WAR FINANCE (COST OF THE WORLD WAR).
Estimates of the direct cost of the World War, 1914-18, vary greatly and even ten years after the conclusion of the armistice it is impossible to give precise figures. The reason of this lies in the difficulty of clearly determining what part of the national outlays during the war period can be strictly regarded as war expenditure, while there is also difficulty in determining the net, as distinct from the gross, cost. Much of the war expenditure of the various countries constituted in some respects a source of fresh income, and, while national treasuries were heavy losers by war outlays for goods and materials at fabulous war prices, indi vidual nationals made large fortunes, which in due course fur nished fresh resources of national wealth for use after the war. The difficulty of determining precise figures is also increased by the task of deciding when war expenditure really terminated. In most cases, increased expenditure from the national exchequers, resulting directly or indirectly from the war, went on for some time after the armistice, in 1918, and it was only some few years later that anything in the way of statistics was prepared giving the cost of the war, although all kinds of hurried estimates were made during its progress. Thus, in Nov. 1917, the Mechanics and Metals National Bank of the State of New York prepared a statement estimating that at that time the money expended was more than $100,000,000,000, or about £20,000,000,000, the further estimate being made that the expenditure was at the rate of $5,000,000,000 each month, so that, inasmuch as the war per sisted for another year, another $6o,000,000,000, or £'2,000,000, 000, would have to be added. In 1924, however, some six years after the war, an exhaustive enquiry into the cost was made by Harvey E. Fisk, of the Bankers' Trust company, in New York, and, according to that authority, the total cost of the war was placed at $8o,68o,000,000 gold, or about £16,000,000,000. That statement, however, was reached on the basis of endeavouring to calculate the cost of the war on the price-level basis, the inflated currencies which characterized the war years, and especially the latter periods, being adjusted to terms of 1913 prices, which the authority quoted described as "the gold cost of the war." Bankers' Trust Company Estimate.—Inasmuch, however, as not all the countries formally de-valued their currencies after the war, and while Great Britain, although experiencing, in com mon with other nations, a decline in commodity prices, preserved intact the exchange value of the £, it is perhaps simpler and more illuminating to give the following estimates, which were put f or ward in 1924 by the Bankers' Trust company of New York, where the cost to the various nations is set out in sterling, without the further calculations based on an adjustment of price-levels.
These figures, as briefly summarized in Whitaker's Almanack for 1928, are as follows: Nation Total Expenditure British Empire ..... . . • 13,577,900,00o Great Britain ..... . . 11,076,000,000Canada-Newfoundland 762,700,000 Australia ..... . . . 476,700,000 New Zealand . . . . • • • • 234,400,00o South. Africa. . . . . . . . . 159,000,000India ...... . . . . 687,100,000 Other Parts ...... . . 182,000,000Belgium 411,800,000 France ....... . . 7,962,200,000 Greece ...... . . . 115,100,000 Italy ...... . . • • • 4,432,700,00o ...... . . . . 419,100,000 Portugal ..... . . . . . 235,300,000 Rumania . . . . . . . . . 308,800,000 . . . . . . . . . Serbia . . . . . . . . . 119,000,000 United States . . . . . . . . . 7,500,000,000 Total, Allies 140,363,600,00o Austria-Hungary . . 4,068,400,000 Bulgaria . . . . . . . . . 261,000,000 Germany . . . . . 10,341,100,000 Turkey . . . . • • • • 451,800,000 Total, Central Powers £15,122,300,000 Grand Total L55,486,000,000 The Basis of Calculation.—A striking example of the discrepancies' in calculations is afforded by the answer given by the British chancellor of the exchequer to a question in the House of Commons in May 1919, regarding the cost of the war to Great Britain. Sir (then Mr.) Austen Chamberlain said that up to March 31, 1919, the net cost might be estimated, in round figures, at 16,700,000,00o. It will be observed, however, that in the table the figure is given as £ 11,076,000,000. Not only, however, did the chancellor of the exchequer's statement exclude all debts due from dominions and allies, but it is impossible to follow the allowance made for "normal peace expenditure." Broadly speak ing, the basis of calculation in the case of the foregoing figures may be said to be (a) a calculation based upon the excess of ex penditure over the normal figures of the year previous to the war, while the period taken is not 1914-18 but 1914-20, inclusive, war expenditure extending certainly to that date and possibly longer. Thus, in the case of Great Britain alone, expenditure totalled (for one year) £1,666,000,000 more than a year after the war and was over L1,000,000,000 two years after the war. In certain of course, such, for example, as war pensions, war expenditure is still going on, but no attempt has been made to carry the calcu lation beyond 1920. Nor, as already stated, do the calculations attempt to follow out the American process adopted by the Bankers Trust company of adjusting the currency cost of the war to 1913 levels, although, of course, the point is important.