The Cash Nexus: Money and Politics in Modern History, 1700-2000

by Niall Ferguson

  MEN OF WAR

  The dramatic difference between the world wars and the rest of modern history is immediately apparent when we turn to the extent of military mobilization: that is to say, the proportion of the population employed in the armed forces. In absolute terms, armies reached historically unprecedented sizes in the twentieth century: probably the largest military force in history was that of the Soviet Union in 1945, which numbered around 12.5 million. By comparison, the armies that fought the Hundred Years War seldom exceeded twelve thousand in size. Even today, after some fifteen years of troop reductions, the American services still employ 1.4 million people.

  But such figures tell us little about the relative degrees of mobilization involved. In the eighteenth century the highest recorded percentage of the British population under arms was 2.8 per cent in 1780, when Britain was at war not only with her American colonists, but also with France, Spain and Holland. But in more peaceful years the figure fell below 1 per cent. For France, the proportion of men in the armed forces tended to decline in the eighteenth century, from 1.8 per cent in 1710 to 0.8 per cent in 1790. Austria consistently kept between 1 and 2 per cent of her population under arms throughout the century; but this was a much lower proportion than that of Prussia, which in 1760 had as many as 4.1 per cent of her people in the army. For all countries, the Napoleonic ‘revolution in war’ meant an increase in the proportion of the population that had to be mobilized. In 1810 Britain had more than 5 per cent of her people under arms, Prussia 3.9 per cent, France 3.7 per cent and Austria 2.4 per cent.28

  By comparison, the nineteenth century saw relatively low rates of military participation. With the exceptions of Russia during the Crimean War, the United States during the Civil War and France and Prussia during the war of 1870–1, none of the major powers mobilized more than 2 per cent of the population between 1816 and 1913. Apart from the years 1855–6, 1858–63 and 1900–1902, the figure in Britain remained less than 1 per cent until 1912, reaching a low point of 0.5 per cent in 1835. On average, Austria and Piedmont/Italy also had armed forces of less than 1 per cent of the population between 1816 and 1913; and for Prussia, Russia and France, the average proportions were all below 1.3 per cent. Just 0.2 per cent of the population of the United States was in the armed forces during the nineteenth century as a whole. Even in 1913, despite contemporary and historical perceptions of an arms race, only Britain, France and Germany had more than 1 per cent of their populations under arms.

  The First World War saw the highest rates of military participation in all history. At their peaks of wartime mobilization, France and Germany had more than 13 per cent of their populations in the services, Britain more than 9 per cent, Italy more than 8 per cent, Austria-Hungary just over 7 and Russia only slightly less. But immediately after the war, as if in reaction, all the major powers substantially reduced their military participation ratios. On average, only France mobilized more than 1 per cent of her population. In Britain the figure touched a nadir of 0.7 per cent in the mid-1930s; while in the Soviet Union in 1932 it was less than a third of 1 per cent. The United States also reverted to its nineteenth-century level of military unreadiness. Even Nazi Germany took time to raise the share of the population in the army, navy and air force after the enforced reduction that had been a part of the Versailles Treaty of 1919. Not until 1938 did the German armed services exceed 1 per cent of the population. Italy’s Abyssinian adventure pushed its armed forces up to above 3 per cent in 1935, but by the eve of the Second World War the figure had sunk back to just over 1 per cent.

  Surprisingly, no country mobilized as large a percentage of the population into its armed forces between 1939 and 1945 as France managed in 1940 (just short of 12 per cent). The peak figure for Germany was 8.3 per cent in 1941, rather less than Britain managed in 1945 (10.4 per cent). It is also noteworthy that the Soviet proportion in that year (7.4 per cent) was less than the American (8.6 per cent). In the First World War, Germany had almost certainly committed too many men to the army at the expense of the industrial workforce. The Second World War apparently saw a more balanced allocation of labour.

  By comparison with the previous two post-war eras after 1815 and 1918, the years after 1945 did not witness such a rapid and sustained demobilization. In the Soviet case, the armed forces jumped back up from 1.5 per cent of the population in 1946 to 3.1 per cent in 1952; while American military participation rose from 0.9 per cent in 1948 to a post-war high of 2.2 per cent in 1952. Britain too experienced a slight rise associated with the Korean War. The French figure rose to a peak of 2.2 per cent in 1960 as a result of conflicts associated with decolonization.

