✪✪✪ Two Major Causes For US Expansion After 1890

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Two Major Causes For US Expansion After 1890



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Western Expansion

Austria-Hungary feared that if it displayed weakness, its neighbours to the south and the east would be emboldened, but war with Serbia would put to an end the problems experienced with Serbia. There was also a feeling that the moral effects of military action would breathe new life into the exhausted structures of the Habsburgs by restoring the vigour and virility of an imagined past and that Serbia must be dealt with before it became too powerful to defeat militarily. His removal not only provided the casus belli but also removed one of the most prominent doves from policymaking. Since taking on Serbia involved the risk of war with Russia, Vienna sought the views of Berlin.

Germany provided unconditional support for war with Serbia in the so-called "blank cheque. It was hoped that the ultimatum would be rejected to provide the pretext for war with a neighbor that was considered to be impossibly turbulent. Samuel R. Williamson, Jr. Convinced that Serbian nationalism and Russian Balkan ambitions were disintegrating the empire, Austria-Hungary hoped for a limited war against Serbia and that strong German support would force Russia to keep out of the war and to weaken its prestige in the Balkans. Austria-Hungary remained fixated on Serbia but did not decide on its precise objectives other than eliminating the threat from Serbia.

Worst of all, events soon revealed that Austria-Hungary's top military commander had failed to grasp Russia's military recovery since its defeat by Japan; its enhanced ability to mobilize relatively quickly; and not least, the resilience and strength of the Serbian Army. Nevertheless, having decided upon war with German support, Austria-Hungary was slow to act publicly and did not deliver the ultimatum until July 23, some three weeks after the assassinations on 28 June. Thus, it lost the reflex sympathies attendant to the Sarajevo murders and gave the further impression to the Entente powers of using the assassinations only as pretexts for aggression.

On July 6, Germany provided its unconditional support to Austria-Hungary's quarrel with Serbia in the so-called "blank cheque. The thinking was that since Austria-Hungary was Germany's only ally, if the former's prestige was not restored, its position in the Balkans might be irreparably damaged and encourage further irredentism by Serbia and Romania. A Serbian defeat would also be a defeat for Russia and reduce its influence in the Balkans. The benefits were clear but there were risks that Russia would intervene and lead to a continental war. However, that was thought even more unlikely since Russia had not yet finished its French-funded rearmament programme, which was scheduled for completion in Moreover, it was not believed that Russia, as an absolute monarchy, would support regicides and, more broadly, "the mood across Europe was so anti-Serbian that even Russia would not intervene.

On the other hand, the military thought that if Russia intervened, St. Petersburg clearly desired war, and now would be a better time to fight since Germany had a guaranteed ally in Austria-Hungary, Russia was not ready and Europe was sympathetic. On balance, at that point, the Germans anticipated that their support would mean the war would be a localised affair between Austria-Hungary and Serbia, particularly if Austria moved quickly "while the other European powers were still disgusted over the assassinations and therefore likely to be sympathetic to any action Austria-Hungary took.

Petersburg for a prescheduled state visit on 20 July and departed on 23 July. The French and the Russians agreed their alliance extended to supporting Serbia against Austria, confirming the pre-established policy behind the Balkan inception scenario. As Christopher Clark noted, "Poincare had come to preach the gospel of firmness and his words had fallen on ready ears. Firmness in this context meant an intransigent opposition to any Austrian measure against Serbia. At no point do the sources suggest that Poincare or his Russian interlocutors gave any thought whatsoever to what measures Austria-Hungary might legitimately be entitled to take in the aftermath of the assassinations. On 21 July, the Russian Foreign Minister warned the German ambassador to Russia, "Russia would not be able to tolerate Austria-Hungary's using threatening language to Serbia or taking military measures.

German Chancellor Theobald von Bethmann-Hollweg told his assistant that Britain and France did not realise that Germany would go to war if Russia mobilised. He thought that London saw a German "bluff" and was responding with a "counterbluff. Meanwhile, Berlin downplayed its actual strong support for Vienna to avoid appearing the aggressor and thus alienate German socialists. On 23 July, Austria-Hungary, following its own enquiry into the assassinations, sent an ultimatum [1] to Serbia, containing their demands and giving 48 hours to comply. On 24—25 July, the Russian Council of Ministers met at Yelagin Palace [70] and, in response to the crisis and despite the fact that Russia had no alliance with Serbia, it agreed to a secret partial mobilisation of over one million men of the Russian Army and the Baltic and Black Sea Fleets.

It is worth stressing since it is a cause of some confusion in general narratives of the war that Russia acted before Serbia had rejected the ultimatum, Austria-Hungary had declared war on 28 July, or any military measures had been taken by Germany. The move had limited diplomatic value since the Russians did not make their mobilisation public until 28 July. In addition, Russian Foreign Minister Sergey Sazonov believed that war was inevitable and refused to acknowledge that Austria-Hungary had a right to counter measures in the face of Serbian irredentism. On the contrary, Sazonov had aligned himself with the irredentism and expected the collapse of Austria-Hungary.

Crucially, the French had provided clear support for their Russian ally for a robust response in their recent state visit only days earlier. Also in the background was Russian anxiety of the future of the Turkish Straits, "where Russian control of the Balkans would place Saint Petersburg in a far better position to prevent unwanted intrusions on the Bosphorus. The policy was intended to be a mobilization against Austria-Hungary only. However, incompetence made the Russians realise by 29 July that partial mobilization was not militarily possible but would interfere with general mobilization. The Russians moved to full mobilization on 30 July as the only way to allow the entire operation to succeed.

Christopher Clark stated, "It would be difficult to overstate the historical importance of the meetings of 24 and 25 July. For one thing, Russian premobilisation altered the political chemistry in Serbia, making it unthinkable that the Belgrade government, which had originally given serious consideration to accepting the ultimatum, would back down in the face of Austrian pressure. It heightened the domestic pressure on the Russian administration Most importantly of all, these measures drastically raised the pressure on Germany, which had so far abstained from military preparations and was still counting on the localisation of the Austro-Serbian conflict.

Serbia initially considered accepting all the terms of the Austrian ultimatum before news from Russia of premobilisation measures stiffened its resolve. The Serbs drafted their reply to the ultimatum in such a way as to give the impression of making significant concessions. However, as Clark stated, "In reality, then, this was a highly perfumed rejection on most points. On July 29, , the Tsar ordered full mobilisation but changed his mind after receiving a telegram from Kaiser Wilhelm and ordered partial mobilisation instead. The next day, Sazonov once more persuaded Nicholas of the need for general mobilization, and the order was issued on the same day.

