Far from an expected short and sharp war, World War I lasted four years, mobilized societies in unprecedented ways, and reshaped political and economic systems. German war aims could not ignore these realities; planners instead had to assess carefully the impact of the war in shaping their hopes for the postwar world. Was the war only a painful blip that momentarily disrupted the international order but left the basic structures of the nineteenth-century international system (e.g., the sovereign nation state, an international balance of power, open transnational markets, the gold standard) untouched? Or had the war disrupted international order so severely that there was no going back to the status quo ante? How one answered that question had a great deal to do with what sort of peace one thought necessary.
Earlier debates have focused on whether Germany consistently sought a vast geopolitical revision of the European balance of power, or pursued more limited and defensive goals. This article argues that, in the late stages of the war, German policy was deeply shaped by anxiety about the structure of the postwar global economy. More specifically, Germans increasingly worried about the Anglo-American ability to control access to global markets even in peacetime—and thus their ability to undermine the German economy in the future. To protect themselves from Anglo-American market power, German war aims sought to strengthen the country's economic control over Eastern Europe, and to compel Great Britain to reverse policy and guarantee the flow of raw materials to Germany after the war. This argument differs in emphasis and imputed motivation from those offered by scholars ranging from Fritz Fischer to Egmont Zechlin to Jennifer Jenkins. German war aims evolved over the course of the war in response to the action of the country's rivals, and they sought a sweeping reorganization of the political and economic global order. This reorganization would have included privileged market access for Germans across Eastern Europe; the expansion of the mark zone and of the area where the German central bank enjoyed responsibility; new customs unions; as well as controls on Western shipping and the delivery of raw materials to Germany. The cumulative effect of these changes would have been substantial, effectively reshaping the distribution of economic wealth and power while also revamping many prewar norms and restructuring established institutions of international economic exchange.
German War Aims: A Review
The centenary of World War I coincides with a period in which historians have become increasingly interested in transnational and global history.Footnote 1 It is no surprise, then, that there has been a recent “global turn” in the historiography of World War I as well. This literature has highlighted the enormous human cost of the war across the globe. As Oliver Janz points out, the war was much more than just Europe's “seminal disaster”: “It was a global war, that was also fought outside Europe, that was fused with extra-European conflicts, and that increasingly took the form of a worldwide economic war.”Footnote 2 Stig Förster has similarly emphasized that increasing globalization had connected the globe in a fashion that made it possible to link not just economies but also military conflicts into a single, coherent whole.Footnote 3 A central element of the geographic extension of the war was rooted in the efforts of the Entente powers to mobilize transnational markets. Perhaps the most significant advantage of the Western war effort was that it “intervened massively in international markets to purchase huge quantities of raw materials, food, and goods of all sorts.”Footnote 4
As Jennifer Jenkins has usefully reminded us, an essential element of the global conflict was Germany's global ambitions, particularly its use of revolutionary movements to break apart several of the multiethnic empires it was fighting—the very empires that were organizing international markets to wage war against Germany. Germans sought to mobilize ethnic nationalism to break up the Russian Empire, for example, and Islamic jihad to destabilize the vast British Empire. Jenkins sees this as an essential element of Germany's bid to claim a leading global position, or Weltmachtstellung. This global dimension of German war aims, she argues, was properly highlighted by Fritz Fischer in his classic study, German Aims in the First World War, but it has been neglected since. Jenkins argues that, as a result of their initial reaction to Fischer's discovery of Germany's plans for expansion and annexation (set forth in the so-called September Program), his critics and other historians lost sight of Fischer's claims about Germany's plans for global revolution.Footnote 5
As Jenkins suggests, the central point for any discussion of German war aims remains Fritz Fischer's classic study, which argued that Germany sought to gain a global position of power on par with that of Great Britain. Frustrated by the ways in which the Entente, the arms race on land and sea, and the increasing financial power of the West had closed the door on German expansion, Fischer argued, the Reich’s leadership opted for war, with the enthusiastic backing of German society. The war was freely chosen by Germany to achieve prior goals, and Germany stuck to those aims throughout the conflict. Over the course of the 1960s, Fischer increasingly drew a clear link between the needs of German capital for its markets and the nature of German imperialism: German industrial society required external markets, and conquest offered a way to secure those markets.Footnote 6 But, by assuming that German policy was rooted in the demands of capital and that the country's war aims did not significantly change over the course of the conflict, Fischer was implicitly forced to imagine a set of rigid, unchanging market structures. If the same goal of expanded market dominance found expression in unchanging war aims, policy makers presumably did not perceive any structural changes in the markets, which might have necessitated new types of war aims.
