Economies of occupied Europe compared to WW1

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
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Guaporense
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Economies of occupied Europe compared to WW1

Post by Guaporense » 06 Sep 2016 02:16

While it's often stressed that the French economy and Western Europe overall collapsed under German occupation in WW2 I have noticed in fact that in WW1 the damage to the continental European economy was in fact much greater.

In Occupied Economies (https://www.amazon.com/Occupied-Economi ... 1845208234) we have estimates of the GDP of 6 countries occupied by Germany during the war (including black market output which surged following German occupation), I also included figures from Klein (1957) of German GNP and weighted all these indexes in proportion to pre-war GDP using the PPP estimates by Willianson (1995):

Image

Some economies declined while Germany experienced some moderate growth, overall there was a very small growth over the 7 countries' block by 1943 compared to 1938.

Compare now with the macroeconomic performance of Austria-Hungary, France and Germany in WW1 (The Economics of WW1 https://www.amazon.com/Economics-World- ... ics+of+ww1):

Image

Which was characterized by almost total collapse. By 1918, Austria-Hungary was starving while Germany was on the edge of starvation:

Cereal production Germany
1913 --- 100
1914 --- 88
1915 --- 71
1916 --- 72
1917 --- 49
1918 --- 57

Still even in WW1 they managed to maintain the level of coal production at nearly 90% of the pre-war level as well as expanded metal-working industries, while in WW2 continental Europe's coal production actually increased a little bit from pre-war levels:

Image

Sources:
WW1 - Race to the Front
WW2 - Jason Long's website The Sinews of War: Economics, Production, Logistics.

Real wages also declined further in WW1 versus WW2:

German real wages (source: The Economics of WW1):

1914 - 100
1915 - 88
1916 - 79
1917 - 65
1918 - 66

In WW2:

Real wages in 1943 versus 1938 (source: Occupied Economies):

Germany ----- 110
France -------- 58
Belgium ------- 95
Netherlands -- 77
Denmark ----- 86

So most of Europe under German occupation in WW2 was faring better, even in terms of real wages, than Germany was in WW1.

What was the reason? Well, both in WW1 and WW2, the economic collapse was caused mainly by massive conscription which deprived all the countries' economies from labor force (although the maritime blockade hurt significantly as well). In WW2, Germany conscripted millions of people from occupied countries to work in Germany, that was according to Occupied Economies, the most damaging policy the Nazis did in occupied Europe, although that helped to prevent Germany's economy from collapsing like it did in WW1.

Another reason for the discrepancy in GDP performance in WW1 versus WW2 was that in 1938 the world was in the Great Depression so output was already below potential, while in 1913, the world economy was almost at full employment.
Last edited by Guaporense on 06 Sep 2016 04:29, edited 1 time in total.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

pugsville
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Re: Economies of occupied Europe compared to WW1

Post by pugsville » 06 Sep 2016 03:00

vague recollections IIRC it was choice between using nitrates for fertiliser or explosives. WW1 they chose explosives. by ww2 they had better chemical process and were able to maintain fertiliser in German agriculture.

this is very vague memory stuff i could well have it wrong .. anybody clearer on this?

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Re: Economies of occupied Europe compared to WW1

Post by Guaporense » 09 Sep 2016 17:05

You are right. But another major factor in the collapse of agricultural production in WW1 was that they simply conscripted a lot of the farm labor force.

Actually Tooze says that in 1944, due to their desperate situation, the Nazis started consuming their nitrates that were earmarked for fertilizers into explosives.

Here is an estimate of Russia's GNP in WW1:

1913 - 100
1914 - 100
1915 - 96.5
1916 - 84.5
1917 - 80.0

From The Economics of World War I.

A collapse but not as bad as Austria-Hungary or France's. Still both Russia and Austria-Hungary were effectively knocked out of the war due to the fact that their rather primitive agricultural economies couldn't handle mobilizing 18.6 million and 9.3 million soldiers, respectively. In Russia's case they mobilized 51% of the working age agricultural male population, leaving to few hands to produce food while the Russian army swelled to 9.5 million soldiers by the end of 1916 (almost the scale of the Red Army in WW2). Then the Russian economy collapsed while trying to maintain the armed forces, Austria-Hungary was the same case: by 1918 they had only 48% of the male labor force they had in 1913. The country's collapse followed.

And it's interesting to conclude that overall WW1 indeed appears to be a stronger case for total war than WW2. For another piece of evidence: In terms of production of consumer goods, in Germany in WW2, consumption good industries (textiles, food processing, beverages) operated at 85-90% of the 1939 level even in 1943-1944. But in WW1 this was Germany's textile industry:

1913 - 100
1914 - 87
1915 - 65
1916 - 27
1917 - 22
1918 - 17

Germany mobilized the same share of the population into the armed forces in WW1 but without the luxury of millions of POWs to work for them (they managed to get several hundred thousand POWs, not remotely enough to maintain industrial production at pre-war levels).
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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