  Nevertheless, during the Cold War period as a whole there was a steady fall in military participation ratios in many major countries. The average rate of mobilization in Germany, Italy and Austria was lower in the period 1947–85 than it had been between 1816 and 1913. Even for Russia the figure was below 2 per cent. Moreover, the break-up of the Warsaw Pact and the collapse of the Soviet Union has allowed military participation to fall back to inter-war levels and in some cases even lower. In 1997 just 0.37 per cent of the British population was serving in the armed forces: the lowest figure since 1816. The present French proportion (0.65 per cent) is the lowest since 1821.

  Rates of military mobilization, then, have been subject to sharp fluctuations above a relatively stable (and perhaps over the very long run even declining) base line. The major wars of the modern period, and particularly the world wars, have necessitated large but not sustained increases in military participation. Indeed, it is precisely because of its discontinuous, non-cyclical character that warfare has exerted such a decisive influence over the development of financial and political institutions.

  Figure 2. Military personnel as a percentage of population, 1816–1996 (log. scale)

  Sources: Correlates of War database; IISS, Military Balance database; OECD.

  BANGS PER BUCK

  Sudden increases in the proportion of men under arms are not the principal source of pressure on military budgets, however. Changes in military technology matter more. From the fourteenth-century gunpowder revolution onwards, artillery has periodically increased its range, accuracy and destructive power. The development of the cast-iron cannon, with its iron ball, ‘corns’ of powder and wheel base, necessitated a parallel improvement in fortifications like the trace italienne.29 Indeed, it was partly the rising cost of fortifications that put the finances of continental powers under strain in the sixteenth century.30 Likewise, the standardization and improvement of handguns in the early eighteenth century enhanced the firepower and raised the cost of equipping the individual infantryman.31 The eighteenth century saw further improvements in the manufacture of artillery, notably the bored barrel introduced to France by the Swiss engineer Jean Maritz, which set the standard until the advent of the breech-loading gun in the 1850s.32 The parallel development in Britain was in maritime technology: copper-sheathed bottoms for ships, short-barrelled, large-calibre carronades and steering wheels for ships.33

  Moreover, the pace of technological advance quickened in the course of the nineteenth century: at sea, the application of steam power, Henri Paxihans’ large-calibre shell-firing gun and iron cladding, followed by the torpedo, the submarine, Nordenfeldt’s and Vavasseur’s naval guns, the tube-boiler and the turbine; on land, the new rifles of Minié, Dreyse and Colt and the improved breech-loading artillery pieces of Krupp, Armstrong and Whitworth – to say nothing of brass cartridges (1867), steel artillery (1883), the Maxim Gun (1884), magazine rifles (1888) and the Schneider-Creusot quick-firing field gun (1893).34 The cauldron of the First World War brought forth new instruments of destruction, barely imagined before 1914: among them the tank, the aerial bomber and the fighter plane, as well as the hand grenade, the trench mortar and poison gas. Despite all talk of war-weariness, the process did not halt in the 1920s and 1930s: one need only compare the aircraft and tanks of 1938 with those of 1918 to see that. But the pace of ch
ange accelerated dramatically during the Second World War as the major combatants sought to out-innovate as well as out-produce one another, increasing the speed, range, accuracy and armour-plating of nearly all the machines of mid-century warfare. The British Spitfire – to give one example – was modified 1,000 times between 1938 and 1945, adding 100 mph to its top speed.35 At the same time, advances in radio technology ushered in a revolution in battlefield communications (wireless communication, radar detection), while a host of new inventions arrived in time for use in the final phase of the conflict: jet engines, amphibious vehicles, guided missiles, rockets and, of course, atomic bombs.36 This technological race continued in the Cold War, as A-bombs gave way to hydrogen and neutron bombs and the arms race became simultaneously a space race between rockets and satellites (with astronauts and cosmonauts thrown in to sustain public interest).37

  In absolute terms, expenditure on military hardware has therefore risen inexorably in the long run. By 1982 a critic of the arms race could lament: ‘Bombers cost two hundred times as much as they did in World War II. Fighters cost one hundred times or more than they did in World War II. Aircraft carriers are twenty times as expensive and battle tanks are fifteen times as expensive as in World War II.’38 Writing four years later, Paul Kennedy enlarged on this point:

  Edwardian statesmen, appalled that a pre-1914 battleship cost £2.5 million, would be staggered that it now costs the British Admiralty £120 million and more for a replacement frigate!… The new [American] B-1 bomber … will cost over $200 billion for a mere one hundred planes … Cynics [forecast] that the entire Pentagon budget may be swallowed up by one aircraft by the year 2020.39

  According to Kennedy, weapon prices in the 1980s were ‘rising 6 to 10 per cent faster than inflation, and … every new weapon system is three to five times costlier than that which it is intended to replace’.40 Despite a ‘near trebling of the American defence budget since the late 1970s’, there had occurred by the late 1980s ‘a mere 5 per cent increase in the numerical size of the armed forces on active duty’.41 To Kennedy, warnings were not misplaced of an impending ‘militarization of the world economy’.42

  Even allowing for inflation and relating expenditure to the size of armed forces, military expenditure has tended to rise. In 1850 Britain spent just under £2,700 per serviceman on her armed forces (in 1998 prices); by 1900 the figure had risen to £12,900, and by 1950 £22,000. In 1998 the figure was close to £105,500. The United States spent $30,000 per man in 1900 (again in 1998 prices); $71,900 in 1950, and $192,500 in 1998 (see Figure 3).43 Nearly all the increase has been due to increased quantity and quality of military hardware (as opposed to improvements in soldiers’ pay and living conditions). It is not too much to say that the increase in the military capital/labour ratio in the course of the twentieth century has been exponential.

  Yet in assessing the growing sophistication of military technology there are a number of things we should not lose sight of: in particular, its increasing destructiveness. For in the purchase of a new weapon, it is not only the price that matters; it is also its capacity, compared with the weapon it is intended to replace, to mete out murder.

  The death toll of the War of the Spanish Succession (1701–13) was 1.2 million. A century later, the Napoleonic Wars killed 1.9 million men. And a century after that, the First World War cost more than 9 million servicemen their lives. Perhaps as many as 8 million people died in the maelstrom of the Russian Civil War of 1918–21 (though most of these were the victims of the famine and pestilence unleashed by the conflict). But even this figure pales into insignificance alongside the total mortality caused by the Second World War. For military personnel, the total body count was roughly twice the figure for the First World War. But this figure excludes civilian casualties. According to the best available estimates, total civilian deaths in the Second World War amounted to 37.8 million, bringing the total death toll to nearly 57 million people.44 In other words, the majority of deaths in the Second World War were due to deliberate targeting – by all sides – of civilians on land and sea and from the air. Including all the minor colonial wars like the Boer War and all the civil wars like the one that raged in India after independence, the total figure for war deaths between 1900 and 1950 approaches 80 million.

  Figure 3. Defence spending per serviceman in Britain and the United States, 1816–1998 (log. scale)

  Sources: Defence spending: UK: 1850–1914: Singer and Small, Correlates database; 1914–88: Butler and Butler, British Political Facts, pp. 393 f.; 1989–98: SIPRI. US: 1870–1913: Hobson, ‘Military-extraction Gap and the Wary Titan’, p. 501; 1914–85: Correlates database; 1986–98: SIPRI. CPI: UK: Goodhart, ‘Monetary Policy’, appendix; US: Economist, Economic Statistics, pp. 108 f.; Federal Reserve Bank of St Louis. Armed forces: Correlates of War database.

  The increase in the destructiveness of war becomes even more striking when the relative brevity of the world wars is taken into account. Though it lasted five times as long, the Thirty Years War caused only a ninth of the battlefield mortality inflicted during the Second World War, and an even smaller fraction of the civilian mortality. The First World War caused five times as many deaths in four and a quarter years as the entire Napoleonic Wars in the space of twelve. Another way of expressing this is to calculate the approximate annual death rate during the various wars. This rose from above 69,000 in the Thirty Years War to some 104,000 in the War of the Spanish Succession, 124,000 in the Seven Years War, 155,000 in the Napoleonic Wars and for the world wars, respectively, 2.2 and 3.2 million – or 9.5 million if civilian deaths in the Second World War are included. In short, between the seventeenth and the twentieth century, the capacity of war to kill rose by a factor of roughly 140. From the time of Napoleon to the time of Hitler – born a mere 120 years apart – the increase was more than sixty-fold (see Appendix A).

