Budgetary concerns Britain vs USA

[kotori87]

Ahoy folks!  I am currently playing as Britain, in my second war against the USA.  It is 1926 and we are in the 21st month of the war.  When the conflict started, the US had around 10% larger budget than me.  Since then, I have seized several territories from them, won or tied every major battle, and reduced their fleet to half its original size.  The enemy is blockaded in two of their three home territories, and food shortages have been causing shortages and strikes for several turns now. My prestige is soaring, industry is booming, but despite everything I've done, the enemy's budget has grown to fully 50% larger than mine.  They are spending over 1.2 billion dollars on their navy, in 1926!  Is this normal?  I feel like the enemy can produce ships faster than I can sink them.  While this is understandable if I were a smaller nation, I have the might of the entire British Empire behind me.  What am I doing wrong?

[rimbecano]

The US starts out with a smaller economy than Britain, but grows much more quickly. Historically, the US padded Britain at some point in the interwar period. By WWII, the US economy was not only larger than any one power involved in the war, but was equal to the entire economy of the rest of the allies put together (or the entire economy of the Axis powers put together).

Europe being bombed to smithereens in WWII, and the subsequent collapse of the European colonial empires (except for the USSR's), cemented US supremacy, but it was already pretty solid even before the war.

[ddg]

I've just updated my signature with a link to a post where I explain the basic economic model of the game. There are other valuable insights in later posts in the same thread, especially those by aeson.

The short version is, USA gets more of both direct injections of resources and percentage growth than GB or any other power and the value of colonial possessions to your economy declines over the course of the game, so your relative position substantially erodes over time. Stripping the American colonies has barely affected their economy at all.

Also, you only have to blockade a country's Home Area (North American East Coast for USA) to get the effects of the blockade.

[oldpop2000]

Historically, the decline of the British, began in the 1880’s because of wide and varied changes in the economics and technology in the world. The invention and development of steam with its application to ships and trains helped to accelerate the movement of technology around the world and move trade goods along with raw materials much easier and faster. This increased the flow of funds around the world through the now developing central banks, better bureaucracies which allowed countries to gather both personal and corporate taxes. Another factor was the relative peace throughout Europe since the Franco-Prussian War of 1870 allowed for more interaction between states. There were more free-trade agreements. This pushed forward long-term commercial and industrial investment and stimulated all global economies.

One factor that we in the US don’t recognize as important in the global economy was the way the North financed the Civil War and fought it. This was the first modern war, fought with relatively modern weapons and financed by a government with excellent financial entities. Another factor was the availability of historical financial statistics which allowed economist to predict how economies would operate under various conditions.
Population growth exploded during this period due to better agricultural methods and the reduction in diseases through better medicines and research.

We can see this decline in British economics by examining tables showing percentages of manufacturing output. For 1880, England had 22.9% of the manufacturing output of the world. By 1900, this decline to 18.5 but the US had gone from 14.7 to 23.6. This same trend is seen in the Per Capita levels of industrialization. All of these factors began to affect the share of the world’s trade that was carried under the British flag. Another factor that isn’t seen in the statistics is the conclusion of the US Indian Wars during this time period and the rapid increase throughout the US railroads so that raw materials from the West were not rapidly moved across the Pacific and the movement of people from the East to the West was now facilitated. This was a very important factor.

All this began the decline in the British lead in the world. The Naval Race of early 20th century and the World War were just the coup de gras for the British Empire. After this period, the decline increased with the social unrest in England and the tiring of the people of war. None of this can be reflected in the game as it is far too complex however, this was history.

[kotori87]

Thanks, that explains a lot. I'll have to re-evaluate my wartime plans to figure out something to do.

[oldpop2000]

Oct 3, 2018 10:40:12 GMT -6 kotori87 said:

Thanks, that explains a lot. I'll have to re-evaluate my wartime plans to figure out something to do.

Just remember; I don't know how the team has configured the game for progress in industrial technology, financial technology and the advancement of different nations. However, you do have to keep these different variables in mind. Possibly someone on the team or who has dissected the game more than I have, can answer these questions. Maybe this might be something that can be added to RTW2, I don't know. What I have given you was actual history, nothing more.

[mobeer]

One of the disappointing things about the game is that whilst the research rate can be reduced, the rate of economic growth remains unchanged. So if you want a long game with slow research then the US and Austria Hungary grow much too fast.

[director]

Most estimates are that the US economy passed Britain's sometime between 1876 and 1900. With a very high birthrate, massive immigration and the highest standard of living in the world added to the freely-available homestead land grants, US population exploded. By that time the US had more steel production than any other power and more miles of railroad track than the rest of the world combined. Our economy went from being a mass importer of finished products to satisfying its own internal needs and then becoming a net exporter and a trading rival to Britain.

