Financing Armed Conflict, Volume 1: Resourcing US Military Interventions from the Revolution to the Civil War

398 Pages·2017·3.46 MB·English

by  Thomas M. Meagher (auth.)

Financing
Armed Conflict
Volume 1
resourcing us military
interventions from
the revolution to
the civil war
Thomas M. Meagher
Financing Armed Conflict, Volume 1
Thomas M. Meagher
Financing Armed
Conflict, Volume 1
Resourcing US Military Interventions
from the Revolution to the Civil War
Thomas M. Meagher
Armstrong State University
Savannah, Georgia, USA
ISBN 978-1-137-38289-4 ISBN 978-1-137-37742-5 (eBook)
DOI 10.1057/978-1-137-37742-5
Library of Congress Control Number: 2016954975
© The Editor(s) (if applicable) and The Author(s) 2017
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the pub-
lisher nor the authors or the editors give a warranty, express or implied, with respect to the
material contained herein or for any errors or omissions that may have been made.
Cover illustration: © PAINTING / Alamy Stock Photo
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Nature America Inc. New York
To Patricia, Cowboy, Kendall Jackson, Stonewall Jackson, Barksdale,
and Sherman—without you, my life would be incomplete
P
reface
“Wars are not decided exclusively by military and naval force; finance is
scarcely less important. When all other things are equal, it is the longer
purse that wins.”1
For some time now, there has been an ongoing academic debate
regarding an “American Way of War”. This debate has its roots in the
work of military historian Hans Delbruck, who, in his landmark analysis
of the German army, argued that there were two strategic approaches to
modern warfare: annihilation and attrition.2 With this framework in mind,
Russell Weigley argued that the United States has, since the Civil War,
pursued a strategy of annihilation.3 Brian McAllister Linn, by contrast,
argued the opposite; that is, the United States instead has employed both
approaches.4 Antulio Ecchevaria and other distinguished military histori-
ans have also weighed in with opinions on the subject.
However, I believe that a pure focus on military strategy and opera-
tions misses a critical point; any discussion of an American Way of War
must include a detailed analysis of political, economic, and financial fac-
tors as well. Why study the interaction between politics, strategy, military
history, finance, and economics? While a substantial amount of scholarly
work exists relative to politics, strategy, and military operations, the study
of the resource management of armed conflict, by contrast, is a relatively
under-researched sub-concentration of military history and national secu-
rity policy for two primary reasons. First, this subject matter falls outside
of the traditional boundaries associated with military history, as historian
John Lynn notes:
vii
viii PREFACE
“To me, the essence of military history is combat; it is what makes our sub-
ject unique. The life and death nature of war defines attitudes and practices
within militaries, even in peacetime and even in elements of the military
which are not directly in harm’s way”.5
Second, war resourcing is also viewed by many historians as an exclu-
sively economic, as opposed to a military, issue. The most influential pro-
ponents of this thesis were Mary and Charles Beard and Louis Hacker.
The Beards for example regarded the Civil War as a watershed resulting in
the “rise of capitalism”.6 Yet, as Chester Wright noted:
“In the Revolution, the direct outlay, Continental and state expenditures
were probably not over 150 million specie value and the post-war reaction
was relatively brief. Government outlay was under 90 million, but the post-
war depression, while slower in appearing, was more serious; yet some of
this should be attributed to the abnormal stimulation given the country’s
economy before 1812 by the European wars. The Civil War losses must have
achieved much greater proportions. The direct government outlay in the
Union alone was over $5 billion and the process of readjustment was not
completed before 1878”.7
Economic historian Herman Krooss calculated that “each of America’s
three wars (following the War of 1812) cost ten and one half times the
previous one; the Civil War cost the United States over three billion dol-
lars, World War One over thirty three billion dollars, and World War Two
approximately three hundred and sixty billion dollars”.8
This leads to a question: What are the goals and concerns of the finan-
cial system in the event of war? Jonathan Kirshner argues that
“Bankers dread war. More precisely, financial communities within states
favor cautious national security strategies and are acutely averse to war and
to politics that risk war. This general rule holds across time and place, in a
wide variety of political and economic settings. Finance wants macroeco-
nomic stability. Because war is largely incompatible with macroeconomic
stability, the financial community is especially leery of risking armed conflict.
This disposition is an important influence in contemporary international
relations and will remain so long as financial globalization endures”.9
Thus, while financial and economic forces have not been and were not
the main cause of American wars, they often played an important role
in pushing the nation toward war. The role of finance and economics in
PREFACE ix
war and peace, therefore, is still an important component in the study of
military history and the development of future national security policy,
particularly as the United States faces some grim new realities attempting
to finance its current defense establishment in light of current threats.
The negative consequence of armed conflict upon the financial system
is well known: extraordinary government expenditures resulting in higher
taxes, increased debt levels, currency debasement, post-war deficits, and
inflation. Still, bankers have been financing and resourcing armed conflict
since the beginnings of the modern financial system in the early fifteenth
century. If financiers are that leery of the consequences of armed conflict,
why should this be? In this book, I make the argument that, despite the
disinclination toward war, there were significant incentives to providing
financial and resource management support to individual rulers and nation
states in times of war. This is particularly true when considering the mili-
