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However, during World War I the British government was forced to borrow heavily in order to finance the war effort. The national debt increased from £650 million in 1914 to £7.40 billion in 1919. [7] [failed verification] Britain borrowed heavily from the US during World War I, and many loans from this period remain in a curious state of limbo.
British poster encouraging investment in war bonds. The economic history of World War I covers the methods used by the First World War (1914–1918), as well as related postwar issues such as war debts and reparations. It also covers the economic mobilization of labour, industry, and agriculture leading to economic failure.
Compared to France, the British government relied more on short-term financing in the form of treasury bills and exchequer bonds during World War I. [19] Treasury bills provided the bulk of British government funds in 1916, and were available for terms of 3, 6, 9 and 12 months at an interest rate of 5%. [19]
The European liquidation of American securities in 1914 (also called the financial crisis of 1914) was the selloff of about $3 billion (equivalent to $91.26 billion in 2023) of foreign portfolio investments at the start of World War I, taking place at the same time as the broader July Crisis of 1914.
During the war British private investments abroad were sold, raising £550 million. However, £250 million new investment also took place during the war. The net financial loss was therefore approximately £300 million ; less than two years investment compared to the pre-war average rate and more than replaced by 1928. [ 183 ]
Data on global debt during the Napoleonic Wars, which took place in the early 1800s, is harder to come by. But for comparison, some estimates put British government debt at more than 200% of GDP ...
John Maynard Keynes, then in poor health and shortly before his death, was sent by the United Kingdom to the United States and Canada to obtain more funds. [4] British politicians expected that in view of the United Kingdom's contribution to the war effort, especially for the lives lost before the United States entered the fight in 1941, America would offer favorable terms.
The Home Front: Civilian Life in World War One (2006) Dewey, P. E. "Food Production and Policy in the United Kingdom, 1914–1918," Transactions of the Royal Historical Society (1980). v. 30, pp 71–89. in JSTOR; Doyle, Peter. First World War Britain: 1914–1919 (2012) Fairlie, John A. British War Administration (1919) online edition