There were signs before WW1 that the British economy, while doing well, wasn't growing as fast as the US and Germany, especially in key new areas like electrical equipment, automobiles and chemical production. But what kneecapped it was World War One, with the drain of maintaining the largest navy in addition to a very large army, supplying payments and materials to its allies, coping with shipping losses and then trying to pay for US materials and equipment. Britain went from being the greatest financial power (banker, loan maker and investor) with London the financial center of the world, to second place behind the United States as massive amounts of investments were liquidated to pay for the war and capital fled to Wall Street.

It seems likely to me that Britain picked up an Empire 'on the cheap' from 1815 to 1900 or so, while maintaining small armed forces and having little tax burden, then had to spend increasingly large amounts to secure it from foreign threats.


I know there is a modifier in the Nation file that sets the US economy to grow strongly after 1912 or so. You can create a custom nation for the US with that switched off if you like, or just us historical budgets.

[oldpop2000]

Oct 4, 2018 22:34:03 GMT -6 director said:

Most estimates are that the US economy passed Britain's sometime between 1876 and 1900. With a very high birthrate, massive immigration and the highest standard of living in the world added to the freely-available homestead land grants, US population exploded. By that time the US had more steel production than any other power and more miles of railroad track than the rest of the world combined. Our economy went from being a mass importer of finished products to satisfying its own internal needs and then becoming a net exporter and a trading rival to Britain.

There were signs before WW1 that the British economy, while doing well, wasn't growing as fast as the US and Germany, especially in key new areas like electrical equipment, automobiles and chemical production. But what kneecapped it was World War One, with the drain of maintaining the largest navy in addition to a very large army, supplying payments and materials to its allies, coping with shipping losses and then trying to pay for US materials and equipment. Britain went from being the greatest financial power (banker, loan maker and investor) with London the financial center of the world, to second place behind the United States as massive amounts of investments were liquidated to pay for the war and capital fled to Wall Street.

It seems likely to me that Britain picked up an Empire 'on the cheap' from 1815 to 1900 or so, while maintaining small armed forces and having little tax burden, then had to spend increasingly large amounts to secure it from foreign threats.


I know there is a modifier in the Nation file that sets the US economy to grow strongly after 1912 or so. You can create a custom nation for the US with that switched off if you like, or just us historical budgets.

The reason that the British Empire flourished was due to the creation of the Bank of England in 1694. It set monetary policy, It issued bank notes, controlled the UK's gold reserves and provided funding for the wars that might be needed to further the empire. It also was able to fund and  manage government borrowing. It was in the 1880's and afterwards, that other nations including Germany and France developed their own central banks to control their government finances. The US had a central bank from 1791-1811 chartered by Congress and it was modelled after the Bank of England. We had in fact two national banks until the creation of the Federal Reserve on 1913.  The Federal Reserve was created after a special, secret meeting at Jekyll Island which is a secluded island off the coast of Georgia. It was a place where the rich built homes to get away from the bad weather of New York. I have visited the island and actually seen the homes and meeting places of the six men who created it. This is the key to the improvement of finances as globalization began to take effect.  

[director]

I've seen convincing speculation (by economists) that Andrew Jackson's dissolution of the Bank of the United States made the cycle of boom-and-bust in the US economy not only inevitable but more severe. Admittedly the running of the US economy by a secret, private cabal is objectively a bad thing. But someone had to do it - the Panics before and after the Civil War had terrible effects on large businesses and families alike, and as Nature abhors a vacuum so a control vacuum cannot last. The US government was prevented from doing so by the de-chartering of the Bank, so we got JP Morgan and his ilk in charge instead.

[oldpop2000]

Oct 5, 2018 7:34:01 GMT -6 director said:

I've seen convincing speculation (by economists) that Andrew Jackson's dissolution of the Bank of the United States made the cycle of boom-and-bust in the US economy not only inevitable but more severe. Admittedly the running of the US economy by a secret, private cabal is objectively a bad thing. But someone had to do it - the Panics before and after the Civil War had terrible effects on large businesses and families alike, and as Nature abhors a vacuum so a control vacuum cannot last. The US government was prevented from doing so by the de-chartering of the Bank, so we got JP Morgan and his ilk in charge instead.

The elimination of the Bank of the United States did cause the boom or bust times in the 19th century. J.P.Morgan basically assisted the US government by pushing the Congress which had been considering the concept of a Federal Reserve. He did this by getting all the bankers together and providing a sizeable load to keep the country afloat after the Panic of 1907. This action embarrassed the Congress into acting and in 1913 they passed the Federal Reserve Act. The Federal Reserve is in charge of monetary policy but the Congress and President are in charge of Fiscal policy.