War is, of course, economically, purely destructive. The men employed produce nothing; the engines prepared are useless, except for killing; the money expended is most of it consumed on objects which can yield no direct return. Enormous quantities of food are wasted in transport, domestic animals are used-up in unproductive labor, and the men slain are necessarily among the strongest in the nation. Nevertheless, the economic loss of war is often not felt for a time; and it is probable that in the war supposed to be coming with Russia this will be the case to an unusual degree. Almost all the possessing classes, to begin with, will at first feel as if the war had made them less poor. Those of them who are lucky enough always to save, find all investments cheaper, which is to them as if their money had directly increased in power. Only six weeks ago you could not buy a solid security to pay quite four per cent., and to-day there are twenty to choose among. The possessing classes have been suffering from the fall in prices, and the fall in prices will cease. Already the owners of land are relieved of apprehension by a rise in the price of wheat which may be taken as equivalent in effect to a five-shilling protective duty; and the farmers, possibly misled by the tradition of former wars, look forward to a rise of at least double that. As the American supply will not be affected, and the Indian supply will be as good as ever, and every rise in price draws new supplies, they may possibly be disappointed; but imagination is a factor in trade, as in all other things governed by human minds, and the prices of things to eat will undoubtedly stiffen. The mere increase in the cost of sea-carriage will secure that; and this increase will be considerable, for a Government at war draws heavily on the surplus shipping for transport; and while freight rises, so also do rates of insurance and competent seamen’s wages. Large as the seafaring class is, the demand made on it in war-time by a great Power sensibly diminishes it, and so increases the value of the remaining seamen. All sea-borne goods must rise perceptibly in price, and so, though the reason is not so apparent, do all metals; and owing to the law which tends to equalise all profits, so in smaller proportion do all other vendible things. The phenomenon called by housewives “dearness” appears at once; and as the possessing and trading classes, distributors excepted, fret under cheapness, this is for the time a satisfaction to them. Landlords, shipowners, planters abroad, farmers at home, mineowners, and manufacturers with large stocks, classes which greatly influence opinion, deem themselves to be, and in some instances are, decidedly better-off. Nor are the distributing classes at first injured. Much of the enormous expenditure of war goes into their pockets; war is recognised as full excuse for heavier prices; and the demand from the well-to-do which so often makes the difference between profit and loss increases rather than diminishes. The currency, too, tends to become inflated by the issue of Government paper, not in the form of bank-notes, but of obligations of all kinds, signed by a firm—the Government—known to be solvent, and passing in large transactions from hand to hand, and inflation always produces the appearance of prosperity. The enormous mass of expense, again, based on borrowed money,—that is, practically, on future earnings,—swells the volume of available money in circulation, and enlarges, sometimes enormously, the profits of certain men, e.g., army contractors, who immediately spend on their own objects till the veins of the community seem full of blood. Even wages rise, and especially the wages of the poorest class, the half-skilled laborers. It is often supposed that this is not the case; but the truth would seem to be that the withdrawal of laborers from production caused by war, falling as it does, not on the whole people, but on a limited section of them,—namely, those who are at once poor, specially able-bodied, and under thirty-five,—greatly diminishes the total supply, and at once raises wages. This is thoroughly recognised on the Continent, where mobilisation affects such a huge mass of men, and even in England the numbers taken away are very serious. In a war of two years at least 100,000 men will require to be replaced, another 100,000 will be hired for garrison duty of all kinds, and a further contingent of unknown numbers will be employed in dockyards, transport services, and the endless forms of hard labor necessary to send armies to the field. If we remember that the half-skilled laborers are only a division of the people, and that agricultural laborers, in particular, upon whom much of the pressure falls, are only 600,000, we shall see that war seriously reduces the available supply of hands, and so sends up one class of wages. In truth, in the beginning of a war in a country not liable to invasion, and not harassed from the first by financial distress, it is difficult to see what class—unless it be soldiers’ wives—suffers economically from the very beginning, and does not rather feel as if it were prospering. Something of this is, no doubt, imaginary, and due to the bustle and interest created by war, and the sense it causes of a necessity for harder work; but most of it has a true economic source. The expenditure is greater, the competition is less, and one new career, rapidly consuming men, has been opened to the discontented. There is more room for those who are not engaged, and more to get, and they therefore feel well-off. So strong is this impression, that in countries where the well-off classes govern—as was the case in England’s war with Napoleon—war is often protracted by their reluctance to lose the advantages which they think, often with reason, they are enjoying, though at the expense of the whole community.