Clark stated, "The Russian general mobilisation was one of the most momentous decisions of the [ clarification needed ] July crisis. This was the first of the general mobilisations. It came at the moment when the German government had not yet even declared the State of Impending War. Clark states, "German efforts at mediation — which suggested that Austria should 'Halt in Belgrade' and use the occupation of the Serbian capital to ensure its terms were met — were rendered futile by the speed of Russian preparations, which threatened to force the Germans to take counter—measures before mediation could begin to take effect. Thus, in response to Russian mobilisation, [ citation needed ] Germany ordered the state of Imminent Danger of War on 31 July, and when the Russians refused to rescind their mobilization order, Germany mobilized and declared war on Russia on 1 August.

The Franco-Russian Alliance meant that countermeasures by France were correctly assumed to be inevitable by Germany, which declared war on France on 3 August After the German invasion of neutral Belgium, Britain issued an ultimatum to Germany on 2 August to withdraw or face war. The Germans did not comply and so Britain declared war on Germany on 4 August Britain's reasons for declaring war were complex. The ostensible reason given was that Britain was required to safeguard Belgium's neutrality under the Treaty of London According to Isabel V.

Hull :. The German invasion of Belgium legitimised and galvanised popular support for the war, especially among pacifistic Liberals. The strategic risk posed by German control of the Belgian and ultimately the French coast was unacceptable. Britain's relationship with its Entente partner France was critical. Edward Grey argued that the secret naval agreements with France, despite not having been approved by the Cabinet, created a moral obligation between Britain and France. That would leave both Britain and its empire vulnerable to attack. What will be the position of a friendless England? What would be their attitude towards England? What about India and the Mediterranean?

Domestically, the Liberal Cabinet was split, and if war was not declared the government would fall, as the Prime Minister H. Asquith , as well as Edward Grey and Winston Churchill , made it clear that they would resign. In that event, the existing Liberal Cabinet would fall since it was likely that the pro-war Conservatives would come to power, which would still lead to a British entry into the war, only slightly later. The wavering Cabinet ministers were also likely motivated by the desire to avoid senselessly splitting their party and sacrificing their jobs.

On the diplomatic front, the European powers began to publish selected, and sometimes misleading, compendia of diplomatic correspondence, seeking to establish justification for their own entry into the war, and cast blame on other actors for the outbreak of war. The German government was still dominated by the Prussian Junkers , who feared the rise of left-wing parties. Fritz Fischer famously argued that they deliberately sought an external war to distract the population and to whip up patriotic support for the government.

Other authors argue that German conservatives were ambivalent about a war for fear that losing a war would have disastrous consequences and believed that even a successful war might alienate the population if it was lengthy or difficult. Many German people complained of a need to conform to the euphoria around them, which allowed later Nazi propagandists to "foster an image of national fulfillment later destroyed by wartime betrayal and subversion culminating in the alleged Dolchstoss stab in the back of the army by socialists.

The argument that Austria-Hungary was a moribund political entity, whose disappearance was only a matter of time, was deployed by hostile contemporaries to suggest that its efforts to defend its integrity during the last years before the war were, in some sense, illegitimate. Clark states, "Evaluating the prospects of the Austro-Hungarian empire on the eve of the first world war confronts us in an acute way with the problem of temporal perspective The collapse of the empire amid war and defeat in impressed itself upon the retrospective view of the Habsburg lands, overshadowing the scene with auguries of imminent and ineluctable decline. It is true that Austro-Hungarian politics in the decades before the war were increasingly dominated by the struggle for national rights among the empire's eleven official nationalities: Germans, Hungarians, Czechs, Slovaks, Slovenes, Croats, Serbs, Romanians, Ruthenians Ukrainians , Poles, and Italians.

However, before , radical nationalists seeking full separation from the empire were still a small minority, and Austria-Hungary's political turbulence was more noisy than deep. In fact, in the decade before the war, the Habsburg lands passed through a phase of strong widely-shared economic growth. Most inhabitants associated the Habsburgs with the benefits of orderly government, public education, welfare, sanitation, the rule of law, and the maintenance of a sophisticated infrastructure. Christopher Clark states: "Prosperous and relatively well administered, the empire, like its elderly sovereign, exhibited a curious stability amid turmoil.

Crises came and went without appearing to threaten the existence of the system as such. The situation was always, as the Viennese journalist Karl Kraus quipped, 'desperate but not serious'. Jack Levy and William Mulligan argue that the death of Franz Ferdinand itself was a significant factor in helping escalate the July Crisis into a war by killing a powerful proponent for peace and thus encouraged a more belligerent decision-making process. The principal aims of Serbian policy were to consolidate the Russian-backed expansion of Serbia in the Balkan Wars and to achieve dreams of a Greater Serbia , which included the unification of lands with large ethnic Serb populations in Austria-Hungary, including Bosnia [93].

Underlying that was a culture of extreme nationalism and a cult of assassination, which romanticized the slaying of the Ottoman sultan as the heroic epilogue to the otherwise-disastrous Battle of Kosovo on 28 June Clark states: "The Greater Serbian vision was not just a question of government policy, however, or even of propaganda. It was woven deeply into the culture and identity of the Serbs.

The Black Hand believed that a Greater Serbia would be achieved by provoking a war with Austria-Hungary by an act of terror. The war would be won with Russian backing. The official government position was to focus on consolidating the gains made during the exhausting Balkan War and to avoid further conflicts. That official policy was temporized by the political necessity of simultaneously and clandestinely supporting dreams of a Greater Serbian state in the long term. Clark states: "Serbian authorities were partly unwilling and partly unable to suppress the irredentist activity that had given rise to the assassinations in the first place". Russia tended to support Serbia as a fellow Slavic state, considered Serbia its "client," and encouraged Serbia to focus its irredentism against Austria-Hungary because it would discourage conflict between Serbia and Bulgaria, another prospective Russian ally, in Macedonia.

Imperial rivalry and the consequences of the search for imperial security or for imperial expansion had important consequences for the origins of World War I. Imperial rivalries between France, Britain, Russia and Germany played an important part in the creation of the Triple Entente and the relative isolation of Germany. Imperial opportunism, in the form of the Italian attack on Ottoman Libyan provinces, also encouraged the Balkan wars of , which changed the balance of power in the Balkans to the detriment of Austria-Hungary. Some historians, such as Margaret MacMillan , believe that Germany created its own diplomatic isolation in Europe, in part by an aggressive and pointless imperial policy known as Weltpolitik.

