1914: It Could Happen AgainSubmitted by barracuda_trader on Thu, 01/23/2014 - 18:40
By Bob Bauman JD, Offshore and Asset Protection Editor
During my freshman year at Georgetown University, one of my research assignments was to chronicle the assassination in Sarajevo of Austro-Hungarian Archduke Franz Ferdinand by the Serbian nationalist Gavrilo Princip in June 1914. That was the spark that ignited the Great War.
But my fascination with World War I goes back even further. My father fought in France after enlisting when he was 18 in Baltimore and serving in the U.S. Army’s 29th Division, made up of National Guard troops from Maryland, Virginia and North Carolina.
As a child, I was fascinated by a trunk containing his uniform in mothballs, his service metals and the sepia photos of him and his company.
The archduke’s assassination took place in a corner of Europe, far from where the heavy fighting subsequently occurred. Few people at the time expected that incident in Sarajevo to be followed by four years of human butchery and bloody turmoil. Most people expected wiser heads to prevail.
If history has taught us anything, it is that wiser heads do not always prevail.
Yet, at the same time, history is not necessarily destined to repeat itself either.
In the run-up to the 100th anniversary of the outbreak of that devastating conflict, scholars have indulged in the obvious historical parallel: Is 2014 another 1914? Are we poised for global conflagration?
Today’s Geographical Flashpoint
And, once again, the big question: Will wiser heads prevail this time?
After all, just like 1914, there are two superpowers, one in decline and one ascendant, contending for economic and political dominance — the U.S. and China. There is once again widespread dissatisfaction with the institutions and arrangements governing global affairs, paradoxically and perhaps “delusionally,” combined with a belief that “it can’t happen here.”
There is even a far-off geographical flashpoint — the disputed waters and islands of the East China Sea. There, China faces off against a U.S. “proxy,” Japan. In 1914, it was Austria-Hungary facing off against Serbia, a Russian proxy.
All this historical speculation, not to mention the growing potential for another global conflagration, got me thinking. The jury is still out on whether wiser heads will prevail this time — whether the superpowers will move toward a meaningful partnership, as Germany and Britain should have done — or whether the U.S. and China repeat the catastrophic folly of 1914.
I don’t claim to know the answer. But it does make me wonder: What did the “smart money” do in anticipation of the Great War? What can we learn from it?
As it turns out, the lessons are profound …
Based on my extensive reading over the years, one thing is clear: Very few people anticipated the extent or outcome of World War I.
Even wealthy, well-connected families assumed there was little or no need to take precautions against the coming “time of troubles.”
No matter which country they lived in, most assumed they would be protected by the geopolitical arrangements that had made the previous century more or less stable. After all, the era since the end of the Napoleonic wars a century earlier had been the most peaceful Europe had known since the fall of the Roman Empire.
In the first years of the 20th century, Europe believed it was marching to a golden, happy and prosperous future. Things had been good for a long time for the residents of Berlin, Vienna, Budapest, Istanbul and St. Petersburg.
How wrong they were. The Great War disrupted or destroyed tens of thousands of families, as well as fortunes, across Europe. This process of wealth destruction was especially devastating in Eastern Europe, where the Romanov Dynasty collapsed and was replaced by Bolshevism. If you’ve ever seen or read Boris Pasternak’s Doctor Zhivago, you’ll have an image of what that was like.
So, what of the 1914 to 2014 parallel? The truth is that nobody knows what the future holds.
And that’s precisely the point.
The Key Lesson
The key lesson I take from my studies of World War I is this: Never underestimate the power of the unexpected.
Assuming the future will be just like the past is as grave a mistake as assuming nothing will happen. Events can move more quickly than anyone expects. The great tower of prosperity can easily tumble. And the truth is that wiser heads rarely prevail.
But the wisest heads of all always have a Plan B — something much easier to accomplish today than in 1914.
Back then, only a few families were able to escape with their wealth intact, but most had no place to go and no resources abroad when the storm hit. They didn’t think they needed one. And many of those who did have a stash outside the country made the mistake of choosing places that were soon at war with their Czar or Kaiser or Emperor.
And, of course, once the storm broke in 1914, it was too late. Global trade and oceanic transport shut down. Money and wealth were frozen in place, to be consumed by inflation, government theft or the material destruction of war.
Those without a Plan B were stuck. Many once-proud families of means were reduced to paupers.
But there is no reason for history to repeat itself here. There are dozens of countries where you can stash your wealth — and your family and possessions, too, if the need were to arise. Countries friendly to Americans and their money, but not beholden to the United States government — places like Panama or Uruguay — are wonderful opportunities to explore, if you haven’t done so already.
There are many others with idyllic lifestyles, secure and private banking systems, as well as numerous investment opportunities.
I’ve spent a lot of my life researching these kinds of places, getting to know their laws, learning how to obtain residence, and understanding the process of transferring money and wealth to them. It’s not difficult — if you have the right information and advice.
So by all means, in 2014, read up on the Great War — I recommend Margaret MacMillan’s The War That Ended Peace. But above all, begin putting the elements of your Plan B into place.
After all, it’s never too early to start.
Bob Bauman JD
Editor, Offshore Confidential