The Second World War

A Military History

Gordon Corrigan

• Publisher: Atlantic Books
• Year: 2010
• ISBN:
  9780857891358
• Topic: Historia
• Subtopic: Historia del mundo

In this major new history, Gordon Corrigan argues that what we call the Second World War was in fact two separate conflicts: one against Germany (and, for a while, Italy) in Western Europe, Soviet Russia and North Africa; the other against Japan in the Far East and Pacific. Each conflict had distinct causes and had to be fought in different ways against very different enemies, who rarely, if ever, coordinated their efforts.

This is a new and cogent account of an immense, exhausting six-year conflict that continues to fascinate. Corrigan examines the agendas of the warring nations and offers fresh and vivid interpretations; Britain's own part in the war comes in for particularly close scrutiny: militarily, the British suffered an agonising series of defeats before the tide turned. The country emerged economically broken, with the loss of her empire a virtual certainty.

The Second World War is vast in its erudition and epic in its execution. It will change forever the way we think about the titanic conflicts that dominated the years 1939 to 1945.

1

ON YOUR MARKS…

It would be quite unfair to blame the United States of America for starting the Second World War. Hitler did not come to power because of the Wall Street Crash, but, as the Great Depression sparked off by the crash affected the economies of the whole developed world and encouraged the rise of extreme politics, it certainly helped. Indeed, before the crash led indirectly to the collapse of a major Austrian bank in May 1931 – a collapse which brought down the entire German banking system with it – German liberal democracy might, just, have survived; after it, the rise of extreme German nationalism could not be contained.

Stock markets depend on confidence – confidence in the soundness of the market, confidence in the individual companies and utilities quoted on it, and confidence in its regulation. When any of these factors is absent, then it is only a question of time before financial chaos and collapse ensue. The Wall Street Crash was not the first such implosion, nor by any means the last. Economists still argue about the causes of the 1929 crash, but what actually happened is clear enough, even if the reasons for it are not. Democracies and controlled economies are mutually incompatible and in a free market occasional adjustment – recession even – is probably inevitable. The United States had been heading for recession in 1914 and the First World War had got her out of it. The slack in American industry was taken up by British and French contracts for war-making materiel, and indeed there were cynics who claimed (unfairly, in this author’s view) that America only entered the war to make sure that the Allies won and she got paid. As the only participant that actually emerged from the war richer than she entered it, America was poised for a period of sustained economic growth after it, and, under the administrations of Presidents Calvin Coolidge from 1921 and Herbert Hoover from 1928, she got it. Among the results of this boom were very large amounts of cash looking for a home, and some of this surplus cash was absorbed by lending to overseas governments and financial institutions: by 1929, American banks had outstanding foreign loans of $8.5bn, about half of this total being to Germany.^* A proportion of these loans were undoubtedly dubious, but, as long as the lenders were happy to lend and the borrowers could service the loans at interest rates that were not onerous, nobody minded very much.

It was not just corporations and the US government that used overseas loans as a seemingly safe resting place for spare capital, but individuals too, and many not only bought into loans but piled into the stock market, which seemed as if it would go on rising for ever.By 1929 it was estimated that 9 million individuals were engaged in owning, buying and selling shares, which, if dependants are included, means that around 20 per cent of the entire US population (120 million in 1929) was involved with the stock market and directly affected by it. Many knew perfectly well that shares can go down as well as up, but there was an almost universal suspension of belief that for many years appeared to be justified as the market marched ever upwards.

America had never believed in the regulation of making money, and there was the usual crop of out-and-out swindlers who encouraged investment in companies that either did not exist or were set up purely to fleece the gullible. Most brokers – those who arranged for the purchase and sale of shares – were not dishonest, but too many of them were either incompetent or incurable optimists who encouraged the naive and the greedy to buy and to go on buying. By 1929 shares were changing hands at prices that could not possibly be justified by the underlying assets backing them, and between 1925 and 1929 the total of share prices on the New York exchange had trebled. The trouble about booms, though, is that they nearly always over-extend themselves and are followed by some sort of bust.

