Modern History I (Imperialism to the Age of Depression and Recovery)
CONTENTS
IMPERIALISM.................................................................................................................................................... 7
I INTRODUCTION ......................................................................................................................................................... 7
II HISTORY ................................................................................................................................................................... 7
III EXPLANATIONS OF IMPERIALISM ............................................................................................................................. 7
A The Economic Motive ......................................................................................................................................................8
B Political Motives...............................................................................................................................................................8
C Ideological Motives ..........................................................................................................................................................8
D Reactive Imperialism .......................................................................................................................................................8
IV THE EFFECTS OF IMPERIALISM ................................................................................................................................. 8
BALKAN WARS ................................................................................................................................................. 9
I INTRODUCTION ......................................................................................................................................................... 9
II BACKGROUND .......................................................................................................................................................... 9
III FIRST BALKAN WAR ................................................................................................................................................. 9
IV SECOND BALKAN WAR ........................................................................................................................................... 10
THE EASTERN QUESTION .......................................................................................................................... 11
I INTRODUCTION ....................................................................................................................................................... 11
II THE CONCERT OF EUROPE ....................................................................................................................................... 11
III INCREASING TENSIONS AND FINAL RESOLUTION .................................................................................................... 12
WORLD WAR I ............................................................................................................................................... 13
I INTRODUCTION ....................................................................................................................................................... 13
II CAUSES OF THE WAR .............................................................................................................................................. 13
A Nationalism ....................................................................................................................................................................13
B Imperialism ....................................................................................................................................................................13
C Military Expansion .........................................................................................................................................................14
D Crises .............................................................................................................................................................................14
III MILITARY OPERATIONS .......................................................................................................................................... 28
A Diplomatic Moves ..........................................................................................................................................................29
B Declarations of War .......................................................................................................................................................29
C 1914-1915: .....................................................................................................................................................................29
C1 The Western Front .......................................................................................................................................................30
C2 The Eastern Front.........................................................................................................................................................31
C3 The War in Serbia.........................................................................................................................................................31
C4 The Ottoman Front ......................................................................................................................................................32
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Modern History I (Imperialism to the Age of Depression and Recovery)
C5 The Italian Front .......................................................................................................................................................... 32
D 1916: ............................................................................................................................................................................. 54
D1 Verdun and Somme .................................................................................................................................................... 54
D2 Russian Losses-Romanian Defeat................................................................................................................................ 63
D3 Italy and the Balkans ................................................................................................................................................... 64
D4 The Ottoman Dominions ............................................................................................................................................. 64
D5 Negotiation Attempts ................................................................................................................................................. 64
E 1917: .............................................................................................................................................................................. 65
IV AMERICA AND WORLD WAR I ................................................................................................................................ 65
a Over There ..................................................................................................................................................................... 66
b Over Here ...................................................................................................................................................................... 66
E1Arras and Ieper ............................................................................................................................................................. 80
E2 Use of Tanks ................................................................................................................................................................ 80
E3 Submarine Warfare ..................................................................................................................................................... 81
E4 Russia Withdraws ........................................................................................................................................................ 82
E5 Italian Setbacks ............................................................................................................................................................ 82
E6 Greece Enters the War ................................................................................................................................................ 84
E7 The Middle East ........................................................................................................................................................... 84
F 1918: .............................................................................................................................................................................. 90
F1 Bulgaria and Austria-Hungary Withdraw ..................................................................................................................... 91
F2 Ottoman Empire Withdraws........................................................................................................................................ 91
F3 Last German Efforts ..................................................................................................................................................... 92
F4 End of the War in Europe ............................................................................................................................................ 92
G Colonial Warfare ........................................................................................................................................................... 93
G1 Africa ........................................................................................................................................................................... 93
G2 The Pacific ................................................................................................................................................................... 93
H The War at Sea .............................................................................................................................................................. 93
H1 Early Operations.......................................................................................................................................................... 94
H2 1916 and After ............................................................................................................................................................ 94
H3 German Fleet Scuttled ................................................................................................................................................ 94
I The War in the Air .......................................................................................................................................................... 97
V SUMMARY OF THE WAR ......................................................................................................................................... 97
RUSSIAN REVOLUTION OF 1905 ........................................................................................................... 108
THE RUSSIAN REVOLUTION OF 1917 .................................................................................................. 109
I INTRODUCTION...................................................................................................................................................... 109
II BACKGROUND ...................................................................................................................................................... 109
III THE FEBRUARY REVOLUTION................................................................................................................................ 110
A Mounting Crisis ........................................................................................................................................................... 110
B Strikes and Demonstrations ........................................................................................................................................ 110
C Confrontation with Troops .......................................................................................................................................... 111
IV THE PETROGRAD SOVIET ...................................................................................................................................... 111
V THE PROVISIONAL GOVERNMENT ......................................................................................................................... 112
A Spread of the revolution ............................................................................................................................................. 112
B Postponement of Decisions......................................................................................................................................... 112
VI WAR OR PEACE .................................................................................................................................................... 113
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Modern History I (Imperialism to the Age of Depression and Recovery)
VII GROWTH OF BOLSHEVIK INFLUENCE ................................................................................................................... 113
VIII FIRST CONGRESS OF SOVIETS ............................................................................................................................. 114
A The July Uprising ..........................................................................................................................................................114
B Bolshevik Leadership ...................................................................................................................................................114
IX THE KERENSKY GOVERNMENT ............................................................................................................................. 115
X THE OCTOBER REVOLUTION .................................................................................................................................. 116
XI SECOND CONGRESS OF SOVIETS ........................................................................................................................... 118
A Ratification of Principles ..............................................................................................................................................122
B New Government.........................................................................................................................................................122
XII CIVIL WAR .......................................................................................................................................................... 122
TREATY OF VERSAILLES .......................................................................................................................... 124
I INTRODUCTION ..................................................................................................................................................... 124
II DISARMAMENT AND REPARATIONS ...................................................................................................................... 124
III TERRITORIAL CHANGES ........................................................................................................................................ 124
LEAGUE OF NATIONS ................................................................................................................................ 133
I INTRODUCTION ..................................................................................................................................................... 133
II THE COVENANT AND THE UNITED STATES ............................................................................................................. 133
III LEAGUE STRUCTURE ............................................................................................................................................ 133
IV WORLD INVOLVEMENT ........................................................................................................................................ 133
V LEGACY................................................................................................................................................................. 134
VI MEMBERSHIP ...................................................................................................................................................... 134
REPARATIONS ............................................................................................................................................. 135
I INTRODUCTION ..................................................................................................................................................... 135
II WORLD WAR I....................................................................................................................................................... 135
III WORLD WAR II..................................................................................................................................................... 135
GREAT DEPRESSION IN THE UNITED STATES .................................................................................. 137
I INTRODUCTION .............................................................................................................................................................137
II CAUSES OF THE DEPRESSION .......................................................................................................................................137
III ECONOMIC COLLAPSE (1929-1933) ............................................................................................................................139
IV INITIAL RESPONSE TO THE DEPRESSION .....................................................................................................................140
V INTERNATIONAL EFFECTS OF THE DEPRESSION ..........................................................................................................141
VI ROOSEVELT AND THE NEW DEAL................................................................................................................................141
VII LIFE DURING THE DEPRESSION ..................................................................................................................................142
VIII END OF THE DEPRESSION .........................................................................................................................................143
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Modern History I (Imperialism to the Age of Depression and Recovery)
IX LEGACY OF THE DEPRESSION ..................................................................................................................................... 143
Franklin D. Roosevelt's First Inaugural Address: Franklin Delano Roosevelt delivered this address on March 4, 1933. 144
ROOSEVELT CLOSES ALL BANKS; CONGRESS MEETS THURSDAY ................................................................................ 147
Prices in Upward Whirl as America Quits Gold, Los Angeles Times, April 20, 1933 ..................................................... 151
Franklin Delano Roosevelt's Fireside Chat on Drought Conditions, September 6, 1936 .............................................. 153
The National Emergency Council, 1938 ..................................................................................................................... 158
Roosevelt, Franklin Delano (1882-1945) ................................................................................................................... 169
I INTRODUCTION ............................................................................................................................................................ 169
II EARLY LIFE.................................................................................................................................................................... 169
A Education .................................................................................................................................................................... 169
B Marriage ...................................................................................................................................................................... 170
III ENTRY INTO POLITICS ................................................................................................................................................. 170
A State Senator ............................................................................................................................................................... 170
B Assistant Secretary of the Navy................................................................................................................................... 171
C Vice-Presidential Candidate ........................................................................................................................................ 172
D Illness .......................................................................................................................................................................... 172
E Governor of New York ................................................................................................................................................. 172
F Stock Market Crash ...................................................................................................................................................... 173
IV ROAD TO THE PRESIDENCY......................................................................................................................................... 174
A Democratic National Convention ................................................................................................................................ 174
B 1932 Presidential Election ........................................................................................................................................... 174
V PRESIDENT OF THE UNITED STATES ............................................................................................................................ 175
A Domestic Programs 1933-1941 ................................................................................................................................... 175
A1 First Appointments.................................................................................................................................................... 175
A2 The Hundred Days ..................................................................................................................................................... 176
A3 The New Deal ............................................................................................................................................................ 176
A3a Relief Legislation ..................................................................................................................................................... 176
A3b Recovery Legislation................................................................................................................................................ 177
A3c Reform Legislation ................................................................................................................................................... 178
A4 New Deal Politics ....................................................................................................................................................... 180
A4a The 1936 Election .................................................................................................................................................... 180
A4b Decline in Popularity ............................................................................................................................................... 181
A4c The 1940 Election .................................................................................................................................................... 181
B Foreign Policy (1933-1941).......................................................................................................................................... 181
B1 The Stimson Doctrine ................................................................................................................................................ 181
B2 Good Neighbor Policy ................................................................................................................................................ 182
B3 Growth of U.S. ........................................................................................................................................................... 182
B4 Quarantine of Aggressors .......................................................................................................................................... 183
B5 Start of World War II ................................................................................................................................................. 183
B5a Defense Buildup ...................................................................................................................................................... 183
B5b Lend-Lease .............................................................................................................................................................. 184
C Wartime Leadership (1941-1945) ............................................................................................................................... 184
C1 Pearl Harbor .............................................................................................................................................................. 184
C2 Atlantic Charter ......................................................................................................................................................... 185
C3 War Plans................................................................................................................................................................... 185
C4 Wartime Conferences ............................................................................................................................................... 185
D Death ........................................................................................................................................................................... 186
Franklin D. Roosevelt's Second Inaugural Address .................................................................................................... 186
Wages ..................................................................................................................................................................... 189
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Modern History I (Imperialism to the Age of Depression and Recovery)
I INTRODUCTION .............................................................................................................................................................189
II DETERMINING INFLUENCES .........................................................................................................................................189
III GENERAL WAGE LEVEL ................................................................................................................................................190
IV THEORIES OF WAGES ..................................................................................................................................................190
V HISTORY OF WAGES .....................................................................................................................................................192
Stock Exchange ........................................................................................................................................................ 192
I INTRODUCTION .............................................................................................................................................................192
II THE IMPORTANCE OF STOCK EXCHANGES...................................................................................................................193
III STOCK TRADING ..........................................................................................................................................................193
A Stock Specialists and the Exchange Floor ....................................................................................................................194
B Floor Brokers ................................................................................................................................................................194
C Institutional Brokers ....................................................................................................................................................194
D Example of a Large Trade ............................................................................................................................................194
IV TRADING IN OTHER SECURITIES..................................................................................................................................194
A Bonds ...........................................................................................................................................................................195
B Options.........................................................................................................................................................................195
C Futures .........................................................................................................................................................................195
V THE OVER-THE-COUNTER MARKET..............................................................................................................................195
VI INTERNATIONAL EXCHANGES .....................................................................................................................................195
VII HISTORY OF U.S. STOCK EXCHANGES ........................................................................................................................196
A The Crash of 1929 ........................................................................................................................................................196
B Regulation of Exchanges ..............................................................................................................................................197
VIII RECENT DEVELOPMENTS ..........................................................................................................................................198
Unemployment ....................................................................................................................................................... 198
I INTRODUCTION .............................................................................................................................................................198
II MEASUREMENT ...........................................................................................................................................................199
III CAUSES ........................................................................................................................................................................199
IV GOVERNMENT INVOLVEMENT ...................................................................................................................................200
V UNEMPLOYMENT IN OTHER NATIONS ........................................................................................................................201
Macroeconomics ..................................................................................................................................................... 202
I INTRODUCTION .............................................................................................................................................................202
II KEYNESIAN THEORY AND UNEMPLOYMENT ................................................................................................................202
III MONEY SUPPLY ...........................................................................................................................................................204
IV INFLATION...................................................................................................................................................................204
V MODERN THEORIES .....................................................................................................................................................204
Dow Jones Averages ................................................................................................................................................ 205
Business Cycle ......................................................................................................................................................... 206
I INTRODUCTION .............................................................................................................................................................206
II PHASES OF THE BUSINESS CYCLE .................................................................................................................................206
III SPECIAL CYCLES ...........................................................................................................................................................207
IV CAUSES OF CYCLES ......................................................................................................................................................207
V ACCELERATOR AND MULTIPLIER EFFECTS ...................................................................................................................208
VI REGULATING THE CYCLE .............................................................................................................................................208
The New Global Economic Order By Richard C. Longworth ....................................................................................... 209
Bond (finance) ......................................................................................................................................................... 217
I INTRODUCTION .............................................................................................................................................................217
II HOW BONDS WORK .....................................................................................................................................................217
III KINDS OF BONDS.........................................................................................................................................................217
IV ISSUING BONDS ..........................................................................................................................................................217
V INVESTING IN BONDS...................................................................................................................................................218
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Modern History I (Imperialism to the Age of Depression and Recovery)
Taxation .................................................................................................................................................................. 218
I INTRODUCTION ............................................................................................................................................................ 218
II TYPES OF TAXES ........................................................................................................................................................... 219
A Individual Income Tax ................................................................................................................................................. 219
B Corporate Income Tax ................................................................................................................................................. 220
C Payroll Tax ................................................................................................................................................................... 221
D Consumption Taxes ..................................................................................................................................................... 221
D1 General Sales Taxes................................................................................................................................................... 221
D2 Excise Taxes ............................................................................................................................................................... 221
D3 Value-Added Tax ....................................................................................................................................................... 222
D4 Tariffs ........................................................................................................................................................................ 222
E Property Taxes ............................................................................................................................................................. 222
F Estate, Inheritance, and Gift Taxes .............................................................................................................................. 223
G Other Taxes ................................................................................................................................................................. 223
III HOW GOVERNMENT SPENDS TAXES .......................................................................................................................... 224
IV PRINCIPLES OF TAXATION .......................................................................................................................................... 224
A Fairness ....................................................................................................................................................................... 224
A1 Ability-to-Pay Principle .............................................................................................................................................. 224
A2 Benefits Principle ...................................................................................................................................................... 225
B Efficiency ..................................................................................................................................................................... 226
C Administration Costs ................................................................................................................................................... 226
D Compliance Costs ........................................................................................................................................................ 226
E Excess Burden .............................................................................................................................................................. 226
V EFFECTS OF TAXES ....................................................................................................................................................... 226
A Labor Supply ................................................................................................................................................................ 227
B Saving .......................................................................................................................................................................... 227
C Physical Investment ..................................................................................................................................................... 228
D Tax Evasion and Avoidance ......................................................................................................................................... 228
VI HISTORY OF TAXATION ............................................................................................................................................... 228
A Ancient Times .............................................................................................................................................................. 228
B Medieval Times ........................................................................................................................................................... 229
C 16th Century to Modern Period .................................................................................................................................. 229
D Taxation in the United States ...................................................................................................................................... 230
D1 Early Colonies ............................................................................................................................................................ 230
D2 A New Nation ............................................................................................................................................................ 230
D3 Introduction of Income Taxes ................................................................................................................................... 231
E Taxation in Canada ...................................................................................................................................................... 232
Retailing .................................................................................................................................................................. 232
I INTRODUCTION ............................................................................................................................................................ 232
II RETAILING STRATEGY .................................................................................................................................................. 232
A The Product ................................................................................................................................................................. 233
B Quantity....................................................................................................................................................................... 233
C Location ....................................................................................................................................................................... 233
D Timing.......................................................................................................................................................................... 233
E Pricing .......................................................................................................................................................................... 233
F Appeal .......................................................................................................................................................................... 233
III KINDS OF RETAILERS ................................................................................................................................................... 233
A Specialty Stores ........................................................................................................................................................... 233
B Department Stores ...................................................................................................................................................... 234
C Discount Stores............................................................................................................................................................ 234
D Retail Chain Stores ...................................................................................................................................................... 234
F Off-Price Retailers ........................................................................................................................................................ 234
IV OTHER RETAILERS ....................................................................................................................................................... 234
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Modern History I (Imperialism to the Age of Depression and Recovery)
IMPERIALISM
I INTRODUCTION
Practice by which powerful nations or peoples seek to extend and maintain control or influence over weaker nations or peoples. Scholars frequently use the term more restrictively: Some
associate imperialism solely with the economic expansion of capitalist states; others reserve it
for European expansion after 1870. Although imperialism is similar in meaning to colonialism,
and the two terms are sometimes used interchangeably, they should be distinguished. Colonialism usually implies formal political control, involving territorial annexation and loss of sovereignty. Imperialism refers, more broadly, to control or influence that is exercised either formally
or informally, directly or indirectly, politically or economically.
II HISTORY
Imperialism dates from antiquity, and throughout history it has taken many forms. In any given
historical period, certain forms tend to be more prevalent than others. In the ancient world imperialism manifested itself in a series of great empires that arose when one people, usually representing a particular civilization and religion, attempted to dominate all others by creating a
unified system of control. The empire of Alexander the Great and the Roman Empire are salient
examples.
Early modern European imperialism (1400-1750), by contrast, generally took the form of overseas colonial expansion. Rather than one state attempting to unify the world, in this period
many competing states established political control over territories in South and Southeast Asia
and in the New World. Imperial systems were organized according to the doctrine of mercantilism: Each imperial state attempted to control the trade of its colonies, in order to monopolize
the benefits of that trade.
In the mid-19th century yet another variant of imperialism appeared, the imperialism of free
trade. The practice endured in this period even though mercantilism and the pace of formal
empire building declined significantly. European, especially British, power and influence were
extended informally, mainly through diplomatic and economic means, rather than formally,
through direct colonial rule. The imperialism of free trade, however, was short-lived: By the
end of the 19th century European powers were once again practicing imperialism in the form
of overseas territorial annexation, expanding into Africa, Asia, and the Pacific.
Since the end of World War II, when most of the formal empires were dissolved, what might be
called modern economic imperialism has come to predominate. Control is exercised informally
and less overtly. The U.S., for instance, exerts considerable influence over certain Third World
nations, as a result of its national economic power and its dominance of certain international
financial organizations, such as the World Bank and the International Monetary Fund. Similarly, European powers have continued to affect significantly the politics and the economics of
their former colonies, and they have consequently been accused of neocolonialism-the exercise of effective sovereignty without the formality of colonial rule.
III EXPLANATIONS OF IMPERIALISM
Historically, states have been motivated to pursue imperialism for a variety of reasons, which
may be classified broadly as economic, political, and ideological. Theories of imperialism
break down similarly, according to which motive or motives are viewed as primary.
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Modern History I (Imperialism to the Age of Depression and Recovery)
A The Economic Motive
Economic explanations of imperialism are the most common. Proponents of this view hold that
states are motivated to dominate others by the need to expand their economies, to acquire raw
materials and additional sources of labor, or to find outlets for surplus capital and markets for
surplus goods. The most prominent economic theories, linking imperialism with capitalism, are
derived from those of Karl Marx. Lenin, for example, explained the European expansion of the
late 19th century as the inevitable outcome of the need for the European capitalist economies
to export their surplus capital. Similarly, contemporary Marxists explain the postwar expansion
of the U.S. into the Third World in terms of economic imperatives.
B Political Motives
Alternatively, some stress the political determinants of imperialism, contending that states are
motivated to expand primarily by the desire for power, prestige, security, and diplomatic advantages vis-à-vis other states. In this view, late 19th-century French imperialism was intended
to restore France's international prestige after its humiliating defeat in the Franco-Prussian War.
Similarly, Soviet expansion into Eastern Europe after 1945 can be understood in terms of security needs, specifically the need to protect the nation from another invasion across its western
border.
C Ideological Motives
A third set of explanations focuses on ideological or moral motives. According to this perspective, political, cultural, or religious beliefs force states into imperialism as a "missionary activity." Britain's colonial empire was motivated at least in part by the idea that it was the "white
man's burden" to civilize "backward" peoples. Germany's expansion under Hitler was based in
large measure on a belief in the inherent superiority of German national culture. The desire of
the U.S. to "protect the free world" and of the former Soviet Union to "liberate" the peoples of
Eastern Europe and the Third World are also examples of imperialism driven by moral and
ideological concerns.
D Reactive Imperialism
Finally, some explanations of imperialism focus not on the motives of powerful states but rather
on the political circumstances in weaker states. The argument holds that powerful states may
not intend to expand, but may be forced to by instability on the periphery; new imperial actions result from past imperial commitments. The British conquest of India and the Russian
colonization of Central Asia in the 19th century are classic examples of reactive imperialism.
IV THE EFFECTS OF IMPERIALISM
Because imperialism is so often viewed as economically motivated, discussions of its effects
also tend to revolve around economic issues. Disagreement arises between those who believe
that imperialism implies exploitation and is responsible for the underdevelopment and economic stagnation of the poor nations, and those who argue that although the rich nations benefit from imperialism, the poor nations also benefit, at least in the long run. The truth has been
difficult to ascertain for at least two reasons: (1) No consensus has been reached on the meaning of exploitation, and (2) it is frequently difficult to disentangle the domestic causes of poverty from those that are possibly international. What is apparent is that the impact of imperialism is uneven: Some poor nations have enjoyed greater economic benefits from contact with
the rich than have others. India, Brazil, and other developing nations have even begun to compete economically with their former colonial powers. Thus, it is prudent to examine the economic impact of imperialism on a case-by-case basis.
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Modern History I (Imperialism to the Age of Depression and Recovery)
The political and psychological effects of imperialism are equally difficult to determine. Imperialism has proven both destructive and creative: For better or worse, it has destroyed traditional institutions and ways of thinking and has replaced them with the habits and mentality of
the Western world.
Contributed By: Michael Mastanduno
BALKAN WARS
I INTRODUCTION
Two consecutive wars fought from 1912 to 1913 among the countries of the Balkan Peninsula
for possession of European territories held by the Ottoman Empire. The Balkan Wars severely
damaged European alliances and helped kindle the volatile conditions that led to the outbreak
of World War I (1914-1918).
II BACKGROUND
At the close of the Russo-Turkish War of 1877-1878, the Treaty of Berlin, signed on July 13,
1878, provided for an autonomous principality of Bulgaria. The remaining Bulgarian province,
called Eastern Rumelia, was placed under the control of the Ottoman Turks. In 1885 a revolution broke out in Eastern Rumelia, and the province was joined to Bulgaria proper. That voluntary annexation led to trouble with Russia.
The tsar withdrew all Russian officers then serving in the Bulgarian army, and King Milan of
Serbia thought it a good time to realize his territorial aspirations. On November 14, 1885, Serbia declared war on Bulgaria. In a campaign that lasted less than five months, Serbia was defeated but was saved from absolute destruction by the intervention of Austria. A series of conspiracies followed. The Bulgarian ruler, Prince Alexander I of Battenberg, was abducted by
Russian and Bulgarian conspirators but was recaptured in a few days. He was forced to abdicate and left the country in September 1886. Prince Ferdinand I of the house of Saxe-CoburgGotha succeeded Alexander as ruler a year later.
Austria played a conspicuous role in these Balkan disturbances. The Austrian foreign ministers
tried to establish internal discord between the Slav countries (Bulgaria and Serbia) and the nonSlav ones (Greece and Romania). War almost broke out again in 1908 when Austria annexed
Bosnia and Herzegovina, a step bitterly resented by Serbia.
III FIRST BALKAN WAR
The Balkan states saw in the Turkish revolution of 1908-1909 and the Turko-Italian War of
1911-1912 an opportunity to retaliate against the Turks, their former oppressors. In March
1912, Serbia arranged a treaty of alliance with Bulgaria. Greece concluded a military convention with Bulgaria the following May. Tension increased steadily in the Balkan Peninsula during the summer of 1912, especially after August 14, when Bulgaria dispatched a note to the
Turks demanding that Macedonia, then a Turkish province, be granted autonomy. The Balkan
states began to mobilize on September 30, and eight days later Montenegro declared war on
the Ottoman Empire. On October 18 the Balkan allies entered the war on the side of Montenegro, precipitating the First Balkan War. The Balkan Alliance won a series of decisive victories
over the Turks during the next two months, forcing them to relinquish Albania, Macedonia, and
practically all their other holdings in southeast Europe. Late in November the Turks sued for an
armistice. An armistice agreement was signed on December 3 by all the Balkan allies except
Greece, which continued military operations against the Turks. Later in the month, representa-
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Modern History I (Imperialism to the Age of Depression and Recovery)
tives of the belligerents and the major European powers met in London to decide the Balkan
question. The Turks rejected the peace conditions demanded by the Balkan states, and the conference ended in failure on January 6, 1913. On January 23, a successful coup d'état brought
an extreme nationalist grouping to power in the Ottoman Empire, and within a week fighting
resumed.
In the subsequent fighting Greece captured Ioánnina, Albania, and Adrianople (now Edirne,
Turkey) fell to Bulgaria. The Turks obtained an armistice with Bulgaria, Greece, and Serbia on
April 19, 1913. Montenegro accepted the armistice a few days later. Another peace conference, with the major European powers again acting as mediators, met at London on May 20.
By the terms of the Treaty of London, concluded on May 30, the Turks ceded the island of
Crete (Kríti) to Greece and relinquished all territories in Europe west of a line between the
Black Sea port of Midye and Enez, a town on the coast of the Aegean Sea. Boundary questions
and the status of Albania and the Aegean Islands were referred to an international commission.
IV SECOND BALKAN WAR
The Treaty of London created friction among the Balkan allies, especially between Serbia and
Bulgaria. Among the causes of the friction was the Bulgarian refusal to recognize the Serbian
claim to certain Bulgarian-held portions of Macedonia. In addition, Serbia was resentful because it failed to obtain territory along the Adriatic Sea. On June 1, 1913, Greece and Serbia
concluded an alliance aimed against Bulgaria. The Second Balkan War began on June 29. On
that date a Bulgarian general, acting without orders from his government, launched an attack
on Serbian defensive positions. The Bulgarian government disavowed this attack, but on July 8
Serbia and Greece declared war. Within the next two weeks Montenegro, Romania, and the
Ottoman Empire entered the war against Bulgaria. On July 30, Bulgaria, unable to withstand
this coalition, asked for and received an armistice. By the ensuing peace agreement, signed at
Bucharest, Romania, on August 10, Bulgaria lost considerable territory, including nearly 7770
sq km (nearly 3000 sq mi) allotted to Romania. The agreement, among other things, awarded
most of Macedonia to Serbia and Greece. By later agreements Bulgaria also yielded a large territory to the Turks.
The Balkan Wars profoundly influenced the subsequent course of European history. By creating
a strong and ambitious Serbia, the peace settlements engendered fear and anti-Serbian sentiment in neighboring Austria-Hungary. The dismantling of the Ottoman Empire and Bulgaria
created equally dangerous tensions in southeastern Europe. These conditions greatly intensified
the contemporary forces in shaping a general European conflict.
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Modern History I (Imperialism to the Age of Depression and Recovery)
THE EASTERN QUESTION
I INTRODUCTION
A term used to describe the diplomatic problems posed in Europe during the 19th and early
20th centuries regarding the decline of the Ottoman Empire. The strategic location of the Ottoman territories, which included the Balkan Peninsula and the area that is now Turkey, made
it of great importance to other European powers. Austria, Britain, and Russia were the principal
powers involved in the debate about what was to become of the failing empire. In general,
Britain and Austria wanted to maintain the weak empire while Russia desired the formation of
national states.
The Eastern Question arose as a by-product of the state system in Europe, which had been in
use since the late 18th century as a way to preserve the balance of power.
Before the Congress of Vienna in 1815, Europe was divided into some 50 states and free cities
sharing a common cultural heritage. Intended to ensure the survival of each member and to
prevent the domination of Europe by any one power, this system of states was regulated by a
mechanism of compensation. If the balance of power was upset in favor of one of the major
states, it was restored by means of compensation to all or some of the others. Gradually, it became more difficult to find areas in Europe that could serve as compensation without endangering the survival of existing states. The partitions of Poland in the late 1700s maintained the
balance of power but resulted in the demise of Poland. Only the Ottoman Balkan domains remained as future compensation. What then was to become of the European holdings of the
Ottoman sultan?
II THE CONCERT OF EUROPE
The Congress of Vienna introduced new rules into the balance-of-power game. Britain, France,
Russia, Prussia, and Austria were now dedicated to a European territorial settlement maintained
by a new mechanism called the Concert of Europe. Any changes would have to be made by
prior consultation among the five major powers. The Eastern Question revolved around the fear
that one of the European powers would upset the balance of power by taking advantage of any
internal changes made in the domains of the Ottoman Empire.
The Concert of Europe preserved the peace until the outbreak of the Crimean War in 1853.
Tensions frequently arose, but they were managed. The Greeks achieved their independence
after a revolt initiated in 1821 and the short Russo-Turkish War in 1828 and 1829. Although
Russia had declared the war, it quickly ended the conflict after Tsar Nicholas I was convinced
that Russia should preserve the Ottoman Empire. When Muhammad Ali of Egypt attacked the
Ottomans in 1831, Russia came to the aid of Mahmud II, the sultan of the Ottoman Empire.
The reward was the Treaty of Unkiar-Skelessi (1833), which placed the Ottoman Empire under
the exclusive protection of the Russians and gave them an advantage at the straits of Bosporus
and Dardanelles. Britain, in order to nullify any Russian gain, sought to internationalize the
regime at the straits. After several years of tortuous diplomacy, the European powers and the
Ottomans signed the Straits Convention in 1841. That agreement closed the straits to all foreign
warships when the sultan was at peace, thus providing the other powers with the same advantage as Russia.
Crucial consequences flowed from the Treaty of Paris that ended the Crimean War in 1856.
Russia and France, dissatisfied with its provisions, emerged as revisionist powers dedicated to
its nullification. Russia took advantage of Europe's preoccupation with the Franco-Prussian War
11
Modern History I (Imperialism to the Age of Depression and Recovery)
in 1870 to denounce the Black Sea clauses of the treaty, and France supported the concept of
nationality as a means to redraw the map of Europe. Nationalism's impact on the Ottoman Empire was especially devastating. In 1876 the Bulgars revolted against the Turks and were joined
by the Serbs in war against the Ottomans. Russia declared war on the Ottomans in 1877. Although Turkish resistance prevented a swift Russian victory, the Russians finally advanced to
the outskirts of Constantinople (present-day Ýstanbul) itself, compelling the Ottomans to sign
the Treaty of San Stefano in March 1878. That treaty, however, gave the Russians an undesirable preponderance in the Balkans, and again Britain led the opposition to Russian aggrandizement. The subsequent Congress of Berlin in 1878 rewrote the Treaty of San Stefano, limiting the Russian gains.
III INCREASING TENSIONS AND FINAL RESOLUTION
From the Congress of Berlin to the outbreak of World War I (1914-1918), the Eastern Question
was characterized by a developing alliance among Russia, Germany, and Austria engineered
by German Chancellor Prince Otto von Bismarck to defend German interests. It was agreed to
by Russia and Austria-Hungary as a check against each other's expansionist desires in the Balkans. Conflicting Balkan policies gradually increased enmity between Russia and Austria, and
the Germans soon tired of keeping them apart; after the dismissal of Bismarck in 1890, the relationship with Russia was allowed to lapse. Russia and Austria, however, patched up their differences in 1897, agreeing to maintain the status quo in the Balkans for a 10-year period.
Russia resolved its differences with Britain by a comprehensive Anglo-Russian agreement in
1907. The agreement became the cornerstone of the military alliance between Britain, France,
and Russia known as the Triple Entente. Germany, Austria-Hungary, and Italy had formed the
Triple Alliance in 1882. Europe was rapidly becoming an armed camp. To this explosive mix
was added the Young Turk Revolution of 1908 that instilled a new spirit in the Ottoman Empire
and threatened Austria's interests in the Balkans. Russia then agreed to accept Austrian annexation of Bosnia and Herzegovina, if Austria supported the opening of the straits to Russian warships. Austria, however, jumped the gun. It formally annexed the provinces in October 1908,
leaving Russia without international support for revision of the straits regime and deeply humiliated. The Balkan Wars of 1912 and 1913 severely strained the European alliances. Austria
chided Germany for its lack of support, and Russia did the same to Britain. Diplomatic partners
were leery of disappointing their allies again, a stance that rendered the Austro-Russian rivalry
in the Balkans extremely dangerous. The assassination of Archduke Francis Ferdinand in Sarajevo on June 28, 1914, sparked a war between Austria-Hungary and Serbia that eventually escalated into World War I.
World War I provided the final resolution of the Eastern Question. The Allies secretly arranged
to carve up the Ottoman Empire, giving Russia the long-desired city of Constantinople, but
revolution in Russia and its defeat by Germany, as well as the fall of the sultan's government in
the Ottoman Empire, rendered those secret agreements null and void. A new regime was organized at the straits in an annex to the Lausanne Treaty of 1923, stipulating the conditions
under which warships could transit the straits in times of peace and war. Turkey is now the
guardian of the straits.
Contributed By: Norman Itzkowitz
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Modern History I (Imperialism to the Age of Depression and Recovery)
WORLD WAR I
I INTRODUCTION
The military conflict, from 1914 to 1918, that began as a local European war between AustriaHungary and Serbia on July 28, 1914; was transformed into a general European struggle by
declaration of war against Russia on August 1, 1914; and eventually became a global war involving 32 nations. Twenty-eight of these nations, known as the Allies and the Associated
Powers, and including Britain, France, Russia, Italy, and the United States, opposed the coalition known as the Central Powers, consisting of Germany, Austria-Hungary, the Ottoman Empire (now Turkey), and Bulgaria. The immediate cause of the war between Austria-Hungary
and Serbia was the assassination on June 28, 1914, at Sarajevo in Bosnia (then part of the
Austro-Hungarian Empire; now in Bosnia and Herzegovina), of Archduke Francis Ferdinand,
heir-presumptive to the Austrian and Hungarian thrones, by Gavrilo Princip, a Serb nationalist.
The fundamental causes of the conflict, however, were rooted deeply in the European history
of the previous century, particularly in the political and economic policies that prevailed on the
Continent after 1871, the year that marked the emergence of Germany as a great world power.
II CAUSES OF THE WAR
The underlying causes of World War I were the spirit of intense nationalism that permeated
Europe throughout the 19th and into the 20th century, the political and economic rivalry
among the nations, and the establishment and maintenance in Europe after 1871 of large armaments and of two hostile military alliances.
A Nationalism
The French Revolution and the Napoleonic era had spread throughout most of Europe the idea
of political democracy, with the resulting idea that people of the same ethnic origin, language,
and political ideals had the right to independent states. The principle of national selfdetermination, however, was largely ignored by the dynastic and reactionary forces that dominated in the settlement of European affairs at the Congress of Vienna in 1815. Several peoples
who desired national autonomy were made subject to local dynasts or to other nations. Notable examples were the German people, whom the Congress of Vienna left divided into numerous duchies, principalities, and kingdoms; Italy, also left divided into many parts, some of
which were under foreign control; and the Flemish- and French-speaking Belgians of the Austrian Netherlands, whom the congress placed under Dutch rule. Revolutions and strong nationalistic movements during the 19th century succeeded in nullifying much of the reactionary and
antinationalist work of the congress. Belgium won its independence from the Netherlands in
1830, the unification of Italy was accomplished in 1861, and that of Germany in 1871. At the
close of the century, however, the problem of nationalism was still unresolved in other areas of
Europe, resulting in tensions both within the regions involved and between various European
nations. One particularly prominent nationalistic movement, Panslavism, figured heavily in the
events preceding the war.
B Imperialism
The spirit of nationalism was also manifest in economic conflict. The Industrial Revolution,
which took place in Britain at the end of the 18th century, followed in France in the early 19th
century, and then in Germany after 1870, caused an immense increase in the manufactures of
each country and a consequent need for foreign markets. The principal field for the European
policies of economic expansion was Africa, and on that continent colonial interests frequently
clashed. Several times between 1898 and 1914 the economic rivalry in Africa between France
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Modern History I (Imperialism to the Age of Depression and Recovery)
and Britain, and between Germany on one side and France and Britain on the other, almost
precipitated a European war.
C Military Expansion
As a result of such tensions, between 1871 and 1914 the nations of Europe adopted domestic
measures and foreign policies that in turn steadily increased the danger of war. Convinced that
their interests were threatened, they maintained large standing armies, which they constantly
replenished and augmented by peacetime conscription. At the same time, they increased the
size of their navies. The naval expansion was intensely competitive. Britain, influenced by the
expansion of the German navy begun in 1900 and by the events of the Russo-Japanese War,
developed its fleet under the direction of Admiral Sir John Fisher. The war between Russia and
Japan had proved the efficacy of long-range naval guns, and the British accordingly developed
the widely copied dreadnought battleship, notable for its heavy armament. Developments in
other areas of military technology and organization led to the dominance of general staffs with
precisely formulated plans for mobilization and attack, often in situations that could not be reversed once begun.
Statesmen everywhere realized that the tremendous and ever-growing expenditures for armament would in time lead either to national bankruptcy or to war, and they made several efforts
for worldwide disarmament, notably at the Hague Conferences of 1899 and 1907. International
rivalry was, however, too far advanced to permit any progress toward disarmament at these
conferences.
The European nations not only armed themselves for purposes of "self-defense," but also, in
order not to find themselves standing alone if war did break out, sought alliances with other
powers. The result was a phenomenon that in itself greatly increased the chances for generalized war: the grouping of the great European powers into two hostile military alliances, the Triple Alliance of Germany, Austria-Hungary, and Italy and the Triple Entente of Britain, France,
and Russia. Shifts within these alliances added to the building sense of crisis.
D Crises
Foreshadowing the War (1905-14). With Europe divided into two hostile camps, any disturbance of the existing political or military situation in Europe, Africa, or elsewhere provoked an
international incident. Between 1905 and 1914 several international crises and two local wars
occurred, all of which threatened to bring about a general European War. The first crisis occurred over Morocco, where Germany intervened in 1905-06 to support Moroccan independence against French encroachment. France threatened war against Germany, but the crisis was
finally settled by an international conference at Algeciras, Spain, in 1906. Another crisis took
place in the Balkans in 1908 over the annexation by Austria-Hungary of Bosnia and Herzegovina. Because one form of Panslavism was a Pan-Serbian or Greater Serbia movement in Serbia, which had as one of its objects the acquisition by Serbia of the southern part of Bosnia, the
Serbs threatened war against Austria. War was avoided only because Serbia could not fight
without Russian support, and Russia at the time was unprepared for war. A third crisis, again in
Morocco, occurred in 1911 when the German government sent a warship to Agadir in protest
against French efforts to secure supremacy in Morocco. After threats of war on both sides, the
matter was adjusted by a conference at Agadir. Taking advantage of the preoccupation of the
Great Powers with the Moroccan question, Italy declared war on the Ottoman Empire in 1911,
hoping to annex the Tripoli region of northern Africa. Because Germany's policy of Drang nach
Osten ("drive toward the East") obliged it to cultivate friendship with the Ottomans, the Italian
attack had the effect of weakening the triple alliance and encouraging its enemies. The Balkan
Wars of 1912-13 resulted in an increased desire on the part of Serbia to obtain the parts of Aus-
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Modern History I (Imperialism to the Age of Depression and Recovery)
tria-Hungary inhabited by Slavic peoples, strengthened Austro-Hungarian suspicion of Serbia,
and left Bulgaria and the Ottoman Empire, both defeated in the wars, with a desire for revenge.
Germany, disappointed because the Ottoman Empire had been deprived of its European territory by the Balkan Wars, increased the size of its army. France responded by increasing peacetime military service from two to three years. Following the example of these nations, all the
others of Europe in 1913 and 1914 spent huge sums for military preparedness.
THE HEIR TO AUSTRIAN THRONE ASSASSINATED. ARCHDUKE AND WIFE SHOT AFTER ESCAPING BOMB.
Shock May Kill Aged Emperor Francis Joseph, Who Has Been in Ill Health for the Last Few
Months. Hungarians May Not Recognize Succession and Rupture in Dual Empire Is Feared.
Los Angeles Times June 29, 1914
On June 28, 1914, Serbian nationalists assassinated Austrian Archduke Francis Ferdinand and
his wife during the couple's official visit to Bosnia and Herzegovina. The act brought to a head
longstanding tensions between Austria and Serbia concerning Austria's dominance in the Balkans. The assassins were put on trial and convicted, but Austria's demand for a larger role in
Serbian affairs led directly to war between the two countries and, eventually, to World War I
(1914-1918).
Serajevo (Bosnia) June 28.-Archduke Francis Ferdinand, heir to the Austro-Hungarian throne,
and the Princess of Hohenberg, his morganatic wife, were shot dead today by a student in the
main street of the Bosnian capital, a short time after they had escaped death from a bomb
hurled at the royal automobile. They were slain while passing through the city on their annual
visit to the annexed provinces of Bosnia and Herzegovina.
The Archduke was struck full in the face and the Princess was shot through the abdomen and
throat. They died a few minutes after reaching the palace, to which they were hurried with all
possible speed.
Those responsible for the assassination took care that it should prove effective, as there were
two assaults, the first with a bomb, and the second with a revolver. The bomb was thrown at
the royal automobile as it was proceeding to the Town Hall, where a reception was to be held.
The Archduke saw the missile hurtling through the air and warded it off with his arm. It fell outside the car and exploded, slightly wounding two aides de camp in a second car and half a
dozen spectators.
It was on the return of the procession that the tragedy was added to the long list of those that
have darkened the pages of the recent history of the Hapsburgs. As the royal automobile
reached a prominent point in the route to the palace, an eighth-grade student, Gavrio Prinzipe,
sprang out of the crowd and poured a deadly fusillade of bullets from an automatic pistol at the
Archduke and Princess.
ESCAPE LYNCHING.
Prinzipe and a fellow-conspirator, a compositor from Trebinje, named Gabrinovics, barely escaped lynching by the infuriated spectators. They finally were seized by the police, who afforded them protection. Both are natives of the annexed province of Herzegovina.
The first attempt against the Duke occurred just outside the Girls' High School. His car had
restarted after a brief pause for an inspection of the building, when Gabrinovics hurled the
bomb. This was so successfully warded off by the Archduke that it fell directly beneath the following car, the occupants of which, Count Von Boos Waldeck and Col. Merizzo, were struck
by slivers of iron.
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Modern History I (Imperialism to the Age of Depression and Recovery)
Archduke Francis Ferdinand stopped his car, and after making inquiries as to their injuries and
lending what aid he could, continued his journey to the Town Hall. There the burgomaster began the customary address, but the Archduke sharply interrupted and snapped out:
"Herr Bürgermeister, we have come here to pay you a visit and bombs have been thrown at us.
This is altogether an amazing indignity."
After a pause the Archduke said:
"Now you may speak."
On leaving the hall the Archduke and his wife announced their intention of visiting the
wounded members of their suite at the hospital on their way back to the palace. They were
actually bound on their mission of mercy when, at the corner of Rudolf Strasse and Franz Josef
Strasse, Prinzipe opened fire.
PRINCESS IS SLAIN.
A bullet struck the Archduke in the face. The Princess was wounded in the abdomen and another bullet struck her in the throat, severing an artery. She fell unconscious across her husband's knee. At the same moment the Archduke sank to the floor of the car.
The assassins were interrogated by the police and both seemed to glory in their exploit. Prinzipe said he had studied for a time at Belgrade. He asserted he had long intended to kill some
eminent person from nationalist motives. He was awaiting the Archduke at a point where he
knew the automobile would slacken speed turning into Frans Josef Strasse. The presence of the
Princess in the car caused him to hesitate, but only for a moment. Then his nerve returned and
he emptied his pistol at the imperial pair. He denied that he had any accomplices.
Prinzipe is 18 years old; Nedeljo Gabrinovics is 21. He told the police he had obtained the
bomb from anarchists at Belgrade, whose names he did not know. He denied also that he had
accomplices, and treated the tragedy with cynical indifference.
After his unsuccessful attempt to blow up the imperial visitors Gabrinovics sprang into the
River Miljaehka in an effort to escape, but witnesses of his crime plunged after him and seized
him.
A few yards from the scene of the shooting an unexploded bomb was found which, it is suspected, was thrown away by an accomplice after he had noted the success of Prinzipe's attack.
Source: Los Angeles Times, June 29, 1914
"Archduke and Wife Assassinated," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999
Microsoft Corporation. All rights reserved.
THE CONSTITUTION OF THE UJEDINJENJE ILI SMRT - UNIFICATION OR DEATH
I. Purpose and Name
Article 1. For the purpose of realising the national ideals - the Unification of Serbdom - an organization is hereby created, whose members may be any Serbian irrespective of sex, religion,
place or birth, as well as anybody else who will sincerely serve this idea.
Article 2. The organisation gives priority to the revolutionary struggle rather than relies on cultural striving, therefore its institution is an absolutely secret one for wider circles.
Article 3. The organization bears the name: "Ujedinjenje ili Smrt".
Article 4. In order to carry into effect its task the organization will do the following things: (1)
Following the character of its raison d etre it will exercise its influence over all the official factors in Serbia - which is the Piemont of Serbdom - as also over all the strata of the State and
over the entire social life in it: (2) It will carry out a revolutionary organisation in all the territo16
Modern History I (Imperialism to the Age of Depression and Recovery)
ries where Serbians are living: (3) Beyond the frontiers, it will fight with all means against all
enemies of this idea: (4) It will maintain friendly relations with all the States, nations, organisations, and individual persons who sympathise with Serbia and the Serbian race: (5) It will give
every assistance to those nations and organisations who are fighting for their own national liberation and unification. II. Official Departments of the Organisation
Article 5. The supreme authority is vested in the Supreme Central Directorate with its headquarters at Belgrade. Its duty will be to see that the resolutions are carried into effect.
Article 6. The number of members of the Supreme Central Directorate is unlimited - but in
principle it should be kept as low as possible.
Article 7. The Supreme Central Directorate shall include, in addition to the members from the
Kingdom of Serbia, one accredited delegate from each of the organisations of all the Serbian
regions: (1) Bosnia and Herzegovina, (2) Montenegro, (3) Old Serbia and Macedonia, (4) Croatia, Slovenia and Symria (Srem), (5) Voyvodina, (6) Sea-coasts.
Article 8. It will be the task of the Supreme Central Directorate to carry out the principles of the
organisation within the territory of the Kingdom of Serbia.
Article 9. The duty of each individual Provincial Directorate will be to carry out the principles
of the organisation within the respective territories of each Serbian region outside the frontiers
of the Kingdom of Serbia. The Provincial Directorate will be the supreme authority of the organisation within its own territory.
Article 10. The subdivisions of the organisation into District Directorates and other units of authority shall be established by the By-Laws of the organisation which shall be laid down, and if
need be, from time to time amended and amplified by the Supreme Central Directorate.
Article 11. Each Directorate shall elect, from amongst its own members, its President, Secretary
and Treasures.
Article 12. By virtue of the nature of his work, the Secretary may act as a Deputy President. In
order that he may devote himself entirely to the work of the organisation, the Secretary s salary
and expenses shall be provided by the Supreme Central Directorate.
Article 13. The positions of President and Treasurers shall be un- salaried.
Article 14. All official business questions of the organisation shall be decided in the sessions of
the Supreme Central Directorate by a majority of votes.
Article 15. For the execution of such decisions of the organisation, the absolute executive
power shall be vested in the President and the Secretary.
Article 16. In exceptional and less important cases the President and the Secretary shall make
the decisions and secure their execution, but they shall report accordingly at the next following
session of the Supreme Central Directorate.
Article 17. For the purpose of ensuring a more efficient discharge of business, the Supreme
Central Directorate shall be divided into sections, according to the nature of the work.
Article 18. The Supreme Central Directorate shall maintain its relations with the Provincial Directorates through the accredited delegates of the said provincial organisations, it being understood that such delegates shall be at the same time members of the Supreme Central Directorate; in exceptional cases, however, these relations shall be maintained through special delegates.
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Modern History I (Imperialism to the Age of Depression and Recovery)
Article 19. Provincial Directorates shall have freedom of action. Only in cases of the execution
of broader revolutionary movements will they depend upon the approval of the Supreme Central Directorate.
Article 20. The Supreme Central Directorate shall regulate all the signs and watchwords, necessary for the maintenance of secrecy in the organisation.
Article 21. It shall be the Supreme Central Directorate s duty punctually and officially to keep
all the members of the organisation well posted about all the more important questions relative
to the organisation.
Article 22. The Supreme Central Directorate shall from time to time control and inspect the
work of its own departments. Analogically, the other Directorates shall do likewise with their
own departments.
III. The Members of the Organisation
Article 23. The following rule, as a principle, shall govern all the detailed transactions of the
organisation: All communications and conversations to be conducted only through specially
appointed and authorised persons.
Article 24. It shall be the duty of every member to recruit new members, but it shall be understood that every introducing member shall vouch with his own life for all those whom he introduces into the organisation.
Article 25. The members of the organisation as amongst themselves shall not be known to one
another. Only the members of Directorates shall be known personally to one another.
Article 26. In the organisation the members shall be registered and known by their respective
numbers. But the Supreme Central Directorate must know them also by their respective names.
Article 27. The members of the organisation must unconditionally obey all the commands
given by their respective Directorates, as also all the Directorates must obey unconditionally
the commands which they receive direct from their superior Directorate.
Article 28. Every member shall be obliged to impart officially to the organisation whatever
comes to his knowledge, either in his private life or in the discharge of his official duties, in as
far as it may be of interest to the organisation.
Article 29. The interest of the organisation shall stand above all other interests.
Article 30. On entering into the organisation, every member must know that by joining the organisation he loses his own personality; he must not expect any glory for himself, nor any personal benefit, material or moral. Consequently the member who should dare to try to exploit
the organisation for his personal, or class, or party interests shall be punished by death.
Article 31. Whosoever has once entered into the organisation can never by any means leave it,
nor shall anybody have the authority to accept the resignation of a member.
Article 32. Every member shall support the organisation by his weekly contributions. The organisations, however, shall have the authority to procure money, if need be, by coercion. The
permission to resort to these means may be given only by Supreme Central Directorate within
the country, or by the regional Directorates within their respective region.
Article 33. In administering capital punishment the sole responsibility of the Supreme Central
Directorate shall be to see that such punishment is safely and unfailingly carried into effect
without any regard for the ways and means to be employed in the execution.
IV. The Seal and the Oath of Allegiance
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Modern History I (Imperialism to the Age of Depression and Recovery)
Article 34. The Organisation's official seal is thus composed: In the centre of the seal there is a
powerful arm holding in its hand an unfurled flag on which - as a coat of arms - there is a skull
with crossed bones; by the side of the flag, a knife, a bomb and a phial of poison. Around, in a
circle, there is the following inscription, reading from left to right: "Unification or Death", and
in the base: "The Supreme Central Directorate".
Article 35. On entering into the organisation the joining member must pronounce the following
oath of allegiance:
"I (the Christian name and surname of the joining member), by entering into the organisation
"Unification or Death", do hereby swear by the Sun which shineth upon me, by the Earth
which feedeth me, by God, by the blood of my forefathers, by my honour and by my life, that
from this moment onward and until my death, I shall faithfully serve the task of this organisation and that I shall at all times be prepared to bear for it any sacrifice. I further swear by God,
by my honour and by my life, that I shall unconditionally carry into effect all its orders and
commands. I further swear by my God, by my honour and by my life, that I shall keep within
myself all the secrets of this organisation and carry them with me into my grave. May God and
my comrades in this organisation be my judges if at any time I should wittingly fail or break this
oath!"
V. Supplementary Orders
Article 36. The present Constitution shall come into force immediately. Article 37. The present
Constitution must not be altered.
Done at Belgrade this 9th day of May, 1911 A.D.
Signed:
Major Ilija Radivojevitch Vice-Consul Bogdan Radenkovitch Colonel Cedimilj A. Popovitch
Lt.-Col. Velimir Vemitch Journalist Ljubomir S. Jovanovitch Col. Dragutin T. Dimitrijevitch Major Vojin P. Tanksoitch Major Milan Vasitch Col. Milovan Gr. Milovanovitch
FRANZ FERDINAND, ARCHDUKE. (1863-1914)
Born, Graz, Austria. Heir to the imperial throne of the Austro-Hungarian empire. His assassination on June 28, 1914, provided the spark that ignited the Great War.
The eldest son of Emperor Franz Joseph's younger brother Carl Ludwig, Franz Ferdinand became the hier-apparent following the death of Crown Prince Rudolf in 1889, and his own father in 1896.
Not an especially cultured man, at times prideful and mistrusting, F.F. lacked the charisma to
make him socially and politically popular. His short temper and suspicious nature ensured that
truly talented advisors did not last long in his cabinet-in-waiting. He became more reclusive
following his morganatic marriage to Sophie Chotek von Chotkova in 1900. Contrary to his
public persona, he was a very happy husband and devoted father.
Another source of F.F.'s lack of popularity was the reforms he intended to enact when he became Emperor. Recognizing growing the strains and pressures of nationalism among the many
ethnic groups within Austria-Hungary, F.F. proposed to replace Austro-Hungarian dualism with
'Trialism,' a triple monarchy in which the empire's slavs would have an equal voice in government with the Germans and Magyars. Another possible variation F.F. was exploring was a
form of federalism made up of 16 states. While such radical reforms might have saved the empire, they were not popular among those with vested interests in the existing structure. Serbia
was as uncomfortable with F.F.'s potential reforms as any group within the empire. Contented
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Modern History I (Imperialism to the Age of Depression and Recovery)
slavs living within the empire would not be likely to agitate for separation and to join with Serbia.
As Inspector General of the Army, F.F. accepted an invitation to visit the provincial capital of
Bosnia -- Sarajevo -- to inspect army manoeuvres. The trip also provided an opportunity for
both himself and Sophie to be seen as 'imperial.'
The provinces of Bosnia and Herzogovina had been under Austro-Hungarian administration
and protection by international agreement, since 1878. In 1908, Austria annexed the provinces
outright. Some European governments were upset at the annexation, but Greater-Serbia proponents were outraged. They wanted the provinces to be part of a Serbian led pan-slav state, not
part of the Austro-Hungarian empire. A Serbian secret terrorist group, the Black Hand, decided
to assassinate somebody in protest. F.F. was eventually selected when his trip to Saravejo was
made public. By killing him, the threat of his reforms would be removed.
On June 28th, 1914, while riding in the motorcade through the streets of Sarajevo, Franz Ferdinand and his wife Sophie were shot and killed by Gavrilo Princip -- one of seven young Bosnians and Black Hand recruits. The assassination provided 'justification' for Austria to take hard
action against Serbia. Throughout the month of July, 1914, the Austro-Serbian situation quickly
escalated to include the Eruopean world powers -- resulting in world war.
Franz Ferdinand was buried in a crypt beneath the chapel of his castle, Artstetten, instead of
the customary burial place of the Hapsburgs, Capuchin Crypt, in Vienna.
SARAJEVO, JUNE 28, 1914 THE ASSASSINATION OF ARCHDUKE FRANZ FERDINAND BY MICHEAL
SHACKELFORD
Note on Slavic spelling: Due to the current limitations of HTML, certain Slavic characters can
not be reproduced. I have chosen to use the same letters, but without the diacritical marks,
rather than translitterating. Cabrinovic, for instance, will be spelled as is, and not rendered as
Chabrinovitj, or Chabrinovitch. Accurate orthography accompanies the map shown below
Background
Events Leading Up to Murder
Bosnia and Herzegovina were provinces just south of Austria which had, until 1878, been governed by the Turks. The Treaty of Berlin (1878) settled the disposition of lands lost by the Turks
following their disastrous war with Russia. Austria was granted the power to administer the two
provinces indefinitely.
Bosnia was populated primarily by three groups -- Croats (Roman Catholic), ethnic Serbs (SerbOrthodox) and Muslims (left from the days of Turkish rule). There is no ethnic group: Bosnians.
Many Bosnian-Serbs felt a strong nationalistic desire to have their province joined with that of
their Serb brothers across the river in Serbia. Many in Serbia openly shared that desire.
The Annexation
On October 6, 1908, Austria annexed Bosnia and Herzegovina directly into the AustroHungarian empire. The reasons were complex. Annexation would remove any hopes Turkey
might have for reclaiming the provinces. Full inclusion into the empire would give Bosnians
full rights and privileges. It may have been an act of will by the Austrians, just to show that they
were still an active, sovereign power. For whatever reason, the annexation caused quite a stir
in Europe. The move was not exactly legal. Russia, particularly, was upset, even though the
Russians had earlier given their consent to the annexation. (Austria was supposed to help Russia in the Dardanelles first) After Austria payed Turkey a cash settlement, most of Europe
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Modern History I (Imperialism to the Age of Depression and Recovery)
calmed down. The Serbs, however, did not. They coveted the provinces for their own Serb empire.
The Black Hand
A secret society called Ujedinjenje ili Smrt, ('Union or Death') was founded in Belgrade, an
outgrowth of an older Serb nationalist group: Narodna Odbrana . The Black Hand took over
the older group's work of anti-Austrian propaganda within Serbia, sabotage, espionage and
political murders abroad -- especially in provinces Serbia wished to annex. The group included
many government officials, professionals and army officers.
When it was learned that the Heir-Apparent to the Austrian throne, Franz Ferdinand, was
scheduled to visit Sarajevo in June of 1914, the Black Hand decided to assassinate him. Three
young Bosnians were recruited, trained and equipped: Gavrilo Princip, Nedjelko Cabrinovic
and Trifko Grabez.
The Serbian Government
Because of its many government and army members, the Black Hand's activities were fairly
well known to the Serbian government. When Prime Minister Pasic learned of the assassination
plot, he had a difficult problem on his hands. If he did nothing, and the plot succeeded the
Black Hand's involvement would surely come to light. The tangled connections between the
Black Hand and the Serbian government would put Serbia in a very bad position. It could even
bring on war with Austria. Should he warn the Austrians of the plot, he would be seen as a traitor by his countrymen. He would also be admitting to deeper knowledge of anti-Austrian actions in Serbia.
A weak attempt was made to intercept the assassins at the border. When that failed, Pasic decided that he would try to warn the Austrians in carefully vague diplomatic ways that would
not expose the Black Hand.
The Warning
The Serbian Minister to Vienna, Jovan Jovanovic, was given the task of warning the Austrians.
Because of his extremist, pan-Serb views, Jovanovich was not well received in Austrian Foreign
Ministry offices. He did, however, get along better with the Minister of Finance, Dr. Leon von
Bilinski.
On June 5, Jovanovic told Bilinski, that it might be good and reasonable if Franz Ferdinand
were to not go to Sarajevo. "Some young Serb might put a live rather than a blank cartridge in
his gun and fire it." Bilinski, unaccustomed to subtle diplomatic innuendo, completely missed
the warning. "Let us hope nothing does happen" he responded good humoredly. Jovanovic
strongly suspected that Bilinski did not understand, but made no further effort to convey the
warning.
Preparations
The three Black Hand trainees secretly made their way back to Sarajevo roughly a month before Franz Ferdinand. A fourth man, Danilo Ilic, had joined the group and on his own initiative,
recruited three others. Vaso Cubrilovic and Cvijetko Popovic were 17 year old high school students. Muhamed Mehmedbasic, a Bosnian muslim, was added to give the group a less panSerb appearance. Four Serbian army pistols and six bombs were were supplied from Serbian
army arsenals.
The Visit
Franz Ferdinand accepted the invitation of Bosnia's governor, General Oskar Potoirek, to inspect the army manoeuvres being held outside Sarajevo. The Archduke's role as Inspector
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General of the Army made the visit logical. It had also been four years since a prominent
Hapsburg had made a goodwill visit to Bosnia.
The visit would also roughly coincide with his 14th wedding anniversary. While his wife
Sophie, not being of royal blood, was not permitted to ride in the same car as her royal husband back in Vienna, such taboos did not apply to provincial cities like Sarajevo. During the
visit, Sophie would be able to ride beside her husband -- a thoughtful anniversary gift.
Security during the visit was not tight. Franz Ferdinand was a brave man and disliked the presence of secret service men. Nor did he like the idea of a cordon soldiers between the crowd
and himself. For the most part, Franz Ferdinand was welcomed warmly by the Bosnians. Sarajevo was not seen as hostile territory. Arrangements were not based on the assumption that the
streets were lined with assassins. As it was, only Sarajevo's hundred and twenty policemen
were at work.
June 28, 1914
At around 10:00 a.m., the archducal party left Philipovic army camp, where Franz Ferdinand
had performed a brief review of the troops. The motorcade, consisting of six automobiles was
headed for City Hall for a reception hosted by Sarajevo's mayor. The chosen route was the
wide avenue called Appel Quay, which followed the north bank of the River Miljacka.
In the first automobile rode the Mayor, Fehim Effendi Curcic, and the city's Commissioner of
Police, Dr. Gerde. In the second automobile, its top folded down and flying the Hapsburg pennant, rode Franz Ferdinand, Sophie and General Potoirek. The driver and the car's owner,
Count Harrach, rode in front. The third automobile in the procession carried the head Franz
Ferdinand's military chancellery; Sophie's lady in waiting; Potoirek's chief adjutant, Lieutenant
Colonel Merizzi; the car's owner and his driver. The fourth and fifth automobiles carried other
members of Franz Ferdinand's staff and assorted Bosnian officials. The sixth automobile was
empty -- a spare should one of the others fail.
The morning was sunny and warm. Many of the houses and buildings lining the route were
decorated with flags and flowers. Crowds lined the Appel Quay to cheer the imperial couple.
Amid the festive crowd mingled seven young assassins. They took up their assigned positions,
all but one along the river side of the Appel Quay. First in line was Mehmedbasic, to the west
of the Cumurja Bridge. Near him was Cabrinovic. The others were strung out as far back as the
Kaiser Bridge.
The Bomb
The motorcade approached and the crowds began to cheer. As Franz Ferdinand's car passed
Mehmedbasic, he did nothing. The next man in line, Cabrinovic, had more resolve. He took
the bomb from his coat pocket, struck the bomb's percussion cap against a lamp post, took aim
and threw the bomb directly at Franz Ferdinand.
In the short time it took the bomb to sail through the air, many small events took place. The
car's owner, Count Harrach, hearing the bomb being struck against the lamp post, thought they
had suffered a flat tire. "Bravo. Now we'll have to stop." The driver, who must have seen the
black object flying, did just the opposite -- he stepped on the accelerator. As a result, the bomb
would not land where intended. Franz Ferdinand, also catching a glimpse of the hurtling package, raised his arm to deflect it away from Sophie. She sat to his right, and so was between
Franz Ferdinand and Cabrinovic.
The bomb glanced off Franz Ferdinand's arm, bounced off the folded car top and into the street
behind them. The explosion injured about a dozen spectators. The third car was hit with fragments and stalled. Merizzi received a bad cut to the back of the head. Others in the party re22
Modern History I (Imperialism to the Age of Depression and Recovery)
ceived minor cuts. The first and second cars continued on for a few moments then stopped
while everyone assessed who was injured and who was not.
After the Bomb
Cabrinovic swallowed his cyanide and jumped into the river. The trouble was, the poison was
old -- it only made him vomit -- and the river was only a few inches deep. He was quickly
seized by the crowd and arrested. The motorcade continued on to City Hall, passing the other
assassins. Either because they thought Cabrinovic had succeeded or from lack of resolve, they
failed to act.
At City Hall, a furious Franz Ferdinand confronted the Mayor. "Mr. Mayor, one comes here for
a visit and is received by bombs! It is outrageous!" After a pause to calm himself, he regained
his composure and let the Mayor speak. The Mayor, either completely unaware of what had
happened, or personally ill equiped for crises, launched into his prepared speech. "Your Royal
and Imperial Highness!...Our hearts are full of happiness..."
By the end of the Mayor's speech, Franz Ferdinand had regained his composure and thanked
his host for his cordial welcome. Activities at City Hall were observed as planned.
Changed Plans
Discussions were held as to whether to change the rest of Franz Ferdinand's schedule. The
Archduke did not wish to cancel his visit to the museum and lunch at the Governor's residence, but wished to alter his plans to include a visit to Merizzi in the hospital.
The same motorcade set out along the Appel Quay, but neither the Mayor's driver, nor Franz
Ferdinand's driver had been informed of the change in schedule. This would have been Merizzi's job.
The young assassins had counted on succeeding on the first attempt. With no assurance that
Franz Ferdinand would follow his original itinerary, the remaining assassins took up various
other positions along the Appel Quay. Gavrilo Princip crossed the Appel Quay and strolled
down Franz Joseph Street. He stepped into Moritz Schiller's food store to get a sandwich. As he
emerged, he met a friend who inquired about a mutual friend.
The Wrong Turn
The Mayor's car, followed by Franz Ferdinand's car turned off the Appel Quay and onto Franz
Joseph Street, as originally planned, to travel to the museum. General Potoirek leaned forward.
"What is this? This is the wrong way! We're supposed to take the Appel Quay!" The driver put
on the brakes and began to back up. Franz Ferdinand's car stopped directly in front of Schiller's
store -- five feet away from Princip.
The Shots
Princip was quick to recognize what had happened. He pulled the pistol from his pocket, took
a step towards the car and fired twice. General Potoirek happened to look directly at Princip as
he fired. He thought the gun's report unusually soft. Both Franz Ferdinand and Sophie were still
sitting upright. Potoirek thought the shots had missed, but given the assult, ordered the driver to
drive directly to the Governor's residence.
Arrest
Princip then turned the gun on himself, but was mobbed by the crowd. Police had to rescue
Princip from the crowd before they could arrest him. Princip had swallowed his poison, but it
was from the same batch as Cabrinovic's. He was violently ill, but did not die.
Mortal Wounds
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As the car sped across the Lateiner Bridge, a stream of blood shot from Franz Ferdinand's
mouth. He had been shot in the neck. Sophie, seeing this, exclaimed: "For Heaven's sake!
What happened to you?" She sank from her seat. Potoirek and Harrach thought whe had
fainted and were trying to help her up. Franz Ferdinand, knowing his wife better, suspected the
truth. Sophie had been shot in the abdomen and was bleeding internally.
"Sopherl! Sopherl! " he pleaded. "Sterbe nicht! Bleibe am Leben für unsere Kinder! " (Sophie
dear! Sophie dear! Don't die! Stay alive for our children!)
The cars rushed to the Governor's residence. Sophie may have died before they arrived. Franz
Ferdinand died shortly afterward.
The July Crisis
The murders of Franz Ferdinand and Sophie brought Austro-Serbian tensions to a head. Serbia
had been fomenting trouble for Austria for many years. For many in Vienna, the double murders provided the 'last straw' for a get-tough showdown. The trail back to the Black Hand
would not be unraveled for years to come. Vienna felt she could not wait for conclusive proof
and acted based on the mass of circumstantial evidence.
As Vienna took a hard line against Serbia, the other powers in Europe took sides. The wheels of
war gained speed. The stakes far outgrew the squabble between Austria and Serbia. The Crisis
of July turned into world war, just over thirty days after Franz Ferdinand and his wife Sophie
were shot.
23 JULY, 1914: THE AUSTRO-HUNGARIAN ULTIMATUM TO SERBIA, VIENNA, JULY 22, 1914
Your Excellency will present the following note to the Royal Government on the afternoon of
Thursday, July 23: On the 31st of March, 1909, the Royal Serbian Minister at the Court of Vienna made, in the name of his Government, the following declaration to the Imperial and
Royal Government:
Serbia recognizes that her rights were not affected by the state of affairs created in Bosnia, and
states that she will accordingly accommodate herself to the decisions to be reached by the
Powers in connection with Article 25 of the Treaty of Berlin. Serbia, in accepting the advice of
the Great Powers, binds herself to desist from the attitude of protest and opposition which she
has assumed with regard to the annexation since October last, and she furthermore binds herself to alter the tendency of her present policy toward Austria-Hungary, and to live on the footing of friendly and neighborly relations with the latter in the future.
Now the history of the past few years, and particularly the painful events of the 28th of June,
have proved the existence of a subversive movement in Serbia, whose object it is to separate
certain portions of its territory from the Austro-Hungarian Monarchy. This movement, which
came into being under the very eyes of the Serbian Government, subsequently found expression outside of the territory of the Kingdom in acts of terrorism, in a number of attempts at assassination, and in murders.
Far from fulfilling the formal obligations contained in its declaration of the 31st of March,
1909, the Royal Serbian Government has done nothing to suppress this movement. It has tolerated the criminal activities of the various unions and associations directed against the Monarchy, the unchecked utterances of the press, the glorification of the authors of assassinations, the
participation of officers and officials in subversive intrigues; it has tolerated an unhealthy
propaganda in its public instruction; and it has tolerated, finally, every manifestation which
could betray the people of Serbia into hatred of the Monarchy and contempt for its institutions.
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This toleration of which the Royal Serbian Government was guilty, was still in evidence at that
moment when the events of the twenty-eighth of June exhibited to the whole world the dreadful consequences of such tolerance.
It is clear from the statements and confessions of the criminal authors of the assassination of the
twenty-eighth of June, that the murder at Sarajevo was conceived at Belgrade, that the murderers received the weapons and the bombs with which they were equipped from Serbian officers
and officials who belonged to the Narodna Odbrana, and, finally, that the dispatch of the
criminals and of their weapons to Bosnia was arranged and effected under the conduct of Serbian frontier authorities.
The results brought out by the inquiry no longer permit the Imperial and Royal Government to
maintain the attitude of patient tolerance which it has observed for years toward those agitations which center at Belgrade and are spread thence into the territories of the Monarchy. Instead, these results impose upon the Imperial and Royal Government the obligation to put an
end to those intrigues, which constitute a standing menace to the peace of the Monarchy.
In order to attain this end, the Imperial and Royal Government finds itself compelled to demand that the Serbian Government give official assurance that it will condemn the propaganda
directed against Austria-Hungary, that is to say, the whole body of the efforts whose ultimate
object it is to separate from the Monarchy territories that belong to it; and that it will obligate
itself to suppress with all the means at its command this criminal and terroristic propaganda. In
order to give these assurances a character of solemnity, the Royal Serbian Government will
publish on the first page of its official organ of July 26/13, the following declaration:
"The Royal Serbian Government condemns the propaganda directed against Austria-Hungary,
that is to say, the whole body of the efforts whose ultimate object it is to separate from the
Austro- Hungarian Monarchy territories that belong to it, and it most sincerely regrets the
dreadful consequences of these criminal transactions.
"The Royal Serbian Government regrets that Serbian officers and officials should have taken
part in the above-mentioned propaganda and thus have endangered the friendly and
neighborly relations, to the cultivation of which the Royal Government had most solemnly
pledged itself by its declarations of March 31, 1909.
"The Royal Government, which disapproves and repels every idea and every attempt to interfere in the destinies of the population of whatever portion of Austria-Hungary, regards it as its
duty most expressly to call attention of the officers, officials, and the whole population of the
kingdom to the fact that for the future it will proceed with the utmost rigor against any persons
who shall become guilty of any such activities, activities to prevent and to suppress which, the
Government will bend every effort."
This declaration shall be brought to the attention of the Royal army simultaneously by an order
of the day from His Majesty the King, and by publication in the official organ of the army.
The Royal Serbian Government will furthermore pledge itself:
1. to suppress every publication which shall incite to hatred and contempt of the Monarchy,
and the general tendency of which shall be directed against the territorial integrity of the latter;
2. to proceed at once to the dissolution of the Narodna Odbrana to confiscate all of its means
of propaganda, and in the same manner to proceed against the other unions and associations in
Serbia which occupy themselves with propaganda against Austria-Hungary; the Royal Government will take such measures as are necessary to make sure that the dissolved associations
may not continue their activities under other names or in other forms;
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3. to eliminate without delay from public instruction in Serbia, everything, whether connected
with the teaching corps or with the methods of teaching, that serves or may serve to nourish the
propaganda against Austria-Hungary;
4. to remove from the military and administrative service in general all officers and officials
who have been guilty of carrying on the propaganda against Austria-Hungary, whose names
the Imperial and Royal Government reserves the right to make known to the Royal Government
when communicating the material evidence now in its possession;
5. to agree to the cooperation in Serbia of the organs of the Imperial and Royal Government in
the suppression of the subversive movement directed against the integrity of the Monarchy;
6. to institute a judicial inquiry against every participant in the conspiracy of the twenty-eighth
of June who may be found in Serbian territory; the organs of the Imperial and Royal Government delegated for this purpose will take part in the proceedings held for this purpose;
7. to undertake with all haste the arrest of Major Voislav Tankosic and of one Milan Ciganovitch, a Serbian official, who have been compromised by the results of the inquiry;
8. by efficient measures to prevent the participation of Serbian authorities in the smuggling of
weapons and explosives across the frontier; to dismiss from the service and to punish severely
those members of the Frontier Service at Schabats and Losnitza who assisted the authors of the
crime of Sarajevo to cross the frontier;
9. to make explanations to the Imperial and Royal Government concerning the unjustifiable
utterances of high Serbian functionaries in Serbia and abroad, who, without regard for their
official position, have not hesitated to express themselves in a manner hostile toward AustriaHungary since the assassination of the twenty-eighth of June;
10. to inform the Imperial and Royal Government without delay of the execution of the measures comprised in the foregoing points.
The Imperial and Royal Government awaits the reply of the Royal Government by Saturday,
the twenty-fifth instant, at 6 p.m., at the latest.
A reminder of the results of the investigation about Sarajevo, to the extent they relate to the
functionaries named in points 7 and 8 [above], is appended to this note.«
Appendix:
«The crime investigation undertaken at court in Sarajevo against Gavrilo Princip and his comrades on account of the assassination committed on the 28th of June this year, along with the
guilt of accomplices, has up until now led to the following conclusions:
1. The plan of murdering Archduke Franz Ferdinand during his stay in Sarajevo was concocted
in Belgrade by Gavrilo Princip, Nedeljko Cabrinovic, a certain Milan Ciganovic, and Trifko
Grabesch with the assistance of Major Voija Takosic.
2. The six bombs and four Browning pistols along with ammunition -- used as tools by the
criminals -- were procured and given to Princip, Cabrinovic and Grabesch in Belgrade by a
certain Milan Ciganovic and Major Voija Takosic.
3. The bombs are hand grenades originating from the weapons depot of the Serbian army in
Kragujevatz.
4. To guarantee the success of the assassination, Ciganovic instructed Princip, Cabrinovic and
Grabesch in the use of the grenades and gave lessons on shooting Browning pistols to Princip
and Grabesch in a forest next to the shooting range at Topschider.
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Modern History I (Imperialism to the Age of Depression and Recovery)
5. To make possible Princip, Cabrinovic und Grabesch's passage across the BosniaHerzegovina border and the smuggling of their weapons, an entire secretive transportation system was organized by Ciganovic. The entry of the criminals and their weapons into Bosnia and
Herzegovina was carried out by the main border officials of Shabatz (Rade Popovic) and Losnitza as well as by the customs agent Budivoj Grbic of Losnitza, with the complicity of several
others.«
On the occasion of handing over this note, would Your Excellency please also add orally that -in the event that no unconditionally positive answer of the Royal government might be received in the meantime -- after the course of the 48-hour deadline referred to in this note, as
measured from the day and hour of your announcing it, you are commissioned to leave the I.
and R. Embassy of Belgrade together with your personnel.
28 JULY, 1914: THE AUSTRO-HUNGARIAN DECLARATION OF WAR ON SERBIA
from: Collected Documents Relating to the Outbreak of the European War (London, 1915), p.
392. This is Document No. 45 quoted from the Serbian Blue Book.
"At 11:10 A.M. on July 28, 1914, Count Leopold von Berchtold, the Austro-Hungarian Minister
for Foreign Affairs, sent the following telegram from Vienna to M. N. Pashitch, Serbian Prime
Minister and Minister for Foreign Affairs. This declaration of war was received at Nish at 12:30
P.M."
[Telegraphic]
Vienna, July 28, 1914
The Royal Serbian Government not having answered in a satisfactory manner the note of July
23, 1914, presented by the Austro-Hungarian Minister at Belgrade, the Imperial and Royal
Government are themselves compelled to see to the safeguarding of their rights and interests,
and, with this object, to have recourse to force of arms. Austria-Hungary consequently considers herself henceforward in state of war with Serbia.
COUNT BERCHTOLD
1 AUGUST, 1914: THE GERMAN DECLARATION OF WAR ON RUSSIA
The Imperial German Government have used every effort since the beginning of the crisis to
bring about a peaceful settlement. In compliance with a wish expressed to him by His Majesty
the Emperor of Russia, the German Emperor had undertaken, in concert with Great Britain, the
part of mediator between the Cabinets of Vienna and St. Petersburg; but Russia, without waiting for any result, proceeded to a general mobilisation of her forces both on land and sea. In
consequence of this threatening step, which was not justified by any military proceedings on
the part of Germany, the German Empire was faced by a grave and imminent danger. If the
German Government had failed to guard against this peril, they would have compromised the
safety and the very existence of Germany. The German Government were, therefore, obliged to
make representations to the Government of His Majesty the Emperor of All the Russias and to
insist upon a cessation of the aforesaid military acts. Russia having refused to comply with [not
having considered it necessary to answer]* this demand, and having shown by this refusal [this
attitude]* that her action was directed against Germany, I have the honour, on the instructions
of my Government, to inform your Excellency as follows: -- His Majesty the Emperor, my august Sovereign, in the name of the German Empire, accepts the challenge, and considers himself at war with Russia.
HERBERT S. PARMET: "THE POLICY OF THE BIG STICK" SEPTEMBER 23, 1914
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Modern History I (Imperialism to the Age of Depression and Recovery)
Within weeks after the start of World War I (1914-1918) and Germany's invasion of Belgium,
Theodore Roosevelt chided President Woodrow Wilson for his stubborn neutrality. Roosevelt,
who had done much to reshape American foreign policy during his own presidency from 1901
to 1909, encouraged Wilson to "speak softly and carry a big stick." This explanation of the big
stick policy appeared in an article in Outlook, a magazine that Roosevelt used as a platform to
air his views. Roosevelt had many criticisms of Wilson, who defeated him in the 1912 election.
One of the main lessons to learn from this war is embodied in the homely proverb, "Speak
softly and carry a big stick." Persistently only half of this proverb has been quoted in deriding
the men who wish to safeguard our national interest and honor. Persistently the effort has been
made to insist that those who advocate keeping our country able to defend its rights are merely
adopting "the policy of the big stick." In reality, we lay equal emphasis on the fact that it is necessary to speak softly; in other words, that it is necessary to be respectful toward all people and
scrupulously to refrain from wronging them, while at the same time keeping ourselves in condition to prevent wrong being done to us. If a nation does not in this sense speak softly, then
sooner or later the policy of the big stick is certain to result in war. But what befell Luxembourg
six weeks ago, what has befallen China again and again during the past quarter of a century
shows that no amount of speaking softly will save any people which does not carry a big
stick.…
We must so conduct ourselves that every big nation and every little nation that behaves itself
shall never have to think of us with fear, and shall have confidence not only in our justice but
in our courtesy.
Submission to wrongdoing on our part would be mere weakness and would invite and insure
disaster. We must not submit to wrong done to our honor or to our vital national interests. But
we must be scrupulously careful always to speak with courtesy and self restraint to others, always to act decently to others, and to give no nation any justification for believing that it has
anything to fear from us as long as, it behaves with decency and uprightness.…
…The worst policy for the United States is to combine the unbridled tongue with the unready
hand.…
In view of what has occurred in this war, surely the time ought to be ripe for the nations to
consider a great world agreement among all the civilized military powers to back righteousness
by force. Such an agreement would establish an efficient World League for the Peace of Righteousness. Such an agreement could limit the amount to be spent on armaments and, after defining carefully the inalienable rights of each nation which were not to be transgressed by any
other, could also provide that any cause of difference among them, or between one of them
and one of a certain number of designated outside nonmilitary nations, should be submitted to
an international court, including citizens of all these nations, chosen not as representatives of
the nations but as judges - and perhaps in any given case the particular judges could be chosen
by lot from the total number. To supplement and make this effectual it should be solemnly
covenanted that if any nation refused to abide by the decision of such a court the others would
draw the sword on behalf of peace and justice and would unitedly coerce the recalcitrant nation.…
Source: Roosevelt, Theodore. "The World War: Its Tragedies and Its Lessons," Outlook, September 23, 1914.
III MILITARY OPERATIONS
On a Europe thus heavily armed and torn by national rivalries, the assassination of the Austrian
archduke had a catastrophic effect.
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A Diplomatic Moves
The Austro-Hungarian government, considering the assassination the work of the Greater Serbian movement, concluded that the movement must be suppressed by a military expedition
into Serbia. Otherwise it might become powerful enough, particularly if aided by similar
movements elsewhere, to cause the disruption of the Austro-Hungarian Empire. On July 23
Austria-Hungary sent an ultimatum to Serbia submitting ten specific demands, most of which
had to do with the suppression, with Austrian help, of anti-Austrian propaganda in Serbia.
Urged by both Britain and Russia, Serbia on July 25 accepted all but two of the demands, but
Austria declared the Serbian reply to be unsatisfactory. The Russians then attempted to persuade Austria to modify the terms of the ultimatum, declaring that if Austria marched on Serbia,
Russia would mobilize against Austria. A proposal, on July 26, by the British foreign minister,
Sir Edward Grey, Viscount Grey of Fallodon, that a conference of Britain, France, Germany,
and Italy settle the Austro-Serbian dispute, was rejected by Germany.
B Declarations of War
On July 28 Austria declared war against Serbia, either because it felt Russia would not actually
fight for Serbia, or because it was prepared to risk a general European conflict in order to put
an end to the Greater Serbia movement. Russia responded by partially mobilizing against Austria. Germany warned Russia that continued mobilization would entail war with Germany, and
it made Austria agree to discuss with Russia possible modification of the ultimatum to Serbia.
Germany insisted, however, that Russia immediately demobilize. Russia declined to do so, and
on August 1 Germany declared war on Russia.
The French began to mobilize on the same day; on August 2 German troops traversed Luxembourg and on August 3 Germany declared war on France. On August 2 the German government informed the government of Belgium of its intention to march on France through Belgium
in order, as it claimed, to forestall an attack on Germany by French troops marching through
Belgium. The Belgian government refused to permit the passage of German troops and called
on the signatories of the Treaty of 1839, which guaranteed the neutrality of Belgium in case of
a conflict in which Britain, France, and Germany were involved, to observe their guarantee.
Britain, one of the signatories, on August 4 sent an ultimatum to Germany demanding that Belgian neutrality be respected; when Germany refused, Britain declared war on it the same day.
Italy remained neutral until May 23, 1915, when, to satisfy its claims against Austria, it broke
with the Triple Alliance and declared war on Austria-Hungary. In September 1914 Allied unity
was made stronger by the Pact of London, signed by France, Britain, and Russia. As the war
progressed, other countries, including the Ottoman Empire, Japan, the United States, and other
nations of the western hemisphere, were drawn into the conflict. Japan, which had made an
alliance with Britain in 1902, declared war on Germany on August 23, 1914. The United States
declared war on Germany on April 6, 1917.
C 1914-1915:
Entrenchment Military operations began on three major European fronts: the western, or
Franco-Belgian; the eastern, or Russian; and the southern, or Serbian. In November 1914 the
Ottoman Empire entered the war on the side of the Central Powers, and fighting also took place
between the Ottomans and the British at the Dardanelles and in Ottoman-held Mesopotamia.
In late 1915 two more fronts had been established: the Austro-Italian, after Italy joined the Allies in May 1915; and one on the Greek border north of Salonika (Thessaloníki), after Bulgaria
joined the Central Powers in October 1915.
