Financial crisis of 1914

The European liquidation of American securities in 1914 (also called the financial crisis of 1914) was the selloff of about $3 billion (equivalent to $87.65 billion in 2022) of foreign portfolio investments at the start of World War I, taking place at the same time as the broader July Crisis of 1914. Together with loans to finance the Allied war effort, made by J.P. Morgan and others, the liquidation of European-held securities transformed the United States from a debtor nation to a creditor nation for the first time in its history.^[1]

When Britain declared war on Germany on August 4, 1914, global stock exchanges were non-functional after days of massive selloffs. American banker Frank A. Vanderlip wrote to his wife:^[2]

You can not possibly have any conception of what has happened to the world. Civilization has broken down, and there is the most absolute derangement of a great part of our affairs.

After several consecutive days of sell offs, Treasury Secretary William Gibbs McAdoo closed the New York Stock Exchange on July 31. For four months the stock market remained closed to prevent the sale of British-held American securities. As the leading financial superpower in 1914, Britain was under tremendous pressure to maintain its gold payments. McAdoo was determined to keep pace but his ambitions were hampered by a Federal Reserve System still in its infancy. During the course of the crisis, McAdoo distributed gold to Treasury offices to protect the dollar and intervened in the near bankruptcy of New York City. On August 3, while the stock market was still closed, he increased the supply of paper money to avoid a run on the banks that would force them to suspend deposit convertibility, as they had in the Panic of 1907.^[3]

References

↑ Van Der Pijl, Kees (2014). The Making of an Atlantic Ruling Class. Verso Books. ISBN 9781844679362.
↑ Wilkins, Mira (2004). The History of Foreign Investment in the United States, 1914-1945. Harvard University Press. p. 4.
↑ Silber, William L. (2007). When Washington Shut Down Wall Street: The Great Financial Crisis of 1915 and the Origins of America's Monetary Supremacy. Princeton University Press.

Recessions in the United States and Commonwealth of Nations countries
Aggregate demand/Supply Effective demand General glut Model Overproduction Paradox of thrift Price-and-wage stickiness Underconsumption Business cycle Deflation/Inflation Chronic Classical dichotomy Disinflation Neutrality of money Price level Real and nominal values Economic expansion Recovery Stagnation U.S. expansions Interest rate Nominal interest rate Real interest rate Yield curve/Inverted Recession Balance sheet Depression Global Rolling Shapes Stagflation U.K. recessions U.S. recessions Shock Demand Supply Unemployment
Commercial Revolution (1000–1760)	Great Slump (1430–1490) Great Frost of 1709
1st Industrial Revolution (1760–1840)	British credit crisis of 1772–1773 1772–1774; England Scotland Thirteen Colonies 1785–1788 Copper Panic of 1789/Panic of 1792 (1789–1793) Panic of 1796–1797 (1796–1799) 1802–1804 1807–1810 1812 Post-Napoleonic Depression (1815–1821) 1822–23 Panic of 1825 (1825–1826) 1828–29 1833–34 Panic of 1837 (1836–1838 and 1839–1843)
Civil War-era United States/ Early Victorian Britain (1840–1870)	1845–46 Panic of 1847 (1847–1848) 1853–54 Panic of 1857 (1857–1858) 1860–61 Panic of 1866 (1865–1867) Black Friday (1869–1870)
2nd Industrial Revolution (1870–1914)	Long Depression 1873–1879; United Kingdom United States Depression of 1882–1885 1887–88 Baring crisis (1890–1891) Panic of 1893 (1893–1897) 1899–1900 Panic of 1901 (1902–1904) Panic of 1907 (1907–1908) Panic of 1910–1911 (1910–1912) Financial crisis of 1914 (1913–14)
Interwar period (1918–1939)	Post–World War I recession (1918–1919) Depression of 1920–1921 1923–1924 1926–1927 Great Depression 1929–1939; Australia Canada India New Zealand South Africa United Kingdom United States Recession of 1937–1938
Post–WWII expansion (1945–1973)	1945 Recession of 1949 (1948–1949) Recession of 1953 (1953–1954) Recession of 1958 (1957–1958) Recession of 1960–1961 Recession of 1969–1970
Great Inflation (1973–1982)	1973–1975 recession United Kingdom United States Early 1980s recession 1980–1982; Canada United Kingdom United States
Great Moderation/ Great Regression (1982–2007)	Early 1990s recession 1990–1991; Australia Canada United Kingdom United States 1997 Asian financial crisis Early 2000s recession (2001)
Digital Revolution (2007–present)	Great Recession 2007–2009; Australia Bangladesh Canada India Malaysia New Zealand Pakistan South Africa Sri Lanka United Kingdom United States COVID-19 recession 2020–present; Australia Bangladesh Belize Botswana Canada India Malaysia Namibia New Zealand Singapore United Kingdom United States Zambia

