Economic Disasters of the Twentieth Century

Economic Disasters of the Twentieth Century

Edited by Michael J. Oliver and Derek H. Aldcroft

The First and Second World Wars, the great depression, oil shocks, inflation, financial crises, stock market crashes, the collapse of the Soviet command economy and Third World disasters are discussed in this comprehensive book. The contributors subject these disasters to in-depth assessment, carefully considering their costs and impact on specific countries and regions, as well as assessing them in a global context. The book examines the legacy of economic disasters and asks whether economic disasters are avoidable or whether policymakers can learn from their mistakes.

Chapter 3: The Second World War as an Economic Disaster

Niall Ferguson

Subjects: economics and finance, economic psychology, financial economics and regulation, money and banking


1 Niall Ferguson On 20 April 1949, the New York Times carried three items about Japan. The most arresting headline was: ‘Japan’s War Cost Is Put at $31 Billion; 2,252,000 Buildings Razed, 1,850,000 Dead’. Similar figures were produced in the post-war period for nearly all the combatant countries. In four countries – China, Germany, Poland and the Soviet Union – the death toll was even higher, or five countries if the mortality of the 1943 Bengal famine is attributed to the war. Altogether, the best available estimates suggest, somewhere in the region of 60 million people lost their lives as a result of the Second World War. In some countries the mortality rate was higher than one in ten. In Poland it approached one in five (Harrison 1998a, 3,7).2 No other previous war had been so catastrophic in relative, much less in absolute, terms. Nor was Japan unique in the scale of destruction its capital stock had suffered. Although the bombing of Hiroshima and Nagasaki represented the logical culmination of Anglo-American strategy – two entire cities laid waste by just two atomic bombs – comparable devastation had already been wreaked in other cities by conventional weaponry. In the aggregate, according to the US Strategic Bombing Survey, 40 per cent of the built-up areas of 66 Japanese cities had been destroyed; nearly a third of the urban population had lost their homes. In Germany a similar proportion of the housing in 49 cities had been destroyed or seriously...

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