Economic warfare

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Economic warfare, or economic war, is defined by the Oxford English Dictionary as involving "an economic strategy based on the use of measures (e.g. blockade) of which the primary effect is to weaken the economy of another state". [1]


In military operations, economic warfare may reflect economic policy followed as a part of open or covert operations, cyber operations, information operations [2] during or preceding a war. Economic warfare aims to capture or otherwise to control the supply of critical economic resources so that the military and intelligence agencies can operate at full efficiency or deprive enemy forces of those resources so that they cannot function properly.

The concept of economic warfare is most applicable to conflict between nation states, especially in times of total war, which involves not only the armed forces of an enemy nation, but also a mobilized war economy. In such a situation, damage to the enemy's economy is damage to its ability to fight a war.

Policies and measures in economic warfare may include blockade, blacklisting, preclusive purchasing, rewards and the capturing or the control of enemy assets or supply lines. [3] Other policies, such tariff discrimination, sanctions, the suspension of aid, the freezing of capital assets, the prohibition of investment and other capital flows, and expropriation, [4] even if without war, may be referred to as economic warfare. Scorched earth policies have often been applied to deny resources to an enemy.

American Civil War

Attacks on infrastructure

Union forces in the American Civil War had the challenge of occupying and controlling the 11 states of the Confederacy, a vast area larger than Western Europe. The Confederate economy proved surprisingly vulnerable. [5] Union forces were faced with guerrilla warfare supported by a large fraction of the Confederate population that provided food, horses, and hiding places for official and unofficial Confederate units. [6] Before the war, most passenger and freight traffic moved by water through the river system or coastal ports. Travel became much more difficult during the war. The Union Navy took control of much of the seacoast and the main rivers such as the Mississippi River and the Tennessee River, using the Mississippi River Squadron of powerful small gunboats. Land transportation was contested, as Confederate supporters tried to block shipments of munitions, reinforcements and supplies through West Virginia, Kentucky, and Tennessee to Union forces to the south. Bridges were burned, railroad tracks torn up, and telegraph lines were cut. Both sides did the same and effectively ruined the infrastructure of the Confederacy. [7] [8]

Union soldiers destroying telegraph poles and railroads in Georgia, 1864 Sherman sea 1868.jpg
Union soldiers destroying telegraph poles and railroads in Georgia, 1864

The Confederacy in 1861 had 297 towns and cities with a total population of 835,000 people, 162 of which were at one point occupied by Union forces with a total population of 681,000 people. In practically every case, infrastructure was damaged, and trade and economic activity was disrupted for a while. Eleven cities were severely damaged by war action, including Atlanta, Charleston, Columbia, and Richmond. The rate of damage in smaller towns was much lower, with severe damage to 45 out of a total of 830. [9]

Farms were in disrepair, and the prewar stock of horses, mules, and cattle was much depleted; 40% of the South's livestock had been killed. [10] The South's farms were not highly mechanized, but the value of farm implements and machinery in the 1860 census was $81 million and had been reduced by 40% by 1870. [11] The transportation infrastructure lay in ruins, with little railroad or riverboat service available to move crops and animals to market. [12] Railroad mileage was located mostly in rural areas and over two thirds of the South's rails, bridges, rail yards, repair shops, and rolling stock were in areas reached by Union armies, which systematically destroyed what they could. Even in untouched areas, the lack of maintenance and repair, the absence of new equipment, the heavy overuse, and the relocation of equipment by the Confederacy from remote areas to the war zone ensured the system would be ruined at war's end. [13]

The enormous cost of the Confederate war effort took a high toll on the South's economic infrastructure. The direct costs to the Confederacy in human capital, government expenditures, and physical destruction totaled perhaps $3.3 billion. By 1865, the Confederate dollar was worthless because if high inflation, and people in the South had to resort to bartering for goods or services to use scarce Union dollars. With the emancipation of the slaves, the entire economy of the South had to be rebuilt. Having lost their enormous investment in slaves, white planters had minimal capital to pay freedmen workers to bring in crops. As a result, a system of sharecropping was developed in which landowners broke up large plantations and rented small lots to the freedmen and their families. The main feature of the Southern economy changed from an elite minority of landed gentry slaveholders to a tenant farming agriculture system. The disruption of finance, trade, services, and transportation nodes severely disrupted the prewar agricultural system and forced Southerners to turn to barter, ersatz, and even spinning wheels. The entire region was impoverished for generations. [14]

World War I

The British used their greatly-superior Royal Navy to cause a tight blockade of Germany and a close monitoring of shipments to neutral countries to prevent them from being transshipped to there. Germany could not find enough food since its younger farmers were all in the army, and the desperate Germans were eating turnips by the winter of 1916–17. [15] [16] US shipping was sometimes seized, and Washington protested. The British paid monetary compensation so that the American protests would not escalate into serious trouble. [17]

World War II

Clear examples of economic warfare occurred during World War II when the Allied powers followed such policies to deprive the Axis economies of critical resources. The British Royal Navy again blockaded Germany although with much more difficulty than in 1914. [18] The US Navy, especially its submarines, cut off shipments of oil and food to Japan.