There were many critics of Fischer's work. Disputes quickly focused on specific questions about German responsibility for the war and on the proper way to interpret the September Program. These were, broadly speaking, debates about the point at which Germany became expansionary—and to what end. In the context of this discussion, one of the more important arguments advanced by Fischer's critics was that of his colleague at the University of Hamburg, Egmont Zechlin, who rejected the idea that Germany had entered the war in order to overthrow the European balance of power. Chancellor Theobold von Bethmann Hollweg's initial intention, he argued, was simply to break a threatening geopolitical “encirclement.” This was a tightly circumscribed political goal that would allow for a short, controlled war, followed by a peace that would only slightly shift the European balance of power, primarily by breaking up the Entente system. When it became clear that the British, in particular, intended to fight an unlimited war, the option of a short, violent one, followed by a modest peace, became impossible. Zechlin further argued that the introduction of British economic warfare was the signal that the war would last for some time. Economic warfare promised a lengthy conflict and, by using civilians to wage war on civilians, it significantly radicalized how World War I would be waged. Only then, Zechlin maintained, did Bethmann Hollweg develop his September Program, whose contents should therefore not be understood as the original goal of the war but as an effort to create a position of power necessary for fighting the sort of global economic war sought by the British Empire.Footnote 7 For Zechlin, in other words, the September Program was not a plan for peace at all, but rather a tool to defeat the British Empire by leveraging newly-won control of the European continent.
Unlike Fischer, Zechlin cast German war aims as a response to Western, especially British, policy. The reactive quality of German war aims also appeared in the tradition of the so-called Bread Peace, i.e., the argument that the Treaties of Brest-Litovsk and of Bucharest were dictated not by long-held imperial ambitions, but rather by temporary social crises in Central European cities. Historians such as Winfried Baumgart cast German policy toward Russia in 1918 as driven, in part, by a political desire to weaken Germany's opponents, and, in part, by a desire to overcome wartime starvation and shortages rapidly by accessing the agricultural surplus of the former Russian Empire.Footnote 8 Much as Zechlin did, historians in this tradition argued that the German state sought to create large and lasting alterations to the European political and economic order as a response to short-term supply crises endogenous to the war effort.
The literature produced during the Fischer era tends to ignore the international order as a factor in decision-making. By contrast, more recent scholarship has begun to emphasize the challenges of reconstructing an international political order in Eastern Europe. Much of Eastern Europe, most notably Poland, had been controlled by multinational empires. When these empires went to war with one another, it therefore raised significant questions about the postwar form of political organization in the region. Jesse Kauffman powerfully makes this argument for Poland, suggesting that an essential goal of German wartime policy was the effort to build a sustainable political order east of Germany, one that would support German political domination.Footnote 9 Alexander Watson has noted that the Treaty of Brest-Litovsk reorganized east-central Europe not simply by changing borders, but also by seeking a different sort of relationship between the imperial center and periphery—one in which Germans conceded local autonomy and local institutions, but within a system based on German hegemonic power.Footnote 10 In both cases, German war aims were part and parcel of an effort, in the aftermath of the collapse of the prewar international political order, to construct a viable political system dominated by Germany.
When these studies look at the connection between economics and the articulation of German war aims, they usually focus on the wartime supply crisis, thereby sharing some common assumptions held by critics of Fischer's analysis of German economic war aims. Watson, for example, emphasizes the Habsburg foreign minister Ottokar on Czernin's disastrous effort to trade Chelm for nonexistent Ukrainian food. Wolfram Dornik and Peter Lieb, for their part, suggest that German policy toward Ukraine sought to weaken Russia and to secure resources aimed at addressing wartime shortages at home.Footnote 11 Adam Tooze, who explores the political significance of shifts in financial and commercial power so effectively in his analysis of the Western alliance, similarly subordinates economics to questions of annexationism and national self-determination when examining Germany's war aims. In each case, the scholars characterize the economic components of Germany's war aims as being both limited to redressing wartime shortages and subordinate to other considerations. In short, then, the historiography of German war aims has not really addressed the ways in which deep changes in international markets—in “geoeconomics”—during the war shaped German ambitions for the postwar world.Footnote 12
World War I and Global Markets
This article links the global nature of the war with German war aims. But it does not make that connection, as Jennifer Jenkins does, by focusing on German support for revolutionary movements from Ireland to India, but rather on the ways in which the British and Americans mobilized global markets. That transformation shaped German perceptions of the likely structure of postwar international economies, and these expectations, in turn, shaped how Germans approached the question of war aims. The developing international economic order shaped German policy-making in more significant ways than simply addressing wartime shortages, as Baumgart has suggested, or simply defeating Great Britain, as Zechlin argued.
The shifting structures of the global economy had substantial implications for Germany. Since the German national economy was deeply dependent on processing imported raw materials for domestic consumption and for export, the availability of imported raw materials loomed particularly large in the discussion of the postwar economy. By examining the relationship between German expectations of future global trading structures and German war aims, this article ties the emergence of a global, Anglo-American commercial hegemony to German policy on topics ranging from currency union with Lithuania to the allocation of global shipping. In this respect, it interprets the formulation of German war aims as a dynamic process. Despite Fischer's arguments, German war aims were not monolithic and unchanging: they evolved in response to changing political and economic contexts created by the war. In this case, the rhetoric about economic war tended to shape German thinking about the country's war aims beginning roughly in the autumn of 1917, and especially in 1918, as American economic pressure on neutrals and Germany alike grew stronger, and as British preparations to exclude Germany from the postwar global economy accelerated.
