THE COST OF WAR
BY
Prof. Charles J. Bullock
Extract from the Atlantic Monthly, June, 1904
ANTI-IMPERIALIST LEAGUE
20 Central Street, Boston
THE COST OF WAR
The experience of Europe teaches that national debts would
hardly he known, and taxation might be so moderate as to
surpass belief, if it were not for war and the burdens which it
entails. Our own financial history leads to the same conclu¬
sion.
The facts may be determined with the greatest ease and cer¬
tainty by an examination of federal expenditures from the
establishment of our government down to the present . day.
We shall exclude from the accounts so much of the cost'of
operating the Post- Office Department as is defrayed out of the
postal revenues, since this is no burden upon taxpayers; and
include only the postal deficit, which is made up by the federal
treasury. "We shall omit, also, payments upon the principal of
the national debt, since these are made out of such surplus
revenues as may remain after defraying the cost of maintaining
the government, and are no parti, of. the running expenses.
Erom 1792, the first year for which the accounts are separately
stated, down to 1904, the cost of supporting the national
government is shown by the following table, in which all
except the per capita expenditure are stated in millions of
i
dollars:
Year.
Ordinary
Expenditures.
Interest
Charges.
Per Capita
Total Expen-
Expenditures. ditures.
1792
1800
1810
1820
1830
1840
1850
1860
1870
1880
1886
1890
1900
1904
5.9
7.4
5.3
13.1
13.2
24.1
37.1
60.1
164.4
169.1
191.9
261.6
447.5
557.8
2.4
3.4
3.2
5.2
1.9
0.2
8.3
10.8
$2.04
3.1
129.2
95.7
50.6
36.1
40.2
24.6
3.8
18.3
15.1
24.3
40.9
63.2
293.6
264.8
242.5
297.7
487.7
582.4
8.5
1.17
1.90
1.18
1.42
1.76
2.01
7.61
5.28
4.22
4.75
6.39
7.12
From 1792 to 1810 it will be seen that the annual interest
charge upon the debt, incurred chiefly in the War for Inde¬
pendence, accounted for thirty or forty per cent of the total
outlay. The remainder was devoted in considerable part to
the support of the army or navy and to military pensions; so
that, for instance, in 1800, interest charges, pensions, and
military or naval expenditures amounted to $9,470,000, while
the entire outlay for civil purposes was but $1,330,000. On
a per capita basis, the civil expenditures for that year were
$0.25, and the outlay chargeable to war was $1-79; for 1810
the figures were, respectively, $0.18 and $0.99.®
The War of 1812 increased the public debt from $45,200,000
to $127,300,000, so that, despite a considerable reduction
effected between 1816 and 1820, the interest charge in the
latter year was much higher than it had been in 1810. More¬
over, the war raised the general scale of other expenditures;
so that the ordinary outlay in 1820 was nearly 150 per cent
larger than it had been a decade earlier, and the per capita
cost of government advanced to $1.90. In every case in our
history, the result has been the same; war always leads to a
permanent increase of expenditures, because, for one reason or
another, the finances never return to ante-bellum conditions.
The next two decades witnessed an unprecedented feat, the
complete extinction of the national debt. This was made
4
possible by abundant revenues, a dozen years of economical
expenditure, and the decrease in the annual interest charges.
In 1835 the last installment of the debt was paid off, and the
treasury was confronted by the prospect of a large surplus.
The result was a considerable increase of general expenditure,
SO' that the total per capita outlay advanced from $1.18 in 1830
to $1.42 in the year 1840. At the latter date the per capita
cost of civil government was $0.49, while the expense for the
army, navy, and pensions was $0.93.
During the next decade, expenditures increased but slightly
until the outbreak of the Mexican War in 1846. This event
added some forty-eight millions to the small debt incurred in
order to meet deficits after the panic of 1837, and committed the
country to an increased permanent expenditure. The ordinary
outlay had been $26,418,000 in the year before the war; in
1850 it stood at $37,165,000, and thereafter advanced instead
of receding to the former level. Erom 1851 to 1857 over¬
flowing revenues encouraged larger appropriations; and, even
with the slight economies effected after the panic of the latter
year, the total per capita outlay was $2.01 in 1860, an advance
of some forty per cent in twenty years, of which about one-halt
was due to the war. Even at that figure, however, the per
capita cost of running the government was slightly less than
it had been in 1800; so that for sixty years the total federal
expenditures had not grown as rapidly as population. Upon
the whole, affairs had been administered with general economy,
even though the territory over which government was exercised
had vastly increased. In 1860 the civil expenditure was
approximately $1.03 per capita, while the outlay chargeable to
war was $0.97.
The Civil War wrought in our finances a transformation as
complete as that which it worked in the character of the federal
government, and by 1870 the American taxpayer was living in
what was virtually a new world. The enormous debt incurred
for the preservation of the Union now entailed an annual
interest charge of $129,200,000, which was more than twice
the entire national outlay in 1860. Prior to the war the
expenditure foir the army and navy had been $27,980,000,
while in 1870 it stood at $79,430,000; and, in the meantime,
the pension roll had grown from $1,100,000 to $28,340,000.