Either way, the isolation was important because it left Germany few options but to ally itself more strongly with Austria-Hungary, leading ultimately to unconditional support for Austria-Hungary's punitive war on Serbia during the July Crisis. Bismarck disliked the idea of an overseas empire but supported France's colonization in Africa because it diverted the French government, attention, and resources away from Continental Europe and revanchism after Germany's "New Course" in foreign affairs, Weltpolitik "world policy" , was adopted in the s after Bismarck's dismissal. Its aim was ostensibly to transform Germany into a global power through assertive diplomacy, the acquisition of overseas colonies, and the development of a large navy.

Some historians, notably MacMillan and Hew Strachan , believe that a consequence of the policy of Weltpolitik and Germany's associated assertiveness was to isolate it. Weltpolitik , particularly as expressed in Germany's objections to France's growing influence in Morocco in and , also helped cement the Triple Entente. The Anglo-German naval race also isolated Germany by reinforcing Britain's preference for agreements with Germany's continental rivals: France and Russia. Historians like Ferguson and Clark believe that Germany's isolation was the unintended consequences of the need for Britain to defend its empire against threats from France and Russia.

They also downplay the impact of Weltpolitik and the Anglo-German naval race, which ended in Britain and France signed a series of agreements in , which became known as the Entente Cordiale. Most importantly, it granted freedom of action to Britain in Egypt and to France in Morocco. Equally, the Anglo-Russian Convention greatly improved British—Russian relations by solidifying boundaries that identified respective control in Persia, Afghanistan, and Tibet. However, the Triple Entente was not conceived as a counterweight to the Triple Alliance but as a formula to secure imperial security between the three powers.

Clark states it was "not that antagonism toward Germany caused its isolation, but rather that the new system itself channeled and intensified hostility towards the German Empire. The war made it clear that no great power still appeared to wish to support the Ottoman Empire, which paved the way for the Balkan Wars. The status of Morocco had been guaranteed by international agreement, and when France attempted a great expansion of its influence there without the assent of all other signatories, Germany opposed and prompted the Moroccan Crises: the Tangier Crisis of and the Agadir Crisis of The intent of German policy was to drive a wedge between the British and French, but in both cases, it produced the opposite effect and Germany was isolated diplomatically, most notably by lacking the support of Italy despite it being in the Triple Alliance.

The French protectorate over Morocco was established officially in In , however, the African scene was peaceful. The continent was almost fully divided up by the imperial powers, with only Liberia and Ethiopia still independent. There were no major disputes there pitting any two European powers against each other. Marxists typically attributed the start of the war to imperialism. Richard Hamilton observed that the argument went that since industrialists and bankers were seeking raw materials, new markets and new investments overseas, if they were blocked by other powers, the "obvious" or "necessary" solution was war.

Hamilton somewhat criticized the view that the war was launched to secure colonies but agreed that while imperialism may have been on the mind of key decision makers. He argued that it was not necessarily for logical, economic reasons. Firstly, the different powers of the war had different imperial holdings. Britain had the largest empire in the world and Russia had the second largest, but France had a modestly-sized empire. Germany had a few unprofitable colonies, and Austria-Hungary had no overseas holdings or desire to secure any and so the divergent interests require any "imperialism argument" to be specific in any supposed "interests" or "needs" that decision makers would be trying to meet. None of Germany's colonies made more money than was required to maintain them, and they also were only 0.

Thus, he argues that colonies were pursued mainly as a sign of German power and prestige, rather than for profit. While Russia eagerly pursued colonisation in East Asia by seizing control of Manchuria, it had little success; the Manchurian population was never sufficiently integrated into the Russian economy and efforts to make Manchuria, a captive trade market did not end Russia's negative trade deficit with China. Hamilton argued that the "imperialism argument" depended upon the view of national elites being informed, rational, and calculating, but it is equally possible to consider that decision-makers were uninformed or ignorant. Hamilton suggested that imperial ambitions may have been driven by groupthink because every other country was doing it.

That made policymakers think that their country should do the same Hamilton noted that Bismarck was famously not moved by such peer pressure and ended Germany's limited imperialist movement and regarded colonial ambitions as a waste of money but simultaneously recommended them to other nations. Hamilton was more critical of the view that capitalists and business leaders drove the war. He thought that businessmen, bankers, and financiers were generally against the war, as they viewed it as being perilous to economic prosperity. The decision of Austria-Hungary to go to war was made by the monarch, his ministers, and military leaders, with practically no representation from financial and business leaders even though Austria-Hungary was then developing rapidly.

Furthermore, evidence can be found from the Austro-Hungarian stock market, which responded to the assassination of Franz Ferdinand with unease but no sense of alarm and only a small decrease in share value. However, when it became clear that war was a possibility, share values dropped sharply, which suggested that investors did not see war as serving their interests. One of the strongest sources of opposition to the war was from major banks, whose financial bourgeoisie regarded the army as the reserve of the aristocracy and utterly foreign to the banking universe.

While the banks had ties to arms manufacturers, it was those companies that had links to the military, not the banks, which were pacifistic and profoundly hostile to the prospect of war. However, the banks were largely excluded from the nation's foreign affairs. Likewise, German business leaders had little influence. Hugo Stinnes , a leading German industrialist, advocated peaceful economic development and believed that Germany would be able to rule Europe by economic power and that war would be a disruptive force.

Carl Duisberg , a chemical industrialist, hoped for peace and believed that the war would set German economic development back a decade, as Germany's extraordinary prewar growth had depended upon international trade and interdependence. While some bankers and industrialists tried to curb Wilhelm II away from war, their efforts ended in failure. There is no evidence they ever received a direct response from the Kaiser, chancellor, or foreign secretary or that their advice was discussed in depth by the Foreign Office or the General Staff. The German leadership measured power not in financial ledgers but land and military might. Lord Nathanial Rothschild , a leading British banker, called the financial editor at The Times newspaper and insisted for the paper to denounce the war and to advocate for neutrality, but the lead members of the newspaper ultimately decided that the paper should support intervention.

Generally speaking, the European business leaders were in favour of profits and peace allowed for stability and investment opportunities across national borders, but war brought the disruption trade, the confiscation of holdings, and the risk of increased taxation. Even arms manufacturers, the so-called "Merchants of Death," would not necessarily benefit since they could make money selling weapons at home, but they could lose access to foreign markets.