German politicians, academics, and businessmen often discussed shifts in the global distribution of economic power in terms of a postwar economic war. As we shall see, this was, in part, an effort to understand the growing economic power of the Anglo-Americans and how that power might be leveraged by the British and Americans. It was also an effort to grasp some of the implications of Anglo-American commercial power operating within the market, i.e., how shifts in relative market power independent of state policy might have affected the German economy. The prospect of a global economy organized against Germany—whether the outcome of conscious state policy or a result of market structures—worried German businessmen and policymakers. Their responses tended to revolve around the use of coercive military pressure to reshape markets and institutions in their own interests, whether through the pursuit of economic empire or through coercive arrangements aimed at organizing markets to ensure outcomes more favorable to Germany.
German politicians and businessmen may have been inclined to use the language of economic war to describe the transformation of international markets during the war, but the reality was more complex than such rhetoric suggested. The transformation of the global economy during World War I was, in fact, an important and multifaceted phenomenon. As Adam Tooze and Ted Fertik argue, World War I led to a “repurposing and reorganization” of the global economy. The British Empire, they contend, “turned its far-flung commercial and financial networks into the world's first truly global military mobilization apparatus.” Cuban sugar, Iranian petroleum, Argentinian beef, and American copper were all organized into a supply system that fed the war effort against Germany. British purchasing agents assumed an outsized role in local economies around the world, the Entente's Allied Maritime Transport Council controlled the flow of material around the globe, and various interallied committees directed distribution of the world's riches. That commercial power, operating in the context of reasonably open markets, effectively aligned the economies of the neutral states with those of the Western allies. The insatiable Allied demand for food and raw materials created strong incentives for countries, ranging from the Netherlands to Chile, to cooperate with the Entente, thus expanding the reach of its economic power and severely reducing the choices available to the neutral states.Footnote 13 Wartime Allied mobilization was effectively establishing new networks of production, distribution, and consumption that aligned closely with the political interests of Great Britain and her allies.
At the same time, British policy sought to tighten the screws on the German economy. Through a wide variety of measures, ranging from an actual blockade and controls on bunker coal and insurance, to diplomatic pressure and preemptive purchases in third markets, the Western allies worked to exclude Germany from global markets. Germany's ability to mobilize labor and resources for its own war effort was to be eliminated as much as possible. The country's access to global markets did decline, in fact, and the effect of that could be seen in the declining caloric intake of German civilians and soldiers, as well as in shortages of clothing, shoes, electricity, heat, and much more.Footnote 14
Economic change during World War I worked to extrude the Germans (and the Austro-Hungarians) from global markets. It marked, as noted earlier, a “repurposing and reorganization” of the global economy, very much to the advantage of the West—and to the disadvantage of the Central Powers. This process endangered the war effort of the latter, as well as the cohesion of their societies, while shoring up those of their opponents. For that reason alone, the repurposing of the global economy was highly significant for Germany. But there was also reason for German politicians and businessmen to suspect that the Western Allies would seek to entrench this new international economic order. This meant not simply that the British Empire and the United States would remain in political control of vast territories with substantial resource advantages, but also that they would manipulate distribution structures to ensure that the flow of resources served their own political and economic interests.
Economic War after the War
The most significant single moment signaling an intent to hobble the German economy permanently was the Paris Economic Conference of June 1916 (not to be confused with the Paris Peace Conference of 1919). In 1916, the Entente committed itself to a variety of measures intended, for some period after the war, to disadvantage German exports: by denying Germany “most favored nation” trading status (and thus reducing how much Germans could afford to buy from abroad), as well as by giving priority to the Entente and the neutral states when it came to the distribution of raw materials and limited shipping space.Footnote 15 It was certainly possible to dismiss the 1916 agreement as a product of wartime passions that would subside once the war ended. That high-ranking figures, ranging from French Prime Minister and Minister of Foreign Affairs Aristide Briand to British Colonial Secretary and Conservative party leader Bonar Law, negotiated the agreement nevertheless gave it a certain degree of credibility.