It is by degrees that the economic effect of war comes to be felt, through the agency, usually, of taxation. No nation can throw away perhaps two years’ revenue in one on unproductive effort without becoming gradually poorer,—that is, without having less to spend in giving good wages to great multitudes of men. Suppose a war to cost fifty millions a year—and the American war cost £120,000,000—though much of that is spent in wages, the whole is loss, for even the wages are paid, from the economic point of view, for doing nothing. In the best case, that of a country which is annually heaping-up a reserve in the shape of savings, this reserve must be diminished to an appreciable degree; and the effect, pro tanto, is as if the community were making less profit, or were fractionally less industrious, or were more addicted to consumable luxuries like tobacco or wine. If the process continues long, or the war is excessively expensive, all saving-power is consumed, and the community sinks gradually to the position of a man who is living from hand to mouth, and making nothing to provide against the future. The process, of course, may be slow; it may be retarded, as in England in the Great War, by the sudden rise of new and profitable industries, and it may be diminished in its effect by thrift; but it is inevitable. No nation could expend a second year’s revenue on war continuously for a century without being beggared; and each separate year must of necessity involve some approach towards beggary. Borrowing distributes the loss over future years; but it does not diminish the loss itself, which is positive, and not to be diminished by any financial arrangement. Borrowing involves taxation, and the effect of taxation in the gross is to impoverish. It is often said, for instance, that England could borrow a hundred millions, and then pay for it by a twopenny tax on sugar; and that, as a financial statement, is correct. But then this also is correct, that the three and a half millions a year raised to pay for a loan of that amount expended in a past war, means a loss equivalent to an obligation to keep 100,000 unskilled laborers at £35 a year each in idleness for ever. An unskilled laborer does not earn more than that; and that, therefore, is one expression of what the community gives away through such a tax, without real benefit to its producing-power. It is true that three and a half millions is not an amount sufficient to hurt England; but it is a fresh burden on England, and it begins to fall just when it is hardest, that is, when war expenditure and consequent borrowing ceases. It is on the top of the loss of the great customer who has been throwing away, say, £100,000,000 a year, that the new taxation comes, and is, therefore, often so cruelly felt. We have been told, on high financial authority—that of the late Mr. James Wilson—that after Waterloo, when the era of war ended, and the war expenditure ceased, the people found that just when their mighty customer, the Government, ceased to buy everything, and prices suddenly sank, everybody was paying seven-and-sixpence in the pound of his earnings to the State. The reaction was terrible; every man felt nearly ruined, and for at least four years a spirit of economic dishonesty spread among the people, till the ominous words, “the sponge,” began to be uttered aloud. As it happened, the distress did not matter. An enormous development of industry, the result of new inventions and mechanical appliances, rapidly made England rich again; and, followed as it was by a new system of communication, rebuilt the national fortune; but the economic danger for a few years was terrible. Nothing like that is likely to occur again; but still, a great war will touch every household with its consequences before it is done. A shilling income-tax will be felt even by the rich, and will directly deplete the reservoir out of which those who provide the comforts of life are paid. Duties on edible luxuries or necessaries will be felt by the poor in proportion to their poverty, and this the more because they will come on the back of the general “dearness,” especially of eatables, which is the inevitable consequence of war. When the war stops, therefore, there will be distress, great or little, in proportion to the expenditure; but, great or little, equally inevitable, not to be kept-off by any financial arrangement. It may be rendered short, of course, or even innocuous, by other causes, such as a sudden discovery of a new and cheaper motor which, by reducing the energy to be expended on producing a result, positively adds to the national force, and, therefore, to the national producing-power, or by the opening-up of new channels of industry; but, apart from these, there is no avoiding the economic consequence of war. War is waste; the nation pays for the waste by taxation, and, therefore, every individual in the nation must, pro tanto, suffer. The particular war may be right, or unavoidable, or purely self-defensive, but one of its consequences must be this; and it is never wise to conceal what inevitably must happen.—Spectator.