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C1 The Western Front
The initial German plan of the campaign was to defeat France quickly in the west, while a
small part of the German army and the entire Austro-Hungarian army held in check an expected Russian invasion in the east. The speedy defeat of France was to be accomplished by a
strategic plan known as the Schlieffen plan, which had been drawn up by Count Alfred von
Schlieffen, German chief of staff from 1891 to 1907. The Schlieffen plan called for powerful
German forces to sweep through Belgium, outflank the French by their rapid movement, then
wheel about, surround, and destroy them. As executed with certain modifications in the fall of
1914, the plan at first seemed likely to succeed. The swift German incursion into Belgium at
the beginning of August routed the Belgian army, which abandoned the strongholds of Liège
and Namur and took safety in the fortress of Antwerp. The Germans, rushing onward, then defeated the French at Charleroi and the British Expeditionary Force of 90,000 men at Mons,
causing the entire Allied line in Belgium to retreat. At the same time the Germans drove the
French out of Lorraine, which they had briefly invaded, and back from the borders of Luxembourg. The British and French hastily fell back to the Marne River, but three German armies
advanced steadily to the Marne, which they then crossed. The fall of the French capital seemed
so imminent that the French government moved to Bordeaux. After the Germans had crossed
the Marne, however, the French under General Joseph Jacques Césaire Joffre wheeled around
Paris and attacked the First German army, commanded by General Alexander von Kluck, on
the right of the three German armies moving on Paris.
In the First Battle of the Marne, which took place September 6-9, the French halted the advance of Kluck's army, which had outdistanced the other two German armies and could not
obtain their support. In addition, the German forces had been weakened on August 25 when,
believing the victory had already been won in the west, the German chief of staff, General
Helmuth von Moltke, dispatched six corps to the eastern front. The French pressure on the
German right flank caused the retreat of Kluck's army and then a general retreat of all the German forces to the Aisne River. The French advanced and, in an endeavor to force the Germans
from the Aisne, engaged them in three battles: the Battle of the Aisne; a battle on the Somme
River; and the First Battle of Arras. The Germans, however, could not be dislodged, and even
extended their line eastward to the Meuse north of Verdun. A race to the North Sea ensued
between the two belligerents, the objective being the channel ports. The Germans were prevented from advancing to the French channel ports chiefly by the flooding of the region of the
Yser River by the Belgians. The western part of the Allied line was held by the British who, in
the race for the channel, had advanced to Ieper, the southwest corner of Belgium. After taking
Antwerp on October 10, the Germans endeavored to break through the British positions in Belgium, but were checked in a series of engagements known collectively as the Battle of Flanders. In December the Allies attacked along the entire front, from Nieuport in the west to Verdun in the east, but failed to make any appreciable gains.
By the end of 1914 both sides had established lines extending about 800 km (about 500 mi)
from Switzerland to the North Sea and had entrenched; these lines were destined to remain
almost stationary for the next three years.
The Battle of Flanders marked the conclusion of the war of movement or fighting in the open
on the western front. From the end of 1914 until nearly the end of the war in 1918, the fighting
consisted largely of trench warfare, in which each side laid siege to the other's system of
trenches, consisting of numerous parallel lines of intercommunicating trenches protected by
lines of barbed wire, and endeavored from time to time to break through the lines. In this type
of fighting during 1915 in the west, the Allies were on the offensive; the Germans, who were
engaged in a heavy offensive on the eastern front (see below), made only a single attack in the
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Modern History I (Imperialism to the Age of Depression and Recovery)
west during the year. The principal attempts in 1915 to force a breakthrough included a British
attack at Neuve Chapelle in March, which took only the German advance line. The Germans
unsuccessfully attacked Ieper in April, using clouds of chlorine gas, the first time in history that
gas was used in this manner on a large scale. A combined attack by the British and French
along the front between Neuve Chapelle and Arras, in May and June, advanced troops 4 km
(2.5 mi) into the German trench system, but did not secure a breakthrough. Unsuccessful simultaneous attacks were made in September by the British in the town of Lens and French at
Vimy Ridge overlooking the town. A large-scale French attack in September on a front of about
25 km (about 15 mi) between Reims and the Argonne Forest, took the Germans' first line of
trenches, but was stopped at the second. On the whole the lines that had been established in
the west at the close of 1914 remained practically unchanged during 1915.
C2 The Eastern Front
On the eastern front, in accordance with the plans of the Allies, the Russians assumed the offensive at the very beginning of the war. In August 1914 two Russian armies advanced into East
Prussia, and four Russian armies invaded the Austrian province of Galicia. In East Prussia a series of Russian victories against numerically inferior German forces had made the evacuation of
that region by the Germans imminent, when a reinforced German army commanded by General Paul von Hindenburg decisively defeated the Russians in the Battle of Tannenberg, fought
on August 26-30, 1914. The four Russian armies invading Austria advanced steadily through
Galicia; they took Przemyœl and Bukovina, and by the end of March 1915 were in a position
to move into Hungary. In April, however, a combined German and Austrian army drove the
Russians back from the Carpathians. In May the Austro-German armies began a great offensive
in central Poland, and by September 1915 had driven the Russians out of Poland, Lithuania,
and Courland, and had also taken possession of all the frontier fortresses of Russia. To meet this
offensive the Russians withdrew their forces from Galicia. The Russian lines, when the German
drive had ceased, lay behind the Dvina River between Rîga and Dvinsk (Daugavpils), and then
ran south to the Dniester River. Although the Central Powers did not force a decision on the
eastern front in 1914-15, the Russians lost so many men and such large quantities of supplies
that they were subsequently unable to play any decisive role in the war. In addition to the Battle of Tannenberg, notable battles on this front during 1914-15 were the First Battle of the
Masurian Lakes (September 7-14, 1914), and the Second Battle of the Masurian Lakes (February
7-21, 1915), both German victories.
C3 The War in Serbia
On the Serbian front considerable activity took place in 1914-15. In 1914 the Austrians undertook three invasions of Serbia, all of which were repulsed; the Serbs, however, made no attempt to invade Austria-Hungary. The front remained inactive until October 1915. Early that
month, in anticipation of Bulgarian entrance into the war on the side of the Central Powers,
and in order to aid Serbia, which would be the target of a Bulgarian attack, British and French
troops were landed at Salonika, the gateway into the Balkans, by arrangement with the neutral
Greek government. After Bulgaria declared war on Serbia on October 14, 1915, the Allied
troops advanced into Serbia. The Bulgarian troops defeated Serbian forces in Serbia and also
the British and French troops that had come up from Salonika. Also in anticipation of the Bulgarian declaration of war, on October 6 a strong Austro-German drive, commanded by General August von Mackensen, was launched from Austria-Hungary into Serbia. By the end of
1915 the Central Powers had conquered all of Serbia and eliminated the Serbian army as a
fighting force. The surviving Serbian troops took refuge in Montenegro, Albania, and the Greek
island of Corfu (Kérkira), which the French occupied in January 1916 in order to provide a
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place of safety for the routed Serbians. The British and French troops in Serbia retreated to Salonika, which they fortified and where they were held in readiness for later action.
C4 The Ottoman Front
The Ottoman Empire entered the war on October 29, 1914, when Ottoman warships cooperated with German warships in a naval bombardment of Russian Black Sea ports; Russia formally declared war on the Ottomans on November 2, and Britain and France followed suit on
November 5. In December the Ottomans began an invasion of the Russian Caucasus region.
The invasion was successful at its inception, but by August 1915 the hold that Ottoman forces
had gained had been considerably reduced. Ottoman pressure in the area, however, impelled
the Russian government early in 1915 to demand a diversionary attack by Britain on the Ottoman Empire. In response, British naval forces under the command of General Sir Ian Hamilton
bombarded Ottoman forts at the Dardanelles in February 1915. Also, between April and August, two landings of Allied troops took place on the Gallipoli Peninsula, one of British, Australian, and French troops in April, and one of several additional British divisions in August. The
Allied purpose was to take the Dardanelles; however, strong resistance by Ottoman troops and
bad generalship on the part of the Allied command resulted in complete failure. The Allied
troops were withdrawn in December 1915 and January 1916.
In the Mesopotamian Valley, meanwhile, British forces from India defeated the Ottomans in
several battles during 1914-1915, particularly that of Al Kuût; but in the Battle of Ctesiphon,
November 1915, the Ottomans checked the advance of the British toward Baghdâd and forced
them to retreat to Al Kuût. On December 7 the Ottomans laid siege to this town.
C5 The Italian Front
Italy declared war on Austria-Hungary on May 23, 1915. The chief military events on the
Austro-Italian Front in 1915 were four indecisive battles between Austro-Hungarian and Italian
armies on the Isonzo River (June 29-July 7, July 18-August 10, October 18-November 3, and
November 10-December 10). The purpose of the Italian attack was to break through the Austrian lines and capture Trieste.
THE STATIC FRONT: WHY THERE WAS NO BREAKTHROUGH IN WORLD WAR I ON THE WESTERN FRONT MICHAEL J. CRANE, SR.
Introduction
It is fairly common knowledge, at least among students of history, that the Western Front was
stalemated almost from the beginning of World War I until the armistice went into effect in
November 1918. This stalemate is often attributed to many causes, among them technological
problems, tactical problems, and the difficulty encountered due to the huge size of the opposing armies in a relatively restricted area. It is my intention to discuss these and other causes,
and in the process, state my case for the one factor that is usually ignored, indeed, the one factor which my research has convinced me outweighs all the others.
The conventional explanation offered by historians for the deadlock is that by 1914 technology
and industrialism had overtaken military strategy and tactics, making them obsolete. Supposedly machine guns and rapid-fire artillery had made the traditional tactics worthless; linear tactics and cavalry charges were things of the past by 1914. This explanation is accurate to a degree; as far as it goes, it explains the situation. I contend, however, that this explanation ignores
the crucial factor: leadership.
Before a case-by-case analysis can begin, a brief chronology is in order. In August 1914, war
broke out between Germany on the one hand and France, Belgium, and Great Britain on the
other. (Russia, Austria-Hungary, and Serbia were involved as well, but they are not our concern
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here.) The Germans relied on the Schlieffen Plan; the French relied on their Plan XVII. After the
maneuvering and fighting of late summer and autumn of 1914 had subsided, the front had stabilized and entrenching had begun. The trenches got deeper as time wore on, and the casualty
lists got longer, but no significant breakthrough resulted. There were a few occasions when one
side got close, but only after exhaustion set in did the war end. Strategy
The Schlieffen Plan relied upon the reserve mobilization system originated by Helmuth von
Moltke (the elder). The Prussian reserve system proved its value during the German wars of
unification, specifically the wars against Austria and France in 1866 and 1870, respectively.
The Prussians were able to achieve mass without sacrificing mobility, thereby fulfilling two requirements that the American Civil War had shown to be essential for victory. The success of
this system caused the other powers of Europe to adopt reserve systems identical, or virtually
so, to the Prussian system.
The reserve system was little more than the maintenance of trained troops in a state not unlike
hibernation. The troops, after a quick course of instruction in soldiering, returned to their everyday occupations, training at regular intervals for a short time each year. The idea was to keep
this reserve of men available to augment the regular standing army in the event of a major crisis. The army would "awaken" from its "hibernation" to wield its full strength. It was this reserve
system, used by all the continental powers, that caused the mass of men to swarm over the face
of Europe so quickly in 1914. Notably, Great Britain had no such reserve system, a fact which
would cause the British much grief later. Instead, she depended upon her great navy for security.
Rates of mobilization varied from country to country, varied however. German mobilization
was so organized and automatic that it was supposedly unstoppable once it had begun (Germany's forces could be mobilized in a matter of a few days). Regardless of that conjecture, it
was the most efficient of all the powers' systems. Russia's system was on the other end of the
spectrum. Her size coupled with a lack of railroad capacity to give her the least efficient mobilization system (Russia's forces could only be completely mobilized in a number of months -in World War I, Russia's army continued to receive freshly mobilized troops as late as December 1914).
It was this disparity between German mobilization capability and the Russian that led Count
Alfred von Schlieffen to decide on a "France first" strategy. The Schlieffen Plan called for the
vast majority of German troops to be deployed against France in order to deliver a knockout
blow, so that Germany's armed might could then be turned to face Russia's. The Russians
could be fully mobilized in perhaps six weeks (although as events would demonstrate, this was
an overestimate of Russia's capability; most of her forces, however, were available within this
time span). The German and French mobilization time was between one and two weeks.
Therefore, the Germans had one to two months to make their plan work.
Schlieffen was cognizant of the essential parity between France and her likely allies versus
Germany. The Germans only had a slight numerical advantage over the Allied forces on the
Western Front; it was through strategy that they hoped to prevail, as they had in 1870. Schlieffen also recognized, assuming as he did that Germany must pursue an aggressive strategy of
attack against France, that the number of troops each side would deploy was so great as to
make restriction of the fighting to the Franco-German border areas impracticable. Compounding this problem was the frontier fortress system France had constructed; Schlieffen considered
these strongholds impregnable (subsequent experience bore him out). He therefore conceived
of the "strong right wing." The idea was to form the German forces into two wings: a left wing
and a right wing. He weakened the German left wing so much that the German troops would
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be required to fall back in the face of overwhelming French superiority upon their own frontier
fortresses, pulling the attacking French forces in upon them. While this was going on, the German right wing would sweep through Belgium, crush the French left wing, and capture Paris
and the French army in one huge bag.
The French Plan XVII coupled with this perfectly, from the German point of view, although
neither side was aware of the relationship of the plans to one another. The French plan called
for a direct assault on the German frontier, relying exclusively on cran and elan (loosely
Americanized as "guts")--the spirit of the attack. The French plan had no realistic strategy in it,
merely some strange metaphysical faith in the ability of the human body and spirit to overcome
bullets, not unlike the fanaticism of some Indian cults in the American West in the late 1800s
(for example, the "Ghost Dance").
Plan XVII, adopted in March 1913, remained essentially unchanged until it was enacted in August 1914. The Schlieffen Plan was changed by Schlieffen's successor, Helmuth von Moltke
(the younger), a nephew of the architect of the Prussian reserve system, after Schlieffen died in
1913. The younger Moltke changed the ratio of right-wing forces to left-wing forces from 8:1 to
about 3:1, violating Schlieffen's reputed deathbed wish to "keep the right wing strong." This
change probably was the single most important reason for the failure of the Germans to win in
1914, although other high-level German decisions also affected the outcome of the 1914 campaign.
During the opening moves of the campaign, the French attacked just as expected. Their assaults into the provinces of Alsace and Lorraine were decisively repulsed. Given that the
French still wore bright red-and-blue uniforms, this should hardly surprise the reader, for even
the tradition-bound British army had abandoned its scarlet coats after the Zulu War, and the
German army had long since adopted field-gray. This French retention of old uniforms was not
due to oversight or neglect. When, in 1912, the proposal was made to adopt dull-colored uniforms as the Bulgarians had done (the Bulgarians had been very successful in the Balkan War),
fierce resistance in the highest army and political circles resulted. During the opening engagements, the highly visible French soldiers were knocked down in the open by their fortified
German opponents like tenpins. As it turned out, bullets were indeed superior to guts...
Due to its unexpected defensive success, Moltke allowed the German left wing to counterattack during the Battle of the Frontiers, driving back the French forces, who were disorganized
after their doomed attack against the German left wing. This retrograde movement by the
French quite accidentally gave them the momentum in the appropriate direction not only to
avoid the trap, but to perform the "miracle of the Marne": using the famous taxicab convoy, in
addition to more important means of transport, the French and British checked the German
advance on the River Marne, not far from Paris. Meanwhile, stubborn and valiant resistance by
the British Expeditionary Force, probably man-for-man the finest infantry of the age, was slowing the progress of the German right wing through Belgium. Another factor in the failure of the
Schlieffen Plan's execution was that the German commander closest to the Channel coast
feared being too distant from his colleague on the left, and moved his forces closer to those of
his colleague, shortening the arc of the German line. This shortening movement caused the
rightmost German forces to miss Paris, thereby causing the execution of the Plan to fail (as
Schlieffen supposedly put it, "Let the last man brush the Channel coast with his sleeve"). This
last error was the death knell to German hopes in 1914, even though it was not immediately
apparent to the commanders at the time. The Schlieffen Plan might have worked, even with the
shortsighted changes, if the wheeling movement had not been distorted, but "what-if" is not our
purpose here. Suffice it to say that the excellent Schlieffen Plan, the probabilities for the success
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of which were so significantly enhanced by the French Plan XVII, was bungled by shortsighted
commanders.
Following the opening moves in the west, the Germans and the Allies engaged in what has
been somewhat inappropriately dubbed "the march to the sea." This "march" was more a series
of small engagements fought as each side attempted to outflank the other than a straight march
to the Channel coast. This last-chance maneuvering failed to provide any significant outcome,
and both sides began "digging in." It was after this period that a new German commander,
Erich von Falkenhayn, took over command of the German armed forces in the west from
Moltke, who in any event had never wanted the job. It should be noted, before we leave the
subject of the mobility of the opening months of World War I, that the Germans had great success at the Battle of Tannenberg in autumn 1914, against a numerically superior Russian force,
by using the aforementioned principles of mass and mobility. This is worth mentioning so that
the reader can recognize that maneuver and mobility were not impossible in this war, as many
might believe.
Falkenhayn is perhaps most noted for his, in my view, bankrupt policy of winning the war by
attrition. This policy demonstrates a complete lack of imagination. It was his view that the
French could be defeated by a huge attack against a major strong point, and he chose Verdun.
This is the first example of what were termed "big-push attacks." The idea was that if enough
energy and men and ammunition were concentrated and expended, then the enemy would
break from the resulting pressure and the attacking forces would either advance virtually unhindered or the enemy would collapse completely and the war would be over. This incredibly
stupid method was tried once by the Germans, and then they reverted to the strategic defensive
so that they could fight against Russia, while allowing the Allied forces to "push" against them.
The Allies, apparently, never did learn to appreciate the bankruptcy of the "big-push" strategy.
On the Somme, at Verdun, again and again the Allies attacked "over the top." Even the Americans at first engaged in this ludicrous foolishness after their entry later in the war. Eventually
the French army mutinied in 1917, refusing to attack any more, but consenting to continue the
defense. The French generals had the good sense not to try to force the issue (perhaps for no
other reason than that the Americans were coming with fresh troops).
Hundreds of thousands of men died in these senseless attacks, all for a few hundred yards of
barren real estate. Only the Germans developed new tactics to mitigate their difficulties, which
we shall examine later. Eventually the Americans arrived, and the naval blockade of Germany
by the Allies made itself felt before the German U-boat blockade of Britain could accomplish
its goal of defeating that country; the Central Powers began to fall like dominoes. The two sides
had fought each other to the point of exhaustion and the Germans temporarily lost their nerve
as their allies deserted them one by one; internal civil disorder resulted in Germany and General Erich Ludendorff could not bring the situation under control. Armistice resulted.
Technological Factors
The recurring theme of the First World War is the machine gun. No major war had been fought
on the European continent since 1815, with the possible exception of the Crimean War (I leave
the decision whether the Crimean War was "major" to the reader), which was fought without
the "benefit" of twentieth-century advances in weaponry. In the interval, there were no tactical
developments to match the developments in weaponry. The successful German wars of unification had not persuaded even the great elder Moltke to adopt more modern tactics and formations in the second half of the 1800s, and one does not usually argue with success (the elder
Moltke did, however, institute some modifications of existing tactics in the Franco-Prussian
War of 1870-71). On the other hand, there were striking examples of wars that cried for tactical
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reform in the European armies, notably the Russo-Japanese War of 1904-1905 and the Second
Boer War of 1899-1902.
It was thought, at least by the French, that the machine gun would not affect the course of battle very greatly. In a London Times article in March 1908, the French Senate's debate on machine guns was reported. The august senators felt the gun was of limited, if any, value. The British leadership, even in 1915, was debating whether to raise the number of machine guns in a
standard battalion from the pre-war complement of two (today, an American platoon of 42
men has as many)! The Germans were alone in appreciating the value of the machine gun, and
in organizing machine-gun companies to support standard infantry companies.
In the event, machine guns in fixed defensive positions soon became a dominant factor. But
why? First, it was soon discovered in battle that one fortified (or entrenched) machine gun, with
a full crew and plenty of ammunition, could destroy an entire attacking infantry battalion of
600-1000 men advancing across the barren stretch of ground between the trenches, known
appropriately as No Man's Land, before the attackers could close with the defenders. Since
there were always several such defending emplacements in any given stretch of trenchline, it is
easy to see how a few machine guns could grind up a division of 10,000 men in a half hour or
less. The second and more important factor, however, is that the attacking Allied, and to a
lesser extent German, armies continued to use "traditional," that is Napoleonic, tactics and
formations. Just like the "enemy" in so many war movies, the attacking soldiers placidly lined
up like proverbial sheep for the slaughter, advancing in four or five waves, each in its turn to be
cut down like so much wheat before the scythe.
One important argument needs to be made at this point. There were only two offensive actions
that came near to causing a strategic breakthrough by attacking forces. The first was the British
attack at Cambrai (20 November to 3 December 1917); the second was the German
Kaiserschlacht offensive between Ypres and Rheims in the spring of 1918. The first example
turns on the first use of massed armor, while the second turns on the use of then-revolutionary
infantry tactics. The reason the second example is of importance in my analysis of the machine
gun is that the offensive was very nearly successful, as we shall see later. That fact implies that
technology was not required to overcome the effects of the machine gun; that is to say, the
deadlock could be broken by men as well as machines if those men used the right tactics.
The number of machine guns per division had increased by 1918. In 1914, the average infantry
division had twenty-four machine guns, whereas by 1918 that same division had increased its
complement of machine guns to between fifty and one hundred, with one hundred to two
hundred automatic rifles as well. Obviously, defensive firepower per man had vastly increased
in four years, especially when one considers that few, if any, divisions were at full strength after
1914. Given that the Kaiserschlacht offensive was very nearly successful, it would seem that to
argue that strategic breakthroughs were prevented by the advent of the machine gun is rather
shortsighted. Rather, it seems that the machine gun imposed a new obstacle for the military
leaders to overcome.
Another technological factor of the Great War was the advent of rapid-fire (breech-loading)
artillery. It was assumed that the combination of artillery and the offensive spirit of the infantry
would prove overwhelming to any defending force, even one of equal size. This assumption
had its roots in the Napoleonic doctrine of frontal assault backed by powerful direct artillery
fire. It was widely held in the century following the Battle of Waterloo that the way to win battles was to press hard in the center with the main infantry force, with artillery providing close
support. The French were not the only proponents of this doctrine, just the most zealous. This
doctrine overlooked several things, however.
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First, Napoleon won his great battles through the use of maneuver when his was the numerically inferior force, notably at Marengo and Austerlitz. He only used his center-thrust strategy
later when he possessed the superior force, notably at Borodino and Waterloo (and at Waterloo, his margin of numerical superiority was slim indeed). It was not the center-thrust strategy
that gained Napoleon his reputation; it was his ability to lead troops in complicated maneuvers
that made him a Great Captain.
Second, weaponry in Napoleon's day was much less effective. Rifles were not in abundant
supply; muskets had an effective range of fifty or perhaps one hundred yards. Infantry dealt
with enemy infantry with the bayonet, not always by killing the enemy with their bayonets, but
sometimes by merely charging or threatening to charge, thereby causing morally or numerically weaker enemy forces to run away. Artillery was of the (relatively slow) muzzle-loading
variety and artillerymen used rather unsophisticated fire-control techniques. Furthermore, the
effective range of the guns and the killing power of artillery loads were inferior (if that is the
right word) to their twentieth-century counterparts. In the days of Waterloo-style battles, the
most effective round was the solid-shot cannonball, since it acted like a very lethal bowling
ball which, when properly aimed, had the effect of transforming the packed enemy troops into
so many bowling pins. By 1914, artillery shells had become much more sophisticated, including a wide variety of exploding shells.
Third, the armies of Napoleon's day did not possess the machine gun or anything like it. It is
obvious, reviewing what we have seen, that some tactical and strategic learning was in order,
but the only way to learn total war is to practice it, and the great powers, as we have also seen,
had managed to avoid just that experience for ninety-nine years.
Another weapon often mentioned when discussing the problems of the attacker on the Western
Front is poison gas. It should be noted that poison gas was primarily an offensive weapon,
since it was extremely unreliable in its effects; the wind might shift at any time, so it was normally not a weapon to be used to break up enemy attacks. When it was used defensively, it
was used more as a passive barrier to protect flanks and the like, rather than as a form of defensive fire. If gas was so potent a weapon of attack, why then did it not produce a tactical breakthrough?
First, one must realize that weapons are developed through scientific activities and are therefore easily developed by more than one nation at a time, since scientific knowledge is usually
considered to be the property of the international community and is consequently widely published and otherwise disseminated. Seldom does one nation ever gain a significant advantage
through the use of a "secret weapon." Often a weapon may prove to be surprisingly more effective than previously thought, for example the French 75mm howitzer. More often, as in the
case of poison gas, the side that introduces the new weapon enjoys a fleeting advantage at
best, since the opposing side develops countermeasures, or a similar weapon, or both. In a protracted war, it is possible that new weapons might be used to advantage only once; after the
initial use, their surprise value is lost and their ability to give an advantage to the users may be
lost.
The use of poison gas is just such an example. The Germans used it first in 1915, to the great
surprise of the French colonial troops opposing them, who threw down their weapons and fled.
Lack of planning caused the Germans to fail to strategically exploit their tactical success, which
is surprising. If the Germans did not intend to break through the Allied lines by using gas, what
did they intend? In the event, grossly insufficient reserves were available to exploit the hole in
the French lines caused by the gas.
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Second, it must be realized that relatively speaking, gas did not produce many casualties (about
15 per cent of the World War I total to be more exact). Gas wounds were only about half as
likely to cause a victim to subsequently die as were conventional weapons. Conventional artillery accounted for more than half of the battlefield casualties in the Great War, up by a factor
of at least five from the 9 to 10 per cent that cannon produced in the American Civil War.
It seems accurate to say that technological advances in weaponry were an obstacle to the successful prosecution of the war by either side, not the reason why the war was unsuccessfully
prosecuted. Weapons existed that did not exist in the Napoleonic Wars, but the conditions
were essentially the same for both sides. The weapons in question were in greater abundance
(specifically the machine gun) later in the war, when greater tactical success was enjoyed by
both sides; therefore technological advances should not be held up as "the reason why there
was no breakthrough" on the Western Front. Moreover, weapons of even greater sophistication
were available in the Second World War, and in larger numbers; World War II casualty rates
were higher; and the Second World War is characterized as a war of movement and maneuver.
How then can one conclude that the First World War had no breakthroughs on the Western
Front because of powerful weapons? It should be mentioned, for purposes of clarification, that
tanks were frequently used in an exploitive role rather than in a breakthrough role in World
War II...
Before leaving the subject of weapons and technology, I would like to add some "footnotes," so
to speak.
The first involves artillery. Two main types of artillery shells existed at the time of the war:
shrapnel and high-explosive, shrapnel being significantly the more expensive to produce. Highexplosive rounds were just powder charges inside a steel casing, while shrapnel rounds contained steel shot as well. Shrapnel was considered for a long time to be vastly superior in producing casualties. The Germans therefore decided to forgo economy in order to gain effectiveness, while the other powers opted for economy.
Several years after the war, a testing-ground accident showered several people with supposedly
lethal shrapnel; they survived virtually unscathed. Apparently the shrapnel rounds were capable of penetrating wood planks calculated to be equal in resistance to human flesh, but human
flesh turned out to be much more resilient than was previously thought. To quote my source, "a
lot of very humane artillery rounds had been flying around." This "footnote" is worth considering since it points out that many of our preconceived notions about weapon effectiveness,
whether they be born of the proving ground or the military historian, are often grotesquely
wrong.
The second "footnote" regards the effectiveness of artillery rounds against trenches. For a long
time, and down to the present day, many people have accepted the notion that the artillery
barrages that characterized the build-up before a "big push" were incredibly lethal. In other
words, many people who have studied the Great War have accepted the lethality of these attacks as fact. That is, however, not the case.
In his book The Face of Battle, the noted military historian John Keegan analyzes in great detail
the effects of artillery bombardment of trenches. While some have offered an impressionistic
interpretation, Keegan's is more mathematical. He totals the weight of the shells, demonstrates
the proportion of that weight that was explosive (shrapnel and casing being virtually ineffective
against dirt), and then shows mathematically that the German trenchlines before the Battle of
the Somme, perhaps the quintessential British "big push," were subjected to a mere one pound
of explosive for each square yard over the week-long preliminary bombardment. This may
sound like a great deal of explosive power, but consider that this weight of explosive was de-
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livered over a period of a week, and that the Germans were extremely well dug in (more on
this later). Imagine a pound of dynamite or TNT exploding on your roof--it might (might!) blow
a hole in your roof, but it would not injure you, and if your roof is made of concrete, as many
apartment-building roofs are, then you would almost certainly be unaffected. Keegan's analysis
is sufficient proof to explode the myth of artillery power in an offensive-preparation role in
World War I. Literary treatments like Erich Maria Remarque's All Quiet on the Western Front
only reinforce such an interpretation. In short, it was the defensive use of artillery against attacking troops that caused the high casualties witnessed in World War I, not the use of that
same artillery against fortified and entrenched defending troops.
The third "footnote" regards personal weapons. The Germans are often scornfully held up as
"the bad guys." They used poison gas first, they caused the war, and so on and so on. For (especially) American readers I offer the following:
The American soldier in World War I was outfitted with much the same equipment as his
European counterpart. But he also sometimes carried the Winchester Model 97 "trench gun"
(shotgun). It was capable of firing seven aimed rounds of 00 shot in rapid succession, each
round containing nine pellets equivalent to a soldier, this weapon had the capability of firing
more projectiles more accurately in a shorter time than any sub-machinegun, including the
Uzi, the Thompson, and the Schmeisser (readers will note that these weapons all came after
World War I). The Germans pointed out, and quite rightly, that this weapon violated certain
internationally established conventions of war. If nothing else, these trench guns projected soft,
round lead shot, not jacketed, shaped projectiles, as other small arms did -- the difference being that a shaped, jacketed missile will cause much less damage to the target than will soft,
round lead shot. Despite such wartime protests, the Americans continued to use this weapon.
The Americans also often carried the trench knife, a frightening combination of dagger and
brass knuckles, which apparently was also prohibited by the above-mentioned conventions of
war. Like the trench gun, the trench knife was the subject of similar protests, with the same result. This second "footnote" is included to give (I hope) a more rounded perspective on the war;
the implication is, I think, obvious.
Significant Battles
It is appropriate at this point to outline some of the significant battles and lesser engagements
fought on the Western Front. Just what separates a major battle from a lesser engagement is a
matter of personal definition, so I leave any discrimination to the reader. Some of these actions,
such as the Battle of the Somme, are actions in which there never existed the slightest possibility of a strategic breakthrough; some were ripe with opportunity; the remainder lay somewhere
in between. In his book Strategy, B. H. Liddell Hart notes that some argue that the entire conflict should be regarded as one continuous battle, but then says that "a method which requires
four years to produce a decision is not to be regarded as a model for imitation." I cannot but
agree with Liddell Hart, despite his understatement.
Even in the opening moves of the war, tragedy due to poor leadership was possible, the presence of the opportunity for maneuver notwithstanding. At Fromelles (10 November, 1914), the
Germans made a last-ditch effort to break through the Allied positions. Among the troops used
were the idealistic youths of the 48th Reserve Division. These students were trained by retired
officers who were veterans of the Franco-Prussian War of 1870. Forty-four years later, in Flanders, things worked differently. The students advanced, with banners waving, drums beating,
their officers on white horses, and their sergeants carrying half-pikes to make certain that the
ranks were perfectly straight. They advanced, singing Deutschland ueber Alles, into the fire of
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numerous professional British army units, including the famed Ghurkas. The slaughter was appalling; the event has been recorded in history as "The Slaughter of the Innocents."
At the Second Battle of Ypres in April 1915, the Germans introduced the world to the military
effects of chlorine gas. The targeted troops were mostly French colonial troops, as noted earlier,
but Canadian and British troops were also in the vicinity. Being entirely unprepared, the French
colonials understandably broke and ran, leaving an undefended gap in the line four and a half
miles in length. The Canadians did not however, and, subsequently, filled the gap in the line
during the night. The Germans only advanced a distance of two miles, forfeiting their opportunity. Some sources indicate the possibility of a major German victory, that is the encirclement
of some 50,000 British troops and the rupturing of the Allied front, but Falkenhayn stopped
after advancing the aforementioned two miles.
One can only guess at what led to such a decision, but it is disgusting even to consider the possibilities. Whatever the reader may think of the possible consequences of German victory in
World War I, certainly that outcome would have been preferable to the outcome we actually
got (in other words, a sequence of events that led to Adolf Hitler, the Nazis, and World War II).
It seems most likely that in this case, Falkenhayn's behavior was deplorably stupid or that he
was a tactical imbecile, given his later "strategy" at Verdun. Other possibilities, for instance that
of treasonous behavior, belong in the realm of paranoid fantasy. The one really great opportunity to end the war early with relatively slight loss of men and resources was fumbled.
As mentioned previously, the Germans initiated the Battle of Verdun. The Germans made their
one try at a "big-push" attack there in 1916. To illustrate the myopic attitude surrounding the
battle, I quote from a recent edition of Compton's Encyclopedia: "After the middle of July the
tables were turned. The French were holding the Germans at Verdun to prevent their transfer
further north." The implication is that the French were now doing the attacking; how else could
they prevent the transfer of troops by the Germans? The encyclopedia continues,"There the
British were launching their first great drive (!) on the Somme River ... For the victorious (!)
French and their allies it was a turning point in the war."
I realize that this encyclopedia is not considered a "scholarly" work, but nonetheless the above
passage is, I think, enlightening. It illustrates the senseless perspective of which even post-war
writers are capable; if such narrative myopia is possible, perhaps we must not be too hard on
the participants for their tactical myopia. In any event, Falkenhayn could not have been pursuing a major breakthrough as we would define it. It seems that he was more interested in killing
enormous numbers of Allied soldiers than in defeating the Allied commanders in battle, regardless of the cost to Germany; he must have intended to break France by attrition. The failure of
Falkenhayn's "strategy" is seen by some non-German authors, even today, as an Allied "victory."
Indeed, "bleeding France white" was Falkenhayn's objective. After a time, he had had enough,
but Crown Prince Rupprecht, one of the German commanders at Verdun, had not, and insisted
that the attack continue. When even he had had enough death and gore, the battle was discontinued.
But battles are not usually ended unilaterally. Falkenhayn had been correct about one thing-the French would fight virtually unto death for Verdun, and for reasons that had nothing whatever to do with military expediency. The French counter-attacked even as the British were attacking on the Somme, and took back most (not all) of the territory they had held before the
Germans' initial attacks. After more than six months' fighting, most of a million young men,
German and French, lay dead. Only a tiny amount of French soil had changed hands. The
storm of explosive had been so great that towns composed of brick buildings in the district had
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been pounded by artillery unto dust; even today some of the main geographical locations in
the battle can only be discerned from the air. The soil is pink...
It is useful to digress a bit at this point. There is a subtle difference, as I see it, between causing
an opponent to collapse from great pressure and defeating an opponent through the use of superior tactics and strategy. As mentioned previously, Falkenhayn was interested in killing large
numbers of Allied soldiers, thereby engendering Allied collapse. This is not the same thing as
using tactics to dislocate an opponent, thereby disrupting his defenses and creating an unstable
situation for the defender, which in turn is exploited, and so on. This latter case is the same
type of fighting which characterized the Second World War. The attackers rarely attempted to
win the war in one stroke; rather they attempted to enlarge on a local success in order to make
a significant (strategic) gain, which in turn was exploited, leading to a still larger success which
in turn was exploited, and so on. Neither Falkenhayn nor his Allied counterparts ever showed
the inclination to use the principles of mass, maneuver, and mobility required to make the second type of warfare work; I therefore submit that those generals were not attempting to achieve
a breakthrough as modern strategists would define it.
Verdun was the virtual end of Falkenhayn's career. He was demoted and sent off to Rumania,
where, ironically, the German forces enjoyed considerable success; apparently, for all his errors, Falkenhayn had learned something about what would work tactically during the Great
War (although it probably didn't hurt that he had a subordinate named Rommel under his
command). At a higher level, the Germans had learned that the "big push" was not the way to
go. Strangely, the British and French had not. As already noted, the French earlier had counterattacked and had retaken, yard by bloody yard, the territory initially lost to the Germans at
Verdun. Falkenhayn's attempt to cause a moral breakdown of the French did not occur for another year, and while the German casualties were marginally less than the French, it was almost certainly the Germans themselves who suffered the most in the long run from the strategy
of attrition.
That same year, while the Verdun lunacy continued, the British prepared and executed their
own form of insanity, better known as the First Battle of the Somme. Fresh levies, called the
Kitchener Army, were brought over, apparently to avoid the problems posed by cynical veterans or to take advantage of youthful exuberance and naivete, or both. However all that may be,
the instructions were simple: at the command, the men would get up out of the trenches, and
walk across No Man's Land, with officers twenty yards in the lead. As absurd as that may
sound, that is exactly what happened. One group of four lieutenants organized a race in which
the winner would be the first to shoot his soccer ball into what "remained" of the opposing
German trenchline. 60,000 British casualties resulted on the first day! This insanity went on for
four months. Estimates vary, but it is commonly held that the British suffered one million casualties for a gain that could reasonably be expressed in yards. Deaths on both sides combined
surpassed 1.1 million, but the British and French got the worst of it (the term "casualties" includes wounded and missing men as well as men killed in action). A detailed study of the Battle of the Somme yields a picture of frustration. Given the state of unpreparedness of the Kitchener Army, the attack should never have been made. Historians are virtually unanimous in
roundly criticizing the Russians in 1917 for sending "armies" forward without rifles or boots,
but to send troops forward in battalions that were battalions in name only is a slim distinction
indeed. (Many of the Kitchener troops were gathered together in sufficient numbers, given one
officer, usually a second-rate one at that, and designated a battalion. This contrasts sharply with
the "old sweats" who had trained together, literally for years, and had numerous good officers
to lead them.) The plan to have the infantry follow the artillery barrage across No Man's Land
was probably the only plan that could possibly have worked, but there was sufficient evidence
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to show that it was not likely to work, as we shall see later. In the final analysis, the commanders knew what they were dealing with, and in any event had the final decision in their hands;
there was no great need to send those ill-trained volunteers into the meat-grinder.
General Joseph Joffre, the French supreme commander, was sacked, but General Sir Douglas
Haig, his British counterpart, was promoted. Joffre was finished; a peripheral front did not exist
for him as it had for Falkenhayn. Both governments, British and French, fell; new prime ministers were selected. The French had not become as enlightened as they appeared; Joffre's successor was a seemingly promising, though small-minded, man named Robert Nivelle, who
promised a "secret plan" to end the war. His plan turned out to be, in effect, "business as usual."
In fact, Nivelle's plan called for an attack only a very short distance from Verdun. When asked
how he would win, or at least turn the tide of, the war in the promised forty-eight hours, he
replied, "with violence, brutality, and rapidity." At least Haig demonstrated a modest ability to
learn; after the Somme he took his cues more or less from Prime Minister David Lloyd George,
who was, if not a great opponent of the Western Front and all that it entailed, at least a consummate politician who could tell which way the wind blew.
Nivelle continued with the same basic "strategy" as his predecessors: all-out frontal attack. The
British did the same, but their generals seemed less zealous and (relatively) more concerned
with not getting their men killed. Large numbers of French soldiers, however, mutinied, just as
vast numbers of Russian soldiers did. Unlike the Russian commanders, the French commanders, after initial attempts to suppress the mutineers (including some executions), soft-pedaled
the issue. The poilus (French frontline soldiers) eventually went back to their posts, with the
tacit understanding that further "offensive" action would not be required of them; they were
merely to hold on to what they had, and (presumably) wait for the Americans. French morale
was shattered, however, for the rest of the war, and, arguably, for the next twenty-five years. In
fairness, it should perhaps be pointed out that the French front-line units had developed tactics,
at least in an informal way, that resemble fire-and-movement tactics (tactics in which two
groups alternately advance in short rushes and support one another by firing at the enemy).
Unfortunately for the French, this half-way development did not yield a similar development in
higher-level thinking.
Tanks were first used en masse at Cambrai (20 November to 3 December 1917), where the
British intended to reach "the green fields beyond" -- No Man's Land. Over three hundred of
the mechanical monsters took part in the attack, but many suffered from mechanical failure.
Even so, the German defense line was rather quickly breached, since anti-tank weapons had
obviously not yet been developed. At a relatively light cost, the British gained six miles in one
day (more than was ever gained in the months-long Battle of the Somme). After this grand
achievement, they promptly stopped. No one, or at least no generals, on either side appreciated what had been demonstrated. Like the Germans at Second Ypres, the British now forfeited
a tactical coup for lack of sufficient reserves to exploit the temporary advantage; for, just as the
Canadians had done in 1915, the Germans quickly sealed the hole and the salient was reduced.
It is worth our while to look more closely at the strategic shortcomings of these battle plans.
We have seen how the Germans at Second Ypres opened a huge hole in the British lines, and
then promptly did nothing. At Cambrai, a similar thing happened. Even at the Somme, despite
the horrible carnage, there were still some local successes that could have been exploited had
the proper plans been laid in place. What is common to all these battles is that the planners
never had any troops available for exploitation of any local success. The commanders were set
upon the notion of bludgeoning the enemy's strong points, not with finding the "chinks" in his
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"armor." There were three divisions of cavalry at the Somme; they were never earmarked for the
battle. Instead, these formations, which could at least raid and maneuver against undefended or
weak rear areas, sat around and did nothing, despite the frequent talk on both sides of the line
about how to make a breakthrough so that cavalry could be turned loose against the enemy. At
Cambrai, there were troops that could have been used but were not. At Second Ypres, no extra
troops were available for exploitation. Even after years of study, I still find it difficult to imagine
what these respective commanders could have been planning and thinking about. At the very
least, it seems safe to say that these commanders did not completely think through their respective situations. Indeed, they seem to have been mentally hamstrung by a "battles last for one
day" way of thinking, for battles did indeed only last for one day up until and including Waterloo. But in World War I, the nature of the beast had changed. Despite anything they ever may
have said, the commanders continued on in the old way, forming their battalions in line and
moving out together, often leaving no reserves, or allotting strategic reserves to the task of making the breakthrough instead of saving those reserves for possible exploitation should a breakthrough result. To use an analogy from football, what good would a football offense be if it
used all its running backs to open holes in the opposing line? There would be no one left to
carry the ball...
Ludendorff and the Germans had their last great opportunity in 1918. The Kaiserschlacht offensive (really three offensives) began in March of that year. The Germans were planning on using
comparatively new tactics developed in Russia, during the capture of Riga, by General Oskar
von Hutier and Colonel Georg von Bruchmueller.
These tactics were essentially the reduction of weak points in the opposing line, as distinct
from the heretofore standard tactic of reducing enemy strong points. Machine guns were to be
used in the attack for the first time in the Great War. (I have seen paintings in military museums
depicting the use of the Gatling gun in the attack during the Spanish-American War; this was
therefore not a new idea). These attacking guns would suppress the fire of defending machine
guns, thereby allowing infantry squads increased opportunity for maneuver. An element of mobility and maneuver, even though on a small scale, would therefore be reintroduced to the
static front. Coupled with a short, extremely violent preparatory bombardment (drumfire barrage), along with the selective use of gas, the troops would depend on shock and surprise to
carry the day. Artillery barrages had heretofore been hours-long to days-long affairs that served
little purpose; if anything, the defenders were alerted. As we have seen, these barrages had little effect, but the drumfire barrage was intended merely to shock or daze the enemy, not to kill
him outright.
These shock troops, or Stosstruppen, were specially trained and equipped for speed and assault. They were not intended for reduction of secure enemy positions; that was left to the follow-up troops. The Stosstruppen were intended to penetrate and gain ground (a remarkable
change from Falkenhayn's "strategy" and "tactics"). Clearly, in fact, the Germans had made an
effort to break the deadlock by forcing the evolution of their tactics. The only failing was the
lack of understanding of the logistical requirements to exploit a rapid breakthrough; this is not
surprising since the commanders had demonstrated this logistical ignorance at the beginning of
the war. Indeed, the whole war is a demonstration of a lack of appreciation of logistics and the
movement and placing of reinforcements, of what would today be called "battle management."
Thus, at the Somme, the troops that were supposed to break through the German trenches were
carrying two days' rations (carrying food into battle is usually considered a foolish thing to do,
since it is heavy and exhausts the soldier prematurely; it takes up space that could be used to
carry ammunition, and so on), for there was neither the will nor the way to resupply them. One
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is tempted to wonder what the staff officers expected their men to eat after they had captured
the German positions...
The first new-style attack on the Western Front, code-named Operation Michael, began in the
latter half of March, 1918, the major effort falling on the link between the British and French
units in the line. It was this attack that showed the greatest promise, since the tactics used were
new to the British, who were required to make the largest effort to stem the German tide. The
French commander, Henri Phillipe Petain, was so distressed by this attack, as were his men on
the scene, that he told Haig that if the Germans pressed their attack any harder, he would have
to abandon the trench line and fall back on Paris. Had he done so, this would have given the
Germans the choice of either destroying the British Expeditionary Force or pursuing the French
to Paris; either course would likely have brought about a settlement of the war.
In the event, it seems that Ludendorff again lost his nerve as he had at Tannenberg; or else he
did not fully appreciate the ramifications of the strategy required to make the new shock tactics
fully successful. At what can only be termed the eleventh hour, Operation Michael was
thwarted. British actions, coupled with Ludendorff's hesitancy, saved the Allied situation.
Two more attacks followed, but these were less strong and less determined. While they gained
significant ground compared to earlier efforts by either side, Ludendorff's intention seems to
have been the disruption rather than the rupture of the Allied line (in fairness, it must be said
that merely disrupting the line had worked in Russia only a few months earlier). The Allies held
on, however, and, with the arrival of the Americans, the strategic balance shifted irrevocably to
the Allied side.
Leadership
The previous section was devoted to outlining the major actions on the Western Front in order
to suggest indirectly what I shall now suggest directly: faulty leadership was the immediate, and
most important, cause of the stalemate. While this assertion seems rather sweeping, I remind
the reader that I did not say leadership was the only cause, just the most important. In order to
make my case, I shall give evidence that is not strictly related to the history of World War I, but
rather is related to military principles.
While it is accurate and fair to say that technology was a major factor (some maintain that it
was the factor), I submit that leadership can mitigate the problems posed by enemy weaponry. I
am not alone; the noted historian and military expert James F. Dunnigan makes the same point
in his book How to Make War. To quote that work: "... motivation, leadership, training, and
equipment produce victory." Furthermore, Dunnigan states that: "... [leadership] can allow the
attacker to uncover the defender's weaknesses"; the implication is that by doing so, a military
leader can achieve victory.
It is useful to note that poorly trained and poorly led troops do not press attacks and take heavy
casualties as a consequence of their poor preparation. Since training is part of the leadership
function, it seems clear that the military hierarchy should take the lion's share of the blame for
the disaster of the First World War. Men will start fighting for any number of reasons, but they
will continue to do so and succeed only if they have confidence in their leaders, training,
equipment, and themselves.
The previous paragraph might seem to imply that all the troops on the Western Front were
poorly trained and led. To draw this conclusion would be to oversimplify. The most obvious
cases of poor training and leadership were found on the Eastern Front in the Russian and
Austro-Hungarian armies. On the other hand, varying degrees of training were received by the
troops who made up the armies on the Western Front. The troops with the best training would
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undoubtedly have been the "old sweats" of the British pre-war Regular Army. The men of the
German Army were a close second, and those of the French Army, on the whole, a fairly distant third. However, after the initial campaigns had taken their toll, the quality of training and
the quality of those who did the training declined. The Kitchener Army of 1916, for example,
assembled hosts of ill-trained men and sent them to the front with little in the way of preparation or support. The German levies of late 1918 fall into this category, as do the men of the
French Army of 1917. The French Army, it will be remembered, refused to attack in 1917, and
agreed only to defend its positions. It was only after the French leadership changed that the
French Army became willing once again to attack. In short, the generalization offered in the
previous paragraph must be applied with consideration of which army and which period of the
war is being discussed.
Throughout history, theorists have maintained that the most successful military leaders are
those who achieve their objectives without fighting and destruction. While this may seem obvious, it is not always so. The side that shows superior leadership will usually win; this leadership need not be Hannibalic in its quality, but merely demonstrably superior to that of the enemy side.
It seems obvious that, as a Vietnam-era veteran, I strongly favor the leadership explanation,
since I was close to an environment similar to the one I described earlier. It is only fair to the
reader for me to declare my views, since part of the study of history is the determination of an
author's bias. I have advised you of mine, but I am not alone; I shall now suggest that Mr.
Dunnigan's assertions about successful theorists and their espoused principles throughout history are in fact accurate.
The earliest military theorist of note is the Chinese thinker Sun Tzu. The exact identity of this
pre-Christian figure is not certain; indeed, it is not clear whether "he" was one man or more
than one. What is certain is that a body of writing attributed to "him" exists and is the basis of
the military theory used by such historical figures as Mao Tse-tung.
Sun Tzu (hereafter I shall refer to him as if he were indeed one man) was a writer of military
strategy who also advised the Chinese emperor(s) of his day. Some of his principles follow:
"Victory is the main object of war ... delay ... [means] morale [is] depressed."
"[When leadership morale diminishes] ... advisors (that is, leaders) ... [will do a poor job]."
"Do not put a premium on killing. To subdue the enemy without fighting is the acme of skill.
Capturing [the enemy] is better than killing [him]. Attack first the enemy's strategy, second his
alliances, third his army, and lastly his cities (or his strong points)."
"[The leader who makes] fewer mistakes will win."
While the last may seem obvious, it is not always so in practice. One last quotation from Sun
Tzu is of a slightly different slant:
"[The leader of a] martial host [controls its] morale."
The reader should be able to apply the quotations above to some or even all of the events that
were laid out earlier and draw some logical conclusions. The leaders, except for the German
ones in 1917 (Riga) and 1918 (Operation Michael) did not adhere to the order of attack specified by Sun Tzu, but rather attacked constantly the defender's strong points. The leadership on
both sides suffered loss of personal morale at one time or another (we have seen as much), and
in the case of Ludendorff and the Germans, at a critical time; this circumstance affected their
performance and the destiny of their commands and of the nations they served. While in 1914
the leaders on both sides talked of being "home before the leaves fall," even after the deadlock
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had begun, virtually no leaders seemed truly interested in, or capable of, creating a quick resolution to that deadlock. Morale certainly suffered on the "home front" and among the front-line
troops as well. The works of Sun Tzu were discovered before this century; that is to say, the
soldiers of the nineteenth and early twentieth century should and could have studied them.
Another prominent historical figure who wrote extensively on the art of war was the Soldier
King, Frederick the Great of Prussia (some historians deny Frederick the Great the title of Soldier King, awarding it to his father instead). As an enlightened despot, he was interested in furthering his country's interests, and the interests of his army were intertwined with those of Prussia. Frederick was interested in winning his wars more than in fighting them. His wars were
characterized by the use of maneuver and mobility in order to attain superior mass at the critical time.
Frederick wrote that "the ... general ... has more influence..." By 1914, nationalism and its emotional appeal had eroded Frederick's admonition to avoid unnecessary war ("A general ... will
never give battle if [it is] not important..." and "Never commence hostilities unless you have the
most glowing prospects for [success]..."). National and personal vanity, animosity, and hate
must certainly be counted among the conditions leading to the Great War, and the lack of such
leadership as Frederick considered essential was a cause of the deadlock.
Probably the most famous saying regarding leadership and morale is attributed to Napoleon
Bonaparte: "The moral is to the physical as three is to one." Napoleon knew that morale is cultivated by leaders; it may originally come from the troops themselves, but like glory, it is fleeting. The commander is responsible for the continued moral well-being of his men. Wellington
and Blücher, Napoleon's adversaries at Waterloo, are both said to have remarked that Napoleon's presence on the battlefield was worth an additional 40,000 men.
One could find innumerable sayings on the importance of leadership in war, but I think some
of the most illuminating opinions are those of General John J. "Black Jack" Pershing. He noted
that American troop units had excellent morale. Furthermore, he pointed out that "a competent
leader can get efficient service from poor troops ... an incapable leader can demoralize the best
of troops." General Pershing was adamant about maintaining American divisional integrity (the
policy of keeping large American fighting units, that is, divisions, together, instead of breaking
them up into small fragmentary units for the purpose of reinforcing exhausted British and
French units). His goal in this was to preserve the confidence and morale that comes from
working closely with men one has trained with and is acquainted with; indeed, Pershing was
successful in keeping all American divisions together to form an autonomous American field
army. Pershing believed that effective high command was a requirement not met by the European Allies; vigor, stamina, and leadership were required of higher-level commanders, and the
British and French commanders did not exhibit those qualities. In pressing his point, Pershing
noted that younger men had higher commands in the United States Army; moreover, many
Allied, in other words, non-American, commanders were merely figureheads.
Even General Pershing was not the source of a revolutionary answer to the deadlock. In noting
the British "victory" at Cambrai, he felt that the front was too narrow, considering the depth of
the objectives. In noting the "successful" (!) offensive on the Somme, he contrasted the British
actions with those of the French at Verdun, which he considered a failure. All in all, however,
Pershing seems to have been one of the better top commanders on either side.
On the tactical level, Pershing noted that "British and French troops are not trained for open
warfare," also that the "French thought open warfare visionary," that is, a fantasy. A French
General Headquarters memorandum dated 1 May 1918 stated that "Americans dream of operating in open country after having broken through the front. This results in too much attention
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being devoted to this form of operation." Apparently trench-foot was beginning to seep into the
brains of the Allied commanders at higher levels. While the French may have learned through
the baptism of fire how to attack at the company level, and the Americans had not yet done so,
the Americans demonstrated flexibility in their thinking; they avoided the hidebound thinking
that the Allied leaders demonstrated at the high levels of the military hierarchy.
Pershing stressed the use of the machine gun for the attack (as did the German Stosstruppen in
1917-1918 and the Americans in the Spanish-American War) and the use of artillery and infantry in close support of one another despite the difficulty of such efforts. Pershing was apparently
aware of the value of combined-arms tactics. He used heavy artillery against sensitive points
(road junctions, railheads, communications, and so forth) rather than against trenches. Pershing
seems to have learned most of the grand tactical lessons needed for success at the point in history represented by the watershed year of 1918.
B. H. Liddell Hart asserts throughout his book Strategy that the only successful military tactics
are those which use an indirect approach; indeed the purpose of his book is to define and illustrate the indirect approach and its successful implementations throughout recorded military
history. We have seen some of his opinions already; suffice it to say that Liddell Hart deplored
most of the tactics and strategy used in the Great War, specifically and especially the big-push
attacks and the direct attacks on fortresses. It was Liddell Hart's experiences as a captain on the
Western Front that prompted him in the long run to write the book. He felt that the tactics used
by the Stosstruppen came near to an indirect approach.
The aforementioned author James F. Dunnigan is straightforward in his conclusions on leadership, pointing out that leadership can overcome all reasonable obstacles, including those presented to the leaders during World War I.
Recently (September-November, 1985) the local public television station aired a series by
Gwynne Dyer, a military historian. While this series was devoted to the issue of war and peace
in general, a significant portion dealt with World War I in particular.
Dyer maintains that warfare has essentially remained the same throughout history, and Sir John
Hackett, a noted British military figure who was interviewed as part of the presentation, added
that the soldier has also been the same from the Stone Age until today. The issue being raised
was that of morale. Winning depends on discipline and morale, Dyer said, and the object of
military forces is to break down the other side's control (in other words, its discipline and morale).
During one sequence showing the British high command, Dyer noted that "They (the British
generals) aren't wicked men; some of them aren't even stupid." Let me put this flippant but
somewhat appropriate quotation in context: Dyer was pointing out that the lessons of the
American Civil War had been lost upon the European military and political leaders. He indicated that even the trenches were not a plan of the leadership to keep the men alive; rather
they evolved from the efforts of the men themselves. Dyer says of the strategy of attrition: "The
Allies had more men, so when all the Germans were dead, they would still have some men
left, so they would have won." Hyperbole perhaps, but an interesting comment on the somewhat Clausewitzian Allied frame of mind (Karl von Clausewitz, the eminent nineteenth-century
military theorist, is perhaps best known for his writings that called for success through the use
of "blood and iron." Clausewitz is perhaps also the most misunderstood and misread military
theorist. Clausewitz was a proponent of military action in order to achieve diplomatic ends, but
rampant nationalism in the second half of the nineteenth century caused readers to pervert his
assertions into a doctrine of slaughter and struggle unto death. The results of those interpreta-
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tions were seen at Verdun and the Somme. In spite of experience, many readers interpret his
writings in the way they were interpreted in the late nineteenth century).
With one million killed on all fronts in the first two months of the war, the scale of warfare had
clearly changed. The changes in weaponry had been revolutionary, in fact corresponding to
the Industrial Revolution. But the strategy and tactics of war as practiced in Europe had not
even begun to change significantly. It is easy for us, with our 20/20 hindsight, to point the finger of blame at the leadership and shout "villain!," but we must remember that these men were
humans with human failings. As a military veteran, I am especially prone to this behavior; the
leaders in question in fact should have changed their methods but failed to do so or, worse, did
not even try. Perhaps they were mostly just mediocre men thrust into an extraordinary situation, victims of a system that rewarded social position or length of time-in-service rather than
ability. Under these circumstances the deadlock in France was, perhaps, inevitable.
Afterthoughts
It has been nearly three years since the original version of this paper appeared (it is now August, 1988). As with so many other historical views, and so many other papers one writes, one
is tempted to revise. So it is that the sins of revisionism shall be visited upon this paper.
I am not tempted to retract any major conclusion of three years ago. Indeed, those three years
of intervening study have convinced me that the leadership argument is inherently correct.
What I may have done, in typical American fashion, is to overstate the case. I have been accused by some of being "unhistorical," inasmuch as I called some of the leaders in question
"stupid," or "small-minded," or the like. For that "unhistoricalness," to coin a word, I apologize,
but I do not apologize for still feeling that the idea expressed by these words is accurate. To
send men unceasingly in waves to certain death is at best foolish and at worst criminal. By contrast, my harshness in labelling such men as "stupid" or "small-minded" pales to insignificance.
One who has seen combat at first hand is usually at pains to express it and explain it to others.
How much more is this true of someone like me who knows combat only at second hand? I
have tried to explain the actions of the leaders in a brief, succinct, and accurate way, while at
the same time conveying the responses the story of the Western Front evokes in me. Topics that
deal with dead soldiers, whose lives are or were frequently wasted, provokes powerful responses in me that seem more irrational than rational. So to those who have criticized this paper for its emotionalism, I apologize.
But the way the Great War was conducted on the Western Front can evoke little but moral outrage. As the moth is attracted to the flame, the military historian is drawn to the topic because
of its fascinating allure, but upon "reaching" it, finds himself disgusted with the horror of it all.
The human mind is often at pains to imagine some of the things we historians sometimes talk
about without thinking. Imagine, just for a moment, what must be required to kill 20,000
young (and some not so young) men in the space of a few hours, and wound some 40,000
more. Then extrapolate that "thing" out over several such days. One is left either with a mind
numbed by the enormity of the horror, or with a more complete understanding of the Great
War. Sad to say, usually it is the former...
Perhaps in some places I have oversimplified. Further study has certainly yielded additional
factual details which tend to destroy generalizations. For instance, even the Battle of the
Somme could have yielded a breakthrough (though at what price?) but the conventional wisdom remains that the battle was among the most foolish of the war. The Brusilov Offensive on
the Eastern Front took place at about the same time, and cost the Russians between a half million and a million men (depending upon whom you read), and was (and often still is) hailed as
a success. The only essential difference between it and the Somme was that it captured a great
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deal more territory, but to no avail, for no "breakthrough" resulted... In the final analysis, I still
stand by the generalizations I have offered, for if one never generalizes, one will never write
any history, though I recognize that additional detail might have illuminated the issue more. In
that spirit I have added to the main text a passage here and a paragraph there, but my primary
response is to offer the following "appendix."
Gee, I Wish I'd Said...
A number of questions were posed to me when this paper was first presented to a graduate
seminar almost three years ago. Surprisingly, many of those questions and the resulting constructive criticisms revolved not around my conclusions as such but around some of my assertions and observations. One of the great errors a historian can commit is to assume that his
reader will automatically envision exactly what he describes; I made that assumption too often
three years ago. What follows are the answers to some of the questions that were raised at the
first presentation, with the thought that the present reader may be tempted to ask the same
questions.
The common notion of "trench warfare" and trenches themselves is often a confused one.
Readers who have grown up watching television and war movies may be tempted to think that
a trench is nothing more than a shallow ditch, not unlike the shallow irrigation canals that lace
parts of Fresno County, California. This image is, of course, a false one. The first entrenchments
in October 1914 were, to be sure, merely "scrapes" in the ground, to use the contemporary
term, only large enough and deep enough for a man to lie in and fire his weapon. By the time
the lines had become static, local commanders, as local commanders are wont to do, instructed their men to "improve their positions." If nothing else, it gave the men something to do.
However that may be, this "improvement" eventually yielded virtual earthen fortresses, in some
places thirty feet deep (such positions were created using mining techniques). When an author
speaks of "dugouts" he is not speaking of the little roofed enclosures just outside the foul lines
of a baseball diamond, but of elaborate underground rooms with electric lights or candles,
rough furniture, and other small comforts.
Generally speaking, the German trenches were the best, partly because they had the advantage
of choosing the best (and therefore, usually the highest and, literally, the driest) ground. The
French trenches were often very poorly maintained, which corresponded to the treatment of
the French soldier by his officers. The British and, later, American trenches were a fairly close
second to the German ones in quality. Disease was a problem in the trenches, and especially
the afflictions related to wetness (such as trench foot, athlete's foot, any disease carried by
mosquitoes in summer, and colds and pneumonia in winter); for drainage was a problem, especially in British parts of the line (the Somme Valley, for instance, was an especially marshy
and miserable section of the Western Front). Here again the advantage the Germans had in
choosing the high ground indirectly and accidentally yielded a positive result.
Trenches were dug in a zig-zag pattern to prevent the enemy from firing up and down their
lengths should he reach a trench after making it across No Man's Land (and the attacking enemy reached the defenders' trench lines much more often than we might have been led to believe). Another purpose behind this arrangement was the creation of interlocking zones of fire,
also called crossfires, so that each section of trench could not only defend itself, but also support one or two adjacent sections. The trenches were usually constructed in three or four separate lines, each one a hundred to four hundred yards behind the one in front of it, yielding a
fortified zone sometimes as much as a mile deep. The lateral trench lines were connected by
"communications trenches" that ran roughly perpendicular to the fighting trenches, so that
troops or messengers moving forward or rearward would be less exposed to enemy fire.
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Another question frequently asked related to artillery. It is easy to convey with film or photographs how preparatory bombardments functioned, but the use of artillery in the defense is
usually not widely understood, if the reader is familiar with such things at all.
First of all, the defenders' artillery batteries would "pre-register" their fire. This means that any
given artillery position would know the proper adjustments to make in its aiming mechanisms
in order to hit any given portion of the field in front of it. Upon a pre-arranged signal, or
through the use of telephones, the batteries would fire at these unseen targets and adjust fire as
needed. To be sure, this technique was much refined by the time of the Second World War,
but a workable version existed in the First. Given that pre-offensive bombardment was so ineffective, this defensive use of artillery against attacking troops is the only way to explain the
high proportion of deaths caused by artillery in World War One.
Second, there was another type of fire mission used by artillery, called "counter-battery fire."
This was achieved by triangulation on an enemy's own artillery positions. By observing muzzle
flashes or listening for the direction of the opposing guns, a rough idea of where the enemy
positions were could be gained. At this point, the data would be compared to other data from
different positions along the line and friendly artillery would fire gas or conventional shells at
the suspected enemy artillery positions. Sometimes this worked very well. Sometimes it didn't.
My assertion regarding the trench gun and its superiority to sub-machineguns raised a number
of questions and challenges. The reason why this weapon is superior to even the much-vaunted
Uzi and Schmeisser (the type that every German soldier seems to carry in the movies) is that it
fires nine pellets in a small group for a great distance (about fifty yards; in this context, "distance" refers to what military people call "effective range") because of its relatively long barrel.
Of course, the sub-machineguns can theoretically fire more missiles, but they are more affected
by recoil and can therefore not place a group of nine projectiles in as small a "shot group" as
the trench gun can. After only one or two bullets have been fired, the muzzle begins to climb,
or "creep" (move erratically in a random direction). Soldiers today are instructed to fire bursts of
no more than three bullets to achieve maximum effect (or, in other words, the greatest number
of well-aimed shots). The size of a 00 shotgun pellet is about the same as that of a submachinegun 9mm bullet, and the trench gun can fire at least seven such rounds in quick succession, yielding 63 pellets, roughly twice the maximum magazine capacity of the Uzi or
Schmeisser. As a final testament, the reader should realize that United States soldiers in Viet
Nam frequently exchanged (usually unofficially) their M-16 and M-14 rifles, despite their superior range and large magazine capacity, for Winchester shotguns, which differed from the
World War I trench gun only in that the Vietnam-era Winchesters could usually load ten cartridges instead of seven.
Another question frequently asked was related to suggested solutions to the deadlock. It is, after
all, very easy to cast stones at the actions of men long since dead without offering alternatives.
These are some of my ideas on the matter.
First, the concept of the "big-push" daylight attack should have been abandoned after the first
attempt. Any rational person could have seen that the method yielded no fruit, and that continued execution of these attacks could only result in the destruction of the battalions carrying out
the attacks. The British and French had seen the results of the trench warfare of the RussoJapanese War in 1905, though from a distance, and had seen, on a smaller scale, the deadly
effectiveness of the relatively primitive Boer armies in the Second Boer War at the turn of the
century. Indeed, many of the important commanders of World War I had been subalterns or
middle-level commanders with an opportunity to observe the carnage up close in the Boer
War. There can be no excuse for not having attempted to find a solution to the obstacles posed
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by modern weapons in the hands of determined defenders to the successful prosecution of land
offensives in 1914-1918.
Second, the day attack could have been abandoned in favor of night attacks in which the attackers would creep across No Man's Land right up to the enemy's trench line. This method
was used to great effect in the Soviet Union in World War II, at least when the Soviets were not
attempting to use their attacking infantry in a "shock" role. As an experienced infantry soldier, I
can unequivocally state that this method works. Anyone who has read about or was in the Viet
Nam war can attest that such a method works. I would much rather crawl for a mile across No
Man's Land in the dark, no matter how fatiguing such an exertion is, than rush (or walk, as was
tried at the Somme) across it in the light of day. And one should remember that the trenches
were often much closer to each other than a mile; at Vimy Ridge the Canadians and Germans
were within conversational distance of one another.
To be sure, there were night trench-raids, but major night attacks were not widely used. Many
soldiers who were wounded in the daylight attacks were forced to fall into a shellhole in No
Man's Land to await nightfall so that they could creep back to their own trenches in the dark; it
would seem, therefore, that some officer might eventually surmise the tactical value of darkness. And the point remains that the generals did not attempt to arrive at a solution to the deadlock problem, but rather relied, in the end, on foolish and inexperienced American troops to
carry out their only marginally refined daytime attack tactics.
Third, the British, especially after the Battle of Jutland in 1916, held command of the sea. How
much more true was this after the entry of the Americans, with their powerful navy, in 1917? In
any event, the execution of a seaborne attack was highly feasible. Of course, the problems of
Gallipoli come to mind, but Gallipoli hardly stands as a testament to the highest level of Allied
military and naval prowess (it is hard to think of any military-naval operation being prepared
and supported more poorly than was the Gallipoli campaign; surely the British Admiralty could
have done better a second time, especially since a target on the North Sea would be much
closer to Britain). Indeed, what might be called a "Gallipoli syndrome" seems to have affected
British strategic thought even into the Second World War, in which the highly promising Anzio
operation failed to break the deadlock in the Italian campaign, which so much more than anything else resembled the Great War on the Western Front. In any event, such a maneuver was
possible in World War I, and highly feasible.
Fourth, one is tempted to ask why the machine gun was not used in the attack. The Germans
did so, or at least their Stosstruppen units did; those units were in action on the Eastern Front as
early as 1916. Why did the British and French take so long in beginning to use the machine
gun on the attack, especially when they had American experience in the Spanish-American
War as an example?
Of course, the Germans did solve their problems, or nearly did, by adopting new tactical
methods (these methods caused the Russian and Rumanian surrenders, caused the Italians to be
neutralized nearly until the end of the war, and very nearly caused, as we have seen, a French
collapse). The British and French (perhaps inevitably) adopted a technological solution--the
tank. But the British and French did not follow up their advantage with proper strategic reserves, or with proper logistical planning; nor did the Germans. For instance, the muchneglected cavalry could have been used to exploit a breakthrough by the Germans, the British,
or the French on the rare occasions when initial tactical success was achieved, but such forces
were never in place. On the other hand, one of the chief reasons why the German attacks
broke down in 1918 was that the soldiers stopped to loot Allied supply stores, since the Allied
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rations were so much better and more plentiful than the German ones; the gorged, and in some
cases besotted, troops were then unable to continue.
Smoke shells could have been used more, making the trip across No Man's Land less dangerous; for after all, the race in trench warfare was to see if the attacker could cross No Man's
Land faster than the defender could emerge from his dugout and man his machine gun positions--smoke instead of high-explosives might have yielded better tactical results.
I suppose the list of possibilities could go on and on. Suffice it to say that there were alternatives that the hidebound Allied (and to a much lesser extent German) generals could have tried
instead of using the same methods over and over. There was certainly painful recent experience from which they should have learned (the aforementioned Boer and Russo-Japanese
Wars) but did not.
I had originally intended to include in this appendix some anecdotal material, intended to further round out the picture of the Western Front by relating some stories showing that the Germans were not the only ones to commit "atrocious" acts, and to otherwise illuminate the subject of trench warfare, but upon further examination I realized that the extra material was too
lengthy. Instead I would like to suggest a few books which are interesting since they convey
much of what it was like to have been in these battles. One cannot truly say that one has studied the First World War thoroughly until one has absorbed the story of trench warfare. Some
parts of the story are so brutal as to be, in a strange way, awe-inspiring. It has been demonstrated, at least for the British Expeditionary Force, that to leave for the front in 1914 was the
equivalent of a guarantee of death or maiming; few men who marched away in 1914 returned
without severe physical scars.
In any event, one should read The Face of Battle by John Keegan; it is a comparative study of
the battles at Agincourt, Waterloo, and the Somme. Also, Lyn MacDonald's The Somme is
worth reading. Literary volumes such as Erich Maria Remarque's All Quiet on the Western
Front, while not "historical" in the strictest sense, nevertheless convey important material to the
reader. The British poet, Siegfried Sassoon, and others, wrote numerous memoirs which give
the reader a look at personal stories of officers and private soldiers (it should be remembered
that the Great War was the first European war of note to include a highly literate group of men
in the rank-and-file; hence the large volume of very readable material). General studies such as
Eye-Deep in Hell, by John Ellis, portray the realities of trench warfare so vividly as to be sometimes emotionally exhausting to read. Obviously the list is endless, and one could not possibly
read all that has been written about the Great War. But to fully understand European and
American intellectual and political history in the twentieth century, one must at least read some
of these books.
22 APRIL, 1915: THE USE OF POISON GAS WILL IRWIN, CORRESPONDENT FROM THE NEW
YORK TRIBUNE, APRIL 25, 26, 27, 1915.
The German Army dispersed chlorine gas over Allied lines at Ypres on 22 April 1915.
North of France, April 24. -- There is no doubt that the action which has been proceeding
about Ypres for a week, and which will probably be known in history as the second battle of
Ypres, is the hardest and hottest which has yet developed on the extreme Western front. Indeed, no battle of the war has developed so much action on so concentrated a front. It is the
third desperate attempt of the Germans since this war began to break through the combined
British and Belgian lines and take the all-important City of Calais.
This series of attacks and counterattacks running along the whole line, developed into that
general attack on the British lines with Calais for objective which the Germans probably had
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been planning ever since matters began to come to a deadlock in the Carpathians. The Germans, making full use of their artillery, launched infantry attacks in their old manner -- closelocked. As formerly, the British and French slaughtered them heavily with machine-gun and
rifle fire. Then on Thursday the Germans suddenly threw in that attack its asphyxiating bombs,
which will doubtless become famous in this war. It succeeded in breaking the line of French
near Bixschoote, although not to such an extent as the Germans claim in today's communique.
The nearest British support was a part of the Canadian contingent. Fighting with desperate
bravery, the Canadians succeeded in recovering part of the lost ground. They are still at it today. On a favorable wind the sound of cannonading can be heard as far away as the coast
towns.
The nature of the gasses carried by the German asphyxiating shells remain a mystery. Whatever
gas it is, it spreads rapidly and remains close to the ground. It is believed not to be specially
deadly -- one that rather over powers its victims and puts them hors de combat without killing
many. Its effect at Bixschoote may have been due to panic caused by the novelty of the device.
Its composition and manner of discharge are probably no mystery to the scientific artillerymen
of the Allies. That such devices might be used in war has been known for a long time, but the
positive prohibitions of The Hague Conference have prevented the more civilized nations of
Europe from going far with experiments in this line.
NEW YORK TRIBUNE, APRIL 27, 1915
Boulogne, April 25.-- The gaseous vapor which the Germans used against the French divisions
near Ypres last Thursday, contrary to the rules of The Hague Convention, introduces a new
element into warfare. The attack of last Thursday evening was preceded by the rising of a cloud
of vapor, greenish gray and iridescent. That vapor settled to the ground like a swamp mist and
drifted toward the French trenches on a brisk wind. Its effect on the French was a violent nausea and faintness, followed by an utter collapse. It is believed that the Germans, who charged
in behind the vapor, met no resistance at all, the French at their front being virtually paralyzed.
Everything indicates long and thorough preparation for this attack. The work of sending out the
vapor was done from the advanced German trenches. Men garbed in a dress resembling the
harness of a diver and armed with retorts or generators about three feet high and connected
with ordinary hose pipe turned the vapor loose towards the French lines. Some witnesses maintain that the Germans sprayed the earth before the trenches with a fluid which, being ignited,
sent up the fumes. The German troops, who followed up this advantage with a direct attack,
held inspirators in their mouths, thus preventing them from being overcome by the fumes.
In addition to this, the Germans appear to have fired ordinary explosive shells loaded with
some chemical which had a paralyzing effect on all the men in the region of the explosion.
Some chemical in the composition of those shells produced violent watering of the eyes, so
that the men overcome by them were practically blinded for some hours.
The effect of the noxious trench gas seems to be slow in wearing away. The men come out of
their nausea in a state of utter collapse. Some of the rescued have already died from the aftereffects. How many of the men left unconscious in the trenches when the French broke died from
the fumes it is impossible to say, since those trenches were at once occupied by the Germans.
This new form of attack needs for success a favorable wind. Twice in the day that followed the
Germans tried trench vapor on the Canadians, who made on the right of the French position a
stand which will probably be remembered as one of the heroic episodes of this war. In both
cases the wind was not favorable, and the Canadians managed to stick through it. The noxious,
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explosive bombs were, however, used continually against the Canadian forces and caused
some losses.
D 1916:
Continued Stalemate German success in 1915 in thrusting the Russians back from East Prussia,
Galicia, and Poland enabled Germany to transfer some 500,000 men from the eastern to the
western front for an attempt to force a decision in the west during 1916.
D1 Verdun and Somme
The German plan, as worked out by Erich von Falkenhayn, chief of the general staff of the
German army, was to attack the French fortress at Verdun in great strength in an effort to
weaken the French irretrievably by causing the maximum possible number of casualties. The
Allied plan for 1916, as laid out by commanders in chief, Marshal Joffre of the French army
and General Sir Douglas Haig of the British, was to attempt to break through the German lines
in the west by a massive offensive during the summer in the region of the Somme River. The
Germans began the attack on Verdun, on February 21. After bitter fighting the Germans took
Fort Douaumont (February 25), Fort Vaux (June 2), and the fortifications of Thiaumont (June
23), but did not succeed in capturing Verdun. (It was here that General Henri Philippe Pétain
gained prominence as the "hero of Verdun.") Because of the severe losses in the battle, the
French were able to contribute to the Allied offensive on the Somme only 16 divisions of the
40 originally planned; the offensive, which began on July 1 and continued until the middle of
November, consequently was largely in the hands of the British. They succeeded in winning
about 325 sq km (about 125 sq mi) of territory, but the drive did not bring about a breakthrough. The First Battle of the Somme marked the earliest use of the modern tank, deployed by
the British on September 15 in an attack near Courcelette. From October to December the
French staged a counterattack at Verdun and succeeded in recapturing Forts Douaumont and
Vaux (November 2), restoring the situation that had prevailed before February. In August Hindenburg replaced Falkenhayn as German chief of staff with General Erich Ludendorff. In December General Robert Georges Nivelle succeeded Joffre as commander in chief of the French
armies in the north and northeast.
HAIG: WAS HE A GREAT CAPTAIN? BY GEOFFREY MILLER
"Good morning, good morning!" the General said,
When we met him last week on the way to the line.
Now the soldiers he smiled at are most of 'em dead,
And we're cursing his staff for incompetent swine.
"He's a cheery old card" grunted Harry to Jack,
As they slogged up to Arras with rifle and pack.
But he did for them both with his plan of attack.
The general referred to in Sassoon's searing verse was certainly not Sir Douglas Haig; nobody
could have ever called him a "cheery old card" because Haig was noted for his reserved and
remote manner.
However this verse does illustrate the prevailing British opinion of military leadership in the
years immediately after the War. Haig always attracted controversy concerning his competence, his detractors include De Groot(1) and Winter(2), whereas his supporters include the
eminent historian, John Terraine(3) and Marshall-Cornwall(4).
The purpose of this paper is to argue the case that Haig was not a great Captain. It is maintained that, no matter how well he may have performed as C.in C. of the British and Dominion
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forces in 1918, his plans of attack unnecessarily 'did for' hundreds of thousands of his soldiers
in the great battles of the Somme and Passchendaele (Third Ypres). Any discussion on Haig's
competence must, therefore, consider aspects of the management of his battles and, in particular, these two.
Haig's plans were derived from the plan that he conceived for the battle of Neuve Chappelle
and he used this basic plan of battle throughout the war(5). His plans were always very painstaking, timing was meticulous and critical and as much prior intelligence as possible was obtained by aerial observation and photography, ground patrols and interrogation of prisoners.
The battles always started with an artillery bombardment to destroy the German barbed wire in
front of their trenches and this preceded a massed infantry attack over No Man's land on the
German trenches. The bombardment, he hoped, would kill or demoralise the German front
line troops with their machine guns and allow his men to cross safely to the German trenches
before they were exposed to the deadly fire.
Unfortunately, his plans did not allow for those unavoidable mistakes that always occur during
the confusion of battle. Specifically they failed to allow for the frequent occasions when the
artillery failed to cut the barbed wire and to disable the German heavy artillery situated well to
the rear, often out of range of the British guns. The result was that those hapless men who were
facing uncut wire were funnelled into zones that were enfiladed by German machine guns and
exposed to pre-registered shell-fire.
General Hackett wrote of the Battle of Loos(6): "...Then twelve battalions, 10,000 men, on a
clear morning, in columns, advanced up a gentle slope towards the enemy's trenches. The wire
behind which these lay was still unbroken. The British advance met with a storm of machine
gun fire. Incredulous, ... the Germans mowed the attackers down, until, three and a half hours
later, the remnants staggered away... having lost 385 officers and 7,681 men. The Germans as
they watched the survivors leave, stopped firing in compassion. Their casualties at the same
time had been nil."
The unavoidable delays resulting from such slaughter inevitably caused disruption to Haig's
precise plans because no provision was made for them. The Germans were given time to regroup, causing the British to suffer further failure of their attacks. Significantly, Haig's usual reaction was to order them to advance again! They did so, even though this led to almost certain
death. At Neuve Chappelle, a relatively small battle, the British lost nearly 17,000 casualties,(7)
at the Somme they lost about 420,000.(8)
The Battle of the Somme: Haig was ultimately responsible for the planning and direction of the
series of battles known collectively as the Battle of the Somme. Despite his awareness of what
had gone wrong at Neuve Chappelle, and again at Loos, and the failure of these battles, Haig
still repeated the same principles of attack, although on a vastly greater scale. Yet again, he
made no allowance for the failure of the artillery to cut the wire and completely misjudged the
capacity of the Germans to survive his artillery bombardments, despite the tremendous bombardments they were still able to fire their machine guns and cause immense carnage on his
unprotected men. One important reason why the bombardments were not successful was because about one in three of the British shells failed to explode! Haig was aware of the deficiencies in his ammunition but failed to realise how seriously this affected the effects of the shelling.
The Germans had built a complex system of defence in depth, involving a strongly fortified
front line with deep dugouts where the defenders could shelter, safe from all but a direct hit
from a very large shell. When the barrage eventually ceased, they were able to emerge and set
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up machine guns before their attackers could reach them. On the first day of the battle of the
Somme, The British soldiers were actually ordered to advance in line abreast into their fire!(9)
The unavoidable result was 61,816 casualties on the first day of the Somme, July the 1st,
1915.(10) and even Terraine admits that there was a great tactical blunder. (11) Yet, on the first
day of the battle, Haig was quite unaware of the magnitude of the disaster; Terraine wrote:
"What is difficult to grasp, from the vantage of today, is how a disaster of such proportions
could fail to be instantly apparent. Yet such was the case. It is perfectly clear from Haig's Diary
that he had no sense whatever, on July 1st, of the catastrophe that had befallen his army."(12).
Even at the end of July 2nd, according to his diary, Haig still believed that the losses had been
40,000 in two days, instead of over 61,000 in one day.(13)
Importantly, in view of what was to happen at Passchendaele, Haig made no allowance for the
weather and this deteriorated into rain on July 7th, turning the chalky battlefield into a swamp
and the trenches became knee-deep in mud. Despite this, the main assault was planned for the
14th. July. There was an initial success but, because Haig had allowed himself to be persuaded
by Joffre that operations should continue as a 'Battle of Attrition' to wear down the German
forces, the battle then bogged down and dragged on for a further four months.
The ostensible reason for this 'Battle of Attrition' was to divert the Germans from Verdun but
Brigadier General Marshall did not agree. He considered that Haig "...by self hypnosis, became
convinced that the Somme was an open-sesame to final victory. He would cut the German
army in two, and do it in one day. He would have the Cavalry Corps under bit and ready to
charge through the shell-cratered gap and 'into the blue' as proof of his intent to crush the enemy... By February 11 his plan was tentatively set. By late April a great part of Europe knew
that the British were organising the Big Push...but by then the German attack on Verdun had
slackened. ...When General Fritz von Below ...reported that he sensed that a great attack was
coming, Falkenhayn told him it was a wonderful hope. Having splintered his own army by
throwing it against the immovable object (Verdun), Falkenhayn couldn't imagine that the enemy would be equally stupid.".(14)
Bean, the Australian historian, like Marshall, was also convinced that Haig never really intended to fight a battle of attrition and originally intended a breakthrough battle. He wrote: "A
general who wears down 180,000 of the enemy by expending 400,000 men...has something to
answer for(15)" and "Haig failed to break through, and, because he failed, his literary supporters have argued that it was never his main purpose; if that were true - which it is not - the most
comprehensible reason for his conduct of the battle would disappear".(16)
Haig's losses now numbered hundreds of thousands but he still insisted on continuing the
slaughter, despite the rain and the freezing conditions at the beginning of October. Although he
was frustrated by the dreadful weather and the stubborn German defences, he still would not
abandon the now useless and unwinnable conflict. The battles of the Somme did, indeed, wear
down the enemy and cause them immense loss, but the British and Dominion forces, too, suffered horrendous losses, fighting under the most appalling conditions. Marshall wrote that:
"...this hideous turmoil must be recorded as the most soulless battle in British annals. The
Somme deteriorated into a blood purge rivalling Verdun. It was a battle not so much of attrition
as of mutual destruction, and it continued until November 18." (17)
The Battle of Passchendaele: Haig had long advised attacking the Germans at the Passchendaele Ridge as, if he could break through, then the Flemish ports with their submarine bases
could be captured and the Ruhr itself would be threatened. The war could even be won.. Unfortunately, the Germans, who were not stupid, were also aware of this and had fortified the
area so that it was one of their most strongly defended positions. In December 1916 Ludendorff
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Modern History I (Imperialism to the Age of Depression and Recovery)
made radical changes to the policy of defence in the Western Front. His new doctrine was to
withdraw as many troops as possible from the forward trenches, thus saving them from the British artillery. The forward trenches were to be supported by strong concrete pillboxes; the
commanders were instructed to rely on firepower, not manpower, in order to conduct their
defence. The key to the concept was the use of immediate counterattacks after the British had
overrun the front lines; fresh soldiers were to be kept in reserve especially for this purpose(18).