In turn, Germany attempted to damage the Allied war effort via submarine warfare: the sinking of transport ships carrying supplies, raw materials, and essential war-related items such as food and oil. [19]

Neutral countries continue to trade with both sides. The allies made a special effort to cut off sales to Germany of critical minerals such as wolfram, a tungsten ore that is used to make steel armor, as well as mercury from Spain and Portugal. [20] Germany wanted Spain to enter the war but rejected its terms, which included control of French colonies in Africa. It was essential to keep Germany and Spain apart and so Britain used a carrot-and-stick approach. Britain provided oil and closely monitored Spain's export trade. It outbid Germany for the wolfram, whose price soared, and by 1943, wolfram was Spain's biggest export-earner. Britain's cautious treatment of Spain brought it into conflict with the more aggressive American policy. Washington cut off oil supplies in 1944 but then agreed with London's requests to resume oil shipments. [21] [22] Portugal feared a German invasion, but when that became unlikely in 1944, it virtually joined the Allies. [23]

French Economic Warfare School

Christian Harbulot, the director of the Economic Warfare School in Paris, provides an historical reconstruction of the economic balance of power between states. In his study, he demonstrates that the strategies that states put in place to increase their economic power and their impact on the international balance of power can be interpreted only by the concept of economic warfare.

Economic sanctions

The Covenant of the League of Nations provided for military and economic sanctions against aggressor states, and the idea of economic sanctions was regarded as a great innovation. [24] However, economic sanctions without military ones failed to dissuade Italy from conquering Abbysinia.

In 1973–1974, the Arab nations imposed an oil embargo against the United States, United Kingdom, Canada, South Africa, Japan, and other industrialized nations that supported Israel during the Yom Kippur War of October 1973. Results included the 1973 oil crisis and a sharp rise in prices [25] but not an end to support for Israel.

Many United States sanctions have been imposed since the middle 20th century.

See also

Related Research Articles

American Civil War Internal war in the United States over slavery

The American Civil War was a civil war in the United States from 1861 to 1865, fought between northern states loyal to the Union and southern states that had seceded from the Union to form the Confederate States of America. The civil war began primarily as a result of the long-standing controversy over the enslavement of black people. War broke out in April 1861 when secessionist forces attacked Fort Sumter in South Carolina just over a month after Abraham Lincoln had been inaugurated as the President of the United States. The loyalists of the Union in the North, which also included some geographically western and southern states, proclaimed support for the Constitution. They faced secessionists of the Confederate States in the South, who advocated for states' rights to uphold slavery.

Confederate States of America unrecognized breakaway state in North America from 1861 to 1865

The Confederate States of America (CSA), commonly referred to as the Confederate States or the Confederacy, was an unrecognized breakaway state that fought against the United States during the American Civil War.

Confederate States Navy maritime warfare branch of the Confederate States military

The Navy of the Confederate States (CSN) was the naval branch of the Confederate States Armed Forces, established by an act of the Confederate States Congress on February 21, 1861. It was responsible for Confederate naval operations during the American Civil War (1861–1865), fighting against the United States Navy.

Union (American Civil War) United States national government during the American Civil War

During the American Civil War (1861–1865), the Union, also known as the North, refers to the United States of America, specifically to the federal government of President Abraham Lincoln and the 20 free states and 5 border states that supported it. The Union was dedicated to the defeat and termination of the Confederate States of America, informally called "the Confederacy" or "the South".

Blockade runner ship type

A blockade runner is a merchant vessel used for evading a naval blockade of a port or strait. It is usually light and fast, using stealth and speed rather than confronting the blockaders in order to break the blockade. Blockade runners usually transport cargo, for example bringing food or arms to a blockaded city. They have also carried mail in an attempt to communicate with the outside world.

Cotton diplomacy refers to the diplomatic methods employed by the Confederacy during the American Civil War to coerce the United Kingdom and France to support the Confederate war effort by implementing a cotton trade embargo against the United Kingdom and the rest of Europe. The Confederacy believed that both the United Kingdom and France, who before the war depended heavily on Southern cotton for textile manufacturing, would support the Confederate war effort if the cotton trade were restricted. Ultimately, cotton diplomacy did not work in favor of the Confederacy. In fact, the cotton embargo transformed into a self-embargo which restricted the Confederate economy. Ultimately, the growth in the demand for cotton that fueled the antebellum economy did not continue.

Union blockade Union blockade of the Confederacy in the U.S. Civil War

The Union blockade in the American Civil War was a naval strategy by the United States to prevent the Confederacy from trading.

"King Cotton" is a slogan that summarized the strategy used before the American Civil War by pro-secessionists in the southern states to claim the feasibility of secession and to prove there was no need to fear a war with the northern states. The theory held that control over cotton exports would make a proposed independent Confederacy economically prosperous, would ruin the textile industry of New England, and—most importantly—would force the United Kingdom and perhaps France to support the Confederacy militarily because their industrial economies depended on Southern cotton. The slogan, widely believed throughout the South, helped in mobilizing support for secession: by February 1861, the seven states whose economies were based on cotton plantations had all seceded and formed the Confederacy. Meanwhile, the other eight slave states, with little or no cotton production, remained in the Union.