Krupp, a major arms manufacturer, started the war with 48 million marks in profits but ended it million marks in debt, and the first year of peace saw further losses of 36 million marks. William Mulligan argues that while economic and political factors were often interdependent, economic factors tended towards peace. Prewar trade wars and financial rivalries never threatened to escalate into conflict. Governments would mobilise bankers and financiers to serve their interests, rather than the reverse. The commercial and financial elite recognised peace as necessary for economic development and used its influence to resolve diplomatic crises.

Economic rivalries existed but were framed largely by political concerns. Prior to the war, there were few signs that the international economy for war in the summer of Social Darwinism was a theory of human evolution loosely based on Darwinism that influenced most European intellectuals and strategic thinkers from to It emphasised that struggle between nations and "races" was natural and that only the fittest nations deserved to survive.

German colonial rule in Africa in to was an expression of nationalism and moral superiority, which was justified by constructing an image of the natives as "Other. German colonization was characterized by the use of repressive violence in the name of "culture" and "civilisation. Furthermore, the wide acceptance of Social Darwinism by intellectuals justified Germany's right to acquire colonial territories as a matter of the "survival of the fittest," according to the historian Michael Schubert. The model suggested an explanation of why some ethnic groups, then called "races," had been for so long antagonistic, such as Germans and Slavs. They were natural rivals, destined to clash. Senior German generals like Helmuth von Moltke the Younger talked in apocalyptic terms about the need for Germans to fight for their existence as a people and culture.

MacMillan states: "Reflecting the Social Darwinist theories of the era, many Germans saw Slavs, especially Russia, as the natural opponent of the Teutonic races. Britain admired Germany for its economic successes and social welfare provision but also regarded Germany as illiberal, militaristic, and technocratic. War was seen as a natural and viable or even useful instrument of policy. Russia was viewed as growing stronger every day, and it was believed that Germany had to strike while it still could before it was crushed by Russia.

Nationalism made war a competition between peoples, nations or races, rather than kings and elites. It tended to glorify warfare, the taking of initiative, and the warrior male role. Social Darwinism played an important role across Europe, but J. Leslie has argued that it played a critical and immediate role in the strategic thinking of some important hawkish members of the Austro-Hungarian government. Although general narratives of the war tend to emphasize the importance of alliances in binding the major powers to act in the event of a crisis such as the July Crisis, historians such as Margaret MacMillan warn against the argument that alliances forced the Great Powers to act as they did: "What we tend to think of as fixed alliances before the First World War were nothing of the sort.

They were much more loose, much more porous, much more capable of change. The most important alliances in Europe required participants to agree to collective defence if they were attacked. Some represented formal alliances, but the Triple Entente represented only a frame of mind:. There are three notable exceptions that demonstrate that alliances did not in themselves force the great powers to act:. By the s or the s, all the major powers were preparing for a large-scale war although none expected one. Germany, France, Austria, Italy, Russia, and some smaller countries set up conscription systems in which young men would serve from one to three years in the army and then spend the next twenty years or so in the reserves with annual summer training.

Men from higher social statuses became officers. Each country devised a mobilization system in which the reserves could be called up quickly and sent to key points by rail. Every year, the plans were updated and expanded in terms of complexity. Each country stockpiled arms and supplies for an army that ran into the millions. Germany in had a regular professional army of , with an additional 1. By , the regular army was , strong and the reserves 3. The French in had 3. The various national war plans had been perfected by but with Russia and Austria trailing in effectiveness.

Recent wars since had typically been short: a matter of months. All war plans called for a decisive opening and assumed victory would come after a short war. None planned for the food and munitions needs of the long stalemate that actually happened in to As David Stevenson put it, "A self-reinforcing cycle of heightened military preparedness The armaments race It was "the armaments race and the speculation about imminent or preventive wars" that made his death in the trigger for war. The Second Hague Conference was held in All signatories except for Germany supported disarmament. Germany also did not want to agree to binding arbitration and mediation. The Kaiser was concerned that the United States would propose disarmament measures, which he opposed.

All parties tried to revise international law to their own advantage. Historians have debated the role of the German naval buildup as the principal cause of deteriorating Anglo-German relations. In any case, Germany never came close to catching up with Britain. From to , the Royal Navy embarked on its own massive expansion to keep ahead of the Germans. The competition came to focus on the revolutionary new ships based on the Dreadnought , which was launched in and gave Britain a battleship that far outclassed any other in Europe. The overwhelming British response proved to Germany that its efforts were unlikely ever to equal the Royal Navy. In , the British had a 3. Ferguson argues, "So decisive was the British victory in the naval arms race that it is hard to regard it as in any meaningful sense a cause of the First World War.

The US Navy was in a period of growth, which made the German gains very ominous. In Britain in , there was intense internal debate about new ships because of the growing influence of John Fisher 's ideas and increasing financial constraints. In , Germany adopted a policy of building submarines, instead of new dreadnoughts and destroyers, effectively abandoning the race, but it kept the new policy secret to delay other powers from following suit.

The main Russian goals included strengthening its role as the protector of Eastern Christians in the Balkans, such as in Serbia. The start of the war renewed attention of old goals: expelling the Ottomans from Constantinople, extending Russian dominion into eastern Anatolia and Persian Azerbaijan, and annexing Galicia. The conquests would assure the Russian predominance in the Black Sea and access to the Mediterranean.

Traditional narratives of the war suggested that when the war began, both sides believed that the war would end quickly. Rhetorically speaking, there was an expectation that the war would be "over by Christmas" in That is important for the origins of the conflict since it suggests that since it was expected that the war would be short, statesmen tended not to take gravity of military action as seriously as they might have done so otherwise. Modern historians suggest a nuanced approach.

There is ample evidence to suggest that statesmen and military leaders thought the war would be lengthy and terrible and have profound political consequences. While it is true all military leaders planned for a swift victory, many military and civilian [ citation needed ] leaders recognised that the war might be long and highly destructive. The principal German and French military leaders, including Moltke, Ludendorff, and Joffre, expected a long war. Moltke hoped that if a European war broke out, it would be resolved swiftly, but he also conceded that it might drag on for years, wreaking immeasurable ruin.

Asquith wrote of the approach of "Armageddon" and French and Russian generals spoke of a "war of extermination" and the "end of civilization. Clark concluded, "In the minds of many statesmen, the hope for a short war and the fear of a long one seemed to have cancelled each other out, holding at bay a fuller appreciation of the risks. Moltke, Joffre, Conrad, and other military commanders held that seizing the initiative was extremely important. That theory encouraged all belligerents to devise war plans to strike first to gain the advantage. The war plans all included complex plans for mobilization of the armed forces, either as a prelude to war or as a deterrent.