The British were aware of this change in policy from prisoners but made no allowance for it.
Geographically the Germans were very strong as they occupied the high ground of the sickleshaped ridge that extends from the east to the northwest of Ypres, overlooking the city. The
British were forced to occupy the marshy, waterlogged plain between the ridge and the city,
even though this was overlooked by the Germans.
The Battle of Third Ypres was preceded by the successful Battle of Messines, this allowed the
British to occupy the south eastern arm of the ridge. Before Messines, Haig had proposed that,
if the attack was successful, then the vital Gheluvelt Plateau could be seized by a prompt advance of only 700 yards.(19) After the battle, Plumer wanted to wait for three days to enable his
supporting artillery to be placed in position, but Haig, for inexplicable reasons according to
Prior and Wilson, considered this delay excessive and ordered Gough, the commander of the
5th Army, to take over from Plumer and prepare a plan for action on the Gheluvelt plateau.
Gough naturally asked for time to do this and Haig granted him this, even though this delay
would be longer than that requested by Plumer. Unfortunately this unwarranted delay allowed
the German forces on the plateau to be strengthened and the chance of occupying the vital
plateau was lost. Prior and Wilson wrote: "So the only consequence of the commander-inchief's determination on a hasty sequel to Messines was no action whatever."(20)
Haig had been given expert advice that the area planned for his battle was below sea level and
was only prevented from flooding by a system of drainage ditches and dykes. To open the battle with an artillery bombardment would destroy these and, if it rained, as was likely, the bombardment would result in widespread flooding. Despite this advice, Haig started the battle with
the bombardment. The result was that, when the inevitable rains started, the battlefield turned
into a quagmire of mud, deep enough to prevent movement of guns and vehicles and in which
men and animals drowned.
Initially Haig had proposed the battle to be a short intensive attack on a narrow front. He wrote
to Plumer: "...That is to break through the enemy's trench system and get to open fighting with
the least possible delay so as to defeat the troops immediately available before they can be reinforced."(21)
It is difficult to understand why, in view of this proposal, Haig should have insisted on continuing the battle after it had become obvious that he was not going to be able to break through;
yet he ordered the battle to continue at Langemarck to the north. General Gough, whom Haig
had chosen because he was the most aggressive of his Generals, actually advised Haig to cease
the attack, but Haig persisted, despite horrific losses, for another three weeks until August 26th.
He then changed the axis of attack from the north to the east and, when finer weather came, he
ordered the assault on the Passchendaele Ridge itself. The Battle of Menin Road on September
20th. was the first of the three famous victories of Menin Road, Polygon Wood and Broodseinde, possible only because the weather remained fine. Prior and Wilson, however, have
pointed out that even the Battle of Broodseinde was only successful by chance.(22) The Germans had exhibited ill-judgement by keeping too many men in the front line and they had
launched an attack on the Australians at the very moment that the Australians had launched
theirs.
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Unfortunately it started to rain again on the 5th. of October. Haig however, encouraged by the
three successes, decided to make a further attempt to break the Germans on the Ridge. He ordered the Anzacs to take Passchendaele village on October the 9th. even though the wind and
rain had now developed into a gale force storm. This order was given despite his experiences
at the Somme, a year earlier, and it was given despite the fact that the wire had not been cut
and that the Germans had replaced their soldiers with fresh support troops in their relatively
dry pillboxes. The result was a disaster, the attack cost 7000 casualties and the Australian 3rd.
Division lost 3199 lives in 24 hours.(23)
By now, the artillery was running out of ammunition and the shells were burying themselves in
the liquid mud and expending themselves in a fountain of water and a cloud of steam. Yet even
now Haig went on with the battle, even though the rain and bitter cold had set in. On October
the 12th. Haig ordered still another attack, this was fated to fail as miserably as the others, with
men struggling up to their knees and waists in the dreadful stinking mud.
It was not until November that the Canadians, under General Currie, who refused to advance
until conditions had improved, were able to take the ruins of Passchendaele village. Prior and
Wilson pointed out that the most that could be hoped for as a result of the capture of the Village was to place Haig's forces in a salient and they wrote: "So although the operations proposed by Currie made more sense than those which had just preceded them, their overall purpose was not sensible at all."(24)
Haig now allowed the battle to end, having incurred 275,000 casualties, of whom about
70,000 were killed, (25) for very little gain. The original objectives of the battle had not been
realised.
Haig has been blamed for the deaths of a whole generation of British and Dominion young
men in the Battles of the Somme and Passchendaele. Of course the blame was not his alone,
but his management of these two battles suggests, at the very least, that he was unable to learn
from his previous experiences, that he was not in control of events, that he underrated his enemy and that, indeed, he was far from being a great Captain.
SOURCES:
1. De Groot G. J., Douglas Haig 1861 - 1928, Unwin Hyman, London, 1988.
2. Winter, Denis, Haig's Command, Penguin Books, London, 1992.
3. Terraine John, Douglas Haig - the Educated Soldier, Hutchinson, London 1963.
4. Marshall-Cornwall James, Haig as Military Commander, Batsford, London 1973.
5. Johnson, J. H.., "Stalemate," Arms & Armour, London, 1995, p. 22.
6. General Sir John Hackett, The Profession of Arms, Sidgwick & Jackson, London, 1983,
p.157.
7. Johnson, Ibid. p. 31.
8. Johnson, Ibid. p. 87.
9. Winter, Ibid. pp. 58 and 59
10. Middlebrook M. The First day of the Somme, Penguin Books, 1984 edition, p 262.
11. Terraine, Ibid p.204
12. Terraine, Ibid p.207.
13.The Private Papers of Douglas Haig 1914-1919, Ed. Blake R., Eyre and Spottiswoode, London 1952, p.154.
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Modern History I (Imperialism to the Age of Depression and Recovery)
14. Marshall S. L. A. World War 1. American Heritage Press, New York, 1964, p. 248.
15. C.E.W. Bean, Official History of Australia in the War of 1914 - 1918; III, p.945.
16. Bean, Ibid, p.945
17. Marshall, Ibid, p.251.
18. Paschall R., The Defeat of Imperial Germany, 1917-1918. De Capo Press, New York, 1994.
19. Prior R. and Wilson T, Passchendaele: the Untold Story, Yale University Press, New Haven
and London, 1996, p. 64.
20. Prior and Wilson, Ibid, p. 64.
21. Bean, Ibid., p 946.
22. Prior and Wilson, Ibid. p. 137.
23. Bean C. E. W. Official History of Australia in the War of 1914-1918, lV, pp. 927 and 928.
24. Prior and Wilson, Ibid, p. 137.
25. Prior and Wilson, Ibid., p. 195.
LLOYD GEORGE ON THE BATTLE OF THE SOMME, JULY 1, 1916
So, much to the secret satisfaction of General Joffre, we turned our backs on Salonika and our
faces once more to the Somme. It ranks with Verdun as one of the two bloodiest battles ever
fought on this earth up to that date. The casualties on both sides were well over a million. It
was not responsible for the failure of the German effort to capture Verdun. It was only an element in slackening up a German offensive which had already slowed down and was by now a
practical and almost an acknowledged failure. The French Commander-in-Chief said in May
that the Germans had already been beaten at Verdun. Had the battle continued to rage around
the remaining forts which held up the German Army we could have helped to reinforce the
hard-pressed French Army either by sending troops to the battle area or by taking over another
sector of the French Front. The Somme campaign certainly did not save Russia. That great
country was being rapidly driven by the German guns towards the maelstrom of anarchy. You
could even then hear the roar of the waters. That is, we might have heard it had it not been for
the thunders of the Somme. These deafened our ears and obscured our vision so that we could
not perceive the approaching catastrophe in Russia and therefore did not take measures to
avert it. One-third of the Somme guns and ammunition transferred in time to the banks of another river, the Dnieper, would have won a great victory for Russia and deferred the Revolution
until after the war.
It is claimed that the Battle of the Somme destroyed the old German Army by killing off its best
officers and men. It killed off far more of our best and of the French best. The Battle of the
Somme was fought by the volunteer armies raised in 1914 and 1915. These contained the
choicest and best of our young manhood. The officers came mainly from our public schools
and universities. Over 400,000 of our men fell in this bullheaded fight and the slaughter
amongst our young officers was appalling. The "Official History of the War", writing of the first
attack, says:
"For the disastrous loss of the finest manhood of the United Kingdom and Ireland there was
only a small gain of ground to show...."
Summing up the effect on the British Army of the whole battle it says:
"Munitions and the technique of their use improved, but never again was the spirit or the quality of the officers and men so high, nor the general state of the training, leading and, above all,
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Modern History I (Imperialism to the Age of Depression and Recovery)
discipline of the new British armies in France so good. The losses sustained were not only
heavy but irreplaceable."
Had it not been for the inexplicable stupidity of the Germans in provoking a quarrel with
America and bringing that mighty people into the war against them just as they had succeeded
in eliminating another powerful foe-Russia- the Somme would not have saved us from the inextricable stalemate. I was not surprised to read in the British "Official History of the War" that M.
Poincaré is reported to have said that the greatest of all French soldiers, General Foch, was opposed to the Somme offensive. When the results came to be summed up they reminded me of
an observation made by Mr. Balfour when the project of this great offensive first came from the
French Staff. He said: "The French are short of men; yet they want to do something which
would reduce their numbers still more." At that time he was in favour of telling the French that
we thought they were going to make a mistake.
4 MARCH 1916: VERDUN BY LORD NORTHCLIFFE
What is the secret motive underlying the German attempt to break the French line at Verdun, in
which the Crown Prince's army is incurring such appalling losses? Is it financial, in view of the
coming war loan? Is it dynastic? Or is it intended to influence doubting neutrals? From the evidence of German deserters it is known that the attack was originally intended to take place a
month or two hence, when the ground was dry. Premature spring caused the Germans to accelerate their plans. There were two final delays owing to bad weather, and then came the colossal onslaught of February 21st.
The Germans made a good many of the mistakes we made at Gallipoli. They announced that
something large was pending by closing the Swiss frontier. The French who were not ready,
were also warned by their own astute Intelligence Department. Their avions were not idle, and,
if confirmation were needed, it was given by deserters, who, surmising the horrors that were to
come, crept out of the trenches at night, lay down by the edge of the Meuse till the morning,
and then gave themselves up, together with information that has since proved to be accurate.
Things went wrong with the Germans in other ways. A Zeppelin that was to have blown up
important railway junctions on the French line of communications was brought down at Revigny, and incidentally the inhabitants of what remains of that much-bombarded town were
avenged by the spectacle of the blazing dirigible crashing to the ground and the hoisting with
their own petard of 30 Huns therein. It is not necessary to recapitulate that the gigantic effort of
February 21st was frustrated by the coolness and tenacity of the French soldiers and the deadly
curtain fire of the French gunners.
Though a great deal of calculated nonsense has been sent out in official communiques and
dilated upon by dithyrambic Berlin newspaper correspondents as to the taking by storm of a
long-dismantled fort at Douaumont, nothing whatever has been admitted by the Germans as to
the appalling price in blood they have paid since February 21st and are still paying. The French
losses are, and have been, insignificant. I know the official figure. It has been verified by conversations with members of the British, French and American Red Cross Societies, who are obviously in a position to know. The wounded who pass through their hands have, in many
cases, come straight from where they have seen dead Germans, as has been described by
scores of witnesses, lying as lay the Prussian Guard in the first Battle of Ypres. The evidence of
one army as to another army's losses needs careful corroboration. This exists amply in the evidence of many German prisoners interrogated singly and independently at the French Headquarters.
The case of one man, belonging to the 3rd Battalion of the 12th Regiment in the 5th Division of
the 3rd Army Corps, may be taken as characteristic. On the morning of February 28th this pris-
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oner reached the fort of Douaumont and found there one battalion of the 24th Regiment, elements of the 64th Regiment and of the 3rd Battalion of Jaegers. The strength of his company
had been, on February 21st, 200 rifles with four officers. On February 22nd it had fallen to 70
rifles, with one officer. The other companies had suffered similar losses. On February 23rd the
prisoner's company was re-enforced by 45 men, bearing the numbers of the 12th, the 52nd,
the 35th, and the 205th Regiments. These men had been drawn from various depots in the interior. The men of the 12th Regiment believed that five regiments were in reserve in the woods
behind the 3rd Corps, but, as time went on and losses increased without any sign of the actual
presence of these reserves, doubt spread whether they were really in existence. The prisoner
declared that his comrades were no longer capable of fresh effort.
None of the prisoners questioned estimated the losses suffered by their companions at less than
one-third of the total effectives. Taking into account all available indications, it may safely be
assumed that, during the fighting of the first 13 days, the Germans lost in killed, wounded, and
prisoners at least 100,000 men.
The profits -- as the soldier speaks of such matters -- being so small, what then were the overwhelming motives that impelled the attack on Verdun, and the chicanery of the German communiques? Was it any of the reasons I have given above, or was it an effect of economic pressure which led to the miscalculation that the possible taking over of the French line at Verdun
was a means of ending the war? The Germans are so wont to misread the minds of other nations that they are quite foolish enough to make themselves believe this or any other foolish
thing. It cannot be pretended that the attack had in it anything of military necessity. It was
urged forward at a time of year when weather conditions might prove, as they proved, a serious
handicap in such matters as the moving of big guns and the essential observation by aeroplanes.
The district of Verdun lies in one of the coldest and also the most misty sectors in the long line
between Nieuport and Switzerland. Changes of temperature, too, are somewhat more frequent
here than elsewhere; and so sudden are these changes that not long ago here occurred, on a
part of the front, one of nature's furious and romantic reminders of her power to impose her
will. The opposing French and German trenches, their parapets hard frozen, were so close that
they were actually within hearing of each other. Towards dawn a rapid thaw set in. The parapets melted and subsided, and two long lines of men stood up naked, as it were, before each
other, face to face with only two possibilities wholesale murder on the one side or the other, or
a temporary unofficial peace for the making of fresh parapet protections.
The situation was astounding and unique in the history of trench warfare. The French and
German officers, without conferring and unwilling to negotiate, turned their backs so that they
might not see officially so unwarlike a scene, and the men on each side rebuilt their parapets
without the firing of a single shot.
This instance serves to illustrate the precarious weather in which the Germans undertook an
adventure in the quick success of which the elements play such a part. That the attack would
certainly prove more costly to them than to the French the German Staff must have known.
That the suffering of the wounded lying out through the long nights of icy wind in the No
Man's Land between the lines would be great did not probably disturb the Crown Prince. It is
one of the most grewsome facts in the history of the War that the French, peering through the
moonlight at what they thought to be stealthily crawling Germans, found them to be wounded
men frozen to death....
The vast battle of Verdun might have been arranged for the benefit of interested spectators,
were it not that the whole zone for miles around the great scene is as tightly closed to the outer
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world as a lodge of Freemason. Furnished with every possible kind of pass, accompanied by a
member of the French Headquarters Staff in a military car driven by a chauffeur whose steel
helmet marked him as a soldier, I was nevertheless held up by intractable gendarmes at a point
twenty-five miles away from the great scene. Even at that distance the mournful and unceasing
reverberation of the guns was insistent, and, as the gentry examined our papers and waited for
telephonic instructions, I counted more than 200 of the distant voices of Kultur.
As one gets nearer and nearer the great arena on which the whole world's eyes are turned today, proofs of French efficiency and French thoroughness are countless. I do not pretend to any
military knowledge other than a few scraps gathered in some half-dozen visits to the War, but
the abundance of reserve shells for guns, from mighty howitzers to the graceful French mitrailleuse of the aeroplane, of rifle ammunition, of petrol stores, and of motor-wagons of every description, was remarkable. I can truly say that the volume exceeded anything in my previous
experience.
As one approaches the battle the volume of sound becomes louder and at times terrific. And it
is curious, the mingling of peace with war. The chocolate and the pneumatic tire advertisements on the village walls, the kilometer stone with its ten kilometers to Verdun, a village
cur\'8e peacefully strolling along the village street, just as though it were March, 1914, and his
congregation had not been sent away from the war zone, while their houses were filled by a
swarming army of men in pale blue. Such a wonderful blue this new French invisible cloth! A
squadron of cavalry in the new blue and their steel helmets passes at th e moment, and gives
the impression that one is back again in what were known as the romantic days of war.
When one has arrived at the battlefield, there are a dozen vantage points from which with
glasses, or, indeed, with the naked eye, one can take in much that has happened. Verdun lies
in a great basin with the silvery Meuse twining in the valley. The scene is, on the whole, Scottish. Small groups of firs darken some of the hills, giving a natural resemblance to Scotland.
The town is being made into a second Ypres by the Germans. Yet, as it stands out in the
sunlight, it is difficult to realize that it is a place whose people have all gone, save a few of the
faithful who live below ground. The tall tower of Verdun still stands. Close by us is a hidden
French battery, and it is pretty to see the promptitude with which it send its screaming shells
back to the Germans within a few seconds of the dispatch of a missive from the Huns. One
speedily grows accustomed to the sound and the scene, and can follow the position of the villages about which the Germans endeavor to mislead the world by wireless every morning.
We journey farther afield, and the famous fort of Douaumont is pointed out. The storming of
Fort Douaumont, gunless and unmanned, was a military operation of little value. A number of
the Brandenburgers climbed into the gunless fort, and some of them were still there on March
6th, supplied precariously with food by their comrades at night. They were practically surrounded by the French, whose Headquarters Staff regarded the whole incident as a simple episode in the give-and-take of war. The announcement of the fall of Fort Douaumont to the world
evinces the great anxiety of the Germans to magnify anything concerning Verdun into a great
event. It should also cause people to apply a grain of salt to German official communiques before swallowing them.
Who are the men who organized the great battle for the French side? Let me at once say that
they are young men. General Petain, one of the discoveries of the war, till lately colonel and
after this date promoted to chief command; is still in his late fifties; most of the members of his
staff are much younger. One hears of luxury at Headquarters, but I have not experienced it,
either at our own Headquarters or at the French. General Petain, when I enjoyed his hospitality
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at luncheon, drank tea. Most of his young men contented themselves with water, or the white
wine of the Meuse.
In the brief meal he allowed himself the General discussed the battle as though he were merely
an interested spectator. In accordance with the drastic changes that the French, like the Germans, are making in their Command, his rise has been so rapid that he is little known to the
French people, though greatly trusted by General Joffre and the Government. I naturally did not
ask his opinion on any matters connected with the War. We discussed the Australians, the Canadians, the great growth of the British army, and kindred matters.
At another gathering of officers some one asked whether the French would not expect the British to draw off the Germans by making an attack in the West. "It is questionable," replied one
young officer, "whether such an attack would not involve disproportionate losses that would
weaken the Allies." The same officer pointed out that, although the capture of Verdun would
cause great regret, owing to the historic name it bears, it would not, for many reasons, be more
important than the pressing back of any other similar number of miles on the front. Forts being
of little account since the introduction of the big German hammers, he believed that General
Sarrail had said that the question was not one merely of dismantling the forts, but of blowing
them up. As it is, whenever the Germans capture a piece of land where an old fort happens to
be, they will use it as an advertisement. But though the French officers are not looking to Britain, so far as I could learn, for active cooperation now, they are most certainly urging that
when our new armies and their officers are trained we shall aid them by bearing our full share
of the tremendous military burden they are carrying.
The present attack on the French at Verdun is by far the most violent incident of the whole
Western War. As I write it is late. Yet the bombardment is continuing, and the massed guns of
the Germans are of greater caliber than have ever been used in such numbers. The superb calm
of the French people the efficiency of their organization, the equipment of their cheery soldiery, convince one that the men in the German machine would never be able to compare
with them. Whatever may be the result of the attack on the Verdun sector, every such effort
will result in adding many more thousands of corpses to those now lying in the valley of the
Meuse, the numbers of which are being so carefully concealed from the neutral world and the
Germans themselves; and could neutrals see the kind of men whom the Germans do not scruple to use as soldiers, their faith in Teutonic physical efficiency would receive a shock.
D2 Russian Losses-Romanian Defeat
On the eastern front in 1916 the Russians staged an offensive in the Lake Narocz region about
95 km (about 60 mi) northeast of Vilna. Their attack, designed to force the Germans to move
troops from Verdun to the Lake Narocz region, was a complete failure. Not only did it fail to
divert the Germans in any degree from their attack on Verdun, but also the Russians lost more
than 100,000 men. In June the Russians carried out a more successful offensive. In response to
an Italian request for action to relieve the pressure of an Austrian offensive in the Trentino (see
below), the Russians moved against the Austrians on a front extending from Pinsk south to
Czernowitz. By September, when strong German reinforcements from the western front
stopped the Russian advance, the Russians had driven some 65 km (40 mi) into the AustroGerman position along the entire front and had taken about 500,000 prisoners. They did not
succeed, however, in capturing either of their objectives, the cities of Kovel' and Lemberg; and
their losses of approximately 1 million men left the army in a demoralized and discouraged
state. The Russian drive had nonetheless given sufficient evidence of strength to play a large
part in inducing Romania to enter the war on the side of the Allies (August 27, 1916). After its
entrance into the war, Romania at once began an invasion of the Austro-Hungarian province of
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Transylvania (August-September), but Austro-German forces speedily drove the Romanians out
of that region. In conjunction with Bulgarian and Ottoman troops, the Austro-German forces
invaded Romania (November-December). By the middle of January 1917 Romania had been
completely conquered, and the Central Powers had gained a valuable source of wheat and oil.
D3 Italy and the Balkans
On the Italian front 1916 was marked by another inconclusive battle on the Isonzo River, the
fifth of a series in that region, and by an Austrian offensive in the Trentino designed to break
through the Italian lines and reach the rear of the Italian position on the Isonzo. The Austrians
gained considerable territory in the Trentino, but lacked the strength to accomplish a breakthrough, and an Italian counteroffensive (June-July) succeeded in regaining most of the captured terrain. From August to November four additional inconclusive battles took place on the
Isonzo; the principal gain on either side was the capture of Gorizia by the Italians on August 9.
In the Balkans during 1916 the Allied powers interfered in Greek affairs on the grounds that the
Greek government under King Constantine I was, in spite of its declared neutrality, unduly favoring the Central Powers. Allied intervention brought about the establishment (September 29)
of a provisional Greek government under the statesman Eleutherios Venizelos, who had consistently favored the Allied cause. At Salonika the provisional government declared war on Germany and Bulgaria on November 3. The government of King Constantine was still in power in
Athens and large parts of Greece, and friction took place between that government and the
Allies, who resorted to a naval blockade of Greece and other action in order to enforce their
demands that the Greeks cease aiding the Central Powers. On December 19 Britain officially
recognized the provisional Greek government.
Two periods of fighting took place in the Balkans during 1916. In August a Serbian army,
brought to Salonika after having been reconstituted at Corfu, advanced together with Russian
and Italian troops against the Bulgarians and Germans on the Salonika front. After they had
gained some initial successes, a strong counterattack thrust them back. Beginning in early October Allied forces began a large-scale offensive in Macedonia. On November 19 the Allied
troops captured Monastir, and by the middle of December had reached Lake Ohrid, on the
border of Albania and Macedonia.
D4 The Ottoman Dominions
Considerable military activity took place in 1916 in three parts of the Ottoman Empire: Mesopotamia, Arabia, and Palestine. In Mesopotamia, the besieged town of Kut-al-Imara fell to the
Ottomans on April 29, 1916. In December of that year the British began a drive toward the
town, which they recaptured two months later. In Arabia in June 1916 Hussein ibn Ali, grand
sharif of Mecca, continued the traditional conflict between Arabs and Ottomans by leading,
with his son Abdullah ibn Hussein, a revolt of Al ?ijâz (the Hejaz, now in Saudi Arabia) against
Ottoman rule. Hussein had the help of the British, who recognized him as king of Al ?ijâz in
December 1916. As a diversionary move to aid the Arabian revolt, the British in November
began an advance from Egypt, which they had garrisoned since early in the war, into the Sinai
Peninsula and Palestine, and by the early days of January 1917 had taken several fortifications.
D5 Negotiation Attempts
In 1916 President Woodrow Wilson of the U.S., at that time a neutral nation, attempted to
bring about negotiations between the belligerent groups of powers that would in his own words
bring "peace without victory." As a result of his efforts, and particularly of the conferences held
in Europe during the year by Wilson's confidential adviser, Colonel Edward M. House, with
leading European statesmen, some progress was at first apparently made toward bringing an
end to the war. In December the German government informed the U.S. that the Central Pow64
Modern History I (Imperialism to the Age of Depression and Recovery)
ers were prepared to undertake peace negotiations. When the U.S. informed the Allies, Britain
rejected the German advances for two reasons: Germany had not laid down any specific terms
for peace; and the military situation at the time (Romania had just been conquered by the Central Powers) was so favorable to the Central Powers that no acceptable terms could reasonably
be expected from them. Wilson continued his mediatory efforts, calling on the belligerents to
specify the terms on which they would make peace. He finally succeeded in eliciting concrete
terms from each group, but they proved irreconcilable.
E 1917:
U.S. Entrance-Russian Withdrawal Wilson still attempted to find some basis of agreement between the two belligerent groups until a change in German war policy in January 1917 completely altered his point of view toward the war. In that month Germany announced that, beginning on February 1, it would resort to unrestricted submarine warfare against the shipping of
Britain and all shipping to Britain. German military and civil experts had calculated that such
warfare would bring about the defeat of Britain in six months. Because the U.S. had already
expressed its strong opposition to unrestricted submarine warfare, which, it claimed, violated
its rights as a neutral, and had even threatened to break relations with Germany over the issue,
Wilson dropped his peacemaking efforts. On February 3, the U.S. broke diplomatic relations
with Germany and at Wilson's request a number of Latin American nations, including Peru,
Bolivia, and Brazil, also did so. On April 6 the United States declared war on Germany.
IV AMERICA AND WORLD WAR I
World War I broke out in Europe in the summer of 1914. The war set Germany and AustriaHungary (the Central Powers) against the United Kingdom, France, and Russia (the Allied Powers), and eventually involved many more nations. The United States declared itself a neutral
nation, but neutrality proved elusive. For three years, as Europeans faced war on an unprecedented scale, the neutrality so popular in the United States gradually slipped away.
At the outset, Germany and Britain each sought to terminate U.S. trade with the other. Exploiting its naval advantage, Britain gained the upper hand and almost ended U.S. trade with Germany. Americans protested this interference, but when German submarines, known as U-boats,
began to torpedo American merchant ships, American public opinion turned against Germany.
Then on May 7, 1915, a German submarine attacked a British passenger liner, the Lusitania,
killing more than a thousand people, including 128 Americans. Washington condemned the
attacks, which led to a brief respite in German attacks, and in the presidential race of 1916,
President Wilson won reelection on the campaign slogan, "He Kept Us Out of War."
In January 1917, however, Germany declared a policy of unrestricted submarine warfare. Ending diplomatic ties with Germany, Wilson still tried to keep the United States out of the war.
But Germany continued its attacks, and the United States found out about a secret message, the
Zimmerman telegram, in which the German government proposed an alliance with Mexico
and discussed the possibility of Mexico regaining territory lost to the United States. Resentful
that Germany was sinking American ships and making overtures to Mexico, the United States
declared war on Germany on April 6, 1917.
The United States entered World War I with divided sentiments. Americans debated both
whether to fight the war and which side to support. Since the outbreak of war in Europe, pacifists and reformers had deplored the drift toward conflict; financiers and industrialists, however,
promoted patriotism, "preparedness," and arms buildup. Some Americans felt affinities for
France and England, but millions of citizens were of German origin. To many Americans, fi-
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nally, the war in Europe seemed a distant conflict that reflected tangled European rivalries, not
U.S. concerns.
But German aggression steered public opinion from neutrality to engagement, and the United
States prepared for combat. The Selective Service Act passed in May 1917 helped gradually
increase the size of America's armed forces from 200,000 people to almost four million at the
war's end.
a Over There
By the spring of 1917, World War I had become a deadly war of attrition. Russia left the war
that year, and after the Bolsheviks assumed power in the Russian Revolution of 1917, Russia
signed a separate peace treaty with Germany in March 1918. Allied prospects looked grim.
With Russia out of the picture, Germany shifted its troops to the western front, a north-south
line across France, where a gruesome stalemate had developed. Dug into trenches and shelled
by artillery, great armies bogged down in a form of siege warfare.
In June 1917 the American Expeditionary Force, led by General John J. Pershing, began to arrive in France. By March 1918, when Germany began a massive offensive, much of the American force was in place. Reluctantly, the United States allowed American troops to be integrated
into Allied units under British and French commanders. These reinforcements bolstered a
much-weakened defense, and the Allies stopped the German assault. In September 1918
American troops participated in a counteroffensive in the area around Verdun. The Saint-Mihiel
campaign succeeded, as did the Allied Meuse Argonne offensive, where both the Allies and the
Germans suffered heavy casualties. Facing what seemed to be a limitless influx of American
troops, Germany was forced to consider ending the war. The Central Powers surrendered, signing an armistice on November 11, 1918. Only the challenge of a peace treaty remained.
American manpower tipped the scales in the Allies' favor. At war for only 19 months, the
United States suffered relatively light casualties. The United States lost about 112,000 people,
many to disease, including a treacherous influenza epidemic in 1918 that claimed 20 million
lives worldwide. European losses were far higher. According to some estimates, World War I
killed close to 10 million military personnel.
b Over Here
World War I wrought significant changes on the American home front. First, the war created
labor shortages. Thousands of African Americans left the South for jobs in Northern steel mills,
munitions plants, and stockyards. The great migration of the World War I era established large
black communities in Northern cities such as New York, Philadelphia, and Chicago. The influx, however, provoked racial tensions and race riots in some cities, including East Saint Louis,
Illinois, in July 1917 and Chicago in July 1919.
Labor shortages provided a variety of jobs for women, who became streetcar conductors, railroad workers, and shipbuilders. Women also volunteered for the war effort and sold war
bonds. Women mustered support for woman suffrage, a cause that finally achieved its longsought goal. The 19th Amendment, granting women the right to vote, triumphed in Congress in
1919 and was ratified by the states in 1920.
The war greatly increased the responsibilities of the federal government. New government
agencies relied mainly on persuasion and voluntary compliance. The War Industries Board
urged manufacturers to use mass production techniques and increase efficiency. The Railroad
Administration regulated rail traffic; the Fuel Administration monitored coal supplies and regulated gasoline. The National War Labor Board sought to resolve thousands of disputes between
management and labor that resulted from stagnant wages coupled with inflation. The Food
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Administration urged families to observe "meatless Mondays," "wheatless Wednesdays," and
other measures to help the war effort. The Committee on Public Information organized thousands of public speakers ("four-minute men") to deliver patriotic addresses; the organization
also produced 75 million pamphlets promoting the war effort.
Finally, to finance the war, the United States developed new ways to generate revenue. The
federal government increased income and excise taxes, instituted a war-profit tax, and sold war
bonds.
War pressures evoked hostility and suspicion in the United States. Antagonism toward immigrants, especially those of German descent, grew. Schools stopped teaching German. Hamburgers and sauerkraut became "Salisbury steak" and "liberty cabbage." Fear of sabotage
spurred Congress to pass the Espionage Act of 1917 and the Sedition Act of 1918. The laws
imposed fines, jail sentences, or both for interfering with the draft, obstructing the sale of war
bonds, or saying anything disloyal, profane, or abusive about the government or the war effort.
These repressive laws, upheld by the Supreme Court, resulted in 6,000 arrests and 1,500 convictions for antiwar activities. The laws targeted people on the left, such as Socialist leader
Eugene V. Debs, who was imprisoned, and Emma Goldman, who was jailed and deported. The
arrests of 1917 reflected wartime concerns about dissent as well as hostility toward the Russian
Revolution of 1917.
Before the United States entered World War I (1914-1918), President Woodrow Wilson tried to
serve as a peacemaker between the Allies and the Central Powers. In a January 22, 1917
speech before the U.S. Senate, he called for a "peace without victory." Many people scoffed at
what they considered Wilson's idealism. His proposals, however, foreshadowed international
collaborations such as the League of Nations and the United Nations (UN). His ideas also
formed the basis for the concept of a "new world order" that President George Bush developed
at the close of the Cold War in the 1980s.
Herbert S. Parmet
WILSON: "PEACE WITHOUT VICTORY" JANUARY 22, 1917
…I have sought this opportunity to address you because I thought that I owed it to you, as the
council associated with me in the final determination of our international obligations, to disclose to you without reserve the thought and purpose that have been taking form in my mind in
regard to the duty of our government in the days to come, when it will be necessary to lay
afresh and upon a new plan the foundations of peace among the nations.
It is inconceivable that the people of the United States should play no part in that great enterprise. To take part in such a service will be the opportunity for which they have sought to prepare themselves by the very principles and purposes of their polity and the approved practices
of their government ever since the days when they set up a new nation in the high and honorable hope that it might, in all that it was and did, show mankind the way to liberty.
They cannot in honor withhold the service to which they are now about to be challenged. They
do not wish to withhold it. But they owe it to themselves and to the other nations of the world
to state the conditions under which they will feel free to render it.
That service is nothing less than this, to add their authority and their power to the authority and
force of other nations to guarantee peace and justice throughout the world.… …this government should frankly formulate the conditions upon which it would feel justified in asking our
people to approve its formal and solemn adherence to a League for Peace. I am here to attempt
to state those conditions.
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The present war must first be ended; but we owe it to candor and to a just regard for the opinion of mankind to say that, so far as our participation in guarantees of future peace is concerned, it makes a great deal of difference in what way and upon what terms it is ended.
The treaties and agreements which bring it to an end must embody terms which will create a
peace that is worth guaranteeing and preserving, a peace that will win the approval of mankind, not merely a peace that will serve the several interests and immediate aims of the nations
engaged. We shall have no voice in determining what those terms shall be, but we shall, I feel
sure, have a voice in determining whether they shall be made lasting or not by the guarantees
of a universal covenant; and our judgment upon what is fundamental and essential as a condition precedent to permanency should be spoken now, not afterwards when it may be too late.
…It will be absolutely necessary that a force be created as a guarantor of the permanency of
the settlement so much greater than the force of any nation now engaged, or any alliance hitherto formed or projected, that no nation, no probable combination of nations, could face or
withstand it. If the peace presently to be made is to endure, it must be a peace make secure by
the organized major force of mankind.
The terms of the immediate peace agreed upon will determine whether it is a peace for which
such a guarantee can be secured. The question upon which the whole future peace and policy
of the world depends is this: Is the present war a struggle for a just and secure peace, or only
for a new balance of power? If it be only a struggle for a new balance of power, who will guarantee, who can guarantee the stable equilibrium of the new arrangement? Only a tranquil
Europe can be a stable Europe. There must be, not a balance of power but a community of
power: not organized rivalries but and organized, common peace.
Fortunately we have received very explicit assurances on this point. The statesmen of both of
the groups of nations now arrayed against one another have said, in terms that could not be
misrepresented, that it was no part of the purpose they had in mind to crush their antagonists.
But the implications of these assurances may not be equally clear to all-may not be the same
on both sides of the water. I think it will be serviceable if I attempt to set forth what we understand them to be.
They imply, first of all, that it must be a peace without victory. It is not pleasant to say this. I
beg that I may be permitted to put my own interpretation upon it and that it may be understood
that no other interpretation was in my thought. I am seeking only to face realities and to face
them without soft concealments [sic]. Victory would mean peace forced upon the loser, a victor's terms imposed upon the vanquished. It would be accepted in humiliation, under duress, at
an intolerable sacrifice, and would leave a sting, a resentment, a bitter memory upon which
peace would rest, not permanently but only as upon quicksand. Only a peace between equals
can last. Only a peace the very principle of which is equality and a common participation in a
common benefit. The right state of mind, the right feeling between nations, is as necessary for a
lasting peace as is the just settlement of vexed questions of territory or of racial and national
allegiance.
The equality of nations upon which peace must be founded if it is to last must be an equality of
rights; the guarantees exchanged must neither recognize nor imply a difference between big
nations and small, between those that are powerful and those that are weak. Right must be
based upon the common strength, not upon the individual strength, of the nations upon whose
concert peace will depend.
Equality of territory or of resources there of course cannot be; nor any other sort of equality not
gained in the ordinary peaceful and legitimate development of the peoples themselves. But no
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one asks or expects anything more than an equality of rights. Mankind is looking now for freedom of life, not for equipoises of power.
And there is a deeper thing involved than even equality of right among organized nations. No
peace can last, or ought to last, which does not recognize and accept the principle that governments derive all their just powers from the consent of the governed, and that no right anywhere exists to hand peoples about from sovereignty to sovereignty as if they were property.…
Any peace which does not recognize and accept this principle will inevitably be upset. It will
not rest upon the affections or the convictions of mankind. The ferment of spirit of whole populations will fight subtly and consistently against it, and all the world will sympathize. The world
can be at peace only if its life is stable, and there can be no stability where the will is in rebellion, where there is not tranquillity of spirit and a sense of justice, of freedom, and of right.…
I am proposing government by the consent of the governed; that freedom of the seas which in
international conference after conference representatives of the United States have urged with
the eloquence of those who are the convinced disciples of liberty; and that moderation of armaments which makes of armies and navies a power for order merely, not an instrument of
aggression or of selfish violence.
These are American principles, American policies. We could stand for no others. And they are
also the principles and policies of forward-looking men and women everywhere, of every
modern nation, of every enlightened community. They are the principles of mankind and must
prevail.
Source: 64th Congress, 2nd Session, Senate Document No. 685: "A League for Peace."
CONCERNING BLACK AMERICAN TROOPS FRENCH MILITARY MISSION STATIONED WITH THE
AMERICAN ARMY AUGUST 7, 1918
When black Americans joined the United States Army and were sent to Europe to fight in
World War I (1914-1918), many whites worried that those soldiers would not be willing to accept their restricted place in American society when they returned from the war. The following
document, which instructs French officers to "respect" the U.S. Army's segregation policy while
American soldiers were fighting in France, appeared in the magazine The Crisis in May 1919.
According to black American historian W. E. B. Du Bois, editor of The Crisis, this notice was
written by French military forces at the request of the U.S. Army. Racial segregation remained
the official policy of the U.S. Army until July 1948.
Secret Information Concerning Black American Troops
1. It is important for French officers who have been called upon to exercise command over
black American troops, or to live in close contact with them, to have an exact idea of the position occupied by Negroes in the United States. The information set forth in the following communication ought to be given to these officers and it is to their interest to have these matters
known and widely disseminated. It will devolve likewise on the French Military Authorities,
through the medium of the Civil Authorities, to give information on this subject to the French
population residing in the cantonments occupied by American colored troops.
2. The American attitude upon the Negro question may seem a matter for discussion to many
French minds. But we French are not in our province if we undertake to discuss what some call
"prejudice." American opinion is unanimous on the "color question" and does not admit of any
discussion.
The increasing number of Negroes in the United States (about 15,000,000) would create for the
white race in the Republic a menace of degeneracy were it not that an impassable gulf has
been made between them.
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As this danger does not exist for the French race, the French public has become accustomed to
treating the Negro with familiarity and indulgence.
This indulgence and this familiarity are matters of grievous concern to the Americans. They
consider them an affront to their national policy. They are afraid that contact with the French
will inspire in black Americans aspirations which to them [the whites] appear intolerable. It is
of the utmost importance that every effort be made to avoid profoundly estranging American
opinion.
Although a citizen of the United States, the black man is regarded by the white American as an
inferior being with whom relations of business or service only are possible. The black is constantly being censured for his want of intelligence and discretion, his lack of civic and professional conscience and for his tendency toward undue familiarity.
The vices of the Negro are a constant menace to the American who has to repress them sternly.
For instance, the black American troops in France have, by themselves, given rise to as many
complaints for attempted rape as all the rest of the army. And yet the [black American] soldiers
sent us have been the choicest with respect to physique and morals, for the number disqualified at the time of mobilization was enormous.
Conclusion
1. We must prevent the rise of any pronounced degree of intimacy between French officers and
black officers. We may be courteous and amiable with these last, but we cannot deal with
them on the same plane as with the white American officers without deeply wounding the latter. We must not eat with them, must not shake hands or seek to talk or meet with them outside
of the requirements of military service.
2. We must not commend too highly the black American troops, particularly in the presence of
[white] Americans. It is all right to recognize their good qualities and their services, but only in
moderate terms, strictly in keeping with the truth.
3. Make a point of keeping the native cantonment population from 'spoiling' the Negroes.
[White] Americans become greatly incensed at any public expression of intimacy between
white women with black men. They have recently uttered violent protests against a picture in
the "Vie Parisienne" entitled "The Child of the Desert" which shows a [white] woman in a
"cabinet particulier" with a Negro. Familiarity on the part of white women with black men is
furthermore a source of profound regret to our experienced colonials who see in it an overweening menace to the prestige of the white race.
Military authority cannot intervene directly in this question, but it can through the civil authorities exercise some influence on the population.
Source: Articles from Bibliobase edited by Michael A. Bellesiles. Copyright © 1998 by Houghton Mifflin Company. All rights reserved. Reprinted by permission.
SENATOR NORRIS'S SPEECH AGAINST THE WAR APRIL 4, 1917
In this speech Senator Norris details his reasons for opposing a Senate resolution entering the
United States in World War I. He criticizes British and German acts of war toward neutral third
parties and the use of American citizens as "insurance policies to guarantee the safe delivery of
munitions of war to belligerent nations." Norris also criticizes opportunistic businessmen who
seek to profit from the war.
Mr. NORRIS. Mr. President, while I am most emphatically and sincerely opposed to taking any
step that will force our country into the useless and senseless war now being waged in Europe,
yet if this resolution passes I shall not permit my feeling of opposition to its passage to interfere
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in any way with my duty either as a Senator or as a citizen in bringing success and victory to
American arms. I am bitterly opposed to my country entering the war, but if, notwithstanding
my opposition, we do enter it, all of my energy and all of my power will be behind our flag in
carrying it on to victory.
The resolution now before the Senate is a declaration of war. Before taking this momentous
step, and while standing on the brink of this terrible vortex, we ought to pause and calmly and
judiciously consider the terrible consequences of the step we are about to take. We ought to
consider likewise the route we have recently traveled and ascertain whether we have reached
our present position in a way that is compatible with the neutral position which we claimed to
occupy at the beginning and through the various stages of this unholy and unrighteous war.
No close student of recent history will deny that both Great Britain and Germany have, on numerous occasions since the beginning of the war, flagrantly violated in the most serious manner the rights of neutral vessels and neutral nations under existing international law as recognized up to the beginning of this war by the civilized world.
The reason given by the President in asking Congress to declare war against Germany is that
the German Government has declared certain war zones, within which, by the use of submarines, she sinks, without notice, American ships and destroys American lives.
Let us trace briefly the origin and history of these so-called war zones. The first war zone was
declared by Great Britain. She gave us and the world notice of it on the 4th day of November,
1914. The zone became effective November 5, 1914, the next day after the notice was given.
This zone so declared by Great Britain covered the whole of the North Sea. The order establishing it sought to close the north of Scotland route around the British Isles to Denmark, Holland, Norway, Sweden, and the Baltic Sea. The decree of establishment drew an arbitrary line
from the Hebrides Islands along the Scottish coast to Iceland, and warned neutral shipping that
it would cross those lines at its peril, and ordered that ships might go to Holland and other neutral nations by taking the English Channel route through the Strait of Dover.
The first German war zone was declared on the 4th day of February, 1915, just three months
after the British war zone was declared. Germany gave 15 days' notice of the establishment of
her zone, which became effective on the 18th day of February, 1915. The German war zone
covered the English Channel and the high sea waters around the British Isles. It sought to close
the English Channel route around the British Isles to Holland, Norway, Sweden, Denmark, and
the Baltic Sea. The German war zone decreed that neutral vessels would be exposed to danger
in the English Channel route, but that the route around the north of Scotland and in the eastern
part of the North Sea, in a strip 30 miles wide along the Dutch coast, would be free from danger.
It will thus be seen that the British Government declared the north of Scotland route into the
Baltic Sea as dangerous and the English Channel route into the Baltic Sea as safe.
The German Government in its order did exactly the reverse. It declared the north of Scotland
route into the Baltic Sea as safe and the English Channel route into the Baltic Sea as dangerous.
The order of the British Government declaring the North Sea as a war zone used the following
language:
The British Admiralty gives notice that the waters of the North Sea must be considered a military area. Within this area merchant shipping of all kinds, traders of all countries, fishing craft,
and other vessels will be exposed to the gravest danger from mines it has been necessary to lay.
The German Government, by its order declaring its war zone around the south of England, declared that the order would be made effective by the use of submarines.
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Thus we have the two declarations of the two Governments, each declaring a military zone
and warning neutral shipping from going into the prohibited area. England sought to make her
order effective by the use of submerged mines. Germany sought to make her order effective by
the use of submarines. Both of these orders were illegal and contrary to all international law as
well as the principles of humanity. Under international law no belligerent Government has the
right to place submerged mines in the high seas. Neither has it any right to take human life
without notice by the use of submarines. If there is any difference on the ground of humanity
between these two instrumentalities, it is certainly in favor of the submarines. The submarine
can exercise some degree of discretion and judgment. The submerged mine always destroys
without notice, friend and foe alike, guilty and innocent the same. In carrying out these two
policies, both Great Britain and Germany have sunk American ships and destroyed American
lives without provocation and without notice. There have been more ships sunk and more
American lives lost from the action of submarines than from English mines in the North Sea; for
the simple reason that we finally acquiesced in the British war zone and kept our ships out of
it, while in the German war zone we have refused to recognize its legality and have not kept
either our ships or our citizens out of its area. If American ships had gone into the British war
zone in defiance of Great Britain's order, as they have gone into the German war zone in defiance of the German Government's order, there would have been many more American lives
lost and many more American ships sunk by the instrumentality of the mines than the instrumentality of the submarines.
We have in the main complied with the demands made by Great Britain. Our ships have followed the instructions of the British Government in going not only to England but to the neutral
nations of the world, and in thus complying with the British order American ships going to Holland, Denmark, Norway, and Sweden have been taken by British officials into British ports, and
their cargoes inspected and examined. All the mails we have carried even to neutral countries
have been opened and censored, and oftentimes the entire cargo confiscated by the Government. Nothing has been permitted to pass to even the most neutral nations except after examination and with the permission of the officials of the British Government.
I have outlined the beginning of the controversy. I have given in substance the orders of both of
these great Governments that constituted the beginning of our controversy with each. There
have been other orders made by both Governments subsequent to the ones I have given that
interfered with our rights as a neutral Nation, but these two that I have outlined constitute the
origin of practically the entire difficulty, and subsequent orders have only been modifications
and reproductions of those I have already mentioned. It is unnecessary to cite authority to show
that both of these orders declaring military zones were illegal and contrary to international law.
It is sufficient to say that our Government has officially declared both of them to be illegal and
has officially protested against both of them.
The only difference is that in the case of Germany we have persisted in our protest, while in the
case of England we have submitted. What was our duty as a Government and what were our
rights when we were confronted with these extraordinary orders declaring these military zones?
First, we could have defied both of them and could have gone to war against both of these nations for this violation of international law and interference with our neutral rights. Second, we
had the technical right to defy one and to acquiesce in the other. Third, we could, while denouncing them both as illegal, have acquiesced in them both and thus remained neutral with
both sides, although not agreeing with either as to the righteousness of their respective orders.
We could have said to American shipowners that, while these orders are both contrary to international law and are both unjust, we do not believe that the provocation is sufficient to
cause us to go to war for the defense of our rights as a neutral nation, and, therefore, American
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ships and American citizens will go into these zones at their own peril and risk. Fourth, we
might have declared an embargo against the shipping from American ports of any merchandise
to either one of these Governments that persisted in maintaining its military zone. We might
have refused to permit the sailing of any ship from any American port to either of these military
zones. In my judgment, if we had pursued this course, the zones would have been of short duration. England would have been compelled to take her mines out of the North Sea in order to
get any supplies from our country. When her mines were taken out of the North Sea then the
German ports upon the North Sea would have been accessible to American shipping and Germany would have been compelled to cease her submarine warfare in order to get any supplies
from our Nation into German North Sea ports.
There are a great many American citizens who feel that we owe it as a duty to humanity to take
part in this war. Many instances of cruelty and inhumanity can be found on both sides. Men
are often biased in their judgment on account of their sympathy and their interests. To my
mind, what we ought to have maintained from the beginning was the strictest neutrality. If we
had done this I do not believe we would have been on the verge of war at the present time. We
had a right as a nation, if we desired, to cease at any time to be neutral. We had a technical
right to respect the English war zone and to disregard the German war zone, but we could not
do that and be neutral. I have no quarrel to find with the man who does not desire our country
to remain neutral. While many such people are moved by selfish motives and hopes of gain, I
have no doubt but that in a great many instances, through what I believe to be a misunderstanding of the real condition, there are many honest, patriotic citizens who think we ought to
engage in this war and who are behind the President in his demand that we should declare war
against Germany. I think such people err in judgment and to a great extent have been misled as
to the real history and the true facts by the almost unanimous demand of the great combination
of wealth that has a direct financial interest in our participation in the war. We have loaned
many hundreds of millions of dollars to the allies in this controversy. While such action was
legal and countenanced by international law, there is no doubt in my mind but the enormous
amount of money loaned to the allies in this country has been instrumental in bringing about a
public sentiment in favor of our country taking a course that would make every bond worth a
hundred cents on the dollar and making the payment of every debt certain and sure. Through
this instrumentality and also through the instrumentality of others who have not only made millions out of the war in the manufacture of munitions, etc., and who would expect to make millions more if our country can be drawn into the catastrophe, a large number of the great newspapers and news agencies of the country have been controlled and enlisted in the greatest
propaganda that the world has ever known, to manufacture sentiment in favor of war. It is now
demanded that the American citizens shall be used as insurance policies to guarantee the safe
delivery of munitions of war to belligerent nations. The enormous profits of munition manufacturers, stockbrokers, and bond dealers must be still further increased by our entrance into the
war. This has brought us to the present moment, when Congress, urged by the President and
backed by the artificial sentiment, is about to declare war and engulf our country in the greatest
holocaust that the world has ever known.
In showing the position of the bondholder and the stockbroker I desire to read an extract from a
letter written by a member of the New York Stock Exchange to his customers. This writer says:
Regarding the war as inevitable, Wall Street believes that it would be preferable to this uncertainty about the actual date of its commencement. Canada and Japan are at war, and are more
prosperous than ever before. The popular view is that stocks would have a quick, clear, sharp
reaction, immediately upon outbreak of hostilities, and that then they would enjoy an oldfashioned bull market such as followed the outbreak of war with Spain in 1898. The advent of
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peace would force a readjustment of commodity prices and would probably mean a postponement of new enterprises. As peace negotiations would be long drawn out, the period of
waiting and uncertainty for business would be long. If the United States does not go to war it is
nevertheless good opinion that the preparedness program will compensate in good measure for
the loss of the stimulus of actual war.
Here we have the Wall Street view. Here we have the man representing the class of people
who will be made prosperous should we become entangled in the present war, who have already made millions of dollars, and who will make many hundreds of millions more if we get
into the war. Here we have the cold-blooded proposition that war brings prosperity to that
class of people who are within the viewpoint of this writer. He expresses the view, undoubtedly, of Wall Street, and of thousands of men elsewhere, who see only dollars coming to them
through the handling of stocks and bonds that will be necessary in ease of war, "Canada and
Japan," he says, "are at war, and are more prosperous than ever before."
To whom does war bring prosperity? Not to the soldier who for the munificent compensation of
$16 per month shoulders his musket and goes into the trench, there to shed his blood and to
die if necessary; not to the broken-hearted widow who waits for the return of the mangled body
of her husband; not to the mother who weeps at the death of her brave boy; not to the little
children who shiver with cold; not to the babe who suffers from hunger; nor to the millions of
mothers and daughters who carry broken hearts to their graves. War brings no prosperity to the
great mass of common and patriotic citizens. It increases the cost of living of those who toil
and those who already must strain every effort to keep soul and body together. War brings
prosperity to the stock gambler on Wall Street-to those who are already in possession of more
wealth than can be realized or enjoyed. Again this writer says that if we can not get war, "it is
nevertheless good opinion that the preparedness program will compensate in good measure for
the loss of the stimulus of actual war." That is, if we can not get war, let us go as far in that direction as possible. If we can not get war, let us cry for additional ships, additional guns, additional munitions, and everything else that will have a tendency to bring us as near as possible
to the verge of war. And if war comes do such men as these shoulder the musket and go into
the trenches?
Their object in having war and in preparing for war is to make money. Human suffering and
the sacrifice of human life are necessary, but Wall Street considers only the dollars and the
cents. The men who do the fighting, the people who make the sacrifices, are the ones who will
not be counted in the measure of this great prosperity that he depicts. The stock brokers would
not, of course, go to war, because the very object they have in bringing on the war is profit,
and therefore they must remain in their Wall Street offices in order to share in that great prosperity which they say war will bring. The volunteer officer, even the drafting officer, will not
find them. They will be concealed in their palatial offices on Wall Street, sitting behind mahogany desks, covered up with clipped coupons-coupons soiled with the sweat of honest toil,
coupons stained with mothers' tears, coupons dyed in the lifeblood of their fellow men.
We are taking a step to-day that is fraught with untold danger. We are going into war upon the
command of gold. We are going to run the risk of sacrificing millions of our countrymen's lives
in order that other countrymen may coin their lifeblood into money. And even if we do not
cross the Atlantic and go into the trenches, we are going to pile up a debt that the toiling
masses that shall come many generations after us will have to pay. Unborn millions will bend
their backs in toil in order to pay for the terrible step we are now about to take. We are about
to do the bidding of wealth's terrible mandate. By our act we will make millions of our countrymen suffer, and the consequences of it may well be that millions of our brethren must shed
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their lifeblood; millions of broken-hearted women must weep, millions of children must suffer
with cold, and millions of babes must die from hunger, and all because we want to preserve
the commercial right of American citizens to deliver munitions of war to belligerent nations....
I know that I am powerless to stop it. I know that this war madness has taken possession of the
financial and political powers of our country. I know that nothing I can say will stay the blow
that is soon to fall. I feel that we are committing a sin against humanity and against our countrymen. I would like to say to this war god, You shall not coin into gold the lifeblood of my
brethren. I would like to prevent this terrible catastrophe from falling upon my people. I would
be willing to surrender my own life if I could cause this awful cup to pass. I charge no man
here with a wrong motive, but it seems to me that this war craze has robbed us of our judgment. I wish we might delay our action until reason could again be enthroned in the brain of
man. I feel that we are about to put the dollar sign upon the American flag.
I have no sympathy with the military spirit that dominates the Kaiser and his advisers. I do not
believe that they represent the heart of the great German people. I have no more sympathy
with the submarine policy of Germany than I have with the mine-laying policy of England. I
have heard with rejoicing of the overthrow of the Czar of Russia and the movement in that
great country toward the establishment of a government where the common people will have
their rights, liberty, and freedom respected. I hope and pray that a similar revolution may take
place in Germany, that the Kaiser may be overthrown, and that on the ruins of his military despotism may be established a German republic, where the great German people may work out
their world destiny. The working out of that problem is not an American burden. We ought to
remember the advice of the Father of our Country and keep out of entangling alliances. Let
Europe solve her problems as we have solved ours. Let Europe bear her burdens as we have
borne ours. In the greatest war of our history and at the time it occurred, the greatest war in the
world's history, we were engaged in solving an American problem. We settled the question of
human slavery and washed our flag clean by the sacrifice of human blood. It was a great problem and a great burden, but we solved it ourselves. Never once did we think of asking Europe
to take part in its solution. Never once did any European nation undertake to settle the great
question. We solved it, and history has rendered a unanimous verdict that we solved it right.
The troubles of Europe ought to be settled by Europe, and wherever our sympathies may lie,
disagreeing as we do, we ought to remain absolutely neutral and permit them to settle their
questions without our interference. We are now the greatest neutral nation. Upon the passage
of this resolution we will have joined Europe in the great catastrophe and taken America into
entanglements that will not end with this war, but will live and bring their evil influences upon
many generations yet unborn.
Source: Library of Congress
WOODROW WILSON'S SECOND INAUGURAL ADDRESS MARCH 5, 1917
The specter of war with Germany dominated United States President Woodrow Wilson's inauguration for a second term on March 5, 1917. A passionate defender of American neutrality
during the first three years of World War I (1914-1918), Wilson had campaigned for reelection
on the slogan "He kept us out of war." In his second inaugural address, however, he suggested
that circumstances might draw the nation into the conflict "whether we would have it so or
not." The United States entered the war one month later.
My Fellow Citizens:
The four years which have elapsed since last I stood in this place have been crowded with
counsel and action of the most vital interest and consequence. Perhaps no equal period in our
history has been so fruitful of important reforms in our economic and industrial life or so full of
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Modern History I (Imperialism to the Age of Depression and Recovery)
significant changes in the spirit and purpose of our political action. We have sought very
thoughtfully to set our house in order, correct the grosser errors and abuses of our industrial
life, liberate and quicken the processes of our national genius and energy, and lift our politics
to a broader view of the people's essential interests.…
Although we have centered counsel and action with such unusual concentration and success
upon the great problems of domestic legislation to which we addressed ourselves four years
ago, other matters have more and more forced themselves upon our attention-matters lying
outside our own life as a nation and over which we had no control, but which, despite our
wish to keep free of them, have drawn us more and more irresistibly into their own current and
influence.
It has been impossible to avoid them.… It has been hard to preserve calm counsel while the
thought of our own people swayed this way and that under their influence. We are a composite
and cosmopolitan people. We are of the blood of all the nations that are at war. The currents of
our thoughts as well as the currents of our trade run quick at all seasons back and forth between us and them. The war inevitably set its mark from the first alike upon our minds, our industries, our commerce, our politics and our social action. To be indifferent to it, or independent of it, was out of the question.
And yet all the while we have been conscious that we were not part of it. In that consciousness, despite many divisions, we have drawn closer together.…
As some of the injuries done us have become intolerable we have still been clear that we
wished nothing for ourselves that we were not ready to demand for all mankind-fair dealing,
justice, the freedom to live and to be at ease against organized wrong.
It is in this spirit and with this thought that we have grown more and more aware, more and
more certain that the part we wished to play was the part of those who mean to vindicate and
fortify peace.… We stand firm in armed neutrality since it seems that in no other way we can
demonstrate what it is we insist upon and cannot forget. We may even be drawn on, by circumstances, not by our own purpose or desire, to a more active assertion of our rights as we
see them and a more immediate association with the great struggle itself.…
There are many things still to be done at home, to clarify our own politics and add new vitality
to the industrial processes of our own life, and we shall do them as time and opportunity serve,
but we realize that the greatest things that remain to be done must be done with the whole
world for stage and in cooperation with the wide and universal forces of mankind, and we are
making our spirits ready for those things.
We are provincials no longer. The tragic events of the thirty months of vital turmoil through
which we have just passed have made us citizens of the world. There can be no turning back.
Our own fortunes as a nation are involved whether we would have it so or not.
And yet we are not the less Americans on that account. We shall be the more American if we
but remain true to the principles in which we have been bred. They are not the principles of a
province or of a single continent. We have known and boasted all along that they were the
principles of a liberated mankind. These, therefore, are the things we shall stand for, whether in
war or in peace:
That all nations are equally interested in the peace of the world and in the political stability of
free peoples, and equally responsible for their maintenance; that the essential principle of
peace is the actual equality of nations in all matters of right or privilege; that peace cannot securely or justly rest upon an armed balance of power; that governments derive all their just
powers from the consent of the governed and that no other powers should be supported by the
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common thought, purpose or power of the family of nations; that the seas should be equally
free and safe for the use of all peoples, under rules set up by common agreement and consent,
and that, so far as practicable, they should be accessible to all upon equal terms; that national
armaments shall be limited to the necessities of national order and domestic safety; that the
community of interest and of power upon which peace must henceforth depend imposes upon
each nation the duty of seeing to it that all influences proceeding from its own citizens meant
to encourage or assist revolution in other states should be sternly and effectually suppressed
and prevented.
I need not argue these principles to you, my fellow countrymen; they are your own part and
parcel of your own thinking and your own motives in affairs. They spring up native amongst
us.…
I stand here and have taken the high and solemn oath to which you have been audience because the people of the United States have chosen me for this august delegation of power and
have by their gracious judgment named me their leader in affairs.
I know now what the task means. I realize to the full the responsibility which it involves. I pray
God I may be given the wisdom and the prudence to do my duty in the true spirit of this great
people. I am their servant and can succeed only as they sustain and guide me by their confidence and their counsel. The thing I shall count upon, the thing without which neither counsel
nor action will avail, is the unity of America-an America united in feeling, in purpose and in its
vision of duty, of opportunity and of service.
We are to beware of all men who would turn the tasks and the necessities of the nation to their
own private profit or use them for the building up of private power.
United alike in the conception of our duty and in the high resolve to perform it in the face of all
men, let us dedicate ourselves to the great task to which we must now set our hand. For myself
I beg your tolerance, your countenance and your united aid.
The shadows that now lie dark upon our path will soon be dispelled, and we shall walk with
the light all about us if we be but true to ourselves-to ourselves as we have wished to be known
in the counsels of the world and in the thought of all those who love liberty and justice and the
right exalted.
"Wilson's Second Inaugural Address," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999
Microsoft Corporation. All rights reserved.
HOUSE APPROVES STATE OF WAR RESOLUTION ASSOCIATED PRESS APRIL 6, 1917
After Germany declared it would conduct unrestricted warfare against ships from any country
going to the United Kingdom, United States President Woodrow Wilson, who had tried to keep
the United States neutral in the war in Europe, cut off diplomatic relations with Germany on
February 3, 1917. Two months later on April 6, Congress approved the country's entry into
World War I (1914-1918), despite opposition in both the House of Representatives and the
Senate. Jeannette Rankin, mentioned in this article, was the first woman elected to the House
and a staunch pacifist who later voted against the declaration of war with Japan in 1941.
Washington, April 6.-The resolution declaring that a state of war exists between the United
States and Germany, already passed by the Senate, passed the House shortly after 3 o'clock this
morning by a vote of 373 to 50.
President Wilson will sign the resolution as soon as Vice-President Marshall has attached his
signature in the Senate. It formally accepts the state of belligerency forced by German aggres-
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Modern History I (Imperialism to the Age of Depression and Recovery)
sions and authorizes and directs the President to employ the military and naval forces and all
the resources of the nation to bring war against Germany to a successful termination.
Without roll calls the House rejected all amendments, including proposals to prohibit the sending of any troops overseas without Congressional authority.
Passage of the resolution followed seventeen hours of debate. There was no attempt to filibuster, but the pacifist group under the leadership of Democratic Leader Kitchin prolonged the
discussion with impassioned speeches. Kitchin declared his conscience would not permit him
to support the President's recommendation that a state of war be declared.
Miss Rankin of Montana, the only woman member of Congress, sat through the first roll call
with bowed head, failing to answer to her name, twice called by the clerk.
On the second roll call Miss Rankin rose and said in a sobbing voice, "I want to stand by my
country, but I cannot vote for war."
For a moment then she remained standing, supporting herself against a desk and as cries of
"Vote, vote," came from several parts of the House, she sank back into her seat without voting
audibly. She was recorded in the negative.
The fifty who voted against the resolution were: Almond, Bacon, Britten, Browne, Burnett,
Carey, Church, Connolly of Kansas; Cooper of Wisconsin; Davidson, Davis, Decker, Dill, Dillon, Dominick, Esch, Frear, Fuller of Illinois; Haugen, Hayes, Hensley, Hilliard, Hull of Iowa;
Igoe, Johnson of South Dakota; Keating, King, Kinkaid, Kitchin, Knutson, La Follette, Little,
London, Lundsen, McLemore, Mason, Nelson Randall, Rankin, Reavis, Roberts, Rodenburg,
Shackleford, Sherwood, Sloan, Stafford, Van Dyke, Voigt, Wheeler and Woods of Iowa.
Cheers greeted the announcement of the result. A few minutes later Speaker Clark signed the
resolution and the House then adjourned to meet again Monday and take up the administration's recommendations for war legislation.
Source: Associated Press, April 6, 1917.
WILSON ASKS CONGRESS FOR WAR APRIL 2, 1917
The German government in January 1917 announced its intent to pursue "unrestricted submarine warfare" and forced United States president Woodrow Wilson to ask Congress for a declaration of war. Wilson recognized that the "ultimate peace of the world" required American participation on the battlefield and at the peace table. His speech to Congress on April 2, 1917,
outlines the prescription for international leadership that Wilson hoped the United States would
follow during the rest of the 20th century. Congress declared war on Germany four days later.
Herbert S. Parmet
…I have called the Congress into extraordinary session because there are serious, very serious,
choices of policy to be made, and made immediately, which it was neither right nor constitutionally permissible that I should assume the responsibility of making.
On the third of February last I officially laid before you the extraordinary announcement of the
Imperial German Government that on and after the first day of February it was its purpose to
put aside all restraints of law or of humanity and use its submarines to sink every vessel that
sought to approach either the ports of Great Britain and Ireland or the western coasts of Europe
or any of the ports controlled by the enemies of Germany within the Mediterranean.…
Vessels of every kind, whatever their flag, their character, their cargo, their destination, their
errand, have been ruthlessly sent to the bottom without warning and without thought of help or
mercy for those on board, the vessels of friendly neutrals along with those of belligerents. Even
hospital ships and ships carrying relief to the sorely bereaved and stricken people of Belgium,
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though the latter were provided with safe conduct through the proscribed areas by the German
Government itself and were distinguished by unmistakable marks of identity, have been sunk
with the same reckless lack of compassion or of principle.…
It is a war against all nations. American ships have been sunk, American lives taken, in ways
which it has stirred us very deeply to learn of, but the ships and people of other neutral and
friendly nations have been sunk and overwhelmed in the waters in the same way.
There has been no discrimination. The challenge is to all mankind.
Each nation must decide for itself how it will meet it. The choice we make for ourselves must
be made with a moderation of counsel and a temperateness of judgment befitting our character
and our motives as a nation. We must put excited feeling away. Our motive will not be revenge or the victorious assertion of the physical might of the nation, but only the vindication of
right, of human right, of which were are only a single champion.…
…armed neutrality, it now appears, is impracticable. Because submarines are in effect outlaws
when used as the German submarines have been used against merchant shipping, it is impossible to defend ships against their attacks as the law of nations has assumed that merchantmen
would defend themselves against privateers or cruisers, visible craft giving chase upon the open
sea. It is common prudence in such circumstances, grim necessity indeed, to endeavor to destroy them before they have shown their own intention. They must be dealt with upon sight, if
dealt with at all. The German Government denies the right of neutrals to use arms at all within
the areas of the sea which it has proscribed, even in the defense of rights which no modern
publicist has ever before questioned their right to defend. The intimation is conveyed that the
armed guards which we have placed on our merchant ships will be treated as beyond the pale
of law and subject to be dealt with as pirates would be. Armed neutrality is ineffectual enough
at best; in such circumstances and in the face of such pretensions it is worse than ineffectual: it
is likely only to produce what it was meant to prevent; it is practically certain to draw us into
the war without either the rights or the effectiveness of belligerents. There is one choice we
cannot make, we are incapable of making: we will not choose the path of submission and suffer the most sacred rights of our Nation and our people to be ignored or violated.
The wrongs against which we now array ourselves are no common wrongs; they cut to the very
roots of human life.
With a profound sense of the solemn and even tragical character of the step I am taking and of
the grave responsibilities which it involves, but in unhesitating obedience to what I deem my
constitutional duty, I advise that the Congress declare the recent course of the Imperial German
Government to be in fact nothing less than war against the government and people of the
United States; that it formally accept the status of belligerent which has thus been thrust upon
it; and that it take immediate steps not only to put the country in a more thorough state of defense but also to exert all its power and employ all its resources to bring the Government of the
German Empire to terms and end the war.…
Our object now, as then, is to vindicate the principles of peace and justice in the life of the
world as against selfish and autocratic power and to set up amongst the really free and selfgoverned peoples of the world such a concept of purpose and of action as will henceforth insure the observance of those principles. Neutrality is no longer feasible or desirable when the
peace of the world is involved and the freedom of its peoples, and the menace to that peace
and freedom lies in the existence of autocratic governments backed by organized force which
is controlled wholly by their will, not by the will of their people.…
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We are glad, now that we see the facts with no veil of false pretense about them, to fight thus
for the ultimate peace of the world and for the liberation of its peoples, the German peoples
included: for the rights of nations great and small and the privilege of men everywhere to
choose their way of life and of obedience. The world must be made safe for democracy. Its
peace must be planted upon the tested foundations of political liberty. We have no selfish ends
to serve.
We desire no conquest, no dominion. We seek no indemnities for ourselves, no material compensation for the sacrifices we shall freely make. We are but one of the champions of the rights
of mankind. We shall be satisfied when those rights have been made as secure as the faith and
the freedom of nations can make them. …
It is a distressing and oppressive duty, Gentlemen of the Congress, which I have performed in
thus addressing you. There are, it may be, many months of fiery trial and sacrifice ahead of us.
It is a fearful thing to lead this great peaceful people into war, into the most terrible and disastrous of all wars, civilization itself seeming to be in the balance. But the right is more precious
than peace, and we shall fight for the things which we have always carried nearest our hearts, for democracy, for the right of those who submit to authority to have a voice in their own Governments, for the rights and liberties of small nations, for a universal dominion of right by such
a concert of free peoples as shall bring peace and safety to all nations and make the world itself
at last free. To such a task we can dedicate our lives and our fortunes, everything that we are
and everything that we have with the pride of those who know that the day has come when
America is privileged to spend her blood and her might for the principles that gave her birth
and happiness and the peace which she has treasured. God helping her, she can do no other.
Source: U.S. 65th Congress, 1st Session, Senate Document 5.
E1Arras and Ieper
In 1917 the Allies made two large-scale attempts to break the German lines on the western
front. The first Allied attempt took place near Arras between April 9 and May 21. While it was
being planned by the British and the French high commands, the Germans withdrew from their
original line along the Aisne to a new position, previously prepared somewhat to the north, and
known as the Hindenburg line, against which the Allies directed their attack. Their offensive
included the Third Battle of Arras, in which Canadian troops captured the heavily fortified and
stubbornly defended Vimy Ridge, and the British forces made an advance of 6 km (4 mi); and a
battle on the Aisne, and one in the Champagne district, both of which resulted in a slight
French gain at a cost in casualties so great as to cause a mutiny among the troops. Because of
the failure of his reckless attack, General Nivelle on May 15 was replaced by General Henri
Philippe Pétain; the new commander's policy was to remain on the defensive until U.S. troops
arrived.
The second great Allied offensive took place in June, when the British under Haig made an attempt in Flanders to break through the right wing of the German position. A preliminary battle
at Messines set the stage for the main attacks (July 31-November 10) at Ieper. Desperate fighting, in which each side suffered approximately 250,000 casualties, did not result in a breakthrough.
E2 Use of Tanks
Other attacks of Allied forces on the western front in 1917 included a battle at Verdun, in
which the French succeeded in regaining an additional section of the area they had lost the
previous year; and (November 20-December 3) the Battle of Cambrai, during which the British
opened the attack with a raid by nearly 400 tanks. This was the first tank raid on such a scale in
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Modern History I (Imperialism to the Age of Depression and Recovery)
military history, and, but for lack of reserves, the British might have achieved a breakthrough.
As it was, the British drove an 8-km (5-mi) salient into the German lines. German counterattacks, however, compelled the British to yield most of the newly won ground.
After the U.S. entered the war in April 1917, it moved rapidly to raise and transport overseas a
strong military force, known as the American Expeditionary Force (AEF), under the command of
General John J. Pershing. By June 1917 more than 175,000 American troops were training in
France, and one division was actually in the lines of the Allied sector near Belfort; by November 1918 the strength of the AEF was nearly 2 million. From the spring of 1918 U.S. troops
played an important part in the fighting.
E3 Submarine Warfare
In 1917 not only did the U.S. enter the war, but also the Germans failed in their attempt to
drive Britain to surrender through the destruction by submarine of the British and Allied shipping on which it depended for food and other supplies. At the outset the German submarine
campaign seemed likely to succeed. Toward the end of 1916 German submarines were destroying monthly about 300,000 tons of British and Allied shipping in the North Atlantic; in
April 1917 the figure was 875,000 tons. Because the Germans had calculated that the destruction of 600,000 tons monthly for six consecutive months would be sufficient to force Britain to
capitulate, they were doubly certain of victory after April. Britain, however, roused itself to unprecedented efforts to fight the submarine menace. By the adoption of a system of convoying
fleets of merchant vessels with warships, especially destroyers and submarine chasers, and by
the use of hydroplanes for spotting submarines and depth bombs or charges for destroying
them, the Britain, as the summer advanced, rendered the German submarine campaign less
and less effective. By the fall, although large numbers of Allied ships were still being sunk, the
Germans were sustaining heavy losses in submarines. At the same time the Allied nations, especially the U.S., were rapidly building new shipping. By the outset of 1918 the Allies were
turning out more new ships than the Germans were destroying, and the German effort to end
the war by submarine warfare had clearly failed.
THE ZIMMERMANN TELEGRAM GERMAN LEGATION JAN. 19,1917 VIA GALVESTON
Before the United States entered World War I, the German government tried to provoke a war
between the United States and Mexico. On January 19, 1917, the German foreign secretary,
Arthur Zimmermann, sent an encoded telegram to his diplomatic representatives in Mexico,
asking them to propose a secret alliance with the Mexican government. But British intelligence
officers intercepted and quickly decoded the message, sending it on to President Woodrow
Wilson. A huge public outcry ultimately resulted in an American declaration of war against
Germany. The encoded telegram, below, is followed by the deciphered text.
MEXICO CITY
130 13042 13401 8501 115 3528 416 17214 6491 11310
18147 18222 21560 10247 11518 23677 13605 3494 14936
98092 5905 11311 10392 10371 0302 21290 5161 39695
23571 17504 11269 18276 18101 0317 0228 17694 4473
22284 22200 19452 21589 67893 5569 13918 8958 12137
1333 4725 4458 5905 17166 13851 4458 17149 14471 6706
13850 12224 6929 14991 7382 15857 67893 14218 36477
5870 17553 67893 5870 5454 16102 15217 22801 17138
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Modern History I (Imperialism to the Age of Depression and Recovery)
21001 17388 7446 23638 18222 6719 14331 15021 23845
3156 23552 22096 21604 4797 9497 22464 20855 4377
23610 18140 22260 5905 13347 20420 39689 13732 20667
6929 5275 18507 52262 1340 22049 13339 11265 22295
10439 14814 4178 6992 8784 7632 7357 6926 52262 11267
21100 21272 9346 9559 22464 15874 18502 18500 15857
2188 5376 7381 98092 16127 13486 9350 9220 76036 14219
5144 2831 17920 11347 17142 11264 7667 7762 15099 9110
10482 97556 3569 3670
BERNSTORFF.Charge German Embassy.
TELEGRAM RECEIVED. FROM 2nd from London # 5747.
"We intend to begin on the first of February unrestricted submarine warfare. We shall endeavor
in spite of this to keep the United States of America neutral. In the event of this not succeeding,
we make Mexico a proposal of alliance on the following basis: make war together, make peace
together, generous financial support and an understanding on our part that Mexico is to reconquer the lost territory in Texas, New Mexico, and Arizona. The settlement in detail is left to
you. You will inform the President of the above most secretly as soon as the outbreak of war
with the United States of America is certain and add the suggestion that he should, on his own
initiative, invite Japan to immediate adherence and at the same time mediate between Japan
and ourselves. Please call the President's attention to the fact that the ruthless employment of
our submarines now offers the prospect of compelling England in a few months to make
peace." Signed, ZIMMERMANN.
Source: National Archives and Records Administration
E4 Russia Withdraws
On the eastern front the dominating influence on the fighting during 1917 was the outbreak in
March of the Russian popular uprising against the imperial government, which resulted in turn
in the establishment of a provisional government and the abdication, in March, of Tsar Nicholas II. The provisional government continued the prosecution of the war, in July, under General
Aleksey Alekeseyevich Brusilov, the Russians staged a moderately successful 2-week drive on
the Galician front, but then lost much of the territory they had gained. In September the Germans took Rîga, defended by Russian forces under General Lavr Georgiyevich Kornilov, and in
October occupied the greater part of Latvia and a number of Russian-held islands in the Baltic
Sea. The Bolshevik party seized power by force on November 7. A cardinal point of Bolshevik
policy was the withdrawal of Russia from the war, and on November 20 the government that
had just come into power offered the German government an armistice. On December 15 an
armistice was signed between the Russian and Austro-German negotiators, and fighting ceased
on the eastern front.
E5 Italian Setbacks
The Allies suffered disaster on the Italian front in 1917. During the first eight months of the
year, despite deficiencies in troop strength, artillery, and ammunition, the Italian forces under
General Luigi Cadorna continued efforts to break through the Austrian lines on the Isonzo River
and to attain Trieste. The Italian drives of 1917, which resulted in the 10th and 11th battles of
the Isonzo, did not attain their objective. The latter part of the year (October-December) was
marked by a determined Austro-German offensive carried on by nine Austrian and six newly
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arrived German divisions. Attacking on the upper Isonzo near the town of Caporetto, they succeeded in breaking the line of the Italians, who fell back in confusion from the Isonzo to positions on the Piave River. In the disastrous Caporetto campaign the Italian forces lost 300,000
men as prisoners alone and, the morale of the army broken, approximately the same number as
deserters. In November British and French troops arrived to reinforce the Italians on the Piave,
and a new Italian commander in chief, General Armando Díaz, was appointed in place of
General Cadorna.
In this excerpt from her correspondence reprinted in National Geographic, the Marchesa de
Rosales describes her experiences in hospitals on the Italian front during World War I (19141918). The difficulties faced by the Italian soldiers trying to stop the Austrian advance is clear
in this first-hand account, published while the battles continued in 1917.
LETTERS FROM THE ITALIAN FRONT BY MARCHESA LOUISE DE ROSALES TO ETHEL MATHER
BAGG
Dear L-:
... Our hospital is the most advanced in this zone, and therefore we receive the most gravely
wounded. Naturally we cannot do everything that we want to; but I think it would be worse if
we were not here, and with the moral part, coupled with the help at the bedside, we can comfort so many stricken bodies, so many poor lacerated hearts.
I have not written so frequently of late because I am dead tired when I at last get to my room. I
fall asleep quickly, but we are often awakened at night by gas attacks and must go down to
safety with our gas masks on. So one sleeps when one can. My soul has been obliged to go
through a process of adaptation to the surroundings, to the visions, to the continual surprises;
but little by little one acquires the courage to face it all....
The big guns roar and thunder day and night; but we are already so accustomed to the noise
that we often forget the sound and talk quite lightly of different things. They are pounding as I
write, as though they would break off bits of the mountain and crumble parts of it to pieces.
Under my window hundreds of camions pass day and night-one long procession-carrying up
fresh troops and ammunition, carrying down the wounded or those who have stood the strain
of the fighting so long that they are being brought away to rest a little. At night the sky is fully
illuminated by the flashes of explosives.
I was in the cemetery this afternoon. They have knocked down part of the wall to enlarge it,
and the soldiers were busy digging new graves, so as to have them ready. There was military
music in one of the camps near by and it was really comforting to hear it.
Strange, we have a feeling of perfect security and the sensation of believing that the enemy is
being beaten back and back and will never cross the Isonzo again.
This little town was Austrian a short time ago. Except for a very few simple peasant folk and a
few others in little shops, I am the only woman in the town, with its thousands of soldiers, and
every half hour of the day I gain some new, unexpected impression impossible to describe by
letter-very difficult even by speech....
One cloudless, sunny afternoon I shall never forget. In the little cemetery, just outside the village, the sound of the artillery was continuous, but rather far away. Over our heads Italian
aëroplanes were flying, and suddenly from the blue came a strange rattle, an Austrian mitraliatrice, that was trying to bring them down. Several soldiers were working silently at some tombs
of their comrades; one with a portrait bas-relief made by the simple soldier friend. In a corner
of the cemetery other soldiers were busy digging new graves to have them ready for the men
who were fighting a few kilometers away and would not return alive. Mingled with the sound
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of the spades was a little song of the soldier outside of the cemetery gate, singing as he looked
for the mules.
And the never-ending procession I saw every time I looked out of my bedroom window! Day
and night the camions went up on one side of the little street taking munitions, bread, etc.,
while thousands of mules and men tramped by, the mules bearing water and food for the soldiers, and brightly painted Sicilian carts carrying fodder for the mules. On the opposite side of
the street came down another procession, made up of empty camions to be loaded again and
Red Cross ambulances bringing in the wounded. Through our tiny village 120,000 loaves of
bread passed each day.
SOLDIERS BATTLE AMID ARCTIC COLD IN THE HIGH ALPS
I was talking to a young nurse, 21 years old, who came down from a hospital in the high Alps
by toboggan last week. At noon, when hanging out her sheets to dry in the sun, they often
freeze stiff. The sentinels must sometimes be changed every ten minutes, so as not to die with
the cold. Some of the men are fighting on peaks, where supplies can reach them only by the
teliferica (you know, the baskets slung to a wire that pulls them up thousands of feet), or by
cords and ladders up perpendicular walls of rocks.
This afternoon I attended a party at the Villa Mirafiori, where there are about 83 wholly helpless victims of the war. They had a lottery and some gifts. Kind friends gave me 45 francs, with
which I was able to buy a number of gifts for them-knives, pipes, etc. Four of the boys had lost
both hands-strong, competent-looking men, so good and patient and serene. It is terrible to be
so entirely well otherwise and yet so helpless....
Source: National Geographic Magazine, July 1917.
E6 Greece Enters the War
On the Balkan front in 1917, after the Allied troops had fought several inconclusive engagements at Monastir, at Lake Presba, and on the Vardar (Axiós) River, the Allies initiated an effort
to oust the Greek king, Constantine, claiming that his pro-German sympathies and his aid to
the Central Powers made it impossible for the Allies to conduct successful operations in the
Balkan region. In June the Allies began an invasion of Greece, and at the same time exerted
diplomatic pressure on Constantine to abdicate. He did so on June 12; Venizelos became premier of the government formed under Alexander, the son of Constantine; and on June 27 the
Greek government declared war on all four Central Powers.
E7 The Middle East
In Palestine during 1917 the British made two unsuccessful attempts (March and April) to take
the city of Gaza. Under a new commander, General (later Field Marshal) Sir Edmund Allenby,
the British broke through the Ottoman lines at Beersheba (November), compelling the evacuation of Gaza; and on December 9, Allenby's troops took Jerusalem. The year also witnessed the
beginning of the brilliant leadership of British Colonel T. E. Lawrence, known as Lawrence of
Arabia, in the Arab revolt against the Ottoman Empire. Arab troops led by Lawrence took the
Ottoman-held port of Al 'Aqabah in July, and during the remainder of the year executed many
forays against the Ottoman-held Al ?ijâz (the Hejaz) Railway. The year 1917 was also marked
by British successes in Mesopotamia; they took Baghdâd in March and by September had advanced to Ar Ramâdî on the Euphrates River and Tikrît on the Tigris.
Encarta Historical Essays reflect the knowledge and insight of leading historians. This collection
of essays is assembled to support the National Standards for World History. In this essay, Edward J. Davies II of the University of Utah examines the changes that occurred in warfare and
world politics after industrial technology was applied to the development of military weaponry.
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INDUSTRIAL WARFARE IN THE MODERN ERA BY EDWARD J.DAVIES II
In the fall of 1854, French and British troops clashed with Russian infantry in Crimea. Armed
with new, rifled muskets, the invaders delivered devastating blows to the Russians, who fought
with outmoded, smoothbore muskets in traditional formations used in the era of Napoleon.
Within a decade of that war, in the United States, President Abraham Lincoln ordered 25,000
men from the Army of the Potomac to board trains on their way to relieve threatened Northern
forces around Chattanooga, Tennessee. Meanwhile, Lincoln apprised Ulysses S. Grant, thousands of miles away in the western theater, of his plans to break the Confederate lines near
Chattanooga. To send this information, Lincoln used the telegraph. These seemingly unrelated
events heralded the beginnings of a technological transformation in warfare that would reshape
armies, nation-states, and later, the world.
Industrialization forever changed warfare in Europe and the west, starting in the mid-19th century. Weapons, transportation, and communication all took new forms as industrial technology
increased the firepower and variety of weapons as well as the speed and volume capabilities
for moving people, war materials, and information. Europeans and Americans used these technologies to organize and equip mass armies filled with ordinary citizens rather than professional warriors. More than before, war involved entire nations. Europeans used these military
technologies to reach beyond their borders into Africa and Asia, conquering most of the peoples on these continents. Advances in western medicine made it possible for Europeans to survive the harsh climates and the diseases encountered in these regions and thus indefinitely sustain their presence. Yet, Europeans would meet fierce resistance on both continents, sometimes
resistance with other industrial weapons. The costs of war and imperialism would be heavy,
both in human and material terms.