There were other signs as well that the Western Allies were serious about continuing economic warfare after the formal conclusion of a peace treaty. For example, they repeatedly sought to convince neutral states to sever not just wartime but also postwar economic links to Germany and to bind themselves instead to the West. To that end, the British government circulated questionnaires to merchants in the Netherlands and elsewhere who were interested in trading with the British Empire after the war. The questionnaires were particularly interested in gathering information about ownership structures, capital sources, banking connections, and the languages spoken in operations.Footnote 16 To the Germans, this was an obvious move to prepare for economic war after the war, since it appeared to be aimed at ensuring that companies domiciled in neutral states and structured under neutral laws were not, in reality, German firms operating with German capital and staffed by German nationals. Such precautions would have been superfluous if the British had not foreseen continuing efforts to exclude German interests from international markets. German intelligence later discovered that the Western Allies were attempting to establish a system to oversee and limit the postwar flow of imports to the Central Powers through Switzerland; and to pressure the Swiss to purchase from American companies rather than from German ones.Footnote 17 Similar reports came out of Copenhagen and Stockholm.Footnote 18
Reinforcing the information flowing from European neutrals was the development of formal Entente policy and legislation beyond the formidable influence that wartime organizations such as the Allied Maritime Transport Council would wield, were they to be extended into the postwar period. For instance, German political and economic leaders were worried about the passage of the Non-Ferrous Metals Industry Bill through the British Parliament. As they understood the law, it would have effectively blocked postwar German access to mines and to smelters of metals other than iron by excluding Germans from trading for them on the dominant London commodity exchanges.Footnote 19 This obviously would have affected German production of aluminum, copper, and tin, but it would also have reduced high-grade steel production by limiting German access to strategic alloys. British colonial officials had taken steps, meanwhile, to curb the flow of palm oil and similar products from British West Africa to Germany.Footnote 20 Given the policies elaborated at the Paris Conference of 1916, Britain's interest in ensuring that neutrals did not act as commercial Trojan horses for Germans, as well as efforts to use British colonial and financial power to restrict German trade, it was not difficult for German leaders to imagine that Britain really did intend intent to leverage the country's own position in the global economy to undercut the German industrial economy after the conclusion of a formal peace.
The prospect of an extended period during which Germany would be largely excluded from the global economy worried many prominent Germans, of course. After all, the prewar German economy had been well integrated into global markets. Exports had comprised a larger percentage of the German economy than was the case for France, the United States, or Austria-Hungary. Both imports and exports had grown at a faster pace than overall Gross Domestic Product (GDP), indicating an accelerating German dependence on external markets. An inescapable element of this had been growing demand for imported raw materials of all sorts.Footnote 21 That prewar economic structure led the Economics Ministry to worry, in June 1918, that “cutting the import of raw materials would eliminate the life blood of our industry, break the back of the German economy, and make its recovery impossible.”Footnote 22 Otto Rücker-Embden, a Hamburg merchant who traded in colonial products, warned that, without access to global markets, soldiers would return home to shuttered factories and deteriorating national finances.Footnote 23 Without free access to world commodities markets, the argument went, German industrialists would be hard pressed to reconstruct their supply chains, putting industrial production at risk as a result of the ensuing shortages and higher prices. German consumers, meanwhile, would confront higher prices for those products they were at all able to find. As a consequence, German industry would be at a steep disadvantage in global markets, as their processing industries struggled to find material to process, and domestic demand would decline as a result of higher prices—which would also be driven higher by rising taxes and new wage demands.
German businessmen, bureaucrats, and policymakers assessed this prospect in different ways, with three broad (if somewhat overlapping) lines of argument emerging. For the first group, an extended economic conflict after the war was unlikely. Dr. Franz von Schoenbeck, for example, argued in two major reports written for the Office of the Interior in 1916 and 1917, that there was very substantial resistance in the Entente and neutral countries to the idea of an extended economic war following cessation of the current hostilities. Major economists like Charles Gide, and journals ranging from The Economist to The New York Times, came out against this attempt to exclude the German economy from global markets. Von Schoenbeck also pointed to the self-interest of French, Russian, Italian, Belgian, and Dutch businesses that had either purchased material from Germany or sold to Germany before the war. Continental European industries relied on German supplies of coal and potash, and French wine producers would want to continue to sell in Germany. This was, he argued, “the soft underbelly of the Paris Plan.”Footnote 24 The Hamburg shipping magnate Albert Ballin similarly argued in July 1918, that self-interest would guide the British and especially the Americans to resume trade with the Germans. The comparatively low value of the mark in particular, Ballin thought, would induce American money to flow to Germany as a sort of “buy-low” investment opportunity.Footnote 25 In effect, this line of argument suggested that, whatever their wartime bluster, self-interest would swiftly lead Germany's opponents back to the marketplace. In fact, Count Stephan Burian, the foreign minister of Austria-Hungary, made precisely this argument to his German counterparts in June 1918.Footnote 26 Market society was seen as an almost natural state that could be disturbed temporarily by the passions and exigencies of war, but that would reassert itself once the war had passed: Ricardo must triumph over Fichte!
