by T. Hunt Tooley | Mises.org | November 24, 2014
Central banks finance war, which leads to assault on freedoms
A surprising range of news and opinion outlets have memorialized a string of anniversaries related to the Great War over the last few months: the assassination of the Archduke, the July Crisis, the start of the war, etc. Newspapers, magazines, the blog world, the top ten list sites, and Youtube channels have all featured anniversary observations.
We have now arrived at another grim centennial, but one which may not be as obvious as the terrorist murders in Sarajevo. At this moment a hundred years ago, one of the less distinct but nonetheless crucially important “events” of the First World War took shape: the formation of stalemate on the Western Front.
The early months of the war in the West that started with the German invasion of Belgium and Luxembourg was characterized by huge armies, high-tech communications, and devastating weapons, but it was fought to a large extent in the old way. The first real assault of the war, that of the Germans on the fortress ring around Liège, featured German soldiers formed up in column, marching toward the bristling Belgian guns — like something out of the Napoleonic Wars. Indeed, the French, British, Belgian, and German armies all experienced unbelievably high losses (killed, wounded, captured, MIA) in the first months of the war. The French lost the most: just short of a million men during the last five months of 1914, about a third of those were killed in action. The Germans lost nearly 700,000 in 1914 on the Western Front alone.
The opening phase of the war, from the first days of September, we call the Battle of Frontiers. Germans attacked, French and Belgians counterattacked, the British Expeditionary Force (BEF) arrived to slow down the German advance. Waiting and waiting, the ponderous French commander Joffre used the sagging French line as a trap, springing that trap on September 5. In seven furious days of fighting along the Marne River, Joffre overturned the German Schlieffen Plan, the design for a short war in the West and a protracted war against Russia. By mid-September, the “First Battle of the Marne” ended with the Germans moving back to strong prepared positions — the beginnings of the trench network. Over the next weeks, as the Allies tried to destabilize or outflank the entrenched Germans and the Germans tried to maintain forward motion at least somewhere along the front, the stationary line filled in. The “Race to the Sea” was on.
By the end of October 1914, the vast Western Front was almost formed. The war of movement raged only in a small piece of western Belgium (the war had started, remember, in eastern Belgium). There the tattered and footsore Belgian army and the BEF, having very nearly exhausted its whole strength in the previous months, struggled to place themselves in front of the still moving Germans. For the Germans, confusion represented the last chance for anything like a quick outcome in the West. Hence, in this piece of Belgian Flanders the Germans mounted a series of assaults centering on the town of Ypres (more correctly known today by its Flemish name, Ieper) and extending all the way to the watery flatlands on the coast, between Ostend and Nieuport, a few miles from where the British would be trapped by the Germans in 1940, at Dunkirk.
Beginning on October 19, the Germans hurled themselves at Ypres. The beautiful Renaissance trading center lay just west of (and half encompassed by) a semi-circular rim of hills, which the Germans utilized to great advantage in shelling soldiers and city. The BEF, having fought a series of storied defensive battles for two months, now brought up its last reserves.
To the north, right up to the sea, the Germans attacked British and Belgian positions at Dixmuide, Langemarck, and other places. Exhaustion was close on both sides, but the Germans were able to draw on new recruits, a part of which were students from military academies and high schools who had volunteered in August. These new, inexperienced units moved on the entrenched British and Belgians in stand-up frontal assaults in columns and waves. In a certain German nationalist myth, they were all students, and the “Slaughter of the Innocents” (Kindermord, Murder of the Children, in German) would later become a trope of national sacrifice for ultra-nationalists, including the Nazis. In reality, the students were in the minority of German assault troops, and the preponderance of these “innocents” was less pronounced than later patriotic depictions. But the German attacks against dug-in and experienced (if weary) Belgians and Brits was in no uncertain terms a slaughter.
The Germans drew closer and closer to Ypres, probing, attacking, digging in. From the coast all the way to the French border, most sections of the line were already dug in on both sides, but in the gaps, German commanders continued attacking to keep up momentum. On November 11, a number of German assaults — and even at this stage still in stand-up, closed packed formations — made some headway, and in a couple of days were a mile and half from the walled city of Ypres. At numerous spots along the line, the fight came down to few hundred yards of unexploited stretches where defenders were sparse or absent. Some of the most crucial fights came down to footraces between attackers and defenders on the outskirts of Ypres.
