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Post by oldpop2000 on May 14, 2019 9:22:00 GMT -6
I believe that we all agree that the situation after WW1 through the interwar period was complex with the demise of three empires and creation of new states that were internally in conflict with different ethnic groups. In fact, we are still dealing with that ethic problem, not as bad, but still it is a simmering pot. This is just my opinion, I could be wrong.
I believe that the ethic issue with the border problems, and the economic issues are the real underlying causes and those gave rise to Nazism and Adolf Hitler.
I have a very good book on the economic issue titled "The Lords of Finance" by LIaquat Ahamed. I need to go through it some more and get some facts. This is an excellent intelligent discussion, let's keep it going and investigate what happened, why it happened and were there "paths not taken" and why.
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Post by oldpop2000 on May 14, 2019 10:29:30 GMT -6
In my research, the world banking crisis reached a peak in the middle of 1931. The world was a depression for its second year. Records show that in that year, that 8 million people in the US were out of work. Another 2.5 million in Great Britain, 5 million in Germany. Berlin was almost in a state of civil war and in the elections of September 1930, The Nazis party took advantage of the chaos and blaming the Allies, the Communists and the Jews gain near 6.5 million votes . The biggest threat was to the banking system. I believe that our quest for answers probably has to start in the 1929 Wall Street crash, which actually wasn't as bad as recorded. The worst problem was the demise of the Bank of the United States. which was not a federal reserve bank but a private bank and its failure left $200 million dollars frozen in the depositor accounts. One year later the largest bank in Austria failed and closed its doors. In July of that year, the third largest bank in Germany failed caused a run on German banks. The problems spread to the Bank of England which had to borrow cash from the US, France to manage its gold reserves.
The noted economist John Maynard Keynes noted "“We are today in the middle of the greatest catastrophe—the greatest catastrophe due almost to entirely economic causes—of the modern world." I believe strongly that this banking crisIs and world-wide economic depression was a major cause for WW2.
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Post by dorn on May 14, 2019 12:55:55 GMT -6
oldpop2000I think you are right, it was one of the most important reasons.
I would say that settlement of WW1 was that it gives potential issues on table. However it was not enough to start something very large. The economic crises started changes in Germany in way dangerous in the world at time where western democracies saw outside threat mostly from communismus.
Still this was not enough. A little more ambitious France and everything was settled. However France gave hands of central Europe, completely opposite what they did past hundreds years. They give Germany free will to do with Central, Eastern, Southe Europe what they want. And they pay a price for that.
Just one question. I am quite suprised that Poland cannot have any thoughts that they can be next after Czechoslovakia especially as they own a lot of German land. At that time Poland army was still reasonable against Germany and allowing Czechoslovakia be annexed by Germany means that German land army have now 2 times equipment as before. So just taking Czechoslovak equipment, Germany army almost doubled.
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Post by oldpop2000 on May 14, 2019 14:12:58 GMT -6
oldpop2000 I think you are right, it was one of the most important reasons.
I would say that settlement of WW1 was that it gives potential issues on table. However it was not enough to start something very large. The economic crises started changes in Germany in way dangerous in the world at time where western democracies saw outside threat mostly from communismus.
Still this was not enough. A little more ambitious France and everything was settled. However France gave hands of central Europe, completely opposite what they did past hundreds years. They give Germany free will to do with Central, Eastern, Southe Europe what they want. And they pay a price for that.
Just one question. I am quite suprised that Poland cannot have any thoughts that they can be next after Czechoslovakia especially as they own a lot of German land. At that time Poland army was still reasonable against Germany and allowing Czechoslovakia be annexed by Germany means that German land army have now 2 times equipment as before. So just taking Czechoslovak equipment, Germany army almost doubled.