Industrialization and War
The technological innovations of industrialization created new battlefields and armies from the
mid-19th century onward. The most significant changes came early and were in the areas of
transportation and communications. Railroads appeared first in Britain then quickly spread to
the continent and across the ocean to North America. Military commanders realized the implications of these "Iron Horses" that could move men and equipment great distances in relatively
short times. Suddenly, wars, once confined to a few tens of kilometers, now expanded to hundreds, even thousands, of kilometers.
The great distances between theaters of operation were also bridged by the telegraph. Introduced by American Samuel Morse, the telegraph enabled commanders to move information
almost instantly across spaces as vast as those covered by the railroads. Commanders could
remain in daily contact with scattered armies. Distance became less and less an obstacle to
military planning and execution.
Finally, industry created a new set of deadly weapons. Manufacturing entrepreneurs in Europe
and the United States produced a new array of products, from rifled muskets in the 1850s and
1860s to breech-loading rifles and machine guns by the 1880s. New improvements increased
the power of these weapons. Smokeless gunpowder, for instance, increased the velocity of the
bullet in the muzzle and improved its ballistic behavior overall. The new steel industry of the
1860s and 1870s produced larger artillery weapons with greater strength and durability. Manufacturers made stronger, more effective barrels, simplified how they were loaded, and developed high-explosive shells to fire out of them. By the 1890s, the addition of the recoilless
mechanism increased the rate of fire, regardless of the size of an artillery piece. These and
other innovations made battlefields far more deadly sites as the ability to kill or injure thousands of troops in a relatively short time increased dramatically.
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The demand for these new weapons was high, yet the new weapons manufacturers managed to
meet that demand. Staffed by a vast array of scientists and engineers, Krupp Manufacturing in
Germany, Carnegie Steel in the United States, and a host of other large-scale companies delivered new or improved weapons in large quantities and on strict schedule. By the end of the
19th century, the size and flexibility of a country's industrial base proved an effective indicator
of its military capacity.
New Military Methods in the West
The American Civil War (1861-1865) was one of the first industrialized wars. Both the North
and the South equipped large armies that fought over distances of more than a thousand kilometers. Both the North and South needed modern forms of transportation and communications
to command their forces. The North used its huge industrial base, much greater than the cotton-based economy of the South, to build up the war materials necessary to support its vast
armies, which had grown to 1 million men by 1864.
To win the war, Union Commander Ulysses S. Grant realized the Union needed both to break
civilian morale and to destroy the economic capacity of the South to sustain Northern armies.
He planned to reduce Southern forces in the east through relentless combat, gambling that the
greater northern economic resources would prevail. To complete the task of reducing Southern
resistance, Union General William Sherman led his forces on a massive raid into Georgia and
South Carolina with the intention of devastating the economies and the people of these states.
This raid and other similar acts did, indeed, accomplish these goals. Grant had used the tools
of modern war, including the railroads and telegraph lines, to achieve victory.
In Europe during these years, Prussian leadership used these same tools to dominate the German states, then under the influence of the Austrian Empire. Beginning in the 1840s, Prussia,
vulnerable along its exposed borders, had built a system of strategic railways designed to move
troops quickly from one threatened area to another. Prussia had also organized an effective
general staff composed of officers trained in the science and history of war. These men demonstrated keen organizational abilities, especially in the arena of planning and running campaigns. Under the leadership of the brilliant Helmuth von Moltke, the general staff had acquired a professional and innovative character unmatched by any other military group in
Europe.
Realizing the new demands of industrialized warfare, Moltke decentralized the command
structure in order to give his officers flexibility in achieving their objectives. At the tactical
level, the company and platoon became the units of maneuver because these units could efficiently exploit a battlefield dominated by rapidly firing weapons. Moltke believed that the
smaller formations also enabled his lower-level officers to use every available rifle in combat
and thus maximize the army's effectiveness. The main infantry weapon, the new bolt-action,
breech-loading Dreyse rifle, enabled the Prussian soldier to move quickly on the battlefield
while firing at rates far greater than those of the older muskets. Strategically, Moltke continued
to urge the state to invest funds in railways and telegraph lines because these facilitated the
speed and mobility essential for victory.
The Prussians also instituted universal conscription. This fostered patriotism, which was
couched in terms of defending the homeland against enemies. Universal service that included
spending time in the reserve army also enabled the Prussians to exploit the power of their citizenry to the fullest. To ensure the availability of trained veterans, the state demanded that all
men sign up for three years with the regular army, four years in reserve, and finally, five years
in the Landwehr, or home watch. No other power in Europe could draw on their male populations to such an extent as the Prussians could.
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The Austrians, the Prussians' chief military rival, approached war much as their grandfathers
had. Tactically, the Austrians employed column maneuver, shock assaults, and cavalry pursuit.
Strategically, they placed their faith in fortresses and rigid lines of communications. The Austrians had developed no general staff nor put in place effective plans for mobilization. Needless
to say, once the Prussians and Austrians battled for supremacy among the German states, the
assets of the Prussians proved decisive.
At first the world was stunned at the might of Prussian victories against the powerful Austrians
in the 1860s and, a decade later, against the French. Later they emulated them. Armies that had
modeled their military schools, tactics, and strategy after the French now turned to the Prussians. Even Prussian-style uniforms were adopted throughout the West. Military professionals
avidly read the writings of German military theorist Karl von Clausewitz, whose writings had
taught Moltke so much about war. War had taken a new road; one built on conscription, steel,
and technology.
Medicine, Technology, and the Expansion of European Power
The tools of war enabled Westerners to reach beyond their boundaries into lands once dominated by Asian and African powers. The new industrial technology of war provided a crucial
means to accomplish this end. But Europeans were also greatly aided by dramatic breakthroughs in medical knowledge. For centuries, disease had effectively blocked Europeans from
permanent settlement in Asia or Africa. Malaria, yellow fever, typhoid, cholera, and other diseases devastated Western troops regularly.
Breakthroughs such as the new understanding of how germs worked helped Europeans survive
the tropics. Discoveries such as mosquito abatement for malaria moved quickly through an
international network of medical professionals. For the deadliest killer, malaria, Westerners had
used quinine as an effective deterrent since the 1600s. In the 1800s they perfected their technique. By the 1890s, Westerners knew how to purify water, remove and treat sewage, and kill
deadly bacteria. The tropics posed a far less intimidating environment. No longer would armies
succumb to the assault of disease.
Once they knew they could endure the tropics, Europeans used heavily armed steamships to
journey inland along the interior rivers. Made first of iron, then steel, steamships were more
durable in the tropics than wooden ships, which were prone to rot. Armed with steel guns and
high-explosive shells, steamships also proved far more lethal than their predecessors. New industrial products such as brass cartridges were designed for efficient storage on the new metal
ships and proved resistant to deterioration.
These advances facilitated the expansion of European power throughout the tropical world. By
1900, Europeans would rule almost all of Africa and parts of Asia. Even with their industrial
might, however, this feat was rarely easy. Africans bitterly resisted encroachments on their independence. Often, the Africans' resistance depended on European weapons and ingenious
strategies.
Resistance to European Imperialism
The British fought the Ashanti of the Gold Coast for twenty years before conquering them in
1896. The Ashanti had been partners with the Europeans in the African slave trade. By the late
19th century, they had built a formidable state, were equipped with European weapons-albeit
inferior ones-and were otherwise capable of challenging the British. First rebuffed in the 1860s,
the British returned in 1873 under Lord Wolseley, whose campaign against the Ashanti provided a model of administrative and planning excellence. He limited the number of troops to a
few thousand to simplify logistical arrangements and ordered roads built to facilitate supplying
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his forces. Along these routes, he set up way stations to assist his men and maintain a British
presence. Wolseley also made sure that pack animals were available and that his troops were
supplied with canned food, quinine, and potable water, all of which ensured their good health.
Once he confronted the Ashanti, he had the maximum number of breech-loading Snider rifles,
plus artillery pieces that fired seven-pound shells and the American-made, rapid-firing gatling
guns. The less well-armed Ashanti depended on inferior European muskets. Wolseley's victory
proved short-lived, however, since it would take the British another 20 years to subdue the
powerful Ashanti.
In their struggles against the Europeans, African states such as the Ashanti often had built-in
cultural disadvantages that weakened their technical and organizational abilities. The Ashanti
organized their society on cultural premises very different from those of Europeans. These
premises were reflected in Ashanti armies. For example, leaders arranged their troops on the
battlefield in an arc. In this arc, position was determined by the hierarchical relationship of the
local chief to the ultimate ruler. To organize any differently would have nearly required a cultural revolution within the society as a whole. The Ashanti armies were also geared toward
small slaving raids or brief campaigns against formidable enemies. Once a neighboring enemy
yielded, it became part of the Ashanti empire, a practice common in West Africa. The Ashanti
never imagined war of the duration, scale, and level of violence that the Europeans wielded in
their determination to impose permanent rule.
In some cases, those who resisted attempted to match the European advances. The African
military leader Samory Touré waged an 18-year resistance against the French in the SenegalNiger region of West Africa beginning in 1880. He understood European advantages and
sought to offset them. Early on, Samory Touré acquired European muskets, which gave him
undisputed leadership among potential leaders in the region. Always alert to opportunities, he
purchased French chassepots rifles in the mid-1880s and the French Gras and German Mauser
repeater rifles in the 1890s. In fact, by 1898 he had some 4,000 repeaters in his arsenal. He
even tried to develop a local arms industry, but the regional blacksmiths simply lacked the resources to manufacture European weapons made in industrial centers. In the end, the French
assets proved too formidable, and Samory Touré, captured by the French, spent his last days in
Gabon, another French colony.
On one occasion, Europeans found they could neither hold a significant advantage in weapons
nor overwhelm their enemies. The Ethiopian state withstood an attempted conquest by the Italians in the late 1890s. Much like Samory Touré, the Ethiopians realized the advantages of industrial weapons and purchased the latest rifles to equip their armies. They bought Hotckiss
machine guns, developed by Austrian Baron Adolf von Odkolek and first adopted by the
United States Navy in 1897. And they went one step further by abandoning their traditional
phalanx formation, which like the Ashanti's arc, reflected their social organization. In its place,
they introduced the loose formation that was first developed by the Prussians to accommodate
the firing methods of the new weapons.
When the Italians began their war of conquest in 1896, the Ethiopians were skilled in European
warfare and well-practiced in the use of European weapons. The Ethiopians also relied on British advisers to prepare their army for battle. Plus, the Ethiopians received 100,000 rifles and 2
tons of ammunition from the French governor of nearby Somaliland, who feared an Italian victory. Still, the Ethiopians lacked the logistical apparatus of European armies and were faced
with dwindling resources when Italian generals, forced by their political bosses in Rome,
launched a premature attack on the Ethiopian army. Even so, the decision proved fatal for the
Italians as Ethiopians troops, ably led and superbly equipped, defeated the Italian troops.
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Europeans also encountered unexpected opposition in Southeast and East Asia. In China, the
British Navy met defeat in 1859 at the mouth of the Peiho river, where Chinese artillery, protected by fortifications, severely damaged British warships. The Chinese had also turned back
the British landing at Taku in 1857 when they tried to seize Canton on the south coast of
China. In Vietnam, the French confronted substantial resistance. To overcome this opposition,
the French raised a large fighting force and committed significant resources to impose their rule
on Vietnam from 1882 to 1896.
Probably the most formidable opposition encountered by imperial powers were the Boers of
South Africa, descendants of the early Dutch settlers. Forced out of their original 16th-century
colony by the British in the late 1800s, the Boers set up two independent republics: Transvaal
and the Orange Free State. The mineral wealth of these regions-especially the gold reservescompelled the British to attempt a takeover of these republics. The Boers, anticipating this
move, conducted a preemptive strike against British positions in 1899. The Boers arrived with
smokeless powder, bolt-action rifles, and machine guns. They fought in elusive mobile columns.
Early Boer victories compelled the British to gather more resources from other parts of their
empire and to develop new strategies and tactics. Yet, once the British defeated the Boers, diehard Boer resisters formed a guerrilla army prepared for a long fight. The British responded with
novel techniques. Under Lord Kitchner's leadership, the British built blockhouses in enemy
territory to guard communications and supply lines. Kitchner, a powerful figure in the British
military, also forced Boer civilians, mostly women and children, into camps, where they were
leveraged as hostages against the men in the field. Thousands died because of the poor conditions they were forced into by the British. This, and the rising costs of victory, provoked bitter
protests in Britain. Nevertheless, the strategy worked, and the Boer republics became part of
the British colony in South Africa.
Of non-western nations, only the Japanese successfully adopted the western industrial strategy.
In the late 1860s, the Japanese abandoned their feudal order and embraced industrialization
and other aspects of modern life. Subsequently, they sent missions to Europe and the United
States to study their institutions and military systems. The Japanese then modified what they
had learned to Japanese culture. From a society defended by samurai warriors in the 1850s,
Japan emerged with a modern army, a general staff, universal conscription, and a Prussian-style
reserve scheme by the 1890s. To sustain these innovations, Japan relentlessly pursued industrialization. And by 1900, they had established a modern economy. Japan built one of the best
navies in the world, fielded an army unmatched in Asia, and began building an overseas empire in island possessions. In 1904, Japan went to war with Russia for control of the Korean
peninsula. To the shock of the Russians and the Western observers, Japanese forces decisively
defeated the Russians both on land and at sea. Japan had gained a foothold on the Asian
mainland. The tables seemed to have turned.
The high casualty rates and huge financial and material costs of the Russo-Japanese war foreshadowed what would happen in World War I a decade later. In the two decades before World
War I, European powers-fueled by enormous corporate production and innovation-constructed
large navies, introduced increasingly powerful weapons, and prepared for conflict that few expected would last long. The technology that brought ascendancy after 1850 would prove far
too effective during the great destruction of World War I. The huge costs of World War Iincluding the loss of an entire generation of young men-forced many Europeans to reexamine
where industrialization had taken them. The progress of the previous century had collapsed
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into horrifying catastrophe. Industrialization had changed the way they lived their lives. Now it
had changed how many thousands would die.
About the author: Edward J. Davies II is an associate professor of history at the University of
Utah. He is the author of The Anthracite Aristocracy: Leadership and Social Change in the
Hard Coal Regions of Northeastern Pennsylvania among other publications.
F 1918:
The Final Year The early part of 1918 did not look propitious for the Allied nations. On March
3 Russia signed the Treaty of Brest-Litovsk, which put a formal end to the war between that
nation and the Central Powers on terms more favorable to the latter; and on May 7 Romania
made peace with the Central Powers, signing the Treaty of Bucharest, by the terms of which it
ceded the Dobruja region to Bulgaria and the passes in the Carpathian Mountains to AustriaHungary, and gave Germany a long-term lease on the Romanian oil wells.
RUSSIANS, BLINDFOLDED, SIGN A TREATY OF PEACE. KAISER HALTS ARMIES ON THE EASTERN
FRONT
Pact more Ignominious than the One First Offered them is Finally Accepted by the Slavs. Los
Angeles Times March 4, 1918
The Treaty of Brest-Litovsk, as described in this article, meant enormous territorial losses for
Russia but was the only way in which Bolshevik leader Vladimir Lenin (spelled here as
"Lenine") could hold to his goal of withdrawing Russia from World War I (1914-1918). Russia's
signing of the treaty affected the Allied Powers by freeing Germany to focus on other fronts.
Petrograd, March 3.-A German airman bombed various parts of the city. Three persons were
killed and five wounded.
The material damage was unimportant.
Berlin, via London, March 3.-(British Admiralty per Wireless Press.)-The Germans, in their advance through Russia, have captured, according to the official communication from general
headquarters, 6800 officers and 57,000 men, 2400 guns, 5000 machine guns, thousands of
motor vehicles, 800 locomotives and thousands of railroad trucks.
Petrograd, March 3.-The peace treaty with Germany has been signed. The Ukrainian army has
occupied Kiev, Gomel and Berdichev.
Berlin (via London) March 3.-"By reason of the signing of the peace treaty with Russia," says the
official communication from headquarters tonight, "military movements in Great Russia have
ceased."
CONFIRMATION.
[By Atlantic Cable and A. P.]
Petrograd, Saturday, March 2.-In the fear that argument would result in even more onerous
terms, the Russian delegation at Brest-Litovsk has accepted all the German peace conditions
and is about to sign an agreement, according to a telegram from the delegates received today at
the Smolny Institute. The demands already have been increased, they reported. The message,
which was addressed to Premier Lenine and Foreign Minister Trotzky, follows:
"As we anticipated, deliberations on a treaty of peace are absolutely useless and could only
make things worse in comparison with the ultimatum of February 21. They might even assume
the character of leading to the presentation of another ultimatum.
In view of this fact and in consequence of the Germans' refusal to cease military action until
peace is signed, we have resolved to sign the treaty without discussing its contents and leave
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after we have attached our signatures. We, therefore, have requested a train, expecting to sign
today and leave afterward.
"The most serious feature of these new demands, compared with those of February 21, is the
following:
"To detach the regions of Karaband, Kars and Batoum from Russian territory on the pretext of
the right of peoples to self-determination."
The new territorial claims upon Russia are apparently advanced in the interest of Turkey. Batoum, a strongly fortified seaport on the Black Sea coast, in Trans-Caucasia, about twenty miles
north of the border of Turkish Armenia, was one of the cities ceded by Turkey to Russia after
the Russo-Turkish war of 1877-1878. Kars, also in Trans-Caucasia, 105 miles northeast of
Krzeroum in Turkish Armenia, has been in dispute between Turks and the Russians for nearly a
century and finally was ceded to Russia at the same time as was Batoum. The other region
mentioned probably is that of Karabagh, Trans-Caucasia, lying to the east of the Kars region
and north of the Persian border.
Source: Los Angeles Times, March 4, 1918.
F1 Bulgaria and Austria-Hungary Withdraw
On the Balkan front, however, the result of the fighting of 1918 was disastrous to the Central
Powers. In September a force of about 700,000 Allied troops, consisting of French, British,
Greeks, Serbs, and Italians, began a large-scale offensive against the German, Austrian, and
Bulgarian troops in Serbia. The Allied offensive was so successful that by the end of the month
the Bulgarians were thoroughly beaten and concluded an armistice with the Allies. The German success in Romania was nullified in November when, with the support of Allied troops
who had advanced into Romania after the Bulgarian capitulation, Romania reentered the war
on the Allied side. After the conclusion of the Bulgarian armistice, the Serbian part of the Allied
army continued to advance, occupying Belgrade on November 1, while the Italian army invaded and occupied Albania.
On the Italian-Austro-Hungarian front, the Austrians, in June, attacked on the Piave and succeeded in crossing the river, only to be driven back with the loss of about 100,000 men. In October-November the Allies definitely gained the victory in Italy, routing the Austrians in an offensive that culminated in the Battle of Vittorio Veneto (October 24-November 4). The Allies
completely shattered the Austrian army in this campaign; they took several hundred thousand
prisoners and the remainder of the Austrian army fled into Austria. On November 3 the Italians
at last took Trieste, and on November 5 they occupied Fiume. The shock of the defeat precipitated revolutionary events in Austria-Hungary. The Czechs and the Slovaks had already set up a
separate state; in October the South Slavs proclaimed their independence, and in December set
up an independent kingdom, later part of Yugoslavia. In November the Hungarians established
an independent government. The Austro-Hungarian government at Vienna concluded an armistice with the Allies on November 3 and nine days later the last Habsburg emperor, Charles I,
abdicated; on the following day the Austrian Republic was proclaimed.
F2 Ottoman Empire Withdraws
During 1918 the Allies also brought the campaigning in Palestine to a successful conclusion. In
September the British forces broke through the Ottoman lines at Megiddo and routed the Ottoman army and the German corps that was assisting it. After being joined by Arab forces under Lawrence, the British took Lebanon and Syria. In October they captured Damascus, ?alab
(Aleppo), and other key points, while French naval forces occupied Beirut, and the Ottoman
government asked for an armistice. An armistice was concluded on October 30, and by its
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terms the Ottomans were obliged to demobilize, break relations with the Central Powers, and
permit Allied warships to pass through the Dardanelles.
F3 Last German Efforts
Despite the German victories over Russia and Romania in 1917, at the outset of 1918 the Allies, principally through their spokesperson Woodrow Wilson, formulated war aims drastically
opposed to those already stated by the Central Powers; Wilson's peace policy was enunciated
in an address to the U.S. Congress and comprised 14 points designed to bring about a just
peace, which were of considerable influence in inducing the Central Powers to cease hostilities
later in the year. At the beginning of 1918 the Germans, realizing that victory by means of
submarine warfare was impossible, and that they must force a decision on the western front
before American troops might take up positions there in force, planned for the spring of the
year an all-out effort to break through the Allied lines and reach Paris. The opening drive of
their powerful offensive, which began on March 21, was directed at the British front south of
Arras. The drive hurled the British lines back 65 km (40 mi) before it was halted, on April 5,
principally by hastily summoned French reserves. The fear of a German breakthrough aroused
among the Allies by the German success in the first week of the offensive caused the Allies to
appoint General (later Marshal) Ferdinand Foch in charge of assuring coordination of Allied
operations; in the following month he was made commander in chief of the Allied armiesFrench, Belgian, British, and American-in France. During April a second German thrust took
Messines Ridge and Armentières from the British, and in June a powerful German surprise attack against the French on the Aisne drove a salient 65 km (40 mi) deep into the French position and enabled the Germans to reach a point of the Marne only 60 km (37 mi) from Paris.
During this battle American troops first went into action in force; together with French troops,
the U.S. Second Division halted (June 4) the German advance at Château-Thierry. The Germans made additional gains of terrain in June, but by the middle of July the force of their offensive had largely been spent. In the Second Battle of the Marne, they succeeded in crossing the
river, but once they were across their progress was halted by French and American troops.
Sensing that the German drive had lost its power, General Foch on July 18 ordered a counterattack. The attack drove the Germans back over the Marne, and the Allies took the initiative on
the western front that they retained to the end of the war.
F4 End of the War in Europe
Beginning with a British drive (August 8-11) into the German lines around Amiens, the Allies
began the offensive that three months later resulted in German capitulation. During the last
week of August and the first three days of September, British and French forces won the Second
Battle of the Somme and the Fifth Battle of Arras, and drove the Germans back to the Hindenburg line. A particularly strong German salient at Saint-Mihiel was then reduced by American
troops (September 12-13), who took more than 14,000 prisoners. In October and early November the British moved toward Cambrai and the Americans advanced partly through the Argonne Forest. The latter thrust broke the German lines between Metz and Sedan. As a result of
these offensives, Ludendorff requested his government to seek an armistice with the Allies. The
German government initiated armistice talks (October) with the Allies, but they failed when
President Wilson insisted on negotiating only with democratic governments. The British advance meanwhile made rapid progress in northern France and along the Belgian coast, and on
November 10, U.S. and French troops reached Sedan. By the beginning of November the Hindenburg line had been completely broken, and Germans were in rapid retreat on the entire
western front. The defeat of the German army had domestic political repercussions that were
catastrophic to the established German government. The German fleet mutinied; an uprising
dethroned the king of Bavaria; and in November Emperor William II abdicated and fled to the
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Netherlands. The German republic was proclaimed on November 9. An armistice commission
had already been dispatched to negotiate with the Allies. At 5 AM on November 11, an armistice was signed at Compiègne between Germany and the Allies on terms laid down by the
Allies; at 11 the same morning hostilities ended on the western front.
G Colonial Warfare
The forces in the German colonies of Africa and the Pacific, with the chief exception of those
in German East Africa in late 1917 and 1918, generally fought on the defensive. They were in
some cases swiftly overcome, and in others gradually, but by the end of the war in 1918 practically all had capitulated to the Allies.
G1 Africa
In 1914 the German colonies in Africa consisted of Togoland, the Cameroons (German. Kamerun), German Southwest Africa, and German East Africa. An Anglo-French force took possession of Togoland in August 1914. In September of that year a British force invaded the Cameroons from Nigeria, and a French force invaded from French Equatorial Africa to the east and
south of the Cameroons. After many campaigns in which the Germans several times defeated
the Allied Forces, German resistance was finally overcome in February 1916. German Southwest Africa was conquered, between September 1914 and July 1915, by troops from the Union
of South Africa. The most important of the German possessions, German East Africa, displayed
the strongest resistance to the attacks of the Allies. Early assaults by British and Indian troops
(November 1914) were repulsed by the Germans under General Paul von Lettow-Vorbeck. In
November 1915, British naval units gained control of Lake Tanganyika, and the following year
the Allied forces (British, South Africans, and Portuguese) intended for the invasion of German
East Africa were placed under the command of General Jan Christiaan Smuts. In 1916 the Allies captured the principal towns of German East Africa, including Tanga, Bagamoyo, Dar es
Salaam, and Tabora, and Lettow-Vorbeck's troops then retreated into the southeast section of
the colony. Late in 1917, however, the German forces took the offensive, invading Portuguese
East Africa; and in November 1918 they began an invasion of Rhodesia. When the armistice
was signed in Europe in 1918, the troops in German East Africa were still fighting, even though
most of the colony was in the hands of the Allies. Lettow-Vorbeck surrendered three days after
the European armistice was declared.
G2 The Pacific
In the Pacific a force from New Zealand captured the German-held portions of Samoa Islands
in August 1914 and in September, Australian forces occupied German possessions in the Bismarck Archipelago and New Guinea. Japanese forces took the fortress of Qingdao (Tsingtao), a
German-held port in Shandong (Shan-tung) Province, China, in November 1914, and between
August and November of that year took possession of the German-held Marshall Islands, the
Mariana Islands, the Palau group of islands, and the Carolines. After the war ended, Japan retained Qingdao until 1922, and received a mandate over the Marshall Islands, many of the
Marianas (including Saipan), and over the Palau group and the Carolines.
H The War at Sea
At the outset of war the main British fleet, the Grand Fleet, consisted of 20 dreadnoughts and
numerous other ships, including battle cruisers, cruisers, and destroyers; and Grand Fleet was
based principally on Scapa Flow, in the Orkney Islands north of Scotland. A second British
fleet, consisting of older ships, was used to guard the English Channel. The German fleet, the
High Seas Fleet, consisting of 13 dreadnoughts, was based on the North Sea ports of Germany.
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H1 Early Operations
During 1914 no major naval engagements between the belligerents took place in the Atlantic.
The British raided the German naval base at Helgoland Bight, an island off Germany in the
North Sea, sinking three German ships. German submarines sunk several British naval units,
including the superdreadnought Audacious (October 27); and a daring attempt by German
submarines to raid Scapa Flow caused the British naval units stationed there to withdraw to
bases on the west coast of Scotland.
In the South Pacific a squadron of German cruisers under the command of Admiral Maximilian
von Spee did considerable damage to installations at the French island of Tahiti and the Britishheld Fanning Island (September and October 1914); defeated a British squadron off the headland of Coronel, Chile (November 1); and on December 8 was defeated with the loss of four
out of its five ships in the Battle of Falkland Islands by a British squadron under Admiral Sir
Frederick Sturdee. During 1914 and the early part of 1915 German cruisers did considerable
damage to British shipping in the Indian Ocean and elsewhere until captured or otherwise put
out of commission.
The year 1915 was notable for the submarine blockade Germany instituted around Britain. The
sinking by German submarine action of the British passenger liner Lusitania on May 7 caused
the loss of many American lives, leading to a controversy between the United States and Germany that almost precipitated war between the two nations. The firm stand taken by the U.S.
forced Germany to modify its method of submarine warfare to the satisfaction of the American
government. In March 1916, however, the German sinking in the English Channel by submarine of the French steamer Sussex, with the loss of American lives, led to another controversy
between Germany and the U.S., a virtual U.S. ultimatum compelling Germany temporarily to
cease its unrestricted submarine warfare.
H2 1916 and After
The most important naval engagement of the war was the Battle of Jutland, waged on May 31
and June 1, 1916, between the British Grand Fleet and the German High Seas Fleet. Although
the British losses, both in ships and human lives, were greater than Germany's, the German
fleet, having returned to home ports, did not venture to give battle again during the war, and
the British retained their supremacy at sea. Nevertheless, during the remainder of the war,
German cruisers managed to run the blockade of Germany, which the British had established
from the outset of the war. The Germans sank considerable tonnage of Allied shipping in the
North Atlantic and then returned to their bases. In 1917 the Germans again resorted to unrestricted submarine warfare, convinced that this method was the only one that would defeat
Britain. The plan not only failed to force the capitulation of Britain, but also caused the U.S. to
declare war against Germany. The attacks of German submarines on British convoys in the Atlantic and in the North Sea caused much loss of shipping. As a result, in April 1918 the British
attempted to block the German submarine bases at Ostend (Oostende) and Zeebrugge in Belgium; they succeeded in partially blocking Zeebrugge by sinking three overage British cruisers
in the harbor, but failed at Ostend. In October, however, British land forces, advancing through
Belgium, took the two submarine bases and other Belgian ports.
H3 German Fleet Scuttled
By the terms of the armistice the Germans surrendered to the Allies most of their fleet, consisting of 10 battleships, 17 cruisers, 50 torpedo boats, and more than 100 submarines. All of the
fleet with the exception of the submarines was interned at Scapa Flow in November 1918, with
German captains and crews aboard. The Treaty of Versailles (1919), which ended the war,
provided that all the interned ships become the permanent property of the Allies; that other
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warships still in German possession also be surrendered; and that the size of any future German navy be drastically limited. In reprisal against these terms, the Germans on June 21, 1919,
scuttled their ships interned at Scapa Flow.
The total tonnage of Allied ships sunk by German submarines, surface craft, and mines was
nearly 13 million; the largest tonnage sunk in any one year was about 6 million, in 1917.
OVER A THOUSAND LIVES PROBABLY LOST WHEN THE GERMANS SANK THE LUSITANIA.
Executive Faces Necessity of Making Good War Zone Protest to Germany.
United States Authorities will Make a Thorough Inquiry into the Number of Americans Lost on
the Lusitania and will Include in Whatever Representations are Made Some Other Grievances.
Los Angeles Times May 8, 1915
This report from the Los Angeles Times describes the United States government's initial reaction to the sinking of the British liner Lusitania by Germany. A total of 128 Americans were
killed in the attack, although this early account suggests there were no American casualties.
The article also speculates on how this event will be linked to other German violations of naval
neutrality.
By John Cadlan O'Laughlin
Washington Bureau of the Times, May 7.-Official and diplomatic Washington is stunned tonight by the destruction of the Lusitania and the terrible loss of life which occurred as a consequence thereof. President Wilson and Secretary Bryan are exceedingly anxious that the country
shall observe the advice of Capt. Sigsbee when his ship, the Maine, was destroyed in Havana
Harbor, and "suspend judgment" until all the facts are officially established.
It is their firm intention to hold Germany to a "strict accountability" for the loss of any American
lives, and they may deem it imperative, if no Americans were drowned or killed, to make a
protest to the Berlin government against a practice which they hold to be contrary to the law of
nations. But they realize that any excitement that may sweep over the country will be exceedingly embarrassing to the administration, and they are anxious that the people shall be calm
and leave to Washington the determination of the character of the representations to be made
to Germany.
BRITISH TO MAKE INQUIRY.
The British government will make a thorough probe and will establish the facts. The United
States will not participate in this inquiry, but if any Americans have been lost it will institute an
independent investigation. It will pursue the same course with reference to the American passengers of the Lusitania as it followed when Leon C. Thresher, a passenger on the torpedoed
British steamer Falaba, was drowned. No representations were made to Germany with reference to Thresher, because the President, understanding the superheated frame of mind of the
German government, deemed it advisable to postpone bringing the question of indemnity up
until a more opportune time.
This government, however, has been brought face to face with the necessity of making good
the language it used in protesting against the Berlin decree establishing a "war zone" about the
British Isles.
There is not the slightest doubt that Germany will enthusiastically welcome the news of the
destruction of the Lusitania, while at the same time regretting that innocent neutrals were
drowned, killed or wounded. But it will claim they took the risk of traveling on the Lusitania
when they were warned not to do so.
THE REPRESENTATIONS.
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It is possible that in the representations which will be made to Germany President Wilson will
group the following incidents:
(1.) The death of Thresher, the American lost on the Falaba.
(2.) The aeroplane attack on the American tank steamer Cushing.
(3.) The torpedo attack on the American tank steamer Gulflight and the resultant death of her
captain and two of her crew.
(4.) The drowning of any American passengers on the Lusitania.
According to experts on international law the United States has the right to protest against destruction of the Lusitania on the following grounds:
That of common humanity.
That admission by the United States of such a practice might justify the use of the practice
against the United States.
That American citizens, under a rule laid down by Chief Justice Marshall, have the right in their
persons and property to be safeguarded from death or destruction.
That under the Declaration of Paris, to which Germany is a party, "neutral goods, with the exception of contraband of war, are not liable to capture under enemy's flag."
That it was the duty of the attacking warship under the rules and regulations issued by the
German government on August 3, 1914, to see that the passengers and crew of the Lusitania,
Falaba and Gulflight were taken off the vessel before they were destroyed and placed in safety.
WILSON HEARS NEWS.
President Wilson had just finished luncheon and was about to leave the White House for a
drive when he heard of the sinking of the Lusitania. At the Cabinet meeting less than an hour
before, the torpedoing of the American steamer Gulflight with the death of three Americans
had been discussed and a party of Cabinet members had gathered for luncheon at a near-by
hotel, where the news was taken to them. All the Secretaries immediately hurried back to their
offices.
The President's first question was whether any lives had been lost, and his relief was evident
when he was told that the first dispatches indicated that all were saved. He abandoned his ride
to keep in touch with the State Department, which soon after transmitted to him Ambassador
Page's cablegram, which was the first official information to reach the government. The President kept to his study for the remainder of the afternoon, reading dispatches as the Secretaries
brought them in. He made no comment and White House officials said none would be forthcoming, if at all, until after all the facts were known.
CAME AS A SHOCK.
Even though it had been feared that the liner might be attacked, to the President and his official
family the news was a shock and a surprise.
For some hours officials silently and gravely scanned the news dispatches, and eagerly awaiting
some official advices from London or the American Consulates scattered along the region of
the disaster, withheld their comment, merely expressing the hope that no Americans had been
lost. The tension of the first few hours, however, in all branches of the government was unconcealed. It probably has not been equaled since the Mexican crisis reached its height just a year
ago.
The State Department and the executive offices were deluged with a steady stream of inquiries,
many of which came from the diplomatic colony.
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Ater dinner the President returned to his study and spent the evening reading the dispatches.
Source: Los Angeles Times, May 8, 1915.
I The War in the Air
World War I provided a great stimulus to the production and military use of aircraft, including
the airplane and airship, or dirigible balloon, and the tethered balloon. Aircraft were used for
two principal purposes: observation and bombing. For observation of stationary battlefronts
extensive use was made by both belligerents of small tethered balloons; for scouting at sea,
dirigible balloons were extensively used, and airplanes were used for scouting coastal waters.
In connection with military operations on land, airplanes were used to observe the disposition
of the troops and defenses of the enemy and for bombing the enemy's lines or troops in action.
A special feature of the war was the raids conducted by means of dirigibles or airplanes on important enemy centers far removed from the battlefront.
The first German airplane raid on Paris took place on August 30, 1914; and the first German air
raid on England was on Dover on December 21, 1914. During 1915 and 1916 the German
type of dirigible known as the zeppelin raided eastern England and London 60 times. The first
German airplane raid on London took place on November 28, 1916, and such raids were frequent during the remainder of the war. The object of the German raids on England was to bring
about withdrawal of British planes from the western front for the defense of the homeland; to
handicap British industry; and to destroy the morale of the civilian population. The raids
caused much loss of life and damage to property but accomplished little of military value.
From the middle of 1915 aerial combats between planes or groups of planes of the belligerents
were common. The Germans had superiority in the air on the western front from about October 1915 to July 1916, when the supremacy passed to the British. Allied supremacy gradually
increased thereafter and with the entrance of the U.S. into the war became overwhelming. In
April 1918 the U.S. had three air squadrons at the front; by November 1918 it had 45 squadrons comprising nearly 800 planes and more than 1200 officers. The total personnel of the
American air service increased from about 1200 at the outbreak of the war to nearly 200,000 at
the end. Among the noted airplane fighters, or aces, were the American Eddie Rickenbacker,
the Canadian William Avery Bishop, and the German Baron Manfred von Richthofen.
V SUMMARY OF THE WAR
World War I began on July 28, 1914, with the declaration of war by Austria-Hungary on Serbia, and hostilities between the Allied and Central Powers continued until the signing of the
armistice on November 11, 1918, a period of 4 years, 3 months, and 14 days. The aggregate
direct war costs of all the belligerents amounted to about $186 billion. Casualties in the land
forces amounted to more than 37 million. Despite worldwide hopes that the settlements arrived
at after the war would restore world peace on a permanent basis, World War I actually provided the basis for an even more devastating conflict. The defeated Central Powers declared
their acceptance of President Wilson's 14 points as the basis for the armistice and expected the
Allies to utilize the principles of the 14 points as the foundation for the peace treaties. On the
whole, however, the Allies came to the conference at Versailles and to the subsequent peace
conferences with the determination to exact from the Central Powers the entire cost of the war,
and to distribute among themselves territories and possessions of the defeated nations according to formulas arrived at secretly during the years 1915 to 1917, before the entry of the United
States into the war. President Wilson, in the peace negotiations, at first insisted that the Paris
Peace Conference accept the full program laid out in the 14 points, but finally, in order to se-
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cure the support of the Allies for the all-important 14th point, which called for the creation of
an association of nations, he abandoned his insistence on some of the other points.
The peace treaties that emerged from the conferences at Versailles, Saint-Germain, Trianon,
Neuilly, and Sèvres were on the whole inadequately enforced by the victorious powers, leading to the resurgence of militarism and aggressive nationalism in Germany and to social disorder throughout much of Europe.
For additional information on historical figures, see biographies of those whose names are not
followed by dates. The military conflict is also described in separate articles on major battles.
Contributed By: Donald Joseph Harvey
"World War I," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation.
All rights reserved.
PRESIDENT WOODROW WILSON'S FOURTEEN POINTS 8TH OF JANUARY, 1918:
It will be our wish and purpose that the processes of peace, when they are begun, shall be absolutely open and that they shall involve and permit henceforth no secret understandings of
any kind. The day of conquest and aggrandizement is gone by; so is also the day of secret
covenants entered into in the interest of particular governments and likely at some unlookedfor moment to upset the peace of the world. It is this happy fact, now clear to the view of every
public man whose thoughts do not still linger in an age that is dead and gone, which makes it
possible for every nation whose purposes are consistent with justice and the peace of the world
to avow nor or at any other time the objects it has in view.
We entered this war because violations of right had occurred which touched us to the quick
and made the life of our own people impossible unless they were corrected and the world secure once for all against their recurrence. What we demand in this war, therefore, is nothing
peculiar to ourselves. It is that the world be made fit and safe to live in; and particularly that it
be made safe for every peace-loving nation which, like our own, wishes to live its own life,
determine its own institutions, be assured of justice and fair dealing by the other peoples of the
world as against force and selfish aggression. All the peoples of the world are in effect partners
in this interest, and for our own part we see very clearly that unless justice be done to others it
will not be done to us. The programme of the world's peace, therefore, is our programme; and
that programme, the only possible programme, as we see it, is this:
I. Open covenants of peace, openly arrived at, after which there shall be no private international understandings of any kind but diplomacy shall proceed always frankly and in the public
view.
II. Absolute freedom of navigation upon the seas, outside territorial waters, alike in peace and
in war, except as the seas may be closed in whole or in part by international action for the enforcement of international covenants.
III. The removal, so far as possible, of all economic barriers and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance.
IV. Adequate guarantees given and taken that national armaments will be reduced to the lowest
point consistent with domestic safety.
V. A free, open-minded, and absolutely impartial adjustment of all colonial claims, based upon
a strict observance of the principle that in determining all such questions of sovereignty the
interests of the populations concerned must have equal weight with the equitable claims of the
government whose title is to be determined.
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VI. The evacuation of all Russian territory and such a settlement of all questions affecting Russia as will secure the best and freest cooperation of the other nations of the world in obtaining
for her an unhampered and unembarrassed opportunity for the independent determination of
her own political development and national policy and assure her of a sincere welcome into
the society of free nations under institutions of her own choosing; and, more than a welcome,
assistance also of every kind that she may need and may herself desire. The treatment accorded
Russia by her sister nations in the months to come will be the acid test of their good will, of
their comprehension of her needs as distinguished from their own interests, and of their intelligent and unselfish sympathy.
VII. Belgium, the whole world will agree, must be evacuated and restored, without any attempt
to limit the sovereignty which she enjoys in common with all other free nations. No other single act will serve as this will serve to restore confidence among the nations in the laws which
they have themselves set and determined for the government of their relations with one another. Without this healing act the whole structure and validity of international law is forever
impaired.
VIII. All French territory should be freed and the invaded portions restored, and the wrong done
to France by Prussia in 1871 in the matter of Alsace-Lorraine, which has unsettled the peace of
the world for nearly fifty years, should be righted, in order that peace may once more be made
secure in the interest of all.
IX. A readjustment of the frontiers of Italy should be effected along clearly recognizable lines of
nationality.
X. The peoples of Austria-Hungary, whose place among the nations we wish to see safeguarded
and assured, should be accorded the freest opportunity to autonomous development.
XI. Rumania, Serbia, and Montenegro should be evacuated; occupied territories restored; Serbia accorded free and secure access to the sea; and the relations of the several Balkan states to
one another determined by friendly counsel along historically established lines of allegiance
and nationality; and international guarantees of the political and economic independence and
territorial integrity of the several Balkan states should be entered into.
XII. The turkish portion of the present Ottoman Empire should be assured a secure sovereignty,
but the other nationalities which are now under Turkish rule should be assured an undoubted
security of life and an absolutely unmolested opportunity of autonomous development, and the
Dardanelles should be permanently opened as a free passage to the ships and commerce of all
nations under international guarantees.
XIII. An independent Polish state should be erected which should include the territories inhabited by indisputably Polish populations, which should be assured a free and secure access to
the sea, and whose political and economic independence and territorial integrity should be
guaranteed by international covenant.
XIV. A general association of nations must be formed under specific covenants for the purpose
of affording mutual guarantees of political independence and territorial integrity to great and
small states alike.
In regard to these essential rectifications of wrong and assertions of right we feel ourselves to be
intimate partners of all the governments and peoples associated together against the Imperialists. We cannot be separated in interest or divided in purpose. We stand together until the end.
For such arrangements and covenants we are willing to fight and to continue to fight until they
are achieved; but only because we wish the right to prevail and desire a just and stable peace
such as can be secured only by removing the chief provocations to war, which this programme
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does remove. We have no jealousy of German greatness, and there is nothing in this programme that impairs it. We grudge her no achievement or distinction of learning or of pacific
enterprise such as have made her record very bright and very enviable. We do not wish to injure her or to block in any way her legitimate influence or power. We do not wish to fight her
either with arms or with hostile arrangements of trade if she is willing to associate herself with
us and the other peace- loving nations of the world in covenants of justice and law and fair
dealing. We wish her only to accept a place of equality among the peoples of the world, -- the
new world in which we now live, -- instead of a place of mastery.
© 1997 The Avalon Project. William C. Fray and Lisa A. Spar, Co-Directors. The Avalon Project : President Woodrow Wilson's Fourteen Points was last modified on: 03/18/2001 14:58:33
COUNTRY
EVENT
DATE
Austria-Hungary
Declared war on Serbia
July 28, 1914
Declared war on Russia
August 6, 1914
Declared war on Belgium
August 28, 1914
Declared war on Portugal
March 15, 1916
Refused German ultimatum demanding permission for German troops
to cross Belgium
August 2, 1914
Invaded by Germany
August 3-4, 1914
Bolivia
Severed relations with Germany
April 13, 1917
Brazil
Severed relations with Germany
April 11, 1917
Declared war on Germany
October 26, 1917
Declared war on Serbia
October 14, 1915
Declared war on Romania
September 1, 1916
Severed relations with Germany
March 14, 1917
Declared war on Germany
August 14, 1917
Declared war on Austria-Hungary
August 14, 1917
Severed relations with Germany
September 21, 1917
Declared war on Germany
May 23, 1918
Cuba
Declared war on Germany
April 7, 1917
Ecuador
Severed relations with Germany
December 8, 1917
France
Invaded by Germany
August 2, 1914
Declared war on Austria-Hungary
August 12, 1914
Declared war on the Ottoman Empire
November 5, 1914
Declared war on Bulgaria
October 16, 1915
Belgium
Bulgaria
China
Costa Rica
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Modern History I (Imperialism to the Age of Depression and Recovery)
Germany
Declared war on Russia
August 1, 1914
Declared war on France
August 3, 1914
Declared war on Belgium
August 4, 1914
Declared war on Portugal
March 9, 1916
Declared war on Romania
August 28, 1916
Declared war on Germany
August 4, 1914
Declared war on Austria-Hungary
August 12, 1914
Declared war on the Ottoman Empire
November 5, 1914
Declared war on Bulgaria
October 15, 1915
Greece
Declared war on Austria-Hungary, Bulgaria, Germany, and the Ottoman Empire
June 27, 1917
Guatemala
Declared war on Germany
April 23, 1918
Haiti
Declared war on Germany
July 12, 1918
Honduras
Declared war on Germany
July 19, 1918
Italy
Declared war on Austria-Hungary
May 23, 1915
Declared war on the Ottoman Empire
August 21, 1915
Declared war on Bulgaria
October 19, 1915
Declared war on Germany
August 28, 1916
Declared war on Germany
August 23, 1914
Declared war on Austria-Hungary
August 25, 1914
Liberia
Declared war on Germany
August 4, 1917
Montenegro
Declared war on Austria-Hungary
August 5, 1914
Declared war on Germany
August 8, 1914
Declared war on Bulgaria
October 15, 1915
Nicaragua
Declared war on Germany and Austria-Hungary
May 8, 1918
Ottoman Empire
Declared war on Romania
August 30, 1916
Severed relations with the United States
April 23, 1917
Declared war on Germany
April 7, 1917
Declared war on Austria-Hungary
December 10, 1917
Severed relations with Germany
October 6, 1917
Great Britain
Japan
Panama
Peru
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Romania
Declared war on Austria-Hungary
August 27, 1916
Capitulated to Central Powers by Treaty of Bucharest
May 7, 1918
Reentered the war on the side of the Allies
November 10, 1918
Declared war on the Ottoman Empire
November 2, 1914
Declared war on Bulgaria
October 19, 1915
San Marino
Declared war on Austria-Hungary
June 3, 1915
Serbia
Declared war on Germany
August 6, 1914
Declared war on the Ottoman Empire
November 2, 1914
Siam
Declared war on Germany and Austria-Hungary
July 22, 1917
United States
Declared war on Germany
April 6, 1917
Declared war on Austria-Hungary
December 7, 1917
Severed relations with Germany
October 7, 1917
Russia
Uruguay
GLOBAL CONSEQUENCES OF WORLD WAR I BY EDWARD J. DAVIES II
World War I (1914-1918), one of the world's most devastating conflicts, was a struggle of great
size that began in Europe and eventually involved 32 nations. The war was fought between two
great military alliances-the Allies, which included France, Russia, Britain, and eventually the
United States; and the Central Powers, which included Germany, Austro-Hungary, and later,
the Ottomans. By the end of the Great War, nearly 10 million troops had died and about 21
million soldiers had been wounded.
The Great War also precipitated revolution and unrest, an outcome wholly unexpected by the
European powers. The Bolshevik seizure of power in Russia in 1917 was only a foretaste of the
rumblings and unrest that would eventually reach Berlin and even Peking. At the end of the
war, Vladimir Lenin emerged as a person feared or venerated throughout the world. At the
same time, Woodrow Wilson entered the fray with his famous Fourteen Points, a set of war
aims designed to bring and preserve peace. Wilson's novel ideas, such as self-determination
and the League of Nations, stood in sharp contrast to Lenin's revolutionary appeals to exploited
peoples and his advocacy of violence to achieve justice and equity. The contrasting ideas of
these two visionaries energized colonial peoples across the globe and intensified their demands
for independence or autonomy. At the same time, the end of the war embittered many people
as empires crumbled, reparations were exacted from the losers, and the victors redrew the map
of Europe.
The War, Manpower, and Colonial Populations
Although World War I began in Europe, from the very beginning it reached far beyond the confines of that continent. Peoples throughout Africa, India, and Asia experienced the war as recruits or laborers in European armies. These regions also contributed significant resources to
sustain the war efforts of warring nations.
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As the war raged on, the European powers' desperate need for soldiers and laborers compelled
them to look to their colonial populations. Colonial leaders gave their support, believing that
loyalty demonstrated during the ruling country's time of great danger would lead to greater
autonomy in the colony, a relaxation of racial regulations, and even home rule at the end of
the conflict. Certainly the leaders in British India and the British African colonies supported the
war effort with such motives in mind. Volunteers-both soldiers and laborers-came forth in large
numbers to complement the existing colonial regiments of Britain, France, or Germany.
The French, for example, recruited 70,000 Algerians and 170,000 West Africans to serve in
their European armies. The British relied on Indian troops for their ill-fated 1915 campaign in
southern Iraq and to reinforce their armies in northern France. In fact, almost a million Indian
troops and laborers served throughout the globe. The British also recruited 100,000 Chinese
laborers to meet the logistical demands of their armies in northern Europe. In addition, hundreds of thousands of porters and workers from West Africa, Egypt, and India provided invaluable services for the warring nations.
Subversion and Belligerent Policies in the Colonies
Off the battlefields, the warring nations used other means to weaken their enemies. For example, they vigorously encouraged unrest, rebellion, and nationalism among their enemies' colonial subjects. This strategy was intended to weaken opponents by forcing them to devote resources and military power to suppress civil and military disturbances, especially in west Asia.
Probably the best-known incidence of such subversion occurred in Arabia, where British agent
T. E. Lawrence mobilized the Arab revolt against the Ottoman Empire. The emerging Arab nationalism was a sentiment endorsed by the British government, which promised-but never delivered-Arab independence.
Britain was also behind Zionism, another movement with the potential to affect western Asia.
During World War I, a small number of idealistic Polish and Russian Jews formed into a cohesive group that reached out to all Jewish communities regardless of their country, language, or
local customs. This group eventually won British support for the formation of a Jewish homeland after the war. This support, documented in the Balfour Declaration, collided with Britain's
earlier guarantees to the Arab nationalists and would later lead to violent and bloody disputes
between the Jewish and Arab communities.
The Germans and Ottomans, too, developed subversionary policies. They hoped to exploit the
Pan-Islamic sentiment spreading in the British crown colony of India. An underground opposition party, the Ghadr (Revolt), had already existed in the Punjab State. Leaders in Berlin, a
gathering place for exiled Indian dissidents, hoped to exploit this increasing tension. In the end,
however, the great distance between Europe and India and the difficulty of coordinating potential rebels under stiff British resistance foiled these ambitions. The Germans and Ottomans were
more successful in their efforts to encourage Islamic resistance in North and West Africa, where
opposition to colonial rule eventually outlasted the war itself.
World War I and the Bolshevik Seizure of Power in Russia
Unanticipated events in Imperial Russia proved equally as dramatic and successful as the warring nations' policy of subversion. In 1917, the Russian Revolution shook the entire world and
created an ongoing challenge to Western powers. The revolution would also provide hope to
countries such as China that were struggling against imperial control. Within three decades
after the revolution, more than one-third of the world would live under communist regimes.
A longtime ally of France, Imperial Russia went to war in 1914, ill-prepared to sustain the huge
costs demanded by modern, industrialized conflict. The war brought catastrophic losses and
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unbearable hardships to the millions of Russians who fought in the Imperial armies. During the
war, Russia also coped with massive internal migrations as millions of refugees fled war zones
and large numbers of civilians left their homes for jobs in wartime industries and agencies. This
vast movement of peoples, which equaled the number of individuals called for military service,
greatly disrupted a society already buckling under great domestic pressures and notorious for
its inefficiencies. Food shortages soon affected the cities while inflation undermined peasant
purchasing power. Workers and peasants blamed the deteriorating situation on the country's
leadership. By 1917, Czar Nicholas and his monarchical regime had lost the confidence of the
Russian people. The monarchy was replaced by a provisional government, supposedly under
democratic forces.
At this moment, an exiled Bolshevik revolutionary named Vladimir Lenin returned to Petrograd,
assisted by German authorities who hoped that Lenin would create even more unrest in a
country devastated by internal strife. Lenin and his Bolshevik followers soon decided the provisional government was wrong to keep Russia in the costly and grim war. By the fall of 1917,
Lenin and his supporters had seized power from the provisional government, which had lost
the support of the Russian people. Once in control, the Bolsheviks fulfilled their promise to
take Russia out of the war. In December 1917, they signed the Brest-Litovsk Treaty, which
ended Russia's participation.
Wilson Versus Lenin
Lenin's decision to take Russia out of the war directly challenged the message of U.S. President
Woodrow Wilson. Since early in the war, Wilson had vigorously pursued a negotiated settlement that would bring a just peace to the warring nations. Central to Wilson's Fourteen Points,
a set of war proposals that included territorial settlements and strategies for preventing future
wars, were his notions of self-determination and his ideas for the formation of the League of
Nations, an international assembly similar to the United Nations which eventually superseded
it. Wilson believed his proposals represented a revolution in international affairs and an alternative to traditional European diplomacy, long dependent on balance of power. Wilson faced
further challenges as European nations disagreed with several of his key points. The United
States declared war on the Central Powers in April 1917, with Wilson intending victory as a
way to crush antidemocratic forces.
Lenin challenged both Wilson's vision of the future and European ideas of diplomacy. He saw
imperialism as a poison to working class people everywhere. Lenin also argued that the war
grew naturally out of the imperialism of capitalist countries and their exploitation of colonial
peoples. For Lenin, Wilson was an integral part of the capitalist world and, therefore, part of
the larger problem. While both men advocated a new global order, they pursued it in vastly
different ways.
The End of the War and Revolution
In 1918, the waves caused by the Russian Revolution swept into Europe, which was already in
the midst of great turmoil. In Germany, loss of faith in a leadership unable to break the British
blockade or win a decisive victory in the west led to military mutinies and uprisings throughout
the country. Mass disobedience began in the navy and culminated in the refusal of the German
sailors in the port of Kiel to make one last death ride for the honor of the Second Reich. The
mutiny soon gripped the navy's rank and file, who demanded an end to the war. The old regime was on its last legs, and the Second Reich was soon replaced by a provisional government.
The sailors, joined by soldiers and workers, were soon building soviets, councils modeled after
those pioneered by the Russian Bolsheviks. These soviets directly challenged the old order in
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Germany. Then in 1919, the Spartacist League, reborn as the communist party, attempted an
ill-advised overthrow of the new provisional government. Russian Bolsheviks gave aid directly
and indirectly to their fellow German communists, in hopes of fanning the revolution everywhere in Europe. To Lenin's dismay, German military and paramilitary forces crushed the attempted revolution. Attempted revolutions rocked Austria, Hungary, and Bulgaria, demonstrating the appeal of Lenin to war-weary populations. All failed.
In spite of these European failures, the soviet-style revolution reached beyond Europe. Tobacco
workers in Cuba formed their own soviets, as did Irish Catholic sheepherders in Australia. In
addition, a Bolshevik Party appeared in Monarchical Spain. Even in the United States, the bastion of capitalism, Finnish workers in the upper Midwest embraced communism and revered
Lenin for years. The war and the revolution were transforming the world.
The Impact of the War in East Asia
The war also reached East Asia in dramatic and fateful ways. The Japanese, who had joined the
Allies in declaring war on Germany, ruthlessly exploited wartime conditions. Taking advantage
of the great distance between Europe and East Asia, the Japanese quickly moved to seize the
German-held Shantung Peninsula, southeast of Peking. The Japanese then seized control of the
peninsula's main rail line and began to expand their presence through newly formed manufacturing companies and other industries. The Japanese military also looked to Manchuria and
Mongolia, where they intended to expand Japan's influence.
In the wake of their activities in the Shantung Peninsula, the Japanese government issued an
ultimatum demanding economic and territorial rights from the Chinese government. The
Twenty-One Demands, as the ultimatum was called, severely compromised Chinese sovereignty and greatly enhanced Japan's presence on the mainland. Under the agreement, Japan
took control of territory, manufacturing operations, and key economic and political assets. The
day China submitted to the demands, May 25, 1915, henceforth became known as the Day of
National Humiliation, a day remembered in yearly demonstrations.
If Japan's wartime activities compromised China, peace proved even more disturbing in the
country. The Chinese had hoped their service in Europe would lead to an end of the unequal
treaties the Europeans had forced on them during the second half of the 19th century. Unfortunately, these hopes were never fulfilled. In fact, delegates to the Paris Peace Conference in Versailles learned that a secret agreement among the Allies allowed the Japanese to keep their
troops in Shantung peninsula. This news sparked the May 4th Movement of 1919, a series of
nation-wide protests against the Japanese presence on Chinese soil. This moment also saw the
merging of radical and anti-Japanese sentiments among the Chinese intellectuals and students.
Lenin's claims that imperial powers had exported their exploitation of people abroad struck
home with Chinese intellectuals and students. After all, they had seen firsthand the result of
imperial exploitation in their homeland and encountered it again when the Japanese moved
into the Shantung Peninsula. Having watched the Bolshevik challenge to Russian imperialists,
Chinese radicals saw revolution as the means to overthrow the existing social order.
Marxism and revolution now became a third alternative for Chinese people previously faced
with making the stark choice between the doctrines of the Confucian east and the Imperial
west. Chinese radicals founded debate societies, which brought together young individuals,
such as Mao Zedong, to discuss China's plight. Clearly, many intellectuals and students saw
capitalist exploitation as part of the larger problem reflected in the Japanese presence in north
China. Many of the students from such societies vigorously participated in and led the May 4th
protests.
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Chinese laborers, arriving back from Europe, also contributed to these debates. They had acquired an understanding of the world rare among the vast majority of untraveled Chinese.
While in Europe, many of these young individuals had learned to read and write. Many had
also encountered Wilson's ideas, particularly his call for self-determination. They presumed
that this ideal, if embraced by all nations, would lead to real independence for China and freedom from imperial intruders. The war veterans joined the radical students and intellectuals in
their protest over Japan's continued presence in China. Hundreds of student-led demonstrations
swept across the country. Merchants closed their operations while workers struck by the thousands and joined a boycott of Japanese goods.
The May 4th Movement proved more than just a series of protests over a specific incident. It
marked a turning point in the emergence of Chinese nationalism and secured China's legitimate place in the new global order. New styles of dress, vernacular writing, and calls for new
values spread through China. Scores of newly founded journals enabled intellectuals to debate
the merits of Marxism, liberalism, Socialism, and other new philosophies. Above all, the
movement called for a reunited country free from internal division and external exploitation.
The Impact of the War in Africa
The war deeply affected Africa. As demands for personnel to aid the war efforts increased and
created a shortage of white labor, black Africans assumed administrative posts and mercantile
positions throughout the European colonies. The economic demands of the war also created
new industries. However, African colonies also suffered severe economic consequences. Wartime demands eventually created shortfalls in consumer goods and sparked inflation and serious unrest in places such as Portuguese-held Madagascar and French-ruled Senegal. Such disturbances reached as far as South Africa, where an unprecedented number of biracial unions
formed to demand economic fairness from the colonial government.
The drain of resources severely weakened Africa's local populations. In some areas of East and
Central Africa, famine struck; shortly thereafter, various epidemics devastated the African peoples. Even more damaging, millions perished from the influenza pandemic that arrived from
Europe just before the war ended. In some places, as much as 6 percent of the population perished. While militarily speaking Africa was a sideshow in the Great War, the continent fully
participated in its deadly consequences.
As did many European countries, Africa also witnessed a series of revolts against colonial rule.
Wilson's Fourteen Points, including the right to self-determination, were partly responsible for
these uprisings. At the same time, the loosening of the war's fearsome grip on society also facilitated this unrest. Across the continent, rebels raised their arms-against French rule in Morocco, Italian rule in Cyrenica on the north coast, British and French forces in the central Sahara, and European administrators in Somalia. Europeans generally prevailed against the rebels.
Ironically, imperial rulers had concluded that their African colonies held great material value
and demanded far greater investments in their infrastructures and peoples. This recognition
initiated new policies designed to accomplish these ends.
The Impact of the War on India
The war caused seismic shifts in India's political landscape, too. For instance, the war brought
on an upsurge in production and created new industry. Raw materials and manufactured goods
poured out of India to feed the British war efforts. Industries such as iron and steel works flourished because of Britain's high demand for metals. At the same time, the sale of British consumer goods to Indian markets, slowed almost to a stop because of Great Britain's demands for
military goods. Consequently, Indian buyers turned to Japan and the United States, whose ex-
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ports to south Asia jumped by 400 percent. These changes dramatically affected India's economy and its relationship with Britain.
Demands for Indian home rule also escalated during the war. These demands eventually led to
the creation of a viceregal assembly as well as local assemblies, whose appearance was loudly
announced by Gandhi's campaign of nonviolent resistance in 1920. These bodies operated
under severe restrictions, yet their presence demonstrated the growing leverage of Indian nationalists. Indian soldiers and laborers returned from the war with a profound distrust of their
British rulers. Indian suspicion grew dramatically when the British refused to rescind the harsh
Defense of the Realm Act of 1916 designed to suppress dissent during the war. Britain's initial
refusal, combined with the uprisings in the Punjab over the arrest of nationalists and subsequent Amritsar Massacre of protesters, sparked a fury among the Indians. With a revitalized
economy and vigorous leadership, India continued to challenge British rule.
The Versailles Peace Conference
The formal end of the war occurred at the Peace Conference held in Versailles, outside of Paris,
in 1919. The agreements signed in Versailles affected not only Europe but also millions beyond
Europe's borders. The Germans agreed to a truce, believing that Wilson's Fourteen Points
would serve as the basis for the peace negotiations. The new German leadership hoped Wilson's proposals would moderate the terms of peace. However, Wilson was unable to restrain
France's desire for territory, reparations, and a hobbled Germany. German land was given, either temporarily or permanently, to France or to newly created states such as Poland and
Czechoslovakia. In addition, the treaty broke apart the Austro-Hungarian Empire. Furthermore,
Germans had to admit to war guilt, a humiliation that would linger among many Germans during the 1920s and 1930s.
Finally, a series of new states appeared in eastern Europe. Many of these states, such as Poland
and the Baltic States of Latvia, Lithuania, and Estonia, were designed to act as barriers against
the Bolsheviks as well as to satisfy the demands for independence of ethnic minorities in the
former empires. The Allied victors also dismembered the Ottoman Empire, which had once
stretched from North Africa to Persia. Under the guidance of the League of Nations, the French
and the British imposed the Mandate system on Palestine, Iraq, Jordan, and Syria, taking control of these territories. The Mandate system made Great Britain and France supposedly
enlightened guardians of the West Asian territories. The Europeans took on the charge of promoting the interests of the peoples under their rule, a noble goal many Arab nationalists rightfully doubted. Only Saudi Arabia emerged as an independent nation free of European powers.
If the Versailles Treaty brought peace, it certainly did not bring happiness. The Germans left the
peace table embittered, waiting for their day of revenge. The Russians, who were never invited
to the table, stood as mavericks outside the international system. Beyond Europe, national aspirations and deep resentment over imperial rule continued to fester during the decades after the
Great War. And the people of the European colonies, influenced by the visions of Wilson and
Lenin, imagined a world very different from the one of their imperial rulers.
About the author: Edward J. Davies II is an associate professor of history at the University of
Utah. He is the author of The Anthracite Aristocracy: Leadership and Social Change in the
Hard Coal Regions of Northeastern Pennsylvania among other publications.
"Global Consequences of World War I," Microsoft® Encarta® Encyclopedia 2000. © 19931999 Microsoft Corporation. All rights reserved.
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Modern History I (Imperialism to the Age of Depression and Recovery)
RUSSIAN REVOLUTION OF 1905
A widespread uprising during most of 1905 against the monarchy of the Russian Empire. The
revolution began in Saint Petersburg (then the capital of Russia), rapidly spread across the entire empire, and included most classes and groups of people. A massive demand for social and
political reform, it forced Russian emperor Nicholas II to concede to major changes in the
autocratic system of government.
By the beginning of 1905, dissatisfaction with the imperial government was widespread. Middle- and upper-class Russians called for political reform toward a constitutional system, industrial workers resented brutal working conditions and poverty, and the peasantry wanted the
government to redistribute agricultural land held by wealthy landowners. Illegal revolutionary
parties, including the Socialist Revolutionaries and the Social Democrats (Mensheviks and Bolsheviks), had emerged to champion peasant and worker demands. A liberal political movement
in favor of a constitutional monarchy, which during 1905 would form the Constitutional Democratic Party (Kadets), had also emerged. The unpopular Russo-Japanese War (1904-1905)
added to the climate of discontent.
On January 9 (or January 22, in the Western, or New Style, calendar), a large, peaceful procession of workers and their families-led by a priest, Georgy Gapon-marched to the Winter Palace
in Saint Petersburg to present Nicholas with a petition asking for reforms. Troops and police
fired on them, killing and wounding hundreds. The event, known as "Bloody Sunday," shocked
and outraged the people of Russia. Riots and demonstrations broke out across the country and
continued through the summer, despite both repressive measures and minor concessions from
the government. Workers engaged in local strikes and clashed with police. In the countryside
peasants attacked landlords and government officials. Several mutinies occurred in the armed
forces, including the revolt on the cruiser Potemkin in June. Students and members of the middle class demanded constitutional government and social reform.
On the political front, liberals and some socialists formed the Union of Unions in May under
the leadership of Pavel Milyukov to coordinate pressure against the government. Soon thereafter Milyukov and other liberals formed the Constitutional Democratic Party (Kadets), which
represented especially the educated and propertied classes. Militants from among the industrial
workers, supported by the socialist parties, organized worker's councils (soviets) in many cities.
The most important, the Saint Petersburg Soviet of Workers' and Soldiers' Deputies, was
formed October 13 (October 26, New Style) as both a strike committee and political leadership
forum. Dominated politically by Social Democrats, especially by the party's Menshevik faction,
the soviet soon controlled large parts of the city. Meanwhile, worker activists and socialist
leaders organized a nationwide general strike, which began in September and spread, immobilizing the country by mid-October.
The emperor's advisers, especially Sergey Witte, the new head of government, counseled him
to make concessions that were much more sweeping than he wished. On October 17 (October
30, New Style) Nicholas issued a manifesto promising civil rights and the creation of an elected
legislative assembly, the Duma. His "October Manifesto" divided the opposition, with some
accepting it as a new beginning and others demanding no less than the complete overthrow of
the monarchy. Rural and urban disturbances increased after October, including demonstrations
among non-Russian minorities demanding greater rights. By November, however, the government was confident it had reasserted sufficient control in the army to launch a counterattack.
Government troops easily arrested the leaders of the Saint Petersburg Soviet, but they suppressed the revolution in Moscow only after violent street fighting killed hundreds in Decem-
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ber. Army detachments subdued peasant rebellions. At the same time, right-wing groups
known as "Black Hundreds" attacked non-Russians and radicals and launched pogroms (organized massacres) against Jews in many cities; local officials did not try to prevent these attacks
and may even have encouraged them. Gradually, by mid-1906, the government reasserted
complete control over the country.
The revolution of 1905 had mixed results. It forced major changes in the political system with
the creation of the Duma, which was elected by all classes and had the right to approve all
laws. Although Nicholas retained extensive power, the traditional autocracy was ended with
the creation of the Duma, legalization of political parties, and granting of civil rights such as
freedom of speech and assembly. The imperial government soon found ways to undermine
these reforms, however, while demands for a full legislative democracy, distribution of land to
peasants, and basic improvements in the lives of industrial workers were unfulfilled. The main
sources of discontent therefore remained unresolved, setting the stage for the subsequent revolution of 1917, in which the example of the soviets of 1905 played a central role
Contributed By: Rex A. Wade
THE RUSSIAN REVOLUTION OF 1917
I INTRODUCTION
Series of events in imperial Russia that culminated in 1917 with the establishment of the Soviet
state that became known as the Union of Soviet Socialist Republics (USSR). The two successful
revolutions of 1917 are referred to collectively as the Russian Revolution.
The first revolution overthrew the autocratic imperial monarchy. It began with a revolt on February 23 to 27, 1917, according to the Julian, or Old Style, calendar then in use in Russia. (On
January 31, 1918, the Soviet government adopted the Gregorian, or New Style, calendar,
which moved dates by thirteen days; therefore, in the New Style calendar the dates for the first
revolution would be March 8 to 12. Events discussed in this article that occurred before January 31, 1918, are given according to the Julian calendar.)
The second revolution, which opened with the armed insurrection of October 24 and 25, organized by the Bolshevik Party against the Provisional Government, effected a change in all
economic, political, and social relationships in Russian society; it is often designated the Bolshevik, or October, Revolution.
II BACKGROUND
The underlying causes of the Russian Revolution are rooted deep in Russia's history. For centuries, autocratic and repressive tsarist regimes ruled the country and most of the population lived
under severe economic and social conditions. During the 19th century and early 20th century
various movements aimed at overthrowing the oppressive government were staged at different
times by students, workers, peasants, and members of the nobility. Two of these unsuccessful
movements were the 1825 revolt against Nicholas I and the revolution of 1905, both of which
were attempts to establish a constitutional monarchy. Russia's badly organized and unsuccessful involvement in World War I (1914-1918) added to popular discontent with the government's corruption and inefficiency. In 1917 these events resulted in the fall of the tsarist government and the establishment of the Bolshevik Party, a radical offshoot of the Russian Social
Democratic Labor Party, as the ruling power.
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III THE FEBRUARY REVOLUTION
The immediate cause of the February Revolution of 1917 was the collapse of the tsarist regime
under the gigantic strain of World War I. The underlying cause was the backward economic
condition of the country, which made it unable to sustain the war effort against powerful, industrialized Germany. Russian manpower was virtually inexhaustible. Russian industry, however, lacked the capacity to arm, equip, and supply the some 15 million men who were sent
into the war. Factories were few and insufficiently productive, and the railroad network was
inadequate. Repeated mobilizations, moreover, disrupted industrial and agricultural production. The food supply decreased, and the transportation system became disorganized. In the
trenches, the soldiers went hungry and frequently lacked shoes or munitions, sometimes even
weapons. Russian casualties were greater than those sustained by any army in any previous
war. Behind the front, goods became scarce, prices skyrocketed, and by 1917 famine threatened the larger cities. Discontent became rife, and the morale of the army suffered, finally to be
undermined by a succession of military defeats. These reverses were attributed by many to the
alleged treachery of Empress Alexandra and her circle, in which the peasant monk Grigory Yefimovich Rasputin was the dominant influence. When the Duma, the lower house of the Russian parliament, protested against the inefficient conduct of the war and the arbitrary policies of
the imperial government, the tsar-Emperor Nicholas II-and his ministers simply brushed it
aside.
A Mounting Crisis
At first all parties except a small group within the Social Democratic Party supported the war.
The government received much aid in the war effort from voluntary committees, including representatives of business and labor. The growing breakdown of supply, made worse by the almost complete isolation of Russia from its prewar markets, was felt especially in the major cities, which were flooded with refugees from the front. Despite an outward calm, many Duma
leaders felt that Russia would soon be confronted with a new revolutionary crisis. By 1915 the
liberal parties had formed a progressive bloc that gained a majority in the Duma.
As the tide of discontent mounted, the Duma warned Nicholas II in November 1916 that disaster would overtake the country unless the "dark" (treasonable) elements were removed from the
court and a constitutional form of government was instituted. The emperor ignored the warning. Late in December a group of aristocrats, led by Prince Feliks Yusupov, assassinated
Rasputin in the hope that the emperor would then change his course. The emperor responded
by showing favor to Rasputin's followers at court. Talk of a palace revolution in order to avert a
greater impending upheaval became widespread, especially among the upper ranks.
B Strikes and Demonstrations
The Revolution of 1917 grew out of a mounting wave of food and wage strikes in Petrograd
(now Saint Petersburg) during February. On February 23 meetings and demonstrations in which
the principal slogan was a demand for bread were held, supported by the 90,000 men and
women on strike in the national capital. Encounters with the police were numerous, but the
workers refused to disperse and continued to occupy the streets. Tension steadily increased but
no casualties resulted.
Agitation grew the following day, February 24, until it involved about half the workers of
Petrograd. The slogans now were bolder: "Down with the war!""Down with autocracy!" On
February 25 the strike became general throughout the capital. During these two days violent
encounters took place with the police, with casualties on both sides. The dreaded Cossack
troops, however, which had been called out to support the police, showed little enthusiasm for
breaking up the demonstrations. The workers captured several police stations, seized the small
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arms inside, and then burned the stations to the ground; the police went into hiding. The first
elections to the Petrograd Soviet (council) of Workers' Deputies were held in several factories,
on the model of the Soviet of 1905, which had been formed during a revolution at the end of
the Russo-Japanese War (1904-1905).
C Confrontation with Troops
On February 26 the troops of the Petrograd garrison were called out to suppress the uprising.
When the workers and soldiers came face to face in the streets, the workers tried to fraternize
with the soldiers. In some of these encounters the troops were hostile and fired on order, killing
a number of workers. The workers fled, but did not abandon the streets. As soon as the firing
ceased they returned to confront the soldiers. In subsequent encounters the troops wavered
when ordered to fire, allowing the workers to pass through their lines. Nicholas dissolved the
Duma; the deputies accepted the decree but reassembled privately and elected a provisional
committee of the State Duma to act in its place. On February 27 the revolution triumphed.
Regiment after regiment of the Petrograd garrison went over to the people. Within 24 hours the
entire garrison, approximately 150,000 men, joined the revolution, and the united workers and
soldiers took control of the capital. The uprising claimed about 1500 victims.
IV THE PETROGRAD SOVIET
The imperial government was quickly dispersed. Effective political power subsequently was
exercised by two new bodies, the Petrograd Soviet of Workers' and Soldiers' Deputies and a
Provisional Government formed by the provisional committee of the Duma. The Soviet, a representative body of elected deputies, immediately appointed a commission to cope with the
problem of ensuring a food supply for the capital, placed detachments of revolutionary soldiers
in the government offices, and ordered the release of thousands of political prisoners. On February 28 the Soviet ordered the arrest of Nicholas's ministers and began publishing an official
organ, Izvestia (Russian for "news"). On March 1 it issued its famous Order No. 1. By the terms
of this order, the soldiers of the army and the sailors of the fleet were to submit to the authority
of the Soviet and its committees in all political matters; they were to obey only those orders
that did not conflict with the directives of the Soviet; they were to elect committees that would
exercise exclusive control over all weapons; on duty, they were to observe strict military discipline, but harsh and contemptuous treatment by the officers was forbidden; disputes between
soldiers' committees and officers were to be referred to the Soviet for disposition; off-duty soldiers and sailors were to enjoy full civil and political rights; and saluting of officers was abolished. Subsequent efforts by the Soviet to limit and nullify its own Order No. 1 were unavailing, and it continued in force.
The Petrograd Soviet easily could have assumed complete power in the capital, but it failed to
do so. The great majority of its members, believing that revolutionary Russia must wage a war
of defense against German imperialism, did not want to risk disorganizing the war effort. Taken
by surprise, as were all the political parties, by the outbreak of the revolution, the working-class
parties were unable to give the workers and soldiers in the Soviet strong political leadership.
Even the Bolsheviks, who, in a sense, had been preparing for the revolution since at least the
early 1900s, had been unaware of its imminence and had no program to take advantage of the
situation. It was not until April 16, with the return from Switzerland of their exiled leader,
Vladimir Ilich Lenin, that the Bolsheviks put forward a demand for immediate seizure of land
by the peasantry, establishment of workers' control in industry, an end to the war, and transfer
of "all power to the Soviets." In the Petrograd Soviet, however, the Bolsheviks were then a small
minority. The majority was composed of Mensheviks and Socialist Revolutionaries. The Mensheviks envisioned a period of capitalist development and complete political democracy as the
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essential prerequisite for a socialist order; in the main, they supported continuation of the war.
Most of the leading Socialist Revolutionaries, a peasant party with vague socialist aspirations,
also advocated continuation of the war. Under the leadership of the moderate majority, the
Petrograd Soviet recognized the newly established Provisional Government as the legal authority in Russia.
V THE PROVISIONAL GOVERNMENT
On February 27 the provisional committee of the Duma announced that it would handle restoration of order, and on February 28 it placed its commissars (representatives) in charge of the
ministries. The provisional committee formed the Provisional Government and demanded the
abdication of the tsar. Nicholas abdicated March 2 in favor of his brother, Grand Duke Mikhail
Aleksandrovich. Aleksandrovich, however, stipulated that he would accept the crown only at
the request of a future constituent assembly. The Provisional Government, except for the addition of the socialist leader Aleksandr Fyodorovich Kerensky, was made up of the same liberal
leaders who had organized the progressive bloc in the Duma in 1915. The prime minister,
Prince Georgy Yevgenyevich Lvov, was a wealthy landowner and a member of the Constitutional Democratic Party (Kadets), which favored an immediate constitutional monarchy and
ultimately a republic. Lvov was largely a figurehead; the outstanding personality in the Provisional Government until early May was Pavel Milyukov, minister of foreign affairs and strongest
leader of the Kadets since its founding in 1905. He played the principal role in formulating policy. Kerensky, the minister of justice, who had been leader of the Trudovik ("laborite") faction
in the Duma, was the only representative of moderate socialist opinion in the Provisional Government.
A Spread of the revolution
After the success in Petrograd the Revolution spread throughout the country. Following the
same basic course as it had in the capital, it resulted also in the creation of two parallel systems
of government, in which soviets functioned side by side with authorities who were in communication with the Provisional Government.
Recognized by the Petrograd Soviet and by the command of the army and navy, the Provisional
Government enjoyed widespread popularity at first. It disbanded the tsarist police, repealed all
limitations on freedom of opinion, press, and association, and put an end to all laws discriminating against national or religious groups. The Provisional Government also recognized the
right of Poland to be a free and independent state, but it had no firm basis of authority. The
Duma, from which it derived, could give no support, for that body was not genuinely representative of the masses. Unable to command, the government could not appeal to a war-weary,
impatient people. Its plight was succinctly summed up by the minister of war, Aleksandr
Guchkov: "The government, alas, has no real power; the troops, the railroads, the post, and
telegraph are in the hands of the Soviet. The simple fact is that the Provisional Government
exists only so long as the Soviet permits it."
B Postponement of Decisions
With respect to crucial social problems, the Provisional Government claimed that, being provisional, it could not make fundamental changes such as confiscating land and distributing it to
the peasants. All basic changes had to be postponed for decision by a constituent assembly, but
the election of such an assembly was put off on the grounds that a large part of the country was
under enemy occupation. Actually, the liberals of the Provisional Government realized that
power in the constituent assembly would pass from their hands to the various socialist parties,
and that their only hope of retaining it was to wait for an Allied victory in the war.
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VI WAR OR PEACE
The Provisional Government split with the Petrograd Soviet on the question of war aims. On
March 6 the Provisional Government pledged itself to continue the war until victory was won
and to "unswervingly carry out the agreements made with our allies." Milyukov previously had
informed the Provisional Government that these agreements included secret treaties providing
for the acquisition of Constantinople (now called Ýstanbul) by Russia and the annexation of
other territory. The Petrograd Soviet disclaimed all demands for annexations and reparations
and called upon the peoples of the warring countries to force their governments to negotiate
peace. The Soviet condemned Milyukov's pledge, and although the two bodies found a vague
compromise, the conflict was not resolved during the existence of the Provisional Government.
Not even the Soviet was fully aware then of the widespread unwillingness of the Russian people to continue the war.
The eight months following the formation of the Provisional Government were marked by antagonism between the government and the Petrograd Soviet that eventually grew to open conflict. Essential in this development was the political transformation of the soviets, from institutions supporting parliamentary democracy into instruments for revolutionary socialism. Two
principal causes of this transformation may be distinguished. The first was the government's
policy of postponing for future determination by a constituent assembly the solution of such
pressing problems as economic disorganization, the continued food crisis, industrial reforms,
redistribution of land to peasants, and the growth of counterrevolutionary forces. The government, instead, devoted most of its energy to a continuation of the war. The second cause, a
logical consequence of the first, was the growing conviction of the workers and peasants that
their problems could be solved only by the soviets, a conviction that was decisively molded by
Bolshevik propaganda following the April arrival in Petrograd of Lenin.
Before Lenin's return from exile in April, Bolshevik policy had been formulated by such leaders
as Lev Kamenev and Joseph Stalin, who favored conditional support of the Provisional Government and were in the process of making a political bloc with the Mensheviks and Socialist
Revolutionaries. At the All-Russian Conference of Bolshevik Party Workers, convened in Petrograd on March 29, the only speaker who advocated seizure of power by the Bolsheviks and
establishment of a proletarian dictatorship was ruled out of order. The conference did consider
the question of unification with the Mensheviks, a process already taking place in the provinces
in consequence of the moderate political program of the Bolshevik leaders.
VII GROWTH OF BOLSHEVIK INFLUENCE
Returning to Russia on April 3, Lenin arrived in Petrograd during the All-Russian Conference of
Bolshevik Party Workers. In his first address to the delegates, he advocated uncompromising
opposition to the war and the Provisional Government and irreconcilable hostility toward all
supporters of both; he proposed that the party struggle for the establishment of a proletarian
dictatorship. At the same time he declared that the Bolsheviks, who were a small minority, confronted a task, not of the immediate seizure of power, but of patient propaganda to convince a
majority of the workers of the soundness of Bolshevik policy. Opposed at first by virtually the
entire Bolshevik leadership, Lenin quickly succeeded in converting the party to his course. Bolshevik policy was thereafter directed toward the assumption of full power by the soviets, immediate termination of the war, planned and organized seizure of the land by the peasants, and
control by the workers of industrial production. Bolshevik propaganda themes were exemplified in the slogans "Peace, Land, Bread" and "All Power to the Soviets." The exiled revolutionary Leon Trotsky, who arrived in Petrograd in May from America, agreed with Lenin's policy
and joined the Bolshevik Party.
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Developments favored the Bolshevik cause. On April 18 Milyukov sent a note to the Allied
governments, promising to continue the war to a victorious conclusion; in ambiguous language, the note also pledged his support of the Provisional Government to a policy of annexing
foreign territory and imposing indemnities on defeated nations. This pronouncement, in sharp
contrast with the earlier declaration "to the people of the whole world" issued by the Petrograd
Soviet on March 14 calling for peace without annexations and indemnities, provoked armed
demonstrations of protest by workers and soldiers in the capital. Contrary to the proposal of
General Lavr Georgiyevich Kornilov to quell the demonstrations by force, the Petrograd Soviet,
which assumed sole command of the garrison of the capital, ordered all troops to remain in
their barracks. As a result of the political crisis, Milyukov and Guchkov resigned, and the government was reorganized on May 5 to include representatives of the socialist parties, which
received 6 of the 15 portfolios; Kerensky became minister of war.
VIII FIRST CONGRESS OF SOVIETS
The crisis stimulated considerable growth in the Bolshevik Party, but it still held only a minority
of the delegates to the first all-Russian Congress of Soviets, which convened in Petrograd on
June 3. This congress was dominated by the Mensheviks and Socialist Revolutionaries. The
coalition government, meanwhile, had taken office amid a deepening economic and social
crisis. Failure to provide the cities with grain aggravated the danger of famine, and inflation and
suffering rapidly increased. In industry, the growing power of the workers induced economic
defeatism and lockouts on the part of employers. The more conservative groups demanded that
the government adopt a strong policy and call a halt to the revolution. The workers responded
with economic and political strikes and with demands that the government institute measures
to cope with the crisis. The Congress of Soviets, which supported the government, declared in
favor of state monopolies of bread and other necessary items. The government, however, like
its predecessor, subordinated all problems to the prosecution of the war. On June 16 Kerensky
ordered an offensive that ended in a complete defeat and the virtual disorganization of the
army-all of which added credibility to Bolshevik propaganda. Discipline broke down, and millions of soldiers streamed home from the front to escape further fighting and to take part in the
division of the land.
