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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:

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