The continental Great Powers' mobilization plans included arming and transporting millions of men and their equipment, typically by rail and to strict schedules, hence the metaphor "war by timetable. The mobilization plans limited the scope of diplomacy, as military planners wanted to begin mobilisation as quickly as possible to avoid being caught on the defensive. They also put pressure on policymakers to begin their own mobilization once it was discovered that other nations had begun to mobilize. In , A. Taylor wrote that mobilization schedules were so rigid that once they were begun, they could not be canceled without massive disruption of the country and military disorganisation. Thus, diplomatic overtures conducted after the mobilizations had begun were ignored.

Russia ordered a partial mobilization on 25 July against Austria-Hungary only. Their lack of prewar planning for the partial mobilization made the Russians realize by 29 July that it would be impossible and interfere with a general mobilization. Only a general mobilization could be carried out successfully. The Russians were, therefore, faced with only two options: canceling the mobilization during a crisis or moving to full mobilization, the latter of which they did on 30 July.

They, therefore, mobilized along both the Russian border with Austria-Hungary and the border with Germany. German mobilization plans assumed a two-front war against France and Russia and had the bulk of the German army massed against France and taking the offensive in the west, and a smaller force holding East Prussia. The plans were based on the assumption that France would mobilize significantly faster than Russia. On 28 July, Germany learned through its spy network that Russia had implemented partial mobilisation and its "Period Preparatory to War. Christopher Clark states: "German efforts at mediation — which suggested that Austria should 'Halt in Belgrade' and use the occupation of the Serbian capital to ensure its terms were met — were rendered futile by the speed of Russian preparations, which threatened to force the Germans to take counter-measures before mediation could begin to take effect.

But by the time that happened, the Russian government had been moving troops and equipment to the German front for a week. The Russians were the first great power to issue an order of general mobilisation and the first Russo-German clash took place on German, not on Russian soil, following the Russian invasion of East Prussia. That doesn't mean that the Russians should be 'blamed' for the outbreak of war. Rather it alerts us to the complexity of the events that brought war about and the limitations of any thesis that focuses on the culpability of one actor. Immediately after the end of hostilities, Anglo-American historians argued that Germany was solely responsible for the start of the war.

However, academic work in the English-speaking world in the late s and the s blamed the participants more equally. The historian Fritz Fischer unleashed an intense worldwide debate in the s on Germany's long-term goals. The American historian Paul Schroeder agrees with the critics that Fisher exaggerated and misinterpreted many points. However, Schroeder endorses Fisher's basic conclusion:. From on, Germany did pursue world power. This bid arose from deep roots within Germany's economic, political, and social structures.

Once the war broke out, world power became Germany's essential goal. However, Schroeder argues that all of that were not the main causes of the war in Indeed, the search for a single main cause is not a helpful approach to history. Instead, there are multiple causes any one or two of which could have launched the war. He argues, "The fact that so many plausible explanations for the outbreak of the war have been advanced over the years indicates on the one hand that it was massively overdetermined, and on the other that no effort to analyze the causal factors involved can ever fully succeed.

Debate over the country that "started" the war and who bears the blame still continues. Few historians agreed wholly with his [Fischer's] thesis of a premeditated war to achieve aggressive foreign policy aims, but it was generally accepted that Germany's share of responsibility was larger than that of the other great powers. On historians inside Germany, she adds, "There was 'a far-reaching consensus about the special responsibility of the German Reich' in the writings of leading historians, though they differed in how they weighted Germany's role. From Wikipedia, the free encyclopedia. Historiography of the topic. For the article on the war itself, see World War I. Main article: French entry into World War I. Main article: Bosnian crisis.

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Amsterdam: North-Holland. OCLC New York: Macmillan. LCCN These depressions were often set off by banking crisis, the most significant occurring in , , , and Starting in , there were growing efforts by financial institutions and business men to intervene during these crises, providing liquidity to banks that were suffering runs. During the banking panic of , an ad hoc coalition assembled by J. Morgan successfully intervened in this way, thereby cutting off the panic, which was likely the reason why the depression that would normally have followed a banking panic did not happen this time.

A call by some for a government version of this solution resulted in the establishment of the Federal Reserve. But in —32, the Federal Reserve did not act to provide liquidity to banks suffering bank runs. In fact, its policy contributed to the banking crisis by permitting a sudden contraction of the money supply. During the Roaring Twenties , the central bank had set as its primary goal "price stability", in part because the governor of the New York Federal Reserve, Benjamin Strong , was a disciple of Irving Fisher , a tremendously popular economist who popularized stable prices as a monetary goal.

It had kept the number of dollars at such an amount that prices of goods in society appeared stable. In , Strong died, and with his death this policy ended, to be replaced with a real bills doctrine requiring that all currency or securities have material goods backing them. This policy permitted the U. When this money shortage caused runs on banks, the Fed maintained its true bills policy, refusing to lend money to the banks in the way that had cut short the panic, instead allowing each to suffer a catastrophic run and fail entirely. This policy resulted in a series of bank failures in which one-third of all banks vanished. Consequently, the banking panics of , , and might not have happened, just as suspension of convertibility in and had quickly ended the liquidity crises at the time.

Monetarist explanations had been rejected in Samuelson's work Economics , writing "Today few economists regard Federal Reserve monetary policy as a panacea for controlling the business cycle. Purely monetary factors are considered to be as much symptoms as causes, albeit symptoms with aggravating effects that should not be completely neglected. The monetary explanation has two weaknesses. First, it is not able to explain why the demand for money was falling more rapidly than the supply during the initial downturn in — These questions are addressed by modern explanations that build on the monetary explanation of Milton Friedman and Anna Schwartz but add non-monetary explanations.

Total debt to GDP levels in the U. This level of debt was not exceeded again until near the end of the 20th century. Jerome gives an unattributed quote about finance conditions that allowed the great industrial expansion of the post WW I period:. Probably never before in this country had such a volume of funds been available at such low rates for such a long period. Furthermore, Jerome says that the volume of new capital issues increased at a 7. There was also a real estate and housing bubble in the s, especially in Florida, which burst in Irving Fisher argued the predominant factor leading to the Great Depression was over-indebtedness and deflation.

Fisher tied loose credit to over-indebtedness, which fueled speculation and asset bubbles. The chain of events proceeded as follows:. When the market fell, brokers called in these loans, which could not be paid back. Banks began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits en masse, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets. After the panic of , and during the first 10 months of , U. In all, 9, banks failed during the s. Bank failures snowballed as desperate bankers called in loans, which the borrowers did not have time or money to repay.

