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Economic effects

Macro- and micro-economic consequences devolved from the war. Families were altered by the departure of many men. With the death or absence of the primary wage earner, women were forced into the workforce in unprecedented numbers. At the same time, the industry needed to replace the lost labourers sent to war. This aided the struggle for voting rights for women.

In all nations, the government's share of GDP increased, surpassing 50% in both Germany and France and nearly reaching that level in Britain. To pay for purchases in the US, Britain cashed in its extensive investments in American railroads and then began borrowing heavily from Wall Street. President Wilson was on the verge of cutting off the loans in late 1916 but allowed a great increase in US government lending to the Allies. After 1919, the US demanded repayment of these loans. The repayments were, in part, funded by German reparations that, in turn, were supported by American loans to Germany. This circular system collapsed in 1931 and some loans were never repaid. Britain still owed the United States $4.4 billion of World War I debt in 1934; the last installment was finally paid in 2015.

Britain turned to her colonies for help in obtaining essential war materials whose supply from traditional sources had become difficult. Geologists such as Albert Kitson were called on to find new resources of precious minerals in the African colonies. Kitson discovered important new deposits of manganese, used in munitions production, in the Gold Coast.

Article 231 of the Treaty of Versailles (the so-called "war guilt" clause) stated Germany accepted responsibility for "all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies." It was worded as such to lay a legal basis for reparations, and a similar clause was inserted in the treaties with Austria and Hungary. However, neither of them interpreted it as an admission of war guilt. In 1921, the total reparation sum was placed at 132 billion gold marks. However, "Allied experts knew that Germany could not pay" this sum. The total sum was divided into three categories, with the third being "deliberately designed to be chimerical" and its "primary function was to mislead public opinion... into believing the 'total sum was being maintained. ' " Thus, 50 billion gold marks (12.5 billion dollars) "represented the actual Allied assessment of German capacity to pay" and "therefore... represented the total German reparations" figure that had to be paid.

This figure could be paid in cash or in-kind (coal, timber, chemical dyes, etc.). Some of the territory lost—via the Treaty of Versailles—was credited towards the reparation figure as were other acts such as helping to restore the Library of Louvain. By 1929, the Great Depression caused political chaos throughout the world. In 1932 the payment of reparations was suspended by the international community, by which point Germany had paid only the equivalent of 20.598 billion gold marks. With the rise of Adolf Hitler, all bonds and loans that had been issued and taken out during the 1920s and early 1930s were cancelled. David Andelman notes "Refusing to pay doesn't make an agreement null and void. The bonds, the agreement, still exist." Thus, following the Second World War, at the London Conference in 1953, Germany agreed to resume payment on the money borrowed. On 3 October 2010, Germany made the final payment on these bonds.

The Australian prime minister, Billy Hughes, wrote to the British prime minister, David Lloyd George, "You have assured us that you cannot get better terms. I much regret it, and hope even now that some way may be found of securing agreement for demanding reparation commensurate with the tremendous sacrifices made by the British Empire and her Allies." Australia received £5,571,720 in war reparations, but the direct cost of the war to Australia had been £376,993,052, and, by the mid-1930s, repatriation pensions, war gratuities, interest and sinking fund charges were £831,280,947.