Some more information on our discussion. This is about Danzig, on the Baltic coastline at the mouth of the Vistula River. According to many of my sources, it was this city that led to the invasion of Poland. It had been given to the Poles after WW1 and it was the source of bad feelings. The problem was of course that the Allies cut off the city from Germany although it had been a part of Prussia since the eighteenth century. It had been an ancient Germanic trading city but when Prussia grabbed it it was already in decline due to the economic power shifting to the western seaboard of Europe. The commitment to create an independent Poland was established in Wilson's Fourteen Points for peace. It was necessary to provide the new free Poland with access to the sea, Danzig was the answer. Obviously the German residents did not take this easy and they did protest. The Allies had been committed to self-determination but in this case they went against that universal idea and this caused a rift between the Allies. They knew that by their actions, this would eventually cause a problem with the German's. Eventually, the Allies decided that the city would be an "open city" and that it would be under the supervision of the League of Nations. The German population was given self-government but Poland had free access for goods in and out of the city. Unfortunately, neither the Germans nor the Poles like this agreement. Neither the Weimar Republic nor the Nazi regime ever accepted this solution and they did keep in contact with the German residents. Most books agree that this agreement, was not a good outcome of Versailles and became a rallying cry for the Germans. This is one of the Versailles solutionS that did not work.... there were to be many more.
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Post by oldpop2000 on May 14, 2019 22:05:04 GMT -6
Just a quote that I wanted to pass along from one of my sources about the world economy.
“THE COLLAPSE of the world economy from 1929 to 1933—now justly called the Great Depression—was the seminal economic event of the twentieth century. No country escaped its clutches; for more than ten years the malaise that it brought in its wake hung over the world, poisoning every aspect of social and material life and crippling the future of a whole generation. From it flowed the turmoil of Europe in the “low dishonest decade” of the 1930s, the rise of Hitler and Nazism, and the eventual slide of much of the globe into a Second World War even more terrible than the First.”
This economic disaster was the work of the men in charge of the four central banks: Bank of England, Federal Reserve, The Reichsbank, and the Banque of France.
So, as it stands, we have two causes for the WW2. The Versailles agreement on Danzig and the collapse of the world economies primarily caused by two factors: the bankruptcy of Britain, France and Germany and the work of the leading bankers in each country. The plot thickens.
Ahamed, Liaquat. Lords of Finance (p. 6). Penguin Publishing Group. Kindle Edition.
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Post by oldpop2000 on May 15, 2019 23:03:05 GMT -6
Here is an interesting paragraph from "The Origins of the Second World War" by A.J.P. Taylor
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AiryW
Full Member
Posts: 183
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Post by AiryW on May 16, 2019 6:18:32 GMT -6
The biggest threat was to the banking system. I believe that our quest for answers probably has to start in the 1929 Wall Street crash, which actually wasn't as bad as recorded. The worst problem was the demise of the Bank of the United States. which was not a federal reserve bank but a private bank and its failure left $200 million dollars frozen in the depositor accounts. One year later the largest bank in Austria failed and closed its doors. In July of that year, the third largest bank in Germany failed caused a run on German banks. The problems spread to the Bank of England which had to borrow cash from the US, France to manage its gold reserves. Bank failures were a significant drag however modern economists tend to emphasize the role played by interest rates. As noted depression scholar and later federal reserve chairman Ben Bernanke said at a ceremony honoring Milton Friedman: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again." This words would become oddly foreshadowing as he would subsequently be Federal Reserve Chairman at the time of the 2007 housing market collapse. This provided an interesting test case because even though the defaults after 2007 were an even larger share of the economy then those after 1929, the Great Recession was much less severe then the Great Depression. This suggests that Bernanke's optimism was largely justified, with the lessons we learned from the Great Depression we can greatly reduce the damage. There were those who argued against the choices of the Federal Reserve at the time. It's certainly plausible that the Federal Reserve might have avoided those mistakes. This would not have solved the problem of aggressive German nationalism, frankly it's amazing that the advocates of peace held on so long in German despite never commanding a majority of the electorate. However it's likely that without the economic disruption aggressive German nationalists would have had less of an opportunity for conquest. On the other hand it's also quite plausible that the British and Germans might have made the same mistake that the Americans and French made and that the problem might have been even worse.