A second group believed firmly that the economic war waged during World War I was not a simple warfighting tactic, but rather a reflection of the central political goal of the Western states, particularly Great Britain. This aim, i.e., the destruction of the German economic and political challenge to British (and later American) supremacy, would persist after the war and thus lead to an extended economic conflict. At the Paris Conference of 1916, after all, leaders of the Entente had declared that they must protect themselves from a German commercial offensive by limiting German access to international markets.Footnote 27 Willi Prion, a professor of business at the Berliner Handelshochschule and press officer for the Treasury, believed that three factors were responsible for the Paris Economic Conference and for the threat of long-term economic conflict it represented: the long British campaign to “eliminate the hated competitor everywhere,” the wartime blockade, and the fear that military victory would be elusive. In Prion's analysis, economic war promised the British state the realization of long-standing political goals, even in the absence of victory on the battlefield.Footnote 28 By contrast, Peter Heinrich Schmidt, a professor at the Handels Hochschule in St. Gallen, Switzerland, argued that it was national hatred in the form of economic chauvinism, not long-settled policy, that was driving economic warfare. Carl Duisberg, the director of the chemical giant Bayer, made a similar argument at a conference organized by the Reich Economics Office to discuss the requirements for an “economic peace.”Footnote 29
At the same conference, former Deputy Chancellor Karl Helfferich, who later coordinated the economic parts of the Treaty of Brest-Litovsk, advanced another iteration of this argument, asserting that, contrary to Ballin's view, “the Englishman of today is not the Englishman from before the war.” During the war, he continued, Germany's enemies had gained an enormous advantage over the Germans in organizing the extra-European markets. Those states would pursue economic war after the military conflict had ended to protect the advantages they had secured in the “world economy's new partition.”Footnote 30 In each of these cases, prominent Germans asserted that the German economy was threatened by the extension of wartime politics into the postwar era. Enemy states, they believed, would continue to pursue the same political ends, merely shifting the center of gravity of that struggle from overt military conflict to commercial legislation. Such an economic war after the war implied that markets would not be depoliticized—or free. They would instead remain sites of intense, interstate conflict for years to come.
By contrast, a third group shifted attention from the interests and actions of enemy states, pointing instead to incentives for private economic interests. These individuals argued that market incentives, far from leading Germany's opponents to resume trading with her, would instead prompt them to isolate Germany further. As early as September 1917, the chief of the Admiralty Staff warned, for example, about the impact of interallied debt on the postwar global economic structure. American bankers, he argued, would have an incentive to ensure the profitability of their debtors in Western Europe, and would therefore arrange advantageous terms for acquiring raw materials (this presumably meant primarily American raw materials), as well as preferential customs tolls for their industrial products. Germany, by contrast, would be comparatively disadvantaged.Footnote 31 A board member of the export-oriented League of Industrialists (Bund der Industriellen) warned Deputy Chancellor Friedrich von Payer that a global postwar shortage of raw materials, coupled with the hostility of the Entente producers and distributors of raw materials, would likely prompt these businessmen to sell their limited raw materials to their home countries rather than to Germany. In essence, scarce raw materials would be rationed by nationality rather than by price.Footnote 32
In March 1918, the international Metallgesellschaft AG similarly warned of “private efforts, with the open and secret support of the state, to enable the continuation of the economic war against Germany, even if the peace treaty mandates free trade and the equal treatment of all states.”Footnote 33 (“Private efforts” here presumably referred to rival companies based in enemy states, notably American copper companies.Footnote 34) Georg Simon, a merchant and leading figure in the Hamburg Chamber of Commerce, passed along a report from “a friend” who warned that the Western Allies had already contracted for much of the world's raw materials over the next several years. As a result, Germans would find— “most favored nation” clauses or tariff agreements notwithstanding—that there was simply not much raw material available on the market.Footnote 35
In each of these and other cases, there were economic incentives for private enterprises to exclude German economic interests from the global economy. These operated largely independently of, though sometimes also in cooperation with, state interests. Markets were, in these arguments, less benign than von Schoenbeck and Ballin suggested. Rather, the way in which the global economy had been “repurposed” during the war appeared to some to open up the possibility that markets might find an equilibrium that disadvantaged the German industrial economy. The relative efficiency and capital intensity of German industry would be undermined by the commercial structures developed to wage war against Germany. If correct, the consequences were potentially enormous, not just for Germany's power position but also for the stability of the German state, especially as it demobilized millions of soldiers into what they feared would be, at best, a deeply fragile economy.
For many Germans imagining the postwar world, “the world would have a new face,” as both the Hamburg merchant Otto Rücker-Embden and the anonymous authors of a Reich Economics Office report on an investigation into postwar raw materials security put it.Footnote 36 The restructuring of the international economic order, whether by states or by the incentives operating in a “repurposed” set of markets, was an enormous challenge, one that Germany could not address through the annexation of a strip of Polish territory or even the whole of Belgium. Economic warfare after the war would operate through the ordinary instruments of state power (i.e., trade laws, controls on shipping, patent laws, etc.), as well as through market incentives operating at the corporation and merchant level. As such, traditional instruments of statecraft, the usual topics of peace negotiations, were simply not adequate by themselves to address the perceived challenges. This clearly suggested that the prospects for German capital were widely perceived to be radically different in 1918, than they had been before 1914, and it therefore called for different political and economic goals.
