President Wilson felt Germany wanted some of Britain's world and the U.S. 1916 potential was suppressed by 1) an ineffective political system 2) an unworkable financial system and 3) racial/labor conflicts. Tooze writes “America was a byword for urban graft, mismanagement and greed-fuelled politics, as much as for growth, production, and profit.” America's broader democracy was outdone by Europe's efficient populations mobilization which dazzled Theodore Roosevelt and appalled Woodrow Wilson.
In war year 3, power was visibly tilting from Europe to America as the cost of offensive war were high. Germany, cut off from world trade, began a defensive siege by attacking weak enemies like Romania. The Western allies outfitted their forces with larger US war orders. In 1916, Britain bought substantial airplane engines, shell casings, grain, and nearly all of its oil from mostly US suppliers. Most was financed with large bond issues denominated in dollars. By years end, American investors had gambled $2 billion of her $50 billion GDP on an Allied victory.
American factories switched to military production while farmers planted food and fiber to feed and clothe combatants. Unlike WW 2, it was not a political commitment to one side’s victory. President Wilson wished to stay out of the war but by 1916, the U.S. commitment to Britain and France had become too big to fail.
Wilson animating idea was a startling concept of American Exceptionalism.Political Republican opponents like Theodore Roosevelt and Henry Cabot Lodge were not “isolationists” but they mistrusted Wilson’s League of Nations as an encroachment on American sovereignty. Wanting America to take its place among world powers, they wanted a powerful navy and army, a strong central bank, and other power tools possessed by Britain, France, and Germany.
Wilson, rather than join imperial rivalries, wanted the now powerful United States to suppress those rivalries altogether. Wilson was the first American statesman to perceive that the United States was a kind of ‘super-power with control over world financial and security issues. Wilson hoped to enforce an enduring peace. Mistakes of all concerned doomed geopolitics and allowed disastrous events leading to the Great Depression, the rise of fascism, and a second more deadly world war.Why did the US choose not to cooperate with French, British, Germans, and Japanese governments to create a stabile, viable world economy with collective security. Participants saw the risk of future devastation but no one saw that only the US could and must anchor this new order. But, following the war, Americans declined to lead because it implied too much change of their conservative self image.
One economist, Grant, observed that the post war recession was painful.Then the economy quickly recovered and by 1923, the U.S. had returned to full employment. To Grant, laissez-faire had cured wartime inflation, borrowing financed spending gave way to saving, investing and growth. Falling prices and wages ended the forgotten-depression. Others view it as an ominous milestones leading to World War Two. After the second war money flowed to Europe. After World War I the money flowed from Europe.