This scenario is very difficult to evaluate, as it involves a 10 year period of tension. And each move of either side is likely to cause a reaction in the other side.
The USA vs. UK tension could dampen US economic growth, as - if I got this correctly - the USA was in 1914 the largest debtor country in the world, with 7 billion $ of foreign money invested in it (3,5$ billion of US money was invested abroad, though) . And I suspect that most of this money was British. With the aforementioed 10 year period of tension, would the money that historically was invested in the US actually go there?
And I doubt that the British money (if actually "lost") could be replaced. For one, British capital made up c. 43% of all foreign investments, with France contributing 20% of the total. And French money was tied up in paying for Russian weapons and railroads. I'd venture that the 3rd and 4th largest foreign investors would be USA and Germany. The USA could invest less abroad, but still that would represent some sort of loss to US growth . And in this scenario Germany is not likely to invest in the US.
I know that in this period Governments cannot forbid a business where it can invest. But the Gov't does have leverage and can influence corporate decisons, with certain destinations being frowned or smiled upon.
So I'd venture that US economic growth in the 1906-1916 period would be slower than in OTL, due to less money (and no 1915-16 increase due to WWI).
A military build up between 1906-16 also could have a dampening impact on the US economy.
Thus what should we do - downsize the US economy from 1916 OTL level by 5%? By 10%?
Butterflies chasing butterflies ...
Borys
