Default Setting II.

Between 1775 and 1825, the revolts against the British and Spanish Empires in the Americas created a host of new nations.  In the minds of European leaders, formal “empire” sold at a deep discount.  However, the “empire of free trade” arose as a far more appealing idea.  If non-European countries would pursue Western economic[1] and legal[2] policies, then you could get the same benefits of empire without the costs and heartbreak.  The Western capital generated by industrialization could then safely flow toward the economic development of the rest of the world.[3]  All would benefit.

The world of international investment brimmed with challenging opportunities in the later Nineteenth Century: Latin America, the United States, the Ottoman Empire, Japan, and China for example.  However, a willingness to fulfill commitments to Western economic and legal doctrines in exchange for Western investment varied from society to society.

Russia came late to industrialization and wanted to hurry the process forward.  Russia possessed rich natural resources, but its primitive agriculture generated little wealth.  Where to find the capital for rapid industrialization?  Two solutions offered themselves.  Either the country could borrow from rich foreign lenders or the peasantry could be squeezed very hard.  Fearful of peasant unrest, Russian leaders sensibly opted for foreign borrowing.

Foreign lenders could discern positive and negative features in Russian borrowers.  On the plus side were two essential factors.  Russia’s gigantic territory housed vast amounts of minerals and other natural resources.  In the middle of the century, the Tsar Alexander II had shoved through a series of “Great Reforms” intended to begin the modernization of Russia.  Those reforms had not yet taken full hold, but they provided a foundation for further progress.  On the negative side the “Great Reforms” had compounded the turmoil inside Russia.  Rapid industrialization would intensify the strains.  Then, Russia remained an absolute monarchy.  After the death of Alexander II, the quality of leadership declined markedly.

Between 1890 and 1920 political considerations, rather than purely economic ones, exerted a growing influence over foreign investments in Russia.  First, seeking escape from the diplomatic isolation into which it had been forced by Bismarck’s diplomacy, the French government encouraged lending to the Tsarist regime.  This lending supported the eventual Franco-Russian alliance that surprised and alarmed German statesmen.  Second, during the First World War, the French and British tried to prop up their tottering ally by ample credit.  Third, the Bolshevik regime repudiated the Russian external debt.[4]  The Bolsheviks understood the Red default as a stroke against global capitalism.  It would—and, in France, did—gravely weaken the middle class savers who formed a vital support for bourgeois democracy.

At the same time, default contributed to making Soviet Russia an international pariah.  Within a decade, the Soviets turned to the alternative strategy of squeezing assets out of the peasantry.  As late Nineteenth Century leaders had foreseen, the human cost would be terrible.

[1] Raise no barriers to imports and exports; pursue “sound” money.

[2] Practice Western notions of the rule of law, especially the sanctity of contracts.

[3] See, David Landes, Bankers and Pashas: International Finance and Economic Imperialism in Egypt (1958).

[4] See: Hassan Malik, Bankers and Bolsheviks: International Finance and the Russian Revolution, 1892-1922 (2018).

Kellogg and Briand Frosted Flakes.

In the First World War (1914-1918), Germany fought France, Britain, Russia, and the United States.  Germany lost–barely.  The French sought to create a post-war peace system based on keeping Germany weak.  Break up Germany into smaller states; grant the French control of the Rhineland and the Ruhr (Germany’s industrial heartland).  The British and the Americans didn’t like this solution, which just promised future wars.  Britain and the United States came up with a different plan: they would guarantee French security with an alliance treaty.  If Germany (or Mars) attacked, Britain and France would come to the aid of France.  However, the United States Senate refused to approve the Versailles Treaty (and its obligations for the United States).[1]  The British took the view—not entirely reasonable in light of the subsequent German danger under Mr. Hitler—that this let them off the hook as well.  All of a sudden, the French had neither an American nor a British alliance, nor did they have a weakened Germany.  What to do?

They tried coercing the Germans by occupying the Ruhr (1923-1925).  Unfortunately, they owed American banks a ton of money from the war.  So the American could—and did—bend France over the couch.  This led to the Dawes Plan and, eventually, to the Locarno Agreements.

