War Finance Cost of the World War

The Bankers' Trust divided the figures for each year by the aver age wholesale price index number for the year, thus putting the statistics for each country on the 1913 price basis. The adjusted cost figures were then converted into dollars at par of exchange, and on that basis the real cost of the war in 1913 dollars is esti mated at 80,681,000,00o dollars, or in sterling a little more than £16,000,000,000, which, of course, is a very different figure to the actual gross currency costs recorded in the foregoing table.

The total expenditure in the case of most of the countries enu merated in the table can be regarded as the outside amount, but the two notable instances where the net cost might be reduced if allowance were made for loans to allies, are the British empire and the United States. British loans are over £100,000,000 to dominions and colonies, while at March 31, 1928, loans due to Great Britain included £706,000,000 from France, £266,000,000 from Italy, iioo,000,000 from various smaller European States, and £887,000,000 from Russia, the last item, however, being regarded somewhat in the light of a bad debt.

Indirect Cost of the War.

At this point statistics break down. With the exception, perhaps, of the United States, it may fairly be said that the figures already given do not begin to express the real cost of the war. Great Britain alone sustained 676,442 actual fatalities, with 1,648,014 wounded, while French fatalities totalled 1,400,000 killed, 800,000 maimed, and 3,000,00o wounded.

Previous to 1914 Great Britain, by reason of her seniority among the big nations resulting in an accumulation of savings and a prestige in the matter of manufacturing, had the leading place among the nations in financial lending power and control over the exchanges, conditions in their turn contributing to her power as the leading monetary centre of the world. As a consequence of the war, or, rather, as a consequence of the three years of neutrality on the part of the United States during the war, the equipoise of the balance of trade was completely destroyed, and at the end of the conflagration the belligerent countries of Europe became debtors to the United States, first, on account of the colossal trade balance in favour of America, and, second, because of the actual debts incurred by the belligerent nations to the United States Government. All this, so far as Europe is con cerned, has to be reckoned amongst the indirect costs of the war, and to express that cost in figures is impossible. Whether, on the other hand, an equivalent of the unknown amount to be debited to the belligerent countries of Europe is to be credited to the United States is not only debatable but a controversial subject, because economists in the United States of America often plead that, as a matter of fact, economic progress in their country was retarded rather than helped by the four years' war.

It may be mentioned that in a lecture delivered before the London Institute of Bankers in June 1920 by Edgar Crammond on "The Real Cost of the War," an attempt was made by that statistician to appraise the real net cost of the war after making all allowances for revenues or territories gained or lost. The re

sult was, naturally, to reduce materially the gross cost. Thus he estimated the net real cost of the war to Great Britain at only £3,500,000,000; France at L5,400,000,000; Italy at £2,100,000, 000 and so on while for the five years ended 1919 the United States was reckoned to have gained materially in wealth.

Cost of the War to the United States.

More than in the case of any other country, big deductions have to be made in the case of the United States from the gross amount of war expendi ture. According to the calculations of the Bankers' Trust com pany in 1924, the total cost of the war in currency dollars was about $37,500,000,000, or about From that total, however, has obviously to be deducted about $10,000,000,000 or £2,000,000,000, on account of loans to the Allies, while, although the point is challenged by many American economists, it would seem that just as to the direct ascertained cost of the war to the European belligerents has to be added a large but unknown total representing indirect cost, so in the case of the United States the argument is of the reverse order. The United States as well as the Allies suffered loss through war casualties and also through war inflation. Nevertheless, just as the cost of the war was in creased to the European belligerents by the high prices paid for foodstuffs and war materials, so the United States was the gainer by these same prices. Of still greater moment, however, was the fact that just as the European belligerents lost markets and eco nomic strength by the war, so the United States, by reason of her three years of neutrality, gained in both of these respects. More, however, than any other country, with the exception of Japan, the United States met its war expenditure through taxation, though, equally, and because of its financing of the requirements of the Allies, no country issued within a brief space of time a larger amount in loans, something like $23,000,000,000 being raised after the entry into the war. As the last entrant, however, the United States benefited greatly by the experience gained from the mis takes of other countries, and while a certain measure of inflation was the inevitable accompaniment of such huge and sudden bor rowing, economy and sufficient taxation were the watchwords from the moment of America taking a hand in the conflict, and a con tinuance of that policy has resulted in a greater amount of debt liquidation since the war than any other country has been able to achieve. The above table, taken from The Stock Ex change Official Intelligence for 1927, sets out the debts of the Allied and Associated States to the United States of America as of Oct. 31, 1927, the figures being as shown by the Statement of the Public Debt of the United States issued by the office of the secre tary to the United States Treasury.