The Confederate States of America (1861-1865) started with an agrarian-based economy that relied heavily on slave-worked plantations for the production of cotton for export to Europe and to the northern US. If classed as an independent nation, the area of the Confederate States would have ranked as the fourth-richest country of the world in 1860. When the Union blockaded Confederate ports from summer 1861, exports of cotton fell 95 percent and the South had to restructure itself to emphasize the production of food and munitions for internal use. After losing control of its main rivers and ports, the Confederacy had to depend on a weak railroad system that, with few repairs being made, no new equipment, and destructive federal raids, crumbled away. The financial infrastructure collapsed during the war as inflation destroyed banks and forced a move toward a barter economy for civilians. The government seized needed supplies and livestock. By 1865 the Confederate economy was in ruins.

Southern bread riots Civil unrest in the Confederacy during the American Civil War in March and April 1863

The Southern bread riots were events of civil unrest in the Confederacy during the American Civil War, perpetrated mostly by women in March and April 1863. During these riots, which occurred in cities throughout the South, women and men violently invaded and looted various shops and stores.

Wilmington, North Carolina in the American Civil War

Wilmington, North Carolina, was a major port for the Confederacy during the American Civil War. It was the last port to fall to the Union Army, completing its blockade of the Atlantic coast.

The United Kingdom of Great Britain and Ireland remained officially neutral throughout the American Civil War (1861–1865). It legally recognised the belligerent status of the Confederate States of America (CSA) but never recognised it as a nation and neither signed a treaty with it nor ever exchanged ambassadors. Over 90 percent of Confederate trade with Britain ended, causing a severe shortage of cotton by 1862. Private British blockade runners sent munitions and luxuries to Confederate ports in return for cotton and tobacco. In Manchester, the massive reduction of available American cotton caused an economic disaster referred to as a Cotton Famine. Despite the high unemployment, some Manchester cotton workers refused out of principle to process any cotton from America, leading to direct praise from President Lincoln, whose statue in Manchester bears a plaque which quotes his appreciation for the textile workers in "helping abolish slavery". Top British officials debated offering to mediate in the first 18 months, which the Confederacy wanted but the United States strongly rejected.

France and the American Civil War involvement of France in the American Civil War

The Second French Empire remained officially neutral throughout the American Civil War and never recognized the Confederate States of America. The United States warned that recognition would mean war. France was reluctant to act without British collaboration, and the British government rejected intervention.

Confederate war finance

Confederate war finance involved the various means, fiscal and monetary, through which the Confederate States of America financed its war effort during the American Civil War of 1861-1865. As the war lasted for nearly the entire existence of the Confederacy, military considerations dominated national finance.

Blockade of Germany (1939–1945)

The Blockade of Germany (1939–1945), also known as the Economic War, was carried out during World War II by the United Kingdom and France in order to restrict the supplies of minerals, metals, food and textiles needed by Nazi Germany – and later Fascist Italy – in order to sustain their war efforts. The economic war consisted mainly of a naval blockade, which formed part of the wider Battle of the Atlantic, and included the preclusive buying of war materials from neutral countries to prevent their sale to the enemy.

Blockade runners of the American Civil War Blockaders of the American Civil War

The blockade runners of the American Civil War were seagoing steam ships that were used to get through the Union blockade that extended some 3,500 miles (5,600 km) along the Atlantic and Gulf of Mexico coastlines and the lower Mississippi River. The Confederate states were largely without industrial capability and could not provide the quantity of arms and other supplies needed to fight against the industrial north. Blockade runners built in Scotland and England met this need and imported the guns, ordnance and other supplies that the Confederacy desperately needed, in exchange for cotton that the British textile industry likewise was in desperate need of. To get through the blockade, these ships, built in British ship yards and specially designed for speed, had to cruise undetected, usually at night, through the Union blockade. The typical blockade runners were privately owned vessels often operating with a letter of marque issued by the Confederate States of America. If spotted, the blockade runners would attempt to outmaneuver or simply outrun any Union ships on blockade patrol, very often successfully.

Confederate States Army revival

The Confederate States Army revival was a series of Christian revivals which took place among the Confederate States Army in 1863. It is generally regarded as part of the Third Great Awakening.

Economic history of World War I

The economic history of World War I covers the methods used by the First World War (1914–1918), as well as related postwar issues such as war debts and reparations. It also covers the economic mobilization of labor, industry, and agriculture leading to economic failure. It deals with economic warfare such as the blockade of Germany, and with some issues closely related to the economy, such as military issues of transportation. For a broader perspective see Home front during World War I.

The diplomacy of the American Civil War involved the relations of the United States and the Confederate States of America with the major world powers during the American Civil War of 1861–1865. The United States prevented other powers from recognizing the Confederacy, which counted heavily on Britain and France to enter the war on its side to maintain their supply of cotton and to weaken a growing opponent. Every nation was officially neutral throughout the war, and none formally recognized the Confederacy.


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