As a result, the total expenses chargeable to war had risen from
$30,670,000 to $237,000,000. This represented a per capita
5
'burden of $6.15; whereas all civil expenditures, which now
amounted to $56,640,000, called for but $1.46 per capita.
The country was now spending $7.61,* whereas, a decade
before, it had required but $2.01, for every person within its
borders. In all financial history it is doubtful if another
revolution of such magnitude was ever accomplished within the
brief space of a four years' war. Prior to the struggle a
moderate customs tariff had defrayed the entire charge of the
national government in ordinary times; "thenceforward for¬
ever" the taxpayer must submit to higher duties on imports
and to an extensive system of internal taxes.
For a time after 1870 the country was sated with the joys
and glories of war. It was content to restore the finances to
some semblance of order, place the currency once more upon
,a specie basis, reduce the national debt, and drive numbers of
.rascals out of public life. Within sixteen years the annual
interest charge declined from $129,200,000 to $50,600,000,
and the outlay upon the army and navy fell from $79,430,000
to $44,140,000. Pension expenditures, to be sure, increased
meanwhile from $28,340,000 to $63,404,000; but the saving
upon the other two items was enough to offset this and to
reduce the aggregate expenditure chargeable to war from
$237,000,000 to $158,100,000. As a result, although there
was a moderate increase in civil expenses, the total outlay had
fallen to $242,500,000 by the year 1886, and the per capita
cost of government was $4.22, the lowest point ever reached
after the outbreak of the war.
From 1886 to 1904 the aggregate federal expenditure ad¬
vanced from $242,500,000 to $582,400,000, and the per capita
outlay from $4.22 to $7.12. The causes for this upward
movement can be readily shown by a table which exhibits the
amounts of various classes' of expenditure for the years 1886,
1897, and 1904, the figures being stated in millions of dollars:
Civil Expen-
Pensions. Interest. ditures.
Year.
1886
1897
1904
Army,
30.2
35.3
92.5
Navy.
13.9
34.5
102.9
63.4
141.1
142.6
50.6
37.8
24.6
84.4
117.1
219.8
Total.
242.5
365.8
582.4
*If the figures for 1870 are corrected in order to allow for the deprecia¬
tion of the greenbacks, the per capita outlay becomes $6.80.
6
It is evident that the increased outlay between 1886 and
.1891 was due to larger expenditures far pensions, the navy,
.and for civil purposes, the last item, however, showing a com¬
paratively moderate rate of growth. The slight advance in the
cost of the army was more than offset by the decline in interest
charge®. Then fromi 1897 to 1904 the pension outlay re¬
mained practically stationary, and a further decrease occurred
in interest payments. But the cost of the army and navy
advanced from $69,800,000 to $195,400,000, as the direct
result of new national policies; while civil expenditures,
swollen as they always have been after a war, rose from
$117,100,000 to $219,800,000.* It is evident that, while the
outlay was growing with considerable rapidity prior to 1898,
the Spanish "War has precipitated an avalanche of new expendi¬
tures which are very far from having reached their end.
At the present moment, when the per capita cost of govern¬
ment is $7.12, we are spending about $4.43 for interest,
pensions, and armaments, while $2.69 covers all outlays for
civil purposes. Less than thirty-eight per cent of the annual
expenditure, therefore, is now needed for the charge of civil
administration, and something more than sixty-two pen cent is
required for objects connected with war. With us, as with all
other peoples, the national government is, upon its financial
side, mainly a huge machine for collecting money to meet the
direct and indirect results of settling disputes by the appeal fo
arms. Is it not worth our while, therefore to encourage by
all means at our command the practice of resorting to some less
expensive tribunal?
Until very recently it has been the boast of Americans that
their country was free from the burden which militarism has
imposed upon the people of less favored lands. As late as
1897, when Great Britain, Germany and France were spend¬
ing, respectively, $200,000,000, $191,000,000 and $185,000,-
000 upon their armies and fleets, the United States was content
with an outlay of $69,800,000. But today we have little reason
to congratulate ourselves upon the advantages of our situation.
Great Britain, to be sure, isi now spending $344,000,000 for the
support of military armaments; while Germany expends
$217,000,000, and France $200,000,000. But our own outlay
*In 1904 the figures are increased by the $50,000,000 paid on account of
the Panama Canal; for 1905 they will probably be less. But the canal will
involve us in heavy expenditures for many years to come.
7
for soldiers and fleets lias risen to $195,000,000, and is more
likely to increase than decrease for some time to come; we
have almost overtaken France and Germany, and, by the time
our navy is large enough to police two hemispheres, may be in
a fair way to rival Great Britain. For all the purposes of the
taxgatherer, at least, we seem to have become a militant
power; and it is altogether proper that sober papers of state
should now bristle with homilies upon grand strategy, and with
modest allusions to the "iron in our blood."