A The July Uprising
During the ill-fated offensive, the opposition by workers and soldiers in Petrograd to a renewal
of military hostilities forced the Congress of Soviets to adopt a resolution calling for the abolition of the Duma-that is, the political base of the Provisional Government-and setting September 30 as the date for the convocation of a constituent assembly. A mammoth demonstration of
about 400,000 Petrograd workers, organized by the Congress of Soviets during the offensive,
unexpectedly revealed that the Bolshevik influence was very strong in the working class of the
capital; the prevailing slogans in the demonstrations were "Down with the Offensive" and again
"All Power to the Soviets." On July 3, 4, and 5, this mounting impatience, perhaps quickened
by the resignation of the Kadet ministers over the issue of Ukrainian autonomy, was expressed
in an impromptu armed demonstration of 500,000 workers, soldiers of the city garrison, and
sailors of the nearby naval fortress of Kronshtadt. The demonstrators denounced the government and converged on the Tauride Palace, where the Congress of Soviets was in session, to
force it to assume sole power.
B Bolshevik Leadership
Caught by surprise, the Bolshevik leadership at first attempted to restrain the masses, but when
that proved impossible, the party openly placed itself at the head of the movement, with the
declared intention of keeping the demonstration peaceful. In this the Bolsheviks were largely
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successful. Their policy was motivated by the consideration that they could have seized power
easily in the capital but could not have held it in the rest of the country without support by a
majority of the soldiers at the front and of the peasants in the provinces. The executive committee of the Congress of Soviets denounced the demonstration as a counterrevolutionary Bolshevik insurrection and summoned troops from the front to disperse the demonstrators. The troops,
arriving on July 5, when the demonstration had run its course, placed themselves at the disposition solely of the Congress of Soviets, in effect recognizing it as the supreme governing authority in the country. On July 10 Kerensky succeeded Lvov as prime minister, and on July 23 a
second coalition government, including the Socialist and Kadet wings, was formed, with Kerensky and his political friends holding the decisive posts.
IX THE KERENSKY GOVERNMENT
The July demonstration produced a wave of political reaction. Some land committees were
dissolved by the government; the death penalty, abolished during the first days of the revolution, was restored in the fighting zones although not enforced; and the convocation of the constituent assembly was postponed to the end of November. Forceful methods were employed
against the Bolsheviks. Lenin was denounced as a paid agent of German imperialism and went
into hiding in Finland; Trotsky and others were arrested. Nonetheless, the Sixth Congress of the
Bolshevik Party opened in Petrograd on July 26, despite the absence of some of its leaders.
Because the Kerensky government took no effective steps to overcome the steadily deteriorating economic situation, unrest continued in the cities and countryside, and Bolshevik influence
again began to increase. Convinced that Kerensky could not cope with the situation, some
Kadet elements and the general staff, led by Kornilov, the newly appointed commander in
chief, decided to bring loyal troops to Petrograd and establish a military dictatorship. For a time
Kerensky was a party to the conspiracy, but when he learned that Kornilov proposed to remove
him from the government, he appealed to the Petrograd Soviet for support.
While Kornilov's forces advanced on the capital, the workers' and soldiers' militia prepared to
defend it. With the approval of the Congress of Soviets, military organizations were established
throughout the city, and the boldness and initiative of the Bolsheviks in these bodies made
them the leaders of the defense. The railroad workers refused to transport Kornilov's force. As
the troops advanced on foot, they encountered the soldiers and workers of the capital, who
came out of the city to meet them with appeals to fraternize. Kornilov's army dissolved before
it reached the capital; he himself was arrested. These events left the workers of Petrograd organized and armed. And now, for the first time, the Bolsheviks secured a majority in the Petrograd Soviet.
After Kornilov's defeat the Provisional Government was virtually powerless. Under growing
Bolshevik pressure the All-Russian Soviet Executive Committee decided on the election of a
new Congress of Soviets to convene on October 20; later it was postponed to October 25. A
Bolshevik majority in the new congress was assured by the rising tide of support for Lenin's
party among the soldiers and workers. Fears that the new political alignment would result in
the creation of a Bolshevik government spurred Kerensky to make a half-hearted attempt to
send some troops from the Petrograd garrison to the front. On October 16 the Petrograd Soviet
created the Military Revolutionary Committee for the defense of the capital against the counterrevolution; on this committee the Bolsheviks obtained a commanding majority, and the Mensheviks and Socialist Revolutionaries thereupon refused to participate.
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X THE OCTOBER REVOLUTION
Foreseeing the course of events, Lenin, from about the end of September, pressed the central
committee of the Bolshevik Party to organize an armed insurrection and seize power. After
some resistance, the committee on October 10 approved Lenin's policy. It is generally believed
that the insurrection was planned by the military organization of the party to coincide with the
opening of the second Congress of Soviets. It was carried out during the night of October 24 to
25 and the following day by the Military Revolutionary Committee under the direction of Trotsky. Armed workers, soldiers, and sailors stormed the Winter Palace, headquarters of the Provisional Government. Although the seizure of power involved tens of thousands of men and
women, it was virtually bloodless. On the afternoon of October 25 Trotsky announced the end
of the Provisional Government. Several of its ministers were arrested later that day; Kerensky
escaped and subsequently went into exile.
PETROGRAD FALLS TO THE MAXIMALIST INSURGENTS. KERENSKY A FUGITIVE; CIVIL WAR IN
SIGHT. LOS ANGELES TIMES NOVEMBER 9, 1917.
This article chronicles the takeover of the Russian government by the so-called Maximalists, a
translation of the Russian word Bolshevik. A more common translation is majority, Lenin's
choice as a name for his party, in contrast to the more moderate Communists, the Mensheviks
minority. The events are often referred to as the October Revolution because at the time Russia
used the Julian or Old Style, calendar, with dates 13 days earlier than the Gregorian, or New
Style, calendar. Lenin's name is spelled here as "Lenine."
Petrograd, Nov. 8, 9 a.m.-Government forces holding the Winter Palace were compelled to
capitulate early this morning under the fire of the cruiser Aurora and the cannon of the St. Peter
and St. Paul fortress across the Neva River. At 2 o'clock this morning the woman's battalion
which had been defending the Winter Palace surrendered.
The Workmen's and Soldiers' Delegates are in complete control of the city.
The Russian cruiser Aurora is a vessel of 6730 tons and has a complement of 573 men. She
was built in 1900 and carries ten 6-inch guns, twenty 12-pounders and eight small guns. She
also is armed with two torpedo tubes.
KERENSKY IN MOSCOW? [BY ATLANTIC CABLE AND A. P.]
London, Nov. 8.-Opinion is expressed in Russian circles in London that M. Kerensky, who
early was advised of the intentions of Nikolai Lenine to grasp power, removed the seat of government to Moscow and from there will endeavor to unite the Moderates against the Maximalists, and also to rally to his support the Cossacks and such other troops as have not already
gone over to the extremists.
Premier Kerensky was reported last night at Luga, eighty-five miles northwest of Petrograd.
Late yesterday evening, after the government forces had driven into the Winter Palace, the palace was besieged and a lively fight of machine guns and rifles began. The cruiser Aurora,
which was moored at the Niecolai bridge, moved up within range, firing shrapnel. Meanwhile
the guns of the St. Peter and St. Paul fortress opened fire.
The palace stood out under the glare of the searchlight of the cruiser and offered a good target
for the guns. The defenders held out four hours, replying as best they could with machine guns
and rifles.
There was spasmodic firing in other parts of the city, but the Workmen's and Soldiers' troops
took every means to protect citizens, who were ordered to their quarters. The bridges and the
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Nevsky Prospekt, which early in the afternoon were in the hands of the government forces,
were captured and held during the night by the Workmen's and Soldiers' troops.
The battle at the palace, which began shortly after 6 o'clock, was a spectacular one, armed
cars of the revolutionaries swinging into action in front of the palace gates, while flashes from
the Neva were followed by the explosion of shells from the guns of the Aurora.
TO THE FRONT? [BY ATLANTIC CABLE AND A. P.]
Petrograd, Nov. 7.-At the Winter Palace this afternoon it was said Premier Kerensky had gone
to the front, delegating his authority to Mischkin, Minister of Public Welfare.
ARRESTED. [BY ATLANTIC CABLE AND A. P.]
London, Nov. 8.-The semi-official news agency gives the names of the Cabinet ministers in the
Kerensky government arrested, as follows:
A. I. Konovaloff, Minister of Trade and Industry.
M. Kishkin, Minister of Public Welfare.
M. I. Terestehenko, Minister of Foreign Affairs.
M. Maiyantovitch, Minister of Justice.
M. Nikitin, Minister of the Interior.
DEPOSED. [BY ATLANTIC CABLE AND A. P.]
London, Nov. 8.-Premier Kerensky has been deposed and has fled from the capital, the semiofficial news agency declares. Orders, it states, have been issued for his arrest.
RAILWAY LINES CUT. [BY ATLANTIC CABLE AND A. P.]
London, Nov. 8.-Railway communication with Petrograd is reported to have been interrupted,
the Copenhagen correspondent of the Exchange Telegraph Company cables.
It has been indicated for some time past that an attempt was to be made by the Maximalists in
Petrograd to seize control of the capital. November 2 was the date originally set for an extremist demonstration which was expected by its promoters to result in the taking over of power by
this element. A postponement to an unannounced date was afterward decided upon, however.
The Maximalist or Bolsheviki element comprises the most extreme class of the Russian revolutionary Socialists. It first sprang into prominence in the early days of the revolution under the
leadership of Nikolai Lenine, the radical agitator who later was put under the ban of the provisional government because of his ultra-radical preachments, and his suspected pro-German
leanings. He is known to have been in Petrograd for some time past, but a government order
for his arrest failed to result in his apprehension. Meanwhile the Maximalists were under the
leadership of his chief lieutenant, Leon Trotzky, whose home was in the United States when
the revolution broke out but who sailed for Russia shortly afterward. He was one of the leaders
in the 1905 revolution.
The strength of the Maximalists has lain in the support which they obtained from the military,
chiefly in the Petrograd garrison, among which they have been able to work with little interference from their government. They had failed, however, to impress their policies upon Russia as
a whole, as has been shown by the manner in which they were outvoted in the all-Russian
Congress and the minority part they played in the organization of the preliminary Parliament,
in which they refused to participate after they were shown to be outnumbered.
Source: Los Angeles Times, November 9, 1917.
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On October 25, while the insurrection was in progress, the second Congress of Soviets began
its deliberation. Of the 650 delegates, 390 (60 percent) were Bolsheviks. The opening session,
its speeches punctuated by rifle fire in the streets, was the scene of a stormy debate over the
legality of the congress and the character of the insurrection. Most of the Menshevik and Socialist Revolutionary delegates withdrew from the congress, which continuously received declarations of support from workers' organizations and military groups; the left wing of the Socialist Revolutionaries remained in the congress and formed a short-lived coalition government
with the Bolsheviks.
XI SECOND CONGRESS OF SOVIETS
Making his first appearance at the Congress of Soviets on November 8, Lenin struck the keynote of its further deliberations with his opening declaration: "We shall now proceed to the
construction of the socialist order." The congress then took up the three crucial issues of peace,
land, and the constitution of a new government. It unanimously adopted a manifesto appealing
to "all warring peoples and their governments to open immediate negotiations for a just, democratic peace." To that end the manifesto proposed an immediate armistice for a minimum of
three months.
FROM TEN DAYS THAT SHOOK THE WORLD BY JOHN REED
The hardships resulting from Russia's participation in World War I (1914-1918) was a principal
cause of the Russian Revolution of 1917. The Bolshevik faction of the revolutionaries, led by
Vladimir I. Lenin, opposed the war as an imperialist war, and after seizing power sued for
peace. American journalist John Reed in his famous account of the revolution, Ten Days That
Shook the World (1919), captured the drama of Lenin's first appearance on November 8 at the
Second Congress of Soviets. Lenin issued a proclamation on behalf of the Workers' and Peasants' Government for a "just and democratic peace." The following is Reed's account of Lenin's
speech as it appeared in Ten Days That Shook the World.
It was just 8:40 when a thundering wave of cheers announced the entrance of the presidium,
with Lenin-great Lenin-among them. A short, stocky figure, with a big head set down on his
shoulders, bald and bulging. Little eyes, a snubbish nose, wide generous mouth, and heavy
chin; clean-shaven now but already beginning to bristle with the well-known beard of his past
and future. Dressed in shabby clothes, his trousers much too long for him. Unimpressive, to be
the idol of a mob, loved and revered as perhaps few leaders in history have been. A strange
popular leader-a leader purely by virtue of intellect; colorless, humorless, uncompromising and
detached, without picturesque idiosyncrasies-but with the power of explaining profound ideas
in simple terms, of analyzing a concrete situation. And combined with shrewdness, the greatest
intellectual audacity.
Kameniev [a Bolshevik representative] was reading the report of the actions of the Military
Revolutionary Committee; abolition of capital punishment in the Army, restoration of the free
right of propaganda, release of officers and soldiers arrested for political crimes, orders to arrest
Kerensky and confiscation of food supplies in private storehouses.… Tremendous applause.
Again the representative of the Bund. The uncompromising attitude of the Bolsheviki [the majority group in the Russian Social Democratic Labor Party] would mean the crushing of the
Revolution; therefore, the Bund delegates must refuse any longer to sit in the Congress. Cries
from the audience, "We thought you walked out last night! How many more times are you going to walk out?"
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Then the representative of the Mensheviki Internationalists [the minority group of the Russian
Social Democratic Labor Party]. Shouts "What! You here still?" The speaker explained that only
part of the Mensheviki Internationalists left the Congress; the rest were going to stay"We consider it dangerous and perhaps even mortal for the Revolution to transfer the power to
the Soviets"-interruptions-"but we feel it our duty to remain in the Congress and vote against the
transfer here!"
Other speakers followed, apparently without any order. A delegate of the coal-miners of the
Don Basin called upon the Congress to take measures against Kaledin, who might cut off coal
and food from the capital. Several soldiers just arrived from the front brought the enthusiastic
greetings of their regiments.… Now Lenin, gripping the edge of the reading stand, letting his
little winking eyes travel over the crowd as he stood there waiting, apparently oblivious to the
long-rolling ovation, which lasted several minutes. When it finished, he said simply, "We shall
now proceed to construct the Socialist order!" Again that overwhelming human roar.
"The first thing is the adoption of practical measures to realize peace.… We shall offer peace to
the peoples of all the belligerent countries upon the basis of the Soviet terms-no annexations,
no indemnities, and the right of self-determination of peoples. At the same time, according to
our promise, we shall publish and repudiate the secret treaties.… The question of War and
Peace is so clear that I think that I may, without preamble, read the project of a Proclamation to
the Peoples of All the Belligerent Countries.…"
His great mouth, seeming to smile, opened wide as he spoke; his voice was hoarse-not unpleasantly so, but as if it had hardened that way after years and years of speaking-and went on
monotonously, with the effect of being able to go on for ever.… For emphasis he bent forward
slightly. No gestures. And before him, a thousand simple faces looking up in intent adoration.
Proclamation To The Peoples And Governments Of All The Belligerent Nations
The Workers' and Peasants' Government, created by the revolution of 6 and 7 November and
based on the Soviet of Workers', Soldiers', and Peasants' Deputies, proposes to all the belligerent peoples and to their Governments to begin immediately negotiations for a just and democratic peace.
The Government means by a just and democratic peace, which is desired by the majority of
the workers and the laboring classes, exhausted and depleted by the war-that peace which the
Russian workers and peasants, after having struck down the Czarist monarchy, have not ceased
to demand categorically-immediate peace without annexations (that is to say without conquest
of foreign territory, without forcible annexation of other nationalities), and without indemnities.
The Government of Russia proposes to all the belligerent peoples immediately to conclude
such a peace, by showing themselves willing to enter upon decisive steps of negotiations aiming at such a peace, at once, without the slightest delay, before the definitive ratification of all
the conditions of such a peace by the authorized assemblies of the peoples of all countries and
of all nationalities.
By annexation or conquest of foreign territory the Government means-conformably to the conception of democratic rights in general, and the rights of the working class in particular-all union to a great and strong State of a small or weak nationality, without the voluntary, clear, and
precise expression of its consent and desire; whatever be the moment when such an annexation by force was accomplished, whatever be the degree of civilization of the nation annexed
by force or maintained outside the frontiers of another State, no matter if that nation be in
Europe or in the far countries across the sea.
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If any nation is retained by force within the limits of another State; if, in spite of the desire expressed by it (it matters little if that desire be expressed by the press, by popular meetings, decisions of political parties, or by disorders and riots against national oppression), that nation is
not given the right of deciding by free vote-without the slightest constraint, after the complete
departure of the armed forces of the nation which has annexed it or wishes to annex it or is
stronger in general-the form of its national and political organization, such a union constitutes
an annexation-that is to say, conquest and an act of violence.
To continue their war in order to permit the strong and rich nations to divide among themselves the weak and conquered nationalities is considered by the Government the greatest possible crime against humanity, and the Government solemnly proclaims its decision to sign a
treaty of peace which will put an end to this war upon the above conditions, equally fair for all
nationalities without exception.
The Government abolishes secret diplomacy, expressing before the whole country its firm decision to conduct all the negotiations in the light of day before the people, and will proceed immediately to the full publication of all secret treaties confirmed or concluded by the Government of the landowners and capitalists from March until 7 November 1917. All the clauses of
the secret treaties which, as occur in the majority of cases, have for their object to procure advantages and privileges for Russian imperialists, are denounced by the Government immediately and without discussion.
In proposing to all Governments and all peoples to engage in public negotiations for peace, the
Government declares itself ready to carry on these negotiations by telegraph, by post, or by
pourparlers [discussions] between the different countries, or at a conference of these representatives. To facilitate these pourparlers, the Government appoints its authorized representatives
in the neutral countries.
The Government proposes to all the governments and to all the peoples of all the belligerent
countries to conclude an immediate armistice, at the same time suggesting that the armistice
ought to last three months, during which time it is perfectly possible, not only to hold the necessary pourparlers between the representatives of all the nations and nationalities without exception drawn into the war or forced to take part in it, but also to convoke authorized assemblies of representatives of the people of all countries, for the purpose of the definite acceptance
of the conditions of peace.
In addressing this offer of peace to the Governments and to the peoples of all the belligerent
countries, the Provisional Workers' and Peasants' Government of Russia addresses equally and
in particular the conscious workers of the three nations most devoted to humanity and the three
most important nations among those taking part in the present war-England, France, and Germany. The workers of these countries have rendered the greatest services to the cause of progress and Socialism. The splendid examples of the Chartist movement in England, the series of
revolutions, of world-wide historical significance, accomplished by the French proletariat-and
finally, in Germany, the historic struggle against the Laws of Exception, an example for the
workers of the whole world of prolonged and stubborn action, and the creation of formidable
organizations of German proletarians-all these models of proletarian heroism, these monuments of history, are for us a sure guarantee that the workers of these countries will understand
the duty imposed upon them to liberate humanity from the horrors and consequences of war;
and that these workers, by decisive, energetic, and continued action, will help us to bring to a
successful conclusion the cause of peace-and at the same time, the cause of the liberation of
the exploited working masses from all slavery and all exploitation.
When the grave thunder of applause had died away, Lenin spoke again:
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"We propose to the Congress to ratify this declaration. We address ourselves to the Governments as well as to the peoples, for a declaration which would be addressed only to the peoples of the belligerent countries might delay the conclusion of peace. The conditions of peace,
drawn up during the armistice, will be ratified by the Constituent Assembly. In fixing the duration of the armistice at three months, we desire to give to the peoples as long a rest as possible
after this bloody extermination, and ample time for them to elect their representatives. This
proposal of peace will meet with resistance on the part of the imperialist governments-we don't
fool ourselves on that score. But we hope that revolution will soon break out in all the belligerent countries; that is why we address ourselves to the workers of France, England, and Germany.…
"The revolution of 6 and 7 November," he ended, "has opened the era of the Social Revolution.… The labor movement, in the name of peace and Socialism, shall win, and fulfill its destiny.…"
There was something quiet and powerful in all this, which stirred the souls of men. It was understandable why people believed when Lenin spoke.…
By crowd vote it was quickly decided that only representatives of political factions should be
allowed to speak on the motion and that speakers should be limited to fifteen minutes.
First Karelin for the Left Socialist Revolutionaries. "Our faction had no opportunity to propose
amendments to the text of the proclamation; it is a private document of the Bolsheviki. But we
will vote for it because we agree with its spirit.…"
For the Social Democrat Internationalists Kramarov, long, stoop-shouldered, and near-sighteddestined to achieve some notoriety as the Clown of the Opposition. Only a Government composed of all the Socialist parties, he said, could possess the authority to take such important
action. If a Socialist coalition was formed, his faction would support the entire program; if not,
only part of it. As for the proclamation, the Internationalists were in thorough accord with its
main points.…
Then one after another, amid rising enthusiasm; Ukrainian Social Democracy, support; Lithuanian Social Democracy, support; Populist Socialists, support; Polish Social Democracy, support; Polish Socialists, support-but would prefer a Socialist coalition; Lettish Social Democracy,
support.… Something was kindled in these men. One spoke of the "coming World-Revolution,
of which we are the advance-guard"; another of "the new age of brotherhood, when all the
peoples will become one great family.…" An individual member claimed the floor. "There is
contradiction here," he said. "First you offer peace without annexations and indemnities, and
then you say you will consider all peace offers. To consider means to accept.…"
Lenin was on his feet. "We want a just peace, but we are not afraid of a revolutionary war.…
Probably the imperialist Governments will not answer our appeal-but we shall not issue an ultimatum to which it will be easy to say no.… If the German proletariat realizes that we are
ready to consider all offers of peace, that will perhaps be the last drop which overflows the
bowl-revolution will break out in Germany.…
"We consent to examine all conditions of peace, but that doesn't mean that we shall accept
them.… For some of our terms we shall fight to the end-but possibly for others will find it impossible to continue the war.… Above all, we want to finish the war.…"
It was exactly 10:35 when Kameniev asked all in favor of the proclamation to hold up their
cards. One delegate dared to raise his hand against, but the sudden outburst around him
brought it swiftly down.… Unanimous.
Source: Reed, John. The Collected Works of John Reed. New York: Random House, 1995.
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A Ratification of Principles
Decisions on the land question were made in the form of a decree: "The right to private property in the land is annulled forever ... The landlord's property in the land is annulled immediately and without any indemnity whatever ..." All landed estates and the holdings of monasteries and churches were made national property and were placed under the protection of local
land committees and soviets of peasants. The holdings of poor peasants and of the rank and file
of the Cossacks, however, were specifically exempted from confiscation. Hired labor on the
land was prohibited, and the right of all citizens to cultivate land by their own labor was affirmed. The Congress of Soviets laid down the principle that "the use of the land must be equalized, that is, the land is to be divided among the toilers according to local conditions on the
basis of standards either of labor or consumption." Since most of these principles had already
been put into practice by the Bolsheviks, however, the decrees were in effect a ratification of
an accomplished fact rather than a new change.
B New Government
The Congress of Soviets provided for a governmental structure in which supreme authority was
vested in the congress itself. Execution of the decisions of the congress was entrusted to the
Soviet of People's Commissars, which was made subject to the authority of the Congress of
Soviets and to its Central Executive Committee. Each of the people's commissars was the
chairman of a commissariat (commission) corresponding to the ministries of other governments. Lenin was elected head of the Council of People's Commissars. Among other leading
Bolsheviks elected to this council were Trotsky and Stalin. With the establishment of the new
government, the Congress of Soviets adjourned.
The decisions of the Congress of Soviets on peace and land evoked widespread support for the
new government, and they were decisive in assuring victory to the Bolsheviks in other cities
and in the provinces. In November the Council of People's Commissars also proclaimed the
right of self-determination, including voluntary separation from Russia of the nationalities forcibly included in the tsarist empire, but made it clear that it hoped that the "toiling masses" of the
various nationalities would decide to remain with Russia. It also nationalized all banks and
proclaimed the workers' control of production. Industry was nationalized gradually. The freely
elected constituent assembly, which convened in Petrograd in January 1918, and in which the
Bolsheviks were only a small minority, was dispersed with armed force by the newly formed
government.
XII CIVIL WAR
Under Bolshevik control, the new government ended Russia's involvement in World War I by
signing the Treaty of Brest-Litovsk on March 3, 1918. Under the treaty Russia had to give up
the Baltic states, Finland, Poland, and Ukraine. Indignation at losing this territory sprang up in
Russia, and opposition to the Bolshevik Party, by then called the Russian Communist Party,
erupted into a civil war that lasted from 1918 until late 1920. Lenin's government, operating
out of the new capital in Moscow, began a policy of crushing all opposition. The Russian
Communists began the "Red terror" campaign in which suspected anti-Communists, known as
Whites, were arrested, tried, and executed. Although the peasantry had become hostile to the
Communists, they supported them, fearing that a victory by the Whites would result in a return
to the monarchy. Poorly organized and without widespread support, the Whites were defeated
by the Red Army in 1920.
Lenin and the Russian Communist Party took strict control of the country. Workers' strikes,
peasant uprisings, and a sailors' revolt known as the Kronshtadt Rebellion were quickly
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crushed. In 1921 Lenin established the New Economic Policy to strengthen the country, which
had been drained by seven years of turmoil and economic decline. On December 30, 1922,
the Union of Soviet Socialist Republics (USSR) was formally established when the ethnic territories of the former Russian Empire were united with the Russian Soviet Federated Socialist Republic (RSFSR).
Contributed By: Philip E. Mosley
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TREATY OF VERSAILLES
I INTRODUCTION
Peace treaty signed at the end of World War I between Germany and the Allies. It was negotiated during the Paris Peace Conference held in Versailles beginning January 18, 1919. Represented were the United States, Great Britain, France, and Italy; the German Republic, which
had replaced the imperial German government at the end of the war, was excluded from the
parley. Included in the first section of the treaty was the Covenant of the League of Nations, the
world's first peacekeeping body, which was given the responsibility for executing the terms of
the various treaties negotiated after World War I. The treaty was signed on June 28, 1919, in
the Hall of Mirrors at the Palace of Versailles near Paris. (The U.S. did not ratify the agreement
but signed a separate Treaty of Berlin with Germany on July 2, 1921.)
II DISARMAMENT AND REPARATIONS
By the Treaty of Versailles, Germany was required to abolish compulsory military service; to
reduce its army to 100,000; to demilitarize all the territory on the left bank of the Rhine River
and also that on the right bank to a depth of 50 km (31 mi); to stop all importation, exportation,
and nearly all production of war material; to limit its navy to 24 ships, with no submarines, the
naval personnel not to exceed 15,000; and to abandon all military and naval aviation by October 1, 1919. Germany also agreed to permit the trial of former emperor William II by an international court on the charge of "a supreme offense against international morality." (The trial
never took place.)
For damage incurred by the Allied powers during the war, Germany was required to make extensive financial reparation. In addition to money, payment was made in the form of ships,
trains, livestock, and valuable natural resources. Difficulty arose in collecting payment, and the
situation was not finally settled until the Lausanne Conference in 1932.
III TERRITORIAL CHANGES
Germany recognized the unconditional sovereignty of Belgium, Poland, Czechoslovakia (now
the Czech Republic and Slovakia), and Austria and denounced the treaties of Brest-Litovsk and
Bucharest. In addition, it lost some 71,000 sq km (about 27,500 sq mi), or slightly more than
13 percent of its European domain. Alsace-Lorraine was returned to France, and the Saar basin
placed under a League of Nations Commission for 15 years. Belgium received the small districts of Eupen-et-Malmédy, and Moresnet. Under plebiscites held in 1920
to determine the status of northern and central Schleswig, the former, comprising 3981 sq km
(1537 sq mi), was reunited with Denmark, but the latter remained with Germany. To Poland
were ceded large parts of the provinces of Posen and West Prussia. Plebiscites in southeastern
Prussia and the Marienwerder district of West Prussia, held in 1920, produced substantial majorities for Germany. The plebiscite in Upper Silesia in 1921
gave a majority for Germany, but the Council of the League of Nations, having been invited to
settle the controversy, awarded the richest part of the region to Poland. A portion of Upper
Silesia (now in the Czech Republic) was ceded to Czechoslovakia in 1920. The port of Memel
with adjacent territory was ceded to the Allies for ultimate transfer to Lithuania. The port of
Danzig was ceded to the principal Allied and associated powers, which recognized Danzig
(now Gdañsk) as a free city administered under the League of Nations but subject to Polish jurisdiction in regard to customs and foreign relations. Germany also lost its entire colonial empire.
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HUN HUMBLED AS PEACE IS SIGNED.
Although the United States never ratified the Treaty of Versailles, instead negotiating a separate
peace with Germany, the signing ceremony described in this Los Angeles Times article of June
29, 1919, symbolically ended World War I. The "Hun" referred to is Germany-a term familiar
to readers of World War I propaganda.
Treaty Signatures End World War.
Versailles, June 28.-Germany and the Allied and associated powers signed the peace terms
here today in the same imperial hall where the Germans humbled the French so ignominiously
forty-eight years ago.
This formally ended the world war, which lasted just thirty-seven days less than five years. Today, the day of peace, is the fifth anniversary of the murder of Archduke Francis Ferdinand at
Sarajevo.
The ceremony of signing the peace terms was brief. Premier Clemenceau called the session to
order in the Hall of Mirrors of the Chateau of Versailles at 3:10 o'clock. The signing began
when Dr. Hermann Mueller and Johannes Bell, the German signatories, affixed their names.
Dr. Mueller signed at 3:12 o'clock and Herr Bell at 3:13 o'clock. President Wilson, first of the
Allied delegates, signed a minute later. At 3:45 o'clock the momentous session was concluded.
All the diplomats and members of their parties wore conventional civilian clothes. There was a
marked lack of gold lace and pageantry. There were none of the fanciful uniforms of the Middle Ages, whose traditions and practices are so sternly condemned in the great, seal-covered
document signed today.
A spot of color was made against this somber background by the French guards. A few selected
members of the guard were resplendent in their red-plumed silver helmets and red, white and
blue uniforms.
CONDITIONS REVERSED.
As a contrast with the Franco-German peace session of 1871, held in the same hall, there were
present today grizzled French veterans of the Franco-Prussian war. They replaced the Prussian
Guardsmen of the previous ceremony and the Frenchmen today watched the ceremony with
grim satisfaction. The conditions of 1871 were exactly reversed. Today the disciples of Bismarck sat in the seats of the lowly, while the white marble statue of Minerva, Goddess of War,
looked on. Overhead, on the frescoed ceiling, were scenes from France's ancient wars.
Three incidents jarred the outward smoothness with which the ceremony was conducted. The
first of these was the failure of the Chinese delegation to sign. The second was the protest submitted by Gen. Jan Christian Smuts, who declared the peace unsatisfactory. The third, unknown to the public, came from the Germans. When the programme for the ceremony was
shown to the German delegation Von Haimhausen of the German delegation went to Col.
Henri, French liaison officer, and protested. He said:
"We cannot admit that the German delegates should enter the hall by a different door than the
Entente delegates; nor that military honors should be withheld. Had we known there would be
such arrangements before, the delegates would not have come."
In his protest, Gen. Smuts declared that there were territorial settlements which he believed
would need revision, and that there were guarantees provided which he hoped would soon be
found out of harmony with the new peaceful temper and unarmed statae of the Central Powers.
Punishments also were foreshadowed, he said, over which a calmer mood might yet prefer to
pass the sponge of oblivion.
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Gen. Smuts said that the indemnities stipulated could not be accepted without grave injuries to
the industrial revival of Europe. He declared it would be to the interest of the Allied Powers to
render the stipulations more tolerable and moderate.
After a conference with the French Foreign Ministry, it was decided, as a compromise, to render military honors as the Germans left. Otherwise, the programme was not changed.
An hour before the signing of the treaty, those assembled in the hall had been urged to take
their seats, but their eagerness to see the historic ceremony was so keen that they crowded toward the center of the hall, which is so long that a good view was impossible from the distance. Even with opera glasses, the correspondents and others were unable to observe satisfactorily. The seats were in no way elevated: consequently there was a general scramble for standing room.
Secretary Lansing was the first of the distinguished diplomats to arrive. He was followed shortly
by M. Clemenceau and Gen. Bliss. Few spectators recognized any of the diplomats and there
were no demonstrations.
WILSON APPLAUDED.
The delegates of the minor powers made their way with difficulty through the crowd to their
places at the table. Officers and civilians lined the walls and filled the aisles. President Wilson's
arrival ten minutes before the hour for signing was greeted by a faint burst of applause from the
few persons who were able to see him.
The German correspondents were ushered into the hall shortly before 3 o'clock and were given
standing room in a window at the rear of the correspondents' section.
When Premier Lloyd George arrived, many of the delegates sought autographs from the members of the council of four, and they busied themselves signing copies of the official programme
until the Germans entered the room.
At 3 o'clock a hush fell over the hall and the crowds shouted for the officials who were standing to sit down so as not to block the view. The delegates showed some surprise at the disorder, which did not cease until all spectators either had seated themselves or found places
against the walls.
GERMANS ENTER.
At seven minutes past 3 Dr. Hermann Mueller, the German Secretary for Foreign Affairs, and
Dr. Bell, the Colonial Secretary, were shown into the hall and quietly took seats at the long end
of the U-shaped table. They showed composure and manifested none of the uneasiness Count
von Brockdorff-Rantzau, head of the German peace delegation, displayed when handed the
treaty at Versailles.
M. Clemenceau, as president of the conference, made a brief speech inviting the Germans to
sign the treaty and there was a tense pause. William Martin, master of ceremonies, after a moment's delay, escorted the German plenipotentiaries to the signatory table where they signed
the treaty, the protocol and the Polish undertaking. Because of the confusion and the crowd,
the signing lost much of its expected dignity.
After the Germans had signed, President Wilson, followed by the American delegates, made his
way to the table and he and the others speedily affixed their signatures. Premier Lloyd George
came next with the English delegation. The British dominions followed-Canada. Australia, New
Zealand, South Africa and India-in the order named.
SMUTS CAUSES SURPRISE.
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A murmur of surprise passed around the hall when it became known that Gen. Smuts, representing South Africa, signed under protest and filed a document declaring that the peace was
unsatisfactory.
M. Clemenceau with the French delegates were the next in line for the signing, and then Baron
Saionji and the other Japanese delegates. The Italians came after the Japanese, and were followed by the representatives of the smaller powers.
During the attaching of the signatures of the great powers and the Germans a battery of moving
picture machines and cameras clicking away could be heard above the general disorder.
At 3:45 the booming of the cannon in celebration of the peace broke the monotony in the Hall
of Mirrors where the crowd has tired of the almost endless signing.
China's failure to send her delegates to the ceremony created much comment. The vacant seats
of the Chinese were noted early in the proceedings, but it was expected that the delegates
would arrive later. Then the report was circulated officially that the Chinese would not sign
without reservation on Shantung, and would issue a statement this evening on their position.
M. Clemenceau's announcement that the ceremony was at an end made it clear that China
intended to have no part in the day's ceremonies and that she must be dealt with by letter if the
signatories are willing to grant her the privilege of making the reservations.
ENDLESS STREAM OF AUTOS.
Hours before the time set for the ceremony a seemingly endless stream of automobiles began
moving up the cannon-lined hill of the Champs Elysees, past the Arc de Triomphe and out
through the Bois de Boulogne, carrying the plenipotentiaries, officials and guests to the ceremony. The thoroughfare was kept clear by pickets, dragoons and mounted gendarmes.
At the end of the court of honor in the chateau, a guard of honor was drawn up to present arms
as the leading plenipotentiaries passed. This guard comprised a company of Republican
Guards in brilliant uniform. The entrance for the delegates was by the marble stairway to the
"Queen's apartments" and the Hall of Peace, giving access then to the Hall of Mirrors.
The route to the peace table for the plenipotentiaries was through a space reserved for some
400 privileged guests. It had been arranged that the delegations, instead of struggling in without
order, as when the original terms of peace were communicated to the Germans, should enter
by groups, each one being formally announced by ushers from the French Foreign Office.
This formality was not prescribed for the Germans, who were given a separate route of entry,
coming through the park and gaining the marble stairway through the ground floor. There was
thus avoidance of occasion for the guard of honor to render them military honors, these being
reserved for the Allied representatives. The dismounted guardsmen on the marble staircase and
in the "Queen's apartments," however, were instructed to remain in their place for the entry of
the Germans.
ARRANGEMENT IN HALL.
Within the Hall of Mirrors, where the historical furnishings and paintings gave a tone of impressive state which would otherwise have been rather lacking in the assemblage of soberlyattired delegates, seventy-two chairs for the plenipotentiaries were drawn up around three sides
of the table, which formed an open rectangle fully eighty feet in length on its longer side. A
chair for M. Clemenceau, president of the Peace Conference, was placed in the center of the
long table facing the windows, with those for President Wilson and Premier Lloyd George on
the right and left hand, respectively.
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The German delegates were assigned seats at the side of the table nearest the entrance which
they could take after all the others had been seated.
Forty-five stalwart American doughboys, French Poilus and British Tommies, the real "artisans
of the peace," were present. Marshals and generals of the Allied armies took places on the
benches provided for privileged guests, but the fifteen privates from each of the principal armies stood within the inclosure reserved for the plenipotentiaries and high officials of the conference as the visible sign of their role in bringing into being a new Europe.
When the detachments of fifteen soldiers each from the American, British and French forces
entered the hall shortly before 3 o'clock and took their places at the windows, Premier Clemenceau stepped up to the French detachment and shook the hand of each man. The men had
been selected from those who bore honorable wounds, and the Premier expressed his pleasure
at seeing them there and his regret for the sufferings they had endured for their country.
The soldiers stood in the embrasures of the windows overlooking the chateau park a few feet
from Marshal Foch, who was seated with the French delegation at the peace table.
When the German delegates entered Premier Clemenceau arose and delivered his brief address. He said:
"The session is open. The Allied and associated powers one one side and the German commission on the other side, have come to an agreement on the conditions of peace. The treaty has
been completed, drafted and the president of the conference has stated in writing that the text
that is about to be signed now is identical with the 200 copies that have been delivered to the
German delegation. The signatures will be given now and they amount to a solemn undertaking faithfully and loyally to execute the conditions embodied by this treaty of peace. I now invite the delegates of the German commission to sign the treaty."
The German plenipotentiaries instead of being regarded from the moment of signature as representatives of a formerly friendly power with which diplomatic relations had been renewed, had
to leave the hall after the signature separately by the door through which they entered, not joining the general procession of the delegates to the terrace of the chateau to watch the playing of
the great fountain of Versailles. For them peace will be regarded as concluded from the moment of German ratification.
The German delegates left the hall first, the Allied representatives remaining in their seats.
Those who had assembled in the hall then went to the terrace to see the fountains playing.
Premiers Clemenceau and Lloyd George and President Wilson were photographed together on
the terrace. After the demonstration the three Allied leaders left Versailles in the same automobile, the crowds following and cheering.
Source: Los Angeles Times, June 29, 1919.
"Treaty of Versailles Signed," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft
Corporation. All rights reserved.
UNITED STATES SENATE REJECTS TREATY OF PEACE. LEAGUE OF NATIONS IS BEATEN IN FINAL
VOTE. LOS ANGELES TIMES MARCH 20, 1920
On March 20, 1920, the Los Angeles Times reported on Congress's failure to ratify the Treaty of
Versailles, which established the terms of German surrender in World War I and created the
League of Nations. President Woodrow Wilson, whose Fourteen Points proposals provided for
the formation of the League, was sorely disappointed at this defeat.
By Arthur Sears Henning.
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Washington, March 19.-The German peace treaty with its League of Nations covenant failed of
ratification in the Senate tonight by seven votes, and was ordered returned to the President with
a formal notification of the failure of the body to consent to the pact he had negotiated in Paris.
With the treaty out of the hands of the Senate, Senator Knox moved to proceed to the consideration of his resolution declaring a state of peace with Germany by repealing the declaration
of war, this having been favorably reported to the Senate last December. The Senator's motion
to take up the resolution was pending when the Senate adjourned until Monday noon.
The vote on the ratification motion was 49 ayes and 35 noes, the affirmative side being seven
votes short of the required two-thirds of the Senators present and voting. Twenty-eight Republicans and twenty-one Democrats voted for the treaty with the reservations, while twelve Republicans and twenty-three Democrats voted against it.
Six Republicans and two Democrats were "paired" for and three Republicans and one Democrat against it.
CAUSE OF DEFEAT.
The defeat of the treaty, the second time in four months, was accomplished by a combination
of administration Democrats obeying the command of the President to reject the covenant as
modified by the protective reservations and the Republican and Democratic irreconcilables
who oppose the League of Nations in any form.
Amid efforts of Senator Hitchcock to keep the treaty still before the Senate in spite of its second
defeat Senator Lodge immediately after the ratification roll call offered a resolution to return the
treaty to the President with formal notice of its failure. This resolution was adopted by a vote of
47 to 37.
The treaty will be returned to the President by Secretary Sanderson of the Senate tomorrow. It
then will be up to the President to decide whether to submit again to the Senate under altered
conditions, if such should develop, or to withhold any further action pending the outcome of
the Presidential election and its "solemn referendum" on the issue of the League of Nations with
or without reservations.
AT THE WHITE HOUSE.
When the failure of the treaty was communicated to the White House, Secretary Tumulty said
the President would have no comment to make tonight.
Strenuous efforts were made by the administration leaders to obtain a reconsideration of the
vote by which the treaty failed of ratification even after it had been ordered returned to the
President. When those moves were ruled out of order Senator Lodge said he was willing to
have another vote and asked unanimous consent that it be had at once. Senator Hitchcock objected to another vote at once and the Republicans would not agree to a postponement.
The reconsideration motion was purely a maneuver for delay in returning the treaty to the
President, for not enough additional Democrats were ready to change front to make ratification
possible on another roll call.
The ratification roll call came shortly after 6 o'clock, following a day of listless oratory on the
subject of the covenant and the reservations. The roll was called in a tense silence, with scores
of persons in the crowded galleries keeping tally.
The result had been forecast accurately for forty-eight hours by the leaders on each side. Senator Hitchcock held twenty-three Democrats in line against the treaty, while twenty-one deserted the President. The conspicuous recruits today to the ranks of the Democrats in revolt
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against the President were Senators Walsh of Montana, Ransdell of Louisiana and Smith of
Maryland.
In the confusion that reigned as soon as the defeat of the treaty was announced by Senator
Cummins, the president pro tempore, Senator Lodge offered his resolution to return the treaty
to the President, and Sonator Hitchcock strongly objected.
HITCHCOCK OBJECTS.
"I hope," he said, "that this resolution will be deferred for more mature consideration. While the
treaty remains before the Senate there is still a chance of its ratification, but once it is sent to
the President that chance is removed. It seems to me that the sincere friends of the treaty ought
to be willing to defer action on this measure tonight."
Senator Lodge retorted that the time had come to end the proceedings over the treaty.
"It seems to me," said Senator Lodge, "that after a year of discussion, and after the Senate twice
has failed to ratify the treaty the time has come to end it. The hope of getting the necessary
votes to ratify it is groundless, and we have no right to bring it again before the Senate and interfere with other pressing public business. I feel that I have gone as far as I can, and in justice
to the country we must notify the President that the treaty cannot be ratified."
Senator Lenroot of Wisconsin, supported the resolution.
CAN SUBMIT AGAIN.
"It is very evident," said Senator Lenroot, "that the treaty cannot be ratified until the President
gives his consent. I believe, therefore, that it should be sent back to him. He can submit it again
to to the Senate at any time he sees fit."
Several Senators attempted to speak, but their voices were drowned out by cries of "Vote, vote,"
from members weary of the long treaty fight and anxious to have it ended. The resolution went
to a vote and was carried, 47 to 87.
Senator Robinson of Arkansas, Democrat, one of the President's "battalion of death," moved
then to reconsider the vote by which the treaty had been rejected.
Senator Watson of Indiana, Republican, moved to table the motion. The "mild reservationists"
deserted the Republican ranks on this roll call and joined with the Democrats. The motion to
table was lost, 34 to 43.
Senator Robinson then moved to adjourn. Shouts of "No, no," arose from many parts of the
Senate, and Senators insisted on remaining in session to settle the treaty question then and
there. The motion to adjourn was rejected, 33 to 42.
Senator Brandegee, of Connecticut, Republican "irreconcilable," made a point of order against
Senator Robinson's motion to reconsider the vote by which the treaty was rejected. The Connecticut Senator contended that as the Senate had already voted to return the treaty to the
President, and to notify him of its rejection, the pact was no longer in the Senate's hands and
that therefore the motion to reconsider was not in order.
Senator Cummins of Iowa, president pro tem., sustained the point of order and the motion to
reconsider was scrapped.
Senator Robinson then moved that the President be requested to return the treaty to the Senate,
and that the vote by which the pact was rejected be reconsidered. Senator Lodge started to
make a point of order against the motion, but Senator Robinson suddenly abandoned the effort.
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Senator Knox then moved to proceed to the consideration of his resolution, declaring the war
at an end. Senator Lenroot of Wisconsin said that while he felt that such a resolution should be
adopted within a very near time, he would oppose taking it up immediately.
Senator Lodge thereupon moved to adjourn and the motion was carried without a record vote.
REGARDED "AS DEAD."
Senator Lodge regarded the treaty as dead, but declined to make any statement.
Senator Reed of Missouri, "irreconcilable," said:
"This is the best thing that has happened to America since Cornwallis surrendered at Yorktown."
The first act of the Senate upon resuming consideration of the treaty this morning was to reject
the Brandegee amendment to the preamble, 41 to 42. This amendment would have required
the President to deposit the instrument of ratification at Paris within ninety days after the President had consented to the ratification.
TO PREVENT POCKETING.
Senator Brandegee of Connecticut, author of the amendment, explained that its purpose was to
prevent the President pocketing the treaty and keeping the country in a state of uncertainty for
an indefinite period. By axing a different time for the deposit of the ratification, he said, the
country would be enabled to know at a given date whether it was in a state of war or peace,
and take the necessary steps to restore normal conditions by other processes.
Senator Cummins of Iowa, Townsend of Michigan and Jones of Washington, Republicans,
joined with the Democrats, and accomplished the defeat of the Brandegee amendment by the
narrow margin of one vote.
Without a record vote, the Senate then agreed to the preamble as amended by Senator Lodge.
The preamble as it stands now no longer requires three of the other four principal Allied powers to specifically accept the American reservations, but states that failure of other nations to
the objections prior to the deposit of ratifications shall be taken as full and final acceptance of
the reservations.
Democratic Senators beset on one side with pleas to ratify the treaty and on the other with
commands from the White House to stand firm against the Lodge reservations appeared to be
having a rather unpleasant day of it.
CLOAKROOM CONFERENCES.
Scores of informal conferences were held in the cloakrooms while the debate was in progress
on the floor. Democratic Senators earnestly discussed the political consequences of their attitude. "Between the devil and the deep blue sea" was an expression frequently employed by the
Democrats to describe their plight.
Pressure from the politicians in their home States became so strong during the day that only the
President's most devoted followers were able to stand the strain. Telegrams beseeching them to
take Mr. Bryan's advice and ratify the treaty poured in upon the President's "battalion of death"
in countless numbers.
The wavering in the administration ranks looked ominous at some junctures. Senator Walsh of
Montana, and Senator Ransdell of Louisiann, two of the President's henchmen through thick
and thin, bolted and made speeches on the floor in an effort to gain new insurrection converts.
Senator Ransdell thought he had stood by the President long enough and announced that he
now "deemed it his duty" to vote for ratification.
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Senator Walsh, who once made a speech describing Article X as "the heart of the covenant,"
told the Senate he thought the importance of the article had been greatly overestimated, and
that he had been converted to the belief that the Lodge reservations did not nullify the treaty.
Word went round that the treaty was then within four votes of ratification and the friends of the
pact went to work with renewed energy to win over Senators who appeared most likely to
weaken. On the Republican side the ratification spirit spread, and the treaty advocates made a
final effort to persuade "irreconcilables" to support the pact and put it up to President Wilson.
In the midst of these activities, Postmaster-General Burleson (frequently called the liaison officer of the White House, and the Capitol) appeared at the Senate as he invariably does at crucial moments. A few minutes later Secretary of the Navy Daniels arrived. They had many conferences with Senators, but the explanation was made that they brought no message from the
White House with regard to the treaty.
Senator Myers of Montana, a Democrat, who voted for ratification with the Lodge reservations
on November 19, took the floor and announced that he would again support the pact, although
he was by no means enthusiastic about it.
Citing the inability of the Allied governments to bring the Kaiser to trial, Senator Myers declared that the treaty "had been a failure from the start." He declared that the terms imposed
upon Germany were far too lenient.
BLAMES PRESIDENT.
Senator Lenroot, of Wisconsin, Republican, one of the most persistent workers for ratification,
made a strong speech, declaring that President Wilson would be the one most largely to blame
if the treaty was defeated.
"Once more," he said, "we have a combination of President Wilson and the 'irreconcilables'
sufficient in numbers, it is reported, to kill the treaty. Who would have thought a year ago that
today we would see Senator Hitchcock and Senator Borah standing shoulder to shoulder and
sending the treaty down to defeat?
"But with all the skill and genius with which the 'irreconcilable' Senators have opposed ratification, the credit will not be theirs if the pact is rejected. President Wilson is the man who will
defeat it."
Senator Lenroot carefully analyzed the reservations and undertook to show that they did not
nullify the treaty, but merely made it safe for America.
Source: Los Angeles Times, March 20, 1920.
"Senate Rejects Treaty of Versailles," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999
Microsoft Corporation. All rights reserved.
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LEAGUE OF NATIONS
I INTRODUCTION
International alliance for the preservation of peace. The league existed from 1920 to 1946. The
first meeting was held in Geneva, on November 15, 1920, with 42 nations represented. The
last meeting was held on April 8, 1946; at that time the league was superseded by the United
Nations
(UN). During the league's 26 years, a total of 63 nations belonged at one time or another; 28
were members for the entire period.
II THE COVENANT AND THE UNITED STATES
In 1918, as one of his Fourteen Points summarizing Allied aims in World War I, United States
president Woodrow Wilson
presented a plan for a general association of nations. The plan formed the basis of the Covenant of the League of Nations, the 26 articles that served as operating rules for the league. The
covenant was formulated as part of the Treaty of Versailles, which ended World War I, in
1919.
Although President Wilson was a member of the committee that drafted the covenant, it was
never ratified by the U.S. Senate because of Article X, which contained the requirement that all
members preserve the territorial independence of all other members, even to joint action
against aggression. During the next two decades, American diplomats encouraged the league's
activities and attended its meetings unofficially, but the United States never became a member.
The efficacy of the league was, therefore, considerably lessened.
III LEAGUE STRUCTURE
The machinery of the league consisted of an assembly, a council, and a secretariat. Before
World War II (1939-1945), the assembly convened regularly at Geneva in September; it was
composed of three representatives for every member state, each state having one vote. The
council met at least three times each year to consider political disputes and reduction of armaments; it was composed of several permanent members-France, Britain, Italy, Japan, and
later Germany and the Union of Soviet Socialist Republics (USSR)-and several nonpermanent
members elected by the assembly. The decisions of the council had to be unanimous. The secretariat was the administrative branch of the league and consisted of a secretary general and a
staff of 500 people. Several other bodies were allied with the league, such as the Permanent
Court of International Justice, called the World Court, and the International Labor Organization.
IV WORLD INVOLVEMENT
The league was based on a new concept: collective security against the "criminal" threat of
war. Unfortunately, the league rarely implemented its available resources, limited though they
were, to achieve this goal.
One important activity of the league was the disposition of certain territories that had been
colonies of Germany and Turkey before World War I. Supervision of these territories was
awarded to league members in the form of mandates. Mandated territories were given different
degrees of independence, in accordance with their stage of development, their geographic
situation, and their economic status.
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The league may be credited with certain social achievements. These include curbing international traffic in narcotics and prostitution, aiding refugees of World War I, and surveying and
improving health and labor conditions around the world.
In the area of preserving peace, the league had some minor successes, including settlement of
disputes between Finland and Sweden over the Åland Islands in 1921
and between Greece and Bulgaria over their mutual border in 1925. The Great Powers, however, preferred to handle their own affairs; France occupied the Ruhr, and Italy occupied Corfu
(Kérkira), both in 1923, in spite of the league.
Although Germany joined the league in 1926, the National Socialist (Nazi) government withdrew in 1933. Japan also withdrew in 1933, after Japanese attacks on China were condemned
by the league. The league failed to end the war between Bolivia and Paraguay over the Chaco
Boreal between 1932 and 1935 and to stop the Italian conquest of Ethiopia begun in 1935.
Finally, the league was powerless to prevent the events in Europe that led to World War II. The
USSR, a member since 1934, was expelled following the Soviet attack on Finland in 1939. In
1940 the secretariat in Geneva was reduced to a skeleton staff, and several small service units
were moved to Canada and the United States.
In 1946 the league voted to effect its own dissolution, whereupon much of its property and
organization were transferred to the UN.
V LEGACY
Never truly effective as a peacekeeping organization, the lasting importance of the League of
Nations lies in the fact that it provided the groundwork for the UN. This international alliance,
formed after World War II, not only profited by the mistakes of the League of Nations but borrowed much of the organizational machinery of the league.
VI MEMBERSHIP
The accompanying table lists the countries that were members of the international organization. Where no date is given, the country was an original member of the league. The year in
parentheses is the year of admission to the league unless otherwise indicated.
Contributed By: Lee Congdon
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REPARATIONS
I INTRODUCTION
Payments that a victorious power seeks from the defeated side to compensate for costs or damages incurred during a war. U.S. President Woodrow Wilson applied the term reparations at
the end of World War I to differentiate the Allies' demand for restitution for civilian damages
from the older concept of indemnity. Money indemnities, as distinguished from simple booty,
emerged with the Thirty Years' War (1618-48), then became prevalent in the settlements of the
French revolutionary and Napoleonic wars (1792-1815). In 1871 the Prussians under Prince
Otto von Bismarck imposed an indemnity of 5 billion francs (then about $1 billion) on the defeated French. At the time this seemed an extraordinarily heavy sum, but the French paid it off
within a few years.
II WORLD WAR I
Because the term indemnity had acquired a punitive and discredited connotation, Wilson and
the Allies resorted to the concept of reparations. The defeated Germans accepted the obligation
of reparations payments when they signed the armistice of November 11, 1918. To justify
Germany's obligation to pay, the Allies included in the peace treaty what became known as
the war-guilt clause stating that Germany accepted sole responsibility for causing the war. This
aroused intense nationalist bitterness in Germany. The treaty also required provisional payments in kind and cash of 20 billion gold marks ($5 billion) and established a Reparations
Commission, which by 1921 was to calculate a full bill and propose a multiyear schedule of
payments. The Reparations Commission subsequently made a total assessment of 132 billion
gold marks ($33 billion), which the Germans accepted only under duress.
Between 1919 and 1924, successive international conferences discussed the problems arising
from reparations. After an initial cash payment of $250 million in September 1921, the hyperinflation of the mark led the Germans to seek repeated postponements until French troops occupied (1923) the German industrial region of the Ruhr in an attempt to enforce payment. This
recourse proved extremely costly to both sides and finally induced Paris and Berlin to accept
the American-arbitrated Dawes Plan (named after U.S. Vice President Charles G. Dawes) in
1924. Under this scheme, the payment term was to be lengthened with annual installments
gradually increasing; and in fact, private American loans during the 1920s more than made up
the balance-of-payments deficit that transfer of reparations entailed.
In 1929, when Germany faced an increase in annual payments that might again threaten the
value of its currency, the modified Young Plan (named after the American lawyer and financier
Owen D. Young) was substituted for the Dawes Plan. With the onset of the Great Depression,
however, all payments became difficult. In 1931, U.S. President Herbert Hoover proposed, and
the French were constrained to accept, a one-year moratorium both on German reparations
payments and on the war debts owed by the Allies to the United States. A year later at the
Lausanne Conference, with world commerce near collapse, remaining reparations were reduced to negligible amounts.
III WORLD WAR II
During World War II, the Allies again agreed to impose reparations on a defeated Germany.
Instead of annual payments, however, reparations totaling $20 billion would be extracted from
the enemy's factories and capital plant. At the Potsdam Conference (July 1945) it was arranged
that each of the occupying powers would take three-fourths of its reparations from the respec-
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tive German zone it was to administer. The remaining amount was to be provided by transfers
among zones-a provision that soon led to intense wrangling between the Americans and the
British on one side and the Soviets on the other. With the issues of the cold war driving apart
the USSR and the U.S., the reparations settlement broke down at the April 1947 conference of
foreign ministers-a fact that contributed to the final partition of Germany. The Soviets extracted
their reparations from East Germany, and West Germany made some further payments to the
former Western allies. After 1948 these payments were indirectly replaced by Marshall Plan
aid; the Federal Republic of Germany that emerged in 1949 did recognize some continuing
reparations obligations, however, including more than $700 million to the state of Israel for the
Nazi persecution of European Jews. Japan and other Axis powers also paid about $1.4 billion
in aggregate reparations.
Contributed By: Charles S. Maier
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GREAT DEPRESSION IN THE UNITED STATES
I INTRODUCTION
Worst and longest economic collapse in the history of the modern industrial world, lasting from
the end of 1929 until the early 1940s. Beginning in the United States, the depression spread to
most of the world's industrial countries, which in the 20th century had become economically
dependent on one another. The Great Depression saw rapid declines in the production and
sale of goods and a sudden, severe rise in unemployment. Businesses and banks closed their
doors, people lost their jobs, homes, and savings, and many depended on charity to survive. In
1933, at the worst point in the depression, more than 15 million Americans-one-quarter of the
nation's workforce-were unemployed.
The depression was caused by a number of serious weaknesses in the economy. Although the
1920s appeared on the surface to be a prosperous time, income was unevenly distributed. The
wealthy made large profits, but more and more Americans spent more than they earned, and
farmers faced low prices and heavy debt. The lingering effects of World War I (1914-1918)
caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression: the disastrous U.S. stock market crash of 1929, which ruined thousands of investors and destroyed confidence in the economy. Continuing throughout the 1930s, the depression ended in the United
States only when massive spending for World War II began.
The depression produced lasting effects on the United States that are still apparent more than
half a century after it ended. It led to the election of President Franklin Delano Roosevelt, who
created the programs known as the New Deal to overcome the effects of the Great Depression.
These programs expanded government intervention into new areas of social and economic
concerns and created social-assistance measures on the national level. The Great Depression
fundamentally changed the relationship between the government and the people, who came to
expect and accept a larger federal role in their lives and the economy.
The programs of the New Deal also brought together a new, liberal political alliance in the
United States. Roosevelt's policies won the support of labor unions, blacks, people who received government relief, ethnic and religious minorities, intellectuals, and some farmers, forming a coalition that would be the backbone of the Democratic Party for decades to come.
On a personal level, the hardships suffered during the depression affected many Americans'
attitudes toward life, work, and their community. Many people who survived the depression
wanted to protect themselves from ever again going hungry or lacking necessities. Some developed habits of frugality and careful saving for the rest of their lives, and many focused on accumulating material possessions to create a comfortable life, one far different from that which
they experienced in the depression years.
The depression also played a major role in world events. In Germany, the economic collapse
opened the way for dictator Adolf Hitler to come to power, which in turn led to World War II.
II CAUSES OF THE DEPRESSION
It is a common misconception that the stock market crash of October 1929 was the cause of
the Great Depression. The two events were closely related, but both were the results of deep
problems in the modern economy that were building up through the "prosperity decade" of the
1920s.
As is typical of post-war periods, Americans in the Roaring Twenties turned inward, away from
international issues and social concerns and toward greater individualism. The emphasis was
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on getting rich and enjoying new fads, new inventions, and new ideas. The traditional values of
rural America were being challenged by the city-oriented Jazz Age, symbolized by what many
considered the shocking behavior of young women who wore short skirts and makeup,
smoked, and drank.
The self-centered attitudes of the 1920s seemed to fit nicely with the needs of the economy.
Modern industry had the capacity to produce vast quantities of consumer goods, but this created a fundamental problem: Prosperity could continue only if demand was made to grow as
rapidly as supply. Accordingly, people had to be persuaded to abandon such traditional values
as saving, postponing pleasures and purchases, and buying only what they needed. "The key to
economic prosperity," a General Motors executive declared in 1929, "is the organized creation
of dissatisfaction." Advertising methods that had been developed to build support for World
War I were used to persuade people to buy such relatively new products as automobiles and
such completely new ones as radios and household appliances. The resulting mass consumption kept the economy going through most of the 1920s.
But there was an underlying economic problem. Income was distributed very unevenly, and
the portion going to the wealthiest Americans grew larger as the decade proceeded. This was
due largely to two factors: While businesses showed remarkable gains in productivity during
the 1920s, workers got a relatively small share of the wealth this produced. At the same time,
huge cuts were made in the top income-tax rates. Between 1923 and 1929, manufacturing
output per person-hour increased by 32 percent, but workers' wages grew by only 8 percent.
Corporate profits shot up by 65 percent in the same period, and the government let the wealthy
keep more of those profits. The Revenue Act of 1926 cut the taxes of those making $1 million
or more by more than two-thirds.
As a result of these trends, in 1929 the top 0.1 percent of American families had a total income
equal to that of the bottom 42 percent. This meant that many people who were willing to listen
to the advertisers and purchase new products did not have enough money to do so. To get
around this difficulty, the 1920s produced another innovation-"credit," an attractive name for
consumer debt. People were allowed to "buy now, pay later." But this only put off the day
when consumers accumulated so much debt that they could not keep buying up all the products coming off assembly lines. That day came in 1929.
American farmers-who represented one-quarter of the economy-were already in an economic
depression during the 1920s, which made it difficult for them to take part in the consumer buying spree. Farmers had expanded their output during World War I, when demand for farm
goods was high and production in Europe was cut sharply. But after the war, farmers found
themselves competing in an over-supplied international market. Prices fell, and farmers were
often unable to sell their products for a profit.
International problems also weakened the economy. After World War I the United States became the world's chief creditor as European countries struggled to pay war debts and reparations. Many American bankers were not ready for this new role. They lent heavily and unwisely
to borrowers in Europe, especially Germany, who would have difficulty repaying the loans,
particularly if there was a serious economic downturn. These huge debts made the international banking structure extremely unstable by the late 1920s.
In addition, the United States maintained high tariffs on goods imported from other countries,
at the same time that it was making foreign loans and trying to export products. This combination could not be sustained: If other nations could not sell their goods in the United States, they
could not make enough money to buy American products or repay American loans. All major
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industrial countries pursued similar policies of trying to advance their own interests without
regard to the international economic consequences.
The rising incomes of the wealthiest Americans fueled rapid growth in the stock market, especially between 1927 and 1929. Soon the prices of stocks were rising far beyond the worth of
the shares of the companies they represented. People were willing to pay inflated prices because they believed the stock prices would continue to rise and they could soon sell their
stocks at a profit.
The widespread belief that anyone could get rich led many less affluent Americans into the
market as well. Investors bought millions of shares of stock "on margin," a risky practice similar
to buying products on credit. They paid only a small part of the price and borrowed the rest,
gambling that they could sell the stock at a high enough price to repay the loan and make a
profit.
For a time this was true: In 1928 the price of stock in the Radio Corporation of America (RCA)
multiplied by nearly five times. The Dow Jones industrial average-an index that tracks the stock
prices of key industrial companies-doubled in value in less than two years. But the stock boom
could not last. The great bull market of the late 1920s was a classic example of a speculative
"bubble" scheme, so called because it expands until it bursts. In the fall of 1929 confidence that
prices would keep rising faltered, then failed. Starting in late October the market plummeted as
investors began selling stocks. On October 29, in the worst day of the panic, stocks lost $10
billion to $15 billion in value. By mid-November almost all of the gains of the previous two
years had been wiped out, with losses estimated at $30 billion.
The stock market crash announced the beginning of the Great Depression, but the deep economic problems of the 1920s had already converged a few months earlier to start the downward spiral. The credit of a large portion of the nation's consumers had been exhausted, and
they were spending much of their current income to pay for past, rather than new, purchases.
Unsold inventories had begun to pile up in warehouses during the summer of 1929.
The crash affected the economy the way exposure to cold affects the human body, lowering
the body's resistance to infectious agents that are already present. The crash reduced the ability
of the economy to fight off the underlying sicknesses of unevenly distributed wealth, agricultural depression, and banking problems.
III ECONOMIC COLLAPSE (1929-1933)
The stock market crash was just the first dramatic phase of a prolonged economic collapse.
Conditions continued to worsen for the next three years, as the confident, optimistic attitudes of
the 1920s gave way to a sense of defeat and despair. Stock prices continued to decline. By late
1932 they were only about 20 percent of what they had been before the crash. With little consumer demand for products, hundreds of factories and mills closed, and the output of American
manufacturing plants was cut almost in half from 1929 to 1932.
Unemployment in those three years soared from 3.2 percent to 24.9 percent, leaving more than
15 million Americans out of work. Some remained unemployed for years; those who had jobs
faced major wage cuts, and many people could find only part-time work. Jobless men sold apples and shined shoes to earn a little money.
Many banks had made loans to businesses and people who now could not repay them, and
some banks had also lost money by investing in the stock market. When depositors hit by the
depression needed to withdraw their savings, the banks often did not have the money to give
them. This caused other depositors to panic and demand their cash, ruining the banks. By the
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winter of 1932 to 1933, the banking system reached the point of nearly complete collapse;
more than 5,000 banks failed by March 1933, wiping out the savings of millions of people.
As people lost their jobs and savings, mortgages on many homes and farms were foreclosed.
Homeless people built shacks out of old crates and formed shantytowns, which were called
"Hoovervilles" out of bitterness toward President Herbert Hoover, who refused to provide government aid to the unemployed.
The plight of farmers, who had been in a depression since 1920, worsened. Already low prices
for their goods fell by 50 percent between 1929 and 1932. While many people went hungry,
surplus crops couldn't be sold for a profit.
Natural forces inflicted another blow on farmers. Beginning in Arkansas in 1930, a severe
drought spread across the Great Plains through the middle of the decade. Once-productive topsoil turned to dust that was carried away by strong winds, piling up in drifts against houses and
barns. Parts of Kansas, Oklahoma, Texas, New Mexico, and Colorado became known as the
Dust Bowl, as the drought destroyed the livelihood of hundreds of thousands of small farmers.
Packing up their families and meager possessions, many of these farmers migrated to California
in search of work. Author John Steinbeck created an unforgettable fictional portrait of their fate
in the novel The Grapes of Wrath (1939).
IV INITIAL RESPONSE TO THE DEPRESSION
The initial government response to the Great Depression was ineffective, as President Hoover
insisted that the economy was sound and that prosperity would soon return. Hoover believed
the basic need was to restore public confidence so businesses would begin to invest and expand production, providing jobs and income to restore the economy to health. But business
owners saw no reason to increase production while unsold goods clogged their shelves. By
1932 investment had dropped to less than 5 percent of its 1929 level.
Convinced that a balanced federal budget was essential to restoring business confidence, Hoover sought to cut government spending and raise taxes. But in the face of a collapsing economy, this served only to reduce demand further. As conditions worsened, Hoover's administration eventually provided emergency loans to banks and industry, expanded public works, and
helped states offer relief. But it was too little, too late.
The epitome of a "self-made man," Hoover believed in individualism and self-reliance. As more
and more Americans lost jobs and faced hunger, Hoover asserted that "mutual self-help
through voluntary giving" was the way to meet people's needs. Private giving increased greatly,
reaching a record high in 1932, but charitable organizations were overwhelmed by the enormous number of people in need. To many, government assistance seemed the only answer, but
Hoover was convinced that giving federal relief payments would undermine recipients' selfreliance, and he resisted this step throughout his term.
The tension between citizens seeking government action and Hoover's administration came to
a head in June 1932. More than 20,000 World War I veterans marched on Washington, D.C.,
to ask for early payment of government bonuses they had been promised. But the government
refused, and when some members of the so-called Bonus Army didn't leave the capital, federal
troops used tear gas and bayonets to evict the men and their families (see Bonus March).
Hoover and most of his Republican Party firmly supported protective tariffs to block imports
and stimulate the American economy by increasing sales of American-made products. In 1930
they enacted the Hawley-Smoot Tariff, which established the highest average tariff in American
history. This was a crushing blow to European economies, which were already sinking into
depression. Other nations retaliated by raising their own tariffs. This action helped to worsen
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and spread the depression by choking off international trade. Between 1929 and 1932 the total
value of world trade had declined by more than half.
V INTERNATIONAL EFFECTS OF THE DEPRESSION
Like Hoover, leaders of other nations around the world were determined to balance their
budgets by raising taxes and slashing government spending. Germany, struggling to pay reparations imposed by the peace settlements after World War I, suffered to a larger extent than any
other major industrial nation. Nearly 40 percent of the German workforce was unemployed by
1932. In these desperate economic circumstances, large numbers of Germans began to listen to
the tirades of Hitler, who blamed the depression on Jews and Communists and promised to
restore Germany to economic and military strength. After his Nazi (National Socialist) Party
became the strongest political force in Germany, Hitler was named chancellor in January 1933.
He soon seized absolute control of the German government.
In Britain the effects of the depression were not as dramatic because the nation had been suffering from high unemployment through much of the 1920s. Unlike the United States, Britain already had unemployment insurance and government welfare payments to ease the burden on
the jobless. The depression took longer to hit hard in France because it was less industrialized
than the United States, Germany, and Britain. Also, because so many French men had died in
World War I, the workforce was very small, and it took a severe economic decline before the
demand for workers fell below the small supply.
VI ROOSEVELT AND THE NEW DEAL
By the election year of 1932, the depression had made Hoover so unpopular that the election
of the Democratic presidential candidate Franklin Delano Roosevelt was all but assured. Confidence-Hoover's elusive goal-was Roosevelt's most abundant quality. Declaring in his inaugural speech that "the only thing we have to fear is fear itself," Roosevelt quickly lifted the nation's
spirits with the rapid and unprecedented actions of the New Deal.
Within days of his inauguration Roosevelt called Congress into a special session, during which
many pieces of emergency legislation were passed. Following the example of many states,
Roosevelt proclaimed a nationwide bank holiday, closing all banks to stop panicky depositors
from withdrawing their money. A few days later he broadcast the first of many fireside chats on
the radio, reassuring Americans that all banks that were allowed to reopen would be safe.
The New Deal produced a wide variety of programs to reduce unemployment, assist businesses
and agriculture, regulate banking and the stock market, and provide security for the needy,
elderly, and disabled. The basic idea of early New Deal programs was to lower the supply of
goods to the current, depressed level of consumption. Under the Agricultural Adjustment Act of
1933, the government sought to raise farm prices by paying farmers not to grow surplus crops.
Parts of the National Industrial Recovery Act created codes for many industries that regulated
competition while guaranteeing minimum wages and maximum hours for workers.
The New Deal also tried to increase demand, pumping large amounts of money into the economy through public works programs and relief measures. Public works projects not only provided jobs but built schools, dams, and roads; the innovative Tennessee Valley Authority provided electric power and improved living conditions in an area of the southeast United States.
However, Roosevelt never embraced the new ideas of British economist John Maynard Keynes,
who argued that intentionally unbalancing the budget to a significant degree would boost demand to the point where recovery would take place. The U.S. gross public debt increased from
$22.5 billion in 1933 to $40.44 billion in 1939, but Roosevelt was reluctant to accept any
more deficit spending than seemed absolutely necessary to prevent mass suffering. He did not
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create an unbalanced budget on the scale Keynes advocated until World War II forced it upon
him. Once the government started spending at the levels Keynes had suggested, the depression
ended.
The New Deal helped people to survive the depression, but acted as a painkiller rather than a
cure for the nation's economic ills. Unemployment was reduced, but remained high through
the 1930s. Farm income rose from a low of $1.9 billion in 1932 to $4.2 billion in 1940. The
demands of the depression led the United States to institute social-security programs and accept labor unions, measures that had been taken decades earlier in many European nations.
VII LIFE DURING THE DEPRESSION
The Great Depression had a substantial and varied impact on the lives of Americans. Physically
and psychologically, it was devastating to many people, who not only lacked adequate food,
shelter, and clothing but felt they were to blame for their desperate state.
Although few people died from starvation, many did not have enough to eat. Some people
searched garbage dumps for food or ate weeds. Malnutrition took a toll: A study conducted in
eight American cities found that families that had a member working full time experienced 66
percent less illness than those in which everyone was unemployed.
The psychological impact was equally damaging. During the prosperity of the 1920s, many
Americans believed success went to those who deserved it. Given that attitude, the unemployment brought by the depression was a crushing blow. If the economic system really distributed
rewards on the basis of merit, those who lost their jobs had to conclude that it was their own
fault. Self-blame and self-doubt became epidemic. These attitudes declined after the New Deal
began, however. The establishment of government programs to counteract the depression indicated to many of the unemployed that the crisis was a large social problem, not a matter of
personal failing. Still, having to ask for assistance was humiliating for many men who had
thought of themselves as self-sufficient and breadwinners for their families.
Because society expected a man to provide for his family, the psychological trauma of the
Great Depression was often more severe for men than women. Many men argued that women,
especially married women, should not be hired while men were unemployed. Yet the percentage of women in the workforce actually increased slightly during the depression, as women
took jobs to replace their husbands' lost pay checks or to supplement spouses' reduced wages.
Women had been excluded from most of the manufacturing jobs that were hardest hit by the
depression, which meant they were less likely than men to be thrown out of work. Some fields
that had been defined as women's work, such as clerical, teaching, and social-service jobs,
actually grew during the New Deal.
The effects of the depression on children were often radically different from the impact on their
parents. During the depression many children took on greater responsibilities at an earlier age
than later generations would. Some teenagers found jobs when their parents could not, reversing the normal roles of provider and dependent. Sometimes children had to comfort their despairing parents. A 12-year-old boy in Chicago, for example, wrote to President and Mrs. Roosevelt in 1936 to seek help for his father, who was always "crying because he can't find work
[and] I feel sorry for him." The depression that weakened the self-reliance of many adult men
strengthened that quality in many children.
The depression's impact was less dramatic, but ultimately more damaging, for minorities in
America than for whites. Since they were "born in depression," many blacks scarcely noticed a
change at the beginning of the 1930s. Over time, however, blacks suffered to an even greater
extent than whites, since they were usually the last hired and first fired. By 1932 about 50 per-
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cent of the nation's black workers were unemployed. Blacks were frequently forced out of jobs
in order to give them to unemployed whites.
Yet the depression decade was one of important positive change for blacks. First lady Eleanor
Roosevelt and several leading New Deal figures were active champions of black rights, and
most New Deal programs prohibited racial discrimination. These rules were often ignored in
the South, but the fact that they were included at all was a major step forward. Blacks were
sufficiently impressed with the New Deal to cause a large majority of black voters to switch
their allegiance from the Republican to the Democratic Party during the depression years.
Other minority populations had experiences similar to those of blacks during the depression.
Native Americans were even less likely than blacks to notice a downturn when the depression
began; they already fared poorly by virtually every social or economic indicator. But Native
Americans, like blacks, were brought into New Deal relief programs that in theory did not discriminate, and an attempt was made, through the Indian Reorganization Act, to enable tribes to
reestablish their identities and cultural practices. In industrial cities such as Detroit, Gary, and
Los Angeles and in agricultural regions such as California's San Joaquin Valley, Mexican
Americans were seen as holding jobs that should go to whites. Repatriation (meaning deportation) programs were instituted to persuade Chicanos to return to Mexico, often through intimidation.
Groups of white Americans also faced discrimination during this era. Poor farmers evicted from
their land or fleeing the Dust Bowl were often despised and abused when they arrived in California and other western states. They were commonly labeled "Okies," whether they came from
Oklahoma or other states.
VIII END OF THE DEPRESSION
Although economic conditions improved by the late 1930s, unemployment in 1939 was still
about 15 percent. However, with the outbreak of World War II in Europe in September 1939,
the U.S. government began expanding the national defense system, spending large amounts of
money to produce ships, aircraft, weapons, and other war material. This stimulated industrial
growth, and unemployment declined rapidly. After the United States entered the war in December 1941, all sectors of the economy were mobilized to support the war effort. Industry
greatly expanded, and unemployment was replaced by a shortage of workers.
IX LEGACY OF THE DEPRESSION
The impact of the Great Depression and the programs of the New Deal dramatically altered the
relationship between the American people and their government. The federal government expanded its role in many social and economic areas, becoming larger and more powerful.
Americans came to accept government involvement and responsibility in caring for society's
most needy members and regulating many aspects of the economy.
The New Deal's social programs reflected a shift in American values created by the shared
hardships of the depression era. The depression experience discredited the extreme individualism and pursuit of self-interest that characterized the 1920s, and revived an emphasis on community, cooperation, and compassion. These values were reflected in the popular culture of the
day and in political and labor movements that developed and expanded during the 1930s.
One of the most far-reaching New Deal measures, the Social Security Act of 1935, guaranteed
government help to citizens who were unemployed or disabled, to older Americans, and to
mothers and children. The National Labor Relations Act (1935) provided protection for union
activity, which contributed to the rise of labor unions in mass-production industries such as
steel and automobile manufacturing. Unions and racial minorities, who had benefited from the
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Modern History I (Imperialism to the Age of Depression and Recovery)
New Deal, were among the groups who became staunch supporters of the Democratic Party,
changing American politics for decades to come.
The literature, films, and art of the depression era demonstrated the desire for a more cooperative, less fiercely competitive way of life. Many celebrated the common people, who were contrasted with greedy, powerful interests. Examples included films such as Mr. Smith Goes to
Washington (1939), directed by Frank Capra, and Stagecoach (1939), by John Ford; paintings
by Norman Rockwell; songs by folk singer Woody Guthrie; and novels by such writers as John
Steinbeck.
While many conservatives believed the New Deal was turning the United States toward socialism, other Americans felt it did not go far enough and sought more revolutionary change. Political movements to the left of the New Deal enjoyed considerable support during the 1930s.
Among them were the Minnesota Farmer-Labor Party, which offered radical proposals challenging the capitalist system, and the unsuccessful campaign by novelist Upton Sinclair to be
governor of California in 1934, proposing essentially socialist programs to "End Poverty in California." By alleviating some of the worst effects of the depression, the New Deal helped defuse
tensions and preserve a democratic, capitalist system at a time when other nations turned to
fascism or socialism.
The return of prosperity during and after World War II revived some of the forces that divided
society and promoted self-interest in the 1920s. But the experience of the Great Depression left
a lasting mark on the United States in the forms of a much greater role for the federal government, a new political alignment in which Democrats would retain the support of a majority for
most of the next half century, and a general feeling that the free market must be regulated in
order to avoid another such economic catastrophe.
Contributed By: Robert S. McElvaine
"Great Depression in the United States," Microsoft® Encarta® Encyclopedia 2000. © 19931999 Microsoft Corporation. All rights reserved.
Franklin D. Roosevelt's First Inaugural Address: Franklin Delano Roosevelt delivered this address on March 4, 1933.
I am certain that my fellow Americans expect that on my induction into the Presidency I will
address them with a candor and a decision which the present situation of our Nation impels.
This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need
we shrink from honestly facing conditions in our country today. This great Nation will endure
as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that
the only thing we have to fear is fear itself-nameless, unreasoning, unjustified terror which
paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life
a leadership of frankness and vigor has met with that understanding and support of the people
themselves which is essential to victory. I am convinced that you will again give that support to
leadership in these critical days.
In such a spirit on my part and on yours we face our common difficulties. They concern, thank
God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability
to pay has fallen; government of all kinds is faced by serious curtailment of income; the means
of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie
on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.
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Modern History I (Imperialism to the Age of Depression and Recovery)
More important, a host of unemployed citizens face the grim problem of existence, and an
equally great number toil with little return. Only a foolish optimist can deny the dark realities
of the moment.
Yet our distress comes from no failure of substance. We are stricken by no plague of locusts.
Compared with the perils which our forefathers conquered because they believed and were not
afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts
have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight
of the supply. Primarily this is because the rulers of the exchange of mankind's goods have
failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court
of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition.
Faced by failure of credit they have proposed only the lending of more money. Stripped of the
lure of profit by which to induce our people to follow their false leadership, they have resorted
to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
The money changers have fled from their high seats in the temple of our civilization. We may
now restore that temple to the ancient truths. The measure of the restoration lies in the extent to
which we apply social values more noble than mere monetary profit.
Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the
thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in
the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach
us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.
Recognition of the falsity of material wealth as the standard of success goes hand in hand with
the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a
conduct in banking and in business which too often has given to a sacred trust the likeness of
callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on
honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.
Restoration calls, however, not for changes in ethics alone. This Nation asks for action, and
action now.
Our greatest primary task is to put people to work. This is no unsolvable problem if we face it
wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time,
through this employment, accomplishing greatly needed projects to stimulate and reorganize
the use of our natural resources.
Hand in hand with this we must frankly recognize the overbalance of population in our industrial centers and, by engaging on a national scale in a redistribution, endeavor to provide a better use of the land for those best fitted for the land. The task can be helped by definite efforts to
raise the values of agricultural products and with this the power to purchase the output of our
cities. It can be helped by preventing realistically the tragedy of the growing loss through foreclosure of our small homes and our farms. It can be helped by insistence that the Federal, State,
and local governments act forthwith on the demand that their cost be drastically reduced. It
can be helped by the unifying of relief activities which today are often scattered, uneconom-
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Modern History I (Imperialism to the Age of Depression and Recovery)
ical, and unequal. It can be helped by national planning for and supervision of all forms of
transportation and of communications and other utilities which have a definitely public character. There are many ways in which it can be helped, but it can never be helped merely by talking about it. We must act and act quickly.
Finally, in our progress toward a resumption of work we require two safeguards against a return
of the evils of the old order; there must be a strict supervision of all banking and credits and
investments; there must be an end to speculation with other people's money, and there must be
provision for an adequate but sound currency.
There are the lines of attack. I shall presently urge upon a new Congress in special session detailed measures for their fulfillment, and I shall seek the immediate assistance of the several
States.
Through this program of action we address ourselves to putting our own national house in order and making income balance outgo. Our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national
economy. I favor as a practical policy the putting of first things first. I shall spare no effort to
restore world trade by international economic readjustment, but the emergency at home cannot wait on that accomplishment.
The basic thought that guides these specific means of national recovery is not narrowly nationalistic. It is the insistence, as a first consideration, upon the interdependence of the various
elements in all parts of the United States-a recognition of the old and permanently important
manifestation of the American spirit of the pioneer. It is the way to recovery. It is the immediate
way. It is the strongest assurance that the recovery will endure.
In the field of world policy I would dedicate this Nation to the policy of the good neighbor-the
neighbor who resolutely respects himself and, because he does so, respects the rights of othersthe neighbor who respects his obligations and respects the sanctity of his agreements in and
with a world of neighbors.
If I read the temper of our people correctly, we now realize as we have never realized before
our interdependence on each other; that we can not merely take but we must give as well; that
if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the
good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to
such discipline, because it makes possible a leadership which aims at a larger good. This I propose to offer, pledging that the larger purposes will bind upon us all as a sacred obligation with
a unity of duty hitherto evoked only in time of armed strife.
With this pledge taken, I assume unhesitatingly the leadership of this great army of our people
dedicated to a disciplined attack upon our common problems.
Action in this image and to this end is feasible under the form of government which we have
inherited from our ancestors. Our Constitution is so simple and practical that it is possible always to meet extraordinary needs by changes in emphasis and arrangement without loss of
essential form. That is why our constitutional system has proved itself the most superbly enduring political mechanism the modern world has produced. It has met every stress of vast expansion of territory, of foreign wars, of bitter internal strife, of world relations.
It is to be hoped that the normal balance of executive and legislative authority may be wholly
adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure.
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Modern History I (Imperialism to the Age of Depression and Recovery)
I am prepared under my constitutional duty to recommend the measures that a stricken nation
in the midst of a stricken world may require. These measures, or such other measures as the
Congress may build out of its experience and wisdom, I shall seek, within my constitutional
authority, to bring to speedy adoption.
But in the event that the Congress shall fail to take one of these two courses, and in the event
that the national emergency is still critical, I shall not evade the clear course of duty that will
then confront me. I shall ask the Congress for the one remaining instrument to meet the crisisbroad Executive power to wage a war against the emergency, as great as the power that would
be given to me if we were in fact invaded by a foreign foe.
For the trust reposed in me I will return the courage and the devotion that befit the time. I can
do no less.
We face the arduous days that lie before us in the warm courage of the national unity; with the
clear consciousness of seeking old and precious moral values; with the clean satisfaction that
comes from the stern performance of duty by old and young alike. We aim at the assurance of
a rounded and permanent national life.
We do not distrust the future of essential democracy. The people of the United States have not
failed. In their need they have registered a mandate that they want direct, vigorous action. They
have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.
