------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (January 2007)

Hew Strachan, _Financing the First World War_. Oxford: Oxford 
University Press, 2004. viii + 268 pp. $20/???9 (paperback), ISBN: 
0-19-925727-2.

Reviewed for EH.NET by Hans-Joachim Voth, Department of Economics, 
Universitat Pompeu Fabra, Barcelona.


Long before the trains started to roll towards the battlefields in 
1914, the coming of World War I put heavy demands on other types of 
transport. All over the world, in late July, ships were loading 
unusual freight, in unusual quantities. As William Silber describes 
in his _When Washington Shut down Wall Street_ [1], the cargo for the 
ships waiting in New York harbor came from only a few miles away. 
Workers at depositories stacked thousands of bars of gold in wooden 
kegs, covered them with saw dust to reduce abrasion, and nailed them 
shut. Armed transports took the crates and barrels with their 
precious cargo to the docks, before they were sent to the strong 
rooms of the waiting passenger and cargo ships.

As the risk of war grew, the soon-to-be belligerent powers sold 
foreign assets, and began to repatriate the proceeds in gold. Before 
the barbarism of the conflict became apparent to all, gold, the 
"barbarous relic" in the words of Keynes, started to change from 
currency anchor to strategic asset.  Hew Strachan's _Financing the 
First World War_ is about the struggle to find the funds necessary to 
fight World War I -- the first and the last of the major armed 
conflicts when all the main powers were on the gold standard when 
hostilities broke out. This scramble turned out to be every bit as 
desperate as the attempts to hoard gold in the summer months of 1914. 
The history of finance during World War I has often been told with a 
view to the hyperinflations and deflations, the booms and busts that 
followed -- how economies coped with the large increase in money in 
circulation, the economic dislocation and the overhang of debt. As 
the introduction explains, Strachan is less concerned with the 
consequences of financing World War I. Instead this book aims to 
explain how the war was fought on the financial battlefield.

This is part of a much larger project. Strachan was commissioned to 
write a comprehensive replacement of Cruttwell's (1934) _A History of 
the Great War_. Strachan's _To Arms_ is the first installment in what 
is promised to be a three-volume history of the conflict. _Financing 
the First World War_ is not a self-contained book as such, written 
with the intention to get to the bottom of financing arrangements 
during the Great War. Rather, Oxford University Press is re-issuing 
parts of _To Arms_, the first volume of Strachan's three-volume book 
on World War I, as separate paperbacks. In addition to this book, 
there are _The Outbreak of the First World War_, and _The First World 
War in Africa_. Strachan probably knows as much about the military, 
political and financial history of belligerents as any other author; 
he has also done an admirable job summarizing the main secondary 
works in German, French, Russian, and Italian. Since Strachan's own 
university (Oxford) has abolished even basic language requirements 
(like a two modern languages and Latin) for the study of history 
because of alleged "elitism," this is certainly to be welcomed. It is 
also in pleasing contrast with other English-language books on World 
War I, which often focus on the Anglo-German rivalry.

This is an ambitious and knowledgeable book. It is also poorly 
structured, strikingly confusing, and monumentally boring. The main 
problem seems to be that it has been re-assembled from the 
ingredients of a larger book. Like meat cuts reassembled into false 
filets, the book looks like the real thing, but certainly doesn't 
taste like it. Chapters starts well enough, with a small, intriguing 
vignette -- how the garbage-strewn battlefield of World War I 
indicates the prolific use of materiel, how a German Reichstag 
delegate encountered problems getting change when trying to pay for 
his dinner in Berlin in August 1914, etc. Yet these are rare morsels 
in army-style fare of dry prose and even drier numbers, cooked up 
without salt or spices. This reviewer thinks of himself as a bit of a 
chiffrephile, in Angus Maddison's elegant phrase -- someone who has a 
healthy appetite for figures. Yet the main account of financial 
questions related to the war effort in Strachan's book is close to 
unreadable. The reader is treated to a constant bombardment with 
financial figures, without much explanation. A barrage with millions 
of Sterling here is followed by salvos of millions of Russian Rubles, 
Bulgarian Levas, German Marks and French Francs in adjacent sectors. 
They left this reader shell-shocked. Little or no effort is made to 
put them into context, nor is there much of an explanation of "how 
big is big" (they are certainly almost never related to something 
economically meaningful such as GDP). Only occasionally do we learn 
that the British tax increases in 1917 -- after much back and forth - 
produced only enough additional revenue to cover the cost of five 
days' fighting. A typical example reads like this:

