A Catastrophe for US Munitions Factories
French Morale ‘Cracking’
A Secret Deal to Bring the U.S. In
Special to The Great War Project.
(28-30 November, 1-3 December) As the end of 1916 approaches, Britain is going broke.
“Not even J. P Morgan,” writes historian Thomas Fleming, “could come up with enough money to keep pace with Great Britain’s expenditures in the United States.” British borrowing from Morgan’s bank to purchase military weapons and supplies is leading to British financial ruin.
Drastic action has to be taken.
Morgan informs the British, reports Fleming, that…
“henceforth all loans would have to be on a short-term basis, against collateral.”
These terms are far more onerous than those the British enjoyed up till now in the war. The gold that Britain keeps in its vaults is disappearing, and Britain no longer has enough to pay Morgan back.
Soon it is apparent “that Britain was reeling toward bankruptcy.”
Fleming reports: “Secretary of State Robert Lansing told Woodrow Wilson of a warning from Ambassador Page [the US Ambassador in London] that the “collapse of world trade and of the whole of European finance” is imminent.
“This breakdown,” reports Fleming, “would mean the cessation of all war orders in hundreds of U.S. factories, a day of reckoning that would have a catastrophic impact on the American economy.”
The crisis is not only one of financing the war. At the same moment in the war, a century ago, Wilson’s closest confidante, Colonel Edward House, receives letters from American embassy staffers in Paris and London.
They warn House, according to historian Fleming, that “French morale was in danger of cracking.
House takes this information immediately to President Wilson and tells him, “If France should cave in before Germany, it would be a calamity beyond reckoning.”
There is no doubt where House’s allegiances lie. “If we intend to help defeat Germany…it will be necessary to begin immediately,” he tells Wilson.
It appears that around this time, one hundred years ago, Wilson concludes that it will be necessary for the United States to go to war to defeat Germany.
Colonel House already believes the U.S, will have to declare war on Germany. House’s influence on the president is enormous. “The intensity of their friendship is unique in presidential annals,” writes historian Fleming.
“Wilson repeatedly expressed amazement about how often they thought exactly alike.”
It should come as no surprise. “Much of this reaction,” observes Fleming, “can be credited to House’s astute handling of Wilson, who did not like to be contradicted once he had formed an opinion.”
“There is also no doubt that a great many of Wilson’s opinions about the war were formed by this small shrewd Texan.”
House’s opinions are formed by his close correspondence with Britain’s leaders, especially the foreign secretary, Sir Edward Grey.
Some months earlier House and Grey take it upon themselves to craft a secret agreement setting out the conditions that the U.S. would require to enter the war on Britain’s side.
Grey is especially successful in convincing House to approve a secret agreement that the U.S. will go to war against Germany “if Germany refuses to respond to the president’s call for an immediate peace conference.”
House also agrees that Wilson should make this move when Grey believes the time is most advantageous for the British.
Both House and Grey agree that Wilson should take this action only after the November election in the United States, when Wilson is reelected.
Wilson runs for reelection on the slogan, he kept us out of war.
But in fact, soon after Wilson’s reelection a century ago, House and Wilson decide “they could wait no longer.”
But now a very large obstacle emerges. The British foreign secretary refuses to take part in a peace conference. Britain’s generals believe they are now in a position to win the war.