In this dedication of a Nation we humbly ask the blessing of God. May He protect each and
every one of us. May He guide me in the days to come.
"Franklin Roosevelt's First Inaugural Address," Microsoft® Encarta® Encyclopedia 2000. ©
1993-1999 Microsoft Corporation. All rights reserved.
ROOSEVELT CLOSES ALL BANKS; CONGRESS MEETS THURSDAY
War-time Measure Invoked to Protect Nation's Gold; Emergency Program Awaits Special Session; Issuance of Scrip Authorized Los Angeles Times March 6, 1933, By Kyle D. Palmer
After his inauguration, President Franklin Delano Roosevelt moved quickly and decisively to
end the Great Depression by instituting his New Deal programs. One of his first acts was to
address the problems of the country's financial system by declaring a nationwide bank "holiday." Roosevelt succeeded in stopping panicked runs in the banks and gave Congress enough
time to prepare relief measures for the banking industry.
WASHINGTON, March 5. (Exclusive)-Proclaiming a national bank holiday beginning tomorrow and ending on Thursday, when in response to a summons issued earlier today, the Seventy-third Congress will be called into extraordinary session, President Roosevelt within thirtysix hours after his inauguration moved swiftly and energetically to relieve the country's critical
monetary situation.
The new administration is prepared to submit a far-reaching program to the new Congress calling for extensive regulation and, it is believed, for a definite set of guarantees of deposits and,
possibly other banking assets.
During the period, of the holiday proclaimed late today no withdrawals of gold, silver or currency may be made and no exportations of coin or bullion will be permitted.
RELIEF FACILITATED
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Modern History I (Imperialism to the Age of Depression and Recovery)
Pending conclusion of the moratorium and the accomplishment of legislative action by Congress, the Secretary of the Treasury is authorized to facilitate temporary relief by clearinghouse
associations throughout the country.
By the proclamation all banking business is placed under the regulation of the Secretary of the
Treasury.
Restrictions are placed on withdrawal of deposits already in the banks but provision is made for
unrestricted withdrawal of deposits made from tomorrow morning.
EFFECT OF PROCLAMATION
Specifically the proclamation does the following things:
(1.) Establishes a bank holiday, national in scope, beginning tomorrow morning and ending
Thursday midnight.
(2.) Suspends during the holiday all banking transactions except such as are permitted by the
Secretary of the Treasury.
(3.) Prohibits hoarding.
(4.) Suspends specie payments.
(5.) Declares an embargo on the export of gold.
(6.) Authorizes the Secretary of the Treasury to permit performance of all banking functions
under such regulations as he may impose.
(7.) Authorizes issuance of clearinghouse certificates or other forms of scrip to be used in place
of currency.
(8.) Authorizes segegation [sic] of new deposits which may be drawn on by depositors without
restrictions.
In his proclamation the President recognized the "existence of a national emergency" which, he
said, has been caused by the heavy and unnecessary withdrawal of gold for hoarding purposes
and for exportation.
SEVERE PENALTIES
Severe penalties for violation of the Presidential order are provided as in war-time legislation
adopted in 1917 and under which the proclamation was drafted.
Thus the President has fired the first gun in his promised attack on the entrenched forces of the
depression.
Not since 1861 has a newly inaugurated President been called on to cope with a national crisis
of such magnitude on the first day of his administration.
The plan of action emerged from three hectic sessions of the financial powers that he assembled at the Treasury.
CONFEREES UNITE
All sorts of plans for reopening the banks of the country under conditions that would preclude
a revival of the disastrous drain of deposits by hoarders were discussed and thrown aside. Eventually the conferees united on the plan for creating the Secretary of the Treasury a virtual banking dictator under authority derived from the almost forgotten Trading-with-the-Enemy Act
which was passed by Congress in 1917 to enable the Executive to protect the country's gold
reserve. A decade ago most of the war-time legislation clothing the Executive with autocratic
powers was repealed, but this act was exempted, partly because of the foresight that it might be
needed in some such emergency as that which exists today.
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Modern History I (Imperialism to the Age of Depression and Recovery)
The new Seventy-third Congress will meet in extraordinary session at noon next Thursday.
President Roosevelt issued the special call after conferences with financial leaders from all sections of the country.
The Presidential call for the special session follows:
"IN PUBLIC INTEREST"
"Whereas, the public interest requires that the Congress of the United States should be convened in extraordinary session at 12 o'clock noon on the 9th day of March to receive such
communication as may be made by the President:
"Now therefore I, Franklin Delano Roosevelt, President of the United States of America, do
hereby proclaim and declare that an extraordinary occasion requires that the Congress of the
United States convene in extra session at the Capitol in the city of Washington on the 9th day
of March at 12 o'clock noon of which all persons who shall at that time be entitled to act as
members thereof are hereby required to take notice.
"In virtue whereof, I have hereunto set my hand and caused to be affixed the great seal of the
United States.
"Done at the city of Washington, this, the 5th day of March in the year of our Lord, One Thousand, Nine Hundred and Thirty-three, and of the independence of the United States the one
hundred and fifty-seventh."
BANKING UP FIRST
Later, President Roosevelt issued a statement in which he said that in anticipation of the extraordinary session "I am preparing an immediate program directed to meet the present monetary emergency."
"It is of course essential." Mr. Roosevelt's statement continued, "that the first business before the
Congress will be the present banking and financial situation."
The statement, prepared by the President, was read to newspaper men by Stephen Early, one of
his secretaries.
The short statement follows:
"Anticipating the meeting of Congress on Thursday, I am preparing an immediate program directed to meet the present monetary emergency. It is, of course, essential that the first business
before the Congress will be the present banking and financial situation."
Moving rapidly in the banking crisis, the new President and his Secretary of the Treasury, William A. Woodin, conferred throughout the day with leading financiers and with Republican
and Democratic members of the new Senate and House of Representatives.
MORE MEETINGS SET
Among those summoned to the White House were Representative Snell of New York, Republican minority leader in the House; Senator Johnson of California. Senator Glass of Virginia, Representative Steagall. Democrat of Alabama, chairman of the House Committee on Banking and
Currency, and Representative Byrns, Democrat of Tennessee, majority leader of the House.
Further meetings will be conducted during the next few days and when Congress convenes it is
hoped that a comprehensive and workable financial program will be submitted immediately. It
was understood at the White House tonight that Mr. Roosevelt and his advisers have a rough
draft of their banking and currency proposals and that there will be no delay in presenting
these measures to the new Senate and House.
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Modern History I (Imperialism to the Age of Depression and Recovery)
An embargo on the exportation of gold is expected to constitute a part of the general monetary
program, with additional provision for protecting banks from extensive withdrawal of deposits
until the currency situation has been stabilized.
WOODIN ASKS FAITH
Prior to the announcement from the White House of the President's intention to call Congress
almost immediately into special session, Secretary of the Treasury Woodin issued a brief statement urging public confidence in the new administration's determination and ability to meet
the financial crisis.
There is some question that the Federal government will attempt to enact legislation interfering
with the prerogative of the States to adjust their individual monetary problems.
The immediate purpose of the new government is to determine the best medium of exchange
for the country as a whole.
It is thought that the credit of the Federal Treasury may be invoked as a guarantee for clearinghouse certificates such as were issued in the financial crisis in 1907.
APPROVAL ASSURED
If this policy is followed an effort will be made to have an agreement entered into between the
various State clearinghouses to honor certificates for the face value in the same manner in
which greenbacks are now accepted.
Immediate approval of any specific legislation demanded by President Roosevelt is regarded as
assured.
The Democrats will have a clear majority both in the Senate and the House, and the responsible Republican leadership has pledged full co-operation with the new administration's relief
program.
The decision to call the special session for next Thursday was reached so that members not
attending the inauguration might have time to reach Washington.
GENERAL PLAN IN DOUBT
No decision has been reached as to the general relief program which the Roosevelt administration will ask Congress to consider. Whether a recess will be sought within two or three weeks
or the two legislative houses shall be held in continuous session until the entire economic reconstruction plan has been formulated has not been decided.
Democratic leaders believe the most likely procedure to be followed will be a session lasting
three or four months and a recess until September or October.
While President Roosevelt and members of his Cabinet, Vice-President Garner and other leaders were conferring at the White House, Secretary of the Treasury Woodin conferred throughout the day in his office with leading bankers of New York and Chicago, and other financial
experts. No agreement as to a definite plan was reached. Among those attending the discussion
at the Treasury were:
Ex-Secretary Mills, Ex-Undersecretary Ballantine, ex-Assistant Secretary Douglass, Prof. Raymond Moley, Roosevelt's economic adviser; Gov. Eugene Meyer and members of the Federal
Reserve Board.
Senator Carter Glass of Virginia, Jesse H. Jones of the Reconstruction Finance Corporation,
Atty.-Gen. Homer S. Cummings, Melvin T. Traylor, president of the First National Bank of Chicago; S. Parker Gilbert, a partner in the concern of J. P. Morgan & Co.; George L. Harrison,
chairman of the New York Federal Reserve Bank; Prof. A. A. Berle, another of Roosevelt's fi-
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Modern History I (Imperialism to the Age of Depression and Recovery)
nancial advisers; Percy H. Johnston, president of the Chemical National Bank and Trust Company, New York; J. R. Lavell, president of the Continental-Illinois Bank, Chicago.
Source: Los Angeles Times, March 6, 1933.
"Roosevelt Closes All Banks," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft
Corporation. All rights reserved.
Prices in Upward Whirl as America Quits Gold, Los Angeles Times, April 20,
1933
President Franklin D. Roosevelt's decision to go off the gold standard was an effort to combat
the effects of the Great Depression, following the lead of other nations such as Great Britain.
This move, detailed in this 1933 Los Angeles Times article, provided the government with
greater flexibility to allow for a certain level of inflation and put more money into circulation.
Washington, April 19. (Exclusive)-The United States definitely went off the gold standard today
with the government embarked on a policy of controlled inflation. The Roosevelt administration is studying further moves to restore pre-depression price levels and revive business.
There is to be no resort to "printing press money," the President gave assurance today in announcing that the bars have been put up against further export of gold and that the dollar is to
be allowed to depreciate naturally in foreign exchange.
"We are off the gold standard," said Secretary of the Treasury Woodin on returning to his office
from one of his frequent conferences with the President.
NEW POWERS SOUGHT
Roosevelt, it was learned tonight, contemplates asking Congress shortly, possibly tomorrow, for
broad authority to carry into effect his program of controlled inflation or, as he prefers to call it,
control of commodity price levels. His aim is to raise prices but to keep them from going too
high.
An inflation measure drafted by Senators Byrnes, Democrat, South Carolina; Pittman, Democrat, Nevada, and Thomas, Democrat, Oklahoma, was submitted tonight to Assistant Secretary
of State Moley, the President's economic adviser, for presentation to Roosevelt tomorrow. It is a
modification of the Thomas inflation bill to give the President authority to issue greenbacks, to
revalue the dollar and to accept payments on the war debts in silver at a value of 50 cents an
ounce.
NEW REGULATION
Late in the day Secretary Woodin began preparation of a regulation tightening up the restrictions on the export of gold imposed by the executive order of March 5. Under the new dispensation, no gold will be allowed to leave the country, except that earmarked for foreign account
before last Saturday and such amounts as are required to save American business men from
loss on commitments in foreign trade incurred prior to the proclamation of the new policy today.
By taking the United States off the gold standard, Roosevelt believes he has armed himself with
a powerful weapon for use in his negotiations with Prime Minister MacDonald and other foreign statesmen which are to begin at the White House on Friday. The United States is now on
the same monetary footing as Great Britain and many other nations. Its money is unstable in
value in international trade. Roosevelt can now with greater propriety propose that all nations
go back on the gold standard together.
OTHER FORMS CONSIDERED
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Modern History I (Imperialism to the Age of Depression and Recovery)
Some other forms of inflation that might be adopted the President is not disposed to resort to
except by international agreements and these will be discussed in connection with proposals
for a general return to the gold standard. It might be, for example, that such agreement would
include a reduction of the present 40 per cent backing of gold required for currency issues or a
reduction in the gold content of the dollar.
Remonetization of silver through international agreement is another topic scheduled for consideration at the World Economic Conference to which the conversations with the foreign envoys are to be a prelude.
The President's view is that all the nations must clear away a lot of deadwood if a new basis for
world recovery is to be found, just as the bank crisis of early March in this country made it
necessary to clear away the deadwood of the banking structure in order to make a fresh start.
CHOICE FACED
With regard to the gold embargo, Roosevelt, after discussion of the situation with his Cabinet,
came to the conclusion that the country confronts a choice between raising or even maintaining the level of prices at home and maintaining the value of the dollar abroad.
He decided that the wise course is to stop trying to hold up the dollar abroad, to let it fall as far
as natural forces may take it. This is the course that Great Britain took with regard to the pound
sterling with beneficial results to domestic price levels and business generally.
Raising of commodity prices was the sole motivating force behind the closing down on all gold
shipments despite the fact that many political benefits at home and abroad will accrue to the
administration from it, high government officials insisted.
"HAPPY ACCIDENTS"
They characterized as mere "happy accidents" the effect the move had on quieting inflation talk
in Congress and on the new equality it gave to the United States in the international field just
before conferences are begun with representatives of foreign nations.
Proponents of this point of view pointed out the stimulating effect on commodities which the
action already had had during the course of the day. Once started up, prices might continue,
they held, calling attention to other favorable factors, such as the abnormally short wheat crop.
Out of the welter of differing opinion which was afloat around the White House and the Treasury today, there emerged, however, a skeptical point of view toward the new move, held even
by important figures inside the administration. The skeptics base their beliefs on three premises.
THREE PREMISES
(1.) Because the United States is a creditor nation, the dollar will rise on the international markets again as the necessary demand for dollar exchange to settle debts due to this country and
its businesses becomes felt again. Thus, after the immediate period of wild fluctuations, the
dollar will recover, canceling much of the benefits in world trade which the administration
hopes might arise from its depreciation.
(2.) England and other foreign countries will not idly watch the fall of the dollar undermine
their own trade positions. They will again depreciate their currencies to maintain the advantage
they had while America was on the gold standard. Thus, the United States may have started a
"mad scramble for the bottom" among world moneys.
(3.) The domestic prices may rise with the immediate news of the move, but they will have to
be supported or continued by newly stimulated consumption demands for goods or by further
governmental action.
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Modern History I (Imperialism to the Age of Depression and Recovery)
Already the rise in prices is encouraging the farmer, Secretary Woodin declared. Better feeling
is noticeable in the country generally, he announced after meeting with the governors of the
twelve Federal Reserve banks. Each governor was asked by the Secretary about conditions in
his region.
"It is a hopeful picture that I get from these governors," Woodin said. "There is an improvement
all over this country in almost all lines. The rise in prices has certainly brought new hope to the
farm communities. Of course, we are not in the middle of a boom or even starting one."
Pumping of credit out of banks where it is now piled up was not the major reason for calling
the governors of the Reserve banks to Washington, Woodin insisted. The matter was discussed,
however, but was found to be too closely connected with the general problem of getting business started to be treated alone.
REOPENING DISCUSSED
Reopening of banks now closed was the immediate reason for summoning the governors,
Woodin said, but discussion as yet has hardly gone beyond preliminaries. The governors are to
meet again tomorrow.
Meanwhile, a plan has been worked out by Walter J. Cummings, special assistant to Woodin,
for aiding the banks. This plan, which has been closely guarded while the Federal government
sought the co-operation of State banking authorities, supposedly will be discussed by the governors tomorrow.
So prepared in their own minds for inflation were Senators and Representatives that the quickly
spreading report of the President's announcement aroused only interest and no surprise.
STEP NOT LONG ENOUGH
Senators bound to the support of some even more direct means of inflation were gratified at the
step this country has taken, though they are not satisfied that the step is long enough.
Senator Thomas, who yesterday withdrew his inflation amendment to the farm bill at the request of the President, and who went to the White House late yesterday in order to be informed
of the President's intentions, is considering re-introduction of his amendment. Senator Wheeler,
Democrat, of Montana, whose measure to remonetize silver at 16 to 1 was defeated last Monday by a vote of 33 to 43, announced his hope that the President will eventually declare for
free coinage of silver.
Senator Bulkley of Ohio, one of the senior Democratic members of the Banking and Currency
Committee, greeted the President's announcement with approval.
Approving words also came from other Senators, experts in banking and financial matters.
Source: Los Angeles Times, April 20, 1933.
"America Quits Gold Standard," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Franklin Delano Roosevelt's Fireside Chat on Drought Conditions, September 6,
1936
On the eve of Labor Day, 1936, millions of employed and unemployed workers tuned their
radios to hear President Franklin D. Roosevelt speak. Years of drought in the states of Kansas,
Oklahoma, Texas, New Mexico, and Colorado continued to burden the Depression era's shaky
economy as well as the country's stricken labor force. Newly arrived from a tour of the Dust
Bowl states, President Roosevelt gave a spirited speech on the goals of the Works Progress Administration (WPA) and other government relief programs, and the power of united effort.
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Modern History I (Imperialism to the Age of Depression and Recovery)
I have been on a journey of husbandry. I went primarily to see at first hand conditions in the
drought states; to see how effectively Federal and local authorities are taking care of pressing
problems of relief and also how they are to work together to defend the people of this country
against the effects of future droughts.
I saw drought devastation in nine states.
I talked with families who had lost their wheat crop, lost their corn crop, lost their livestock,
lost the water in their well, lost their garden and come through to the end of the summer without one dollar of cash resources, facing a winter without feed or food-facing a planting season
without seed to put in the ground.
That was the extreme case, but there are thousands and thousands of families on western farms
who share the same difficulties.
I saw cattlemen who because of lack of grass or lack of winter feed have been compelled to
sell all but their breeding stock and will need help to carry even these through the coming winter. I saw livestock kept alive only because water had been brought to them long distances in
tank cars. I saw other farm families who have not lost everything but who, because they have
made only partial crops, must have some form of help if they are to continue farming next
spring.
I shall never forget the fields of wheat so blasted by heat that they cannot be harvested. I shall
never forget field after field of corn stunted, earless and stripped of leaves, for what the sun left
the grasshoppers took. I saw brown pastures which would not keep a cow on fifty acres.
Yet I would not have you think for a single minute that there is permanent disaster in these
drought regions, or that the picture I saw meant depopulating these areas. No cracked earth, no
blistering sun, no burning wind, no grasshoppers, are a permanent match for the indomitable
American farmers and stockmen and their wives and children who have carried on through
desperate days, and inspire us with their self-reliance, their tenacity and their courage. It was
their fathers' task to make homes; it is their task to keep those homes; it is our task to help them
with their fight.
First let me talk for a minute about this autumn and the coming winter. We have the option, in
the case of families who need actual subsistence, of putting them on the dole or putting them
to work. They do not want to go on the dole and they are one thousand percent right. We
agree, therefore, that we must put them to work for a decent wage; and when we reach that
decision we kill two birds with one stone, because these families will earn enough by working,
not only to subsist themselves, but to buy food for their stock, and seed for next year's planting.
Into this scheme of things there fit of course the government lending agencies which next year,
as in the past, will help with production loans.
Every Governor with whom I have talked is in full accord with this program of providing work
for these farm families, just as every Governor agrees that the individual states will take care of
their unemployables but that the cost of employing those who are entirely able and willing to
work must be borne by the Federal Government.
If then we know, as we do today, the approximate number of farm families who will require
some form of work relief from now on through the winter, we face the question of what kind of
work they should do. Let me make it clear that this is not a new question because it has already
been answered to a greater or less extent in every one of the drought communities. Beginning
in 1934, when we also had serious drought conditions, the state and Federal governments cooperated in planning a large number of projects-many of them directly aimed at the alleviation
of future drought conditions. In accordance with that program literally thousands of ponds or
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small reservoirs have been built in order to supply water for stock and to lift the level of the
underground water to protect wells from going dry. Thousands of wells have been drilled or
deepened; community lakes have been created and irrigation projects are being pushed.
Water conservation by means such as these is being expanded as a result of this new drought
all through the Great Plains area, the western corn belt and in the states that lie further south. In
the Middle West water conservation is not so pressing a problem. Here the work projects run
more to soil erosion control and the building of farm-to-market roads.
Spending like this is not waste. It would spell future waste if we did not spend for such things
now. These emergency work projects provide money to buy food and clothing for the winter;
they keep the live stock on the farm; they provide seed for a new crop, and, best of all, they
will conserve soil and water in the future in those areas most frequently hit by drought.
If, for example, in some local area the water table continues to drop and the topsoil to blow
away, the land values will disappear with the water and the soil. People on the farms will drift
into the nearby cities; the cities will have no farm trade and the workers in the city factories
and stores will have no jobs. Property values in the cities will decline. If, on the other hand, the
farms within that area remain as farms with better water supply and no erosion, the farm population will stay on the land and prosper and the nearby cities will prosper too. Property values
will increase instead of disappearing. That is why it is worth our while as a nation to spend
money in order to save money.
I have, however, used the argument in relation only to a small area-it holds good in its effect on
the nation as a whole. Every state in the drought area is now doing and always will do business
with every state outside it. The very existence of the men and women working in the clothing
factories of New York, making clothes worn by farmers and their families; of the workers in the
steel mills in Pittsburgh, in the automobile factories of Detroit, and in the harvester factories of
Illinois, depend upon the farmers' ability to purchase the commodities they produce. In the
same way it is the purchasing power of the workers in these factories in the cities that enables
them and their wives and children to eat more beef, more pork, more wheat, more corn, more
fruit and more dairy products, and to buy more clothing made from cotton, wool and leather.
In a physical and a property sense, as well as in a spiritual sense, we are members one of another.
I want to make it clear that no simple panacea can be applied to the drought problem in the
whole of the drought area. Plans must depend on local conditions, for these vary with annual
rainfall, soil characteristics, altitude and topography. Water and soil conservation methods may
differ in one county from those in an adjoining county. Work to be done in the cattle and
sheep country differs in type from work in the wheat country or work in the corn belt.
The Great Plains Drought Area Committee has given me its preliminary recommendations for a
long-time program for that region. Using that report as a basis we are cooperating successfully
and in entire accord with the Governors and state planning boards. As we get this program into
operation the people more and more will be able to maintain themselves securely on the land.
That will mean a steady decline in the relief burdens which the Federal Government and states
have had to assume in time of drought; but, more important, it will mean a greater contribution
to general national prosperity by these regions which have been hit by drought. It will conserve
and improve not only property values, but human values. The people in the drought area do
not want to be dependent on Federal, state or any other kind of charity. They want for themselves and their families an opportunity to share fairly by their own efforts in the progress of
America.
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The farmers of America want a sound national agricultural policy in which a permanent land
use program will have an important place. They want assurance against another year like 1932
when they made good crops but had to sell them for prices that meant ruin just as surely as did
the drought. Sound policy must maintain farm prices in good crop years as well as in bad crop
years. It must function when we have drought; it must also function when we have bumper
crops.
The maintenance of a fair equilibrium between farm prices and the prices of industrial products
is an aim which we must keep ever before us, just as we must give constant thought to the sufficiency of the food supply of the nation even in bad years. Our modern civilization can and
should devise a more successful means by which the excess supplies of bumper years can be
conserved for use in lean years.
On my trip I have been deeply impressed with the general efficiency of those agencies of the
Federal, state and local governments which have moved in on the immediate task created by
the drought. In 1934 none of us had preparation; we worked without blue prints and made the
mistakes of inexperience. Hindsight shows us this. But as time has gone on we have been making fewer and fewer mistakes. Remember that the Federal and state governments have done
only broad planning. Actual work on a given project originates in the local community. Local
needs are listed from local information. Local projects are decided on only after obtaining the
recommendations and help of those in the local community who are best able to give it. And it
is worthy of note that on my entire trip, though I asked the question dozens of times, I heard no
complaint against the character of a single works relief project.
The elected heads of the states concerned, together with their state officials and their experts
from agricultural colleges and state planning boards, have shown cooperation with and approval of the work which the Federal Government has headed up. I am grateful also to the men
and women in all these states who have accepted leadership in the work in their locality.
In the drought area people are not afraid to use new methods to meet changes in Nature, and
to correct mistakes of the past. If over-grazing has injured range lands, they are willing to reduce the grazing. If certain wheat lands should be returned to pasture they are willing to cooperate. If trees should be planted as wind-breaks or to stop erosion they will work with us. If terracing or summer fallowing or crop rotation is called for, they will carry them out. They stand
ready to fit, and not to fight, the ways of Nature.
We are helping, and shall continue to help the farmer to do those things, through local soil
conservation committees and other cooperative local, state and federal agencies of government.
I have not the time tonight to deal with other and more comprehensive agricultural policies.
With this fine help we are tiding over the present emergency. We are going to conserve soil,
conserve water and conserve life. We are going to have long-time defenses against both low
prices and drought. We are going to have a farm policy that will serve the national welfare.
That is our hope for the future.
There are two reasons why I want to end by talking about re-employment. Tomorrow is Labor
Day. The brave spirit with which so many millions of working people are winning their way
out of depression deserves respect and admiration. It is like the courage of the farmers in the
drought areas.
That is my first reason. The second is that healthy employment conditions stand equally with
healthy agricultural conditions as a buttress of national prosperity. Dependable employment at
fair wages is just as important to the people in the town[s] and cities as good farm income is to
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agriculture. Our people must have the ability to buy the goods they manufacture and the crops
they produce. Thus city wages and farm buying power are the two strong legs that carry the
nation forward.
Re-employment in industry is proceeding rapidly. Government spending was in large part responsible for keeping industry going and putting it in a position to make this re-employment
possible. Government orders were the backlog of heavy industry; government wages turned
over and over again to make consumer purchasing power and to sustain every merchant in the
community. Businessmen with their businesses, small and large, had to be saved. Private enterprise is necessary to any nation which seeks to maintain the democratic form of government.
In their case, just as certainly as in the case of drought-stricken farmers, government spending
has saved.
Government having spent wisely to save it, private industry begins to take workers off the rolls
of the government relief program. Until this Administration we had no free employment service, except in a few states and cities. Because there was no unified employment service, the
worker, forced to move as industry moved, often travelled over the country, wandering after
jobs which seemed always to travel just a little faster than he did. He was often victimized by
fraudulent practices of employment clearing houses, and the facts of employment opportunities
were at the disposal neither of himself nor of the employer.
In 1933 the United States Employment Service was created-a cooperative state and Federal
enterprise, through which the Federal Government matches dollar for dollar the funds provided
by the states for registering the occupations and skills of workers and for actually finding jobs
for these registered workers in private industry. The Federal-State cooperation has been splendid. Already employment services are operating in 32 states, and the areas not covered by
them are served by the Federal Government.
We have developed a nation-wide service with seven hundred District offices, and one thousand branch offices, thus providing facilities through which labor can learn of jobs available
and employers can find workers.
Last Spring I expressed the hope that employers would realize their deep responsibility to take
men off the relief rolls and give them jobs in private enterprise. Subsequently I was told by
many employers that they were not satisfied with the information available concerning the skill
and experience of the workers on the relief rolls. On August 25th I allocated a relatively small
sum to the employment service for the purpose of getting better and more recent information in
regard to those now actively at work on WPA projects-information as to their skills and previous occupations-and to keep the records of such men and women up-to-date for maximum
service in making them available to industry. Tonight I am announcing the allocation of two
and a half million dollars more to enable the Employment Service to make an even more intensive search then it has yet been equipped to make, to find opportunities in private employment
for workers registered with it.
Tonight I urge the workers to cooperate with and take full advantage of this intensification of
the work of the Employment Service. This does not mean that there will be any lessening of our
efforts under our WPA and PWA [Public Works Administration] and other work relief programs
until all workers have decent jobs in private employment at decent wages. We do not surrender our responsibility to the unemployed. We have had ample proof that it is the will of the
American people that those who represent them in national, state and local government should
continue as long as necessary to discharge that responsibility. But it does mean that the government wants to use resource[s] to get private work for those now employed on government
work, and thus to curtail to a minimum the government expenditures for direct employment.
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Tonight I ask employers, large and small, throughout the nation, to use the help of the state and
Federal Employment Service whenever in the general pick-up of business they require more
workers.
Tomorrow is Labor Day. Labor Day in this country has never been a class holiday. It has always been a national holiday. It has never had more significance as a national holiday than it
has now. In other countries the relationship of employer and employee has more or less been
accepted as a class relationship not readily to be broken through. In this country we insist, as
an essential of the American way of life, that the employer-employee relationship should be
one between free men and equals. We refuse to regard those who work with hand or brain as
different from or inferior to those who live from their property. We insist that labor is entitled to
as much respect as property. But our workers with hand[s] and brain[s] deserve more than respect for their labor. They deserve practical protection in the opportunity to use their labor at a
return adequate to support them at a decent and constantly rising standard of living, and to accumulate a margin of security against the inevitable vicissitudes of life.
The average man must have that twofold opportunity if we are to avoid the growth of a class
conscious society in this country.
There are those who fail to read both the signs of the times and American history. They would
try to refuse the worker any effective power to bargain collectively, to earn a decent livelihood
and to acquire security. It is those shortsighted ones, not labor, who threaten this country with
that class dissension which in other countries has led to dictatorship and the establishment of
fear and hatred as the dominant emotions in human life.
All American workers, brain workers and manual workers alike, and all the rest of us whose
well-being depends on theirs, know that our needs are one in building an orderly economic
democracy in which all can profit and in which all can be secure from the kind of faulty economic direction which brought us to the brink of common ruin seven years ago.
There is no cleavage between white collar workers and manual workers, between artists and
artisans, musicians and mechanics, lawyers and accountants and architects and miners.
Tomorrow, Labor Day, belongs to all of us. Tomorrow, Labor Day, symbolizes the hope of all
Americans. Anyone who calls it a class holiday challenges the whole concept of American
democracy.
The Fourth of July commemorates our political freedom-a freedom which without economic
freedom is meaningless indeed. Labor Day symbolizes our determination to achieve an economic freedom for the average man which will give his political freedom reality.
"Franklin Delano Roosevelt's Fireside Chat on Drought Conditions," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
The National Emergency Council, 1938
The Great Depression hit the already economically troubled American South especially hard.
United States President Franklin Delano Roosevelt was anxious to curb unemployment and
economic devastation in the South. In 1938 the National Emergency Council released the findings of its investigation into the causes of the failing Southern economy.
Economic Conditions of the South
In spite of [its] wealth of population and natural resource, the South is poor in the machinery
for converting this wealth to the uses of its people. With 28 percent of the Nation's population,
it has only 16 percent of the tangible assets, including factories, machines, and the tools with
which people make their living. With more than half the country's farmers, the South has less
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Modern History I (Imperialism to the Age of Depression and Recovery)
than a fifth of the farm implements. Despite its coal, oil, gas, and water power, the region uses
only 15 percent of the Nation's factory horsepower. Its potentialities have been neglected and
its opportunities unrealized.
The paradox of the South is that while it is blessed by Nature with immense wealth, its people
as a whole are the poorest in the country. Lacking industries of its own, the South has been
forced to trade the richness of its soil, its minerals and forests, and the labor of its people for
goods manufactured elsewhere.…
This heritage has been sadly exploited. Sixty-one percent of all the Nation's land badly damaged by erosion is in the Southern States. An expanse of southern farm land as large as South
Carolina has been gullied and washed away; at least 22 million acres of once fertile soil has
been ruined beyond repair.… In addition, the sterile sand and gravel washed off this land has
covered over a fertile valley acreage equal in size to Maryland.
There are a number of reasons for this wastage:
Much of the South's land originally was so fertile that it produced crops for many years no matter how carelessly it was farmed. For generations thousands of southern farmers plowed their
furrows up and down the slopes, so that each furrow served as a ditch to hasten the run-off of
silt-laden water after every rain. While many farmers have now learned the importance of terracing their land or plowing it on the contours, thousands still follow the destructive practices
of the past.
Half of the South's farmers are tenants, many of whom have little interest in preserving soil they
do not own.
The South's chief crops are cotton, tobacco, and corn; all of these are inter-tilled crops-the soil
is plowed between the rows, so that it is left loose and bare of vegetation.
The top-soil washes away much more swiftly than from land planted to cover crops, such as
clover, soybeans, and small grains. Moreover, cotton, tobacco, and corn leave few stalks and
leaves to be plowed under in the fall; and as a result the soil constantly loses its humus and its
capacity to absorb rainfall.
Even after harvest, southern land is seldom planted to cover crops which would protect it from
the winter rains. This increases erosion tenfold.
Southeastern farms are the smallest in the Nation. The operating units average only 71 acres,
and nearly one-fourth of them are smaller than 20 acres. A farmer with so little land is forced to
plant every foot of it in cash crops; he cannot spare an acre for soil restoring crops or pasture.
Under the customary tenancy system, moreover, he has every incentive to plant all his land to
crops which will bring in the largest possible immediate cash return. The landlord often encourages him in this destructive practice of cash-cropping.…
Forests are one of the best protections against erosion. Their foliage breaks the force of the rain;
their roots bind the soil so that it cannot wash away; their fallen leaves form a blanket of vegetable cover which soaks up the water and checks run-off. Yet the South has cut away a large
part of its forest, leaving acres of gullied, useless soil. There has been comparatively little effort
at systematic reforestation.…
The South is losing more than $300,000,000 worth of fertile topsoil through erosion every year.
This is not merely a loss of income-it is a loss of irreplaceable capital.…
The population of the South is growing more rapidly by natural increase than that of any other
region. Its excess of births over deaths is 10 per thousand, as compared with the national average of 7 per thousand; and already it has the most thickly populated rural area in the United
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States. Of the 108,600,000 native-born persons in the country in 1930, 28,700,000 were born
in the Southeast, all but 4,600,000 in rural districts.… Of these southerners born in rural areas,
only 17,500,000 live in the locality where they were born, and 3,800,000 have left the South
entirely.
This migration has taken from the South many of its ablest people. Nearly half of the eminent
scientists born in the South are now living elsewhere.… The search for wider opportunities
than are available in the overcrowded, economically undeveloped southern communities
drains away people from every walk of life. About one child of every eight born and educated
in Alabama or Mississippi contributes his life's productivity to some other State.
The expanding southern population likewise has a marked effect on the South's economic
standards. There are fewer productive adult workers and more dependents per capita than in
other sections of the country. The export of population reflects the failure of the South to provide adequate opportunities for its people.
The largely rural States of the South must support nearly one-third of their population in school,
while the industrial States support less than one-fourth. Moreover, in their search for jobs the
productive middle-age groups leave the South in the greatest numbers, tending to make the
South a land of the very old and the very young. A study of one southern community in 1928
showed that about 30 percent of the households were headed by women past middle age.
Since 1930 most of these women, formerly able to live by odd jobs and gardening, have gone
on relief.…
…[B]ecause of the decrease in tillable land, in the older Southern States east of Texas, the farm
acreage was actually less in 1930 than in 1860, though the rural population had nearly doubled. In 1930 there were nearly twice as many southern farms less than 20 acres in size as in
1880. These figures indicate serious maladjustment between the people and the land, and a
consequent misuse of resources.…
Increasing competition for jobs has also upset the balance of employment between white and
Negro. Unemployment among white people has caused them to seek jobs which were traditionally filled only by Negroes in the South. The field for the employment of Negroes has consequently been further constricted, causing greater migration. The lack of opportunity and the
resulting job competition has lowered the living standards of both white and Negro workers in
the South.
The population problems of the South-the disproportion of adult workers to dependents, the
displacement of agricultural workers by machines, the substitution of white workers in traditionally Negro occupations, the emigration of skilled and educated productive workers-are the
most pressing of any America must face. They are not local problems alone. With the South
furnishing the basis for the population increase of the Nation, with southern workers coming
into other sections of the country in quest of opportunity, with the South's large potential market for the Nation's goods, these problems are national.…
Ever since the War between the States the South has been the poorest section of the Nation.
The richest State in the South ranks lower in per capita income than the poorest State outside
the region. In 1937 the average income in the South was $314; in the rest of the country it was
$604, or nearly twice as much.
Even in "prosperous" 1929 southern farm people received an average gross income of only
$186 a year as compared with $528 for farmers elsewhere. Out of that $186 southern farmers
had to pay all their operating expenses-tools, fertilizer, seed, taxes, and interest on debt-so that
only a fraction of that sum was left for the purchase of food, clothes, and the decencies of life.
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It is hardly surprising, therefore, that such ordinary items as automobiles, radios, and books are
relatively rare in many southern country areas.
For more than half of the South's farm families-the 53 percent who are tenants without land of
their own-incomes are far lower. Many thousands of them are living in poverty comparable to
that of the poorest peasants in Europe. A recent study of southern cotton plantations indicated
that the average tenant family received an income of only $73 per person for a year's work.
Earnings of share croppers ranged from $38 to $87 per person, and an income of $38 annually
means only a little more than 10 cents a day.
The South's industrial wages, like its farm income, are the lowest in the United States. In 1937
common labor in 20 important industries got 16 cents an hour less than laborers in other sections received for the same kind of work. Moreover, less than 10 percent of the textile workers
are paid more than 52.5 cents an hour, while in the rest of the Nation 25 percent rise above
this level. A recent survey of the South disclosed that the average annual wage in industry was
only $865 while in the remaining States it averaged $1,219.
In income from dividends and interest the South is at a similar disadvantage. In 1937 the per
capita income in the South from dividends and interest was only $17.55 as compared with
$68.97 for the rest of the country.
Since the South's people live so close to the poverty line, its many local political subdivisions
have had great difficulty in providing the schools and other public services necessary in any
civilized community. In 1935 the assessed value of taxable property in the South averaged only
$463 per person, while in the nine Northeastern States it amounted to $1,370. In other words,
the Northeastern States had three times as much property per person to support their schools
and other institutions.… In 1936 the State and local governments of the South collected only
$28.88 per person while the States and local governments of the Nation as a whole collected
$51.54 per person.
Although the South has 28 percent of the country's population, its Federal income-tax collections in 1934 were less than 12 percent of the national total. These collections averaged only
$1.28 per capita throughout the South, ranging from 24 cents in Mississippi to $3.53 in Florida.
So much of the profit from southern industries goes to outside financiers, in the form of dividends and interest, that State income taxes would produce a meager yield in comparison with
similar levies elsewhere. State taxation does not reach dividends which flow to corporation
stockholders and management in other States; and, as a result, these people do not pay their
share of the cost of southern schools and other institutions.
Under these circumstances the South has piled its tax burden on the backs of those least able to
pay, in the form of sales taxes. (The poll tax keeps the poorer citizens from voting in eight
southern States; thus they have no effective means of protesting against sales taxes.) In every
southern State but one, 59 percent of the revenue is raised by sales taxes. In the northeast, on
the other hand, not a single State gets more than 44 percent of its income from this source.…
The efforts of southern communities to increase their revenues and to spread the tax burden
more fairly have been impeded by the vigorous opposition of interests outside the region which
control much of the South's wealth. Moreover, tax revision efforts have been hampered in
some sections by the fear that their industries would move to neighboring communities which
would tax them more lightly-or even grant them tax exemption for long periods.
The hope that industries would bring with them better living conditions and consequent higher
tax revenues often has been defeated by the competitive tactics of the communities themselves.
Many southern towns have found that industries which are not willing to pay their fair share of
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the cost of public services likewise are not willing to pay fair wages, and so add little to the
community's wealth.
Education
Great numbers of Americans are continually moving from one region to another. This makes
poor schooling in any region a matter of national concern. Illiteracy, poor training, lack of education, go along with those migrating people who have not had schools. The fact that the South
is the source of a considerable part of the rest of the Nation's population makes the South's
difficulties in providing school facilities a national problem.…
In the rural regions of the South, particularly, there is a marked disparity between the number
of children to be educated and the means for educating them. For example, in 1930 the rural
inhabitants of the Southeast had to care for 4,250,000 children of school age … although they
received an income of only about 2 percent of the Nation's total. In the nonfarm population of
the Northeast … there were 8,500,000 children in a group that received 42 percent of the total
national income-21 times as much income available to educate only twice as many children.…
The South must educate one-third of the Nation's children with one-sixth of the Nation's
school revenues. According to the most conservative estimates, the per capita ability of the
richest State in the country to support education is six times as great as that of the poorest State.
Although southern teachers compare favorably with teachers elsewhere, the average annual
salary of teachers in Arkansas for 1933-34 was $465, compared to $2,361 for New York State
for the same year, and in no one of the Southern States was the average salary of teachers equal
to the average of the Nation. In few places in the Nation, on the other hand, is the number of
pupils per teacher higher than as in the South. Overcrowding of schools, particularly in rural
areas, has lowered the standards of education, and the short school terms of southern rural
schools further reduce their effectiveness.
In the South only 16 percent of the children enrolled in school are in high school as compared
with 24 percent in States outside the South.
Higher education in the South has lagged far behind the rest of the Nation. The total endowments of the colleges and universities of the South are less than the combined endowments of
Yale and Harvard. As for medical schools, the South does not have the facilities to educate sufficient doctors for its own needs.…
Between 1933 and 1935 more than $21,000,000 of Federal funds were necessary to keep rural
schools open, and more than 80 percent of this amount was needed in the South, where local
and State governments were unable to carry the burden.
In 1936 the Southern States spent an average of $25.11 per child in schools, or about half the
average for the country as a whole, or a quarter of what was spent per child in New York
State.… There were actually 1,500 school centers in Mississippi without school buildings, requiring children to attend school in lodge halls, abandoned tenant houses, country churches,
and, in some instances, even in cotton pens.
Health
For years evidence has been piling up that food, clothing, and housing influence not only the
sickness rate and death rate but even the height and weight of school children. In the South,
where family incomes are exceptionally low, the sickness and death rates are unusually high.
Wage differentials become in fact differentials in health and life; poor health, in turn, affects
wages.…
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Several years ago the United States Public Health Service conducted syphilis-control demonstrations in selected rural areas in the South. These studies revealed a much higher ratio of
syphilis among Negroes than among whites, but showed further that this higher ratio was not
due to physical differences between the races. It was found to be due to the greater poverty and
lower living conditions of the Negroes. Similar studies of such diseases have shown that individual health cannot be separated from the health of the community as a whole.
The presence of malaria, which infects annually more than 2,000,000 people, is estimated to
have reduced the industrial output of the South one-third. One of the most striking examples of
the effect of malaria on industry was revealed by the Public Health Service in studies among
employees of a cotton mill in eastern North Carolina. Previous to the attempts to control malaria, the records of the mill one month showed 66 looms were idle as a result of ill-health.
After completion of control work, no looms were idle for that reason. Before control work,
238,046 pounds of cloth were manufactured in one month. After completion of the work production rose to 316,804 pounds in one month-an increase of 33 percent.…
The health-protection facilities of the South are limited. For example, there are only one-third
as many doctors per capita in South Carolina as there are in California. The South is deficient
in hospitals and clinics, as well as in health workers. Many counties have no facilities at all.…
Housing
The effects of bad housing can be measured directly in the general welfare. It lessens industrial
efficiency, encourages inferior citizenship, lowers the standard of family life, and deprives people of reasonable comfort. There are also direct relationships between poor housing and poor
health, and between poor housing and crime.
The type of slum most usual in southern towns consists of antiquated, poorly built rental quarters for working people. The rows of wooden houses without any modern improvements, without proper sanitary facilities, and often without running water, are usually in congested areas
and in the least desirable locations. Often they are next to mills or mines where the tenants
work, or on low swampy land subject to floods and no good for anything else. They are usually
far removed from playgrounds and other recreation areas. The southern slum has often been
built to be a slum. It is simply a convenient barracks for a supply of cheap labor.
Lack of running water and impure water supplies are common in southern slums. Bathtubs,
sinks, and laundry tubs are among the bare necessities that are often lacking in slum dwellings.
Sometimes city water is supplied through a yard hydrant shared by several families. Surface
wells are often contaminated on the farms and in the villages and small towns. Contaminated
milk and contaminated water, frequently found, cause typhoid fever, which is becoming a
widespread rural disease in the South.
Lack of sanitary flush toilets and sewer systems for waste disposal is characteristic not only of
the great majority of farm and rural homes, but of a large proportion of homes in small towns
and a substantial number in the cities. Twenty-six percent of southern city or town households
are without indoor flush toilets as contrasted with 13.1 percent for the city and town households of the country as a whole. In extensive rural districts there are not only no indoor flush
toilets, but no outdoor privies even of the most primitive sort. Nearly a fifth of all southern farm
homes have no toilets at all. It is in these regions that hookworm infection and consequent
anemia have flourished as a result of soil pollution.…
Houses in the rural South are the oldest, have the lowest value, and have the greatest need of
repairs of any farm houses in the United States.
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That there are 2 ½ million below-standard houses would be a conservative estimate. Of 3 million farm houses in 14 southern States, including West Virginia, surveyed in 1930 only 5.7 percent had water piped to the house and 3.4 percent had water piped to the bathroom. More
than half the farmhouses are unpainted. More than a third of southern farmhouses do not have
screens to keep out mosquitoes and flies.…
By the most conservative estimates, 4,000,000 southern families should be rehoused. This is
one-half of all families in the South.
Labor
The rapidly growing population of the South is faced with the problem of finding work that will
provide a decent living. Neither on the farm nor in the factory is there the certainty of a continuing livelihood, and thousands of southerners shift each year from farm to mill or mine and
back again to farm.…
Wage differentials are reflected in lower living standards. Differences in costs of living between
the southern cities and cities in the Nation as a whole are not great enough to justify the differentials in wages that exist. In 1935 a study of costs of living showed that a minimum emergency standard required a family income of $75.27 a month as an average for all the cities surveyed. The average of costs in southern cities showed that $71.94 a month would furnish the
minimum emergency standard. This would indicate a difference of less than 5 percent in living
costs. Industrial earnings for workers are often 30 to 50 percent below national averages.
Low wages and poverty are in great measure self-perpetuating. Labor organization has made
slow and difficult progress among the low-paid workers, and they have had little collective
bargaining power or organized influence on social legislation. Tax resources have been low
because of low incomes in the communities, and they have been inadequate to provide for the
type of education modern industry requires. Malnutrition has had its influence on the efficiency
of workers. Low living standards have forced other members of workers' families to seek employment to make ends meet. These additions to the labor market tend further to depress
wages.
Low wages have helped industry little in the South. Not only have they curtailed the purchasing power on which local industry is dependent, but they have made possible the occasional
survival of inefficient concerns. The standard of wages fixed by such plants and by agriculture
has lowered the levels of unskilled and semiskilled workers, even in modern and well-managed
establishments.…
Unemployment in the South has not resulted simply from the depression. Both in agriculture
and industry, large numbers have for years been living only half-employed or a quarter employed or scarcely employed at all. In the problem of unemployment in the South, the relation
between agriculture and industry becomes notably clear. Over 30 percent of the persons employed on emergency works programs are farmers and farm laborers, as compared to 15.3 percent for the country as a whole. The insecurity of southern farmers is reflected in these figures.
Seasonal wages in agriculture do not provide incomes sufficient to tide workers over the slack
seasons.… As long as the agricultural worker cannot gain assurance of a continuing existence
on the farm, he remains a threat to the job, the wages, and the working conditions of the industrial worker.
Women And Children
Child labor is more common in the South than in any other section of the Nation, and several
Southern States are among those which have the largest proportion of their women in gainful
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work. Moreover, women and children work under fewer legal safeguards than women and
children elsewhere in the Nation.
Low industrial wages for men in the South frequently force upon their children as well as their
wives a large part of the burden of family support. In agriculture, because of poor land and
equipment, entire families must work in order to make their living.
The 1930 census, latest source of comprehensive information on child labor, showed that
about three-fourths of all gainfully employed children from 10 to 15 years old worked in the
Southern States, although these States contained less than one-third of the country's children
between those ages.
Child labor, itself due to low wages for adult workers, is also a source of cheap competing labor, and thus it tends to make wages even lower, hours even longer, and generally to break
down labor standards. Child labor, therefore, affects not only the child itself, but it undermines
security of adult workers, and thus reacts seriously on the whole community and, indeed, the
whole Nation.
The South leads the Nation in the employment of children in both farm and industrial work.
One hundred eight out of every 1,000 children between 10 and 15 years old were employed in
the South, compared to 47 out of every 1,000 children of these ages in the country as a
whole.…
Employment of children affects school attendance.… The upper age for compulsory school
attendance throughout the rest of the country is generally 16 to 18. However, two Southern
States require attendance only to 14, one to 15, and only in two States does the upper age extend above 16 years. All permit exemptions which materially lessen their effectiveness.
In many parts of the South legislation to protect women workers and to establish proper working standards for them has not been well developed. This has had far-reaching effects on the
health, the living conditions, and the general well-being of women and their families.
In a region where workers generally are exploited, women are subjected to an even more intense form of exploitation. Many women work more than 50 hours a week in cotton and other
textile mills, and in the shoe, bag, paper box, drug, and similar factories in certain Southern
States.
The South has two of the four states in the entire Nation that have enacted no laws whatever to
fix maximum hours for women workers. Only one of the Southern States has established an 8hour day for women in any industry. Only four of the Southern States have applied a week as
short as 48 hours for women in any industry.
Reports for a number of industries, including cotton manufacturing, have shown wage earners
receiving wages well below those estimated by the Works Progress Administration as the lowest which would maintain a worker's family.
Women's wages ordinarily amount to less than men's. However, only two of the Southern
States have enacted a law providing a minimum wage for women.… Many women, even
though employed full time, must receive public aid because their wages are insufficient to care
for themselves and their children. The community thus carries part of the burden of these low
wages and, in effect, subsidizes the employer.…
Ownership And Use Of Land
The farming South depends on cotton and tobacco for two-thirds of its cash income. More than
half of its farmers depend on cotton alone. They are one-crop farmers, subjected year after year
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to risks which would appall the average businessman. All their eggs are in one basket-a basket
which can be upset, and often is, by the weather, the boll weevil, or the cotton market.
The boll weevil can be conquered, and weather hazards tend to cancel themselves out as good
seasons follow bad; but the cotton market is a sheer gamble. On this gamble nearly 2,000,000
southern families stake their year's work and everything they own. Their only chance of making
a living is tied up with the fluctuations of the world price of cotton.
No other similar area in the world gambles its welfare and the destinies of so many people on a
single crop market year after year.
The gamble is not a good one. Few other crops are subject to such violent and unpredictable
price variations as cotton. In 1927 cotton farmers got 20 cents a pound for their crop; in 1929
they got 16 cents; in 1931 they got 6 cents; in 1933 they got 10 cents. Only once during the
last decade did the price of cotton change less than 10 percent between pickings. Three times
in 5 years it jumped more than 40 percent-once up and twice down.
Because cotton is the cornerstone of the economy of many parts of the South, the merchants,
manufacturers, businessmen, and bankers share the hazards of the farmer. The men who finance cotton farming charge high interest rates because their money is subject to far more than
the normal commercial risk. As a result, the mortgage debt of southern farm owners has been
growing steadily for the last 20 years. A check-up on 46 scattered counties in the South in 1934
showed that one-tenth of the farm land was in the hands of corporations, mostly banks and
insurance companies, which had been forced to foreclose their mortgages.
This process has forced more than half of the South's farmers into the status of tenants, tilling
land they do not own. Whites and Negroes have suffered alike. Of the 1,831,000 tenant families in the region, about 66 percent are white. Approximately half of the sharecroppers are
white, living under economic conditions almost identical with those of Negro sharecroppers.…
Tenant families form the most unstable part of our population. More than a third of them move
every year, and only a small percentage stay on the same place long enough to carry out a 5year crop rotation. Such frequent moves are primarily the result of the traditional tenure system,
under which most renters hold the land by a mere spoken agreement, with no assurance that
they will be on the same place next season. Less than 2 percent have written leases which give
them security of tenure for more than one year.
Under these circumstances the tenant has no incentive to protect the soil, plant cover crops, or
keep buildings in repair. On the contrary, he has every reason to mine the soil for every possible penny of immediate cash return.
The moving habit, moreover, is costly. Most renters merely swap farms every few years without
gain to themselves or anybody else. The bare cost of moving has been estimated at about $57
per family, or more than $25,000,000 annually for the tenants of the South. Children are taken
out of school in midyear, and usually fall behind with their studies. It is almost impossible for a
family constantly on the move to take an active part in community affairs; and, as a consequence, churches and other institutions suffer.…
While it is growing more cotton and tobacco than it can use or sell profitably, the South is failing to raise the things it needs. Southern farmers grow at home less than one-fifth of the things
they use; four-fifths of all they eat and wear is purchased.…
Too many southern families have simply done without, and as a result they have suffered severely from malnutrition and dietary diseases. Many common vegetables are rarities in many
southern farming communities, although both soil and climate are extremely favorable to their
growth.…
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Credit
…Lacking capital of its own the South has been forced to borrow from outside financiers, who
have reaped a rich harvest in the form of interest and dividends. At the same time it has had to
hand over the control of much of its business and industry to investors from wealthier sections.
A glance at the bank reports shows how difficult it has been for the southern people, whose
average income is the lowest in the Nation, to build up savings of their own. Although the region contains 28 percent of the country's population, in July 1937, its banks held less than 11
percent of the Nation's bank deposits, or only $150 per capita, as compared with $471 per
capita for the rest of the United States. Savings deposits were less than 6 percent of the national
total. Of the 66 banks having deposits of $100,000,000 or more only two are in the South, and
they barely qualify.
Even these figures do not fully disclose how small a share the South plays in the country's financial life. Southern investment banking firms managed only 0.07 percent of the security issues larger than $1,000,000 which were offered for sale between July 1, 1936, and June 1,
1938-and it is the investment bankers who find the money for virtually all important industries.
Insurance company funds reflect the same story. Southern companies hold only $756,000,000,
or about 2.6 percent, of the $28,418,000,000 of assets held by the Nation's life-insurance
companies.
The scarcity of local credit sources results in high interest rates and lays a heavy burden both
on individuals and local governments. The average interest paid on southern State, county, and
municipal bonds is 4.4 percent, while the rest of the country pays only 3.98.…
State banks outside the Federal Reserve System, but insured by the Federal Deposit Insurance
Corporation, charge average interest rates in the South ranging from 6.5 percent in Virginia to
10.43 percent in Texas and 11.5 percent in Oklahoma. In the New England and the Middle
Atlantic States, on the other hand, it is 5.75 percent.…
…[T]he majority of southern tenant farmers must depend for credit on their landlords or the
"furnish merchant" who supplies seed, food, and fertilizer. Their advances, in fact, have largely
replaced currency for a considerable part of the rural population. For security the landlord or
merchant takes a lien on the entire crop, which is to be turned over to him immediately after
harvest in settlement of the debt. Usually he keeps the books and fixes the interest rate. Even if
he is fair and does not charge excessive interest, the tenants often find themselves in debt at the
end of the year. This is not necessarily a reflection on the planter-merchant; very often he
would like to improve the lot of his tenants but must exploit them in order that he himself may
survive.…
Use Of Natural Resources
The great natural resources of the South have been exploited with the traditional American regard for cream and disregard for skimmed milk. Perhaps no worse than in the rest of the country, but with serious effect on the South, forests have been girdled, chopped, and burned without regard for their permanent value as timber or as conservers of the soil and rainfall.
Ruthless measures have been used to obtain the best ore, oil, or gas with the least effort. Careless room-and-pillar mining has resulted in the abandonment of untold tons of southern coal in
deserted mines. In 1935 the Nation lost through wastage 479,826,000,000 cubic feet of natural
gas, not including wastage at the wellheads. The Panhandle section of Texas alone accounted
for 67 percent of this extravagant loss. Other sections of the South, similarly guilty, failed to
take advantage of inventions which would have saved and used much of their gas.
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Modern History I (Imperialism to the Age of Depression and Recovery)
Because of the poverty in which the South was left after the War between the States, and because of the high cost of credit since that time, a very large share of the natural resources of the
South is owned in other regions. To the extent that this is true, the South is exposed to a double
danger. On the one hand, it is possible for a monopolistic corporation in another region of the
country to purchase and leave unused resources in the South which otherwise might be developed in competition with the monopoly. On the other hand, the large absentee ownership of
the South's natural resources and the South's industry makes it possible for residents elsewhere
to influence greatly the manner in which the South is developed and to subordinate that development to other interests outside the South.
The public utilities in the South are almost completely controlled by outside interests. All the
major railroad systems are owned and controlled elsewhere. Most of the great electric holding
company systems, whose operating companies furnish the light, heat, and power for southern
homes and industries, are directed, managed, and owned by outside interests. Likewise, the
transmission and distribution of natural gas, one of the South's great assets, is almost completely in the hands of remote financial institutions. The richest deposits of the iron ore, coal,
and limestone that form the basis for the steel industry in Birmingham are owned or controlled
outside of the region.…
Over 99 percent of the sulphur produced in the United States comes from Texas and Louisiana.
Two extraction companies control practically the entire output. Both are owned and controlled
outside the South. One has 15 directors and the other 9, but only 1 member of each board resides in the South.…
An equally serious deterrent to the South's economic development has been the Nation's traditional high tariff policy. The South has been forced for generations to sell its agricultural products in an unprotected world market, and to buy its manufactured goods at prices supported by
high tariffs. The South, in fact, has been caught in a vise that has kept it from moving along
with the main stream of American economic life. On the one hand, the freight rates have hampered its industry; on the other hand, our high tariff has subsidized industry in other sections of
the country at the expense of the South. Penalized for being rural, and handicapped in its efforts to industrialize, the economic life of the South has been squeezed to a point where the
purchasing power of the southern people does not provide an adequate market for its own industries nor an attractive market for those of the rest of the country.
Moreover, by curtailing imports, the tariff has reduced the ability of foreign countries to buy
American cotton and other agricultural exports. America's trade restrictions, without sufficient
expansion of our domestic markets for southern products, have hurt the South more than any
other region.…
Southern people need food. The all too common diet in the rural South of fatback, corn bread,
and molasses, with its resulting pellagra and other dietary diseases, is not dictated by taste
alone. There is a deficiency in the consumption of necessary foods even among employed,
wage-earning families in the cities of the South. The average per capita butter consumption in
cities in this region was found to be about half of that in eastern cities and a quarter of that in
cities on the Pacific coast. Studies of gainfully employed nonrelief white workers in ten of the
largest cities of the South showed that less than two-thirds spent enough money to buy an
"adequate diet at minimum cost," as calculated by the Bureau of Home Economics.…
Of white nonrelief families in four southern cities with incomes less than $500, over one-third
had no indoor running water, almost one-half had no kitchen sink with drain, none had gas or
electricity for cooking, none had central heating. Among southern farm families of the same
income group, less than 1 percent had an indoor water supply, less than 3 percent had kitchen
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sinks with drains, 1 percent had indoor toilets, none had electric or gas cooking facilities, and
less than 2 percent electric lights.… Only 2 percent of the white families and 0.3 percent of the
Negro families of these southern villages owned washing machines, as compared with 81.2
percent in the Pennsylvania, Ohio, Michigan, Wisconsin, and Illinois villages that were surveyed, and 77.3 percent in a similar group of California, Oregon, and Washington villages.…
Northern producers and distributors are losing profits and northern workers are losing work
because the South cannot afford to buy their goods.
Source: Articles from Bibliobase edited by Michael A. Bellesiles. Copyright © 1998 by Houghton Mifflin Company. All rights reserved. Reprinted by permission.
"Economic Conditions of the South," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999
Microsoft Corporation. All rights reserved.
Roosevelt, Franklin Delano (1882-1945)
I INTRODUCTION
32nd president of the United States (1933-1945). Roosevelt served longer than any other president. His unprecedented election to four terms in office will probably never be repeated; the
22nd Amendment to the Constitution of the United States, passed after his death, denies the
right of any person to be elected president more than twice.
Roosevelt held office during two of the greatest crises ever faced by the United States: the Great
Depression of the 1930s, followed by World War II. His domestic program, known as the New
Deal, introduced far-reaching reforms within the free enterprise system and prepared the way
for what is often called the welfare state. His leadership of the Democratic Party transformed it
into a political vehicle for American liberalism. Both in peacetime and in war his impact on the
office of president was enormous. Although there had been strong presidents before him, they
were the exception. In Roosevelt's 12 years in office strong executive leadership became a basic part of United States government. He made the office of president the center of diplomatic
initiative and the focus of domestic reform.
II EARLY LIFE
Roosevelt was born at his family's estate at Hyde Park, in Dutchess County, New York. He was
the only child of James Roosevelt and Sara Delano Roosevelt. James Roosevelt was a moderately successful businessman, with a variety of investments and a special interest in coal. He
was also a conservative Democrat who was interested in politics. His home overlooking the
Hudson River was comfortable without being ostentatious, and the family occupied a prominent position among the social elite of the area. Sara Delano, 26 years younger than her previously widowed husband, brought to the marriage a fortune considerably larger than that of
James Roosevelt. The Delano family had prospered trading with China, and Sara herself had
spent some time with her parents in Hong Kong. Thus, Franklin was born into a pleasant and
sociable home, with loving parents and congenial, rather aristocratic companions.
A Education
Roosevelt spent his early years at Hyde Park. During the summers he was often taken on European trips, and he also spent much time at a vacation home that James Roosevelt purchased on
Campobello Island, on the Bay of Fundy, in New Brunswick, Canada. It was a pleasant life for
the young Roosevelt, who was fond of the outdoors. He soon developed a passionate interest
in natural history and became an ardent bird watcher. He grew to love outdoor sports and became an expert swimmer and a fine sailor.
His mother supervised his education until he was 14. French-speaking and German-speaking
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Modern History I (Imperialism to the Age of Depression and Recovery)
tutors did most of the actual instruction and helped him develop early a talent for those languages. Young Roosevelt was a voracious reader. He was particularly fond of adventure tales,
especially those that touched on the sea. He also developed an absorbing interest in stamp collecting, a hobby that taught him both history and geography and that was to afford him pleasure and relaxation during all of his adult life.
Roosevelt's parents sent him off in 1896 for further education. They selected Groton School in
Massachusetts, which had a reputation as one of the finest of the exclusive private schools that
prepared boys for the Ivy League colleges. Young Roosevelt was a good student, popular with
his fellow students as well as with his teachers.
From Groton Roosevelt went on to Harvard College. He entered in 1899, the year before his
father died, and remained until 1904. He took his bachelor's degree in 1903 but returned to
Harvard in the fall to serve as editor of the student newspaper, The Crimson. He was an aboveaverage student at Harvard, but he devoted a great deal of time to extracurricular activities, and
his grades suffered as a consequence. He was particularly interested in history and political
economy and took courses in those subjects with outstanding professors. Although he was a
competent journalist, his editorials in The Crimson were chiefly concerned with school spirit in
athletics and show no sign of growing social consciousness or political awareness. However,
he joined a Republican club in 1900, out of boyish enthusiasm for the vice-presidential candidacy of his distant cousin Theodore Roosevelt. In 1904 he cast his first vote in a presidential
election for his cousin, who had become president after the assassination of President William
McKinley in 1901. Afterward, however, Franklin joined his father's political party, and he
probably never again voted for a Republican.
Roosevelt then moved to New York City, where he entered the Columbia University Law
School in 1904. Although he attended classes until 1907, he failed to stay on for his law degree
after passing the state examinations allowing him to practice law. For the next three years he
was a clerk in a prominent law firm in New York City, but the evidence is clear that he had
little interest in law and little enthusiasm to be a lawyer.
B Marriage
Well before he finished his work at Columbia, young Franklin Roosevelt had married his distant cousin Anna Eleanor Roosevelt. They had been in love for some time and were determined
to marry in spite of the opposition of Franklin's mother. The bride's uncle, President Theodore
Roosevelt, was present at the ceremony in New York City on March 17, 1905. Five of their six
children grew to maturity: Anna, James, Elliott, Franklin, Jr., and John. The chief problem faced
by the young couple during the early years of their marriage was Sara Roosevelt's possessive
attitude toward her son. Eleanor's forbearance mitigated this situation, but the problem remained for many years.
III ENTRY INTO POLITICS
A State Senator
Roosevelt formally entered politics in 1910, when he became a candidate for the New York
State Senate in a district composed of three upstate farming counties. Democratic leaders had
approached young Roosevelt because of his name and local prominence-and because he might
be expected to pay his own election expenses. The 28-year-old Roosevelt campaigned hard,
stressing his deep personal interest in conservation and other issues of concern in an agricultural area and also his strong support of honest and efficient government. In the first good year
for Democrats since the early 1890s he was narrowly elected. He was only the second Democrat to represent his district after the emergence of the Republican Party in 1856.
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In the state capitol at Albany, Roosevelt gained statewide publicity as the leader of a small
group of upstate Democrats who refused to follow the leadership of Tammany Hall, also
known as the Tammany Society, the Democratic Party organization of New York City. In particular, they refused to vote for the rich politician William F. "Blue-Eyed Bill" Sheehan for U.S.
senator. Roosevelt's group succeeded in blocking the election of Sheehan, which infuriated
Tammany Hall. The dramatic struggle drew the attention of New York voters to the tall vigorous new state senator with the magic name of Roosevelt. He soon became a dedicated social
and economic reformer, and a political independent. He was reelected in 1912, in spite of a
case of typhoid fever that kept him from campaigning.
Roosevelt entrusted his campaign management to the journalist Louis McHenry Howe. Howe,
a genius at politics, performed brilliantly. Henceforth, Roosevelt and Howe were to be almost
inseparable, and Howe, a wizened and colorful little man, guided the political fortunes of the
Hyde Park aristocrat.
B Assistant Secretary of the Navy
Even before his reelection to the New York legislature, Roosevelt had entered the national political arena by taking part in the campaign of Governor Woodrow Wilson of New Jersey for
the Democratic nomination for president. Once again the young state senator was a member of
a minority group among New York Democrats. When Wilson won at both the convention and
the polls in 1912, his early supporters were rewarded, and Roosevelt became assistant secretary of the United States Navy. Roosevelt resigned his state senate seat and moved to Washington, D.C., to take over the position once occupied by his cousin Theodore Roosevelt.
Franklin Roosevelt's years as assistant secretary, from 1913 to 1920, taught him both how to
get things accomplished and, just as important for an executive, how to avoid unnecessary
trouble. He had the devoted assistance of Louis Howe, who came along to the nation's capital
as Roosevelt's assistant. Roosevelt's superior was Secretary of the Navy Josephus Daniels, a
North Carolina editor. Daniels was a close friend and devoted follower of Nebraska editor and
former Representative William Jennings Bryan, three times the Democratic candidate for president and Wilson's secretary of state. Like Bryan, Daniels was concerned about agrarian issues
and was a progressive reformer. He was also an isolationist (someone who believed that the
United States should avoid alliances with other nations), who hated the idea of war. Young
Roosevelt, an energetic supporter of a bigger navy and soon a warm friend of most of the leading admirals, inevitably had many disagreements with his chief, especially during Wilson's first
term. Daniels had the confidence both of the president and of the most influential Democrats
in the Congress of the United States; Roosevelt had neither of these. However, in time the two
men came to have genuine respect for one another's different talents, and they remained good
friends.
The Daniels-Roosevelt administration of the Navy Department was highly effective. American
entry into World War I in 1917 found the navy in relatively good shape. Roosevelt, as the second in command, was particularly concerned with the civilian employees of the department.
With the help of the energetic Howe, he made excellent contacts with labor leaders in the
course of smoothing relations between the navy and its workers. Roosevelt was also involved
in the enormous build-up of the naval forces and with the general administration of the department. Frequent public speeches brought him to the attention of the public, and he soon
had a reputation as a young man of great promise. He turned down an opportunity to win the
Democratic nomination for governor of New York in 1918 in order to go on a three-month tour
of duty in Europe, during which he visited the western front in France. Although he wanted to
go on active duty as a naval officer, both Wilson and Daniels insisted that he stay on as assis-
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tant secretary of the navy. He remained at that post until August 1920, when he resigned to
campaign as the Democratic candidate for vice president.
C Vice-Presidential Candidate
The Democratic National Convention of 1920 nominated as its candidate for president the
governor of Ohio, James M. Cox. It was natural for the convention to turn to Roosevelt for the
second position on the ticket. He was a member of the Wilson administration, closely identified with the League of Nations, an international association of countries that would, according
to Wilson, prevent future wars. Roosevelt was young, handsome, energetic, and had a reputation as a fine administrator. He also came from an important state. Nevertheless the CoxRoosevelt campaign was hopeless, for the American people had had enough of Democratic
leadership and quickly responded to the pledge of the Republican candidate, Warren G. Harding, for a return to "normalcy." Roosevelt campaigned vigorously for a losing cause, making
friends among Democratic leaders from coast to coast. After November 1920 he was a widely
known public figure, even if he no longer held public office. Roosevelt, still under 40, could
afford to wait.
D Illness
Roosevelt resumed his law career on a part-time basis, and became vice president of the Fidelity and Deposit Company of Maryland. In this position he was in charge of the New York office
of one of the most important companies handling bonds for public officials. Roosevelt's wide
contacts and administrative talents provided an excellent background for this situation. Roosevelt also dabbled in a series of speculative ventures, none of which turned out very well.
Personal tragedy struck Roosevelt in August 1921, when he contracted what was diagnosed,
after an unfortunate delay, as poliomyelitis. He had been plagued by illness of various sorts
during the previous decade, and he had overexerted himself swimming and hiking at Campobello. In great agony and completely unable to walk, Roosevelt seemed to have reached the
end of his active public career. Indeed, his mother wanted him to return to Hyde Park for the
peace and quiet of the life of a country gentleman. However, backed by the determination of
his wife and Louis Howe, Roosevelt decided to return to his work as soon as possible. In spite
of the efforts of numerous specialists and of his strenuous exercises, particularly swimming at
his "second home" in Warm Springs, Georgia, he was never again able to walk unaided. He
spent most of his working hours in a wheelchair, and he walked with leg braces and canes,
usually with help. Through the worst years of his paralysis, Roosevelt was amazingly cheerful.
Eleanor Roosevelt often acted as her husband's eyes and ears, bringing him information and
conferring with people he was no longer readily able to meet. Howe remained close by Roosevelt, assisting him in many ways and planning for his return to public life.
E Governor of New York
Roosevelt continued to busy himself with Democratic politics after his illness. In 1922 he aided
Alfred E. Smith, who in that year made a successful political comeback and became governor
of New York for the second time. In 1924 Roosevelt made a rousing nominating speech for
Smith at the Democratic National Convention at Madison Square Garden, in New York City,
calling the governor the "Happy Warrior." Although Smith was unable to win the Democratic
presidential nomination in 1924, he was reelected governor that year and again in 1926. In
1928 Roosevelt again nominated Smith for president at the national convention. This time,
Smith was chosen, becoming the first Roman Catholic nominated by a major U.S. party as its
candidate for president.
At Smith's urging, and against the advice of Eleanor Roosevelt and Louis Howe, Roosevelt
agreed to run for governor. Smith, well aware that his own religion, his identification with ur172
Modern History I (Imperialism to the Age of Depression and Recovery)
ban issues, and his opposition to the prohibition of liquor would hurt him in rural Protestant
areas, needed the help of Roosevelt in New York state. Ironically, Roosevelt was elected governor by the narrow margin of 25,000 out of 4.5 million votes cast, while Smith lost New York,
and the presidency, to Herbert Hoover. Smith felt that his defeat was solely the result of religious prejudice, but it is unlikely that any Democrat could have defeated the Republicans in
1928.
Roosevelt thus succeeded Smith as governor in January 1929. He soon made it clear that he
was going to have his own administration by replacing key Smith associates, and before long
there was coolness between the two former political allies. Like Smith, Roosevelt had to cope
with a Republican legislature. Since Smith had been responsible for a series of important social
and administrative reforms, Roosevelt faced a difficult task in working out a distinctive program
of his own. His first successes were in the fields of conservation and tax relief for farmers, areas
in which he shared a common interest with his Republican legislators. In time he developed a
skill as a political manager and a superb style of speaking on the radio. He was also careful to
develop support among different groups for his plans.
F Stock Market Crash
In October 1929 the economic prosperity that the United States had enjoyed for most of the
1920s came to an abrupt end. During this period many people had put their savings and earnings in risky investments, particularly the buying of stocks on margin. In these cases, the buyer
put up as little as 3 percent of a stock's price in cash and borrowed the remainder from the
broker. The growing demand for stocks and the prosperous state of the nation as a whole
caused stock prices to rise, which in turn encouraged more stock purchases.
Stock prices reached their height in the so-called "Hoover bull market" during the first six
months of the Hoover administration. People invested billions of dollars in the stock market,
obtaining money by borrowing from banks, mortgaging their homes, and selling lower-risk
government securities, such as Liberty Bonds.
Buying stock on margin was a risky bet that the price of that stock would continue to increase.
In August 1929 approximately 300 million shares of stock had been purchased on margin. During normal business periods a share of stock had been purchased mostly for the dividend it
paid, but during the Hoover bull market stocks were purchased increasingly to sell at a higher
price. Unfortunately, industry sales had begun to slow down, indicating that stock prices were
likely to fall because industries would pay smaller dividends. In September 1929 some investors began selling stocks, believing prices had reached their highest level and would fall in the
near future. Other investors began selling, too, and as they sold the price to buy those stocks
began to fall more quickly. The decline in prices especially threatened those who had purchased on margin, because they owed their broker the amount of the original price of the
stock-even if that stock was now worth only half as much.
As a result, by October 1929 the feverish buying had stopped and had given way to desperate
selling. Prices dropped rapidly, and thousands of people lost all they had invested. Many were
completely ruined financially. On October 29 the New York Stock Exchange, the largest in the
world, had its worst day of panic selling. By the end of the day stock values had declined by
$10 billion to $15 billion.
Following the stock market crash of October 1929 Roosevelt found himself a depression governor, with new problems to face. In 1930 he was reelected by the unprecedented number of
725,000 votes.
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IV ROAD TO THE PRESIDENCY
As an energetic governor and a leading progressive reformer who was also head of the nation's
most populous state, Roosevelt was automatically a leading contender for the Democratic
presidential nomination in 1932.His inability to walk unaided had proved to be no political
problem; indeed, many New Yorkers were unaware that their governor used a wheelchair.
Roosevelt and Howe planned the campaign carefully. As the front-runner, Roosevelt was in
some danger of becoming the man against whom the other candidates might combine. This
could be fatal to his chances, since at that time it was necessary that a candidate secure twothirds of the convention vote in order to win the nomination. Due to the growing unpopularity
of the depression-ridden Hoover administration, 1932 looked like a Democratic year, and thus
the Democratic nomination was pursued more aggressively than it had been for years.
New York Democratic chairman James Aloysius Farley traveled across the country in the summer of 1931 and made friends for Roosevelt and himself in each state he visited. He reported
on his return that prospects were excellent for Roosevelt in all of these states except California,
where newspaper publisher William Randolph Hearst had great power and where the Democratic Party was a shambles. Hearst's newspapers, bitter in their attacks on Hoover, gave their
support to Speaker of the House John Nance Garner of Texas, whose isolationist views were
more congenial to Hearst than were the views of a man still identified with former President
Wilson's campaign for the League of Nations. Roosevelt, in an effort to ensure that Hearst
would not lead a fight against him, announced that he no longer favored U.S. entry into the
League of Nations. This position angered many supporters of Wilson, who felt that Roosevelt
had turned his back on Wilson's memory.
A Democratic National Convention
Fortunately for Roosevelt his opponents for the nomination, including the now-embittered Al
Smith, were never able to organize against him and keep him from getting the necessary twothirds vote. The strongest opposition to Roosevelt came from city leaders in the Northeast. His
chief strength came from the South and West. He was nominated on the fourth ballot, after
Garner agreed to accept the vice-presidential nomination. In part to demonstrate his physical
capability and in part to show that he was ready to break with tradition, Roosevelt flew to Chicago, Illinois, to accept the nomination in person rather than wait weeks to reply to a formal
notice of his nomination. In a dramatic speech to the convention, Roosevelt pledged a New
Deal for the American people. The term New Deal came to describe Roosevelt's domestic
policies, under which the government became much more directly involved in national social
and economic affairs than ever before.
B 1932 Presidential Election
Roosevelt had more difficulty in winning the Democratic nomination in 1932 than he had in
defeating President Hoover. In spite of Hoover's unprecedented efforts to use the power of the
federal government to overcome the Great Depression, he was completely identified with the
policies of former U.S. presidents Warren Harding (1921-1923) and of Calvin Coolidge (19231929), since he had served as secretary of commerce in both administrations. Roosevelt's task
was essentially a simple one: to convince the American people that because the Republicans
had claimed full credit for the prosperity of the 1920s, they should receive full blame for the
depression. Roosevelt was spectacularly successful. He had an exuberance as a campaigner, a
glowing confidence, and a warmth that was transmitted to his listeners. He toured widely by
train, making brief appearances to cheering crowds and delivering carefully prepared speeches
nearly every night. He promised to a despondent people a New Deal in manner and in spirit.
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Roosevelt won a resounding victory, losing only six states out of a total of 48. Of the six, four
were in traditionally Republican New England.
V PRESIDENT OF THE UNITED STATES
When Roosevelt became president, on March 4, 1933, the Great Depression was at its worst.
Sixteen million or more people were unemployed, and many had been out of work for a year
or even longer. The American banking system had collapsed. Many states had declared socalled bank holidays, or enforced closings to prevent banks from being ruined when depositors
withdrew all their money. Although the American depression had been touched off by the
stock market crash in New York City in October 1929, it had since become part of a worldwide economic collapse. Whether Americans would be satisfied with the new leadership depended on Roosevelt's success in bringing aid to those in distress and in achieving some measure of economic improvement.
Roosevelt's first inaugural address, with its pledge to make war upon the depression and its
ringing phrase, "we have nothing to fear but fear itself," brought a new style to the U.S. presidency. Roosevelt was confident, both in himself as a leader and in the American people. His
liking for people came through to them over the radio and in the press. Out of his general bewilderment with the failure of the U.S. economy came few specific promises, but Americans
probably felt more comfortable under the leadership of a man pledged to experiment than they
had under Hoover's leadership, which had seemed inflexible. At least the prospect of change
offered hope to the millions of people trapped in the depression.
A Domestic Programs 1933-1941
A1 First Appointments
At this time, Roosevelt was 51. He was vigorous and hard-working but capable of relaxation
and in excellent health and spirits. His brief legislative experience and his public administrative
careers had given him a wide acquaintance among political leaders. He was an irregular Democrat because he had asked for and obtained the support of progressive Republicans in his
campaign and had rewarded several of them with high positions in his government. As president he sought to be "president of all the people." He stressed that the conquest of the depression was "above politics," one of Roosevelt's favorite terms but one not popular with professional Democrats who wanted Roosevelt to give them government jobs. It is noteworthy that
Roosevelt frequently turned for help to people not previously identified with Democratic Party
politics, such as what was called the Brain Trust, which was made up of faculty members from
Columbia University (Raymond Moley, Adolf Berle, and Rexford Tugwell) and from Harvard
(Thomas Corcoran and Benjamin Cohen). Roosevelt liked to learn through listening to and
questioning experts, thus becoming familiar with different points of view. He was not usually
communicative in return, and preferred to make up his mind in private. Indeed, he was "a private person," as Tugwell put it, in spite of his warm public personality. He had a genius for
simple, clear speaking, and he projected a sense of dedication with a rousing style. He was at
his best in press conferences, generally held twice a week. He knew how to handle questions
easily, and had a quick sense of humor and an enormous fund of detailed information. The
reporters usually liked him, and he received good press throughout his presidency, even when
most newspaper publishers had turned against him and his policies.
"Deserving Democrats" also got attention in Roosevelt's administration, thanks particularly to
James A. Farley, both postmaster general and Democratic national chairman. However, much
of the most important work went to men and women who had never engaged in any sort of
politics. Louis Howe, now secretary to the president, continued to help his old chief but did not
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play an important role in creating policy. The Cabinet was generally undistinguished, but it did
contain the first female Cabinet member, Secretary of Labor Frances Perkins.
A2 The Hundred Days
Roosevelt immediately called a special session of Congress to deal with the depression rather
than wait for the regular session in December. The legislation passed by Congress and signed
by Roosevelt in the spring of 1933 was remarkable, both in number of bills passed and in their
scope. Contemporaries called it the Hundred Days, a term that historians continue to use. No
session of Congress had ever produced so much important legislation. Not until 1965 did another president or Congress accomplish as much.
Roosevelt had called the special session to deal with the banking crisis, economy in government, and changes to the liquor law. Congress quickly responded to the first and third. The
Emergency Banking Act, introduced, passed, and signed by the president during a single day,
gave the federal government sweeping power to deal with the banking crisis. The Beer Act
raised the percentage of alcohol considered nonintoxicating from .05 percent to 3.2 percent.
This made it possible to sell three-two, or low alcohol, beer, which had been illegal under the
18th Amendment to the U.S. Constitution (see Prohibition). The Economy Act, reducing government salaries and pensions to meet a Roosevelt campaign pledge, was bitterly opposed by
many Democratic representatives and passed only because of intense pressure from Roosevelt
and support by most Republicans in Congress.
While Congress was acting on these matters, Roosevelt aggressively pushed other legislation.
Bills were frequently written by the executive branch, a procedure that made the legislative
process faster and ensured that measures emerging from Congress would have the approval of
the president. Congress worked quickly on most measures, but there was opposition from some
members, especially those who felt that Roosevelt was not going far enough, fast enough. Roosevelt's success in getting Congress to do so much of what he wanted was in part a result of a
widespread desperation and in part a result of strong leadership.
A3 The New Deal
The basic New Deal legislation was passed in slightly more than five years, from 1933 to 1938.
Historians have frequently discussed these laws under the headings of the three Rs: relief, recovery, and reform.
A3a Relief Legislation
The most pressing problem facing Roosevelt, once the banking crisis had passed, was that of
providing relief for the unemployed and their families. Private charities had long since run out
of money, and few states could still provide any assistance. Under President Hoover the Reconstruction Finance Corporation had made loans to states to finance relief payments, although
Hoover had long tried to avoid this step. However, under Roosevelt's Federal Emergency Relief
Administration (FERA), the first of his major relief operations, large amounts of money were
given to the states. Harry L. Hopkins, a tough-minded professional social worker who had administered state relief under Governor Roosevelt, was the head of FERA. He saw to it that
available funds were spent quickly to provide help to as many as possible.
The president and Hopkins, like President Hoover before them, believed in work relief, or
payment for work performed, rather than the dole, a simple payment without any work requirement. Although they felt that work relief would help to maintain the morale of the recipients, work projects took time to plan and were far more costly to administer than the simple
dole. FERA did have a subdivision, the Civil Works Administration (CWA), which provided
work relief for a large number of men during the winter of 1933 and 1934. However, due to
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the necessity of making the available money go as far as possible, the FERA essentially dispensed money through the state governments.
Unemployment persisted in the early years of Roosevelt's presidency, in spite of some economic recovery. At the end of 1934 about one-sixth of the entire country was still on relief. In
1935 a new semipermanent organization, the Works Progress Administration (WPA, later renamed the Work Projects Administration), was set up by executive order and placed under
Hopkins, and the FERA was abolished. The WPA provided work relief only, and due to lack of
money many people on relief had to depend on the hard-pressed states for a dole.
The WPA projects were better planned than those of the CWA, and many of them were of lasting benefit to their communities. Roads and streets were built or improved. Schools, libraries,
and other public buildings were constructed or repaired. Artists, musicians, and writers performed for the benefit of the public. Administrative costs were higher than those of the FERA,
but the projects carried out were more complex and useful.
Two other relief operations were designed especially for young people. Both were of great interest to the president and his wife. The Civilian Conservation Corps (CCC) provided work for
unemployed and unmarried young men. They received food and shelter and were paid $30 per
month, of which $25 had to be given to relatives or dependents. More than a quarter of a million men, many of them from city slums, worked in the corps, living together in camps under
the management of army officers. They benefited from the healthy outdoor work, their families
benefited from the money, and the country benefited from the many worthy projects they completed. The National Youth Administration (NYA) provided needy high school and college students with part-time jobs at their schools. The NYA also gave useful part-time employment to
needy young people who were no longer in school. NYA workers normally earned from $5 to
$15 per month. Although these sums were small, they proved valuable for the support of the
recipients and their families during this period of great economic distress.
A3b Recovery Legislation
When he took office, Roosevelt must have felt that his basic problem was how to bring about
economic recovery. His predecessor, in spite of his philosophy of rugged individualism, had
reluctantly accepted some government responsibility for improving the economy. The Reconstruction Finance Corporation (RFC), established under Hoover, provided loans to financial
institutions, railways, and public agencies. Roosevelt reappointed the head of that organization,
and with congressional approval, he made RFC loans easier to get and the RFC became a major recovery agency of the New Deal.
