Fifty Things You Need to Know About World History

Bismarck’s political system ensured strong monarchical authority. As Imperial Chancellor, he pursued a policy of pragmatic, peace-oriented diplomacy that made the new German Empire a powerful country. But his approach met with criticism, not least from Wilhelm II, who became German Emperor in 1888. Wilhelm’s politics were more expansionist and militarist than his Chancellor’s and he forced Bismarck to resign in 1890. The man who more than any other built the modern German state lived in restless retirement until his death in 1898.

‘It was,’ said Troeltsch, ‘reminiscent of the way Rome treated Carthage.’

The terms of the Treaty of Versailles were imposed upon Germany. The Germans took no part in any of the discussions prior to their being told what the Allies had agreed. Apart from being forced to reduce their army to 100,000 volunteers and to severely restrict their manufacture of weapons, the Treaty demanded that Germany accept sole responsibility for starting the war. It also insisted on severe economic penalties, forcing the country to make reparations – in the first instance settled at about $31.5 billion – stripped it of all its overseas colonies and reassigned a large part of its European territory to France, Belgium, Denmark, Czechoslovakia and Poland. France was also given all rights for fifteen years over the German coalfields in the Saar on the eastern border between the two countries. Some of these conditions were to be expected: Germany was bound, for instance, to have to hand back Alsace to France and to restore the land it had taken from Belgium. But the economic demands, combined with the requirement to accept all the guilt for causing the war in the first place, aroused the anger of the defeated nation. ‘It was,’ said the German writer, Ernst Troeltsch, ‘reminiscent of the way Rome treated Carthage.’ He was not the only person to feel that the Treaty was unfair. In Britain the economist John Maynard Keynes urged re-negotiation of the terms. In his book, The Economic Consequences of the Peace, published in 1919, he said that: ‘Great privation and great risks to society have become unavoidable.’ A new approach was needed to ‘promote the re-establishment of prosperity and order, instead of leading us deeper into misfortune.’ And he quoted the writer Thomas Hardy, whose long verse-drama, The Dynasts, is set in the Napoleonic war that had engulfed Europe a hundred years previously:

… Nought remains But vindictiveness here amid the strong, And there amid the weak an impotent rage.

The economic demands aroused the anger of a defeated nation.

In fact France was treated rather more carefully in 1815 than Germany a hundred years later, not least because the French negotiator, Talleyrand, participated in the Congress of Vienna where the peace terms were agreed. Talleyrand was the great survivor of the European politics of his day, a famous prince who had played an important part in the early days of the French Revolution, served as Napoleon’s Foreign Secretary, fallen out with him and then, after his defeat, planned the restoration of the Bourbon monarchy. The German representative at Versailles, Ulrich Graf von Brockdorff Rantzau had no such pedigree. Summoned to hear the terms of the peace the Allies had agreed, he and his delegation were kept waiting for several days before they were read out to them. They were shocked at what they heard. Brockdorff Rantzau wrote a letter to the President of the Peace Conference, the French Prime Minister, Georges Clemenceau, describing the attitude of the Allies as ‘victorious violence’. He declared that the ‘exactions of this treaty are more than the German people can bear’.

The whole approach to peace was also very different in Vienna in 1815 from that which existed in Paris in 1919. The monarchs and princes who set about rearranging Europe at the end of the Napoleonic Wars were trying to put things back to where they were before Napoleon’s attempt to create a European continent in his own image. Talleyrand helped them by supporting the return of the Bourbons even though he knew, in his own phrase, that ‘they had learned nothing and forgotten nothing’. After the First World War, the politicians making peace wanted to look forward, and to build a world in which war would not happen again. The American President, Woodrow Wilson, was intent on forming a ‘League of Nations’, a multinational body designed to discuss and debate grievances rather than allow them to slide inevitably into conflict. He got what he wanted, even though America did not join the organisation because Congress refused to ratify its membership. The victors also created new countries out of the fragments of dismembered empires. Czechoslovakia and Yugoslavia came into existence as new independent states; Poland was given independent statehood for the first time in more than a hundred and twenty years; and two small and severely weakened countries, Austria and Hungary, came into being as separate entities. All this seemed fair and proper, responding to Woodrow Wilson’s ‘fourteen points’ for peace in which he explained how he believed Europe should be divided up to give autonomy and self-determination to its different ethnic groups.

The League of Nations

The carnage of the First World War generated widespread international agreement ‘to develop cooperation among nations and to guarantee them peace and to avoid future bloodshed’. The League of Nations was established by the Treaty of Versailles to pursue this aim. It was the brainchild of the American President, Woodrow Wilson, who saw it as a mechanism for the promotion of diplomacy, the prevention of war through collective security, and a way of safeguarding human rights for minority groups. But he failed to persuade the American Senate of its value, and the United States never joined it. During its first ten years of operation, the League successfully resolved several disagreements and international diplomatic activity began to be conducted through it. It oversaw an international judiciary as well as a number of agencies dealing with pressing international issues such as refugees, health, disarmament, opium and slavery.