In the seven years ending June 30, 1904, the United States
spent $1,307,000,000 for military purposes, an annual average
of $186,785,000, as compared with an outlay of $69,800,000
in 1897. This period included, of course, "extraordinary"
expenses for the operations of the Spanish War and innumer¬
able "pacifications" of the Philippine Islands; but the annual
outlay in 1904 was $195,400,000, nearly nine millions more
than the average for the period, and the tendency of these
expenditures is ever onward and upward. In 1899, when the
money was flying most merrily, the army and navy cost
$277,700,000. The following year the outlay fell to
$172,010,000, and we were told that great reductions were to
follow which would allow things to return to a "normal'*
condition; as a matter of fact, the cost increased by twenty-
three millions during the next four years, so that an expendi¬
ture of about $200,000,000 has now become "normal." This
result would surprise no one who is familiar with the history
of military armaments; it follows from the very nature of the
case.
Although national expenditures advanced so rapidly after
1897, the prosperous condition of business made the revenues
large, even when the "war taxes" were repealed, and enabled
the treasury to meet its growing obligations without difficulty
until last year. In 1903 there was a handsome surplus of
$54,297,000, but in 1904 a slight decrease of revenue and a
large increase of outlay produced a deficit of $42,000,000.
During the fiscal year 1905 the deficit continues, and it is now
tolerably clear that our existing revenue system is inadequate
for the support of the national household in its present imperial
state. Congress, of course, is now thinking of economizing iu
the appropriations for 1906, but finds itself committed to so
many splendid undertakings that it is hard to decide where the
pruning knife shall be applied. There has been extravagance
8
in so many directions that it may be possible, for a time, to re¬
duce expenditures somewhat below the level of 1904 and 1905;
bnt, so long as existing policies are unchanged, we shall be
saving at the spigot and wasting at the bung.
The main facts with which we must reckon are the growth
of military expenditures and the ceirtainty of further increase.
The army is now too small for the work of policing North and
South America, together with Asia and the islands of the sea.
The navy is large enough for itsi former duty of protecting our
own shores, but is wholly inadequate for the task it is now ex¬
pected to perform. We must have fleets to defend our Atlantic
and Pacific coasts, must guard the Panama Canal, and must
maintain uponi the Asiatic station as many vessels as any other
power keeps there. Then we must have large numbers of
cruisers moving hither, thither, and yon, in order to be present
at every explosion, revolutionary or volcanic. These things
may be expensive, but they are a patrt of the burden of
empire; then, too, they amuse the children, of all ages and
sizes.
In fact, the talk of economy which now comes from
Washington is merely a sign of inexperience in our new tasks.
No imperial power can economize, or should think of doing so.
When the budget of the German Empire shows a deficit, as it
usually does in these days, the only remedies suggested are
more loans or new taxes; when the British estimates disclose
a balance on the wrong side, the only question which "imperi¬
ally-minded" men consider is how to increase the revenue; and
in France they do things in the same large and liberal way.
We must learn to play the war game as others play it; and
must not be guilty of such gaucherie as talking about economy,
which is a homely luxury in which only unheroic republics can
afford to indulge. Since 1897 we have changed our mode of
living, and must now be ready to defray the bills as they come
in. This is one lesson taught by the history of militarism ever
since the invention of gunpowder and public debts.
The situation was admirably reviewed by Mr. McCall a few
months ago in the columns of the Atlantic, and it is impossible
to gainsay his conclusion that "our revenue is insufficient to
support us with our colonial appendages." We shall soon be
compelled, as he pointed out, "to change ouri relations with the
Philippines or readjust our system of taxation"; and there is
much merit in his suggestion that the first resource should be
9
the reimposition of stamp taxes, such as were levied in 1862
and 1898. There could be no better way of educating dur
people in the duties and responsibilities of empire than to require
them to affix sizable stamps to every docuriient which they use,
provided that care is taken in selecting -the- design. As I have
•elsewhere ventured to suggest, on a field of gold the new rev¬
enue stamps should bear a battleship rampant sable. above: a
taxpayer couchant azure; beneath, a Filipino's head caboshed
gules; over all, -a baton (Big Stick) sinister vert. If this should
not be elaborate enough, a border might be provided, charged
with a syndicate of capitalists sanguine gorged with wreaths of
dollars argent. This, it is believed, would complete a chaste and
appropriate design.- It would tell each taxpayer where we are
spending our money, and what it is expended for, while con¬
veying some idea of the prosperity which our rule has brought
to the Philippines. Its advantages over such outworn symbols
as the Goddess of Liberty or the head of George Washington
should be obvious. Moreover, it is not impossible that such a
method of supporting military armaments would lead us grad¬
ually to a better appreciation of the costs which warfare entails.
*If the figures for 1870 are corrected in order to allow for
the depreciation of the greenbacks, . the per capita outlay
becomes $6.80.
*In 1901 the figures are increased by the $50,000,000 paid
on account of the Panama Canal; for 1905.they will probably
be less.. But the canal will involve us in heavy expenditures
for many years to come.
10
By the kind permission of Mr. Bliss Perry,
Editor of the Atlantic Monthly, and of
Prof. Chas. J. Bullock.