknecht in supporting war credits to finance the war. The party splits a year later between pro-war (MSPD) and anti-war factions (USPD) with the majority supporting the war. In late 1917 and early 1918 with Russia’s withdrawal from the war a wave of optimism sweeps Germany. That was quickly dispelled as the Americans enter the war and the final German offensive is crushed in August of that year. Nevertheless, even with potential defeat Germans remain optimistic that President Woodrow Wilson’s Fourteen Points would lead to a just settlement.  

With Germany headed for defeat in the fall of 1918 a revolution starting with sailors in Kiel spreads throughout the country. Unlike the French and Russian revolutions which started in the capitals, here the German revolution starts in the periphery and ends up in Berlin in November.  On November 9 a republic is proclaimed in Weimar with Friedrich Ebert as its president.

Then things go to hell in a handbasket. A revolution from the Left is orchestrated by the Spartacists Karl Liebknecht and Rosa Luxemburg. That revolution is crushed by the army with the rightwing paramilitary Freicorps. Similarly the so-called Bavarian Soviet Republic in Munich is again crushed by the army and the paramilitaries. Here we see Ebert showing no mercy for his former colleagues on the Left. From the Right there is the Kapp Putsch which is put down by Ebert calling for a general strike. Ebert and the MSPD genuinely believed in democracy and order and even though they were men of the Left, they rightly feared the chaotic consequences of a Bolshevized Germany.

So here we have new government challenged from the Left and the Right and further it is demoralized by the harsh terms of Versailles in complete contradiction of what they believed to be the moderate terms of a Wilsonian Peace. Simply put, they were sold out by Wilson. And if that were not enough the government faces a French occupation of the Ruhr, a runaway inflation and the assassination of its highly regarded finance minister, Walter Rathenau.  Yes despite all of this by 1925 the government is stable, the center parties are in control and the extreme parties of the Right and Left are marginalized. It would take a global depression and a conspiracy of the Right and the Left to bring down Weimar. Absent that, sitting from the vantage point of 1925, the prospects for Weimar looked good.

My two quibbles with Gerwarth’s book is that he spends way to little time on the events of 1920-23 that he advertises in the beginning and he doesn’t spend much time on the role of the nonsocialist center parties had in forming the government. Otherwise “November 1918” makes for interesting history.

For the full Amazon URL see: https://www.amazon.com/review/R1W9DUGA4109F4/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of John Oller's "White Shoe: How a New Breed of Wall Street Lawyers Changed Big Business and the American Century"

Super Lawyers of the Gilded Age

Retired Wall Street lawyer John Oller takes us back to the turn of the 20^th Century when the modern law firm was created to service the giant industrial corporations that were taking form. Among the IVY League WASP lawyers we see Paul Cravath fresh after his winning the “current wars” for his client George Westinghouse against Thomas Edison create the model of today’s law firm. He hires associates straight out of the best law schools, trains them and puts them on a partnership track. He also creates a profit sharing system among the partners. More than 100 years later this is how corporate law firms work.

We meet Frank Stetson, JP Morgan’s lawyer, future Chief Justice of the Supreme Court Charles Evans Hughes, George Wickersham who would become William Howard Taft’s attorney general who brings a multitude of anti-trust lawsuits, and William Nelson Cromwell who pretty much is responsible for a coup in Panama that leads to the building of the Panama Canal.  We also meet a young John Foster Dulles, who would later run Sullivan & Cromwell and be Eisenhower’s secretary of state.

There is also one Jewish lawyer in this telling. He is Samuel Untermyer  who after making a fortune on Wall Street, he becomes a leading muckraker taking on the titans of Wall Street, including JP Morgan in very famous congressional hearing.

Out of their labors we see formulated the notions of the “rule of reason” in antitrust cases first enunciated by William Howard Taft when he was an appellate judge, the consent decree and the business judgement rule for corporate officers and directors. As the story evolves most of Oller’s protagonists make peace with the progressives they rub up against and as such they become part and parcel with the newly emerging administrative state. Of course the emergence of the administrative state would become a great boon to the super lawyers.

We also see the growing internationalist outlook among Oller’s Wall Street lawyers. They push for intervention on the Allies side in World War I and actively support the creation of the League of Nations. A generation later they would form the backbone of Wendell Willkie’s campaign for the presidency. Oller bemoans the fact that Wall Street lawyers are far less involved in Washington D.C. then they were 100 years ago. Instead we see Wall Street investment bankers taking their place.

