War economy

“ As 'war economy' teaches us, even a rather fragmentary planning is sufficient to overcome unemployment and the intentional destruction of goods. Many understand now that by a simple continuation of this war pattern, amenities of life, schools and hospitals, settlements and libraries could be procured; instead of producing war materials, one would improve the standard of living. ”

“ Each of these causes has its root in a deeper cause, the faulty balance of a war economy in which resources essential for maintaining the efficiency of the civilian population were engulfed by the armed forces and the industries most closely connected with them. ”

“ If our history of the war economy had aimed at perfection, it would have included in each chronological Part a long chapter explaining carefully how the war production sector was built up. But the positive employment of resources in the field of war industry is an immense subject. ”

“ Some economists might have preferred us to follow the main economic problems straight through, and it is indeed true that many of them have a continuity which takes small account of strategical landmarks. But we are on balance convinced that our arrangement is right. We have not allowed ourselves to forget that there will be published later on a parallel series of military histories whose authors will have to reckon in each strategical period with the fighting power generated in the war economy. ”

“ Hitherto the approach has been from the particular to the general; the growth of the war economy has been apprehended as the accumulation of those particular concrete problems of supply and distribution that vexed individual departments. ”

“ This war not only does not create difficulties for our economic development, as will happen to nearly all the other countries in the world, but, on the contrary, it will stimulate it, and for this reason, the longer the war lasts the more our national economy will gain at the expense, sad as it is to say it, of the countries now at war. Whilst the war lasts the prices of the majority of our products will not decline, for many of the countries which produce the same goods as we do are at war, and on this account the demand is bound to increase. ”

“ The authorities responsible for war production will inevitably concern themselves with specific commodities of strategic importance which are likely to become difficult to procure in time of war, either through a rise in total demand or because of enemy domination over important sources of supply. ”

“ To what extent would the demands of the Services and war industry siphon away the manpower, materials and other productive resources that in peace time were employed, directly or indirectly, in satisfying consumer need? Until the answers to these questions could be forecast with some show of quantitative precision, it would be vain even to guess at the probable dimensions of the gap that might be expected between the nation’s expanding monetary income and its contracting supplies of purchasable goods and services. ”

“ He said: “It may not be political economy, but there are some great advantages in war. It’s very comfortable when there are no exports, because it means that all the things stay at home and are very cheap.” ”

“ The crucial importance of this in the congressional plan for a stabilized war economy to limit inflation and prevent profiteering is shown by the fact that during the war approximately one-half of the nation's output of goods and services went to federal, state and local governments. ”

“ No more talk of carrying on the war economically! The only economy is to make short and swift work of it, and the people are ready to bear the expense, if it were five hundred millions of dollars, to-day.
This was printed when the war was very young; when no man dreamed that it would cost the Federal government six times five hundred millions.
The Sun’s editorial articles were not without criticism of the conduct of the war. ”

“ In order to determine, therefore, a question of economy, between depending on foreign supplies and encouraging domestic substitutes, it is necessary to compare the probable periods of war with the probable periods of peace, and the cost of the domestic encouragement in time of peace with the cost added to foreign articles in time of war. ”

“ The world makes its peaceful expenditures and not only recompenses itself from production, but actually adds to capital. In war, of course, there is a lot of non-productive expenditure, but on the other hand there is some added stimulus of production and greater enforced economy in everything save in the actual expenditures for carrying on the war. ”

“ Permeating the whole document is a fundamental assumption about method: supply-and-demand prices cannot be trusted in time of war to perform their customary function of allocating productive resources, determining production priorities, and distributing the final products amongst purchasers. All these processes must be governed by explicit government decision and administrative direction, inspired always by one firm purpose: the maximum concentration of the nation’s dispersed economic resources in the zone of effective war-making power. ”

“ Still war had, in times now gone by, ennobling elements and tendencies of the less sordid kind. But one inevitable characteristic of modern war is, that it is associated throughout, in all particulars, with a vast and most irregular formation of commercial enterprise. There is no incentive to Mammon-worship so remarkable as that which it affords. The political economy of war is now one of its most commanding aspects. ”

“ With all these hindrances to contend against, Allied economic warfare during the first six months of the war could not make much of a dent in the enemy’s strength. Paradoxically, the British Government seemed now to be forgetting its earlier and more sober estimates of possible achievement. At the meeting of the Supreme War Council at the end of March, the British Prime Minister acclaimed economic warfare as ‘the main weapon’. ”

“ War, which in a commercial country, interrupts the commerce of states, frequently prevents the exportation of corn from countries where it can be produced with little cost, to others not so favourably situated. Under such circumstances an unusual quantity of capital is drawn to agriculture, and the country which before imported be369comes independent of foreign aid. At the termination of the war, the obstacles to importation are removed, and a competition destructive to the home-grower commences, from which he is unable to withdraw, without the sacrifice of a great part of his capital. ”

“ At the end of 1936, when the German economy was already in the stage of full employment or at least very close to it, the Minister for Co-ordination of Defence warned the House of Commons: ‘ ... Remember that we depend upon the resources of finance for the successful fighting of a war as much upon the production of munitions’. ”