Another Hoover policy, direct spending on major public works, was taken over and greatly
expanded by Roosevelt. He set up a Public Works Administration (PWA) and put it under the
jurisdiction of Secretary of the Interior Harold L. Ickes, a Republican reformer from Chicago.
Ickes proceeded slowly with PWA projects, for he had an obsessive and probably well-founded
idea that if he did not watch closely, the PWA would provide politicians with opportunities for
corruption. As a result of this slowness, Ickes's PWA did not play a very important role in the
early New Deal, and an increasingly larger share of money was given to the less tidy but more
energetic relief operations of Ickes's rival, Harry Hopkins. However, the PWA came into its
own after the recession of 1937, when carefully prepared plans were ready to be implemented
almost at once. Huge public buildings, great dams, and irrigation and flood-control projects are
part of PWA's legacy.
The most spectacular agency designed to promote general economic improvement was the
National Recovery Administration (NRA), an organization set up (along with the PWA) by the
National Industrial Recovery Act (NIRA), which was passed by Congress in June 1933. The
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NRA was designed to help business help itself. Unfair competition was supposed to be eliminated through the establishment of codes of fair competition; in effect, laws against combinations of large businesses were to be suspended in exchange for guarantees to workers. These
guarantees specifically included minimum wages, maximum hours, and the right to bargain as
a group.
Unfortunately, the NRA did not work as its supporters had hoped. The administrator, the colorful former army officer Hugh S. Johnson, let the code-making get out of hand. Eventually there
were hundreds of codes for different industrial groups. Johnson's patriotic speeches, with which
he sought to sell the NRA to the American people, began to wear thin after a while. Johnson
resigned in 1934, and the NRA was unanimously declared unconstitutional by the Supreme
Court of the United States in 1935.
A special recovery agency for one major segment of the economy was the Agricultural Adjustment Administration (AAA), set up in the Department of Agriculture and supervised by Secretary Henry A. Wallace, a farm editor, scientist, and son of a former Republican secretary of agriculture. The AAA sought to eliminate overproduction of basic crops and thus to bring prices
back to the average prices of the period from 1909 to 1914, a time of agricultural prosperity.
The AAA had authority to buy surplus crops and to make payments to producers to restrict production. It concentrated at first on cotton, wheat, corn, and hogs, the most important products
of the Midwest and the South. The plans of the AAA to restrict production and to raise prices
were aided by a series of droughts and windstorms on the Great Plains, and farm prices rose
steadily during Roosevelt's first term. The AAA was declared unconstitutional by the Supreme
Court in 1936, but a so-called voluntary system was established by Congress in 1936 for the
same purposes as the AAA. In 1938 the second AAA was created by Congress. This AAA was
more complex and did not rely on a special tax, and it survived.
A3c Reform Legislation
The laws that later generations tended to think of as the New Deal were mainly reform laws.
Franklin Roosevelt had been a reformer, a believer in progress and in government-sponsored
social and economic change, from the time he first took public office in 1911. The reform impulse in America had been frustrated since the 1918 election victories by conservative politicians, who believed that government should not be involved in social reform. Now that impulse was revived in the Great Depression by President Roosevelt, often under pressure from
congressional liberals, who were concerned with the development of personal freedom and
social progress, and from reform movements outside the government. Between 1933 and 1938,
major legislation passed by Congress constituted the most sweeping reform program since the
progressive period of 1901 to 1907. In general, these reforms increased the existing regulatory
activities of the federal government. After Roosevelt's administrations the government was involved in regulating many more areas of economic activity.
Banking and currency were in obvious need of attention, since the banking system had virtually collapsed by March 1933 and the drain of gold had placed a great strain on the dollar.
Banking legislation passed in the first Roosevelt term created insurance for small savings depositors, separated commercial and investment banking, and greatly increased the authority of
the Federal Reserve Board, the government agency that oversees banking activity. In order to
protect the currency, Roosevelt secured authority from Congress to take the United States off
the gold standard and to devalue the dollar. However, once he discovered that devaluing the
dollar did not in itself help to bring about economic recovery, he was unenthusiastic about
tinkering with the currency. Related to these reforms was the establishment of the Securities
and Exchange Commission, an independent agency empowered to regulate the sale of stocks
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and bonds. The first chairman of the commission was Joseph P. Kennedy, an early Roosevelt
supporter who was himself a wealthy speculator.
In the campaign of 1932 Roosevelt had strongly criticized the tariff, or import tax, policies of
the Harding, Coolidge, and Hoover administrations, blaming the decline of world trade on
those Republican presidents. He appointed Senator Cordell Hull of Tennessee as secretary of
state. A fervent free trader, Hull felt that his main duty should be to eliminate trade barriers by
lowering import tariffs. Some of the early New Dealers did not share Hull's enthusiasm. For
more than a year they were able to block his program, while Roosevelt concerned himself with
purely domestic efforts. However, Hull stubbornly persisted in his course, eventually winning
the president's support and the passage of the Reciprocal Trade Agreements Act, one of the
most ingenious of the New Deal measures. This act did not attempt to alter existing import
taxes by law. Hull and others knew very well how difficult it was to achieve tariff reform this
way. Instead, the act authorized the president to negotiate agreements with other nations for a
mutual lowering of import taxes. Such agreements did not have to be ratified by the Senate,
and they could cut existing tariffs by 50 percent. The most-favored-nation clause promised that
the United States would offer the same tariff rates to all countries with which it had signed a
commercial treaty. If the United States lowered tariffs further in a treaty with another nation, it
would have to lower tariffs for all nations with most-favored-nation status. By this method
benefits from these agreements were slowly extended uniformly to all nations with whom such
agreements had been made. Although Hull did not secure free trade, he did significantly lower
tariff barriers. At the same time, he provided a method for taking tariff making out of the hands
of Congress.
The federal government also became involved with housing. In the depths of the depression
many people lost their homes because they were unable to make payments on their housing
loans, called mortgages. Lending institutions then seized these homes but were often unable to
resell them or even rent them. Two of the most popular of the early New Deal agencies were
the Home Owners' Loan Corporation, which helped individuals by refinancing their home
loans so that banks did not seize the homes, and the Federal Housing Administration, which
helped banks by taking most of the risk out of home loans by insuring loans up to 80 percent of
the value of the property. In his second term, President Roosevelt secured the passage of legislation that allowed him to set up the U.S. Housing Authority. This agency helped to rebuild
slums and encouraged low-cost housing construction, of major importance because it was the
first direct involvement of the federal government in building houses.
One of the most sweeping and imaginative New Deal reforms was the Tennessee Valley Authority (TVA), an independent federal corporation set up to improve conditions in a depressed
area of 103,600 sq km (40,000 sq mi) in seven states. Chiefly responsible for this scheme was
Senator George W. Norris of Nebraska, a progressive Republican who had almost singlehandedly blocked the sale of government-owned power sites on the Tennessee River during the
1920s and who was a firm believer in government ownership and operation of public utilities
such as power and water companies. Roosevelt was a widely known advocate of publicly
owned power, which he saw as a yardstick with which to measure the real costs of private
power companies. He was greatly attracted to the TVA because of its possibilities for the conservation of natural and human resources.
The TVA built a series of dams for power production, flood control, and navigation improvement. It distributed its own water-generated, or hydroelectric, power to many who never before
had enjoyed the benefits of electricity. The TVA also produced cheap fertilizers. As a result, the
standard of living of the people in its area steadily improved. The TVA was seen as a direct
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threat to the country's private-power companies, and it was not imitated elsewhere, although
the Roosevelt administration did build dams and power plants in the West.
The most far-reaching of the New Deal reform measures was the Social Security Act of 1935.
During the first two years of Roosevelt's presidency a commission studied the problems caused
by unemployment, old age, and physical disability and sought to determine the part that should
be played by the federal government in alleviating these problems. Unemployment insurance,
financed by a federal payroll tax paid in equal parts by employers and employees, was established as a joint federal-state program. An old-age pension system was set up to be administered by the federal government and financed by taxes on both employers and employees.
Other provisions of the Social Security Act provided federal money to encourage the states to
care for dependent children and the blind. The Social Security Act did not include health insurance because the commission and the president considered that its inclusion would jeopardize the passage of the act (see Social Security).
After the National Industrial Recovery Act was declared unconstitutional, Congress passed the
National Labor Relations Act, which guaranteed to workers the right to organize and bargain
collectively, free from interference by employers. The act set up the National Labor Relations
Board as an independent agency. The board was a major force assisting the rapid growth of
trade unions in the New Deal era. By statute it was required to be in favor of labor, and it
played its role with enthusiasm. The Fair Labor Standards Act of 1938 was the last important
act of the New Deal. This measure set a minimum wage and a limit to the hours worked. It was
moderate in its provisions, gradual in its application, and limited in its scope, but it established
an important precedent.
A4 New Deal Politics
The New Deal programs were closely associated with the personality of President Roosevelt,
about whom the politics of the 1930s revolved. His skill at clarifying problems and in explaining the solutions he and his associates had devised made him almost an intimate friend of the
American people. For almost six years his popularity with the majority of the people grew. In
1934 the already huge Democratic majorities in Congress were increased, a rare thing for a
party in power in non-presidential, or off-year, elections. In 1936 these majorities were raised
even higher. The number of Republicans left in the House was less than 100; only 17 Republicans remained in the Senate, and about half of them supported the New Deal. Not until the offyear election of 1938 did the Republican Party show any signs of renewed vigor.
Roosevelt did have opponents during these years. During his first year in office his most vigorous enemies were on the political left. Leftists felt that he was missing a priceless opportunity to
move toward socialism, or the direct involvement of government in the economy. From 1935
on, however, his principal opposition came from conservatives, especially the reviving business community. These elements had been so stunned by the depression and so grateful at first
to Roosevelt for his efforts to promote recovery within the framework of the capitalist system
that they scarcely opposed him. However, beginning in 1935, the economy began to recover
and the labor movement, encouraged by New Deal legislation, began to be effective. In addition the Supreme Court began to declare New Deal legislation unconstitutional. These developments encouraged conservatives to oppose the administration.
A4a The 1936 Election
In 1936 Roosevelt won his greatest victory when he received more than 60 percent of the
popular vote and won every state except Maine and Vermont. The Republican candidate, Governor Alfred M. Landon of Kansas, was a progressive himself and accepted much of the New
Deal program while deploring how it was being administered. However, Landon was a dull
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campaigner. His advisers pushed him to the right during the campaign, and he ended with very
little support. Careful students of politics saw in the 1936 election a considerable amount of
voting by social or economic class, with workers and those who lived in the cities voting overwhelmingly for the Democratic Party.
A4b Decline in Popularity
Middle-class support for the New Deal began to slip away in 1937 and 1938, and the Democratic Party became more than ever the party of urban labor. Three major events seem to have
contributed to this change. First was a series of sit-down strikes, in which the militant new unions of the Committee for Industrial Organization, later known as the Congress of Industrial
Organizations (CIO), kept their men inside plants during strikes. This technique, used by the
new unions in the automobile industry, violated property rights. Many middle-class Americans
were antagonized by this, as they were by the labor war between the CIO and the more traditional American Federation of Labor (AFL).
The second event was Roosevelt's so-called court-packing plan, a scheme to enlarge the Supreme Court that he suddenly presented to Congress in 1937. Roosevelt argued that the court
was behind in its work, partly due to the advanced age of many members. However, it was
clear that what really irritated him was a series of decisions that had declared much of his program unconstitutional. A group of Democratic senators, including several former New Deal
supporters, deserted the administration on this issue, and the president suffered his first major
defeat in Congress. However, the court reversed the trend of its decisions after the court plan,
and most New Deal legislation was allowed to stand.
The third event was probably the most damaging of all. It was the so-called Roosevelt recession
that began in the fall of 1937 with another stock market crash. The recession lasted until after
the resumption of large-scale government spending the following spring. This recession had
been preceded by more efficiency in government and a balanced budget, courses promoted by
conservative secretary of the treasury, Henry Morgenthau, Jr. The effect of the Roosevelt recession was to convince many people that the administration did not have any magic formula for
prosperity and that the earlier recovery had been based on the government spending more
money than it collected.
A4c The 1940 Election
In the elections of 1938 the Republicans made a comeback in several key industrial states and
substantially increased their congressional representation. It was freely predicted that the Republicans would regain the presidency in 1940. Many felt that Roosevelt would not run for
president again, thanks to the tradition that no candidate ran for more than two terms. However, by the time the Democratic National Convention met in the summer of 1940, a grave
international crisis was at its height, and Roosevelt was given his third nomination for president. Roosevelt defeated the Republican candidate, the lawyer and businessman Wendell L.
Willkie, but he won by a much narrower margin than he had in 1936. Whether Roosevelt
would have been renominated, and whether he would have accepted if nominated, in the absence of the world crisis will never be known. However, it is clear that his experience in foreign affairs had much to do with his winning an unprecedented third term.
B Foreign Policy (1933-1941)
B1 The Stimson Doctrine
Although in 1932, Roosevelt denied that he believed the United States should become a member of the League of Nations, he seems never to have given up the faith in collective security he
had developed under Wilson. He was disappointed in the accomplishments of the league, but
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like many of the league's supporters he blamed many of its troubles on the failure of the United
States to join. After his election in 1932, but before his inauguration, he conferred with Hoover's secretary of state, Henry L. Stimson, and accepted the so-called Stimson Doctrine of refusing to recognize the recent conquest of Manchuria by Japan. Thus, before he had become
president, one of the cardinal principles of Roosevelt's foreign policy, opposition to Japanese
efforts to dominate East Asia, had been established.
B2 Good Neighbor Policy
Another basic Roosevelt foreign policy was the Good Neighbor Policy toward Latin America.
The phrase "good neighbor," used by the president in his first inaugural address, meant in practice that the United States would no longer intervene in Latin America to protect private American property interests. American support for the savage Cuban dictatorship of Gerardo
Machado was withdrawn, and a revolution soon turned him out. The removal of the last U.S.
Marines from Haiti in 1934 ended direct financial control by the United States. Secretary of
State Hull's reciprocal trade program, which resulted in several agreements with Latin American republics, lowered trade barriers on some goods and was thus popular in many Central
and South American nations.
Hull went to the Pan American Conference at Montevideo, Uruguay, in 1933 to give full support to the important principle that "no state has the right to intervene in the internal or external
affairs of another." The administration acted in accordance with this principle when Mexico
seized foreign-owned oil properties. Unlike Great Britain, the United States did not break off
diplomatic relations with Mexico. Eventually the American companies worked out their own
settlement with the Mexican government. The ambassador to Mexico, Josephus Daniels, was
Roosevelt's old chief in the Navy Department. The actions of these two men did more than
anything else to convince most of the Latin American governments that the United States could
be a good neighbor.
B3 Growth of U.S.
Isolationism Toward Europe, President Roosevelt's policies seemed at first to be almost isolationist, in spite of his background. He did agree to go ahead with U.S. participation in the
World Economic Conference, scheduled to take place in London in the summer of 1933.
President Hoover had promised U.S. attendance. However, Roosevelt did not have much faith
in the ability of the conference to agree on measures to stabilize the value of the dollar. Except
for Hull, most of the U.S. delegates were of minor importance. Roosevelt eventually undercut
the conference by saying that he had little interest in currency stabilization and by announcing
that he would work for economic recovery in other ways. He was strongly influenced by advisers, who had no faith in European central bankers and felt that there was nothing to be gained
by tying the U.S. economy to a hazardous international agreement.
Unquestionably, Roosevelt's action was made easy by the prevailing isolationism in the United
States. Some said the distress of these years was because of disillusionment caused by U.S. participation in World War I. Encouraged by congressional investigations and the works of a number of writers and politicians, many Americans felt that the United States should have stayed
out of that conflict. This feeling was so strong that Congress passed a number of neutrality acts,
which among other things forbade private American loans to nations that weren't paying their
debts to the United States. Other acts required the president to place an embargo on the shipment of arms to nations at war, authorized him to keep U.S. citizens from sailing on the ships
of those nations, and forbade the carrying by American ships of guns or ammunition to countries at war. Roosevelt sought but was denied the right to discriminate between aggressors and
their victims. A majority in Congress believed that trading arms with countries that were at war
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was a dangerous activity. Some belligerent country, isolationists argued, would inevitably attack some of the shipments and draw the United States into another European war.
However, the balance of power in Europe was already shifting, and President Roosevelt was
unable to pursue his domestic program without paying some attention to the international
situation. During his first term, Italy, led by the dictator Benito Mussolini, conquered the eastern African empire of Ethiopia, in spite of mild economic punishment imposed on Italy as an
aggressor by the League of Nations. Soon afterward, Germany, headed by the dictator Adolf
Hitler, placed troops and weapons in the Rhineland in violation of the Treaty of Versailles,
which had been signed at the end of World War I. In the summer of 1936, Italy and Germany
gave vital assistance to the military forces leading a revolution against the Spanish republic.
Not only did Britain and France do nothing, but the United States put its own unofficial embargo on the shipment of weapons to Spain, a course legalized by Congress when it convened
in 1937. The U.S. policy toward Spain was isolationism carried as far as it could be carried,
since under international law the government of Spain had the right to carry on trade, and the
rebels were without legal status.
B4 Quarantine of Aggressors
One of the most significant evidences of Roosevelt's growing concern with the precarious state
of world peace came soon after his reelection in 1936. He journeyed by sea to Buenos Aires,
Argentina, to attend a special Inter-American Conference for Peace, where he warned that nonAmerican nations proposing "to commit acts of aggression against us will find a hemisphere
wholly prepared to consult together for our mutual safety and our mutual good." Less than a
year later, following the renewal of Japanese attacks on China, Roosevelt in a dramatic speech
in Chicago proposed that a quarantine be placed on aggressor nations. Chiefly because of the
lack of enthusiasm of Secretary Hull and the British, nothing came directly out of this proposal.
However, it was a significant speech because it displayed Roosevelt's long-held belief in a system of collective security. Soon afterward, the president requested a billion-dollar appropriation for naval expansion, and then almost at once he asked for even more. Congress obliged,
and the defense build-up was under way.
B5 Start of World War II
The amount of money spent on defense grew enormously. The United States under Roosevelt
was quickly preparing for a new war, which seemed close at hand. In March 1938 Germany
annexed Austria and in 1939, it took over the remainder of Czechoslovakia. Large parts of
Czechoslovakia had already been lost when Britain and France agreed to allow Germany to
absorb German-speaking areas of Czechoslovakia under the Munich Pact in 1938. At the end
of August 1939 the Germans concluded a nonaggression pact with the Union of Soviet Socialist Republics (USSR), which ensured that, if Germany went to war with France and Britain on
one front, the Germans would not have to face the USSR on a second front. When the Germans invaded Poland on September 1, 1939, the Poles appealed to France and Britain for help.
There was little that the Western powers could do to prevent the rapid occupation of Poland by
the Germans, and, in the east, by the Soviets, except to declare war on Germany, which they
did on September 3, 1939.
B5a Defense Buildup
Roosevelt at once convened a special session of Congress and asked it to lift the embargo on
the sale of munitions (weapons), a provision that chiefly hurt the Western countries opposed to
Hitler and Germany, known as the Allies. After a sharp debate, Congress complied with the
request. It passed the so-called cash-and-carry act, which permitted Americans to sell munitions to nations able to pay for them in cash and able to carry them away in ships registered
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abroad. Congress did not change any other provision of the neutrality acts, however (see World
War II).
Unlike President Wilson in 1914, Roosevelt made no secret of his partiality for Britain and
France. He loathed Hitler and his National Socialism, or Nazi, Party and considered them a
threat to U.S. security. When the Germans quickly defeated Denmark, Norway, the Netherlands, Belgium, and France in the spring of 1940, Roosevelt came quickly to the aid of the British, now carrying on alone against Germany. Not only did he ask Congress for more defense
money, but he took steps to establish a kind of coalition government. He brought into the two
key military posts in the U.S. Cabinet distinguished Republicans who shared his alarm at the
Nazi threat. Henry L. Stimson became Roosevelt's secretary of war, and Frank Knox, a Chicago
newspaper publisher and Republican candidate for vice president in 1936, was made secretary
of the navy. Roosevelt also appointed leaders of the business community to a defense advisory
commission.
In September 1940 Roosevelt secured the passage of the United States' first peacetime conscription measure, the Selective Training and Service Act (see Selective Service). Under it, men
between 21 and 35 were required to register for a year of military training. Roosevelt was also
impressed with the great danger to the survival of Britain caused by German planes and submarines. Thus, in September he also transferred 50 U.S. destroyers to Britain in exchange for eight
naval bases in the western hemisphere. Fortunately for the success of the destroyers-bases arrangement, the 1940 Republican candidate for president, Wendell Willkie, endorsed it. Isolationists and others who disliked Roosevelt's policy of aid to Britain thus had no major party
alternative in the election.
B5b Lend-Lease
Following his reelection in 1940, President Roosevelt moved ahead with the dual policy of
building up U.S. defenses while giving assistance to those countries resisting the aggression of
Germany, Italy, and Japan. The major legislation was the Lend-Lease Act of March 1941,
passed over the bitter opposition of the isolationists in Congress and their national organization, the America First Committee. The Lend-Lease Act authorized the president to transfer to
victims of aggression such military equipment (a term interpreted to include food and clothing)
as could be produced in the United States and acquired by the government. This act, which
was destined to be extended for the length of World War II, began with an appropriation of $7
billion. It was an emphatic announcement of support for the hard-pressed British. When Germany attacked the USSR in June 1941 and British Prime Minister Winston Churchill welcomed
the Soviets as allies, Roosevelt extended the privileges of lend-lease to the USSR. Thus, the
United States was virtually at war in the spring and summer of 1941, sending aid to Britain and
the USSR and even patrolling the Atlantic Ocean with the U.S. Navy.
C Wartime Leadership (1941-1945)
C1 Pearl Harbor
Roosevelt officially became wartime president after Japan attacked the United States on December 7, 1941. Although he had opposed Japanese expansion in Asia from the time he took
office, Roosevelt was kept from assisting China to any extent by the difficulties of geographical
distance and by American isolationism. When the Japanese attacked China again in 1937
without a declaration of war, terming the hostilities a mere incident, Roosevelt refused to recognize the existence of a state of war and thus avoided the application of the neutrality laws.
Such enforcement would have discriminated against the Chinese, and Roosevelt was as openly
pro-Chinese in Asia as he was openly pro-British in Europe. In 1940 the administration notified
Japan that the existing commercial treaty between the two countries would be ended. The ad184
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ministration increased U.S. aid to China and placed an embargo on the export of iron and steel
scrap, an important part of U.S. trade with Japan. In Japan, militarists took complete control of
the government in 1941 and prepared for a showdown.
The carrier-based airplane attack upon the U.S. naval base at Pearl Harbor, Hawaii, caught the
U.S. garrison by surprise and resulted in the sinking or damaging of a large number of ships.
The Japanese did not succeed in destroying any aircraft carriers, however, and they were unable or unwilling to follow through with an invasion of Hawaii. At the request of Roosevelt,
who called December 7 "a day which will live in infamy," Congress declared war on Japan.
When Germany and Italy came to the assistance of their Japanese allies by declaring war on
the United States, Roosevelt and Congress reciprocated by declaring war on them.
C2 Atlantic Charter
Roosevelt threw himself into the role of wartime leader with determination and enthusiasm. He
was convinced that the security of the United States depended on the defeat of Germany, Italy,
and Japan. He was also certain that the greatest threat came from Germany. Even before Pearl
Harbor he had spoken with Prime Minister Churchill in a naval vessel off Newfoundland, Canada, and had joined in issuing the Atlantic Charter on August 14, 1941. This document denied
any desire for any territorial changes not desired by the peoples concerned. It also stressed the
goals of improved economic conditions, "freedom from fear," and the disarmament of aggressors. This document reflected many of Woodrow Wilson's ideas that had so strongly influenced
Roosevelt, but it is significant that it is much more general than Wilson's Fourteen Points, a
program to establish a basis for lasting peace following World War I; it included a proposal for
the League of Nations. Roosevelt was determined not to repeat what he considered Wilson's
mistakes: the announcement of specific objectives, the refusal to bring Republicans into the
Cabinet, and the failure to involve Republicans in diplomatic negotiations in preparation for
peace.
C3 War Plans
Roosevelt's leadership included a number of activities. He had to decide, in consultation with
Churchill and the Soviets, upon basic military strategy. He had to promote defense production
without creating inflation, and he had to determine the allocation of the goods among the several theaters of war and the various Allied powers. In these activities he had the tireless assistance of his former relief administrator, Harry Hopkins, who became his principal diplomat.
The president also had to oversee the buildup of an enormous army and navy. By the end of
the war more than 15 million people had served in the armed forces of the United States. Finally, Roosevelt had to explain war developments to the American people to maintain their
support, which was essential to victory.
C4 Wartime Conferences
In retrospect 1942 was the year when the tide turned toward the United Nations, the term then
used to signify the United States and its allies in the war. In that year four major events took
place: the defeat of the Japanese navy at the Battle of Midway in the mid-Pacific; the containment of the Japanese southern thrust at Guadalcanal, in the Solomon Islands; the successful
Allied invasion of French North Africa; and the Battle of Stalingrad, the beginning of the end for
the Germans in the USSR (see Volgograd). In January 1943 Roosevelt and Churchill met at
Casablanca, Morocco, to make further plans and to confer with French leaders. At Casablanca
Roosevelt announced the policy of insisting upon unconditional surrender by the enemy. In
November 1943 the president met with Churchill and the Chinese leader, Chiang Kai-shek, at
Cairo, Egypt. There a number of plans for the war against Japan were worked out.
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Roosevelt also conferred twice with Soviet leader Joseph Stalin. Following the Cairo conference, he and Churchill journeyed to Tehrân, Iran, to meet Stalin. The Chinese were not invited,
since the USSR was not at war with Japan. At Tehrân the leaders agreed upon an invasion of
France by U.S. and British forces in the spring of 1944, to take some of the pressure off the Soviets. Finally, the Big Three, as they were called, conferred again in February 1945 at Yalta, in
Crimea. The Yalta Conference, occurring as the European war seemed about to end, resulted in
several agreements, including: the nature of the postwar international organization (later called
the United Nations); the military occupation and free elections in eastern Europe; the postwar
division and occupation of Germany; and the entry of the USSR into the war against Japan following the end of the European war (see Cold War).
D Death
Roosevelt did not live to see the end of World War II. During the war years he had not appeared often in public, but during his campaign for a fourth term in 1944 many who saw him
said that he looked pale, thin, and old. The election, which resulted in his victory over New
York Governor Thomas E. Dewey, was a strain on the president, as was the long trip to Yalta.
In the early spring of 1945 he went to Warm Springs, Georgia, in an effort to recapture his flagging energy. There he died of a massive cerebral hemorrhage on April 12, 1945. Harry Truman
took the oath of office to become president the same day.
In spite of rumors about Roosevelt's poor health, the nation was terribly shocked by the death
of the man who had been president of the United States longer than any other. Franklin Delano
Roosevelt died knowing that his plans for victory were coming to a successful conclusion, but
he was aware that the Soviet Union was already breaking the agreements about free elections
in eastern Europe. He was laid to rest in the rose garden in the family estate at Hyde Park.
"Roosevelt, Franklin Delano," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Franklin D. Roosevelt's Second Inaugural Address
United States President Franklin Delano Roosevelt delivered his second inaugural address on
January 20, 1937, to Americans still suffering under the economic collapse known as the Great
Depression. Public support for Roosevelt's domestic reform policies, collectively known as the
New Deal, helped Roosevelt secure the electoral majority in all but two states in the 1936 elections. In his address, Roosevelt recognizes the progress made in counteracting the economic
effects of the Great Depression and urges the nation to continue believing in the New Deal. He
sees a country that has "come far from the days of stagnation and despair" but reminds Americans that one-third of the nation remains "ill-housed, ill-clad, ill-nourished."
When four years ago we met to inaugurate a President, the Republic, single-minded in anxiety,
stood in spirit here. We dedicated ourselves to the fulfillment of a vision-to speed the time
when there would be for all the people that security and peace essential to the pursuit of happiness. We of the Republic pledged ourselves to drive from the temple of our ancient faith
those who had profaned it; to end by action, tireless and unafraid, the stagnation and despair of
that day. We did those first things first.
Our covenant with ourselves did not stop there. Instinctively we recognized a deeper need-the
need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization. Repeated attempts at their solution
without the aid of government had left us baffled and bewildered. For, without that aid, we had
been unable to create those moral controls over the services of science which are necessary to
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make science a useful servant instead of a ruthless master of mankind. To do this we knew that
we must find practical controls over blind economic forces and blindly selfish men.…
This year marks the one hundred and fiftieth anniversary of the Constitutional Convention
which made us a nation. At that Convention our forefathers found the way out of the chaos
which followed the Revolutionary War; they created a strong government with powers of
united action sufficient then and now to solve problems utterly beyond individual or local solution. A century and a half ago they established the Federal Government in order to promote the
general welfare and secure the blessings of liberty to the American people.
Today we invoke those same powers of government to achieve the same objectives.
Four years of new experience have not belied our historic instinct. They hold out the clear
hope that government within communities, government within the separate States, and government of the United States can do the things the times require, without yielding its democracy. Our tasks in the last four years did not force democracy to take a holiday.
Nearly all of us recognize that as intricacies of human relationships increase, so power to govern them also must increase-power to stop evil; power to do good.…
In fact, in these last four years, we have made the exercise of all power more democratic; for
we have begun to bring private autocratic powers into their proper subordination to the public's government. The legend that they were invincible-above and beyond the processes of a
democracy-has been shattered. They have been challenged and beaten.
Our progress out of the depression is obvious. But that is not all that you and I mean by the
new order of things. Our pledge was not merely to do a patchwork job with secondhand materials. By using the new materials of social justice we have undertaken to erect on the old foundations a more enduring structure for the better use of future generations.
In that purpose we have been helped by achievements of mind and spirit. Old truths have been
relearned; untruths have been unlearned. We have always known that heedless self-interest
was bad morals; we know now that it is bad economics. Out of the collapse of a prosperity
whose builders boasted their practicality has come the conviction that in the long run economic morality pays.…
This new understanding undermines the old admiration of worldly success as such. We are
beginning to abandon our tolerance of the abuse of power by those who betray for profit the
elementary decencies of life.
In this process evil things formerly accepted will not be so easily condoned. Hardheadedness
will not so easily excuse hardheartedness. We are moving toward an era of good feeling. But
we realize that there can be no era of good feeling save among men of good will.
For these reasons I am justified in believing that the greatest change we have witnessed has
been the change in the moral climate of America.
Among men of good will, science and democracy together offer an ever-richer life and everlarger satisfaction to the individual. With this change in our moral climate and our rediscovered ability to improve our economic order, we have set our feet upon the road of enduring
progress.
Shall we pause now and turn our back upon the road that lies ahead? Shall we call this the
promised land? Or, shall we continue on our way? For "each age is a dream that is dying, or
one that is coming to birth.…"
True, we have come far from the days of stagnation and despair. Vitality has been preserved.
Courage and confidence have been restored. Mental and moral horizons have been extended.
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But our present gains were won under the pressure of more than ordinary circumstances. Advance became imperative under the goad of fear and suffering. The times were on the side of
progress.
To hold to progress today, however, is more difficult. Dulled conscience, irresponsibility, and
ruthless self-interest already reappear. Such symptoms of prosperity may become portents of
disaster! Prosperity already tests the persistence of our progressive purpose.
Let us ask again: Have we reached the goal of our vision of that fourth day of March 1933?
Have we found our happy valley?
…I see a United States which can demonstrate that, under democratic methods of government,
national wealth can be translated into a spreading volume of human comforts hitherto unknown, and the lowest standard of living can be raised far above the level of mere subsistence.
But here is the challenge to our democracy: In this nation I see tens of millions of its citizens-a
substantial part of its whole population-who at this very moment are denied the greater part of
what the very lowest standards of today call the necessities of life.
I see millions of families trying to live on incomes so meager that the pall of family disaster
hangs over them day by day.
I see millions whose daily lives in city and on farm continue under conditions labeled indecent
by a so-called polite society half a century ago.
I see millions denied education, recreation, and the opportunity to better their lot and the lot of
their children.
I see millions lacking the means to buy the products of farm and factory and by their poverty
denying work and productiveness to many other millions.
I see one-third of a nation ill-housed, ill-clad, ill-nourished.
It is not in despair that I paint you that picture. I paint it for you in hope.…The test of our progress is not whether we add more to the abundance of those who have much; it is whether we
provide enough for those who have too little.
If I know aught of the spirit and purpose of our Nation, we will not listen to Comfort, Opportunism, and Timidity. We will carry on.
Overwhelmingly, we of the Republic are men and women of good will; men and women who
have more than warm hearts of dedication; men and women who have cool heads and willing
hands of practical purpose as well. They will insist that every agency of popular government
use effective instruments to carry out their will.…
If I know aught of the will of our people, they will demand that these conditions of effective
government shall be created and maintained. They will demand a nation uncorrupted by cancers of injustice and, therefore, strong among the nations in its example of the will to peace.
Today we reconsecrate our country to long-cherished ideals in a suddenly changed civilization. In every land there are always at work forces that drive men apart and forces that draw
men together. In our personal ambitions we are individualists. But in our seeking for economic
and political progress as a nation, we all go up, or else we all go down, as one people.
To maintain a democracy of effort requires a vast amount of patience in dealing with differing
methods, a vast amount of humility. But out of the confusion of many voices rises an understanding of dominant public need. Then political leadership can voice common ideals, and aid
in their realization.
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In taking again the oath of office as President of the United States, I assume the solemn obligation of leading the American people forward along the road over which they have chosen to
advance.
While this duty rests upon me I shall do my utmost to speak their purpose and to do their will,
seeking Divine guidance to help us each and every one to give light to them that sit in darkness
and to guide our feet into the way of peace.
"Franklin Roosevelt's Second Inaugural Address," Microsoft® Encarta® Encyclopedia 2000. ©
1993-1999 Microsoft Corporation. All rights reserved.
Wages
I INTRODUCTION
In economic theory, price paid for labor. Wages consist of all payments that compensate individuals for time and effort spent in the production of economic goods and services. The payments include not only wages in the ordinary, narrow sense-the earnings, computed generally
on an hourly, daily, weekly, or output basis, of manual and clerical workers-but also weekly,
monthly, or annual salaries of professional and supervisory personnel; bonuses added to regular earnings; premiums for night or holiday work or for work exceeding stated norms of quantity and quality; fees and retainers for professional services; and that part of the income of business owners that compensates them for time devoted to business.
In the U.S. since the 1970s, the share of national income going to wages has been approximately three-fourths of the total, an increase from the 1939-65 level of about two-thirds.
Wages may be reckoned at time rates, piece rates, or incentive rates. Wage earners on time
rates may be docked for days, hours, or even minutes of absence or idleness, but salaried
workers usually received fixed sums for each pay period, whether or not they are continuously
on the job. Workers on piece rates are remunerated uniformly for each unit output. Those receiving incentive wages are paid according to formulas relating output to earnings in ways designed to induce higher production.
A high rate of pay does not ensure large annual earnings. Construction workers are paid relatively high hourly rates, but their annual income often is low because of the irregularity of their
employment. In addition, nominal wages do not reflect real earnings accurately. During a period of inflation the real value of wages may fall although nominal wages rise, because the cost
of living rises more rapidly than monetary earnings. Deductions from wages for income taxes,
social security taxes, pension payments, union dues, insurance premiums, and other charges
further reduce the worker's take-home pay.
II DETERMINING INFLUENCES
The influences determining wage levels in particular countries at particular times are as follows-Cost of living: Even in poor societies, wages are usually at least sufficient to pay the cost
of sustaining workers and their children; otherwise, the working population will not reproduce
itself and will decline. Standards of living: Prevailing living standards influence conceptions of
what constitutes a so-called living wage, thus helping to determine wage levels. Improvements
in general living conditions generate moral pressures for giving laborers a share of the better
life. In the presence of such pressures employers are more inclined to grant wage increases and
legislators are constrained to approve minimum-wage and other laws designed to ameliorate
the worker's lot (see Minimum Wage). This effect is not large. The relative supply of labor:
Where labor is scarce relative to capital, land, and other resources, as in the United States in
the 19th century, employers' competitive bidding for labor tends to raise the general wage
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level. Where, as in present-day India, the ratio of labor to other resources is high and where
accordingly the supply of labor greatly exceeds demand, competition among laborers for the
relatively few available jobs tends to depress the wage level. Productivity: Wages tend to rise
with productivity. Productivity depends partly on the energy and skill of the labor force and
even more on the level of technology employed. U.S. wage levels are high largely because
American workers apply skills of a high order to the operation of an abundance of the most
advanced industrial equipment. Bargaining power: The organization of labor in trade unions
and in political associations enhances its relative bargaining power and thus tends to win for
organized labor, especially in time of deflation, a larger share of the national income (see Inflation and Deflation).
III GENERAL WAGE LEVEL
The general wage level is an average of widely differing individual pay rates and earnings. The
various elements contributing to wage differentiation are as follows-Relative value of product:
An industrious and skilled worker who produces a more valuable output than workers of lesser
capabilities is worth more to an employer and usually is paid more. Costs of required capabilities: Employers must pay the price of special training if they are to fulfill their need for workers
so trained. If engineers did not receive more compensation than laborers, relatively few persons
would invest the time, money, and effort required to become engineers. Relative scarcity of
specific kinds of labor: Common labor is paid poorly because it is common, but entertainers,
such as movie stars and television performers, who have qualities regarded as unique enjoy
very large incomes. Comparative attractiveness of occupations: Difficult, disagreeable, or dangerous jobs usually bring higher rates of pay than do more inviting jobs requiring comparable
skills. Thus, a truck driver engaged in moving explosives earns more than one delivering groceries. Mobility of labor: Where the working population is immobile, wage differentials are
wide. On the other hand, the readiness of workers to change jobs or to move long distances to
better-paying positions tends to narrow wage differentials among firms, occupations, and
communities. Comparative bargaining strength: A union may lift the wages of its members
above the scales paid to unorganized workers of equal skill. Custom and legislation: Many
wage differentials are rooted in custom or legislation. For example, both custom and legislation
are responsible for the fact that black miners in South Africa have long earned only a fraction of
the wages paid white miners doing equivalent work. On the other hand, governments and unions frequently act to eliminate wage differentials based on race, sex, and other irrelevancies
and to standardize wages generally.
IV THEORIES OF WAGES
Most wage theories reflect overemphasis on one or another of the elements determining wages.
The first noteworthy wage theory, the just-wage doctrine of the Italian philosopher St. Thomas
Aquinas, emphasized moral considerations and the role of custom. A just wage is defined as
that which enables the recipient to live in a manner suited to the person's social position.
Aquinas's theory is a view of what wages should be rather than an explanation of what they
actually are.
The first modern explanation of wages, the so-called subsistence theory, emphasized the consumption needed to sustain life and maintain the working population as the chief determinant
of wage levels. The theory was adumbrated by mercantilist economists, elaborated by the Scottish economist Adam Smith, and developed fully by the British economist David Ricardo. Ricardo argued that wages are determined by the cost of barely sustaining laborers and their replacements and that wages cannot long depart from the subsistence level. If earnings should
fall below that level, he contended, the labor force would not reproduce itself; if earnings
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should rise above it, more working-class children than the number needed to replenish the labor force would survive and wages again would be forced down to subsistence levels by the
competition of laborers for the available jobs.
The assumptions of the subsistence theory were invalidated by the facts of subsequent economic history. In advanced countries, the output of food and other consumer goods increased
more rapidly than population during the later 19th and 20th centuries, and wages accordingly
rose well above subsistence levels.
The wage theory of Karl Marx is a variant of Ricardo's wage theory. He argued that under capitalism labor seldom receives more than bare subsistence. According to Marx, the surplus remaining is appropriated by the capitalists as their profits. Like Ricardo's theory, Marx's view
was nullified by later economic experience.
After the decline of the subsistence theory, attention shifted to demand for labor as a wage determinant. The British economist John Stuart Mill, among others, propounded the so-called
wages-fund theory to explain how the demand for labor, as expressed in the money employers
have available to pay for labor, influences wages. The theory rests on the assumption that all
wages are paid out of past accumulations of capital and that the average wage rate is determined by dividing the share set aside for wages by the number of employed workers. Wage
increases for some workers could mean reductions for others. Only by augmenting the wages
fund or by reducing the number of laborers could the wage level be raised.
The wages-fund theorists were mistaken in assuming that wages are paid out of past capital
accumulations. Wages actually are paid mainly out of current production. Wage increases, by
strengthening buying power, may stimulate production and generate more wage-paying potential, especially if unemployed resources exist.
The wages-fund theory was succeeded by the marginal-productivity theory, concerned mainly
with the influence exerted by the demand and supply of labor. Proponents of the theory, which
was developed largely by the American economist John Bates Clark, maintained that wages
tend to be set at the point at which employers find it profitable to engage the last job-seeking
worker, who is called the marginal worker. Because, by the principle of diminishing returns,
the value of each additional worker's contribution to production is supposed to diminish,
growth of the labor force depresses wages. If wages should rise above the level assuring full
employment, part of the labor force would become unemployed; if wages should fall below
that level, competitive bidding by employers for the additional workers would push wages up
again.
The marginal-productivity theory is defective in assuming perfect competition and in ignoring
the effect of wage increases on productivity and buying power. As the British economist John
Maynard Keynes, a vigorous critic of the theory, demonstrated, wage increases may bolster an
economy's propensity to consume rather than to save; expanded consumption creates new
demands for labor, in spite of the higher wages that must be paid, if higher incomes can arise
out of decreased unemployment.
Most economists recognized, with Keynes, that higher wages need not cause reduced employment. A more serious danger that can result from wage increases is inflation, for employers are
inclined to raise prices to compensate for large wage outlays. This danger can be averted only
if wages are not allowed to outrun productivity. Because labor's share of the national income
has been virtually constant and is likely to remain so, real wages can rise mainly to the degree
that productivity rises.
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V HISTORY OF WAGES
Few records exist of the wage scales that prevailed before the 19th century. The little evidence
available indicates that the vast majority of workers seldom earned more than bare subsistence
pay. Both prices and wages began to rise in the 15th century, but wages frequently failed to rise
to as high a level as prices. About 1850 the tide turned in favor of labor, at least in western
Europe and in the U.S. Despite temporary setbacks, real wages of workers in all advanced
countries generally rose after 1850, mainly as a result of the increasing productivity that came
from the application of scientific knowledge to processes of production.
In the U.S. the enormous growth of productivity led to a general rise in real wages, although
the rise was not steady. From the last quarter of the 18th century to about 1820 wage increases
nearly kept pace with price rises, so that real wages remained fairly constant. Real wages doubled in value between 1820 and 1890, remained static from 1890 to 1914, and began to advance rapidly after 1914. Real weekly earnings increased by about 150 percent between 1914
and 1954; 8.1 percent between 1955 and 1964; and about 2.4 percent between 1965 and
1984. Real weekly earnings dropped 5.5 percent between 1985 and 1991.
Developments after World War II enhanced the average worker's economic position, sometimes in ways not discernible in the pay envelope. The 1955 amendment of the Fair Labor
Standards Act of 1938 raised the minimum wage to $1.00 per hour. Further adjustments raised
this to $4.25 by 1991. Provisions in many collective-bargaining agreements correlated wage
rates to the cost of living, thus assuring that real wages would not lag behind nominal wages.
Under a union-sponsored guaranteed-annual-wage plan, the automobile industry in 1956
agreed to pay wages to the workers covered during periods of unemployment. Employers increasingly adopted the practice of paying for holidays, vacation time, sick leave, coffee breaks,
and other periods during which no work is performed. Most collective-bargaining agreements
provide for numerous so-called fringe benefits, including provision that employers bear the cost
of establishing union pension funds and of insuring the workers against various contingencies.
Many employers have added extra benefits to regular compensation, including free meals, subsidized medical treatments, subsidized education and training, shares of profit, and options to
buy company stock at bargain prices. Wage supplements rose from 0.8 percent to more than
12 percent of national income from 1929 to 1985. Since the mid-1980s, however, some financially troubled industries, such as the airlines, have demanded givebacks in benefits and even
in wages when renegotiating union contracts with their employees.
For additional information on individuals mentioned, see biographies of those whose names
are not followed by dates.
Contributed By: Kenneth E. Boulding
"Wages," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All
rights reserved.
Stock Exchange
I INTRODUCTION
Organized market for buying and selling financial instruments, including stocks, options, and
futures. Most stock exchanges have specific locations where commissioned, or paid, intermediaries called brokers conduct trading-that is, buying and selling. Stocks are not always traded
on a stock exchange. Some are traded over the counter, without a specific central trading location.
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Major stock exchanges in the United States include the New York Stock Exchange (NYSE) and
the American Stock Exchange (AMEX), both in New York City. Nine smaller regional stock exchanges also operate in Boston, Massachusetts; Cincinnati, Ohio; Chicago, Illinois; Los Angeles, California; Miami, Florida; Philadelphia, Pennsylvania; Salt Lake City, Utah; San Francisco,
California; and Spokane, Washington. In addition, most of the world's industrialized nations
have stock exchanges. Among the larger international exchanges are those in London, England;
Paris, France; Milan, Italy; Hong Kong, China; and Tokyo, Japan.
II THE IMPORTANCE OF STOCK EXCHANGES
Stock exchanges serve important roles in national economies. They encourage investment by
providing places for buyers and sellers to trade securities, stocks, bonds, and other financial
instruments. Companies issue stocks and bonds to obtain capital to expand their business.
Corporations issue new securities in the primary market (as opposed to the secondary market,
where securities are bought and sold), usually with the help of investment bankers (see Investment Banking). In the primary market, corporations receive the proceeds of stock sales. Thereafter, they are not involved in the trading of stocks. Owners of stocks trade them on a stock
exchange in the secondary market.
In the secondary market, investors, not companies, earn the profits or bear the losses resulting
from their trades. Stock exchanges encourage investment by providing this secondary market.
By allowing investors to sell securities, exchanges increase the safety of investing.
Stock exchanges also encourage investment in other ways. They protect investors by upholding
rules and regulations that ensure buyers will be treated fairly and receive exactly what they pay
for. Exchanges also support state-of-the-art technology and the business of brokering, which
both help traders to buy and sell securities quickly and efficiently.
III STOCK TRADING
Stocks are shares of ownership in companies. People who buy a company's stock are entitled
to dividends, or shares of any profits. A company can list its stock on only one major stock exchange, though options on its stock may be traded on another. Each exchange establishes requirements that a company must meet to have its stock listed. The different exchanges tend to
attract different kinds of companies. Smaller exchanges typically trade the stock of small,
emerging businesses, such as high-tech companies. In the United States, the AMEX lists smallto medium-sized businesses, including many oil and gas companies. The NYSE primarily lists
large, established companies.
Stock brokers must be registered with the exchange in which they trade. Most brokers belong
to brokerage firms. Brokerage firms maintain staffs of many brokers, each of whom has experience in the trading of securities of certain companies or those of particular economic sectors,
high tech, utilities, or transportation businesses, for instance. Brokerage firms also tend to trade
in the stocks of specific companies, and therefore keep inventories of the stocks of those companies. To become a member of an exchange, a firm must register its brokers by buying seats
for them. A seat is simply a right to trade on an exchange. Member firms have the right to vote
on exchange policy and must also arbitrate in disputes among customers. In larger exchanges,
seats may sell for several hundreds of thousands of dollars. Exchanges attract larger or smaller
brokerage firms depending on how high or low their fees are.
Brokerage firms that pay high membership fees to exchanges like the NYSE have the opportunity to make large profits trading in the stock of very successful businesses. They also risk losing
large amounts, and therefore charge their clients higher prices than do smaller firms. In part,
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large companies use large brokerage firms and list on large exchanges because of the potential
losses possible to those trading their securities.
A Stock Specialists and the Exchange Floor
At a stock exchange, certain brokers specialize in trading certain stocks. These specialists operate on the floor of the exchange, the area where all trading takes place. The floor of the NYSE,
for example, is an enormous room that measures about 30 by 56 by 24 m high (about 100 by
183 by 79 ft high). Brokers pack the floor during trading. They often use bargaining and negotiation to execute larger trades, and they take bids for the highest prices. The process is noisy
and frantic, and brokers use hand signals to communicate above the chaos. In U.S. exchanges,
only trades over 1200 shares are negotiated on the floor. In smaller trades, orders commonly go
to specialist brokers directly via computer.
Specialists sometimes act as dealers-instead of as intermediaries, or brokers-trading directly in
the stocks of their firms' accounts. For this reason, they are also known as broker-dealers. They
do this when market trends favor the trading of certain stocks and investors have not ordered
enough trades to clear the market, or balance supply and demand. Floor tradersalways trade
only in stocks owned by their brokerage firms and never act as intermediaries.
B Floor Brokers
Other brokers, called floor brokers(not the same as floor traders), do not act as specialists. They
instead handle large orders to buy or sell stocks of specific companies. Clients place such orders with brokerage firms, who then contact their floor brokers. After receiving orders, floor
brokers take them to specialists to arrange the trades. Floor and specialist brokers negotiate
trades as representatives of clients and companies. In smaller trades, orders commonly go directly to specialist brokers via computer.
C Institutional Brokers
Institutional brokers specialize in bulk purchases of securities, including bonds, for institutional
investors. Institutional brokers generally charge their clients a lower fee per unit than do brokers who trade for individual investors.
D Example of a Large Trade
In an example of a large trade, an investor wanting to buy 2000 shares-also known as 20 round
lots,of 100 shares each-of IBM stock will telephone the order to a brokerage firm. The investor
might request to buy the shares at the market, or current price. On the other hand, the investor
may choose to not pay more than a given amount per share. The firm then contacts one of its
floor brokers on the New York Stock Exchange (NYSE), the exchange on which IBM stock is
traded. The floor broker will communicate the order to a specialist dealing in IBM stock. The
specialist will actually execute the trade and inform the floor broker of the final price. For this
service, the investor will pay the original broker a commission, which is a percentage of the
purchase price.
The price of stocks depends on the market forces of supply and demand. Because companies
only issue limited numbers of shares, sellers can demand higher prices if there are more buyers
of a given stock than there are sellers. Conversely, lack of demand for a stock will result in its
trading for a lower price.
IV TRADING IN OTHER SECURITIES
Exchanges trade in all forms of securities. While the general operations of exchanges apply to
all securities trading, there are some differences. In particular, trades in nonstock securities are
often managed by financial intermediaries other than brokers.
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A Bonds
Bonds provide a way for companies to borrow money. People who invest in bonds are lending
money to a company in return for yearly interest payments. Bonds are traded separately from
stocks on exchanges. Most bonds are bought in large quantities by institutional investors-large
investors such as banks, pension funds, or mutual funds.
B Options
Options are traded on many U.S. stock exchanges, as well as over the counter. Options writers
offer investors the rights to buy or sell-at fixed prices and over fixed time periods-specified
numbers of shares or amounts of financial or real assets. Writers give call options to people
who want options to buy. A call option is the right to buy shares or amounts at a fixed price,
within a fixed time span. Conversely, writers give put options to people who want options to
sell. A put option is the right to sell shares or amounts at a fixed price, within a fixed time span.
Buyers may or may not opt to buy, or sellers to sell, and they may profit or lose on their transactions, depending on how the market moves. In any case, options traders must pay premiums
to writers for making contracts. Traders must also pay commissions to brokers for buying and
selling stocks on exchanges. Options trading is also handled by options clearing corporations,
which are owned by exchanges. Option (finance).
C Futures
Futures contracts are also traded on certain U.S. exchanges, most of which deal in commodities such as foods or textiles. Futures trading works somewhat like options trading, but buyers
and sellers instead agree to sales or purchases at fixed prices on fixed dates. After contracts are
made, the choice to buy or sell is not optional. Futures contracts are then traded on the exchanges. Commodities brokers handle this trading.
Futures and options traders often judge markets trends by monitoring compiled indexes and
averages of stocks, usually organized by industry or market ranking. Among the most closely
watched U.S. indexes are the Dow Jones averages and Standard & Poor's. Futures.
V THE OVER-THE-COUNTER MARKET
Thousands of companies do not list their stock on any exchange. These stocks make up the
over-the-counter (OTC) market. The largest of these companies are traded on the NASDAQ
stock market. NASDAQ stands for National Association of Securities Dealers Automated Quotation system. The member countries of the European Union (EU) have an equivalent market,
called EASDAQ. NASDAQ is a shareholder in and provides operational advice to EASDAQ.
NASDAQ and EASDAQ operate like exchanges, but instead of having central locations, their
specialists are located at computer terminals all over the United States and Europe. Trades are
carried out primarily online through computer networks. Companies that list their stock on
NASDAQ and EASDAQ are generally smaller than those listed on centralized exchanges.
However, some large high-tech corporations also trade in this market.
VI INTERNATIONAL EXCHANGES
Exchanges proliferated first in parts of Western Europe and then in other parts of the world.
Some of the older exchanges, dating back as far as the 1100s, are the Paris Bourse in France;
the Amsterdam Bourse in the Netherlands; the Deutsche Stock Exchange (formerly the Börse) in
Frankfurt, Germany; the London Stock Exchange (LSE) in England; and the Borsa in Milan, Italy.
Other European exchanges opened in the 1600s and 1700s, including those in Belgium, Spain,
Portugal, and Sweden. Because stocks were uncommon before the 1800s, all of these early
exchanges first traded in commodities and currencies. In 1785 Amsterdam's Bourse was the
first to formally begin trading in securities. By the mid-1800s, many countries outside of Europe
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traded in securities, including Canada and Australia. During the 19th and 20th centuries, major
exchanges opened in Asia, Eastern Europe, and parts of Africa and Latin America.
Most of the world's major exchanges have become highly efficient, computerized organizations. Each has a charter for regulating operations and some are integrated within regional economic unions. For instance, the EU, comprised of several Western European countries, was
instrumental in organizing the EASDAQ and drafted its charter. In addition, exchanges now
trade securities from companies around the world. Computerization has enabled brokers to
instantaneously monitor activities on foreign exchanges. Many exchanges also list indexes and
averages-such as the Nikkei 225 Stock Average of the Tokyo Stock Exchange (TSE) and the Financial Times Stock Exchange 100 of the LSE-that are closely followed by options and futures
investors. In terms of the market value of all stocks traded by a given stock exchange, the TSE is
the world's largest. The NYSE, by far the most valuable U.S. exchange in all types of securities,
ranks as the world's second largest.
VII HISTORY OF U.S. STOCK EXCHANGES
In the 1700s groups of brokers in Philadelphia and New York City began to meet in parks and
coffeehouses to buy and sell securities. In open auctions, traders called out names of companies and numbers of shares available. Shares went to the highest bidders. After the American
Revolution (1775-1783) the number of securities traded increased dramatically. Brokers decided to organize in order to handle the growing volume. In 1800 the Philadelphia Board of
Brokers drew up regulations and a constitution and set up central offices where trading could
take place. The organization they created, The Philadelphia Stock Exchange, is the oldest exchange in the United States. In 1817 brokers in New York formed the New York Stock and Exchange Board (renamed the New York Stock Exchange in 1863).
As the United States grew and prospered during the 19th century, many more companies began to issue stocks and bonds. More people began to invest, and dozens of exchanges were
formed across the country. Some of these are still in existence, but many others were shortlived. For example, the California gold rush of 1849 gave birth to a number of small exchanges
where the public could buy shares in the new mining companies. As the gold rush subsided,
these companies went out of business and the exchanges closed.
During the second half of the 19th century, New York City emerged as the primary financial
center of the United States. The New York Stock Exchange became the most successful exchange. Its members concentrated on trading the securities of the largest corporations. At that
time, stocks of smaller companies were traded by brokers on the streets of downtown New
York. In 1908 these brokers formed an organization called the New York Curb Agency, which
became known as the American Stock Exchange in 1953.
A The Crash of 1929
During the 1920s millions of Americans began to purchase stocks for the first time. Many new
investors entered the stock market with borrowed money. Stock prices rose steadily as inflated
market demand outpaced increases in the capital value of businesses. Investors eventually realized that a large imbalance existed between stock prices and the amounts of money available
to back them up, and decided to sell. On October 29, 1929, great numbers of people tried to
sell their stocks all at once. Prices tumbled so drastically on the NYSE and other exchanges that
the event became known as the crash of 1929. Millions of investors lost their savings in the
crash and many found themselves deeply in debt because they could not repay the money they
had borrowed to buy the stocks.
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During the years following the crash, most investors refused to put any more money in stocks.
Without the flow of new capital, many businesses failed and others laid off many workers because they could not afford to pay them. The lack of investment capital was one of the causes
of the Great Depression of the 1930s, an economic crisis that left millions out of work and resulted in widespread poverty.
B Regulation of Exchanges
Investors lost faith in the stock markets partly because of unfair practices and a lack of strict
rules in the exchanges before and during the 1920s. Large investors were able to cheat small
investors because no laws existed to forbid these practices. To remedy this, the federal government passed the Securities Act of 1933, which regulated new securities issues, and the Securities Exchange Act of 1934, which created the Securities and Exchange Commission (SEC).
The SEC regulated stock exchanges and required companies to disclose information that could
help potential investors evaluate its stock. The exchanges also adopted stricter rules after the
crash to protect investors and prevent another crash. In 1938 the Maloney Amendment set up
the National Association of Security Dealers to regulate the over-the-counter market. From the
end of World War II in 1945 through the 1960s, new regulations, combined with a generally
strong economy, encouraged investors to return to the stock markets.
In 1945 the U.S. Federal Reserve Board established that all borrowing to purchase securities
should be covered by a margin, or percentage of the actual market price. Investors pay margin
to brokers, either in cash or by using other securities as collateral. This margin protects brokers
from excessive losses. Before the Great Depression, investors had often borrowed heavily to
make trades. These trades had very low margin requirements. During the period directly preceding the Great Depression, investors rushed to sell stocks for which they had paid only a
very small fraction of the market value. In the rush, brokers tried to recover the money investors
owed them. However, with low margin requirements, most investors had been trading in stocks
with total values well beyond their personal means. Brokers, therefore, lost large sums of
money on their loans.
Between 1945 and the 1980s investors were required to make initial margin deposits ranging
from 50 to 100 percent of market value of the securities in which they wished to trade. The
National Association of Securities Dealers and the NYSE subsequently established their own
minimum margin maintenance requirements. For the NYSE, the requirement is that investors
must keep 25 percent or more of the market value of the securities in which they are trading in
a margin account. Also, for certain stocks-especially those that trade heavily, often, and for
widely varying amounts-the exchange may increase margin requirements. Investors must keep
their margin accounts current, meeting the requirements, or else brokers may sell off their securities. Brokerage firms also have their own margin maintenance requirements for their clients.
The requirements of firms are often higher than those of the exchanges. Overall, the government, exchanges, and brokerage firms have worked to protect the exchange system from excessive borrowing. However, in the late 1980s exchanges established new markets for stock index
futures, and these markets had relatively low margin requirements.
In addition, by the 1970s it was clear that the NYSE, then the world's largest stock exchange, in
many ways did not perform the theoretical function of an exchange, to help facilitate the efficiency of trading. The NYSE tightly controlled its members with fixed commission rates and
limited floor access. Nonmembers were required to trade only through member firms and to
pay commissions. The exchange also rarely permitted members to trade in other regional exchanges or in the OTC market. Also, many NYSE firms increasingly traded in blocks of 10,000
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Modern History I (Imperialism to the Age of Depression and Recovery)
shares or more. Taking advantage of loopholes in exchange regulations, firms often privately
arranged these block trades. This created an essentially exclusive, limited-access market.
In the 1970s the SEC, Congress, and other government and private institutions were instrumental in establishing further regulations on stock exchanges. In 1972 the SEC developed a Consolidated Tape System, which provides trading information to investors from all exchanges and
the OTC market. In 1975 Congress created the National Market System, which provides that
prices of stocks and bonds from all exchanges be available simultaneously at each exchange.
This encourages competition among exchanges. A particular provision of this system also requires that all commissions be competitively negotiated rather than fixed. In response to this
provision, many discount brokerage firms have opened. Discount brokers provide less financial
advice to investors and therefore can charge lower commission fees than were available under
the fixed-fee system. Ultimately, the enforced competition among exchanges has opened them
to smaller investors who want to trade without paying for, or being limited by, various exclusive exchange privileges.
VIII RECENT DEVELOPMENTS
In the 1980s and 1990s stock exchanges have achieved new levels of market efficiency
through their increased use of fast and inexpensive computers. Computer networks have also
allowed exchanges to connect to each other, both within countries and internationally. Electronic exchanges have fostered the growth of an open, global securities market.
Although the overall value of the U.S. stock market has increased substantially since 1946, occasional recessions have occurred during recent decades. In 1987 the stock market experienced a brief, but major crash, marked by a more than a 20 percent decline, over one day's
trading, in the S & P index of stock prices. Markets in other countries have experienced periods
of severe decline as well. The market in Tokyo, for instance, plummeted over a period from the
end of 1989 to late 1990. The Nikkei index of the TSE declined almost 50 percent during that
period. The Japanese government instituted reforms in response to the exchange's poor performance.
Economists potentially linked the 1987 U.S. crash to the use by traders of new, low-margin
stock index futures markets. Exchanges had opened these markets earlier in the decade in response to increased margin requirements on securities trading. Traders in the late 1980s began
to sell their securities on the new futures markets when stock prices dropped. After the government released pessimistic economic forecasts in October of 1987, traders rushed to sell
their stocks on the futures markets with low margin backing. After the crash, the government
established new rules for higher margin requirements across markets, including futures trading.
It is unknown, however, whether new regulations, or competitive deregulation, will make exchanges less volatile in the future.
Contributed By: Samuel Case
"Stock Exchange," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Unemployment
I INTRODUCTION
Enforced idleness of wage earners who are able and willing to work but cannot find jobs. In
societies in which most people can earn a living only by working for others, being unable to
find a job is a serious problem. Because of its human costs in deprivation and a feeling of rejection and personal failure, the extent of unemployment is widely used as a measure of workers'
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welfare. The proportion of workers unemployed also shows how well a nation's human resources are used and serves as an index of economic activity.
II MEASUREMENT
The most common method of measuring unemployment was developed in the U.S. in the
1930s; it is followed by many other countries on the recommendation of the International Labor Organization. In a monthly survey of a sample of households representing the entire civilian population, information is obtained about the activity of each person of working age (16
years of age or older in the U.S.). To ensure precision and ease of recollection, the interviewers
ask what people were doing in a single week. A person who did any work during that week for
pay or profit, worked 15 hours or more as an unpaid worker in a family business, or had a job
from which he or she was temporarily absent, is counted as employed. A person who was not
working but was looking for work or was on a temporary layoff and available to take a job is
counted as unemployed. The number of unemployed is then divided by the number of people
in the civilian labor force (that is, the sum of the employed and the unemployed) in order to
calculate the unemployment rate. In the U.S., statistics for states and local areas are based
partly on the same survey and partly on estimates of unemployment built up from unemployment-insurance records; these records, however, do not include all the unemployed, since
many people who are seeking work are not eligible to receive unemployment compensation
(see Unemployment Insurance).
In some countries, instead of a special survey, unemployment estimates are developed from
data on the number of people who are looking for work through the public employment offices
or the number receiving unemployment compensation payments.
III CAUSES
Economists have described the causes of unemployment as frictional, seasonal, structural, and
cyclical.
Frictional unemployment arises because workers seeking jobs do not find them immediately;
while looking for work they are counted as unemployed. The amount of frictional unemployment depends on the frequency with which workers change jobs and the time it takes to find
new ones. Job changes occur often in the U.S.: A January 1983 survey showed that more than
25 percent of all workers had been with their current employers one year or less. About a quarter of those unemployed at any particular time are employed one month later. This means that
a considerable degree of unemployment in the U.S. is frictional and lasts only a short time. This
type of unemployment could be reduced somewhat by more efficient placement services.
When workers are free to quit their jobs, however, some frictional unemployment will always
be present.
Seasonal unemployment occurs when industries have a slow season, such as construction and
other outdoor work in winter. It also occurs at the end of the school year in June, when large
numbers of students and graduates look for work. At its seasonal high point (January and February), unemployment in the U.S. between 1976 and 1986 was typically 20 percent higher
than at the seasonal low (October).
Structural unemployment arises from an imbalance between the kinds of workers wanted by
employers and the kinds of workers looking for jobs. The imbalances may be caused by inadequacy in skills, location, or personal characteristics. Technological developments, for example,
necessitate new skills in many industries, leaving those workers who have outdated skills without a job. A plant in a declining industry may close down or move to another area, throwing
out of work those employees who are unable or unwilling to move. Workers with inadequate
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education or training and young workers with little or no experience may be unable to get jobs
because employers believe that these employees would not produce enough to be worth paying the legal minimum wage or the rate agreed on with the union. On the other hand, even
highly trained workers can be unemployed; this happened in the U.S. in the early 1970s, for
example, when the large numbers of new graduates with doctoral degrees in physics and
mathematics exceeded the number of jobs available in those fields. If employers practice illegal
job discrimination against any group because of sex, race, religion, age, or national origin, a
high unemployment rate for these workers could result even when jobs are plentiful. Structural
unemployment shows up most prominently in some cities, in some occupations or industries,
for those with below-average educational attainments, and for some other groups in the labor
force. In June 1992, for example, when the U.S. civilian unemployment rate was 7.8 percent,
the rate in the state of New York was 9.2 percent; for teenagers 16 to 19, 23.6 percent; for
black workers, 14.9 percent; and for retail workers, 9.2 percent.
Cyclical unemployment results from a general lack of demand for labor. When the business
cycle turns downward, demand for goods and services drops; consequently, workers are laid
off. In the 19th century, the U.S. experienced depressions roughly every 20 years. A long and
severe depression occurred in the 1890s, when unemployment reached about 18 percent of
the civilian labor force, and four less-severe depressions occurred in the first quarter of the 20th
century. The worst depression in U.S. history was in the 1930s; at its height, one worker in four
was unemployed, and some remained out of work for years. See Business Cycle.
IV GOVERNMENT INVOLVEMENT
As a result of this depression, the U.S. government took steps to alleviate unemployment. In the
mid-1930s millions of jobs were provided by public works and other special programs. Notable among the federal agencies established to carry out these programs were the Civilian Conservation Corps and the National Youth Administration, which employed young workers on a
wide variety of projects; and the Work Projects Administration, which embarked on a broad
program involving both public-works construction and cultural and recreational activities.
Another New Deal measure was the Social Security Act of 1935, which set up the first comprehensive social-insurance system in the U.S. (see Social Security). It introduced unemployment insurance, providing workers who lose their jobs with a weekly compensation payment.
By maintaining the workers' purchasing power, unemployment insurance reduces cyclical
swings in demand, thus helping trade and industry.
The enactment of various laws aimed at reviving business and industrial activity resulted in a
substantial improvement in U.S. economic conditions and a decline in unemployment. Soon
after the outbreak of World War II in September 1939, the U.S. government launched a program for expanding and modernizing the national defense system. The program provided industry with a powerful stimulus, and unemployment rapidly declined. After the U.S. entered
the war in December 1941, not only was the goal of full employment attained, but a shortage
of labor replaced the previous shortage of jobs.
In the postwar period a major new measure was passed by the Congress. The Employment Act
of 1946 proclaimed that the federal government would take the responsibility for maintaining
high employment levels, economic stability, and growth; that is, the government would coordinate its economic policies (such as those on taxation, expenditures, foreign trade, and control
of money, credit, and banking) in such a way as to prevent serious depressions. A Council of
Economic Advisers was set up to monitor the economy and provide advice to the president and
Congress. Between 1945 and 1990 nine cyclical swings in unemployment occurred; all were
smaller than the 1930s depression. During this period the unemployment rate was as low as
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2.9 percent (1953) and as high as 9.7 percent (1982). Because of cutbacks in the unemployment insurance program and changes in the nature of employment during the 1980s, however,
only 37 percent of jobless workers received benefits in 1990.
Fears that the introduction of automation and other labor-saving technology would increase
unemployment have led some workers to oppose such changes. Labor-saving methods, however, increase output per worker and make possible rising levels of worker income. In order to
deal with the effects of technological change, the government passed several acts, such as the
Manpower Training and Development Act (1962), the Comprehensive Employment and Training Act (1973), and the Job Training Partnership Act (1982), to set up programs designed to
train the unemployed in those skills in which there was employment opportunity.
A major policy issue is the relation of unemployment to inflation. In theory, when demand for
labor rises to the point at which unemployment is low and employers find it difficult to hire
qualified workers, wages increase, pushing production costs and prices higher and thus contributing to inflation; when demand declines and unemployment increases, inflationary pressures on wages and production costs are relieved. Confounding this theory, however, both inflation and unemployment rates were high in the 1970s. The government adopted policies to
control inflation that involved reducing demand in the economy in the expectation that one of
the costs of lowering inflation would be rising unemployment. Indeed, the unemployment rate
rose from 5.8 percent in 1979 to 9.7 percent by 1982 before dropping back to between 5 and 7
percent in the mid- and late 1980s.
V UNEMPLOYMENT IN OTHER NATIONS
The post-World War II period in Europe was characterized by sharp rises in unemployment
resulting from the wartime destruction of many industries, the addition to the labor force of
large numbers of war veterans, and a variety of consequent economic maladjustments. U.S. aid
helped the highly successful efforts of Western European countries to rehabilitate their industries and provide employment for their workers
Most of the major nonsocialist industrialized countries had lower rates of unemployment than
the U.S. by the 1950s. In the 1960s, when the U.S. unemployment rate averaged 5-6 percent,
only Canada had a higher rate (7 percent); Italy had a rate of 4 percent, and all the other Western European industrial nations, as well as Japan, had rates of about 2 percent or less. Attempts
to explain these disparities focused on social and economic differences among nations, including the following: the more rapid growth of the labor force in the U.S.; more years of schooling
in the U.S., with many students working part-time and seeking jobs frequently; measures taken
in European countries to reduce seasonal unemployment by spreading work over the year;
European practices of placing youth in their midteens into apprenticeship and other worktraining arrangements that promote job stability; legal restraints in some countries against laying off workers; extensive retraining programs for unemployed workers to update their skills;
and greater attachment of workers to their jobs in both Europe and Japan. By early 1992 Japan's unemployment rate was still low (just over 2 percent), despite an economic slowdown,
but the rate was approaching 10 percent in Britain and France and generally exceeded that rate
in Eastern Europe, where formerly socialist economies were adjusting to free-market capitalism.
The Soviet Union maintained no statistics on unemployment, nor did it have unemployment
insurance. Generally, workers were kept on the payroll whether or not they were needed, making for a low productivity rate. In early 1992, unemployment in Russia was reported to be less
than 1 percent, but the government was opening unemployment offices, preparing for an increase as more people began working in the private sector.
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In developing nations in Asia, Africa, and Latin America a much more serious and widespread
problem is underemployment-that is, people are employed only part time or at work that is
inefficient or unproductive, with a correspondingly low income that is insufficient to meet their
needs. Much of the unemployment and underemployment in developing nations has accompanied migration from rural to larger urban centers.
In industrialized countries, with unemployment insurance and other forms of income maintenance, unemployment does not cause as great a hardship as it once did. Measures to stabilize
the economy have made economic downturns briefer and less severe. Workers are still threatened by long periods of unemployment, however, and some workers bear a disproportionate
burden. The problem of modern governments is how to get the benefits of economic flexibility
and rising productivity while reducing the number of unemployed workers, keeping their spells
of joblessness short, maintaining their income, and helping them return to work with viable
skills.
Contributed By: Harold Goldstein
"Unemployment," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Macroeconomics
I INTRODUCTION
Branch of economics concerned with the aggregate, or overall, economy. Macroeconomics
deals with economic factors such as total national output and income, unemployment, balance
of payments, and the rate of inflation. It is distinct from microeconomics, which is the study of
the composition of output such as the supply and demand for individual goods and services,
the way they are traded in markets, and the pattern of their relative prices.
At the basis of macroeconomics is an understanding of what constitutes national output, or national income, and the related concept of gross national product (GNP). The GNP is the total
value of goods and services produced in an economy during a given period of time, usually a
year. The measure of what a country's economic activity produces in the end is called final
demand. The main determinants of final demand are consumption (personal expenditure on
items such as food, clothing, appliances, and cars), investment (spending by businesses on
items such as new facilities and equipment), government spending, and net exports (exports
minus imports).
Macroeconomic theory is largely concerned with what determines the size of GNP, its stability,
and its relationship to variables such as unemployment and inflation. The size of a country's
potential GNP at any moment in time depends on its factors of production-labor and capitaland its technology. Over time the country's labor force, capital stock, and technology will
change, and the determination of long-run changes in a country's productive potential is the
subject matter of one branch of macroeconomic theory known as growth theory.
The study of macroeconomics is relatively new, generally beginning with the ideas of British
economist John Maynard Keynes in the 1930s. Keynes's ideas revolutionized thinking in several areas of macroeconomics, including unemployment, money supply, and inflation.
II KEYNESIAN THEORY AND UNEMPLOYMENT
Unemployment causes a great deal of social distress and concern; as a result, the causes and
consequences of unemployment have received the most attention in macroeconomic theory.
Until the publication in 1936 of The General Theory of Employment, Interest and Money by
Keynes, large-scale unemployment was generally explained in terms of rigidity in the labor
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market that prevented wages from falling to a level at which the labor market would be in equilibrium. Equilibrium would be reached when pressure from members of the labor force seeking
work had bid down the wage to the point where either some dropped out of the labor market
(the supply of labor fell) or firms became willing to take on more labor given that the lower
wage increased the profitability of hiring more workers (demand increased). If, however, some
rigidity prevented wages from falling to the point where supply and demand for labor were at
equilibrium, then unemployment could persist. Such an obstacle could be, for example, trade
union action to maintain minimum wages or minimum-wage legislation.
Keynes's major innovation was to argue that persistent unemployment might be caused by a
deficiency in demand for production or services, rather than by a disequilibrium in the labor
market. Such a deficiency of demand could be explained by a failure of planned (intended)
investment to match planned (intended) savings. Savings constitute a leakage in the circular
flow by which the incomes earned in the course of producing goods or services are transferred
back into demand for other goods and services. A leakage in the circular flow of incomes
would tend to reduce the level of total demand. "Real" investment, known as capital formation
(the production of machines, factories, housing, and so on), has the opposite effect-it is an injection into the circular flow relating income to output-and tends to raise the level of demand.
In the earlier classical models of unemployment, such as the one described above, deficiency
of demand in the aggregate market for goods and services (known by the short-hand term as
the goods market) was ruled out. It was believed that any discrepancy between planned savings
and planned investment would be eliminated by changes in the rate of interest. Thus, for example, if planned savings exceeded planned investment, the rate of interest would fall, which
would reduce the supply of savings and, at the same time, increase the desire of companies to
borrow money to invest in machines, buildings, and so on. In other words, changes in the rate
of interest would provide the equilibrating force bringing the overall (aggregate) goods market
into equilibrium in the same way that changes in, say, the price of apples would be the equilibrating force bringing the supply and demand for apples into equilibrium.
In the Keynesian model, changes in the level of output and income bring planned savings and
investment into equilibrium, and thereby lead to equilibrium in total national income and output. However, this equilibrium level of income and output is not necessarily the level of output
at which the demand for labor equals the supply of labor. Furthermore, Keynes maintained, a
cut in wages in such a situation would not help eliminate unemployment. Keynes was not the
first economist to explain unemployment in terms of an aggregate deficiency of demand in the
goods market. The 19th-century British economist Thomas Robert Malthus and others had advanced similar explanations.
The Keynesian revolution implied that, in the terminology of macroeconomics, the goods market could be at an underemployment equilibrium, in that it did not ensure equilibrium in the
labor market. In such a labor market, employers would not employ workers up to the point
where it would have been profitable for them to do so had there been adequate demand for
their output. Concepts of underemployment equilibrium, and related concepts of constrained
demand for labor were extensively developed in subsequent years.
Keynes's emphasis on demand as the key determinant of output in the short run stimulated developments in many other fields of macroeconomics. It was partly instrumental in the development of national income accounting, which measures the components of GNPconsumption, investment, government spending and net exports. The Keynesian approach also
stimulated analysis of the factors influencing these components of GNP. For example, econo-
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mists have analyzed how aggregate consumer demand is related to income levels and how
likely it is to change when rates of interest change.
III MONEY SUPPLY
Theories regarding the money supply are central to macroeconomics. They are also the subject
of debate between Keynesians and monetarists (economists who believe that growth in the
money supply is the most important factor that determines economic growth). The classical or
pre-Keynes view was that the interest rate led to a balance between savings and investment,
which in turn would cause equilibrium in the goods market. Keynes disagreed and believed
that the interest rate was largely a monetary phenomenon; its chief function was to balance the
unpredictable supply and demand for money, not savings and investment. This view explained
why the amount of savings was not always correlated with the amount of investment or the
interest rate.
Keynesians and monetarists also disagree about how changes in the money supply affect employment and output. Some economists argue that an increase in the supply of money will tend
to reduce interest rates, which in turn will stimulate investment and total demand. Therefore,
an alternative way of reducing unemployment would be to expand the money supply. Keynesians and monetarists disagree on how successful this method of raising output would be.
Keynesians believe that under conditions of underemployment, the increased spending will
lead to greater output and employment. Monetarists, however, generally believe that an increase in the money supply will lead to inflation in the long run.
IV INFLATION
For several decades after World War II (1939-1945) the main inflation theories were demandpull and cost-push. The cost-push theory basically emphasized the role of excessive increases
in wages relative to productivity increases as a cause of inflation, whereas the demand-pull
theory tended to attribute inflation more to excess demand in the goods market caused by expansion of the money supply. A central concept in inflationary theory since the mid-1950s has
been the Phillips curve, which relates the level of unemployment to the rate of inflation. The
Phillips curve suggests that society can make a choice between various combinations of inflation rate and unemployment level. Many economists, however, dispute whether such a choice
really exists, saying that in order to keep unemployment under control it will be necessary to
accept continuously increasing inflation. At the same time many other economists dispute
whether a stable relationship between unemployment and the level of real wage demands exists.
V MODERN THEORIES
During the last few decades there have been numerous refinements of the Keynesian theory of
unemployment. For example, although there is still much disagreement as to the importance of
wage rigidity, significant progress has been made in explaining it without recourse to trade union behavior or government regulation. At first it seemed difficult to reconcile the notion of
wage rigidity with the usual economist's assumption that people seek to maximize utility or
satisfaction and would be willing to accept a lower wage in order to get a job. However, by
widening the range of variables over which individuals optimize to include variables such as
loyalty and self-respect, it has become easier to reconcile labor market disequilibrium with the
usual assumptions of optimizing behavior.
Macroeconomic theories regarding the way that the determinants of total final demand operate
form the basis of large macroeconomic models of the economy that are used in economic forecasting to make predictions of output and employment and related variables. During the last
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few years, the record of most such predictions has been poor, and an analysis of the errors has
led to continual revisions of the basic models and refinements of the theory.
"Macroeconomics," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Dow Jones Averages
Group of daily and weekly indexes of selected stock and bond prices. Dow Jones & Company,
Inc. of New York City calculates and publishes the indexes in their flagship newspaper, the
Wall Street Journal. Investors and economists watch the Dow Jones averages to monitor the
performance of sectors of the stock market, the stock market as a whole, and the economy.
Movements of the indexes up or down influence when and how investors buy or sell securities,
and may also influence national economic policy. Average prices are listed in points rather
than dollar amounts, where one point equals one dollar.
There are seven Dow Jones indexes that are used most often by investors and financial analysts.
Three of the indexes are daily averages of the cost-per-share of selected stocks in three major
economic sectors: industry, transportation, and utilities. A fourth index is a composite of the
three sector indexes.
Another Dow Jones stock index, the Equity Market Index, is an average of the cost-per-share of
a wide variety of stocks traded on the New York Stock Exchange (NYSE), the American Stock
Exchange (AMEX), and the National Association of Securities Dealers Automated Quotations
system (NASDAQ). Together, the NYSE, AMEX, and NASDAQ account for the majority of trading in major United States securities. Other indexes are daily averages of yields on the bonds of
selected utilities, industrial firms, and the U.S. government; and a weekly average of selected
municipal bond yields.
In 1882 journalists Charles Henry Dow and Edward Jones formed Dow Jones & Company, Inc.
with Charles M. Bergstresser. In 1884 the company first published an index of 11 stocks, 9 of
which were issued by railroads, which were then the cornerstone of the U.S. economy. In 1896
the company published the first Dow Jones Industrial Average (DJIA).
The DJIA, also referred to as the Dow, is the most important U.S. stock market performance
indicator. It is an average of the value of the stocks of 30 large, primarily industrial companies.
In the U.S. news media, a report that the market has gone up 40 points or down 10 points, for
example, actually refers to the movements of the Dow. Economists also monitor trends in the
movement of the DJIA over longer periods of time. During 1996 the DJIA went up by 26 percent. This means that as of December 31, 1996, the average value of the stocks of the 30 corporations in the index had increased by 26 percent over their value on January 1, 1996. Many
economists judge the stock market according to the Dow Theory. Dow Theory holds that the
DJIA and the Transportation Average must move in a high degree of unison to confirm a larger
trend in stock market performance.
As a measure of overall stock market performance, the Dow has limited value. The 30 corporations comprising the index are among the largest in the world, including such giants as General
Electric Company, General Motors Corporation, AT&T Corp., and IBM. The stocks of these 30
companies represent close to 20 percent of the market value of all the stocks listed on the New
York Stock Exchange. The index, therefore, is essentially a measure of the performance of the
stocks of large corporations. It does not do a good job of measuring the stocks of companies
outside the industrial sector or those of small companies. For example, the NASDAQ Composite Index, which measures mostly small companies, was up only 22.7 percent in 1996, compared to the 26 point rise in the DJIA. Differences between these two indexes can be even
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more extreme on any given day. Sometimes the Dow will show a gain while the NASDAQ Index will post a loss.
Editors of the Wall Street Journal pick the stocks listed in the DJIA. Traditionally, these are
stocks of major businesses with long, stable histories and of enduring interest to many investors. Economists refer to these kinds of stocks as blue-chip stocks. The editors only change a
stock if its performance changes dramatically. DJIA stocks are most often changed when a
business undergoes major restructuring, or is acquired by or merges with another business.
These same guidelines also apply generally to the other Dow Jones averages.
In 1997 Dow Jones & Company announced that it was removing four companies from the DJIA
list, ones that had been on the list since the 1920s. Woolworth Corporation, Westinghouse
Electric Corporation, Texaco Inc., and Bethlehem Steel Corporation were replaced by HewlettPackard Company, Johnson & Johnson, Traveler's Group, Inc., and Wal-Mart Stores, Inc. Prior
to these changes, the DJIA components had not changed since 1991 when Caterpillar Inc., The
Walt Disney Company, and J. P. Morgan & Co. Incorporated replaced Navistar, USX Corporation, and Primerica Corp.
Contributed By: Samuel Case
"Dow Jones Averages," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Business Cycle
I INTRODUCTION
Term used in economics to designate changes in the economy. Ever since the Industrial Revolution, the level of business activity in industrialized capitalist countries has veered from high
to low, taking the economy with it.
II PHASES OF THE BUSINESS CYCLE
The timing of a cycle is not predictable, but its phases seem to be. Many economists cite four
phases-prosperity, liquidation, depression, and recovery-using the terms originally developed
by the American economist Wesley Mitchell, who devoted his career to studying business cycles.
During a period of prosperity a rise in production becomes evident. Employment, wages, and
profits increase correspondingly. Business executives express their optimism by investing to
expand production. As the upswing continues, however, obstacles begin to occur that impede
further expansion. For example, production costs increase; shortages of raw materials may further hamper production; interest rates rise; prices rise; and consumers react to increased prices
by buying less. As consumption starts to lag behind production, inventories accumulate, causing a price decline. Manufacturers begin to retrench; workers are laid off. Such factors lead to a
period of liquidation. Business executives become pessimistic as prices and profits drop.
Money is hoarded, not invested. Production cutbacks and factory shutdowns occur. Unemployment becomes widespread. A depression is in progress.
Recovery from a depression may be initiated by several factors, including a resurgence in consumer demand, the exhaustion of inventories, or government action to stimulate the economy.
Although generally slow and uneven at the start, recovery soon gathers momentum. Prices rise
more rapidly than costs. Employment increases, providing some additional purchasing power.
Investment in capital-goods industries expands. As optimism pervades the economy, the desire
to speculate on new business ventures returns. A new cycle is under way.
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In fact, business cycles do not always behave as neatly as the model just given, and no two
cycles are alike. Business cycles vary considerably in severity and duration. In the United States
the major cycles have lasted slightly longer than eight years, on the average. Minor cycles have
a shorter span, generally from two to four years. The American economist Alvin Hansen accounted for 10 major and 23 minor cycles in the U.S. between 1857 and 1937.
