The Importance of U.S. Economic and Foreign Policy in the First World War and Beyond

One hundred years after the guns fell silent in Europe, the First World War is still pivotal in modern history. U.S. involvement in the war certainly redefined the relationship between the U.S. government and the American people and was full of “exciting opportunities” as John Moser notes in his essay. The phrase “exciting opportunities” is relative, but to Americans in 1917, the war was an opportunity to reform not only their society but that of the world.[1]

As the nation geared up for war, it was also gearing up for change. Women’s suffrage, Prohibition, and immigration restrictions were all changes resulting from U.S. participation in the war. President Woodrow Wilson’s worry did not seem to be about positive reform. In 1916, the president had promised a government that focused on the American people’s everyday concerns. At the war’s end, the president was faced with racial strife in the form of race riots in no less than twenty-five cities and labor strife gripping major industries. During the war, Wilson had guaranteed the right of labor to unionize and bargain collectively. Wilson’s administration quickly abandoned this agreement at war’s end, thanks in large part to the Red Scare that gripped the nation in 1919.

But Wilson was more worried about the negative changes that would come out of American participation. Involvement in the war meant, to Wilson, that his plans for international reform were in jeopardy. A more significant worry to the president was that it would forever change domestic politics in the United States. Indeed, the president feared that a movement to war footing would require Americans to shelve their liberal beliefs in a “free society” to compete with Germany and keep Britain and France at bay when it came to the use of U.S. troops. Wilson believed “the [U.S.] Constitution would not survive” a war that required militarism and legislation such as the Espionage and Sedition Acts.[2] Patriotic activities caused Americans to assimilate quickly. Propaganda targeted immigrants specifically as well as the American population more generally as the country moved to a war footing to produce the number of troops needed to fight a modern, industrial war.

It is essential that Wilson’s primary fear—involvement in the war meant his plans for international reform were not realized—is not forgotten. Despite the fight over the ratification of the Treaty of Versailles with the Senate, Wilson hoped to have the United States work as part of an international community to ensure world peace. In the lead essay, Moser gives a nod to Wilson’s desire to “make the world safe for democracy,” but only a nod. This is a mistake because the United States’ growing participation in world affairs unmistakably begins with this phrase. The legacy of the First World War rests on American’s newfound place in the world. Wilson believed that if he had to lead the country into a war, he would attempt to make American involvement force other belligerent nations to create and maintain a peace based on territorial integrity, political independence, equal trade opportunities, and limitation of armaments managed by an evolving League of Nations.[3]

The impact of America’s growing role in international affairs can be seen in the diplomacy and propaganda used by the belligerent nations to entice the United States to become involved in the fighting. However, the postwar foreign policy had a far more significant impact on the United States and its population. To begin with, it was during the period of U.S. neutrality that America’s status changed from a debtor nation to the leading creditor nation. By the war’s end, the United States had loaned Britain 10 billion dollars. An all too often forgotten aspect of U.S. First World War loans was the stipulation that the money could only be spent in America.[4] In one stroke, the United States became the world’s leading exporter. As David Reynolds has noted, during the 1920s, “the world needed America more than America needed the world.”[5] This not only helped Americans prosper, but it provided the United States with the leverage to become the dominant economic force in the world.

America’s newfound economic connection to the world stands in stark contrast to the idea that the United States remained on a war footing to regulate private business and manage the economy. The backlash against war profiteering led to a greater public distrust of bankers, Britain, and the U.S. government’s decision to go to war. The American public sent members to Congress in the late 1920s to stop any future involvement in war. Negotiated by U.S. Secretary of State Frank B. Kellogg and French Foreign Minister Aristide Briand, the Kellogg-Briand Pact of 1928 outlawed war and was eventually signed by more than fifty nations. Republican Senator Gerald P. Nye sponsored legislation to keep America off of a war footing by passing the Neutrality Act of 1935, prohibiting the sale of munitions to belligerents and the use of American ships to carry munitions. A second Neutrality Act was passed in early 1936 banning American loans to belligerents, and a third Neutrality Act in 1937 banned American citizens from traveling on ships owned by belligerent nations. Each of these Acts damaged American industry’s ability to maintain its new position of economic hegemony in the world and limited President Roosevelt’s ability to provide business to American companies during the Great Depression.

America’s rise to world economic powerhouse would not only survive the financial upheaval of the 1930s but be strengthened by it. As U.S. consumption slackened in 1928 and the government turned its focus on domestic economic issues, the world financial system faltered and collapsed. The lesson was clear to the new generation of American leaders who, in 1944, began to plan for a world more tightly intertwined with the U.S. economy. It would be the post-Second World War legacy that would place the United States on a constant war footing. The First World War turned out to be, shockingly, only the prelude.


[1] Jennifer D. Keene, The United States and the First World War (Harlow: Pearson Education Limited, 2000), p. 85.

[2] Ross A. Kennedy, The Will to Believe: Woodrow Wilson, World War I, and America’s Strategy for Peace and Security (Kent: The Kent State University Press, 2009), p. 129.

[3] Thomas J. Knock, To End All Wars: Woodrow Wilson and the Quest for a New World Order (Princeton: Princeton University Press, 1992), pp. 126-7.

[4] Adam Tooze, The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931 (New York: Viking Press, 2014), p. 207.

[5] David Reynolds, The Long Shadow: The Legacies of the Great War in the Twentieth Century (New York: W.W. Norton & Company, 2014), p. 128.

Also from this issue

Lead Essay

  • John E. Moser notes the strong initial appeal that the First World War held for Progressives. Many of them believed that war showed how the federal government could and should undertake a general refashioning of society. Indeed it did; while the United States did not turn socialist, as some progressives hoped, the federal government did vastly expand in scope and authority. The Progressives’ ideal of the permanent war footing, in which all relevant resources are put under unified federal control to achieve one or more pressing social ends, has been with us ever since.

Response Essays

  • Justin Quinn Olmstead looks at a time when U.S. engagement with the world wasn’t a given, and when the world needed the United States a lot more than we needed it. That time was immediately after World War I. He characterizes World War I as “only the prelude” to a state of affairs that has been with us for decades now, namely, a constant war footing that was formerly unknown in American society.

  • Andrew Bacevich argues that World War I changed the ways that western powers justified imperialist foreign policy. Prior to the war, imperial powers offered a frankly white supremacist rationale for their actions, but that rationale rang hollow when Europe lay in ruins. Later empires would need other justifications, including the ideological ones offered by systems as divergent as Marxism-Leninism and liberal market democracy. Yet these ideological empires have proven unstable, and our uncertain future may only be settled by whatever it is that replaces them.

  • Saladin Ambar describes early progressives’ infatuation with war as “a Faustian bargain” that they eventually repudiated, driven substantially by the example of World War I. Not only did the war not bring economic empowerment, it also dashed the hopes of many who looked for it to bring racial justice. The state that the war created was simply not what progressives wanted it to be, whether before the war—or especially after.