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Be Careful
What You Wish For:
Gambling on War and Economics
In an Age of Catastrophe
Roger L Ransom
Professor of History and Economics, Emeritus,
University of California, Riverside
An Age of Catastrophes
On July 28, 1914 A Serbian Nationalist Assassinated
The Crown Prince of The Austrian Hungarian Empire
A Month of Frantic Diplomatic Efforts
Failed To resolve the Crisis
By the First week in August
Austria, Russia, Germany, France, and Great Britain
Were All Engaged In Major European War
Historians have termed the period
1914-1945
An Age of Catastrophes
The “War to End All Wars”
Was the followed by
A Global Depression and Another World War
An Age of Catastrophes
European Wars, 1850-1913An Age of Catastrophes
European Wars, 1850-1913
An Age of Catastrophes
European Wars, 1850-1913
An Age of Catastrophes
European Wars, 1850-1925
The Fruits of Victory May Not Be What You Expect
Wars are Very Expensive
Wars Tend to Create New Problems
Without Resolving Old Problems
Memory On Both Sides Makes Keeping the Peace Difficult
Be Careful What You Wish For
World War I Was Not an Accident or Random Event!
Politicians and Generals Made Conscious Decisions That
War Was The Best Strategy to Deal With The Crisis of 1914
These Decisions Were Made:
Under Pressure to “Do Something” Right Away
In Response to Rapidly Changing Conditions
With Imperfect Information and Exaggerated Emotions
Without Really Knowing What They Were Getting Into
Explaining The Puzzle of World War I
World War I Was An Economic War as Well as a Military War
The Demand for War Needs
Dominated the Economy
There Was Shortage of Labor
There Was Shortage of Food
War expenditures
as a Percent of Gross National Product
International Trade Collapsed
Explaining The Puzzle of World War I
How Did They Pay For the War?
The Inflation Tax!
Russia and Austria had Hyperinflation
German Prices Rose by a Factor of Four
In France and Britain Prices Doubled
Inflation Is An Index of Dislocation
Caused By The War
Explaining The Puzzle of World War I
What Encouraged Leaders to Gamble In 1914?
Wars Involve a Gamble With a High Level of Risk and Uncertainty
Germany Had A Plan for War
➔More Likely to Choose War as Policy
Germany and Austria Felt “Threatened” by Russian Expansion
➔More Likely To Gamble On “All In” Strategies
Explaining The Puzzle of World War I
The Kaiser Saw the 1914 Crisis as an Opportunity to
Defeat BOTH France and Russia
With A Two Front War that Germany Could WIN!
The Schlieffen Plan
Alfred von Schlieffen was Chief of
the German General Staff from
1891 to 1906
His Plan called for the Germans to
Invade France and Then Russia
2/3 of the German Army will be on the Right Wing
Right Wing Swings West of
PARIS
French Army will be trapped
EAS`T pf PARIS
2/3 of the German Army will be on the Right Wing
Schlieffen Was Replaced by
Helmut von Moltke
Who Was NOT a Gambler
July 29–31: The Kaiser and Tsar Nicholas of Russia Exchange Telegrams
In an Unsuccessful Effort To Avoid a War Between Russia and Germany
August 1: Germany Declares War on Russia
France Begins to Mobilize their Troops
August 3: Germany Declares War on France
German Troops invade Belgium
August 4: Britain Declares War on Germany
Schlieffen’s Gamble: The Road to War
July 28: Austria Declares War Against Serbia
Russia Prepares to Mobilize Their Troops
French 5th and 9th Armies attack Kluck and Bulow
BEF and French 6th
Army Attack Von Kluck
Things Don’t Go According
to The Plan
Schlieffen’s Gamble Fails
The Battle of the Marne
Ends the German Advance
The Western Front Becomes
A Stalemate
Its time to Recalculate!
Be Careful What You Wish For
What Were the Leaders Wishing For in 1914 - 18?
VICTORY !
The Pursuit Of Victory Becomes an End In Itself
Don’t LOSE this War!
➔ Keep Gambling
➔ Keep Fighting
Keep on Gambling
The Germans Expected to Win the War
And Schlieffen's Plan Came Close – But Not Close Enough
The Allies Managed to Check the German Advance
But the Germans Now Controlled All of Belgium and Part of France
Neither Side Was in a Position to WIN The WAR
Both Sides Struggled to NOT LOSE THE WAR
Keep on GamblingMajor Gambles Include:
1915: German Offensives Against Ypres [Eric von Falkenhayn]
Gallipoli Offensive [Winston Churchill]
1916: Battle on the Somme [Douglas Haig]
Verdun [Eric von Falkenhayn]
1917: Passchendaele [Douglas Haig]
Nivelle Offensives [Robert Nivelle] Brusilov Offensives [Alexsie Brusilov]
German Offensives Against Russia [Eric von Ludendorff]
1918: German Offensives Against Allies [Eric von Ludendorff]
Final Allied Offensives [Ferdinand Foch]
Every Battle is a Gamble
Note That All of These Gambles are Battles That Were the Idea
Of a Particular General
All of The Major Powers Took Steps to Make Sure
The Next Time Would Be Different
The Central Powers Lost the WAR
Because Their Economies CouldSupport Their War Effort
The Aftermath of World War I
Military Strategy Was Now Linked to Economic Reality
Everyone Became Engaged in a New Arms Race
One of the Most Obvious Lessons of World War I
Was the Importance of Economics
Great Disappointments
No One Was Very Happy With The Outcome of World War I
The German Empire
The Austria-Hungarian Empire
The Russian Empire
The Ottoman Empire
Were All Replaced by New Nation States
The Allies Were Exhausted
And in to Position to Enforce the Treaty of Versalles
Germany Was Convinced It Should Have Won The War
Follow The Leaders
A Final Point to Note In Our Quest For The Causes Of Wars
Is the Tendency of People to
Accept The Judgment of A Relatively Small Group of Leaders
Almost All of the Decisions We Have Discussed Were
Proposed and Enacted By a Few Politicians and Generals
At The Top of the Command Structure
That may be the most significant reason
WARS ARE SO HARD TO PREDICT!
Is War Worth The Gamble?
In Gambling on War I examine two other military gambles
that resulted in major wars:
Operation Barbarossa: The German invasion of the Soviet
Union in June 1942
Pearl Harbor: The Japanese Attack against the United States
in December 1942
The Twentieth Century has seen several instances of
“first strike” gambles to win a war
The key to their plan was a “first strike” that would
annihilate the enemy’s military capabilities
All of these episodes involved an element of desperation
which made a gamble on war seem worthwhile
When they failed to achieve their initial objective …
they kept on gambling
They almost succeeded!
Is War Worth The Gamble?
Coming This Summer:
At your local book store