Oller has written an interesting book highlighting the merger between law and capital. At time he gets bogged down in too many details, but on the whole his book makes for an interesting history. 

The full Amazon URL appears at: https://www.amazon.com/review/R1DA0ATSMPIED3/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Benjamin Carter Hett's "The Death of Democracy: Hitler's Rise to Power and the Downfall of the Weimar Republic"

The fall of Weimar and the Rise of Hitler

Hunter College history professor Benjamin Carter Hett has given us an insightful history into the collapse of the Weimar Republic and the rise of Hitler. He understands the power of myth wherein a large portion of the German population and most notably President Paul von Hindenburg believed there was unity in August 1914 at the outbreak of World War One and deceit in November 1918 when Germany surrendered. It was the power of this myth that underlay the success of the German Right.

From the outset the social democratic Weimar government was never viewed as legitimate by the German Right. Thus there was a permanent built-in opposition to the government. That was compounded by the communists in the late 1920s, following Stalin’s orders, called the social democrats “social fascists.” As a result by 1931 there was an anti-democratic majority consisting of communists and Nazis working almost in tandem to destroy democracy. Although Hett covers the communist May Day demonstration of 1929 that was put down by the Social Democrats he spends far too little time on the role the communists played in bringing down Weimar.

Although the Nazis were marginalized in the 1920s, the weakness in the farm economy, the continued burden of reparations and the onset of the global depression enabled the Nazis under Hitler’s leadership to unite the right. According to Hett German politics was based upon three “confessionals”: the Protestants, the Catholics and the socialist/communist factions. With the Left divided, Hitler utilizing the myths of August and October dominated the Protestants and picked off enough Catholics to become the leading rightwing party. As a result by 1933 the Nazis, by default, had to be part of any coalition government and with their successful bullying tactics they seized power. Of course they were aided by the deflation policies of Heinrich Bruning’s Center Party coalition government. In part the deflationary policies were designed to make things worse to relieve Germany of its reparations liabilities.

Hett gets many things right especially his view that the untimely death of foreign minister Gustav Stresemann in 1929 eliminated a democratic voice in Germany’s center-right. In my opinion Stresemann was the only politician who could have stopped Hitler. However Hett gets a few things wrong. First he over-emphasizes the opposition to globalization. He neglects to mention that globalization was at its apogee in 1914 and Germany was benefiting from it. He conflates globalization with reparations and the gold standard. Initially the real problem was with reparations which Hett notes were relatively mild relative to history, but that is a low bar, the burden on Germany was severe. He also mysteriously leaves out the 1922 assassination of finance minister Walter Rathenau by rightwing extremists. Rathenau had the confidence of both the British and French finance ministries and had he lived the reparations issue might have been ameliorated. Hett also gets wrong blaming the German farm crisis on the rise of U.S., Canadian and Australian wheat. That is not quite true. The true causes for the fall in farm prices was the return to market of Russian and southeastern European grain along with the mechanization of agriculture that reduced the need for forage crops. The farm issue is important because the core of Nazi supporters were the Protestant farmers.

Hett ends his book with the Night of the Long Knives in 1934. Here Hitler eliminates Ernst Rohm’s S.A. and more importantly much of the remaining conservative opposition. If there is a lesson to be learned from Hett’s book, it is that conservatives are play with fire when they suck up to rightwing demagogues. Hett has written an important book. Read it.

The full Amazon URL appears at:  https://www.amazon.com/review/R3GV90GRUF90X/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Charles R. Morris' "A Rabble of Dead Money: The Great Crash and the Global Depression: 1929-1939

The Great Depression: Who done it?

Charles R. Morris has presented us with a very thoughtful popular history on the origins of the Great Depression. He pulls together the thoughts of four really good books on the subject without getting too bogged down in technical jargon. They are Barry Eichengreen’s “Golden Fetters,”  Liquat Ahamed’s “The Lords of Finance,” Robert Gordon’s “The Rise and Fall of American Growth,” and Frederick Lewis Allen’s popular history of the 1920’s “Only Yesterday.”