With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending. A vicious cycle developed and the downward spiral accelerated. The liquidation of debt could not keep up with the fall of prices it caused. The mass effect of the stampede to liquidate increased the value of each dollar owed, relative to the value of declining asset holdings. The very effort of individuals to lessen their burden of debt effectively increased it.

Paradoxically, the more the debtors paid, the more they owed. Fisher's debt-deflation theory initially lacked mainstream influence because of the counter-argument that debt-deflation represented no more than a redistribution from one group debtors to another creditors. Pure re-distributions should have no significant macroeconomic effects. Building on both the monetary hypothesis of Milton Friedman and Anna Schwartz as well as the debt deflation hypothesis of Irving Fisher, Ben Bernanke developed an alternative way in which the financial crisis affected output.

He builds on Fisher's argument that dramatic declines in the price level and nominal incomes lead to increasing real debt burdens which in turn leads to debtor insolvency and consequently leads to lowered aggregate demand , a further decline in the price level then results in a debt deflationary spiral. According to Bernanke, a small decline in the price level simply reallocates wealth from debtors to creditors without doing damage to the economy. But when the deflation is severe falling asset prices along with debtor bankruptcies lead to a decline in the nominal value of assets on bank balance sheets. Banks will react by tightening their credit conditions, that in turn leads to a credit crunch which does serious harm to the economy.

A credit crunch lowers investment and consumption and results in declining aggregate demand which additionally contributes to the deflationary spiral. Economist Steve Keen revived the debt-reset theory after he accurately predicted the recession based on his analysis of the Great Depression, and recently [ when? Expectations have been a central element of macroeconomic models since the economic mainstream accepted the new neoclassical synthesis. While not rejecting that it was inadequate demand that sustained the depression, according to Peter Temin , Barry Wigmore, Gauti B. Eggertsson and Christina Romer the key to recovery and the end of the Great Depression was the successful management of public expectations.

This thesis is based on the observation that after years of deflation and a very severe recession, important economic indicators turned positive in March , just as Franklin D. Roosevelt took office. Consumer prices turned from deflation to a mild inflation, industrial production bottomed out in March , investment doubled in with a turnaround in March There were no monetary forces to explain that turnaround. Money supply was still falling and short term interest rates remained close to zero. Before March , people expected a further deflation and recession so that even interest rates at zero did not stimulate investment.

But when Roosevelt announced major regime changes people began to expect inflation and an economic expansion. With those expectations, interest rates at zero began to stimulate investment as planned. Roosevelt's fiscal and monetary policy regime change helped to make his policy objectives credible. The expectation of higher future income and higher future inflation stimulated demand and investments. The analysis suggests that the elimination of the policy dogmas of the gold standard, a balanced budget in times of crises and small government led to a large shift in expectation that accounts for about 70—80 percent of the recovery of output and prices from to If the regime change had not happened and the Hoover policy had continued, the economy would have continued its free fall in , and output would have been 30 percent lower in than in The recession of —38 , which slowed down economic recovery from the great depression, is explained by fears of the population that the moderate tightening of the monetary and fiscal policy in would be first steps to a restoration of the pre March policy regime.

Austrian economists argue that the Great Depression was the inevitable outcome of the monetary policies of the Federal Reserve during the s. The central bank's policy was an "easy credit policy" which led to an unsustainable credit-driven boom. The inflation of the money supply during this period led to an unsustainable boom in both asset prices stocks and bonds and capital goods. By the time the Federal Reserve belatedly tightened monetary policy in , it was too late to avoid a significant economic contraction.

Acceptance of the Austrian explanation of what primarily caused the Great Depression is compatible with either acceptance or denial of the Monetarist explanation. The reason for this, he argues, is that the American populace lost faith in the banking system and began hoarding more cash, a factor very much beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, which, according to Rothbard's argument, was the cause of the Federal Reserve's inability to inflate.

Friedrich Hayek had criticised the Fed and the Bank of England in the s for not taking a more contractionary stance. Hans Sennholz argued that most boom and busts that plagued the American economy in —20, —43, —60, —78, —97, and —21, were generated by government creating a boom through easy money and credit, which was soon followed by the inevitable bust. The spectacular crash of followed five years of reckless credit expansion by the Federal Reserve System under the Coolidge Administration. The passing of the Sixteenth Amendment , the passage of The Federal Reserve Act , rising government deficits, the passage of the Hawley-Smoot Tariff Act , and the Revenue Act of , exacerbated the crisis, prolonging it.

Marxists generally argue that the Great Depression was the result of the inherent instability of the capitalist model. In addition to the debt deflation there was a component of productivity deflation that had been occurring since The Great Deflation of the last quarter of the 19th century. Oil prices reached their all-time low in the early s as production began from the East Texas Oil Field , the largest field ever found in the lower 48 states.

With the oil market oversupplied prices locally fell to below ten cents per barrel. In the first three decades of the 20th century productivity and economic output surged due in part to electrification , mass production and the increasing motorization of transportation and farm machinery. Electrification and mass production techniques such as Fordism permanently lowered the demand for labor relative to economic output. Sometime after the peak of the business cycle in , more workers were displaced by productivity improvements than growth in the employment market could meet, causing unemployment to slowly rise after Henry Ford and Edward A. Filene were among prominent businessmen who were concerned with overproduction and underconsumption.

Ford doubled wages of his workers in The over-production problem was also discussed in Congress, with Senator Reed Smoot proposing an import tariff, which became the Smoot—Hawley Tariff Act. The Smoot—Hawley Tariff was enacted in June, The tariff was misguided because the U. Another effect of rapid technological change was that after the rate of capital investment slowed, primarily due to reduced investment in business structures. The depression led to additional large numbers of plant closings. It cannot be emphasized too strongly that the [productivity, output and employment] trends we are describing are long-time trends and were thoroughly evident prior to These trends are in nowise the result of the present depression, nor are they the result of the World War.

On the contrary, the present depression is a collapse resulting from these long-term trends. King Hubbert [57]. In the book Mechanization in Industry , whose publication was sponsored by the National Bureau of Economic Research, Jerome noted that whether mechanization tends to increase output or displace labor depends on the elasticity of demand for the product. It was further noted that agriculture was adversely affected by the reduced need for animal feed as horses and mules were displaced by inanimate sources of power following WW I. As a related point, Jerome also notes that the term " technological unemployment " was being used to describe the labor situation during the depression. Some portion of the increased unemployment which characterized the post-War years in the United States may be attributed to the mechanization of industries producing commodities of inelastic demand.