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Post by oldpop2000 on May 16, 2019 7:59:24 GMT -6
The biggest threat was to the banking system. I believe that our quest for answers probably has to start in the 1929 Wall Street crash, which actually wasn't as bad as recorded. The worst problem was the demise of the Bank of the United States. which was not a federal reserve bank but a private bank and its failure left $200 million dollars frozen in the depositor accounts. One year later the largest bank in Austria failed and closed its doors. In July of that year, the third largest bank in Germany failed caused a run on German banks. The problems spread to the Bank of England which had to borrow cash from the US, France to manage its gold reserves. Bank failures were a significant drag however modern economists tend to emphasize the role played by interest rates. As noted depression scholar and later federal reserve chairman Ben Bernanke said at a ceremony honoring Milton Friedman: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again." This words would become oddly foreshadowing as he would subsequently be Federal Reserve Chairman at the time of the 2007 housing market collapse. This provided an interesting test case because even though the defaults after 2007 were an even larger share of the economy then those after 1929, the Great Recession was much less severe then the Great Depression. This suggests that Bernanke's optimism was largely justified, with the lessons we learned from the Great Depression we can greatly reduce the damage. There were those who argued against the choices of the Federal Reserve at the time. It's certainly plausible that the Federal Reserve might have avoided those mistakes. This would not have solved the problem of aggressive German nationalism, frankly it's amazing that the advocates of peace held on so long in German despite never commanding a majority of the electorate. However it's likely that without the economic disruption aggressive German nationalists would have had less of an opportunity for conquest. On the other hand it's also quite plausible that the British and Germans might have made the same mistake that the Americans and French made and that the problem might have been even worse. I do agree that the Reserve Bank of New York's poor performance after the failure of the Bank of the United States began the slide to economic depression. Poor financial controls in the US also caused the problem. The recovery after the crash of 1929 was rather quick, but it was the conduct of four of the world's bankers that has to be established as a leading cause. I have an excellent book on that subject. I agree that the Federal Reserve, apparently did listen and the recovery after the 2007 loan crisis was well conducted and the losses were minimal, depending on who you were. The investment bankers had little or no controls over their actions and this caused the home loan bank crisis. I have three books on this and they do refer to the 1929 crash and subsequent Federal Reserve actions. Don't forget the performance of Alan Greenspan, who was an Ayn Rand Laissez Faire Chairman and he admitted at a Senate Hearing that he did not believe that this would happen and admitted he was wrong. What I find interesting is that J.P. Morgan showed the way in the 1907 Panic which started with a stock manipulation by United Copper. J.P. Morgan put together a major loan to the government, and the panic was stopped. This episode and its solution was the driving force behind the creation of the Federal Reserve. The famous Jekyll Island Club meeting is where the famous bankers discussed the permanent solution. I have actually visited Jekyll Island and that club to see the room where it occurred and heard the detailed story. The point is that this panic of 1907 should have been a guide to the New York Federal Reserve as to how to solve a possible banking crisis in 1929. The other nations like Great Britain, France, Germany and Italy were all in deep debt, our actions would have a ripple effect around the world. It does not appear that these nations including the US realized that globalization had already begun in the early 20th century. This is why we now have a World Bank although I don't know how effective it is, but it is better than nothing. Interesting subject in my opinion. As I have stated, we can't just look for one cause or one person to blame, we must look for many causes and understand the domino effect, all nations had a hand in this debacle.
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Post by oldpop2000 on May 16, 2019 18:52:36 GMT -6
My research now gives me three economic issues that were causes for the depression and the Rise of Germany.
A. Reparation from Germany
B. Shortage of gold - The nations in Europe and the US were on the gold standard. My understanding of that means that the basic currency like a dollar, pound, mark was fixed to a specific amount of gold. To print more paper and help people to buy, save money, you needed to have more gold. Well, many of these countries paid debt to the US in gold, so they lacked gold.
C. The Stock Market Bubble during the 1920's. As we all saw in the 2007-2009 meltdown, bubbles can be dangerous without the proper corrective actions by central banks. This did not happen in the 1920's and the 1929 crash was the result which caused a domino effect around the world.
I am currently researching this whole issue of Economics in the Interwar Period. Wish me luck.
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Post by dorn on May 17, 2019 5:02:31 GMT -6
It is quite long time I have just reading and thinking about that topic.
For Germany another thing was that Germany has no reserves, nothing to fight it. It was in whole Europe but especially in Germany.
Another important thing was that this crisis was for the first time and nobody knew how to solve it and economic theories were about world which has never been true. To remain in golden standard had even worsen things a lot. Cash was difficult to get and without banking system that are able to fullfil her basis meaning transfer cash to where is needed, everything collapsed.
