Old World Economics Led to the Great War

            During the mid-nineteenth century, an economic war and debate was raging throughout the world. The economic principles of free trade and protectionism were hotly disputed during that period history. Efforts were attempted in England by Richard Cobden, a supporter of free trade, to move his nation more towards a laissez-faire economic system. Even though leading European nations like Britain and France made strides to implement free trade, which lead an example for other nations to follow, this “did not mean the abolition of tariffs.”[1] At the same time, the United States of America was being torn apart by Abraham Lincoln, an “old Henry Clay-Tariff Whig” [2] supporter, and his protectionist driven Republican Party; who had passed the Morrill Tariff bill on March 2, 1861, which increased tariffs “by as much as 250 percent on some items” on the eve of the Civil War.[3] During the close of the nineteenth century and right up until the commencement of the First World War, “the free trade system” was continually “under…attack.”[4]

            Opponents of free trade argued that protectionism was the only means to protect national interests. Jules Méline, the French Commerce Minister, Gustav Schmoller, a German economist, and Henry Carey Baird, an American economist all supported the ideals of protectionism. Baird had said that “protection was a policy, which not merely rested on foundations of justice, but it was vindicated by all history.”[5] As the century ended, economists and politicians were attempting to rebrand the old world economic system of mercantilism under a new guise. Free trade or real capitalism was being destroyed through “aggressive imperialism and nationalism,” which created the twentieth century phenomenon of “war collectivism.”[6]

            Unlike the governments that imposed mercantilism in the seventeenth and eighteenth centuries, the governments during the mid-nineteenth century to early twentieth century were not as “brutally frank in [their] class rule, and in [their] scorn for the average worker and consumer.”[7] However, their goals to maintain economic control through a strong centralized government remained the same as before. Thus, the old approach to justify mercantilism received a facelift and the “new ideology of 20th-century liberalism” was born.[8] Citizens were made to believe that nationalism now meant that the government had the welfare of the worker and “the common good of all citizens” in mind when they governed over them.[9] This new ideology created the “corporate” liberal.[10]

            The corporate liberals were responsible for the economic system, which set the stage for the First World War. The United States was drawn into the war as a result of the Federal government joining big businesses in an effort to further “industrial cartelization.”[11] The war overseas drove the Federal governments’ economic plan to create several committees lead by predominant businessmen; which in turn, lead to the creation of the Committee on Industrial Preparedness in 1916.

Next, the Council of National Defense (CND) was created, whose mission was explained by President Wilson as a joint operation between the private and public sectors to promote “Americanism.”[12] The new economic structure and drive of the CND was to form a collective union between the state, the military, the industries, and the public. The CND was formed by key individuals; one of whom was related to the president, and others had great influence and powerful positions in various industries. These men used their sub-committees to promote mercantilism.

Protectionist tariffs and imperialism destroyed free trade and peace throughout the world, which lead to the First World War (even though the French and Indian War can be argued as the world’s first “world war” for the same reasons that contributed to this conflict). The war created an economic crisis that helped governments to promote the destruction of competition through “conservation efforts.”[13] The various committees created by the Federal government to promote war collectivism helped to create a “Standardize[d] American Industry.”[14] This economic system based on old-fashioned mercantilism would be an example to other nations and only help contribute to further wars.

Bibliography

DiLorenzo, Thomas. Lincoln Unmasked: What Your’re Not Supposed to Know About Dishonest Abe. New York: Three Rivers Press, 2006.

DiLorenzo, Thomas. The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War. New York: Three Rivers Press, 2003.

Mulligan, William. The Origins of the First World War. Cambridge: Cambridge University Press, 2010.

Rothbard, Murray N. “War Collectivism in World War I.” Mises Institute, December 13, 2011. http://mises.org/library/war-collectivism-world-war-i.

   

     

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[1] William Mulligan, The Origins of the First World War, (Cambridge: Cambridge University Press, 2010), 186.

[2] Thomas DiLorenzo, Lincoln Unmasked: What Your’re Not Supposed to Know About Dishonest Abe, (New York: Three Rivers Press, 2006), 124.

[3] Thomas DiLorenzo, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War, (New York: Three Rivers Press, 2003), 127.

[4] Mulligan, The Origins of the First World War, 187.

[5] Ibid, 188.

[6] Murray N. Rothbard, “War Collectivism in World War I,” Mises Institute, December 13, 2011, http://mises.org/library/war-collectivism-world-war-i.

[7] Ibid.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Ibid.