Aristide Briand (1862-1932) fell heir to this mess.  Briand was a leftist politician who had been prime minister on many occasions.  In 1925 he became foreign minister.  He needed a way to fend off a future war with Germany.  Partly, this meant sucking-up to Germany.  Partly this meant trying to snare the United States into promising to defend France.  Briand fished around, then proposed what amounted to a defensive alliance between the US and France.

Frank Kellogg (1856-1937) grew up in the Upper Mid-West, taught himself law under the old pre-law-school system, and eventually became a terrifying lawyer for the U.S. Government in the Theodore Roosevelt administration.  He prosecuted the Union Pacific Railroad and Standard Oil.[2]  What he didn’t know about the real meaning of legal agreements wasn’t worth knowing.  He became a Senator from Minnesota (1916-1922).  Unlike most Republicans, he voted for the Versailles Treaty, so he lost that job.  “Progressive” Republicans like Herbert Hoover didn’t hold it against him that he had stood up to the old men and idiots.  He spent a year as Ambassador to Britain (1924-1925), then became Secretary of State (1925-1929).

So, Frank Kellogg had to deal with Aristide Briand’s proposal.  How to dodge a French trap?  He counter-proposed an agreement that would be open to every country and which rejected aggressive war as an instrument of national policy.  Who could be against a rejection of aggressive war?  In the public mind, the Kellogg-Briand Pact “outlawed war.”  Cheering followed.  Robert Ferrell told this story well in Peace in Their Time (1952)

Then Japan attacked China and Germany ran amok in Europe.  The Second World War followed.  The Holocaust followed.  The atom-bombing of Japan followed.  Filled with disgust over humankind, people came to misunderstand the Kellogg-Briand Pact.  First, “nouveau realists” saw it as a joke.  “Outlawing War” is joke, yes?  More recently, lawyers have seen it as the entering wedge for the rule of law, norms, and a rules-based system.[3]  Neither is true.  The Pact is best understood as a “realist” diplomatic maneuver in an age of popular idealism.

[1] This is a complex story.

[2] Yes, Republicans used to do this, just like the Democrats used to be an arm of the KKK.

[3] Oona Hathaway and Scott Shapiro, The Internationalists: How a Radical Plan to Outlaw War Remade the World (2017).  The reviews aren’t much more sensible, even when written by historians

All Quiet on the Western Front.

Carl Laemmle (1867-1939) was a German Jew who migrated to the US in 1884. He worked as a book-keeper, but got interested in movies when they were a new thing. So did a lot of other people. In 1912 Laemmle and some of the others merged their companies into Universal Films, and then moved to Hollywood. Universal Films turned out to be very successful in the Twenties and early Thirties. However, in 1928 Carl Laemmle made the mistake of bring his son, Carl, Jr. (1908-1979), into the business as head of production. Carl, Sr. had been a book-keeper, so he paid attention to what stuff cost. Carl, Jr. had been a rich kid, so he never paid attention to what stuff cost. This could work out OK if the spending produced a huge hit, so Carl Jr. and Universal were always on the look-out for a potential huge hit.

Erich Maria Remarque (1898-1970) grew up in a working class family in Germany, but had some hopes of becoming a writer. He was drafted into the German Army in 1916. After his training, he served six weeks on the Western Front before he was wounded. He spent the rest of the war in hospital. After the war he took a swing at teaching, then wandered between different types of jobs. He still wanted to be a writer. In a burst of creativity in 1927, he wrote All Quiet on the Western Front. It became a hit when it came out in 1929.[1] Universal bought the rights.

First, Universal needed a screen-writer to adapt the novel into a movie. They hired Maxwell Anderson (1888-1959) whose career is a novel in itself: he was a poor kid and son of an itinerant minister; a school teacher[2] and newspaper writer (fired many times in both careers, usually for not toeing the company line); and then he became a successful play-write, who turned to doing move screenplays on occasion. In 1924 his realistic war-play “What Price Glory?” had been a hit on Broadway. Carl, Jr. hired Anderson to adapt the novel.