tary history and national security policy of the United States.
This book utilizes from two different approaches:
• A qualitative methodology that seeks to analyze the resourcing of
American armed conflict through the study of political, economic,
military, and other cultural factors
• At the same time, utilizing a quantifiable methodology that supports
conclusions drawn from the above
By analyzing the resourcing of American armed conflicts utilizing a
limited number of quantifiable variables (e.g. internal and external taxes,
loans, fiscal policy, monetary policy, debt policy, and defense expendi-
tures), and a series of other political, strategic, military, and economic
factors, can an argument be made that the United States possesses a “stra-
tegic resourcing culture” when it comes to national security and has this
contributed to “an American way of war”? The answer to these questions
is yes, although the relative mix of war financing and resourcing tech-
niques varies from administration to administration historically subject to
differing political, economic, and military philosophies and other geopo-
litical factors.
Moreover, I argue that there have been three distinct stages of American
war financing: individual financiers (the Revolution to the War of 1812);
investment banks, domestic, and foreign financial markets (the Mexican–
American War through the Spanish-American War); and government
public finance, specifically the use of income taxes, the printing press,
x PREFACE
and supplemental funding (World War One to the present), particularly
following the establishment of the Federal Reserve in 1913.
Adopting this analytical approach allows for direct comparison between
the conflict finance and resource management approaches of different
administrations and the establishment of a theory of US strategic financial
culture. In addition, the theory can be used in a predictive manner as well.
For example, such a model provides a basis of comparison among the geo-
political, military, economic, and financial factors colonial America faced
in its relations with Great Britain and the US’ current relationship with
the Peoples Republic of China (a major trading partner with a dominant
or resurgent military capability conceivably posing a threat to American
independence or national security interests), giving US decision makers
some historical perspective in future policy formulation.
With this analytic framework in mind, the book explores why various
US administrations chose the war resource management options they did
and how these different choices were influenced by the political, strategic,
operational, economic, and financial environments at the time. It does so
by incorporating existing analytical models encompassing a wide variety of
disciplines such as politics, classical military theory, and political economy,
utilizing the “ends, ways, and means” analytical framework developed by
the United States Army War College. At the end of each chapter, I then
analyze the specific conflict as regards the ends, ways, and means model
and whether the combatants were successful in achieving their desired
objectives.10
An important caveat: While the manuscript takes a best of breed approach
in integrating the models that have been developed in each of these areas, it
has been developed as a survey-level textbook. I am not a politician, career
military officer, or an economist; to that end, the underlying philosophy
of the book is based on an old saying senior American non-commissioned
officers have about junior officers—“they are knowledgeable enough to be
dangerous”. In other words, while I possess some level of expertise in poli-
tics, strategy and operations, economics, and the financial markets, there
is no detailed analysis of American political history, Clausewitz’s thoughts,
the mechanics behind the economics of national security, or specific schools
of thought on fiscal, monetary, and debt policy. While these subjects are
referenced in the text, the reader desiring additional information on a spe-
cific subject matter will be directed to the appropriate detailed source.
In order to properly map, analyze, and support this thesis, this book
is divided into two volumes and 12 chapters. In each volume with the
PREFACE xi
exception of Chap. 1 (Defining US Strategic Resourcing Culture), each
chapter relating to a specific American conflict is further subdivided
into three sections: a pre-war analysis using the strategic resourcing cul-
tural model outlined above, a side-by-side chronological recounting of
the important political, military, and resource management (economic
and financial) events during the conflict in order to assess how political
and operational factors impacted war time finance and supply actions;
and finally, an analysis of how the post-war strategic resourcing culture
changed in both the short and the long term.
The narrative concludes by answering the question “Does the
United States possess a strategic resourcing culture in resourcing
its armed conflicts and has this led to ‘an American way of war’”? I
believe it has, although there is a strong argument to be made that
this culture and its impact on American policy, strategy, and military
operations has continued and will continue to undergo a radical shift
as the nature of threats and the impact of resource constraints evolve
over time.
Savannah, GA, United States Thomas M. Thomas
Notes
1. Julian Corbett. Some Principles of Maritime Strategy, (Mineola, NY:
Dover Publications, 2012), 102.
2. Hans Delbruck, History of the Art of War, Vol. I–IV, (Lincoln, NE:
University of Nebraska Press, 1997).
3. Russell Weigley, An American Way of War, (Bloomington, IN:
University of Indiana Press, 1977).
4. Brian McAllister Linn, “The American Way of War Revisited”, Journal
of Military History, vol. 66, no.2, (2002), 501–530.
5. John Lynn. “Rally Once Again”, The Military History Foundation,
http://www.militaryhistoryfoundation.org/resources/lynn.html,
accessed February 4th, 2015.
6. Charles and Mary Beard, The History of the United States, (New York:
MacMillan, 1921).
7. Chester Wright . “The More Enduring Economic Consequences of
America’s Wars.”, The Journal of Economic History 3.S1 (1943): 9–26.
8. Herman Krooss and Paul Studenski. Financial History of the United
States, (Washington D.C.: Beard Books, 2003), 436–458.