There is one simple answer: the continuing support of all the belligerent peoples, who not only endured the huge military losses but accepted without complaint the increasing controls and hardships demanded by the conduct of the war. Everywhere governments assumed powers over the lives of their citizens to a degree that was not only unprecedented but had previously been unimaginable. Where governments did not take control, volunteer organizations did. The expected financial collapse at the outbreak of war did not occur. Insurance rates were pegged, government loans were oversubscribed, printed currency replaced gold, labour shortage produced soaring wages, and government contracts created unprecedented prosperity for some sections of the business classes.
Agrarian producers suffered severely from shortage of labour, but the demand for their produce was greater than ever. Indeed, after a year of war many sections of the population in all belligerent countries were better off than they had ever been before. But by the end of 1915 the mutual blockade was beginning to bite. Exports declined; prices rose; the inflation resulting from the growing flood of paper money hit the salaried classes; imported raw materials for industry dwindled or disappeared. The combined pressures of the blockade and the demands of the armed forces resulted in growing shortages of food, fuel, and transport; and during 1916 the civilian population began seriously to suffer.
It was the well-organized and cohesive societies of Western Europe—Germany, France, and Britain—that coped best. Indeed, war only made them better organized and more cohesive. The class struggle between capital and labour that had everywhere dominated politics during the first decade of the century was suspended. Labour leaders were given positions of administrative and political responsibility. Labour shortage gave them new bargaining power. Bureaucracies, reinforced by experts from universities and businessmen, took control of more and more aspects of national life, and in many cases were never to lose it. By the end of the war every belligerent European state, even libertarian England, had become a command economy—Germany most of all.
The German, or rather the Prussian, bureaucracy had, like the Prussian army, always been regarded as a model of its kind. It had played little part in preparing for the war: mobilization and everything connected with it were in the hands of the military authorities. There was a good ‘war chest’ in the Reichsbank, but that was as far as civilian war preparations went. In spite of German vulnerability to blockade, nothing had been done to stockpile imported raw materials essential to war production. It was only on the initiative of the civilian Walther Rathenau, creator of the huge electrical combine AEG, that the War Office set up a War Materials Department, initially under his leadership, to control and distribute essential stocks.
At the same time the shipping magnate Albert Ballin took the lead in creating a Central Purchasing Organization to rationalize the acquisition of essential imports. Both these organizations were largely run by the businessmen whose activities they controlled. The German chemical industry, the finest in Europe, again took the initiative in developing substitutes (ersatz) for unavailable raw materials—wood pulp for textiles, synthetic rubber and nitrates for fertilizer, and explosives synthesized from the atmosphere. Even so, by the end of 1915 both food and clothing were becoming scarce. Rationing and price controls were introduced and generally accepted as fair; but in spite of the victories of their armies, the German people were becoming shabby, anxious, and, in the cities, increasingly hungry.
The British were no better prepared for a prolonged war, but the government had been ready with the initial military and political measures. A ‘War Book’ had already been prepared giving control over ports, railways, shipping, and insurance rates, and a Defence of the Realm Act was rushed through a unanimous parliament giving the government virtually plenary powers. The government itself, liberal and pacific under the relaxed leadership of Herbert Asquith, initially left the conduct of the war in the hands of Kitchener. Like so many of Britain’s military leaders, Kitchener had spent most of his career overseas and was quite out of his depth in the job, but, unlike most of his contemporaries, he realized that the war would be a long one and would need a large army as well as a large navy to fight it. He planned to expand the existing six divisions of the Expeditionary Force to seventy, and appealed for volunteers to fill the ranks. The response was immediate. By the end of 1914 a million men had joined up, far more than could be armed and equipped. But these were less than a quarter of what would ultimately be needed, and by the summer of 1915 the supply of volunteers was drying up. Conscription was anathema to the Liberal government, and a series of half-measures was attempted, until in May 1916 it very reluctantly introduced compulsory military service for all men between 18 and 41.