Second, they needed a director. Lieb Milstein (1895-1980) grew up poor and Jewish in Kishinev, a city in pre-Revolutionary Russia. Kishinev wasn’t a good place to be either poor or Jewish, so Milstein did what everyone else who didn’t have rocks in their head did: he migrated to the United States. Upon arrival he changed his name to Lewis Milestone. He had been in the US for five years when America entered the First World War. Milstein enlisted in the Army; the Army taught him the film business as part of its propaganda and training work; and Milstein moved to Hollywood after the war. He soon became a director, with a Best Director Oscar in 1928. At the top of his profession, he was much in demand for big pictures. Carl Jr. hired him to direct “All Quiet on the Western Front.”

Third, they needed a bunch of actors. The “extras” weren’t hard to find. Oddly, there were several thousand German war veterans living around Los Angeles. Carl Jr. hired a lot of them. For the lead role of Paul Baumer, they hired Lew Ayres (1908-1996). Ayres didn’t have much acting experience (and he wasn’t really much of an actor). He was young and innocent and impressionable looking, which was the whole point.

The movie cost $1.2 million to make and earned $1.5 million at the box-office. That was enough profit to tempt Carl Jr. into more big-budget movies. Most didn’t do so well. In 1936 he and Carl Sr. got shoved out of Universal.

Lewis Milestone won the Oscar for Best Director. He got black-listed in the Fifties, then went into television work. Ayres became a conscientious objector/medic in World War II.

[1] Remarque wrote ten more novels, but his first remains his most famous.

[2] You notice that both Remarque and Anderson were school teachers? So was William Clark Quantrill. On the one hand, it didn’t used to be a respectable profession, so all sorts of flakes tried their hand at it. On the other hand, anybody with some brains can learn how to do it.

The Secret History of Veterans Day.

Fighting in the First World War stopped at 11:00 AM on 11 November 1918. In 1919, President Woodrow Wilson proclaimed 11 November of that year to be a national holiday, “Armistice Day.” It was supposed to be a one-off. The next year, Wilson proclaimed the Sunday nearest 11 November to be Armistice Sunday so that churches could devote a day to recalling the lost and pondering the difficulties of peace. In 1921 Congress declared a national holiday on 11 November to coincide with the dedication of the Tomb of the Unknown Soldier at Arlington National Cemetery. Thereafter most states made 11 November a state holiday.

The American Legion campaigned for additional payments to military veterans on the grounds that wartime inflation had eroded the value of their pay. Civilian employees of the federal government had received pay adjustments, so veterans should receive them as well to “restore the faith of men sorely tried by what they feel to be National ingratitude and injustice.” There were a lot of veterans: 3,662,374 of them. All were voters, so Congress passed the Adjusted Compensation Act in 1921, which promised immediate payments to veterans. This would amount to about $2.24 billion. That was a lot of money, especially since Congress didn’t propose a means to pay for it. President Warren Harding initially opposed the Act unless it was paired with new revenue, then came to favor a pension system. Harding managed to block the legislation in 1921 and again in 1922. President Calvin Coolidge vetoed a new bill in 1924, saying that “patriotism…bought and paid for is not patriotism.” Congress over-rode the veto.

The World War Adjusted Compensation Act, also known as the Bonus Act, applied to veterans who had served between 5 April 1917 and 1 July 1919. They would receive $1.00 for each day served in the United States and $1.25 for each day served outside the United States. The maximum pay-out was capped at $625. The ultimate payment date was set for the recipient’s birthday in 1945. Thus, it functioned as a deferred savings or insurance plan. However, a provision of the law allowed veterans to borrow against their eventual payment.

In 1926 Congress urged the President to issue a proclamation each year on the commemoration of Armistice Day. It also ordered creation of a new and grander Tomb of the Unknown Soldier.

In 1929 the Great Depression began. Veterans suffered just like everyone else. Many of them began to borrow against the deferred compensation. By the middle of 1932, 2.5 million veterans had borrowed $1.369 billion.

In April 1932 the new Tomb of the Unknown Soldier at Arlington was completed. In Spring and Summer 1932 about 17,000 veterans gathered in Washington, DC, to demand immediate payment of their compensation. Accompanied by thousands of family members, they camped out in shacks on Anacostia Flats. The papers called them the “Bonus Army.” In mid-June 1932, the House of Representatives passed a bill for immediate repayment, but the Senate rejected it. At the end of July 1932 the Washington police tried to evict the “Bonus Marchers,” but failed. President Herbert Hoover then had the Army toss them out.