Matters were hardly improved by the fact that, alongside the straightforward investment in the Wall Street market, there was a great deal of buying on margin, which was effectively a way of buying shares with borrowed money, the collateral for the loan being the shares themselves. If the market went up, the profits could be enormous,^* but, if it went down, then the investor had to keep pumping more and more money in to back the loan, which now became increasingly greater than the value of the shares. As it was, by October 1929 a staggering total of $6.8bn was outstanding in loans to buy shares, most of it backed by the shares themselves. In short, Wall Street had become as much a medium for gambling, with many small investors sucked in by the lure of easy money, as it was a mechanism for economic growth. It had taken twenty years, from 1907 until 1927, for the Dow Jones industrial average – the measure of the total value of a representative basket of shares on the New York market – to double. It took only another two years – from 1927 to 1929 – for it to double again. The bubble could not go on expanding for ever, and eventually it burst.

The twenties had stopped roaring well before October 1929, although very few seemed to notice. On the 17th of that month, the committee of the Investment Bankers Association of New York warned that speculation in utilities (gas, electricity, water) had ‘reached danger point and many stocks are selling far above their intrinsic value’.² No one seemed to listen. On Wednesday, 23 October, New York prices started to drop and the second-highest number of shares in the history of the exchange was traded. The telegrams demanding increases in margin payments started to go out. The next day’s opening saw more selling but there was a modest upturn in late trading when the banks and investment houses pumped money in to steady the market, and the morning’s losses were halved. On Friday, 25 October, the Dow Jones closed marginally up, and on Saturday marginally down but in steady trading. Both the optimists and those who were in too deeply to get out without huge losses breathed again.

Their relief was short-lived. On Monday morning, a rumour-fuelled wave of selling saw Wall Street’s biggest drop in share prices to date, with $14bn lopped off the value of shares. Worse was to come. On Tuesday, 29 October, massive selling, which was now panic selling, continued. By the close of trading that day, 16.4 million shares had been traded. The Dow, which on 1 October stood at 343, was at 230 and it would be another twenty-five years before it would reach its pre-crash levels again. In all, $10bn had been wiped off the market value. To put this sum into perspective, it was equal to the total cost to America of the first war, ten times the Union budget for the Civil War and twice all the money in circulation throughout the entire nation.³ It was now breathtakingly clear that this really was a crash: there would be no correction, no rally, no pumping in of money by the banks. By the time loans had not been repaid and banks and businesses had failed, the total cost has been estimated at $50bn or $559bn in today’s money.

Manufacturing industries, which were slowing down anyway before the crash, now found themselves with warehouses full of goods that nobody could afford to buy, and employers began to lay off workers. Before the crash, there were 1.5 million Americans unemployed, or 3.3 per cent of a workforce of 45 million. By 1932, that had risen to 15 million, or a third of the workforce. Inevitably, recession in the wake of the crash and the collapse of the American domestic economy quickly began to affect the rest of the world. Overseas companies that sold to America found orders were cancelled or not renewed. If Detroit was not making cars, then it did not need rubber to make tyres, and so there was a slump in the rubber plantations of Malaya, then a British colony. Much the same applied to those exporters of tin, oil and European luxury items. One of the first things that people or companies do when faced with a liquidity crisis is to call in outstanding debts, and this is what American banks began to do.

In these days, when goods cross borders with ease, it is sometimes forgotten that free trade, now accepted by most advanced nations, was still hotly argued about in the interwar years. The USA was protectionist – that is, she imposed tariffs on goods imported from abroad, in order to protect domestic producers. Had tariffs not been imposed, then foreign goods might undercut those produced at home and would drive the price of the latter down, and the wages of those who made them down too. Up to the time of the crash, these tariffs were not a serious obstacle to international trade and even those imposed on goods in direct competition with those made at home were not onerous. All that was to change in 1930 with the imposition of the Smoot– Hawley Act, which imposed swingeing import duties on a wider range of foreign goods, raising some of them by an unprecedented 50 per cent.