Responses to Economic War after the War
Germans political and economic elites proposed a variety of instruments to grapple with the shifting international order. The most traditional and most radical tools involved imperialism, but they also explored alternatives aimed at coercing the Western powers into accepting more accommodating market relations after the war. An examination of both approaches reveals the common political and economic difficulties that shaped both German policy toward Eastern Europe, and the proposed demands on Western shipping and raw materials. German concerns were animated not merely by the geographic distribution of material resources, as implied by geopolitical traditions, but also by the shifting systems that guided the distribution of those resources, i.e., the changes in the structures of global markets. After all, the geopolitical position of the British Empire and the United States had not changed at all. It was the legal and institutional foundations of the market that had changed. Solutions could not be limited, then, to territorial changes.
The influence that the prospect of economic warfare after the war had on German planners was clearly evident as soon as they began seriously addressing the details of a peace agreement with Russia in December 1917 and January 1918. One central component of even the early drafts of the Treaty of Brest-Litovsk included language suggesting that, “with the conclusion of peace, the war in the economic sphere also comes to an end,” and that no public or private organization might participate in such a war “directly or indirectly.”Footnote 37 Those considering the postwar order in the East clearly had on their mind the possibility of economic warfare after the war—and they intended to use the military situation created by the war to put Germany in a position to combat it. Simply forbidding participation in an economic war was not enough, however. Proactive changes were also required, and the desire to prepare for economic war seemed clearer when the German Foreign Ministry proposed that the peace with Russia include the resumption of “most favored nation” (MFN) trading status. The reaction inside and outside the government was intense. Hans Karl Freiherr von Stein, the state secretary of the newly established Economics Office, was very critical, for example, arguing that the position of the Foreign Office left Germany “worse off than before the war.” Karl Helfferich, the coordinator of economic demands for the Eastern peace agreements, concurred. He criticized the Foreign Office for leaving Germany “standing [there] with empty hands, so to speak,” because MFN trading status would deny Germany the tight connection to Russia “necessary for the success of our overseas commerce.”Footnote 38
The source of Stein and Helfferich's concern was couched rather vaguely; it may have reflected their disappointed aspirations with regard to a program of aggressive expansion. How Stein's allies in the chambers of commerce articulated their own hostility throws some light on this and helps to clarify his motivation and that of Helfferich. The representatives of German industry swiftly expressed their “horror and discontent” at the idea of trade relations based simply on “most favored nation” status. They had already argued the month before that the Entente's “future economic war”—in particular, Britain's expected control of industrial raw materials—meant that access to Russian strategic minerals, especially manganese, was crucial, and that duties should be reduced below those set forth in the 1904 trade agreement between Germany and the Russian Empire. The Essen chamber of commerce added that “a new structure of trade and economic relations between German and Russia would be of extraordinary significance for the reconstruction of the German economy.” The president of the Lübeck chamber of commerce similarly argued that, if more than “most favored nation” status were not extracted from Russia, “then we have lost this war.” Finally, Field Marshall Paul von Hindenburg provided the view of the army, namely, that it “had the greatest interest in ensuring that we are strengthened economically after the war; only thus can we calmly contemplate future events.” The War Committee of German Industry argued, for its part, that simple “most favored nation” status would offer no protection from an “economic war” but rather a form of “German unilateral disarmament before the coming economic war by the Entente states.”Footnote 39 The chambers of commerce were clearly worried about more than just securing short-term relief for Germany's cities, and they were not simply focused on defeating Britain in the present military conflict. Rather, they suggested the necessity of accessing Russian raw materials in order to counter “the coming economic war by the Entente states.”Footnote 40
German concern about the postwar economic order extended beyond the issue of peace with Russia. Otto Wiedfeldt, the German economic policy advisor in Ukraine, argued, for example, for sweeping control over the Ukrainian economy because of the threat of a postwar economic war.Footnote 41 And General Erich Ludendorff wanted preemptive rights to all Ottoman exports for several years, in response to Western threats of economic warfare.Footnote 42 State Secretary of the Reich Economics Office von Stein believed that “the economic war will come, about that we should not deceive ourselves. We must therefore seek a close connection to Russia and secure Poland as transit.”Footnote 43 Meanwhile, Councilor Flach of the Economics Office insisted that, “in the event of an economic war after the conclusion of peace, Courland and Lithuania must participate on the German side.”Footnote 44 The Treaty of Bucharest included terms, much criticized by private German banks and oil companies, that ensured the German state's political control of Romanian oil assets, a policy calculated to ensure politically reliable sources of petroleum in the event of economic conflict with the Western powers.Footnote 45 Similarly, the Political Division of the General Government in Belgium emphasized that country's commercial links to Central and South America, which might facilitate German exports. It also underscored Belgium's links to Spain, an important source of raw materials that would be especially valuable if Germany's own access was to be limited.Footnote 46 Again and again, German policy was geared toward achieving political influence over nearby markets for fear of Western efforts to limit German access to other markets.
