The 11^th of November 2018 was a very special day in the world`s affairs. France commemorated the centenary of the World War I armistice. More than 80 world leaders gathered for the Paris ceremony. They all discussed upon the political issues. Economic aspects however deeply shaped the war. Before the industrial revolution, major economic downturns originated mainly from the supply side of the economy, usually through failures of the harvest, disease, or some natural disaster. The First World War was an enormous economic event on both the supply side and the demand side.

A very interesting aspect of the analysis should involve the economic aspects of World War I and its afterwards. Gross domestic product increased for three Allies (Britain, Italy, and U.S.), but decreased in France and Russia, in neutral Netherlands, and in the three main Central Powers. The shrinkage in GDP in Austria, Russia, France, and the Ottoman Empire reached 30 to 40%. In Austria, for example, most pigs were slaughtered, so at war’s end there was no meat. The Western Front quickly stabilized, with almost no movement of more than a few hundred yards. The greatest single expenditure on both sides was for artillery shells, the chief weapon in the war. Since the front was highly stable, both sides built elaborate railway networks that brought supplies within a mile or two of the front lines, with horse-drawn wagons used for the final deliveries. In the ten-month battle at Verdun, the French and Germans fired some 10 million shells in all, weighing 1.4 million tons of steel.

The German counter-blockade with U-Boats was defeated by the convoy system and massive American ship building. Britain paid the war costs of most of its Allies until it ran out of money, then the US took over, funding those Allies and Britain as well. Energy was a critical factor for the British war effort. Most of the energy supplies came from coal mines in Britain, where the issue was labour supply. Critical however was the flow of oil for ships, lorries and industrial use. There were no oil wells in Britain so everything was imported. The U.S. pumped two-thirds of the world’s oil. In 1917, total British consumption was 827 million barrels, of which 85 percent was supplied by the United States, and 6 percent by Mexico. The great issue in 1917 was how many tankers would survive the German u-boats. Convoys and the construction of new tankers solved the German threat, while tight government controls guaranteed that all essential needs were covered. An Inter-Allied Petroleum Conference allocated American supplies to Britain, France and Italy. An oil crisis occurred in Britain due to the 1917 German submarine campaign. Standard Oil of NJ, for example, lost 6 tankers (including the brand new John D. Archbold) between May and September. The only solution to the crisis was to increase oil shipments from America.

The Allies formed the Inter-Allied Petroleum Conference with USA, Britain, France, and Italy as the members. Standard and Royal Dutch/Shell ran it and made it work. The introduction of convoys as an antidote to the German U-boats and the joint management system by Standard Oil and Royal Dutch/Shell helped to solve the Allies’ supply problems. The close working relationship that evolved was in marked contrast to the feud between the government and Standard Oil years earlier. In 1917 and 1918, there was increased domestic demand for oil partly due to the cold winter that created a shortage of coal. Inventories and imported oil from Mexico were used to close the gap. In January 1918, the U.S. Fuel Administrator ordered industrial plants east of Mississippi to close for a week to free up oil for Europe.

Conditions on the Continent were bad for every belligerent. Britain sustained the lightest damage to its civilian economy, apart from its loss of men. The major damage was to its merchant marine and to its financial holdings. The United States and Canada prospered during the war. The reparations levied on Germany by the Treaty of Versailles were, in theory, supposed to restore the damage to the civilian economies, but little of the reparations money served the scope. Most of Germany’s reparations payments were funded by loans from American banks, and the recipients used them to pay off loans they had from the U.S. Treasury. Between 1919 and 1932, Germany paid out 19 billion goldmarks in reparations, and received 27 billion goldmarks in loans from New York bankers and others. These loans were eventually paid back by Germany after World War II.

Celebration of the Armistice became the centrepiece of memories of the war, along with salutes to the unknown soldier. Nations built monuments to the dead and their heroic soldiers, but seldom to the generals and admirals. November the 11th is commemorated annually in many countries under various names such as Armistice Day, Remembrance Day, Veterans Day, and in Poland as Independence Day.