In 1913 the idea of any great power going to war with another was unthinkable. A large part of this was because of how intertwined the banking and financial systems of the world had become. For an extreme example of this, Lloyds of London provided the insurance for the German merchant fleet- so in the event of a war, Lloyds would be honour bound to pay Germany for every ship that sank.
British banks had branches in Germany and profitably lent to their citizens. German banks did business in Russia and the Middle East. Turkish currency flowed into Europe, in Hong Kong, British banks flourished. The flow of money, capital, loans were veins between countries.
Of course, the Great War 1914-1918 did happen. It happened because there are irrational leaders and factors beyond logic (nationalistic fervour, the Kaiser’s desire for an empire to rival the British one, tensions in the Balkans). One of the most dire warnings the Kaiser received was from the German central bank, as war would plunge the various clearing houses and banking relationships into chaos, at immense cost to Germany. In Britain and France, similar warnings were delivered.
My view, and there is plenty of history to support this, is that the more intertwined and connected the banking world is, the harder it becomes to go to war. Not impossible and a deranged enough leader can pursue it but at immense cost to themselves.
Bankers don’t pay much attention to borders, generally having very global outlooks, even more so than most the commercial and political world. Imagine if the US and UK had a major falling out and military tensions were rising. Without a shot being fired, it would be disastrous for both because of the interlinked financial systems. London is the world’s leading city for currency trading, the US could find itself cut off from that, damaging their own currency in value. New York is the leading city for trading shares, the UK would lose access to that, that would be catastrophic here. There are US companies with subsidiaries in the UK, these would have to shut down in the event of war as it is illegal to trade in an enemy nation. Citizens Financial is a large US bank owned by a British bank, if we just closed it down, what about all those people savings and loans? Economic chaos!
If going to war becomes costly, most rational people won’t do it. If going to war is profitable and can be done with minimal cost, then yeah, it becomes a legitimate tool for national advancement.
One of the factors that led to the Islamic State cracking at the seams was the economic war. Yes, the constant fighting and bombing took its tool but it was choking the regime that the currency they tried to invent, the Islamic State Dinar, was so toxic. It failed so totally, being unable to integrate with the global banking system, and was worthless. In the regime’s final days they seem to be relying on real and counterfeited US Dollars (somewhat ironic…). Make no mistake, if the Islamic State had been able to fashion a working financial system, it would be in a far stronger position.
Even now that the UK has voted to leave the EU, no one wants to sever financial ties, rather the main grudge was the EU’s political decisions that didn’t sit well here and also the widespread belief that there was a democratic deficit in the organisation. Already people are looking to see a stronger European Economic Community rise up but to keep politics out of it. Purely economic, I like the idea of that, trading and interdependence but leaving each country alone to devise its own laws and make political decisions as they see fit.
Banking and finance ties the world closer together and has done more to prevent war than all the self-aggrandising politicians, pressure groups, protests and demonstrations put together.