The most severe and widespread of all economic depressions occurred in the 1930s. The Great
Depression affected the U.S. first but quickly spread to Western Europe. The American economy, however, suffered the most. From 1933 to 1937 the U.S. began to recover from the depression, but the economy declined again from 1937 to 1938, before regaining its normal
level. This decline was called a recession, a term that is now used in preference to liquidation.
Real economic recovery was not evident until early 1941.
Since then, the U.S. has been spared another severe depression. Recessions have, however,
occurred repeatedly. In addition, the general pace of economic growth has slowed.
III SPECIAL CYCLES
Apart from the traditional business cycle, specialized cycles sometimes occur in particular industries. The building construction trade, for example, is believed to have cycles ranging from
16 to 20 years in length. Prolonged building slumps made two of the most severe American
depressions worse (in 1872-73 and in the 1930s). On the other hand, an upswing in building
construction has often helped to stimulate recovery from a depression.
Some economists believe that a long-range cycle, lasting for about half a century, also occurs.
It has been shown that a periodic shift in wholesale prices recurred in the U.S. throughout the
19th and early part of the 20th centuries. The pattern went as follows: From about 1790 to the
early 1800s, wholesale prices rose; about 1815 this trend was reversed, and prices declined
until the middle of the century; after another rise, prices again declined following the American
Civil War and continued into the 1890s; a rising-price trend took over until 1920; thereafter
prices fell until 1933. These rise-and-fall cycles averaged about 50 years each.
Studies of economic trends during the same period were made by the Russian economist Nikolay Kondratieff. He examined the behavior of wages, raw materials, production and consumption, exports, imports, and other economic quantities in Great Britain and France. The data he
collected and analyzed seemed to establish the existence of long-range cycles similar to those
just described for wholesale prices. His "waves" of expansion and contraction fell into three
periods averaging 50 years each: 1792-1850, 1850-96, and 1896-1940. Such studies, however,
are not conclusive.
IV CAUSES OF CYCLES
Economists did not try to determine the causes of business cycles until the increasing severity
of economic depressions became a major concern in the late 19th and early 20th centuries.
Two external factors that have been suggested as possible causes are sunspots and psychological trends. The sunspot theory of the British economist William Jevons was once widely accepted. According to Jevons, sunspots affect meteorological conditions. That is, during periods
of sunspots, weather conditions are often more severe. Jevons felt that sunspots affected the
quantity and quality of harvested crops; thus, they affected the economy.
A psychological theory of business cycles, formulated by the British economist Arthur Pigou,
states that the optimism or pessimism of business leaders may influence an economic trend.
Some politicians have clearly subscribed to this theory. During the early years of the Great Depression, for instance, President Herbert Hoover tried to appear publicly optimistic about the
inherent vigor of the American economy, thus hoping to stimulate an upsurge.
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Several economic theories of the causes of business cycles have been developed. According to
the underconsumption theory, identified particularly with the British economist John Hobson,
inequality of income causes economic declines. The market becomes glutted with goods because the poor cannot afford to buy, and the rich cannot consume all they can afford. Consequently, the rich accumulate savings that are not reinvested in production, because of insufficient demand for goods. This savings accumulation disrupts economic equilibrium and begins
a cycle of production cutbacks.
The Austrian-American economist Joseph Schumpeter, a proponent of the innovation theory,
related upswings of the business cycle to new inventions, which stimulate investment in capital-goods industries. Because new inventions are developed unevenly, business conditions
must alternately be expansive and recessive.
The Austrian-born economists Friedrich von Hayek and Ludwig von Mises subscribed to the
overinvestment theory. They suggested that instability is the logical consequence of expanding
production to the point where less efficient resources are drawn upon. Production costs then
rise, and, if these costs cannot be passed on to the consumer, the producer cuts back production and lays off workers.
A monetary theory of business cycles stresses the importance of the supply of money in the
economic system. Since many businesses must borrow money to operate or expand production, the availability and cost of money influence their decisions. Sir Ralph George Hawtrey
suggested that changes in interest rates determine whether executives decrease or increase their
capital investments, thus affecting the cycle.
V ACCELERATOR AND MULTIPLIER EFFECTS
Basic to all theories of business-cycle fluctuations and their causes is the relationship between
investment and consumption. New investments have what is called a multiplier effect: that is,
investment money paid to wage earners and suppliers becomes income to them and then, in
turn, becomes income to others as the wage earners or suppliers spend most of their earnings.
An expanding ripple effect is thus set into motion.
Similarly, an increasing level of income spent by consumers has an accelerating influence on
investment. Higher demand creates greater incentive to increase investment in production, in
order to meet that demand. Both of these factors also can work in a negative way, with reduced
investment greatly diminishing aggregate income, and reduced consumer demand decelerating
the amount of investment spending.
VI REGULATING THE CYCLE
Since the Great Depression, devices have been built into the U.S. economy to help prevent
severe business declines. For instance, unemployment insurance provides most workers with
some income when they are laid off. Social security and pensions paid by many organizations
furnish some income to the increasing number of retired people. Although not as powerful as
they once were, labor unions remain an obstacle against the cumulative wage drop that aggravated previous depressions. Government support of crop prices shields farmers from disastrous
loss of income. The securities markets are now regulated by the Securities and Exchange
Commission and the Federal Reserve System in order to prevent a recurrence of the 1929 financial collapse.
The government can also attempt direct intervention to counter a recession. There are three
major techniques available: monetary policy, fiscal policy, and incomes policy. Economists
differ sharply in their choice of technique.
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Monetary policy is preferred by some economists, including the American Milton Friedman,
and is followed by most conservative governments. Monetary policy involves controlling, via
the central Federal Reserve Bank, the money supply and interest rates. These determine the
availability and costs of loans to businesses. Tightening the money supply theoretically helps to
counteract inflation; loosening the supply helps recovery from a recession. When inflation and
recession occur simultaneously-a phenomenon often called stagflation-it is difficult to know
which monetary policy to apply.
Considered more effective by American economist John Kenneth Galbraith are fiscal measures,
such as increased taxation of the wealthy, and an incomes policy, which seeks to hold wages
and prices down to a level that reflects productivity growth. This policy has not had much success in the post-World War II period.
The United States has not experienced a major depression since the 1930s, in part because of
the federal government's use of anticyclical measures, including wage and price controls, and
deficit spending. After a period of economic stagflation in the United States during the 1970s,
inflation and unemployment were brought under control in the 1980s. The national debt, however, almost quadrupled in that decade. Thus, the federal government's response to the recession that began in 1990 did not include major new spending programs because of a reluctance
to increase the deficit. In fact, an important concern in dealing with the problems of the business cycle is the fear that inappropriate measures might precipitate a severe recession or even a
depression.
Reviewed by: Wallace C. Peterson
"Business Cycle," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
The New Global Economic Order By Richard C. Longworth
The development of instant, international communications, the growth of international trade,
and other factors have contributed to the creation of an unprecedented global economy. As
Chicago Tribune writer Richard C. Longworth points out in this March 1999 Encarta Yearbook
article, the increasing internationalization of finance can bring major benefits to investors and
nations, but it can also have disastrous consequences. Recent economic crises in Asia and Russia and their repercussions on world markets have raised the question of whether more effective regulations are needed in the new global economic climate.
On August 17, 1998, the cash-strapped Russian government announced that it would devalue
the nation's currency and default on part of its foreign debt. News of the decision rocked stock
markets around the world. Within weeks the Dow Jones Industrial Average, a key index of the
value of the New York Stock Exchange (NYSE)-the world's largest-plunged 1,800 points.
Just seven years earlier, in August 1991, a diehard band of hard-line Communists seized President Mikhail Gorbachev at his vacation home in the Crimea and attempted to take control of
the government of the Union of Soviet Socialist Republics (USSR). For a while it seemed that
the USSR-still a mammoth, nuclear-armed superpower-was about to slide back into hard-line
Communism. But if the world trembled, its stock markets did not even notice. The NYSE barely
moved on the news of the coup, or the later news of the coup's defeat.
Why the difference? Why did Russia's currency crisis matter to stock markets while the political
crisis of its predecessor-the much larger and stronger USSR-did not? Why did events halfway
around the world in 1998 have such a resounding effect on the United States?
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The reason is the global economy. In 1991 the global economy was just emerging and held
only a fraction of the power it commanded by decade's end. In 1991, too, the USSR was an
isolated giant on the brink of collapse, barely in touch with the international economy through
trade or investment. By 1998 Russia was deeply involved in the global economy, able to borrow worldwide but unable to pay its debts. When it finally caught cold, Wall Street sneezed.
The Russian default was not an isolated incident. It was preceded by the collapse of economies
in Thailand, Indonesia, and Malaysia, and followed by a currency crisis in Brazil. This rapid
succession of crises triggered widespread fears that more economies could soon fall and alerted
a suddenly attentive world that a new global economic order had arrived.
The global economy is changing not only the way the world does business but also the way it
lives and governs itself. The global economy is still very much a work in progress, presenting
challenges to economists and politicians alike. Many analysts believe that the emerging global
economic order, like the Industrial Revolution 200 years before it, is an epoch-making event
that will fundamentally alter the world. Peter Drucker, a leading management consultant, has
called the new era of the global economy "the age of social transformation … Every few hundred years in Western history, there occurs a sharp transformation. Within a few short decades,
society rearranges itself-its worldview: its basic values: its social and political structure: its arts:
its key institutions. Fifty years later, there is a new world."
Explaining the Global Economy
Globalization is a catchall term for many processes that are at the heart of the global economy:
the spread of instant global communications; the rapid growth of international trade, global
capital markets (markets in which national currencies are traded), and foreign investment; and
the emergence of a new breed of global corporation. The global economy is the product of all
these things, and more than the sum of them. It is a revolution that enables any entrepreneur to
raise money anywhere in the world and, with that money, to use technology, communications,
management, and labor located anywhere the entrepreneur finds them, to produce goods or
services that can be sold anywhere there are customers.
The global economy has been building for 25 years, since the early 1970s. But it burst into
public view only in the 1990s, when the end of the Cold War (the post-1945 struggle between
the USSR and its allies and the United States and its allies) fundamentally challenged the claims
of Communism, diluted the draw of socialism, and enabled supporters of open markets to proclaim the superiority of capitalism. Many nations that formerly followed the theories of German
social philosopher Karl Marx abruptly abandoned that philosophy, bringing virtually the entire
globe into the orbit of the market.
The global economy is different than the preceding international economy, which took much
of its present form in the 17th and 18th centuries with the establishment of nation-states. For
hundreds of years nations promoted foreign trade to increase their wealth and power, but rarely
hesitated to limit such trade when it was perceived as harmful. The new global economic order
is unique in its sheer scope, size, and speed-its ability to leap borders, to treat the world as one
market and the nation-state as though it does not exist.
Globalizing Trends
Most analysts believe the global economy is the result of several reinforcing trends, which have
only recently come fully into view. Taken together, these trends are creating increasingly open
and unfettered markets that stretch around the globe.
One trend is the emergence of instant global communications, made possible by technological
breakthroughs such as the semiconductor and the communications satellite. The ability to send
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messages around the world in a split second enables corporations to manage far-flung operations and currency traders to make their trades anywhere, anytime. Communications technology literally makes the global corporation and global markets possible.
A second trend is the wave of deregulation, which began in the late 1970s and weakened the
control of national governments over economic activity. Governments once controlled the flow
of currencies, held corporations to stern labor laws, and limited imports through tariffs and
quotas. Most of these rules and regulations, and many others, have now been dismantled or
weakened to enable markets to function more freely.
A third trend is the growth of enormous global capital markets, the first of which emerged in
the early 1970s when the Bretton Woods system of fixed currencies collapsed. After the Bretton
Woods Conference in 1944, all national currencies were assigned a fixed exchange rate against
the United States dollar, which was backed by gold. When the Bretton Woods system broke
down in 1973, currencies began to "float" against each other: in other words, they were worth
only what the market said they were worth at any given moment. Suddenly, there were vast
profits to be made by speculating on the market value of currencies, and so the great global
capital markets-linked by instantaneous global communications-were born.
The global economy is far from complete. It is still much easier to do business between Illinois
and California, for example, than between the United States and Poland or between the United
States and Japan. All countries have some limits on trade and foreign investment. If jobs can
move from country to country, people seldom do. Even in this mobile age, only about 2 percent of the world's population lives outside its own country, and most of these people are refugees, not workers chasing jobs.
The Expanding Grasp of Global Markets
But if the global economy is not yet complete, it is becoming more intertwined and integrated
every day. International trade is growing by 8 percent per year, more than double the rate at
which the world's total economic output is growing. Foreign investment (investing in the ownership of foreign businesses) has been growing by 12 percent per year and is now more valuable than trade: The annual economic output of foreign-owned businesses exceeds the value of
all foreign trade combined.
Of all the parts of the global economy, the most developed are the capital markets that trade
national currencies. These markets operate virtually unregulated and trade no less than $1.5
trillion every day, or $400 trillion per year. About 15 percent of this vast sum is vital, because it
pays for the world's trade and investment, and because it pays for the hedging that makes this
trade and investment possible. Through this hedging, businesses and investors buy foreign currencies to protect themselves against potentially costly swings in currency exchange rates. For
example, if the value of a country's currency rises rapidly, businesses that hold a reserve of that
currency can continue to make purchases and pay debts in the same country without first purchasing the currency at its new, higher price. Without such hedging, many companies probably would be reluctant to trade or invest abroad. But apart from this useful hedging, all the rest
is speculation, as traders operating around the globe and around the clock buy and sell currencies, looking for quick profits of as little as 0.05 to 1 percent or less.
This is not idle speculation. Large capital markets are conduits for potent and relentless waves
of money, constantly seeking the best price, a momentary edge. As nations in Asia recently
discovered, these markets can confer wealth, jobs, industrialization, and riches on societies
they favor. As the Asians and, later, the Russians found out, the markets can also pull these
benefits out virtually overnight and, in the process, undermine entire societies. With the smell
of fear in their nostrils, traders can cast instant judgments on other vulnerable economies, send211
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ing the panic careening around the globe, from Asia to Brazil to Russia and, finally, to Wall
Street, which is what happened in 1998.
This tight linkage between global capital markets and national economies is something new.
After World War II (1939-1945), the victorious powers set up systems of nation-based safety
nets, rules, regulations, and other barriers to assure the safety of their currencies and economies
from panic elsewhere. The global economy, powered by technology and deregulation, has
eroded this system of safeguards. A prominent objective of deregulation, for example, has been
to dismantle capital controls limiting the speed and size of currency movements in and out of
countries. These controls have been removed in all but a few nations.
National and international policy makers are now pondering how to create a new set of global
rules and regulations to replace the old web of national regulations. Their goal is to hem in the
power of the global economy and restore some confidence and stability to global markets and
the nations where they operate. One important target of these new rules and regulations is
likely to be the powerful global corporation.
The Global Corporation
The preceding 20 years have witnessed a widespread restructuring of the corporate landscape.
An estimated 50,000 corporations now have operations that are primarily global in scope.
Their predecessors were multinational corporations (MNCs), with sales and manufacturing
branches abroad, but with all major functions, including the international branches, run from
headquarters back home.
The new global corporation typically has a tight, lean headquarters staff, but scatters its other
functions-research and development, accounting, procurement, and sales-wherever the people
are the best and the costs lowest. This corporation seldom has an international department,
because the entire corporation is international. Multinational corporations that have evolved
into global corporations include Ford Motor Company, General Motors Corporation, Royal
Dutch/Shell Group, BP Amoco PLC, Siemens AG, Nestlé S.A., and Zenith Electronics Corporation, among many others.
Global corporations, in turn, are reshaping the political and social landscape. During the last
50 years, major corporations in the United States and other industrialized nations struck a social compact with their employees and communities, through a web of labor agreements, environmental and tax laws, charitable giving, and other obligations, voluntary or imposed. The
global corporation is now mobile enough to escape these obligations and break the social
compact. Companies that once competed domestically with other companies sharing the same
social obligations now compete with firms halfway around the globe, where environmental
laws may not exist and pay scales are a fraction of Western wages.
In the United States, for example, hundreds of corporations-from automakers to electronics
manufacturers-have moved jobs from high-wage U.S. facilities to low-wage plants in Mexico
and other Latin American nations. In response to this trend, policy makers in the United States
have reduced corporate taxes in an effort to keep at least some business operations at home.
United States federal tax receipts tell part of the story: Corporations that once paid a full 30
percent of total federal taxes have seen their tax share fall to 12 percent.
Throughout much of the industrialized world, declining corporate taxes mean less money for
welfare, unemployment, and other social programs that were initially established to help economically vulnerable workers. In the future, political debates will likely focus on efforts by
governments and citizens' groups to force corporations to resume their economic and social
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obligations-in a sense, to declare their corporate citizenship-when they no longer are geographically bound to any particular location.
Loss of Sovereignty
Governments themselves are joining regional trade groupings to give themselves more size and
power in a globalizing world. Fifteen European nations have submerged much of their national
sovereignty in the European Union (EU), by far the most evolved of these groupings. Eleven EU
nations adopted a common currency, the euro, in January 1999, and several others are expected to join. Over time, many analysts believe the common currency will force EU nations to
coordinate many other policies, such as budgeting and taxation. These issues are at the heart of
a nation's political life, and the adoption of the euro is widely viewed as a decisive step toward
a single European government.
The United States has also become involved in regional trade groupings. The North American
Free Trade Agreement (NAFTA) is a much looser bloc connecting the United States, Canada,
and Mexico, but with little of the economic coordination of the EU process. Talks are currently
underway to expand NAFTA, which aims to eliminate tariffs and other barriers to trade, to most
Latin American nations. The Asia-Pacific Economic Cooperation (APEC) agreement is more a
dream of cohesion than a reality. Its leaders meet annually, but the Asian and North American
economies are so different and the impact of the Asian crisis so severe that real coordination,
even on the NAFTA level, is likely to be years away at best.
Despite growing regional cooperation, national governments have seen globalization erode
much of their ability to control their own economies as traders and corporations move beyond
the reach of national law. For the world's market-oriented democracies, erosion of national
sovereignty means a reduction in the power of the ordinary citizen's ability to influence events
through the vote; hence, it has the potential to erode democracy.
In this partial vacuum, international organizations, new and old, have assumed some functions
that national governments once controlled. For example, the International Monetary Fund
(IMF), an independent agency of the United Nations (UN), has become both a safety net for
nations in economic crisis and a global enforcer of economic behavior. Both roles, however,
have become controversial, and there have been proposals for a new global economic authority. The World Trade Organization (WTO) has succeeded the old General Agreement on Tariffs
and Trade (GATT) and has become not only a forum to settle international trade disputes but a
court with power to enforce its decisions.
An alphabet soup of other international bodies, such as the Bank for International Settlements
(BIS) in Switzerland and the International Organization of Securities Commissions (IOSCO), are
setting up new codes and regulations. These organizations are, in effect, now writing the global
economic rulebook for the 21st century.
The global economy, then, is still evolving. No one can say yet what long-term effect it will
have on the economies and societies it touches, nor whether regional and international organizations will succeed or fail to tame its power. To its boosters, the global economy offers the
promise of immense global markets working with maximum efficiency to speed money, goods,
and services to the places where they will do the most good and produce the highest return.
Such boosters include free-market economist Milton Friedman, a Nobel Prize laureate, and
United States treasury secretary Robert Rubin. To many in the developing world, globalization
promises to bring the prosperity so far enjoyed only by wealthy industrialized nations. For analysts such as Drucker, as well as billionaire trader George Soros, the global economy already
has succeeded the Industrial Revolution and, like that epochal economic event, eventually will
change the world.
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Modern History I (Imperialism to the Age of Depression and Recovery)
To its detractors, including organized labor and such critics as conservative U.S. presidential
hopeful Pat Buchanan, the global economy is an untamed force that will undermine wages and
living standards in the industrialized world while bringing little but chaos and exploitation to
the developing world, impoverishing the many as it rewards the few. For proponents and critics
alike, the events surrounding Asia's spectacular economic boom and dramatic bust offer revealing lessons about the great promise, and peril, of the new global economy.
The Growth of the "Asian Tigers"
The seeds of the Asian financial crisis were sown at least 20 years ago, as many Asian nationsSingapore, Hong Kong, Taiwan, South Korea, and, later, Indonesia, Thailand, and Malaysiaadopted market-friendly policies, opened their domestic markets, and courted foreign investment. This investment poured in. Once-poor nations found themselves awash in money, factories, jobs, rapid economic growth, and all the things that go with it: new roads and airports,
soaring skyscrapers, good restaurants, and luxury hotels.
These were the "Asian tigers," and they became the market's darlings. Nations anxious to borrow money met banks that were equally anxious to lend it. The good times rolled, and not
enough questions were asked. In retrospect, once the bubble burst, it became clear that too
much money could cause as much trouble as too little money. Asian banks lacked the supervision and control that had been worked out over the decades in more developed economies.
Too often, loans were given to businesses distinguished primarily by their ties to government
officials or the military. Much of the investment in Asia went for solid productive facilities. But
much also went for speculative projects, such as the twin towers in Kuala Lumpur, Malaysia,
that are now the world's tallest buildings, and which stand mostly vacant.
In the late 19th and early 20th centuries, many Western nations learned that uncontrolled capitalism can destroy as surely as it builds. Over the years, they put into place a web of rules and
regulations to prevent excesses, enforce accountability, and ensure safety nets, such as unemployment insurance. The Asian nations, new to the game and flush with money, lacked key
economic safeguards, including teams of trained bank supervisors, bankruptcy laws, sophisticated commercial courts, and rules requiring corporations to report their finances honestly. So
long as the funds flowed, these nations had no interest in adopting those safeguards.
In the meantime, most of the Asian countries pegged the value of their currencies to the American dollar-a move intended to reduce the threat of costly and destabilizing currency fluctuations, and to reassure investors and lenders that their bets were safe. The IMF warned of trouble
ahead but in tones so muted that no one paid attention. The end, when it came, was brutally
swift.
The Crisis Begins
The crisis began in Thailand, where years of over-lending and growing debts resulted in a sudden loss of confidence in the economy in mid-1997. There does not appear to be a specific
reason why it happened just then, nor any one incident that set it off. Rather, the excessive
exuberance that led to the boom turned suddenly into excessive fears of its future. Just as there
were no real controls on the flow of investment into Thailand, so there were no controls on the
flow out. Foreign banks and investors pulled out billions of dollars of investment and demanded repayment of billions of dollars in loans.
Global capital markets, suddenly convinced that the Thai currency, the baht, could no longer
stay pegged to the dollar, began to sell it in such volume that the fear became a self-fulfilling
prophecy. The value of the baht plummeted, and Thai investors, having borrowed billions of
dollars, found that it would take nearly twice as many baht to repay those dollars. Depression
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Modern History I (Imperialism to the Age of Depression and Recovery)
followed quickly. National output fell by 8 percent, and the Thai stock market lost 75 percent
of its value. Factories closed, jobs disappeared, consumer demand dried up, and the dreams of
middle-class life evaporated.
And then the crisis moved on. Again, there was no reason why it should have. Other Asian
countries had their problems of debt, corruption, over-building, and inadequate regulation. But
these were problems, not crisis points. These problems had existed during the boom years,
when the markets happily overlooked them. But panic has its own logic. As Soros has pointed
out, markets always overshoot: They invest too much when times are good and pull back too
sharply when times turn bad. Markets are fueled as much by emotion as logic, and a herd mentality is common.
This is what happened to Malaysia, and then to Indonesia, then to the Philippines and, at year's
end, to South Korea. Each had grown rich on foreign investment, and each was plunged into
depression by the market's sudden disapproval. The government fell in Thailand. In Indonesia,
the weakening dictatorship of President Suharto was toppled. Currencies collapsed and standards of living fell.
The International Community Intervenes
Foreign governments reacted complacently until the crisis reached South Korea, the world's
11th largest economy, where only a massive IMF bailout in December 1997 staved off total
collapse. The bailout-one of the largest ever arranged by the IMF-was organized because of
growing fears that Japan, the world's second largest economy, might be next.
The IMF oversaw the bailouts of the stricken countries and, as is its custom, tied these bailouts
to demands that the countries lower inflation, cut back spending, and in other ways impose a
diet of economic austerity. The IMF, in an official report released on January 19, 1999, admitted it misjudged the nature of the Asian crisis and hence prescribed austerity programs that
only made the crisis worse. The problem, the IMF concluded, lay not with too much government spending or high inflation, but with over-borrowing and lax oversight by private corporations and banks.
In 1998 the crisis moved from Asia to other emerging markets, so-called because they are all
emerging from economies where markets were historically weak or nonexistent, including
Communist and undeveloped agrarian economies. Simply because they were new and untested, emerging markets became suspect, first to currency traders and then, as their currencies
fell, to other investors. Countries as far removed as Estonia and Venezuela came under attack.
But neither suffered as much as Russia and Brazil. In Russia deep corruption and a total lack of
commercial law undermined all attempts at market reforms, while Brazil struggled under the
burden of heavy public debt. In both Russia and Brazil, global capital markets drove down currencies, increased the economic pain for millions of people, and, in Russia's case, led to a default on foreign debt that essentially removed Russia as a serious player in the global economy.
Reining in the Global Economy
The crises left behind not only vast wreckage but also a growth industry in ideas on how to
cope with a global market so powerful that it could rapidly turn once-prosperous nations into
virtual paupers. Scholars, officials, corporate executives, and traders suggested some form of
new global financial authority to regulate the markets. Analysts who once saw the free flow of
currency as the key to global prosperity suddenly agreed that emerging nations might be justified in imposing capital controls, at least in the short run. Malaysia did so in September 1998
and suffered little of the international criticism that such a move would have invited just one
year earlier.
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Modern History I (Imperialism to the Age of Depression and Recovery)
Suggestions blossomed for slowing down the speculative trading on capital markets. One idea,
first proposed by Nobel Prize-winning economist James Tobin, would impose a tiny tax-less
than 0.5 percent on each currency transaction-on grounds that most speculative currency
trades involve margins no bigger than that. Another suggestion, pioneered by Chile, would penalize short-term investments that do not stay in a country long enough to do some real good.
The Group of Eight, an informal organization that includes the world's seven leading industrialized nations and Russia, announced in October 1998 plans to "create a strengthened financial
architecture for the global marketplace of the next millennium," a phrase vague enough to
permit almost any reform that the nations choose.
Some critics want to do away with the IMF and World Bank altogether; some others want to
hold an international conference to create new institutions to fit the new global era. Still others
argue that the IMF and World Bank, plus others such as the BIS, are established institutions
with experienced staffs that need only new marching orders to be effective. Virtually everyone
now agrees that emerging countries should not open themselves to global markets until they
have a structure of laws and regulations ready to cope with the markets' power.
The Future of Global Capitalism
The unquestioning euphoria that surrounded global markets just a year or two ago has vanished. But utter condemnation of these markets is little accepted. Organized labor in the United
States is likely to continue to oppose trade agreements such as NAFTA, and opinion polls show
that nearly half of all Americans support some tariffs. But Buchanan's call for a "new economic
nationalism," imposing tight limits on trade and immigration, does not appear to have much of
a future. Even analysts who think Buchanan is asking the right questions about trade and investment feel that the imposition of new national barriers would not solve the problem, but
only insulate the United States from the real benefits that the global economy can bestow.
More global economic shocks like the Asian financial crisis are likely to come, if only because
the markets that produced them still exist and the global and national regulations necessary to
prevent the shocks are not yet in place. The work ahead is as much political as it is economic.
The new rule makers will have to balance the need for social stability and broad prosperity
with the efficiency and profit demanded by free markets. In all successful market democracies
in the past, struggles over these issues have resulted in compromise, involving something less
than totally free markets and something short of complete regulation.
Market reforms, no matter how necessary, may limit the ability of the global economy to
spread wealth to developing nations. Some analysts believe that the creation of global safety
nets-to protect stricken countries and prevent crushing depressions-may only provide a cushion
that encourages the speculation and risk-taking that caused the problem in the first place. Others point to the need to reach solutions to global economic problems within a democratic
framework. Global rule making, like global markets, takes place now in an arena that democracy and the vote cannot reach. Making the global economy responsive to the people who live
within it may be the great challenge of the coming century.
About the author: Richard C. Longworth is an award-winning senior writer for the Chicago
Tribune and author of Global Squeeze: The Coming Crisis for First-World Nations (1998).
Further reading:
Bryan, Lowell, and Farrell, Diana. Market Unbound: Unleashing Global Capitalism. Wiley,
1996.
Buchanan, Patrick J. The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy. Little Brown and Company, 1998.
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Modern History I (Imperialism to the Age of Depression and Recovery)
Burtless, Gary, Lawrence, Robert Z., Litan, Robert E., and Shapiro, Robert J. Globaphobia: Confronting Fears About Open Trade. Brookings Institution, 1998.
Greider, William. One World, Ready or Not: The Manic Logic of Global Capitalism. Simon &
Schuster, 1997.
Kuttner, Robert. Everything for Sale: The Virtues and Limits of Markets. Alfred A. Knopf, 1997.
Mishel, Lawrence, Bernstein, Jared, and Schmitt, John. The State of Working America 1998-99.
Economic Policy Institute, 1999.
Sassen, Saskia. Globalization and its Discontents. The New Press, 1998.
Yergin, Daniel, and Stanislaw, Joseph. The Commanding Heights: The Battle Between Government and the Marketplace that is Remaking the Modern World. Simon & Schuster, 1998.
Source: Encarta Yearbook, March 1999.
"The New Global Economic Order," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999
Microsoft Corporation. All rights reserved.
Bond (finance)
I INTRODUCTION
Interest-bearing certificate sold by corporations and governments to raise money for expansion
or capital. An investor who purchases a bond is essentially loaning money to the bond's issuer
in return for interest. The investor can hold the bond and collect interest payments or sell the
bond to a third party.
II HOW BONDS WORK
A bond's principal, or face value, represents the amount of the original loan that is to be repaid
on the bond's maturity date. The interest that the issuer agrees to pay each year is known as the
coupon, a term derived from the obsolete practice of attaching coupons that could be redeemed for interest payments to the bottom of the bond certificate. The interest rate, or coupon
rate, multiplied by the principal of the bond provides the dollar amount of the coupon. For example, a bond with an 8 percent coupon rate and a principal of $1000 will pay annual interest
of $80. In the United States the usual practice is for the issuer to pay the coupon in two semiannual installments.
III KINDS OF BONDS
A number of different kinds of bonds offer variations on this basic formula. Some types of
bonds provide alternative interest structures. A zero-coupon bond does not make periodic interest payments. The bondholder realizes interest by buying the bond substantially below its
face value. A floating-rate bond has an interest rate that is changed periodically according to an
established formula. There also may be provisions that allow either the issuer or the bondholder to alter a bond's maturity date. A callable bond entitles the issuer to pay off the principal
prior to the stated maturity date. Similarly, the owner of a putable bond can force the issuer to
pay off the principal before the maturity date. A convertible bond gives the bondholder the
right to exchange the bond for shares of the issuer's common stock at a specified date.
IV ISSUING BONDS
Bond issuers can sell bonds directly through an auction process or use investment banking services. The investment banker buys the bonds from the issuer and then sells them to the public.
Corporate bonds are issued by private utilities, transportation companies, industrial enterprises,
or banks and finance companies. These corporate bonds can be divided into two additional
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Modern History I (Imperialism to the Age of Depression and Recovery)
categories: mortgage bonds, which are secured by the issuer's assets, and debentures, which
are backed only by the issuer's credit. Most companies try to establish a financial structure
based on a combination of stocks, representing distributed ownership, and bonds, representing
debt obligations. A company that raises funds by issuing bonds is said to be leveraged. Because
bondholders are paid at a set rate regardless of profits, this approach increases the potential for
profit to stockholders but also increases the level of financial risk.
The U.S. government issues bonds through the Department of the Treasury. These bonds,
known as government securities, are backed by the unlimited taxing power of the federal government. Federal agencies and government-sponsored enterprises also issue bonds of their
own. Generally, all of these federal bonds are considered to be among the safest investments.
Municipal bonds are issued by state and local governments and other public entities, such as
colleges and universities, hospitals, power authorities, resource recovery projects, toll roads,
and gas and water utilities. Municipal bonds are often attractive to investors because the interest is exempt from federal income taxes and some local taxes. There are two types of municipal
bonds: general obligation bonds and revenue bonds. Like a government security, a general obligation municipal bond is secured by the issuer's taxing power. Revenue bonds are used to
finance a particular project or enterprise. Income generated by the project provides funds to
pay interest to bondholders.
V INVESTING IN BONDS
From an investor's perspective, stocks offer a higher potential return if profits rise, but bonds
are generally a safer investment. Stock dividends are paid out of company profits, while bond
interest payments are made even if the company is losing money. If a corporation goes bankrupt, bondholders must be paid before stockholders. Nonetheless, risks are associated with investing in bonds. Because most bonds offer a fixed rate of return, a bond with a low coupon
rate will be less valuable if interest rates rise to the point that the investor's money could be
more profitably invested elsewhere. If the inflation rate rises in relation to the coupon rate, the
value of the investor's return will be reduced.
The value of bonds also will vary due to changes in the default risk, or credit rating, of bond
issuers. If the issuer of the bond is unable to make timely principal and interest payments, the
issuer is said to be in default. Bonds issued by the U.S. government and by most federally related institutions are considered free of default risk. For other issuers, the risk of default is
gauged by credit ratings assigned by four nationally recognized rating companies: Moody's
Investor's Service, Standard and Poor's Corporation, Duff & Phelps Credit Rating Company,
and Fitch Investors Service. Bonds that these rating companies place in the highest categories
are known as investment-grade bonds. Bonds that are not assigned an investment grade rating
are called junk bonds. These bonds have a higher degree of credit risk but also offer a higher
potential yield.
Contributed By: Frank J. Fabozzi
"Bond (finance)," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All rights reserved.
Taxation
I INTRODUCTION
System of raising money to finance government. All governments require payments of moneytaxes-from people. Governments use tax revenues to pay soldiers and police, to build dams
and roads, to operate schools and hospitals, to provide food to the poor and medical care to
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Modern History I (Imperialism to the Age of Depression and Recovery)
the elderly, and for hundreds of other purposes. Without taxes to fund its activities, government
could not exist.
Throughout history, people have debated the amount and kinds of taxes that a government
should impose, as well as how it should distribute the burden of those taxes across society.
Unpopular taxes have caused public protests, riots, and even revolutions. In political campaigns, candidates' views on taxation may partly determine their popularity with voters.
Taxation is the most important source of revenues for modern governments, typically accounting for 90 percent or more of their income. The remainder of government revenue comes from
borrowing and from charging fees for services. Countries differ considerably in the amount of
taxes they collect. In the United States, about 28 percent of the gross domestic product, a
measure of economic output, goes for tax payments. In Canada about 36 percent of the country's gross domestic product goes for taxes. In France the figure is 44 percent, and in Sweden it
is 51 percent.
In addition to using taxation to raise money, governments may raise or lower taxes to achieve
social and economic objectives, or to achieve political popularity with certain groups. Taxation
can redistribute a society's wealth by imposing a heavier tax burden on one group in order to
fund services for another. Also, some economists consider taxation an important tool for maintaining the stability of a country's economy.
II TYPES OF TAXES
Governments impose many types of taxes. In most developed countries, individuals pay income taxes when they earn money, consumption taxes when they spend it, property taxes
when they own a home or land, and in some cases estate taxes when they die. In the United
States, federal, state, and local governments all collect taxes.
Taxes on people's incomes play critical roles in the revenue systems of all developed countries.
In the United States, personal income taxation is the single largest source of revenue for the
federal government. In 1997 it accounted for about 44 percent of all federal revenues. Payroll
taxes, which are used to finance social insurance programs such as social security and Medicare, account for more than a third of federal revenues. The United States also taxes the incomes of corporations. In 1997, corporate income taxation accounted for 12 percent of federal
revenues.
State and local governments depend on sales taxes and property taxes as their main sources of
funding. Most U.S. states also tax the incomes of individuals and corporations, although less
heavily than the federal government. All Canadian provinces collect income taxes from individuals and corporations.
A Individual Income Tax
An individual income tax, also called a personal income tax, is a tax on a person's income.
Income includes wages, salaries, and other earnings from one's occupation; interest earned by
savings accounts and certain types of bonds; rents (earnings from rented properties); royalties
earned on sales of patented or copyrighted items, such as inventions and books; and dividends
from stock. Income also includes capital gains, which are profits from the sale of stock, real
estate, or other investments whose value has increased over time.
The national governments of the United States, Canada, and many other countries require citizens to file an individual income tax return each year. Each taxpayer must compute his or her
tax liability-the amount of money he or she owes the government. This computation involves
four major steps. (1) The taxpayer computes adjusted gross income-one's income from all taxable sources minus certain expenses incurred in earning that income. (2) The taxpayer converts
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Modern History I (Imperialism to the Age of Depression and Recovery)
adjusted gross income to taxable income-the amount of income subject to tax-by subtracting
various amounts called exemptions and deductions. Some deductions exist to enhance the
fairness of the tax system. For example, the U.S. government permits a deduction for extraordinarily high medical expenses. Other deductions are allowed to encourage certain kinds of behavior. For example, some governments permit deductions of charitable contributions as an
incentive for individuals to give money to worthy causes. (3) The taxpayer calculates the
amount of tax due by consulting a tax table, which shows the exact amount of tax due for most
levels of taxable income. People with very high incomes consult a rate schedule, a list of tax
rates for different ranges of taxable income, to compute the amount of tax due. (4) The taxpayer
subtracts taxes paid during the year and any allowable tax credits to arrive at final tax liability.
After computing the amount of tax due, the taxpayer must send this information to the government and enclose the amount due. In 1995 the average four-person family in the United States
paid about 9.2 percent of its income in income taxes. Many taxpayers, rather than owing
money, receive a refund from the government after filing a tax return, typically because they
had too much tax withheld from their wages and salaries during the year. Low-income workers
in the United States may also receive a refund because of the earned income tax credit, a federal-government subsidy for the working poor.
Income taxation enjoys widespread support because income is considered a good indicator of
an individual's ability to pay. However, income taxes are hard to administer because measuring income is often difficult. For example, some people receive part of their income "in-kind"-in
the form of goods and services rather than in cash. Farmers provide field hands with food, and
corporations may give employees access to company cars and free parking spaces. If governments tax cash income but not in-kind compensation, then people can avoid taxation by taking
a higher proportion of their income as in-kind compensation.
The Internal Revenue Service (IRS), an agency of the Department of the Treasury, administers
the federal income tax in the United States. Revenue Canada, which operates under the Minister of National Revenue, administers the tax in Canada. See Income Tax.
B Corporate Income Tax
All corporations in the United States and Canada must pay tax on their net income (profits) to
the federal government and also to most state or provincial governments. U.S. corporate tax
rates generally increase with income. For example, in 1997 corporations with profits of up to
$50,000 paid 15 percent in taxes, whereas corporations with profits greater than about $18.3
million were taxed at a flat rate of 35 percent. In Canada the basic rate for corporations was 38
percent in 1996. In 1994 corporate income taxes accounted for about 9 percent of all tax revenues in the United States and about 6.5 percent of all tax revenues in Canada.
The corporate income tax is one of the most controversial types of taxes. Although the law
treats corporations as if they have an independent ability to pay a tax, many economists note
that only real people-such as the shareholders who own corporations-can bear a tax burden. In
addition, the corporate income tax leads to double taxation of corporate income. Income is
taxed once when it is earned by the corporation, and a second time when it is paid out to
shareholders in the form of dividends. Thus, corporate income faces a higher tax burden than
income earned by individuals or by other types of businesses.
Some economists have proposed abolishing the corporate income tax and instead taxing the
owners of corporations (shareholders) through the personal income tax. Other students of the
tax system see the corporate income tax as the price corporations pay in return for special
privileges from society. The most important of these privileges is limited liability for shareholders. This means that creditors cannot claim the personal assets of shareholders, because the
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liability of shareholders for the corporation's debts is limited to the amount they have invested
in the corporation.
C Payroll Tax
Whereas an income tax is levied on all sources of income, a payroll tax applies only to wages
and salaries. Employers automatically withhold payroll taxes from employees' wages and forward them to the government. Payroll taxes are the main sources of funding for various social
insurance programs, such as those that provide benefits to the poor, elderly, unemployed, and
disabled. In 1994 payroll taxes accounted for about 26 percent of all tax revenues in the
United States; in Canada, the figure was 17 percent. For most people, payroll taxes are the second-largest tax they must pay each year, after individual income taxes.
The U.S. federal government levies the social security payroll tax at a flat 12.4 percent rate on
employees' annual gross wages up to a certain limit. The limit, which was $68,400 in 1998,
rises each year at the same rate as the growth in average wages. The government imposes no
payroll tax on earnings above the limit. Employers pay half the tax and employees pay the
other half. The Medicare payroll tax is 2.9 percent of all earnings, with no cap. Again, employers and employees split the cost of the tax. Self-employed individuals must pay the entire payroll tax.
Although the legislators who set up payroll taxes intended to divide the tax burden equally between employers and employees, this may not occur in practice. Some economists believe that
the tax causes employers to offer lower pretax wages to employees than they would otherwise,
in effect shifting the tax burden entirely to employees.
D Consumption Taxes
A consumption tax is a tax levied on sales of goods or services. The most important kinds of
consumption taxes are general sales taxes, excise taxes, value-added taxes, and tariffs.
In the United States, consumption taxes account for only 17 percent of all tax revenues. This is
considerably lower than in most other countries. In Canada, the figure is 27 percent, and in the
United Kingdom it is 35 percent. General sales taxes and excise taxes are the largest sources of
revenue for state and local governments in the United States, accounting for about 35 percent
of their total tax revenues.
D1 General Sales Taxes
A general sales tax imposes the same tax rate on a wide variety of goods and, in some cases,
services. In the United States, most states and many local governments have a general sales tax.
The country has no national general sales tax. State sales taxes range from 3 to 7 percent, and
local sales taxes range from a fraction of 1 percent to 7 percent. In Canada, all provinces except Alberta impose a general sales tax on goods. In some provinces, the provincial sales tax
and the federal goods and services tax (GST) are combined into a single tax known as the harmonized sales tax (HST). Local governments in Canada do not have the authority to impose
general sales taxes.
Although sellers are legally responsible for paying sales taxes, and sellers collect sales taxes
from consumers, the burden of any given sales tax is often divided between sellers and consumers (for more information, see the Effects of Taxes section of this article). Most states exempt
certain necessities from sales tax, such as basic groceries and prescription drugs. Both individuals and businesses pay sales tax. See Sales Tax.
D2 Excise Taxes
Federal, state, and local governments levy excise taxes, which are sales taxes on specific goods
or services. Excise taxes are also called selective sales taxes. Goods subject to excise taxes in
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the United States and Canada include tobacco products, alcoholic beverages, gasoline, and
some luxury items. Excise taxes are applied either on a per unit basis, such as per package of
cigarettes or per liter or gallon of gasoline, or as a fixed percentage of the sales price.
Governments sometimes levy excise taxes to pay for specific projects. For example, voters in a
city might approve a tax on hotel rooms to help pay for a new convention center. Some national governments impose an excise tax on airline tickets to help pay for airport improvements. Revenues from gasoline taxes typically pay for highway construction and improvements. Excise taxes designed to limit consumption of a commodity, such as taxes on cigarettes
and alcoholic beverages, are commonly known as "sin taxes."
Another type of excise tax is the license tax. Most states require people to buy licenses to engage in certain activities, such as hunting and fishing, operating a motor vehicle, owning a
business, and selling alcoholic beverages. See Excise Tax.
D3 Value-Added Tax
In Canada and Europe the favored form of consumption taxation is a value-added tax (VAT). In
this system, the seller pays the government a percentage of the value added to goods or services at each stage of production. The value added at each stage of production is the difference
between the seller's costs for materials and the selling price. In essence, a VAT is just a general
sales tax that is collected at multiple stages.
In the production of apple pies, for example, the farmer grows apples and sells them to a baker,
who turns them into a pie. The baker sells the pie to a restaurant owner, who sells it to a consumer. At each stage, the producer adds value to the commodity by processing it with capital
(machines) and labor. The farmer, the baker, and the restaurant owner each charge their customer a VAT. However, they can each claim a credit to recover the tax they paid on purchases
related to their commercial activities. See Value-Added Tax.
Canada's VAT, adopted in 1991, is known as the goods and services tax (GST). In 1998 the
GST was 7 percent on most goods and services in Canada. The government exempts certain
goods and services from the tax, including most food, most medical and dental services, childcare services, and previously owned residential housing.
D4 Tariffs
Tariffs, also called duties or customs duties, are taxes levied on imported or exported goods.
Import duties are considered consumption taxes because they are levied on goods to be consumed. Import duties also protect domestic industries from foreign competition by making imported goods more expensive than their domestic counterparts. In the United States, import
duties were the largest source of federal revenues until the introduction of the income tax in
1913. Today they account for only a small portion of federal revenues.
For general information on tariffs, see Tariff. For a history of tariffs in the United States, see Tariffs, United States.
E Property Taxes
In principle, a property tax is a tax on an individual's wealth-the value of all of the person's
assets, both financial (such as stocks and bonds) and real (such as houses, cars, and artwork). In
practice, property taxes are usually more limited. In the United States, state and local governments generally levy property taxes on buildings-such as homes, office buildings, and factoriesand on land. There is no federal property tax. In 1994 property taxes accounted for 2.2 percent
of state tax revenues and 75 percent of local tax revenues. The Canadian constitution allows
the federal government to levy property taxes. However, currently only local and provincial
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governments collect property taxes. The property tax is by far the largest source of revenue for
local governments.
The property tax is often unpopular with homeowners. One reason is that, because homes are
not sold very often, governments must levy the tax on the estimated value of the dwelling.
Some citizens believe that the government overvalues their homes, leading to unfairly high
property tax burdens.
F Estate, Inheritance, and Gift Taxes
When a person dies, the property that he or she leaves for others may be subject to tax. An estate tax is a tax on the deceased person's estate, which includes everything the person owned
at the time of death-money, real estate, stock, bonds, proceeds from insurance policies, and
material possessions. Governments levy estate taxes before the deceased person's property
passes to heirs. An inheritance tax also taxes the value of the deceased person's estate, but after
the estate passes to heirs. The inheritors pay the tax. Estate and inheritance taxes are sometimes
collectively called death taxes. A gift tax is a tax on the transfer of property between living
people.
In the United States, the federal government imposes gift and estate taxes, and some states impose inheritance or estate taxes. However, they are minor sources of revenue because the taxes
apply only to very large estates and gifts. In 1998 no federal estate tax was levied on estates
valued at less than $625,000, and only the value in excess of that amount was taxed. This exemption level was scheduled to increase in stages and reach $1 million by 2006. The U.S.
government allows various deductions, including funeral expenses, lawyers' fees, debts of the
estate, and charitable gifts. Also, property transferred to the deceased person's spouse is not
taxed. Less than 2 percent of all people who die in the United States have estates that are subject to the tax. Federal gift-tax law allows each individual to give any other person up to
$10,000 per year tax-free. In Canada, there are currently no death taxes, although both the federal and provincial governments levied estate taxes in the past.
Estate and gift taxes are controversial. Proponents argue that they are useful tools for distributing wealth more equally in society. Opponents argue that it is a person's right to pass on property to his or her heirs, and the government has no right to interfere. If an individual has paid
tax on his or her income while in the process of accumulating wealth, critics ask, why should it
be taxed again when the wealth is transferred? Others argue that estate and gift taxes discourage individuals from working and saving to accumulate wealth to leave to their children. On
the other hand, the presence of an estate tax might encourage people to accumulate greater
wealth in order to reach a given after-tax goal.
G Other Taxes
A poll tax, also called a lump-sum tax or head tax, collects the same amount of money from
each individual regardless of income or circumstances. Poll taxes are not widely used because
their burden falls hardest on the poor. When the British government implemented a system of
local poll taxes in 1990, citizens considered the tax so unfair that they held demonstrationssome violent-around the country. The extreme unpopularity of the tax contributed to the downfall of Prime Minister Margaret Thatcher. Her successor, John Major, repealed the tax in 1991.
In the United States, the 24th Amendment, ratified in 1964, prohibited the payment of poll
taxes as a requirement for voting in federal elections. Until that time, a number of Southern
states had used poll taxes to deny poor blacks the right to vote. See Poll Tax.
A pollution tax is a tax levied on a company that produces air, water, or soil pollution over a
certain level established by the government. The tax provides an incentive for companies to
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pollute less and thus reduce damage to the environment. The United States, France, Germany,
and the Netherlands all levy taxes on some types of pollution. However, these taxes account
for just a tiny amount of total tax revenue. In Canada, some provincial governments levy pollution taxes.
III HOW GOVERNMENT SPENDS TAXES
Governments spend the revenues raised by taxation on an enormous variety of items, from
atomic weapons to drug-abuse treatment programs. The annual budget published by the U.S.
government requires more than 1000 pages to list and describe all of the various programs it
pays for.
Federal government spending comprises several major categories. One of the largest government expenditures is national defense-paying for and supporting the members of the armed
forces absorbed about 17 percent of the federal budget in 1997. The most important nondefense program is Social Security, whose main function is to provide income to individuals during their retirement years. Another major program for the benefit of the elderly is Medicare, a
health insurance program that absorbed about 12 percent of the federal budget in 1997. Social
welfare programs-which include unemployment insurance and payments of cash and food to
the poor-also account for a large slice of the federal budget (see Welfare).
When the government borrows money from the public, it must pay interest like any other borrower. One popular way the federal government borrows money is by selling U.S. treasury
bonds. By purchasing the bonds, individuals lend money to the government. At the end of a
bond's term, the government returns the investment plus interest. In 1997 these and other interest payments on debt absorbed about 15 percent of the budget. This large interest bill reflects the fact that over time, the U.S. government has accumulated an enormous amount of
debt (see National Debt).
State and local governments spend the largest share of their tax revenues on public school systems. Other important expenditures include welfare programs, police and fire protection, maintenance of roads and highways, and public hospitals.
IV PRINCIPLES OF TAXATION
Seventeenth-century French statesman Jean-Baptiste Colbert declared, "The art of taxation is the
art of plucking the goose so as to get the largest possible amount of feathers with the least possible squealing." Today's economists have rather different ideas of what constitutes a good tax
system. Most believe that a tax system should follow two main principles: fairness and efficiency. British economist Adam Smith laid out these principles in his landmark treatise The
Wealth of Nations (1776).
A Fairness
Economists consider two principles of fairness to determine whether the burden of a tax is distributed fairly: the ability-to-pay principle and the benefits principle.
A1 Ability-to-Pay Principle
The ability-to-pay principle holds that people's taxes should be based upon their ability to pay,
usually as measured by income or wealth. One implication of this principle is horizontal equity, which states that people in equal positions should pay the same amount of tax. If two
people both have incomes of $50,000, then horizontal equity requires that they pay the same
amount of tax. Suppose, however, that two individuals both have incomes of $50,000, but one
has a lot of medical bills and the other is healthy. Are they in equal positions? If not, then perhaps the tax burden of the person with medical bills should be reduced. But by how much?
And how does a person document to tax authorities that he or she is truly paying medical costs,
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and not just pretending in order to lower the tax bill? This example illustrates a fundamental
dilemma in tax design: Fairness is often the enemy of simplicity.
A second requirement of the ability-to-pay principle is vertical equity, the idea that a tax system
should distribute the burden fairly across people with different abilities to pay. This idea implies that a person with higher income should pay more in taxes than one with less income.
But how much more? Should families with different incomes be taxed at the same rate or at
different rates? Taxes may be proportional, progressive, or regressive. A proportional tax takes
the same percentage of income from all people. A progressive tax takes a higher percentage of
income as income rises-rich people not only pay a larger amount of money than poor people,
but a larger fraction of their incomes. A regressive tax takes a smaller percentage of income as
income rises-poor people pay a larger fraction of their incomes in taxes than rich people.
Which is fairest-a proportional, progressive, or regressive system? There is no scientific way to
resolve this question. The answer depends on ethical and philosophical judgments, such as
whether a society has the right to take income from one group of people and give it to another.
A progressive, proportional, or even slightly regressive system all can achieve vertical equity's
requirement that a richer person should pay more in taxes than a poorer person. Most industrialized nations have progressive income tax systems, which impose a heavier tax burden as
one's income increases. In the United States, the individual income tax system divides taxable
income into different tax brackets-ranges of income with different tax rates. In 1998, for example, the federal government assessed tax of 15 percent on taxable income from $1 to $42,350,
whereas it assessed tax of 28 percent on taxable income from $42,351 to $102,300. The rate
applied to each bracket is known as the marginal tax rate. In 1998 the highest marginal tax rate
was 39.6 percent, applied to income above $278,450.
Some economists consider sales taxes regressive because individuals with higher incomes
spend a smaller proportion of their incomes on sales taxes than those with lower incomes. A
poor person and a rich person who spend the same amount on groceries each year will pay the
same amount in sales taxes, even though the rich person earns more money. However, rich
people consume more than poor people, and studies of people's spending patterns reveal that,
over the course of a lifetime, the rich person will pay roughly the same proportion of his or her
income in sales taxes as the poor person.
A2 Benefits Principle
The benefits principle of taxation states that only the beneficiaries of a particular government
spending program should have to pay for it. The benefits principle regards public services as
similar to private goods and sees taxes as the price people must pay for these services. The
practical application of the benefits principle is extremely limited, because most government
services are consumed by the community as a whole. For example, one cannot estimate the
benefit received by a particular individual for general public services such as national defense
and local police protection.
One can make a case that, for some taxes, there is a relationship between taxes paid and benefits received. Gasoline taxes, for example, are used to finance highway construction. But even
here, the link between taxes and benefits is weak. Some drivers have more fuel-efficient cars
than others. They may use the roads as much as other drivers, but buy less gasoline and thus
pay less tax. Merchants who operate stores along the sides of highways benefit from the presence of the roads, but the benefit has nothing to do with the merchants' gasoline consumption.
Despite its intuitive appeal, the benefits principle is not important in practice, and it plays little
role in the design of tax systems.
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B Efficiency
In addition to being fair, a good tax system should be efficient, wasting as little money and resources as possible. Three measures of efficiency are administration costs, compliance costs,
and excess burden.
C Administration Costs
Running a tax collection authority costs money. The government must hire tax collectors to
gather revenue, data entry clerks to process tax returns, auditors to inspect questionable returns, lawyers to handle disputes, and accountants to track the flow of money. No tax system is
perfectly efficient, but government should strive to minimize the costs of administration. The
Internal Revenue Service, which administers taxes in the United States, spent about 60 cents to
raise each $100 in taxes in 1995.
D Compliance Costs
Complying with the system-paying taxes-costs taxpayers money above and beyond the actual
tax bill. These costs include the money that people spend on accountants, tax lawyers, and tax
preparers, as well as the value of taxpayers' time spent filling out tax returns and keeping records. The compliance costs of the U.S. tax system are high. In 1989, the year of the most reliable recent survey, the average U.S. household spent about 27 hours on federal tax preparation. One estimate places the overall compliance costs of the personal income tax alone at $50
billion annually. One reason for high compliance costs is the complexity of the tax system.
Some complexity, however, is necessary to ensure fair taxation.
E Excess Burden
A third measure of a tax system's efficiency takes into account the fact that when the government levies a tax on a good, it distorts consumer behavior-people buy less of the taxed good
and more of other goods. Instead of choosing what goods to buy solely on the basis of their
intrinsic merits, consumers are influenced by taxes. This tax-induced change in behavior is
called an excess burden. The larger the excess burden of a tax, the worse it is for efficiency.
Taxes on labor can also lead to excess burdens. When the government taxes people's labor
(through an income tax), people may decide to change the number of hours that they work.
The tax distorts their choice between working and leisure.
Not every tax generates an excess burden. Consider a lump-sum tax-a fixed amount of money
that all taxpayers must pay regardless of their circumstances. If the government levies a tax of
$1000 on each citizen, regardless of what he or she buys or earns, the only way to avoid paying the tax is to leave the country or die. Citizens cannot avoid the tax by changing their behavior. Because it does not distort behavior, a lump-sum tax has no excess burden-it is perfectly efficient. However, most people would perceive such a tax as extremely unfair because it
disregards individual circumstances such as a person's ability to pay. Thus, the principles of
fairness and efficiency conflict: fairness comes at the cost of efficiency. Each society must find
the best tradeoff between fairness and efficiency, given the ethical beliefs of its citizens.
V EFFECTS OF TAXES
Economists have devoted considerable effort to studying the effects of taxes. In particular, they
study how taxes affect people's behavior, including their choices in working, saving, and investing.
To understand the effect of any tax, one must first determine who bears the burden of the tax.
This is not always an easy task. Suppose that the price of a chocolate doughnut is $1.00. The
government then imposes on sellers a tax of 10 cents per doughnut. A few weeks after its imposition, the tax causes the price to increase to $1.10. The doughnut seller clearly receives the
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same amount per doughnut as he or she did before the tax-the tax has not made the seller
worse off. Consumers pay the entire tax in the form of higher prices. On the other hand, suppose that after the tax the price increases to $1.04. In this case, the seller keeps only 94 cents
per doughnut, and is worse off by 6 cents per doughnut. Consumers are also worse off, however, because they have to pay 4 cents more per doughnut. In this case, retailers and consumers share the burden of the tax.
The way a tax affects people is called the tax incidence. The statutory incidence of a tax refers
to the individuals or groups who must legally pay the tax. The statutory incidence reveals essentially nothing about a tax's real burden, because as previously illustrated, prices may
change in response to a tax. In contrast, the economic incidence of a tax refers to its actual effects on people's incomes. The economic incidence of a tax depends on how buyers and sellers of the commodity react when the tax is imposed. The more sensitive consumers are to
changes in price, the easier it is for them to turn to other products when the price goes up, in
which case producers bear more of the tax burden. On the other hand, if consumers purchase
the same amount regardless of price, they bear the whole burden.
A Labor Supply
An economy's labor supply is the number of hours that people work. Taxes can affect the labor
supply by influencing people's decisions about whether to work and how much to work. Suppose that an individual earns $10 per hour, and the government imposes a 40 percent tax on
earnings. Then after tax, the individual receives only $6 per hour ($10 minus $4 in taxes). The
impact of such a tax is hard to predict. On one hand, the tax lowers the cost to the individual
of not working. For each hour of leisure, the individual gives up only $6 instead of $10. In effect, leisure has become cheaper, so the individual tends to consume more of it-that is, to work
less. On the other hand, with a lower wage, the individual must work more hours to maintain
the standard of living he or she had before the tax. Thus, the tax simultaneously leads to two
effects that work in opposite directions.
However, empirical work-analysis based on observation of real-world data-has suggested two
important general tendencies. First, for most men, the effect of taxes on hours of work is relatively small. Second, the work-related decisions of married women are quite sensitive to
changes in taxes. Research suggests that a tax increase that lowered their wages by 10 percent
would lower the number of hours that married women work by about 5 percent.
B Saving
Saving is the portion of income that is not spent. Might taxes levied on returns to saving (such
as interest and dividends) influence the amount people save? When a tax is levied on interest
or dividends, it reduces the reward for saving. For example, if an individual earns 10 percent
interest on a savings account and faces a 20 percent income tax rate, then he or she makes
only an 8 percent return-the other 2 percent goes to the government. This effect tends to reduce
the amount of saving that an individual does. On the other hand, when interest is taxed, an
individual must save more to achieve any particular savings goal. For example, if parents regularly save money to accumulate enough for their child's college tuition payments, and taxes on
interest increase, they must save more in order to reach their saving target. This effect tends to
increase the amount of saving. Because the two effects work in opposite directions, in theory
an increase in the tax on interest can increase or decrease saving. Economists have devoted a
great deal of effort to studying people's saving behavior. Although no firm consensus has
emerged on the impact that changes in interest and dividend tax rates have on saving, a reasonable estimate is that such changes have a negligible effect.
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C Physical Investment
Physical investment refers to the purchase by businesses of manufactured aids to production.
Physical investment includes such items as machines, factories, computers, trucks, and office
furniture. The return on a physical investment is the amount by which the investment increases
the business's revenues. How do taxes affect physical investment? In effect, a tax on business
income is a tax on the physical investment's return-the tax reduces the firm's income and thus
the benefit from making the investment. Most economists believe that business taxes decrease
the amount of physical investment by businesses.
Taxes also influence the types of physical investments that businesses make. This is because the
government taxes returns on some types of investments at higher rates than others. These differences cause businesses to make investment decisions based on tax consequences, rather
than whether they are sound from a business point of view. By distorting physical investment
decisions, the tax system leads to an inefficient pattern of investment.
D Tax Evasion and Avoidance
Tax evasion is failing to pay legally due taxes. One important way that high tax rates affect behavior is by increasing evasion. For example, people may fail to report income to the government, thus reducing their tax bill and the government's tax revenue. Tax cheating is extremely
difficult to measure. The Internal Revenue Service estimates that taxpayers voluntarily pay only
about 80 percent of the taxes they legally owe. The greater an individual's tax rate, the greater
the incentive to defraud the government.
Tax avoidance occurs when people change their behavior to reduce the amount of taxes they
legally owe. When individuals relocate their business to a state with lower taxes or take advantage of loopholes in tax laws, they are practicing tax avoidance. There is nothing illegal about
tax avoidance.
VI HISTORY OF TAXATION
For as long as governments have existed, they have had to come up with ways to finance their
activities. Methods of public finance have changed enormously over time.
A Ancient Times
In the ancient civilizations of Palestine, Egypt, Assyria, and Babylonia, individual property
rights did not exist. The king was sole owner of everything in his domain, including the bodies
of his subjects. Thus, instead of taxing individuals to support the government, the king could
simply force them to work for him. Ancient kings earned income in the form of food from their
lands and precious metals from their mines. If this income did not meet the king's demands, he
might lead his armies into neighboring countries to confiscate their property. The conquered
peoples might also be required to make payment (known as tribute) to the conqueror in acknowledgment of their submission to his power. If kings were not very wealthy or not very
good at stealing from other countries, they would resort to taxing their own people. In societies
that operated without money, the ruler taxed farmers by requiring that they turn over some
proportion of their crops to the state. Poll taxes were a major source of revenue in Egypt under
the Ptolemaic dynasty (323 BC-30 BC).
The government of ancient Athens, Greece, relied on publicly owned silver mines, tribute from
conquered countries, a few customs duties, and voluntary contributions from citizens for revenue. It levied poll taxes only on slaves and aliens (noncitizens) and made failure to pay a capital crime.
In the early years of the Roman republic all Roman citizens paid a poll tax. However, Roman
military victories brought in so much foreign tribute that the government exempted citizens
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from this tax in the 2nd century BC, after the Punic Wars between Rome and Carthage. More
than 100 years later, Emperor Augustus introduced land and inheritance taxes. Succeeding emperors raised rates and found an increasing number of things to tax, including wheat and salt.
B Medieval Times
During the Middle Ages, from about the 5th century AD to the 15th century, taxation varied
from region to region. Europeans were subject to many forms of taxation, including land taxes,
poll taxes, inheritance taxes, tolls (payments for the use of bridges, roads, or seaports), and miscellaneous fees and fines. Many people paid taxes in the form of money or crops directly to the
local lord whose land they farmed.
Under the system of feudalism that dominated in Western Europe beginning in about the 11th
century, kings, nobles, and church rulers all collected taxes. Kings derived income from their
lands, from import and export duties, and from the various feudal dues and services owed by
their vassals. For the most part, church officials and nobles were granted exemption from royal
taxes, so the burden of taxation fell heavily on the peasantry. When King John of England tried
to increase his income by a series of heavy scutages (payments that knights made in lieu of
military service), the feudal nobility refused to pay. In 1215 they forced the king to sign the
Magna Carta, a document in which he agreed to collect scutage only with the "common consent" of his barons-thus limiting the king's power to tax.
The Roman Catholic church was a major tax collector during the Middle Ages. One of the most
important sources of church revenue was the tithe, a compulsory payment of one-tenth of a
person's harvest and livestock. The church also collected various fees, fines, and tolls, and required clergy members, such as bishops and archbishops, to make payments to the papacy in
Rome.
An important development toward the end of the feudal period was the dramatic growth in the
number and population of towns and cities. These urban centers collected revenues using taxes
on property as well as sales taxes on certain items.
C 16th Century to Modern Period
Over a period of time, feudalism faded and strong centralized states emerged in Europe. During
the 16th and 17th centuries, these states relied heavily on revenues generated by the king's
own estates and by taxes on land. In England, the power of Parliament grew steadily because
the kings and queens had to convene it frequently to obtain money. In 1689 the English Bill of
Rights guaranteed that the king could not tax without Parliament's consent.
By the 18th century, England started imposing various taxes on transactions. Taxes on imported
goods (tariffs) assumed great importance, as did taxes on a wide variety of commodities, including sugar, meat, chocolate, alcohol, coffee, candles, and soap. As time passed, people became dissatisfied with this system of public finance for several reasons. First, although the English government levied some taxes on commodities consumed only by the rich-window glass,
for example, which was a great luxury at the time-in general people perceived that the burden
of taxes fell mostly on the poor. In addition, tax systems did not generate as much revenue as
the governing classes wanted. Finally, economists and political leaders began realizing that by
reducing trade, tariffs created economic losses for society.
In the late 19th and early 20th centuries, concerns about both fairness and the ability of tax
systems to generate sufficient revenue led governments to enact income taxes. In 1799 Britain
enacted the first national income tax, to finance the Napoleonic Wars. The government discontinued the tax when the war ended in 1815, but revived it in 1842. The first progressive income
tax-which imposed a greater tax burden on people with higher incomes-was introduced in
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Prussia in 1853. Other countries introduced progressive income taxation in subsequent decades, including Britain in 1907, the United States in 1913, and France in 1917. Although income taxes generated little revenue at first, today they play a major role in all modern tax systems.
D Taxation in the United States
D1 Early Colonies
During the 17th and early 18th centuries, local and provincial governments in the British colonies of North America levied taxes to finance schools, road building, military expenditures, law
enforcement, and in some cases, churches. Cities and counties levied property taxes based on
a person's ownership of land and livestock and imposed poll taxes on adult men-who also paid
the poll taxes of their slaves, servants, and hired workers. Some communities imposed an additional tax on doctors, lawyers, and other professionals and artisans whose special training gave
them greater earning power. The colonies taxed imported goods from Europe and the West
Indies (but not from Britain), and some colonies taxed certain exports, such as tobacco or furs.
Many colonies collected excise taxes on liquor from tavern owners.
Taxation of the American colonies by Great Britain was one of the major causes of the American Revolution. Before the French and Indian War (1754-1763), Britain imposed few taxes on
the colonies. The war left Britain deeply in debt, however, and the British Parliament insisted
that the prosperous colonies help pay for the cost of protecting them. In 1764 Parliament
passed the Sugar Act, which taxed non-British imports of sugar and molasses and, unlike the
Molasses Act of 1733, was strictly enforced (see Sugar and Molasses Acts). A year later Parliament passed the Stamp Act, which required colonists to buy and place tax stamps on all legal
documents, licenses, newspapers, pamphlets, and playing cards. Both taxes caused widespread
resentment among the colonists. They believed that the British government had no right to tax
the colonies without allowing them representation in Parliament-the principle of "no taxation
without representation." In response, colonists rioted and boycotted British goods, causing the
British Parliament to repeal the Stamp Act in 1766.
In 1767 Parliament passed the Townshend Acts, which imposed duties on a variety of imports
to the colonies. Colonists responded with violent protests-one riot led to the Boston Massacreand by again boycotting British goods. In 1770 Britain repealed all but the tea duty, leaving it
as a symbol of its right to tax the colonies. The Tea Act, passed by Parliament in 1773, lifted tea
import duties in England but retained them in the colonies. The measure incensed American
patriots and resulted in the Boston Tea Party, in which patriots dumped shiploads of British tea
into Boston Harbor . War broke out between the colonies and Britain in 1775. See American
Revolution.
D2 A New Nation
The Articles of Confederation, adopted in 1781 as the first constitution of the United States,
denied the federal government the power of taxation. The federal government relied on donations from individual states for its revenues, but sometimes states refused to make payments to
the federal government. The inability of Congress to tax rendered it largely ineffectual. For example, Congress was unable to meet patriot officers' demands for back pay, and it could not
pay interest on the war debt.
The federal government obtained the power to levy taxes with the ratification of the Constitution of the United States in 1789. The Revenue Act of 1791 established tariffs on select imported goods and imposed excise taxes on a variety of goods, including horse-drawn carriages,
distilled liquor, snuff, and refined sugar. These taxes proved extremely unpopular. Discontent
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boiled over into the Whiskey Rebellion of 1794, in which farmers protested a tax on whiskey of
30 cents per gallon. The government repealed most of these sales taxes in 1801 but temporarily
reinstated them to finance the War of 1812. During the Civil War (1861-1865) the Union government financed itself through an elaborate system of excise taxes, including taxes on alcohol,
tobacco, manufactured goods, legal documents, and bowling alleys. Until the beginning of the
20th century, various excise taxes, along with tariffs, were the largest sources of revenue for the
federal government.
D3 Introduction of Income Taxes
The federal government first imposed an individual income tax in 1862 as an emergency
means of financing the Civil War. It also established the Bureau of Internal Revenue, predecessor of the Internal Revenue Service. Tax rates were 3 percent on income from $600 to $10,000
and 5 percent on income above $10,000. Later in the war the maximum rate increased to 10
percent of income. In 1872, the government eliminated the tax because the extraordinary revenue needs of the war no longer existed.
As the 19th century came to a close, sentiment in favor of income taxation grew. Just as in
other countries, the public believed that sales taxes and tariffs permitted wealthy people to
avoid their fair share of the burden of financing government. Congress passed a progressive
income tax in 1894, but the Supreme Court declared it unconstitutional a year later. The court
ruled that the Constitution required taxes on people to be collected in proportion to a state's
population, and that income taxes violated this requirement. In 1909 the government imposed
a tax on the income of corporations for the first time. At the same time, proponents of an individual income tax pressed for a constitutional amendment. The 16th Amendment, ratified in
1913, authorized individual income taxation. It gave Congress the power "to lay and collect
taxes on incomes, from whatever source derived, without apportionment among the several
States, and without regard to any census or enumeration."
In late 1913 Congress enacted a tax on annual income over $3,000, with marginal (bracket)
rates ranging from 1 to 7 percent. At the time, few people earned more than $3,000 per year,
so less than 1 percent of the population even filed tax returns. The costs of World War I (19141918) led Congress to raise income taxes and make more people eligible to pay them. In 1935
the government imposed a tax on payrolls to finance the Social Security system. In 1943 it began mandatory withholding of individual income taxes from payrolls, which dramatically increased the ease of administering the income tax. By 1945 marginal rates ranged from 23 percent to 94 percent. The maximum marginal tax rate dropped to 70 percent in 1965.
In the 1980s President Ronald Reagan made tax reform a centerpiece of his presidency. He
embraced a policy of supply-side economics, which predicted that lower taxes would stimulate
work effort and saving. The Economic Recovery and Tax Act of 1981 reduced business taxes
and lowered the maximum marginal tax rate to 50 percent. The landmark Tax Reform Act of
1986 further lowered this rate to 28 percent. It also ended deductions for interest paid on consumer loans and student debt, raised the capital gains tax rate to that of ordinary income, and
eliminated some special provisions and loopholes in tax laws.
In 1990 President George Bush and Congress agreed to raise taxes to trim the budget deficit,
which had grown substantially in the 1980s. Their tax bill raised the highest marginal tax rate
to 31 percent. President Bill Clinton's deficit-reduction bill, passed by Congress in 1993,
sharply increased corporation taxes, increased tax credits for the poor, and raised taxes on upper-income individuals. The maximum marginal tax rate on individual income increased to
39.6 percent. In the 1990s Congress also restored preferential tax rates for income from capital
gains.
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Modern History I (Imperialism to the Age of Depression and Recovery)
E Taxation in Canada
The first known taxes in Canada were export taxes on furs imposed by the French regime in
1650. The French government soon replaced these with tariffs on imported goods. Tariffs continued to be of major importance during the period of British rule, which began in 1763. The
British North America Act of 1867 stated that the provinces could levy income taxes, but could
no longer levy tariffs. However, the levying of income taxes on individuals and businesses did
not become widespread in the provinces until the end of the 19th century.
In 1917 the federal government, which had relied primarily on excise taxes, created both a
personal income tax and a corporate income tax, both of which had previously been levied
only by provinces. The federal government introduced a general sales tax in 1920. All the provinces created gasoline taxes in the 1920s and collected taxes on alcohol sales. During World
War II the provinces suspended their income taxes.
After World War II, the federal government took over the income tax from the provinces, paying them a fee for this right. In 1962 the provinces regained the right to levy income taxes. All
provinces soon imposed individual income taxes. (Except in the province of Québec, provincial income taxes are collected by the federal government and then given over to provincial
governments.) Also, from 1973 to 1990, all provinces adopted some form of corporate income
tax.
In 1991 the federal government introduced a goods and services tax (GST). This broad-based
tax applies to most goods and services, although certain commodities, such as basic groceries
and medical supplies, are exempt from the tax. In 1997 the federal government began replacing the GST and provincial sales taxes with the harmonized sales tax (HST), an integrated federal-provincial sales tax.
Contributed By: Harvey S. Rosen
"Taxation," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All
rights reserved.
Retailing
I INTRODUCTION
Business activity of selling goods and services directly to consumers. Instead of selling products
for resale, a retailer sells goods or services to individuals making purchases for themselves or
their families. Some retailing businesses sell a combination of goods and services. For example,
an automobile dealership that sells automobiles (goods) may also provide automobile repairs
(services).
Retailers play an important role in getting products from producers to consumers. Retailers help
direct the physical flow of goods and services from places that produce goods to places where
goods are used. Since the retailer has direct contact with the users of goods and services, the
retailer can discover and attempt to meet the needs and preferences of consumers.
II RETAILING STRATEGY
To be successful, a retailer must distinguish itself from other retailers and develop a strategy for
satisfying the needs and preferences of a specific consumer group. This strategy, called a retail
mix, involves careful consideration of (1) the productto sell, (2) the quantity at which to make
the product available, (3) the location at which to sell the product, (4) the time to make the
product available, (5) the pricing of the product, and (6) the appeal that can be generated to
attract the consumer's interest.
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A The Product
Retailers strive to offer products that appeal to the tastes of the consumer, are of good quality,
and function properly. Sometimes the product must also provide psychological and emotional
benefits, such as prestige or convenience. For example, an expensive watch with a wellknown, visible brand name may give its owner a sense of prestige.
B Quantity
Unlike wholesalers, who sell goods in quantities that often are too large to be useful for individuals or families, retailers sell products in small quantities that are more convenient for consumers. For example, wholesalers may sell jeans to retail stores in lots (units) of a dozen pairs
each. Retailers then sell consumers jeans by the individual pair.
C Location
A retailer's location must be convenient. In locating retail stores, retailers consider the market
or town in which they want to establish themselves, the part of town to be in, and the actual
site of their store. In some cases, no store is involved because the right location for shopping for
a product is the consumer's home or place of business. These retailers without stores, known as
nonstore retailers, act as direct marketers by contacting customers directly through mail, the
Internet, television, telephone, or other means.
D Timing
Retailers must make their products available at times when consumers are willing and able to
buy them. Retailers identify consumer buying patterns and adjust such things as store hours,
inventory levels, and promotional programs to accommodate consumers. Retailers also identify
special times that generate opportunities to sell merchandise, such as holidays, changing seasons, and special occasions, such as weddings and school graduations.
E Pricing
Retailers use different pricing strategies to attract different consumers. For example, some stores
use low or discount prices to attract economy-minded consumers, while some stores set higher
prices to convey an upscale image.
F Appeal
Retailers work hard at creating an image of their store or product that customers find appealing.
Retailers use such promotional techniques as advertising and public relations to create awareness and build interest in their products. These techniques also attract customers to the retailer's store, provide valuable information about the retailer, and persuade customers to buy.
III KINDS OF RETAILERS
There are many kinds of retailers and they can be categorized according to their store format.
Each format has different management and selling techniques for satisfying the needs of a select
group of customers. By using different formats, retailers are able to differentiate themselves
from their competition. The most common kinds of retailers include specialty stores, department stores, discount stores, retail chain stores, warehouse retailers, and off-price retailers.
A Specialty Stores
Specialty stores offer a limited number of different product lines, such as women's clothing or
sporting goods, but provide their customers with an extensive selection of brands and styles
within each product line. Examples of specialty stores include those operated by Toys "R" Us,
Circuit City, Tower Records, and Eddie Bauer.
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Modern History I (Imperialism to the Age of Depression and Recovery)
B Department Stores
Department stores feature a wide variety of different product lines and a selection of merchandise within each line. These large stores have many separate departments that sell different
types of merchandise, making a wide variety of goods available to consumers in one place.
Bloomingdale's and Macy's are examples of two national department store chains.
C Discount Stores
Discount stores, such as Wal-Mart and Kmart, sell a wide variety of merchandise at low prices.
Discount retailers focus on attaining a large volume of sales and in return give up some profit
margin per sale.
D Retail Chain Stores
Retail chain stores are multiple stores that carry much of the same merchandise and are managed with the same policies. In many cases chain stores have the same owner, although sometimes individuals own franchises that are part of a chain. Any kind of store, such as a specialty
store, a department store, or a supermarket, can be a chain store. For example, The Gap is a
chain of specialty stores that offers casual apparel for teenagers and adults. Sears and J. C. Penney are two large department store chains.
EWarehouse Retailers Warehouse retailers offer a limited selection of many kinds of products.
They deal in large quantities and tend to have lower prices. Home improvement centers, such
as Builder's Square and Home Depot, and warehouse clubs, such as Sam's Club, Price Club,
and Costco, are examples of warehouse retailers.
F Off-Price Retailers
Off-price retailers include factory outlet stores, close-out stores, and one-price retailers. These
stores sell irregular or flawed merchandise, factory overruns-that is, excess merchandise-and
other goods at prices below regular retail prices.
IV OTHER RETAILERS
Supermarkets and convenience stores are also retailers. Supermarkets offer a broad variety of
groceries, as well as nonfood items such as toiletries and school and office supplies. Many supermarkets also offer a wide selection of ready-to-eat items, such as prepared salads, sandwiches, and entrees. Convenience stores, such as 7-11 and White Hen Pantry, also sell a variety of food and other items. Their strategy is to provide customers with a convenient time and
place to buy needed items. Convenience stores are usually small and located on busy streets to
make it easy for customers to make a quick purchase.
Some retailers do not use a store as their principle means of contacting customers. Instead,
these nonstore retailers contact customers by telephone, mail, the Internet, or by personally
meeting with potential customers at their home, workplace, or some other convenient location.
For example, telemarketers phone potential customers to market goods and services. Some retailers send catalogs to homes and businesses so customers can order merchandise at their
convenience. Cybermalls on the Internet allow customers to browse for goods and services by
visiting a site on the World Wide Web. Finally, vending machine companies act as nonstore
retailers by selling items from machines that are located where people are likely to find them
convenient, such as in gas stations or work places.
Contributed By: Dale M. Lewison
"Retailing," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation. All
rights reserved.
234
Modern History I (Imperialism to the Age of Depression and Recovery)
Nasdaq's year of pain By Jake Ulick, CNNfn Staff Writer
Summary: Once a haven for well-heeled investors, the technology-heavy Nasdaq stock market
continued its year-long slide on Monday, falling below the 2000 mark for the first time in
nearly 27 months. Experts credited the drop to a number of factors, including inflated stock
prices, weak corporate profits and the current wave of economic conservatism among Wall
Street managers.
NEW YORK (CNNfn) - The Nasdaq composite index celebrated the one-year anniversary of its
record high on Saturday. But nobody threw a party.
Some investors may have thrown something else on Monday, however, when the Nasdaq sunk
below 2,000 for Few on Wall Street had a good day on Monday, as the Dow Jones industrial
average and the Standard and Poors 500 both lost over 4 percent of their total value. But both
of these drops paled in comparison to the Nasqdaq's historic 192.39 closing mark, a loss of
over 6 percent of its total value in just one trading day.
In 52 painful weeks, the Nasdaq has tumbled over 60 percent, deflating a technology stock
bubble that, while it lasted, turned the market into a money machine and national pastime.
What a difference a year makes. Twelve months ago, the Nasdaq closed at 5,048.62. Its 16th
record high of the year came on top of an 86 percent gain in 1999.
Now the Nasdaq, after sliding 39.2 percent last year, is down over 20 percent in 2001 and
hovers at levels not seen since late 1998. Investors who once fixated on their portfolios, especially those full of high-tech stocks, now would rather not look.
In twelve fast months, a once hard-charging economy slowed while investor sentiment darkened. Optimism about the growth prospects for technology companies has given way to fears
about the risks of those very same firms.
Companies' earnings and interest rates, once deemed of scant importance, now matter. For
stock market conservatives, or bears, who once were accused of misunderstanding the new
rules of a "new economy," there's vindication.
"Euphoria can only go on for a certain amount of time," said Marc Klee, who manages the John
Hancock Global Technology Fund. "Eventually reality wins out."
Recent months have brought plenty of reality. Microsoft, Sun Microsystems, Oracle and Intel,
once among the nation's most dependable companies, all have warned that profits or sales will
miss forecasts.
When the Nasdaq peaked, the U.S. economy was growing at a 5.4 percent clip. The Federal
Reserve was raising interest rates to keep the economy from overheating.
Economists now expect little if any growth for this quarter. And the central bank, led by chairman Alan Greenspan, has already cut rates and is planning more - all in the hopes of avoiding
a recession.
But changes in economic and corporate fundamentals tell just part of the story. The mania that
drove tech stock valuations to levels beyond precedent has something to do with sentiment.
Overall, the stock market has had to reel in its optimism in favor of a conservative approach
Consider Qualcomm. When 1999 began, the maker of wireless communications equipment
traded at about $6. At the start of last year, its shares had soared above $176. Qualcomm now
trades at $54.
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Modern History I (Imperialism to the Age of Depression and Recovery)
"Like the Great Tulip Mania in Holland in the 1600's and the dot.com mania of early 2000,
markets have repeatedly disconnected from reality," said Tony Crescenzi, analyst at Miller, Tabak & Co.
The boom and bust cycle highlighted several investing basics. One may be the near impossibility of determining when a market's value - or that of a given stock, for that matter -- will peak
and how far it will fall. Trying to time the trends is a bad idea, say money managers who advise
taking a long-term approach to investing.
The past 12 months also underscore the value of diversifying among sectors. With technology
stocks falling, drug, real estate investment trusts, utilities and food stocks all posted smart gains.
A year ago today, many analysts thought that technology stocks were impervious to higher interest rates. They were wrong. Technology spending, some said, would continue even if the
economy cooled.
Oracle proved otherwise. The company last week joined hundreds of firms saying that a slowdown in business orders for its software would cause the company to miss profit expectations.
The Nasdaq's deflation hit most every high-tech field. The Internet stocks were among the first
to go, with Amazon.com peaking above $105 in late 1999; it now trades at $13.
Then came the infrastructure stocks. Cisco Systems, which makes routers and switches for the
Internet, saw its shares top in April last year.
Fiber-optic stocks like JDS Uniphase held up well through September, while data storage shares
such as EMC Corp made it until the early part of winter before falling.
Some of the Web's most recognizable names were hit the hardest, as the Nasdaq's losses pale
compared with some of its components. Yahoo! stock is down 93 percent from its peak of
$237.50 reached earlier last year.
Jeremy Siegel, a professor of finance at the Wharton School, sees the year-long sell-off as a rational response to fast-weakening corporate profits. And he says the worst may not be over. "I
don't think (tech stocks) are cheap," Siegel said. "But they are closer to true value."
John Hancock's Klee is more upbeat. While Klee calls current fundamentals "dreadful," he sees
tech stocks rising modestly later this year as the economy improves. His forecasts for a Nasdaq
at 3,000 by year's end would give the index a 21 percent gain in 2001.
For students of market history, the loses and gains appear rational from afar.
"The market correctly saw that the economy was going to soften in the fourth quarter," Klee
said.
But that's little comfort for the person who bought CMGI, the company with stakes in other
Internet firms, at $163 a share early last year. CMGI now trades at $4.
Wall Street
Site of major United States stock exchanges and financial institutions, located in the lower
Manhattan area of New York City. The term Wall Street has come to be synonymous with
United States financial interests.
"Wall Street," Microsoft® Encarta® Encyclopedia 2000. © 1993-1999 Microsoft Corporation.
All rights reserved.
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