Germany also explored significant institutional change to address the threat of economic war after the war. German efforts to bring Courland and Lithuania, and possibly Belgium and Poland as well, into a currency union with Germany, and to establish the Reichsbank, the German central bank, as their central bank were clear examples of policies designed to help protect Germany from the effects of future Anglo-American economic pressure.Footnote 47 A customs union between Germany and Austria-Hungary that would have closely linked the two principal Central Powers was certainly promoted on these grounds: Deputy Chancellor Friedrich von Payer argued that a customs unions was essential because, should an economic war break out, Germany “must have Austria-Hungary as a secure ally.”Footnote 48
One of the central goals of German war aims throughout Eastern Europe and the Near East was the construction of an economic space that would be effectively independent of Anglo-American commercial hegemony across the globe. German ambitions for economic empire in Eastern Europe in 1918, were a crucial step toward creating a cushion against perceived Western efforts to restructure the global economic order. The challenge of Anglo-American economic power did not require territorial control, but it did require politically reliable markets. A form of informal empire was therefore more desirable than outright annexation. It was in this sense that former Deutsche Bank director and Colonial Secretary Bernhard Dernburg emphasized in June 1918, that one would “be able to value the economic side of the Eastern peace agreements, if they are properly and rationally constructed, as much as the military side.”Footnote 49
The same impulse could be detected in colonial policy, which was why political control over tropical territories was portrayed as a crucial element for protecting Germany from the impact of Western economic warfare. As the German Colonial Society warned the Reich Economic Office in July 1918, “no peace that is otherwise good will protect Germany from an economic coup de grâce if that peace does not place sources of raw materials under the German flag.” This argument was used to justify sweeping demands for colonial concessions—indeed for the very “destruction of the colonial monopoly of England.”Footnote 50 More radical war aims were therefore one result of Germany's response to the restructuring of the global economy by the Western powers, with military victory providing an opportunity to realign the territorial foundations of Germany's industrial economy and create a politically subordinated hinterland. The result would have been a fundamental shift in the global balance of power. This is not a new argument. Fritz Fischer emphasized the economic foundations of German policy, but he and his supporters highlighted the continuities of German prewar and wartime policy. More to the point, they suggested that expansionism had developed as a result of dynamics in German capitalism in effect even before the war—not shifts in the structure of the global economy during the war.
This should not detract from the aggressiveness and illegitimate nature of Germany's bid for European empire. Even if it was, in part, a response to Allied actions, German economic empire was explicitly intended to extract resources from others and to shift the costs of the German war effort onto Germany's neighbors.Footnote 51 Moreover, it would involve intrusive political and commercial arrangements intended to curtail the sovereignty of Germany's neighbors. Debt and currency arrangements would be manipulated to encourage the flow of low-cost resources, as well as money, from the new imperial periphery to Germany.Footnote 52 The result would inevitably have been the immiseration of Germany's “trade partners.” Germany clearly sought more than a simple “bread peace,” then. In fact, the very notion of such a peace assumed, like Zechlin's argument about the September Program, that the Germans sought to construct vast and permanent changes in the international political and economic order in response to passing supply crises. It is more proper to see those crises as symptomatic of Germany's weakness within the international economic order, and as a possibly enduring feature of the postwar world. That made a sweeping restructuring of the European and global order seem more rational, from the German perspective.
Is this focus on German anxiety about the prospect of economic war simply a more ethically justifiable argument in defense of policies that the Germans would have pursued anyway? After all, Otto Wiedfeldt's memoranda about Ukraine suggest that his references to economic warfare after the war were less important to him than economic domination of Ukraine as an end in itself. Still, German anxieties about their country's place in the postwar global economy were expressed frequently and in a variety of contexts. As a number of contemporary observers pointed out, Eastern Europe could not replace the rest of the world, i.e., Poland, Ukraine, and Romania could not supply materials that had once come from North America and the British Empire. An economic empire in Eastern Europe would certainly reduce the pressure that the Anglo-Americans could exert on Germany, but it could not eliminate it entirely. Other options had to be considered to ensure that, after the war, materials continued to flow from Germany's Western enemies. This was what pushed some German businessmen and politicians to embrace alternative visions of international organization. These are important, not least as a part of the prehistory of future European integration, but they also signaled German concerns at the time about shifts in the structure of international markets and the distribution of economic power. Since at least some of Germany's potential economic difficulties after the war were expected to be the consequence of market activities, some Germans began to explore the possibilities of actions aimed less at other states and more at markets. The least innovative of these proposals included the retention of import and export controls, as well as the return of German merchant ships impounded or seized at the beginning of the war.Footnote 53
Shipping was a crucial issue for German government officials and merchants, as well as for planners in all industrial countries, as they contemplated the postwar international economy. It had effectively been “conscripted” during the war, especially for the needs of the Allied war effort. It was widely assumed, however, that there would be a global shipping shortage, which would provide the Allies with another tool to limit German access to international markets. The German merchant fleet was not expected to be sufficient for Germany's needs for imports and exports. For that reason, David Heilner of the League of Industrialists suggested to Deputy Chancellor Friedrich von Payer that Germany seek a temporary “division” (Contingentierung) of global shipping. In effect, he suggested that Germany force the Allies to share their freight capacity, regardless of private property rights, contractual obligations, or market preferences. This was, he thought, a good way to reconcile Germany's enemies and transition to genuine freedom of the seas.Footnote 54 For its part, the Economics Office suggested that, to ensure German access to global markets, the Allies be compelled to turn over to Germany shipping that was under contract to the Allied states: “The rationality of such measures are without question; whether they can be achieved will be a question of Germany's position of power when a peace is reached.”Footnote 55