To Morris and most of the economics profession the cause of the Great Depression was the imbalances that arose out of World War I with its interaction with the gold standard. This is more a Hooveresque version of the cause compared to Roosevelt’s view that causes were domestic; namely rampant speculation, the unequal distribution of income and the 1920’s depression in agriculture. Morris debunks all of the Rooseveltian causes and notes that agriculture wasn’t that bad off in the late 1920s. He does not however note the revolution in agricultural technology caused by the introduction of tractors eliminated the need for forage crops that accounted for 40% of the U.S.’s agricultural output. That alone would have triggered a fundamental restructuring of the industry.

Morris is very good at discussing the impact of electricity, automobiles and radio on production and the lifestyles of average Americans. The 1920’s truly brought with it a revolution in production and consumption. He also has vignettes about the rise and fall of the Samuel Insull, the utility mogul and Ivar Kreuger, the global match king as there empires collapsed under a mountain of debt.

If he holds out one party for special opprobrium it is Germany in its failure to step up to its reparations obligations after the 1924 Dawes Plan knocked them down enough to satisfy Keynes. Simply put they never were going to pay and it was the entire reparation process that put an inordinate amount of stress on the global financial system. However it is unrealistic to assume that any 1920’s social democratic government would have put on such a squeeze on their domestic economy as the French did following their defeat in the Franco-Prussian War of 1870.

As a result if a lay reader doesn’t want to slog through the four books I mentioned above, Morris’ alternative is well worth the read.

For the complete Amazon URL see:

https://www.amazon.com/review/RBRIHGNDDR8L8/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Catherine Merridale's "Lenin on the Train"

Riding the Locomotive of History

One hundred years ago this month V.I. Lenin boarded a train in Zurich that would take him through Germany, Sweden and Finland to ultimately arrive at Finland Station, Saint Petersburg, Russia. As history professor Catherine Merridale describes, Lenin arrives in a city racked by three years of war and rapt in the chaos of a new revolutionary government struggling to govern and a Bolshevik Party torn between participating in governing and advocating another revolution.

Merridale vividly describes the collapse of the Czarist regime at home and on the war front and Lenin’s life in exile in Switzerland. It is the German government who seizes upon the idea of transporting Lenin into Russia with the goal of fomenting a revolution that would take that country out of the war. The plot succeeds brilliantly. The go between was a Bolshevik/ speculator Alexander Helphand also known as Parvus, who is quite a character. With the deal orchestrated Lenin and his entourage occupy three rail cars as they travel through Germany and beyond. Although it was known as a “sealed train” it was far from sealed and passengers actually disembarked on occasion. It was quite a menagerie and the passengers included such luminaries as Karl Radek, Grigory Sokolnikov and Grigory Zinoviev. All three would later die in the Stalin purges of the 1930s.

The interesting thing is that it was no secret. The Russian government knew, the British knew and the Bolsheviks knew that Lenin was coming. With his boisterous arrival he grabs the Bolshevik Party by the throat and with the force of his will he sets them on a revolutionary course. Lenin truly was the “plague bacillus” that Churchill described him as, because in his wake you can count the deaths in the tens of millions.

Although the book is slow going at times, Merridale tells the story with great verve and you get a sense of the drama building as the locomotive of history goes on its journey through northern Europe.

For the complete Amazon URL see: https://www.amazon.com/review/R1O6LJHLGDE58V/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Michael Kazin's "War Against War: The American Fight for Peace 1914-1918"

The Good Fight?

Georgetown history professor Michael Kazin wears his biases on his sleeve. As someone who was very active in the 1960s anti-war and radical movements, Kazin has written a highly sympathetic account of the anti-war movement that arose in the U.S. to keep us out of World War I. He organizes his history around the lives of four people who symbolized the broad-based coalition that worked round the clock in their anti-war efforts. They are the Southern segregationist Majority Leader of the House and Chairman of the Ways and Means Committee, Claude Kitchin; Crystal Eastman a social reformer who founds the Woman’s Peace Party and the American Union Against Militarism; Morris Hilquit the Jewish Socialist labor lawyer and politician form New York City and Senator Robert La Follette, the Wisconsin progressive filibusters President Wilson’s proposal to arm merchant ships. It was that filibuster that caused the Senate to adopt the cloture rules we have today.