Now foreign countries could no longer export with ease to the United States, and some began to impose retaliatory tariffs on US goods. If commodity producers could not export to the United States, then neither would they import American wheat and meat. Grain, unsold and so unharvested, rotted in the fields of the Midwest and cattle were slaughtered because it was not worth bringing them to market. Rightly or wrongly, America was widely blamed for exporting recession: foreign governments argued – with some reason – that, if they could only be allowed to export to America, they could earn dollars and thus repay loans owing to the USA, while American exporters argued that, even though US exports were but a very small part of GDP, foreigners were deliberately driving them out of business. Either way, a crisis of global proportions was in the making.

At home, while America was protectionist, she was also non-interventionist. It was unthinkable then for the federal government to finance a public works programme (which might have solved, or at least massively reduced, unemployment) and impossible for it to direct the banking system. There was a Federal Reserve, but it had little real influence and the plethora of banks, many of them badly managed and mainly confined to one state, were generally uncooperative with it. There was no strong central bank with the power to intervene and offer a lifeline to financial institutions in trouble. It was up to the private sector to get itself out of its own mess, and that the private sector was unable to do. Domestically, President Hoover got little thanks from his countrymen for his handling of the recession. Hard though he tried to stimulate recovery – against all his own principles and those of his party, which saw rescue as being the prerogative of the individual and not the state – he could not succeed, largely because the recession was worldwide and deepening, but also because the machinery whereby he could intervene decisively simply did not exist. Then, in the summer of 1931, Hoover announced a moratorium on foreign debts owed to the government, but it was beyond his – or anyone’s – power to stay debts owed to private investors and private banks, and it was those non-public debts that would prove critical.

* * *

The first spark that would ultimately ignite the Second World War was struck when Kredit Anstalt collapsed in May 1931. The largest bank in Austria and probably the most important bank in Europe, or at least in Central and Eastern Europe,^* it had been in trouble in 1929, but such an institution could not then have been allowed to fail and it had been bailed out by a consortium of banks that included JP Morgan (America), Schroeder (UK) and Rothschild (Austria). Then, in March 1931, Austria turned to her natural ally, Germany, and formed a customs union or free trade area. To France, this was completely unacceptable – the enemies of 1914–18 were getting together again – and French loans to Germany and Austria were immediately called in. Two months later, in May, a run on the bank again brought support, this time from the Bank of England, the Austrian government and the Federal Reserve, but it was not enough. The bank collapsed and Austrian governmental credit had run out. Shortly afterwards came the collapse of virtually the entire German banking system – and this too had been underwritten by the Bank of England. Then, in September 1931, Britain went off the gold standard. Most of Europe went off it too, but for the Bank of England no longer to back sterling with a guarantee to change it into gold on demand inflicted far-reaching and chaotic effects on the global economy. The Bank of England had been effectively the world’s banker, with sterling in wider use as an international currency than even the dollar. Many countries, including France along with most of Europe, kept their national reserves in sterling, which was regarded as totally safe and realizable against gold. Now there was no certainty that these reserves would keep their value.

In America, there was little interest in what was going on in Europe, at least from the general public. The country’s own problems – economic, industrial, social – were quite sufficient without having to worry about what effects the slump might be having elsewhere. Besides, despite the fact that they showed a net profit from their involvement in the first war, many Americans had a sneaking suspicion that the wily British and the mercurial French had somehow conned them into entering it, and given that the United States had refused to ratify the Treaty of Versailles, which brought the war to an end, there was little incentive to become embroiled again in the doings of Europeans.

Across the Atlantic, however, the view was very different, and that France called in her loans to Germany and Austria in 1931 so peremptorily should have come as no surprise. Of all Germany’s erstwhile opponents, France had more reason to fear and hate her than most. Prussia had played a major part in the downfall of Napoleon and she had defeated and humiliated the second Napoleon’s^* empire in 1870: as a crowning insult, William of Prussia was declared emperor of a united Germany in the Hall of Mirrors in Versailles. This, combined with the fact that France had to pay a very large indemnity and lost Alsace (which was largely German-speaking) and one third of Lorraine (with rather less justification), left no great love for the Germans in French hearts – indeed, they were probably disliked almost as much as the British, who at least were no threat to metropolitan France on land.