Structurally, though, the League was flawed; it was bureaucratic and unwieldy, and lacked teeth. In 1931 it declared the Japanese invasion of Manchuria in northern China to be wrong but was unable to enforce a withdrawal when Japan withdrew its membership from the organisation. Nor did it halt Hitler’s militarism, which directly contravened its commitment to disarmament and failed to prevent the German invasion of Austria, Czechoslovakia and Poland. The outbreak of the Second World War was final proof of the League’s ultimate powerlessness. It was eventually disbanded in 1946 following the foundation of the United Nations, which the Americans joined, and which inherited the League’s ideals as well as many of its agencies.

Germany seethed with resentment. Stripped of much of its territory and saddled with the enormous cost of reparation it seemed to have been treated very harshly. In fact, however, its position was rather stronger than it first appeared, not least because the new countries that had been created were so weak. Furthermore it never repaid all the money that the Treaty of Versailles demanded. France and Britain put great pressure on Germany to pay its debts – they needed the money because they themselves owed $10 billion to the United States. When eventually Germany defaulted on the reparations, the country was leant $200 million in a loan floated on the American market by the banker, J. P. Morgan in 1924. It was quickly over-subscribed. The Great Depression of the 1930s brought further hardship to all the countries struggling with the aftermath of the war, and in 1932 the Allies agreed to cancel reparations altogether in return for one final payment. The German economy started to recover, the new, struggling countries surrounding it became victims of Hitler’s demands for national Lebensraum – living space – and Europe was once again in conflict.

The destruction of empires, whether well-intentioned or not, is never easy. The Treaty of Versailles made two fundamental mistakes. First of all, it imposed economic terms on Germany that proved impossible to fulfil. Secondly, it created a patchwork of weak countries that ultimately fell prey to their aggressive neighbour, Germany. Czechoslovakia, Poland and Austria had all come under German control by the time the Second World War broke out in 1939. Implicit in both of these mistakes was a lack of economic common sense. In trying to repair a broken world, the Allies had thought hard about rewards and punishment, but had given little consideration to how any of it was to be paid for. They overlooked the fact that in the years leading up to the war, Germany, as the biggest industrial nation on the continent of Europe, was an important source of wealth for the countries that surrounded it. Their aims were almost entirely political – and in the case of Woodrow Wilson, almost religious. Of the Allies’ approach to the post-war reconstruction, Keynes wrote that ‘that the fundamental economic problems of a Europe starving and disintegrating before their eyes, was the one question in which it was impossible to arouse (their) interest’. The First World War destroyed the wealth of nineteenth-century imperial Europe. The Treaty of Versailles failed to provide a framework in which it could be replaced.

CHAPTER 9

The Model T Ford 1908

The Model T Ford turned America into a nation of motorists and put luxury within the reach of many. The sophisticated pleasures of life were no longer just for the wealthy.

An owner’s manual is not an obvious place in which to look for lofty observations on life, but the one that the Ford Motor Company published at the end of the First World war was not shy about attempting such things. ‘It is a significant fact,’ it warbled, ‘that nearly all Ford cars are driven by laymen – by owners, who in the great majority of cases have little or no practical experience with things mechanical.’ They were, however, not to feel threatened by such ignorance. They had ‘a singular freedom from mechanical annoyances’ owing to the superior craftsmanship of their vehicle, but were still urged to indulge in a little gentle study of its working parts because ‘it is a truism that the more one knows about a thing the more one enjoys it’. Homilies from a manufacturer to its customers reveal a lot. The Ford Motor Company seemed to know that it was in the process of changing the world.

‘I will build a car for the great multitude’ said Ford.

Henry Ford was a visionary in two ways. Firstly, and most importantly, he realised that it was possible to provide ordinary people with what seemed at that time to be an unobtainable luxury – a motor car. ‘I will,’ he declared, ‘build a car for the great multitude.’ Secondly, his manufacturing methods transformed industry by introducing an assembly line capable of mass production. His sturdy little car was a significant invention in its own right. What made it revolutionary was that Ford built a factory capable of distributing it to millions of people. In 1908, the year the first Model T Ford rolled off the production lines, the car cost $825. By 1927, when the last one was built, seventeen million of them had been sold and its price was just $275. The factory at Highland Park in Detroit had reduced the time taken to build each car from around thirteen hours to just over an hour and a half, and was capable of producing one every minute. One of every two cars in the world was a Model T. These are astonishing statistics. In 1927 the population of the whole of the United States was a little over 119 million: by selling seventeen million cars, Henry Ford had unquestionably realised his ambition of bringing the power of motoring to the multitude. The writer E. B. White looked back with wistful humour at the age of the Model T in an article for New Yorker magazine in 1936:

‘Mechanically uncanny, it was like nothing that had ever come to the world before.’