Just thing in todays time. You want to buy house, you need to go to bank to get mortgage. But no bank can give you one so you do not buy the house. Developer cannot sell house, can get back his invested money and will bancrupt. As it is financed by bank, bank loose money. As bank has even less money, bank will be willing borrowing even less. In worst case bank can collapse and bancrupt. In this case all money in bank is lost. All small investors have lost a lot of money they cannot use anymore, so they will buy lower amount of product. It means less production, less employment, less money. It is very dangerous circle and at that time they did not know that it is so dangerous and did not know how to solve it.
Economic has changed a lot in last 2 centuries and we are always late to understand changes.
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Post by oldpop2000 on May 17, 2019 9:03:42 GMT -6
It is quite long time I have just reading and thinking about that topic.
For Germany another thing was that Germany has no reserves, nothing to fight it. It was in whole Europe but especially in Germany.
Another important thing was that this crisis was for the first time and nobody knew how to solve it and economic theories were about world which has never been true. To remain in golden standard had even worsen things a lot. Cash was difficult to get and without banking system that are able to fullfil her basis meaning transfer cash to where is needed, everything collapsed.
Just thing in todays time. You want to buy house, you need to go to bank to get mortgage. But no bank can give you one so you do not buy the house. Developer cannot sell house, can get back his invested money and will bancrupt. As it is financed by bank, bank loose money. As bank has even less money, bank will be willing borrowing even less. In worst case bank can collapse and bancrupt. In this case all money in bank is lost. All small investors have lost a lot of money they cannot use anymore, so they will buy lower amount of product. It means less production, less employment, less money. It is very dangerous circle and at that time they did not know that it is so dangerous and did not know how to solve it.
Economic has changed a lot in last 2 centuries and we are always late to understand changes.
I believe that many forget the effects of economics on our society and how it operates around the world. I know that globalization had begun probably before the turn of the century and that nations did pay their trade debts with gold or convert their currency to the pound sterling to pay. At the beginning of WW1, there was large amount of trade debts and the Bank of England, being the biggest and largest was panicked and a bank holiday declared to deal with the sudden panic in England as the war was declared. England had to assume the debts of almost all nations since the exchanges went through the Bank of England. But there were other factors like German shipping was insured by Lloyds of London and this meant that if the German's lost shipping, Lloyds was supposed to pay for it. So the two biggest factors that I can see now were globalization and the fact that most nations did not understand the effects of a global war on it and the gold standard. I am not trying study economics, just get an understanding of its effects on the 1920's and 1930's. I agree that national banks had to change their way of thinking and John Maynard Keynes had a great effect on this. I have a copy of his book, so I will browse through it.
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Post by oldpop2000 on May 17, 2019 11:53:12 GMT -6
In regards to the gold standard, when the major players like Britain, France, Russia, England and Austria-Hungary came nearer to a declaration of war, there was a panic and people would bring in their notes; Franc's, Mark's, Pounds etc. and exchange them for gold. This run on the banks, would deplete the available gold from the gold reserves backing the currency. When that level went below the level needed to back the current paper currency, then the paper was worthless and now hyperinflation occurred. This also depleted the reserves necessary to purchase weapons and pay the military. Most nations set up a special gold reserve to handle this. But it would never be enough. This is as a direct result of the gold standard and it did have a pronounced effect on the global economies before and during but even more, after the war ended.
The US, on the other hand, was neutral, so it did not have the problem.
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Post by oldpop2000 on May 17, 2019 16:36:48 GMT -6
I've been searching for the key to unlock why WW2 occurred and could it have been prevented. We know that the rise of Hitler and Mussolini was triggered by a world-wide depression which occurred between 1929 and 1931. This depression spread around the world but in essence had already had its foundation layed prior to World War 1. There was economic chaos in Germany with hyperinflation and severe unemployment and the Hitler and Mussolini took advantage of it.