As a unit, the original BEF, the “Old Contemptibles,” was now nearly extinct. The Belgians had been fighting and marching constantly since August 4. But at the close of October and beginning of November, the two remnants delivered one more defensive feat: the Germans pounded the lines, moving closer and closer, but they could not take Ypres. By November 16, the gaps were filled, the Germans momentarily exhausted. And that was the last of the “war of movement” on the Western Front.
The stalemate that now settled in consisted of two trench networks facing each other across No Man’s Land, from the English Channel to the border of Switzerland, 400 miles give or take, across a piece of Belgium and then across northeastern France. The zones were much deeper than one might imagine, since the trenches were vast networks including front line trenches, support trenches farther back, and communications trenches (paths dug into the earth) around the network with at least some safety.
The front was miles wide, counting support and logistical services in the rear, we could call it ten miles on the average. Some parts of this vast slaughterhouse would not change location over the next four years. Some would move by hundreds of yards, even some miles. And some would then move back to where they started.
This was stalemate in the extreme, and in recognition of its beginning exactly one hundred years ago, we should see it as one of the fundamental events of the twentieth century.
It was this stalemate and the desire to “break through to the green fields beyond” which immediately led to emergency and crisis of the kind that Robert Higgs analyzed in his classic Crisis and Leviathan. So, for example, the “shell crises” among all participants in 1915 offered to the warring states the “Crisis!” justification for all kinds of authoritarian wartime political, social, and economic measures. On every side, pre-war observers predicted a short war, in part for the very good reason that no government on earth could afford the massive costs of the new kind of warfare: huge armies, expensive weapons, enormous transport and logistical costs, and all the rest.
The war’s prelude had been a time of often brutal imperialism, mightily strengthened tax systems, practiced by all Western states in manipulating currency both domestically and internationally (especially in “imperial” settings). All these trends were already in train in Europe and the West, in part generated in imperial practice. But the combination of these political and financial techniques with the unbearable Crisis effect of the Western Front stalemate make the ferocious death rates of October and early November 1914 even more pointless, more tragic. This was truly the great Higgsian moment.
Once the two sides sat and faced each other, the only way out of the situation was breakthrough, either on the Western Front or elsewhere. And any breakthrough was expensive, whether through the use of poison gas or shelling for days or developing tanks or sending expeditions to fight the other side far away. It all cost money in quantities hardly ever imagined before. And this financial need to “service” the stalemate effected a fundamental shift in the amount of wealth that the modern state transfers from private to public hands. In terms of taxes alone, the rates of most governments moved a similar distance. For example, in the United States, in 1900, roughly seven percent of the wealth of the country was transferred to government at all levels through taxes (actually, half of that to local community government); after the war, the percentage of wealth transfer via taxes had reached 15 percent. By the thirties, the US government was taking nearly 20 percent.
But quite apart from taxes, an even more commodious method of transferring wealth to national coffers became routine. Beginning with the inflationary arrangements of central banks across Europe, the creation of the Federal Reserve, legislative support for changes in currency laws, the increasing conversion of the gold standard to a “gold exchange standard,” and much more, the transfer process of inflation became easily and continually available to all belligerents and eventually all governments. The “Age of Inflation” got its start before World War I, but the real crucible of inflationary plunder was the war itself. How much wealth would be transferred to central governments via inflation? To quote the inscription on many Great War graves: this answer is “known only to God.” But we can certainly imagine this transfer of wealth to governments as being much higher, even, than that which the increased taxes yielded.
The stalemate “crisis” also justified related repression of all kinds: the internment of “enemy aliens,” new and commodious rights of confiscation of property, jail time for all kinds of nay-sayers, the command economy, the national security state (broadening and creation of state security police, patriot laws like the Defense of the Realm Act in Britain), the state assault on privacy, and much more.
So as we memorialize the Great War, we might well think — with pity and regret — of the great tragedy of the numerous “innocents” slaughtered on all sides and in all battles. And the innocence of those early soldiers of 1914 seems somehow especially marked by the irony of noble expectations and mass death.
But we should also think in particular of this moment that generated the dreadful stalemate that emerged a hundred years ago to shape our world.