The car is fading from the American scene – which is an understatement because to a few million people who grew up with it, the old Ford practically was the American scene. It was the miracle God had wrought. And it was patently the sort of thing that could only happen once. Mechanically uncanny, it was like nothing that had ever come to the world before.

For other writers the age of the Model T was not something to be celebrated, even teasingly. In Aldous Huxley’s novel Brave New World, published in 1932, the characters live in an era known as ‘AF’ – after Ford – inhabiting a uniform world of drug use and recreational sex where everything is reduced to relentless monotony like the work on an assembly line. For some, Henry Ford’s American dream was the beginning of a universal nightmare.

Henry Ford’s own life provides a similar contrast between the bleak and the sunny. Born in Dearborn, Michigan, in 1863, he had little schooling and eventually set up a small business repairing farm machinery. He was a natural engineer and found a job with the Edison Illuminating Company where he was rapidly promoted. He and Thomas Edison became good friends, but Ford left to set up his own company building cars. To begin with his companies failed, even though he and a partner designed and built a racing car that set the world land speed record in 1902. A year later he was able to start a new company. His backers wanted to build luxury cars, but Ford was convinced that the opportunity lay at the other end of the market. He won the boardroom battle and after producing a series of small cars came up with the Model T. The car, and the way in which it was produced, became the epitome of industrial progress. Ford introduced a minimum wage for his workers of $5 a day, double the going rate at the time. His competitors thought he was mad, but he stuck to his principles and followed up his wages policy with, first, a sociology department, and then an education department to try and help his workers spend their new-found wealth wisely. Autocratic but benevolent, it was one of industry’s first recognitions that the welfare of employees was an important component in commercial success. ‘There can be no true prosperity,’ Ford announced, ‘until the worker upon an ordinary commodity can buy what he makes.’

Ford introduced a minimum wage of $5 a day, double the going rate at the time.

Like all autocrats, Henry Ford found change difficult and challenge impossible. He refused to respond to the need to manage his business in a more structured way, preferring to rely on the instinct and touch that had made it successful in the first place. Good managers left, and when after 1927 the production of his new car, the Model A, ran into difficulties, he hired thugs to terrorise union members and break up their meetings. At the same time he gave vent to his anti-semitic feelings by running a newspaper, The Dearborn Independent, that contained articles hostile to Jews. Hitler would be one of Henry Ford’s strongest admirers. The brilliant mechanic who had put America – and the world – on a road from which it would never look back died in 1947 as a rather disagreeable example of a paranoid tycoon.

The life of Henry Ford provides a good description of the way in which the world changed during the twentieth century. It was a change that hinged on one thing above all others: the role of the individual as a consumer. Anyone was entitled to anything as long as he could pay for it. Wealth, even luxury, was within the grasp of all. The role of business, supported by new management techniques, was to ensure that consumers received the marketing messages that would encourage them to participate in this new opportunity.

At the same time as Henry Ford was beginning to manufacture his popular car, another mechanical engineer called Frederick Winslow Taylor published a short book called Principles of Scientific Management. Taylor was one of the world’s first management consultants. A talented tennis player – he was a winning partner in the doubles competition for the first American National Championships in 1881 – he wanted to bring to industry the same precision and efficiency he applied to his sport. Good management, he argued, was the result of carefully designed rules and principles. Workers in America, he said, suffered from the delusion that improved efficiency reduced the amount of labour required; their methods of working encouraged ‘soldiering’ or taking as long as possible to complete each job; and they were organised on a ‘rule-of-thumb’ basis rather than by clear and precise systems. Taylor wanted to achieve the maximum amount of prosperity for both employer and employee and explained how properly defined tasks and responsibilities could achieve this. His ideas followed those of another pioneer in the field of management consultancy, Frank Gilbreth, who not only came up with ideas for improving efficiency but tried to organise his twelve children by the same principles (his efforts were turned into the film Cheaper by the Dozen based on a humorous book written by his son). But the effects of the ideas of men like Taylor and Gilbreth were serious and permanent. They brought to industry – particularly American industry – a belief in the idea of management as a science, even an art, deserving of recognition on the same level as other human activities hitherto regarded as more important or refined. Henry Ford remained very much his own man – an industrial dictator to the end of his working life–but in creating the car plants based on mass production he used many of the principles of ‘scientific management’.