Along the way we meet Crystal Eastman’s brother, Max who publishes Masses, future socialist Norman Thomas, auto magnate Henry Ford, social reformer Jane Addams and Roger Baldwin who would found the ACLU. All in all it was quite a broad coalition and in Kazin’s mind they worked a miracle to keep the U.S. out of the war as long as it did in countering a pro-war movement headed up by Theodore Roosevelt.  After all the Lusitania was sunk by a German U-boat in 1915 and under the aegis of the German ambassador, Germany was running a vast terror network on the east coast. That network caused the Black Tom explosion in New York Harbor which blew up munitions heading for England.

He argues that were it not for the anti-war movement the U.S. would have entered the war sooner causing countless more American deaths. I would argue to the contrary because, in my opinion, a U.S. entry say in early 1916 would have likely shortened the war and prevented the carnage on the eastern front that was to come.

My criticism of Kazin’s work is that he ignores the broad forces of history that made U.S. entry into the war inevitable. The U.S. as a rising power couldn’t really stay out and a Professor Adam Tooze has taught us that during 1916 economic power was being transferred from England to the U.S. Simply put the U.S. had too much at stake in an Allied victory as the Allies were head over in heels in debt to the U.S. and the war was engendering an economic boom. It was only a matter of time for the “peace candidate” Wilson to tip his hand. That happened in 1917 when Germany renewed unrestricted submarine warfare, the Zimmermann telegram was published indicating German overtures to Mexico and Tsar Nicholas II abdicated making it easy for Wilson to say that the war was about democracy. Put in a geopolitical context, no U.S. president would allow a Europe dominated by a hostile Germany.

Nevertheless Kazin tells a good story about an era in American history that has long been forgotten.

The full amazon URL is: https://www.amazon.com/review/R28VC2VEWOSVZL/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Robert Gerwarth's "The Vanquished: Why the First World War Failed to End"

The Never Ending War

Irish historian Robert Gerwarth certainly proves George Kennan’s notion that World War I was “the seminal catastrophe of this century.” To most of us in the West World War I ended on November 11, 1918. However in the East the war would rage on through 1923 and even today nearly a century later we remain prisoner of the forces it unleashed.

He also confirms the view of Ian Kershaw in his “To Hell and Back…..” that the Russian Revolution, an outgrowth of the war, paved the way for fascism by dividing the Left and hardening the Right. We see that at the outset where communists under the leadership of Rosa Luxemburg and Karl Leibknecht die in their attempt to seize power in 1919 Berlin. Similarly an attempt to form a Munich Soviet fails in that year as well. Put simply the Social Democratic government relied on the rightest Freicorps to put down the rebellion. In its aftermath Munich would become the festering ground for the rise of the Nazis. In Hungary Bela Kuhn, a communist, temporarily takes power only to be put down by a counter action from the Right. All the while the Russian civil war rages and within that there are the Russo-Polish and Russo-Finnish Wars, so much for the end of violence in November 1918.

For the Jews of Eastern Europe and Germany the situation turns from bad to worse. On top of the latent anti-Semitism that already existed we have the conflation of Jews with communism as much of the communist leadership in Russia, Germany, Austria and Hungary are Jewish. Thus the way was paved to broaden the appeal of anti-Semitism to much of the middle-class.

Where I think Gerwarth breaks new ground I think is in his discussion on the role of Mustapha Kemal’s success on Mussolini and Hitler. Kemal defeated the Greeks in Turkey and undid the toughest settlement against the Central Powers in the 1920 Treaty of Sevres which made Turkey a vassal of the Allies. In Kemal both Hitler and Mussolini saw his success in the ethnic cleansing of the Greek population in Eastern Anatolia by force and his willingness to stand up to the allies so much so that the 1923 Treaty of Lausanne completely undid the Treaty of Sevres. By the 1930s those lessons were well learned.

There is much more to Gerwarth’s book. He discusses why Italy ended up on the winning side; it still felt like a loser. And he discusses the chaos in the Balkans that we relived once again in the 1990s. Yes, World War I is still not over. Just look at the Middle East.