Wells, [23]. The dramatic rise in productivity of major industries in the U. Corporations decided to lay off workers and reduced the amount of raw materials they purchased to manufacture their products. This decision was made to cut the production of goods because of the amount of products that were not being sold. Joseph Stiglitz and Bruce Greenwald suggested that it was a productivity-shock in agriculture, through fertilizers, mechanization and improved seed, that caused the drop in agricultural product prices. Farmers were forced off the land, further adding to the excess labor supply. The prices of agricultural products began to decline after WW I and eventually many farmers were forced out of business, causing the failure of hundreds of small rural banks.

Agricultural productivity resulting from tractors, fertilizers and hybrid corn was only part of the problem; the other problem was the change over from horses and mules to internal combustion transportation. The horse and mule population began declining after WW 1, freeing up enormous quantities of land previously used for animal feed. The rise of the internal combustion engine and increasing numbers of motorcars and buses also halted the growth of electric street railways. The years to had the highest total factor productivity growth in the history of the U. Most of the benefit of the increased productivity went into profits, which went into the stock market bubble rather than into consumer purchases.

Thus workers did not have enough income to absorb the large amount of capacity that had been added. According to this view, the root cause of the Great Depression was a global overinvestment while the level of wages and earnings from independent businesses fell short of creating enough purchasing power. It was argued that government should intervene by an increased taxation of the rich to help make income more equal. With the increased revenue the government could create public works to increase employment and 'kick start' the economy. In the USA the economic policies had been quite the opposite until The Revenue Act of and public works programmes introduced in Hoover's last year as president and taken up by Roosevelt, created some redistribution of purchasing power.

The stock market crash made it evident that banking systems Americans were relying on were not dependable. Americans looked towards insubstantial banking units for their own liquidity supply. As the economy began to fail, these banks were no longer able to support those who depended on their assets — they did not hold as much power as the larger banks. During the depression, "three waves of bank failures shook the economy. The second wave of bank failures occurred "after the Federal Reserve System raised the rediscount rate to staunch an outflow of gold" [68] around the end of The last wave, which began in the middle of , was the worst and most devastating, continuing "almost to the point of a total breakdown of the banking system in the winter of —".

According to the gold standard theory of the Depression, the Depression was largely caused by the decision of most western nations after World War I to return to the gold standard at the pre-war gold price. Monetary policy, according to this view, was thereby put into a deflationary setting that would over the next decade slowly grind away at the health of many European economies. This post-war policy was preceded by an inflationary policy during World War I, when many European nations abandoned the gold standard, forced [ citation needed ] by the enormous costs of the war.

This resulted in inflation because the supply of new money that was created was spent on war, not on investments in productivity to increase aggregate supply that would have neutralized inflation. The view is that the quantity of new money introduced largely determines the inflation rate, and therefore, the cure to inflation is to reduce the amount of new currency created for purposes that are destructive or wasteful, and do not lead to economic growth. After the war, when America and the nations of Europe went back on the gold standard, most nations decided to return to the gold standard at the pre-war price. When Britain, for example, passed the Gold Standard Act of , thereby returning Britain to the gold standard, the critical decision was made to set the new price of the Pound Sterling at parity with the pre-war price even though the pound was then trading on the foreign exchange market at a much lower price.

At the time, this action was criticized by John Maynard Keynes and others, who argued that in so doing, they were forcing a revaluation of wages without any tendency to equilibrium. Keynes' criticism of Winston Churchill 's form of the return to the gold standard implicitly compared it to the consequences of the Treaty of Versailles. One of the reasons for setting the currencies at parity with the pre-war price was the prevailing opinion at that time that deflation was not a danger, while inflation, particularly the inflation in the Weimar Republic, was an unbearable danger. Another reason was that those who had loaned in nominal amounts hoped to recover the same value in gold that they had lent. The U. This arrangement was codified in the Dawes Plan. In some cases, deflation can be hard on sectors of the economy such as agriculture, if they are deeply in debt at high interest rates and are unable to refinance, or that are dependent upon loans to finance capital goods when low interest rates are not available.

Deflation erodes the price of commodities while increasing the real liability of debt. Deflation is beneficial to those with assets in cash, and to those who wish to invest or purchase assets or loan money. More recent research, by economists such as Temin, Ben Bernanke , and Barry Eichengreen , has focused on the constraints policy makers were under at the time of the Depression. In this view, the constraints of the inter-war gold standard magnified the initial economic shock and were a significant obstacle to any actions that would ameliorate the growing Depression. According to them, the initial destabilizing shock may have originated with the Wall Street Crash of in the U.

According to their conclusions, during a time of crisis, policy makers may have wanted to loosen monetary and fiscal policy , but such action would threaten the countries' ability to maintain their obligation to exchange gold at its contractual rate. The gold standard required countries to maintain high interest rates to attract international investors who bought foreign assets with gold. Therefore, governments had their hands tied as the economies collapsed, unless they abandoned their currency's link to gold. Fixing the exchange rate of all countries on the gold standard ensured that the market for foreign exchange can only equilibrate through interest rates. As the Depression worsened, many countries started to abandon the gold standard, and those that abandoned it earlier suffered less from deflation and tended to recover more quickly.

Monetary Policy , wherein he argued that the Federal Reserve actually had plenty of lee-way under the gold standard, as had been demonstrated by the price stability policy of New York Fed governor Benjamin Strong , between and But when Strong died in late , the faction that took over dominance of the Fed advocated a real bills doctrine, where all money had to be represented by physical goods. Economic historians especially Friedman and Schwartz emphasize the importance of numerous bank failures. The failures were mostly in rural America. Structural weaknesses in the rural economy made local banks highly vulnerable.

Farmers, already deeply in debt, saw farm prices plummet in the late s and their implicit real interest rates on loans skyrocket. Their land was already over-mortgaged as a result of the bubble in land prices , and crop prices were too low to allow them to pay off what they owed. Small banks, especially those tied to the agricultural economy, were in constant crisis in the s with their customers defaulting on loans because of the sudden rise in real interest rates; there was a steady stream of failures among these smaller banks throughout the decade. The city banks also suffered from structural weaknesses that made them vulnerable to a shock. Some of the nation's largest banks were failing to maintain adequate reserves and were investing heavily in the stock market or making risky loans.