Now, that is one of the dots leading to the start of World War 2 but where was the key dot located and why. I think I know. It was complacency, if that is the correct word, on the part of the financiers and the national governments as to how long the war would last. Because of the gold standard, they were under the mistaken belief that when the gold ran out, the war would end and everything would return to normal. What these entities did not realize, was that they were witnessing the end of the old economic order and of course, empires. When the gold ran out, and that was very quickly because the five nations at war in 1914 were spending $3 Billion dollars per month on the war and that was 50% of their collective GDP, they now had to find ways to continue financing the war.
So, how do you continue to finance a war after your gold has run out? Well, just keep printing money which now is essentially worthless over time and prices begin to rise. This inflation now affects everyone in the world and bankrupts everyone and will cause civil unrest. The other way is to raise taxes. But taxes could not pay for even a small amount of the funds necessary to fight the war. Another method is currency debasement meaning, you trim gold and silver coins to remove some of the valuable material. You can also just use a cheaper alloy like copper or steel. So what we see is the old system of the gold standard being abandoned, and countries now just printing money.
This sounds easy but it now requires the central banks to change how they control the economy and with it, inflation. Now they have to begin to monitor the interest rates. With rates low, there is lots of spending and inflation can rise. To control it, you raise interest rates. This is a whole new way of managing the economies and this took men like John Maynard Keyes to advocate this new method.
So, in the end, it was the fall of empires creating new states with ethnic and boundary problems and the end of an old, laissez-faire economic system free from government control. The failure of the old economic system must rank as the key factor because had there been a good economic control system in Europe, there might not have been as much ethic problems and boundary issues. But that is speculation.
I am going to continue my research which is really teaching me a lot, but this is what I feel is the key. Had the national government left the gold standard, and put more economic control regulations in the hands of the national banks, the war might still have happened, but the economies might have survived and Hitler would not have had the chance to rise and take over the German government.
Another factor, especially in the US is better controls on banking. This problem seems to have reared its ugly head in 2007. Interestingly enough because of the same Laissez-faire attitude of Alan Greenspan and Ayn Rand. Those who fail to learn from history, are doomed to repeat it.
I am using my Khan Academy to learn more about macro and micro economics, statistics and other related topics. It's easier for us old folks.
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Post by oldpop2000 on May 17, 2019 22:16:49 GMT -6
My search for a key or keys brings me to Germany itself. Without going to detail, the Germany of WW1 and WW2 came about with the unification in 1871. It was ruled by the Kaiser and early in its history, Otto Von Bismarck. Service to the Kaiser was considered the "cornerstone of Wilhelmine Germany" as one author states it. The men around the Kaiser truly believed that the coming war would be short, and that Germany would win. She felt that she could and would get reparations from the defeated nations and that was that.
The problem with that idea is that Germany lacked a sophisticated financial market like Great Britain. She also did not have a middle-class that saved their money which was important to provide a means of getting tax money to help pay for the war. She also lacked any overseas help to fund her wartime requirements like France and Great Britain. So what did this mean, well printing money.
As the German's printed more money, their money in circulation went up fourfold, much higher than any other nation. This caused hyperinflation and resulted in the civil unrest that eventually ended the war. Support for the war had crumbled into dust due to the blockade and poor financial management. Morale throughout Germany deteriorated and the Kaiser was forced to leave and Germany surrendered.
Now, with hyperinflation in the nation, a new government trying to get a hold onto the whole situation, the reparation issue rears its ugly head. But overall, the plight of the German people was, in fact, their own doing. They had not prepared for the war, by developing a good financial system, adequate gold stocks and a realistic attitude as to how long the war might last. Actually none of the "multipolar nations" as it was called did, but England at least had a good system in place.
I am now researching the reparations issue. I believe that the above provides us with another key to the puzzle.
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Post by oldpop2000 on May 18, 2019 15:32:00 GMT -6
Due to the new game being released, I can see that there is no real interest in discussing history, but I will continue my research and my monographs of what I understand and have learned. I am currently, as I stated in the previous post, researching the reparations and its effects. We know there was more to the Versailles treaty such as loss of Saar Region which was a prime industrial area, Northern Schleswig and the Rhineland was demilitarized. Poland received parts of west Prussia and Silesia. Danzig became a free city and the Hultschin District was given to Czechoslovakia. However, even with these territorial losses, loss of their military the biggest impact was by the reparations. But not all were for the enormous cost to Germany of these reparations. I will get into this later.
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