	A total of 4,460 million marks was subscribed, producing a
	surplus of 1,832 million over existing debt. The second, in
	March 1915, raised 9,060, a surplus of 1,851; the third, in
	September 1915, 12,101 million, a surplus of 2,410; a fourth
	10,712 million, a surplus of 324 million. [???] The fifth loan was
	2,114 million marks short of its target, the sixth (in March
	1917) 6,732 million, the seventh (in September 1917) 14,578
	million, and the eighth 23,970 million. The total of the last
	loan, issued in September 1918, fell back to 10,443 million
	marks, and left a shortfall of 38,971 million (p. 123).

Surely, this is why tables or graphs were invented? Yet not a single 
table or figure adorns the entire, 278-page book. The author 
apparently felt no need for such complications. This is no simple 
oversight, but indicative of his approach to the subject. All too 
often, we are simply told the sequence of minor political intrigues 
and major budget moves, in a blow-by-blow sequence, for one 
belligerent after the other.

For all its command of the minutiae, this book represents a wasted 
opportunity for comparative history. The book contains no insightful, 
analytical, systematically comparative discussion of war finances as 
such, other than a narrative of political maneuvers concerned with 
financial questions. For the most part, the discussion is strung 
across countries in a way that clarifies little. We are treated to 
very brief overviews in the introduction of topics -- financial 
mobilization, taxation, domestic borrowing, foreign borrowing, etc. 
Then, quasi in subchapters, we are told how individual countries 
handled these issues. There is no attempt to summarize what the 
chapters show, nor is there even a brief section that would conclude 
and argue a case. If there is a guiding theme, I failed to find it. 
The book simply peters out with some observations on the Balfour 
mission to the U.S. in 1917, before moving on to suggestions for 
further reading.

The First Word War produced bouts of nostalgia in many. After the 
cessation of hostilities, Keynes wrote longingly about a world where 
goods from all corners of the globe could be ordered quickly, where 
capital flowed freely and no passports were necessary to cross 
borders. This book engendered a different kind of nostalgia in this 
reviewer -- for a long-lost world where middle-aged copy editors in 
sensible shoes corrected spelling mistakes, editors at university 
presses leaned on authors to write to the best of their ability, a 
time when authors tried to publish books that were definitive works, 
not repackaged slices of a bigger volume which also contain prolific 
quantities of reworked secondary material; a time when charity 
publishers didn't go out of their way to boost revenues by academic 
recycling; and one when publishing a book without a concluding 
chapter was unthinkable.

Note:
1. William L. Silber, _When Washington Shut down Wall Street: The 
Great Financial Crisis of 1914 and the Origins of America's Monetary 
Supremacy_, Princeton: Princeton University Press, 2007.


Hans-Joachim Voth is ICREA Research Professor in the Economics 
Department, Universitat Pompeu Fabra, Barcelona, a Research Affiliate 
at the Center for International Economics (CREI, Barcelona), and a 
Research Fellow in the CEPR International Macro Research Program. 
Recent publications include "Interest Rate Restrictions in a Natural 
Experiment: Loan Allocation and the Change in the Usury Laws in 
1714," _Economic Journal_ 2007 (with Peter Temin, forthcoming), "Why 
England? Demographic Factors, Structural Change and Physical Capital 
Accumulation during the Industrial Revolution," _Journal of Economic 
Growth_ 2006 (with Nico Voigtlaender), and "Credit Rationing and 
Crowding Out during the Industrial Revolution: Evidence from Hoare's 
Bank, 1702-1862," _Explorations in Economic History_ 2005 (with Peter 
Temin).

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