  Even allowing for the accelerating growth in the world’s population, then, the world wars were the most destructive in history. Somewhere in the region of 2.4 per cent of the world’s entire population was killed in the Second World War and 0.5 per cent in the First, compared with roughly 0.4 per cent in the Thirty Years War and 0.2 per cent in the Napoleonic Wars and the War of the Spanish Succession. The total death toll in the First World War amounted to something like 1 per cent of the pre-war population of all fourteen combatant countries, 4 per cent of all males between 15 and 49 and 13 per cent of all those mobilized. For Turkey the equivalent figures were 4 per cent of the population, 15 per cent of males between 15 and 49 and almost 27 per cent of all those mobilized. Even worse affected was Serbia, which lost 6 per cent of the population, nearly a quarter of all men of fighting age and over a third of all those mobilized.45 In the Second World War roughly 3 per cent of the entire pre-war population of all combatant countries died as a result of the war. For Germany, Austria and Hungary, the figure was around 8 per cent, for Yugoslavia and the Soviet Union 11 per cent and for Poland – of all countries the worst affected by the war – nearly 19 per cent: almost a fifth of the entire pre-war population. The armies of some countries were almost wholly annihilated. Military deaths as a proportion of all troops mobilized were in the region of 85 per cent for both Poland and Romania. Forty-five per cent of the troops mobilized in Yugoslavia were killed. For the Soviet Union and Germany, locked for four years in the most bloody conflict of all time, the equivalent figures were, respectively, 25 and 29 per cent. Around a quarter of Japanese and Chinese troops were killed in the war in Asia and the Pacific.

  To be sure, casualties as a proportion of troops engaged were sometimes very high in previous wars. Though the statistics are far from reliable for medieval battles, it is nevertheless plausible that the proportions (including wounded and prisoners) were between a quarter and a third of combatants at the battles of Hastings (1066), Crécy (1346), Agincourt (1415), Breitenfeld (1631), Lützen (1632), Naseby (1645), Austerlitz (1805), Waterloo (1815) and Gettysburg (1863). At Blenheim (1704) the figure may have been as high a
s 43 per cent.46 These figures bear comparison with some First and Second World War battles: for instance, El Alamein (c.14 per cent), though not Stalingrad, where, in the space of six and a half months, the Red Army alone suffered 1.1 million casualties and the Wehrmacht as many, if not more.47 Yet these proportions need to be seen in the context of substantial increases in the numbers of troops committed to battle. Perhaps 14,000 men fought at Hastings; perhaps 39,000 at Crécy. But 68,000 fought at Breitenfeld and 108,000 at Blenheim, while more than double the number who fought at Breitenfeld were deployed at Austerlitz. The Battle of Waterloo saw 218,000 men in the field; but even it was dwarfed by El Alamein (300,000) and Stalingrad, where millions fought. Just as military technology had magnified the destructive power of the individual, innovations in drill, discipline, communications and logistics had allowed armies to get ever larger, battles longer.

  Why then have the casualties suffered by Western forces in wars since 1945 tended to fall? The number of US servicemen who died in the Vietnam War was ‘only’ 57,939; the number killed in Korea 37,904. And the death toll has continued to decline. In the Gulf War there were 148 American combat deaths, excluding victims of accidents and ‘friendly fire’: a tiny proportion of a total force numbering 665,000. In the 1999 war against Serbia the figure was precisely zero. Compare those figures with the body counts in the two world wars: 114,000 American servicemen in the First World War and 292,100 in the Second. The drop in military casualties is even more marked in the case of Britain: 720,000 Britons lost their lives in the First World War; over 270,000 in the Second; yet in the Korean War just 537 British soldiers were killed. All told, 719 British soldiers have been killed in Northern Ireland since ‘the Troubles’ began in 1969, along with 302 members of the Royal Ulster Constabulary.48 Just 24 UK servicemen were killed in the Gulf War, not including 9 killed accidentally by their own side.