With mass production went mass consumption. Henry Ford made sure that people bought his cars by setting up a system of dealer franchises across America: there were 7,000 of them by 1912. At the same time he campaigned for better roads and more petrol stations to ensure that his customers had all they needed to enjoy his products more. As his competitors – Chrysler, Packard, Dodge and others – entered the market, the motor car became the symbol of middle-class prosperity. The consumer boom stretched beyond tarmac and gas pumps to shops, cinema and home appliances. In the same year that Ford launched the Model T, Richard Sears was making $41 million a year in sales by offering the nation what it wanted to buy through his mailorder business. Later, as the suburbs sprawled out of the towns, he built department stores all over the country. In Britain, Marks and Spencer began a similar operation, but much more limited in size and with a smaller range of goods for sale. In 1927 the first talking movie, The Jazz Singer, appeared. Six years later, American families could watch a film from their cars as the first drive-in movie theatres were built. Meanwhile radios, refrigerators and sewing machines were selling in huge numbers – often bought on long-term credit plans. The liquid embodiment of American consumerism, Coca-Cola, was a worldwide brand by the end of the 1920s.

There were attempts to turn the relentless tide of acquisitive prosperity. The American temperance movement successfully lobbied for the introduction of Prohibition in 1919, which for fourteen years, until it was repealed in 1933, banned the manufacture, sale or transport of alcohol. This attempt at applied morality – its supporters called it ‘The Noble Experiment’ – was ultimately unsuccessful. Illegal bars, ‘speakeasys’, mushroomed in their thousands and, as with the modern drug trade, gangsters cashed in on the high profits to be made from illegal but much-wanted goods. In 1929 an economic theorist and writer called Ralph Borsodi inveighed against the way of life that America had adopted in a book called This Ugly Civilisation. ‘America,’ he wailed, ‘is a respecter of things only, and time – why time is only something to be killed, or butchered into things which can be bought and sold.’ Borsodi came from a family of Hungarian immigrants – one of millions that had been attracted to America because of its freedom, particularly its wide, open spaces. For men like him, the nation’s founding fathers had been people who combined qualities of intellectual strength, physical vigour and a belief in the land – virtues that were being strangled in a jungle of greed.

The consumer the spender – was to be the agent of renewal.

America, happy and free in its new motor car, was not to be sidetracked. Even when its economy went into severe decline from 1929 as a result of the worldwide depression, the role of the new consumer was actually strengthened rather than weakened. President Roosevelt’s ‘New Deal’, the economic legislation designed to resurrect the nation’s fortunes, provided for consumers to participate in the new authorities he created in order to encourage industrial and financial reform. In the election campaign that first brought him to power he announced that: ‘I believe we are at the threshold of a fundamental change in our popular economic thought, that in the future we are going to think less about the producer and more about the consumer.’ The consumer – the spender – was to be the agent of renewal. The irony was that Henry Ford, who did more than anyone to create the acquisitive citizen whose willingness to spend lay at the heart of economic reconstruction, disliked the idea of government involvement in business and never supported Roosevelt’s reforms.

The Model T Ford was by some accounts an exasperating car to own. Its popular name was the ‘Tin Lizzie’ and as E. B. White recalled in the New Yorker magazine: ‘The lore and legend that governed the Ford were boundless. Owners had their own theories about everything; they discussed mutual problems in that wise, infinitely resourceful way old women discuss rheumatism.’ Cantankerous, strange, cheap and constantly available, it became a fixture of the American way of life – a symbol of wealth that everyone could aspire to own.

CHAPTER 10

The Credit Crunch 2007

In 2007 the world’s financial markets began to face serious problems as owners of houses in America began to default on their loans. It became clear that banks all over the world had extended credit unwisely and were about to collapse. This, combined with a general market recession, created the most serious global economic crisis for nearly a century. It became known as the Credit Crunch.

It is with some caution that I decided to include the Credit Crunch in this book. When in the future people look back at the first years of the twenty-first century, the world’s economic problems that began in 2007 may not appear particularly significant. But for those who have lived and are living through them they represent a moment of reckoning. The Credit Crunch brought to a shuddering halt a cycle of prosperity and growth that had lasted, with one brief interlude, for more than thirty years. It seemed unstoppable and its sudden end sent waves of fear and panic round the world. As fear subsided it was replaced by sober reflection. Many people, particularly in the West, began to reassess their attitudes towards individual wealth. The chief executive of the Royal Bank of Scotland that lost more than £24 billion in 2008 – the biggest in Britain’s corporate history – was urged to relinquish part of his pension as the public mood turned against the big salaries and bonuses earned by senior managers.

Waves of fear and panic went round the world.

In 2009, in a BBC Reith Lecture, an American political philosopher argued that it was time that the self-interest of the individual was replaced by what he called ‘a new politics for the common good’. It is still too early to say whether these agonies of conscience have made a long-term difference to the way men and women behave. In part they are simply the result of the anxiety people always feel during a period of economic decline when wages and profits are falling, concerns that tend to evaporate once growth and prosperity return. That is why the Credit Crunch is important. Whether it was just another blip in the economic cycle, or something far more, only time will tell.