The end of hegemony


MARTIN ELLISON, University of Oxford
THOMAS J. SARGENT,
New York University (NYU) - Department of Economics, Leonard N. Stern School of Business, National Bureau of Economic Research (NBER)
Email: thomas.sargent@nyu.edu
ANDREW SCOTT,
London Business School - Department of Economics, Centre for Economic Policy Research (CEPR)
Email: ascott@london.edu
Britain was the richest country in the world at the outbreak of the Great War, benefitting from all the resources of an industrialised country and a large empire. Funding the war contributed to the beginning of the end for British hegemony. Financiers in London extracted a high price for lending their money to the government to pay for the supplies and munitions needed to win the war. The US extracted a similarly high price for lending to Britain during the war. Russia never paid its war debts to Britain; France, Italy and Belgium got off lightly; but for a long time the US insisted on Britain repaying in full.

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