Just as significant to German planners was the issue of ensuring that someone would sell raw materials to Germany. They worried about the possibility of formal restraints on trading with Germany, about the effect of American financial interests and the corporate strategies of American trusts, and about many other possible reasons why German access to raw materials for its industrial economy might be endangered. Peace agreements should therefore include, they believed, some means of ensuring the flow of material to Germany. That was why Karl Helfferich suggested in a public speech, for example, that all private agreements and contracts concluded by the British, American, and French to procure raw materials for themselves be abrogated as part of a formal peace settlement, and that contracts be concluded, as part of the peace agreement (tied politically if not formally to the peace settlement), that would ensure that Germany be supplied with raw materials.Footnote 56 Along similar lines, the Economics Office argued that state-to-state delivery contracts were a matter of “life and death”: they would ensure that desperate shortages could be addressed, that the population could be fed, and that the civilian economy could begin to recover from the war.Footnote 57
Bernhard Dernberg went a step further. Since all states were going to have difficulties obtaining raw materials, he argued, Germany should seek to create a multilateral body that enjoyed powers of arbitration. This body, in his words a sort of League of Nations (Völkerbundnis), would ensure that Germany and other states got their share of industrial raw materials.Footnote 58 In effect, he was suggesting a supranational political body that would regulate international markets, a sort of forerunner of the European Coal and Steel Community. Georg Simon's friend (and presumably Simon as well) also supported a sort of transnational “Committee for the Transitional Economy,” with a seat in the Hague, Bern, or another neutral city, that would match global raw material production and distribution to industrial demand.Footnote 59 Hugo Stinnes advanced a similar idea, suggesting that Germany collaborate with Britain and the United States in a coal consortium, as a way in which to transfer some of the costs of the war to the neutral states.Footnote 60
Conclusion
By 1918, German businessmen and statesmen had come to believe that the structure of the global economic order was shifting dramatically—and not in their favor. This was, in part, the result of deliberate Western policy aimed at isolating the German economy from global markets in order to undermine the German war effort and, ultimately, to provoke discontent at home. The shifts they detected were also the consequence of the manner in which the British, in particular, incorporated much of the global economy into their own war effort. Both of these trends looked likely to persist into the future. The Entente was formally committed to economic warfare after the war, they believed, and the United States appeared to be preparing for a long-term bid to supplant German economic interests wherever possible.
Fearing the implications of such a restructuring of the global economy for both Germany's position of global power—this was why Germans repeatedly cast the Paris Economic Conference of 1916, as an Allied effort to win a war that they could not win on the battlefield, in the marketplace instead—as well as for German domestic stability, Germans began searching for appropriate responses. No conference took place where a coherent strategy could be hammered out. Instead, the prospect of being locked out of global markets exerted a steady pressure that helped shape policy in all types of areas. Economic empire was one response. As much as possible, the areas under German influence—whether as allies or as conquered territories—had to be yoked to the German economy, not merely during the war but also during the postwar period. In this way, Germany's economic links to the rest of Europe, especially to Eastern Europe, would have become deeply politicized. Germans also envisioned measures, to be included in a peace with the Western powers, that would not only intervene in Entente supply and service contracts, but also compel the Western states to make private resources (whether in the form of ships or raw materials) available to Germany.
This line of thought prompted some Germans to imagine the creation of supranational institutions that would regulate the international economy in such a way that would ensure an equitable distribution of raw materials (equitable, that is, as German political leaders understood it). In effect, this would have been a highly political effort aimed at depoliticizing the flow of raw materials across borders and at turning the distribution of material into an administrative task. In short, Germans hoped to reshape market institutions across Europe and the world in order to maximize their own influence because they had little faith in the neutrality of postwar markets. These were remarkably ambitious claims. As the Economics Office acknowledged, “our purely economic sources of pressure are not very significant in such matters.” Therefore, it continued, Germany would need to use the “military and political position” created by German military success to bring the Western allies to heel and force them to accept German demands.Footnote 61
Because the British and the Americans seemed bent on formally organizing their economic gains into the global structure of postwar economics and politics, the Germans sought to undo or at least limit that developing Anglo-American condominium. The more the British and Americans consolidated their position, German officials and business leaders believed, the greater German demands had to become—and consequently, the greater German military victory had to be. By the spring and summer of 1918, Germany was demanding that the Entente recognize a vast German economic empire in Eastern Europe and Russia, as well as a predominant position in the Ottoman Empire, the Caucasus, and perhaps Belgium; and that it also reorganize systems of production and distribution in the West (and in its empires) to ensure that material and shipping owned by the British and the Americans be used to prevent the collapse of the German economy. To achieve all that, victory would have to have been very great indeed.
