Financing Armed Conflict, Volume 2: Resourcing US Military Interventions from the Spanish-American War to Vietnam

391 Pages·2017·7.66 MB·English

by  Thomas M. Meagher (auth.)

Financing
Armed Conflict
Volume 2
resourcing us military
interventions from
the spanish-american
war to vietnam
Thomas M. Meagher
Financing Armed Conflict, Volume 2
Thomas M. Meagher
Financing Armed
Conflict, Volume 2
Resourcing US Military Interventions from the
Spanish-American War to Vietnam
Thomas M. Meagher
Armstrong State University
Savannah, Georgia, USA
ISBN 978-1-137-54992-1 ISBN 978-1-137-54993-8 (eBook)
DOI 10.1057/978-1-137-54993-8
Library of Congress Control Number: 2016953847
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In loving memory of Thomas Francis Meagher—a man whose life was a
daily inspiration to everyone who knew him.
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 mili-
tary 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 historians 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 War 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 study of the resource management of armed conflict, by contrast,
is a relatively under researched sub-concentration of military history and
national security 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
Secondly, 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 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 one hundred fifty million specie value and the post
war reaction was relatively brief. Government outlay was under ninety mil-
lion, but the post war depression, while slower in appearing, was more seri-
ous; 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 govern-
ment outlay in the Union alone was over five billion dollars 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 and were not been the
main cause of American wars, they often played an important role in
pushing the nation towards 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 towards 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 of America.
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 (internal and external taxes, loans,
fiscal policy, monetary policy, and debt policy for example), and a series
of other political, strategic, military, and economic factors, can an argu-
ment be made that the United States possesses a “strategic 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 techniques varies from
administration to administration historically subject to differing political,
economic, and military philosophies and other geopolitical 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 and
supplemental funding (World War One to the present).
x PREFACE
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 U.S. strategic finan-
cial culture. In addition, the theory can be used in a predictive manner as
well. For example, such a model provides a basis of comparison between
the geopolitical, military, economic, and financial factors colonial America
faced in its relations with Great Britain and the U.S.’s current relation-
ship 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 U.S. deci-
sion makers some historical perspective in future policy formulation.
With this analytic framework in mind, the book explores why various
U.S. 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 U.S. Army War College. At the end of each chapter, I then answer
three specific questions regarding ends, ways and means 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 under-
lying philosophy of the book is based on an old saying senior American
non-commissioned officers have about junior officers—“they are knowl-
edgeable enough to be dangerous”. In other words, while I possess some
level of expertise in politics, 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 pol-
icy. While these subjects are referenced in the text, the reader desiring
additional information on a specific 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 six chapters. With the exception of chapter one (Defining
U.S. Strategic Resourcing Culture), each chapter relating to an American
conflict is further subdivided into three sections: a pre-war analysis using
PREFACE xi
the strategic resourcing cultural 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 long term. The book
concludes with a series of recommendations for future defense planning
efforts, in particular, a new long range planning structure based on the
current U.S. National Security Council (NSC), many of which have been
outlined by other subject matter experts in the field. This model is out-
lined in chapter one.
The narrative concludes by answering the question “Does the United
States possess a strategic resourcing culture in resourcing its armed con-
flicts 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 and will continue to
undergo a radical shift as the nature of threats and the impact of resource
constraints evolve over time.
Thomas M. Meagher
Savannah, Georgia
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).