In other words, the banking system was not well prepared to absorb the shock of a major recession. Economists have argued that a liquidity trap might have contributed to bank failures. Economists and historians debate how much responsibility to assign the Wall Street Crash of The timing was right; the magnitude of the shock to expectations of future prosperity was high. Most analysts believe the market in —29 was a "bubble" with prices far higher than justified by fundamentals. Economists agree that somehow it shared some blame, but how much no one has estimated. Milton Friedman concluded, "I don't doubt for a moment that the collapse of the stock market in played a role in the initial recession".

The idea of owning government bonds initially became ideal to investors when Liberty Loan drives encouraged this possession in America during World War I. This strive for dominion persisted into the s. After World War I, the United States became the world's creditor and was depended upon by many foreign nations. Chief counsel of the Senate Bank Committee, Ferdinand Pecora, disclosed that National City executives were also dependent on loans from a special bank fund as a safety net for their stock losses while American banker, Albert Wiggin, "made millions selling short his own bank shares".

Economist David Hume stated that the economy became imbalanced as the recession spread on an international scale. The cost of goods remained too high for too long during a time where there was less international trade. Policies set in selected countries to "maintain the value of their currency" resulted in an outcome of bank failures. The debate has three sides: one group says the crash caused the depression by drastically lowering expectations about the future and by removing large sums of investment capital; a second group says the economy was slipping since summer and the crash ratified it; the third group says that in either scenario the crash could not have caused more than a recession.

There was a brief recovery in the market into April , but prices then started falling steadily again from there, not reaching a final bottom until July This was the largest long-term U. To move from a recession in to a deep depression in —32, entirely different factors had to be in play. Protectionism , such as the American Smoot—Hawley Tariff Act , is often indicated as a cause of the Great Depression, with countries enacting protectionist policies yielding a beggar thy neighbor result.

This event may have worsened or even caused the ensuing bank runs in the Midwest and West that caused the collapse of the banking system. A petition signed by over 1, economists was presented to the U. Governments around the world took various steps into spending less money on foreign goods such as: "imposing tariffs, import quotas, and exchange controls". These restrictions formed a lot of tension between trade nations, causing a major deduction during the depression. Not all countries enforced the same measures of protectionism. Some countries raised tariffs drastically and enforced severe restrictions on foreign exchange transactions, while other countries condensed "trade and exchange restrictions only marginally": [80].

In a survey of American economic historians, two-thirds agreed that the Smoot-Hawley tariff act at least worsened the Great Depression. Economist Paul Krugman holds that, "Where protectionism really mattered was in preventing a recovery in trade when production recovered". He cites a report by Barry Eichengreen and Douglas Irwin: Figure 1 in that report shows trade and production dropping together from to , but production increasing faster than trade from to The authors argue that adherence to the gold standard forced many countries to resort to tariffs, when instead they should have devalued their currencies. He notes that exports were 7 percent of GNP in , they fell by 1.

When the war came to an end in , all European nations that had been allied with the U. This is one reason why the Allies had insisted to the consternation of Woodrow Wilson on reparation payments from Germany and Austria-Hungary. Reparations, they believed, would provide them with a way to pay off their own debts. However, Germany and Austria-Hungary were themselves in deep economic trouble after the war; they were no more able to pay the reparations than the Allies to pay their debts. The debtor nations put strong pressure on the U. The American government refused. Instead, U. Thus, debts and reparations were being paid only by augmenting old debts and piling up new ones.

In the late s, and particularly after the American economy began to weaken after , the European nations found it much more difficult to borrow money from the U. At the same time, high U. Without any source of revenue from foreign exchange to repay their loans, they began to default. Beginning late in the s, European demand for U. That was partly because European industry and agriculture were becoming more productive, and partly because some European nations most notably Weimar Germany were suffering serious financial crises and could not afford to buy goods overseas.

However, the central issue causing the destabilization of the European economy in the late s was the international debt structure that had emerged in the aftermath of World War I. The high tariff walls such as the Smoot—Hawley Tariff Act critically impeded the payment of war debts. As a result of high U. During the s, the former allies paid the war-debt installments to the U. Similarly, U. Hawley, and signed into law by President Hoover, to raise taxes on American imports by about 20 percent during June This tax, which added to already shrinking income and overproduction in the U. In contrast, European trading nations frowned upon this tax increase, particularly since the "United States was an international creditor and exports to the U.

In the scramble for liquidity that followed the stock market crash, funds flowed back from Europe to America, and Europe's fragile economies crumbled. By , the world was reeling from the worst depression of recent memory, and the entire structure of reparations and war debts collapsed. In , prominent economist Alvin Hansen discussed the decline in population growth in relation to the Depression. Using "a form of the Harrod model " to analyze the Depression, Barber states:. In such a model, one would look for the origins of a serious depression in conditions which produced a decline in Harrod's natural rate of growth, more specifically, in a decline in the rate of population and labour force growth and in the rate of growth of productivity or technical progress, to a level below the warranted rate of growth.

Barber says, while there is "no clear evidence" of a decline in "the rate of growth of productivity" during the s, there is "clear evidence" the population growth rate began to decline during that same period. He argues the decline in population growth rate may have caused a decline in "the natural rate of growth" which was significant enough to cause a serious depression. Barber says a decline in the population growth rate is likely to affect the demand for housing, and claims this is apparently what happened during the s.

He concludes:. And this decline, as Bolch and Pilgrim have claimed, may well have been the most important single factor in turning the downturn into a major depression. Among the causes of the decline in the population growth rate during the s were a declining birth rate after [88] and reduced immigration. The decline in immigration was largely the result of legislation in the s placing greater restrictions on immigration. Factors that majorly contributed to the failing of the economy since , was a decrease in both residential and non-residential buildings being constructed. It was the debt as a result of the war, fewer families being formed, and an imbalance of mortgage payments and loans in —29, that mainly contributed to the decline in the number of houses being built.

This caused the population growth rate to decelerate. There is an ongoing debate between historians as to what extent President Calvin Coolidge 's laissez-faire hands-off attitude has contributed to the Great Depression. Despite a growing rate of bank failures he did not heed voices that predicted the lack of banking regulation as potentially dangerous. He did not listen to members of Congress warning that stock speculation had gone too far and he ignored criticisms that workers did not participate sufficiently in the prosperity of the Roaring Twenties.

From the point of view of today's mainstream schools of economic thought, government should strive to keep some broad nominal aggregate on a stable growth path for proponents of new classical macroeconomics and monetarism , the measure is the nominal money supply ; for Keynesian economists it is the nominal aggregate demand itself. During a depression the central bank should pour liquidity into the banking system and the government should cut taxes and accelerate spending in order to keep the nominal money stock and total nominal demand from collapsing.

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