In 1936 the Democratic majorities in Congress passed a bill to allow immediate payment of the veterans’ compensation, over-riding President Franklin D. Roosevelt’s veto. A bunch of rich-kid jokers at Princeton soon formed the “Veterans of Future Wars” to demand immediate payment of a bonus to them since they were likely to get killed in the next war, before they had a chance to spend a post-war bonus.

In May 1938 Congress passed a law making 11 November an annual holiday for federal employees. In 1954 Congress changed the name to Veterans Day.

The Kurdish Serbia.

Arab historians like Ibn Khaldun noted the tension between the simple, tough, and often war-like people of the mountains and deserts, on the one hand, and the refined, soft, and often feckless people of the towns and plains, on the other hand.[1] It’s not bad as an organizing principle, but in fact the silk slipper was often on the other foot. The Kurds offer a good example of this truth. Their hopes for a nation of their own were frustrated by the nationalism of other peoples. After the break-up of the Ottoman Empire, the Sunni Muslim, non-Arab Kurds found themselves divided between Iran, Iraq, Syria, and Turkey. All of these governments repressed the Kurds. Iraq draws most of the attention for this, but all the governments did it.

Saddam Hussein found the Iraqi Kurds disloyal during the Iran-Iraq War (1980-1989), so he used poison gas to slaughter some and then had many of the male survivors shot. The Americans encouraged and then betrayed a Kurdish revolt at the time of the First Iraq War (1990-1991). To show remorse, the Americans then fostered a semi-autonomous Kurdish area in Iraq through a no-fly zone and humanitarian aid. This potential nation cooked along better than the rest of Iraq for a dozen years.

The American invasion of Iraq in 2003 greatly stimulated Kurdish separatism. Elections in 2005 made the Kurds the second largest group in Iraq’s parliament. More adept at bargaining than their Arab compatriots, the Kurds wrestled-away ever greater degrees of autonomy from Baghdad. The American withdrawal from Iraq in 2011 allowed the Shi’ite government to run amok at the expense of the Sunni Arabs. Again, the Kurds were better able to defend themselves. They built an oil pipeline to Turkey to gain a greater degree of economic freedom from the central government. The crISIS of 2014 then provided the Kurds with yet another opportunity to loosen the bonds between themselves and the failing Iraq state. Kurdish troops took advantage of the collapse of the Iraqi army in the north to expand their territory to include the city of Kirkuk. Similarly, the Kurds of Syria have looked to their fellow Kurds in Iraq and Turkey for aid against ISIS. Regardless of how the crISIS ends, it will be hard for Baghdad to corral the Kurds. The shattering of Syria and Iraq could lead to an enlarged Kurdistan on its way to statehood.

This will have long-term consequences. For one thing, it will be harder to hold Iraq together if it is merely a federation of mutually-hostile Shi’ite Arabs and Sunni Arabs. Kurdistan’s wresting-away of much of Iraq’s oil will leave Baghdad with fewer resources with which to buy-off opponents. For another thing, the majority of Kurds live inside Turkey. The Turks have fought a long struggle to repress separatism among the Kurds. For the moment, they seem willing to have the Iraqi Kurds serve as a bulwark against ISIS. However, an independent Kurdistan will again come to be a magnet for Turkish Kurds. This will threaten Turkish territorial integrity. The Turks might be well-advised to concede this demand ahead of time. They’re not likely to do so. The artist formerly known as Yugoslavia grew out of the Serbian desire to gather all the South Slavs in one state. The Austro-Hungarian Empire might have been well advised to concede this demand ahead of time.   Vienna preferred war.

“The other Iraq,” The Week, 25 July 2014, p. 9.

[1] European Orientalist art of the 19th Century adopted the same perspective as a way of introducing some adventure and soft-core pornography into the lives of highly inhibited European bourgeois gentlemen. See:

Some questions about the origins of the First World War.

There is one question above all others to which historians return again and again. Could this catastrophe have been avoided? In trying to answer that question, historians have tried to tackle smaller chunks of it. Here is a sampling of the questions that historians have asked.


Did the monarchical governments of Germany, Austria, and Russia impede a rational solution of complex problems by means short of war? If so, how? Is democratic government naturally more peaceful than monarchical or authoritarian government?