The complete Amazon URL is: https://www.amazon.com/review/RH2HKCJZ3RUZS/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

My Amazon Review of Ian Kershaw's "To Hell and Back: Europe 1914-1949"

The Wheels Come Off

The Europe of 1914, at least for its bourgeoisie, represented the height of civilization, the “Belle Époque” if you will.  And of a sudden the wheels fell off the track and the continent plunged into the darkness The Great War. British historian Ian Kershaw certainly proves George Kennan’s maxim that World War I was “the great seminal catastrophe of the 20^th Century.” The war arose in the milieu of ethnic nationalism, territorial revisionism and increasing class conflict growing out of mass industrialization. These three factors would remain long after the war ended and into this pot would be thrown the crisis in capitalism induced by the Great Depression.

Also arising out of the war was the successful Bolshevik Revolution that sent chills down the spines of the conservative elite. To Kershaw this was the most important event of the 20^th Century because the very real fear of communism made opposition to the rise of fascism far more difficult in the West. It hardened the right and split the left.  

As a result the crisis in capitalism forced politics to the right rather than the left which is not too much different from what happened post-2008. Thus the West’s response to the rise of fascism was timid, to say the least with respect to Germany’s re-occupation of the Rhineland in 1936, the Spanish Civil War and the dismemberment of Czechoslovakia in 1938. All the while the great purge trials were going on in Moscow.

Kershaw’s view of this history seems more deterministic than say that of Zara Steiner’s. To him there is more or less a straight-line between the Versailles settlements to the start of World War II.  To be sure he gives credit to “the spirit of Locarno,” but not enough in my opinion. He also leaves out two chance events that may have altered history. The first is outside his topic and that was the premature death of New York Federal Reserve President in 1928. Had he lived, in the minds of more than a few economists the worst effects of the Great Depression might have been avoided. Within his bailiwick was again the premature death of German Foreign Minister Gustav Stresemann in October 1929. If there ever were a German politician who could have stopped Hitler, it was Stresemann.

Kershaw brings the holocaust to the forefront in Hitler’s war of annihilation in the East in his coverage of World War II. Simply put Hitler wanted to conquer the West, but he wanted to destroy the East. He almost succeeded.

Kershaw finishes his book with the beginnings of the postwar recovery, the role of the Marshall plan and the start of the Cold War. By 1949 Europe is central to the Cold War between the U.S. and the Soviet Union, but its power is but a shadow of its former self. Kershaw has done an excellent job in portraying this epochal period that this review hardly does justice to. 

For the complete Amazon URL see:

 https://www.amazon.com/review/RUMAWOC0UDGS6/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv

Geopolitics and the Stock Market: A Lesson from the Start of the Great War

World War 1 started 100 years ago today and to the stock market it seemed to come from totally out of the blue. Simply put the stock market failed miserably as a discounting mechanism. Why? The markets were unduly complacent about international affairs where from 1900 – 1914 there were two Moroccan crises and two Balkan Wars that many thought that any one of them would lead to a general war. Those crises were settled diplomatically and thus when the Austrian Archduke Franz Ferdinand was assassinated in Sarajevo by a Bosnian terrorist in the pay of Serbia, the markets thought nothing of it.

Although the U.S. was far away from the enveloping European Crisis as an emerging market, it was unduly dependent upon the inflow of foreign capital. As the crisis came to a boil European investors liquidated their U.S. holdings and the Treasury feared a run on gold. The stock exchange closing along with other measures short circuited the run and enabled the U.S. to remain on the gold standard.

The July 1914 complacency is eerily reminiscent of the world today. We are now in the midst of the second Ukrainian crisis of the year, from Libya to Iraq the Middle East is in flames, and China is making serious naval probes in Southeast Asia. In all likelihood the world will muddle through, but the lesson of 1914 is disquieting.

Here is a thumbnail history of the Dow Jones Industrial Average matched with the events of 1914. A casual reader will note that the stock market did not respond to the events in Europe until war was imminent.

Date           DJIA       Event

January 2 –  57.6       Year Opens

March 20 -   61.1       Year High

June 27    -    58.7       Day before Assassination

June 29   -     58.6       Day After Assassination (Market closed on June 28)

July 22     -    59.2       Day Before Austrian Ultimatum

July 23     -     59.0      Austria Delivers Ultimatum to Serbia

July 28     -     55.9      Austria Declares War on Serbia – WW 1 Begins

July 29    -      56.2       Relief Rally

July 30    -      52.3       Russia Mobilizes

July 31    -                    Stock Exchange Closes

Aug  3     -                   Germany Invades Belgium

Dec 12    -       54.6        Market Reopens