Almost half a century after the indignities of the Franco-Prussian War, France was to emerge on the winning side in 1918, but at fearful cost. With a population 7 million less than that of the United Kingdom, she had suffered twice as many military deaths, and as she already had a declining and ageing population, one in which men of military age comprised a much smaller percentage than they did in Britain, the effects were even worse than the bald statistic might indicate.⁴ It was France that was the moving spirit behind the harsh terms of the Versailles Treaty, and she was determined to brook no deviation from them. Suggestions by the British and Americans that payment of reparations might be modified cut no ice with successive French governments and, while Britain had some – even considerable – sympathy with the fledgling Weimar Republic, she was not prepared to break with France.

While Britain, and to a lesser extent the United States, had spent large sums in prosecuting the war, America herself suffered no damage to the homeland and, apart from the occasional air raid or shelling of a coastal town, neither did Britain. In France, however, at least 300,000 dwelling places were destroyed or damaged so badly that they had to be completely rebuilt and 20,000 factories or manufacturing establishments were rendered unusable. The country was faced with the huge problem of reconstruction while at the same time she could make few savings from disarmament as, unlike Britain, which rushed to get rid of her soldiers, sailors and airmen as quickly as possible, France, even with a defeated and disarmed Germany as a neighbour, felt unable to drop her guard completely. Furthermore, France, like Germany, had opted to finance the war from domestic and international loans rather than from increased taxation and these now had to be paid back. The cost of rebuilding and the repayment of international loans would, the French government hoped, be met from German reparations and any suggestion by the British or the Americans that Germany might not be able to pay were brusquely dismissed. To begin with, even with reparation money coming in, outgoings were only partly covered, and, when reparations lessened and then stopped altogether, serious currency inflation was inevitable. By 1925, the franc was worth only one tenth of its 1914 value, which meant that domestic investors found their wartime loans to the government repaid with a greatly reduced purchasing power. While French inflation was not nearly as bad as Germany’s, it caused serious economic, social and political dislocation nevertheless.

Initially, the weak franc helped exports, but this was short-lived. The Wall Street Crash and the Great Depression hit France, with her less advanced industrial and financial base, later than the rest of the developed world, but much French overseas trade depended on the export of relatively expensive items – wines, cognacs, leather goods, textiles – and luxury goods were amongst the first savings to be made by foreign importers. From 1929 French exports fell dramatically, and from a situation of full employment, and in some sectors a shortage of labour, in 1920, unemployment soared to nearly half a million by 1933.⁵

During the first war, the normal political processes of competing parties trying to persuade the electorate to favour them over others had been in abeyance, and the Union Sacrée (‘Sacred Union’) had maintained a more or less stable support for the war. Once peace came, however, the in-fighting began again and many of the strains inherent in the Third Republic^* reappeared. In very broad terms, French politics between the wars saw a somewhat incongruous alliance of the rich, the aristocracy, conservative peasant smallholders, small businessmen and investors, and much of the lower middle class – this latter previously a staunch supporter of the republican state – set against the proponents of a welfare state, socialists, communists, radical workers, civil servants and intellectuals.^* These groupings were not absolute – there was considerable overlap and the influence of the left was reduced by splits in the socialist and communist ranks between those who wanted to follow Moscow’s line (most, but not all, communists) and those who saw themselves as republican patriots (most, but not all, socialists). While supposedly part of the left but in practice in the centre was the Radical Socialist Party, which drew its support from white-collar workers, the lower end of the professions and some of the peasantry. On the right were a number of fairly unpleasant organizations that were opposed to the whole concept of the Republic. These included L’Action Française, which had grown out of the debacle of 1870 and was monarchist, Catholic and anti-Semitic, taking the Church’s side in the old struggle between secular and clerical influence in government and sending its strong-arm squads out to beat up communists. Allied with them, although not quite so extreme, was the Croix de Feu (literally, ‘Cross of Fire’), an ex-servicemen’s organization, and other bodies whose beliefs varied from a vague feeling that the Third Republic was not working to outrig...