“Wall Street.
By 1916, the Brits had borrowed so much on the Wall Street credit market that the American banks needed an Allied victory in order to guarantee they’d get their money back.
And so we went to war, too.”,
Haven’t heard that one, however it does make some sense.
Hew Strachan’s “The First World War” has a very good chapter on how the warring powers financed their war efforts. It’s dry, but illuminating. The cost of the war was staggering and beyond anything they had contemplated being possible before hand. Most countries thought the war would end quickly as nobody could afford to finance a longer war.
Anyway, the British financed their costs, and the costs of France, Italy and Russia, by selling war debt bonds in New York. At that time, nobody in the world had better credit than His Majesty’s Government. And there was enough capital in New York to buy it. And it made sense to buy British bonds, because a lot of that money was coming directly back to the United States for war material. It was good business.
Contrast this to the Germans. They were frozen out of the New York market by the Brits. It made little sense to sell to the Germans; the British blockade meant they could not buy and ship any American goods. So the Germans sold their war debt to themselves, mostly in the form of short five year notes. In 1923 when the notes came due, nobody wanted to buy them since the Germans lost. So they wrote them off through the Weimar hyper-inflation. And it wiped out a lot of middle class Germans. This is what really led to the rise of Hitler.
The argument that the Wall Street bankers led America into war was not directly stated in Strachan’s book. But you can easily follow the trail of bread crumbs and get there.
By the way, if you apply the historical precedent to today, you find something similar. Until 2008, when America’s annual deficits were around $400 billion, there was enough capital in Shanghai, Tokyo and Riyadh to buy up the debt. In return, they had to prop up the American economy to make sure they got their money back. But from 2009 onward, the annual one trillion dollar deficits exceeded the entire world’s capacity or willingness to finance it. So we started “selling” it to ourselves through “Quantitative Easing” and “bond buying stimulus.”
In other words, the United States government shifted from the British debt model to the German one.