Financial crises
Banking panic Commodity price shocks Credit crunch Credit cycle Currency crisis Debt crisis Energy crisis Financial contagion Social contagion Flash crash Hyperinflation Liquidity crisis Minsky moment Social crisis Stock market crash
Pre-1000	Crisis of the Third Century (235–284 CE)
Commercial Revolution (1000–1760)	Great Bullion Famine (c. 1400–c. 1500) The Great Debasement (1544–1551) Dutch Republic stock market crashes (c. 1600–1760) Kipper und Wipper (1621–1623) Tulip mania crash (1637) South Sea bubble crash (1720) Mississippi bubble crash (1720)
Industrial Revolution (1760–1840)	Amsterdam banking crisis of 1763 Bengal bubble crash (1769–1784) British credit crisis of 1772–1773 Dutch Republic financial collapse (c. 1780–1795) Panic of 1785 Copper Panic of 1789 Panic of 1792 Panic of 1796–1797 Danish state bankruptcy of 1813 Post-Napoleonic Irish grain price and land use shocks (1815–1816) Panic of 1819 Panic of 1825 Panic of 1837
1840–1870	European Potato Failure (1845–1856) Great Irish Famine Highland Potato Famine Panic of 1847 Panic of 1857 Panic of 1866 Black Friday (1869)
Second Industrial Revolution (1870–1914)	Panic of 1873 Paris Bourse crash of 1882 Panic of 1884 Arendal crash (1886) Baring crisis (1890) Encilhamento (1890–1893) Panic of 1893 Australian banking crisis of 1893 Black Monday (1894) Panic of 1896 Panic of 1901 Panic of 1907 Shanghai rubber stock market crisis (1910) Panic of 1910–1911 Financial crisis of 1914
Interwar period (1918–1939)	Early Soviet hyperinflation (1917–1924) Weimar Republic hyperinflation (1921–1923) Shōwa financial crisis (1927) Wall Street Crash of 1929 Great Depression (1929–1939) Panic of 1930
Post–WWII expansion (1940–1972)	Kennedy Slide of 1962 1963–1965 Indonesian hyperinflation
Great Inflation (1973–1982)	1970s energy crisis (1973–1980) 1973 oil crisis 1973–1974 stock market crash Secondary banking crisis of 1973–1975 Steel crisis (1973–1982) Latin American debt crisis (1975–1982) 1976 British currency crisis 1979 oil crisis Brazilian hyperinflation (1980–1982)
Great Moderation (1982–2007)	Brazilian hyperinflation (1982–1994) Souk Al-Manakh stock market crash (1982) Chilean crisis of 1982 1983 Israel bank stock crisis Black Saturday (1983) Savings and loan crisis (1986–1995) Black Monday (1987) Dissolution of the Soviet Union (1988-1991) 1988–1992 Norwegian banking crisis Japanese asset price bubble crash (1990–1992) Rhode Island banking crisis (1990–1992) 1991 Indian economic crisis 1990s Swedish financial crisis 1990s Finnish banking crisis 1990s Armenian energy crisis Cuban Special Period (1991–2000) Black Wednesday (1992 Sterling crisis) Yugoslav hyperinflation (1992–1994) 1994 bond market crisis Venezuelan banking crisis of 1994 Mexican peso crisis (1994–1996) 1997 Asian financial crisis 1998 Russian financial crisis 1998–1999 Ecuador economic crisis 1998–2002 Argentine great depression Samba effect (1999) Dot-com bubble crash (2000–2004) 2001 Turkish economic crisis South American economic crisis of 2002 2002 Uruguay banking crisis 2003 Myanmar banking crisis 2004 Argentine energy crisis 2007 Chinese stock bubble crash Zimbabwean hyperinflation (2007–present)
Great Recession (2007–2013)	2007–2008 financial crisis Subprime mortgage crisis U.S. bear market of 2007–2009 Global financial crisis in September 2008 Global financial crisis in October 2008 Global financial crisis in November 2008 Global financial crisis in December 2008 2008 Latvian financial crisis 2008–2009 Belgian financial crisis 2008–2009 Russian financial crisis 2008–2009 Ukrainian financial crisis 2008–2011 Icelandic financial crisis 2008–2011 Irish banking crisis 2008–2014 Spanish financial crisis Global financial crisis in 2009 Blue Monday Crash 2009 European debt crisis Greek government-debt crisis 2009 Dubai debt standstill Venezuelan banking crisis of 2009–2010 2010–2014 Portuguese financial crisis Energy crisis in Venezuela (2010–present) Syrian economic crisis (2011–present) August 2011 stock markets fall 2011 Bangladesh share market scam 2012–2013 Cypriot financial crisis 2013 Chinese banking liquidity crisis
Digital Revolution (2013–present)	Venezuela economic crisis (2013–present) 2014–2016 Brazilian economic crisis Puerto Rican government-debt crisis (2014–2022) Russian financial crisis (2014–2016) 2015 Nepal blockade 2015–2016 Chinese stock market turbulence 2015–2016 stock market selloff Brexit stock market crash (2016) Venezuelan hyperinflation (2016–present) 2017 Sri Lankan fuel crisis Ghana banking crisis (2017–2018) 2018–2023 Turkish currency and debt crisis Lebanese liquidity crisis (2019–present) 2019–present Sri Lankan economic crisis COVID-19 pandemic Financial market impact 2020 stock market crash Recession 2020–2023 Chinese property sector crisis 2021–2022 inflation surge 2022 Russian financial crisis 2022 stock market decline 2023 United States banking crisis
List of banking crises List of economic crises List of sovereign debt crises List of stock market crashes and bear markets

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