How States Pay for Wars

206 Pages·2016·2.919 MB·English

by  Rosella Cappella Zielinski

HOW STATES PAY FOR WARS

HOW
STATES PAY
FOR WARS
Rosella Cappella Zielinski
CORNELL UNIVERSITY PRESS ITHACA AND LONDON
Cornell University Press gratefully acknowledges receipt of a subvention from
Boston University, which aided in the publication of this book.
Copyright © 2016 by Cornell University
All rights reserved. Except for brief quotations in a review, this book, or parts
thereof, must not be reproduced in any form without permission in writing from
the publisher. For information, address Cornell University Press, Sage House,
512 East State Street, Ithaca, New York 14850.
First published 2016 by Cornell University Press
Printed in the United States of America
Library of Congress Cataloging-in-Publication Data
Names: Cappella Zielinski, Rosella, author.
Title: How states pay for wars / Rosella Cappella Zielinski.
Description: Ithaca : Cornell University Press, 2016. | Includes bibliographical
references and index.
Identifiers: LCCN 2016003676 | ISBN 9781501702495 (cloth : alk. paper)
Subjects: LCSH: War finance—Political aspects. | War finance—History—
19th century. | War finance—History—20th century.
Classification: LCC HB195 .C28 2016 | DDC 355.6/22—dc23
LC record available at http://lccn.loc.gov/2016003676
Cornell University Press strives to use environmentally responsible suppliers and
materials to the fullest extent possible in the publishing of its books. Such materials
include vegetable-based, low-VOC inks and acid-free papers that are recycled,
totally chlorine-free, or partly composed of nonwood fibers. For further
information, visit our website at www.cornellpress.cornell.edu.
Cloth printing 10 9 8 7 6 5 4 3 2 1
Cover design: Richanna Patrick.
Cover illustration adapted from the World War I poster "Your Maxim: 'Buy War
Bonds.'"
For Michael and Rosa Cappella
If we can go on giving the army what they want longer than the
Germans can do this to theirs, we may appear to win by military
prowess. But we shall really have won by financial prowess.
—John Maynard Keynes, 1916
Contents
List of Illustrations ix
Preface xi
Acknowledgments xiii
Introduction: Making Money, Making War 1
1. How States Pay for Wars 10
2. Truman and the Korean War 29
3. Johnson and the Vietnam War 47
4. Britain and Currency Reserves during World War II
and the Crimean War 66
5. Taxation and Currency Reserves during the
Russo-Japanese War 86
6. Confronting the Costs of War, 1823–2003 103
Conclusion: Long War Finance in Perspective 115
Notes 121
Bibliography 165
Index 181
vii

Illustrations
Figures
I.1 Variation in US war finance 4
1.1 War finance continuum 14
1.2 War finance strategy model 28
2.1 Public support for a tax increase, 1951–1953 41
3.1 Percentage of Americans in favor of a tax increase, 1966–1968 58
6.1 War cost and war taxes in US war finance 111
6.2 Percentage of World War I cost by belligerent met by taxation 111
Tables
1.1 United States Civil War finance, 1861–1865 26
4.1 Monthly drain on dollars and gold reserves held by
the British, January to June 1940 72
5.1 Japanese foreign exchange balance, 1901–1906 93
ix