Did the military staffs and their plans, especially in central and eastern Europe, get out of hand?

What part did the widely accepted beliefs of the day play in the coming of the war? The elites in all countries saw war as a legitimate instrument of national policy. Many people accepted ideas of competition, rather than cooperation, between countries, races, and social classes.


European social and political systems were out of joint with the basic realities, so perhaps a great upheaval would have come in any event.

What did domestic crises add to the decision for war? Germany’s established rulers faced political problems in dealing with the rise of the SPD and Center parties; the Austrian rulers faced crises over domestic reforms and South Slav resistance to “Magyarization; Russian rulers feared that a failure to support Serbia would revive the revolutionary forces of 1905. Did the struggle for more responsive government in Germany, Austria, and Russia mean that all were headed toward revolution even without the First World War? Did decision-makers choose war as a way of holding off or resolving domestic problems?

What role did international problems play in the decision for war? The key problems were the rightful place of Germany in Europe, the inability of anyone in central and eastern Europe to formulate a constructive solution to the problems of nationalism in multi-national and multi-ethnic states.

Was the war the product of human errors, which could have been avoided or corrected if better people had been in power, or was it the product of profound causes, which better people might have delayed but could not have prevented from boiling up at some point?


To these questions I would add one more. What lessons, if any, do the answers to these questions have for our own time?


Why the Crimean War mattered

In the middle of the Nineteenth Century there were five “Great Powers” which charted he course of European diplomacy: the Austrian Empire, the German kingdom of Prussia, France, Britain, and Russia.  Of these, Austria held pride of place.  The Austrian Empire dominated both Germany and Italy, and had an alliance with Russia to maintain the international system created at Vienna after the fall of Napoleon.

To the southeast lay the Ottoman Empire.  In those days it included much of the Balkan Peninsula, the future Arab countries of the Middle East, and modern-day Turkey.  Plagued by centuries of sloth and despotism, the Ottoman Empire had been disintegrating for many years.  Europeans expected it to break up, eventually.  When would that time come and who would gather up the bits and pieces?  This last question put Britain, one of whose “lifelines of Empire” ran through the Eastern Mediterranean, at odds with Russia, which shared a long border with the Ottoman Empire.  When Russia and the Ottomans went to war in 1853, Britain and France (which had its own interests in the Middle East) joined the Ottomans in 1854.

The British Army that went to war against Russia suffered from several disabilities.  First of all, it lived in the shadow of its previous successes.  The most recent and most important of these had come under the command of Sir Arthur Wellesley, Duke of Wellington.  Wellington had commanded the British troops fighting against Napoleon’s armies in Spain (1808-1814) and then had defeated Napoleon himself at Waterloo (1815).  Whatever the “Iron Duke” had done was good enough for his successors—even if conditions had change.  The senior ranks of the army were filled with men who had served under the duke in their younger days.  These were now long past, so a virtual living history museum now led the army.  Second, Britain’s subsequent wars had been comparatively small-scale fights in distant India.  Officers drawn from the ranks of the British aristocracy often chose not to accompany British troops to India.  Instead, they allowed professional soldiers from lower social groups to command on foreign duty.  A “European” war against Russia appeared as very different and more acceptable service than did Indian service.  Those with little experience of real war would take command.

The war took place around the edges of the Black Sea, first in the future Rumania, later on the Crimean Peninsula.  The Russians had invaded the Balkan portions of the Ottoman Empire, but had then retreated.  The British and the French decided to invade Russia itself by capturing the port of Sebastopol.  From September 1854 to September 1855 the British and French besieged Sebastopol while other Russian forces tried to raise the siege.  Bloody battles followed at Balaclava, Inkerman, Eupatoria and Tchernaya.  All were defeats for the Russians.  Sebastopol finally surrendered.

The subsequent peace treaty did nothing to solve the problem of Ottoman decadence.  The behavior of the Austrians, who had remained neutral while their Russian ally was beaten, led to Vienna’s isolation when first Italy, then Germany, were united at its expense.  The rise of a powerful Germany, the long-term hostility between Russia and Austria in the Balkans, and the continuing collapse of the Ottoman Empire provided the fuel for the First World War.