The End of the World That Worked
Published: 18 January 2026
By Alex Carberry
via the Dystopia Unmasked website
Dystopia Unmasked header image
Photo by Samuel Regan-Asante on Unsplash
To understand what occurred in the First World War, we must first understand its financial world and how power shifted within it. What follows may feel technical. That is deliberate. Britain’s power did not rest on territory or armies alone, but on a fragile choreography of trust, timing, and liquidity. WWI collapsed this fragile choreography through which British financial dominance had been built. Understanding this collapse is essential to grasp the nature of power in the 20th century.
Britain: The World’s Centre
This system rested on two pillars. The first pillar was the gold standard, which fixed exchange rates and made international payments predictable. The second was a dense network of private financial institutions that specialised in managing time by turning future income into present liquidity.
The liberal British state itself remained small by design. Public spending accounted for only about 13 per cent of national income. The prevailing belief was that markets could coordinate economic life more efficiently than governments, and under peacetime conditions, this belief appeared justified.
In 1912, the British were so confident of their immovable centrality to the global financial system that the German-born British banker Sir Felix Schuster remarked, with assurance, that Britain was “the centre of all things”. He knew that British power was anchored by its domination of the gold standard and the global financial order.
The First World War did not challenge this system gradually; it subjected it to an immediate and overwhelming shock.
When Money Stopped Moving
As war loomed in late July 1914, international trade did not slow. It froze.
Ordinarily, global commerce depended on a chain of trust. A trader would sell goods, receive a bill—essentially a written promise of payment at a future date—and take that bill to a specialist intermediary who would exchange it for cash at a small discount. These bills of exchange were the lifeblood of international trade. The intermediaries, in turn, relied on banks, and banks relied on the assurance that they could always obtain cash from the British central bank—The Bank of England—if needed.
As war approached, this chain snapped.
Gold could no longer be shipped safely across borders. Foreign buyers could not pay British sellers. Bills drawn on London, which normally circulated as freely as money itself, became impossible to sell. Banks, suddenly unsure whether they could meet their own obligations, began calling in loans. Liquidity—the money circulating in the economy—contracted severely.
Institutions that existed precisely to provide liquidity found themselves unable to do so.
Pressure rapidly concentrated in London. Firms that specialised in converting commercial promises into cash rushed to the Bank of England, asking it to exchange those promises for money. The Bank could do this, but only if confidence held. Meanwhile, many banks had extended credit secured by shares and bonds whose prices were now collapsing.
Facing this mounting pressure, on 31 July 1914, the London Stock Exchange closed.
This decision was not about markets in the abstract. It was about preventing the forced sales of financial assets that would have rendered otherwise solvent institutions bankrupt overnight. The closure was an emergency containment of the volatile situation. Normal financial life was suspended so that the system could survive.
It would never fully return.
⇒ Read the entire article on the Dystopia Unmasked website.
External Web Site Notice: This page contains information directly presented from an external source. The terms and conditions of this page may not be the same as those of this website. Click here to read the full disclaimer notice for external web sites. Thank you.
