Contemporary perceptions of the First World War reflected in the capital markets

This paper analyses contemporary perceptions of the First World War in order to identify which historical events were considered turning points in the war effort by actors at the time. Using a new data-set of daily prices of French war debt issued and traded in London, it looks for structural breaks in the time series using a four-step rolling windows algorithm. The data confirm that contemporary actors reacted strongly to some events considered to be less relevant by historians, such as the Battles of Jutland and Caporetto, and did not significantly react to other events generally considered by historians to be turning points for the war effort, such as the German Michael Offensive, the Russian Revolution of 1917 and the resumption of unrestricted submarine warfare. The analysis indicates that contemporary views of turning points in the war differed significantly from those in ex post historical accounts, indicating that the relative importance placed on certain events by historians might not reflect the views held by contemporary financial and political actors.