“ Apart from selling our liquid capital assets in return for foreign goods, and apart from borrowing from foreign countries for the same purpose, our power to provide our own army and navy with all they want and have any surplus over for our Allies has indeed depended entirely on our extraordinary efforts in production—not in normal production, but in war production—and also on the extent to which we have been able to reduce our civil consumption of all kinds. ”

“ We need to know whether an industrial state of society, or the industrial stage of economic development, is especially prone to cause wars, as distinguished from more general political and economic interests. We need to know whether wars, in an industrial stage, do really serve either the interests of industry or countries as a whole. Finally, there is the question whether those who control industry and finance do actually create wars.
In the industrial and financial stages of economic development new conditions arise which certainly must be taken into account in any theory of war. ”

“ His book has the cold steel precision of truth.
He shows that all wars have economic causes, no matter how they are painted over with sentiment. And he demonstrates that one of the most urgent economic incentives to war that has ever existed will be the relative condition of Europe and the United States at the close of the Great War.
Imagine the victors of this gigantic conflict—Allies or Teutons—impoverished in money and resources, with the most colossal public debt in the world's history hanging over them, but possessing an enormous army of trained veterans and a world-beating navy. ”

“ The indirect pecuniary cost of the war is caused, first, by diverting some 150,000 men, engaged in the war directly or remotely, from the works of productive industry, to the labours of war, which produce nothing; and, secondly, by disturbing the regular business of the country, first by the withdrawal of men from their natural work; then, by withdrawing large quantities of money from the active capital of the nation; and, finally, by the general uncertainty which it causes all over the land, thus hindering men from undertaking or prosecuting successfully their various productive enterprises. ”

“ As we gather tonight, our nation is at war, our economy is in recession, and the civilized world faces unprecedented dangers. Yet the state of our Union has never been stronger. ”

“ On the other hand war withdrew workers from constructive industry, and restricted supply at the very time it intensified demand. Every country at war, therefore, sought by means of commerce to relieve the strain on its own resources, importing needed supplies from abroad; each group of belligerents sought to prevent the other group from profiting by this process. The tendency to an increase of imports was accompanied by a tendency to a decline in exports. A country at war could not afford to do business as usual in its foreign trade. ”

“ The wealth of a country measured in its social income may be reduced either by the actual loss of territory, as in Germany; by the impairment of its natural resources like the coal mines and forests, as in France; by the reduction of labor power, due to the wounded workmen or the results of starvation or privation, as in many countries of Europe; or by the loss of economic efficiency due to a reduction of the standard of life or to a changed attitude toward habits of work. The real costs of war, although often incalculable, are none the less of profound significance. ”

“ To build the factories, to buy the materials, to pay the labor, to provide the transportation, to equip and feed and house the soldiers, sailors, and marines, and to do all the thousands of things necessary in a war—all cost a lot of money, more money than has ever been spent by any Nation at any time in the long history of the world. ”

“ The recent cry of the American farmer: "Produce only what you need for your own keep," is a crude effort to imitate the successful tactics of the business world in limiting production to the volume that will yield the greatest possible profit to the owner.
War-menace constitutes another indication of the chaos existing in modern economic society. The purpose of economic activity is to produce wealth. The purpose of war is to destroy it. The two are therefore in direct antagonism; yet the greatest war machines are maintained by the greatest industrial nations. ”

“ The large volume of unemployment, which it had been anticipated would accompany a great war, was avoided, partly because of prompt State action in maintaining the fabric of commerce and finance, and therefore the supply of raw materials, and partly because of the large demand for commodities for the Army and Navy—a war demand vastly in excess of that in any previous war. ”

“ This war has been such a jar to industrial conditions that many manufacturers are reducing their daily output considerably, while others who have a capital are afraid to invest, and are hoarding it in the banks. ”

“ If there is a great reaction, and everybody's one desire is to throw this nightmare of war off their chests and go back to the times as they were before it happened, then all that the war has taught us about the production of capital will have been wasted. But I rather doubt whether this will be so. Saving merely means the diversion of a certain proportion of the output of industry into the further equipment of industry. The war has taught us lessons which, if we use them aright, will help us to increase enormously the output of industry. ”

“ Yet commerce and industry—the glittering prizes which every nation covets when it builds a dreadnought or enlarges its army—demand that the creative forces of peace supplant the destructive wastes of war.
To-day the financial relationships of nations are inextricably entangled. The big banks in the capitals of the world are in communication with each other every second of the day. ”

“ During periods of peace, there tends to be established an equilibrium of supply and demand between our developed industries and our undeveloped resources. Consequently, when war comes [228] and stimulates enormously all our developed industries—arts, sciences, and manufactures—a correspondingly greater demand is placed upon our natural resources, and their development is proportionately increased.
The result is that the nation as a whole is not impoverished in the least by the burden of armaments, but is rather benefited by their support. ”

“ I am no economist, but that does seem to indicate that this extra production has not greatly compensated for the enormous application of labour and material resources to the quick-wasting ends of war instead of to the slow-wasting ends of civil life. In other words, a vast amount of productive energy and material is being shot away. Now this, I suppose, would not matter, in fact might be beneficial to trade by increasing demand, if the purchasing power of the public remained what it was before the war. ”