[ssf] Over the Wall

[dr black]

The War and the Destruction of Capital
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Wednesday 1st September 1878 :: The New York Times
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http://tinyurl.com/3sqejv [1]

  "It cannot excite our special wonder that the mass of the people find 
difficulty in comprehending the principles of finance and the cause of 
commercial depression, when those who make high pretensions to 
intelligence, and have ample opportunities and study, show an utter 
incapacity for dealing with them.

  When members of Congress and prominent political leaders display such 
deplorable ignorance and lack of reasoning power, what is to be expected 
of those who lay no claims to high mental capacity and have had little 
occasion or opportunity for making study of public questions?

  Mr Horace White is neither a member of Congress, nor a political 
leader, and, doubtless, on that very account would claim to be free from 
the bias to which they are liable, and capable of forming conclusions 
more fairly and justly.

  He sets up in some sort as a teacher of the public and a guide for 
popular opinion, and has contrived to get his pretensions to a moderate 
extent recognized. Until he made an exhibition of himself before the 
Hewitt Committee, and publicly insisted upon his ignorance of the very 
subject which he professes to have a special study, he stood a tolerable 
chance of escaping exposure from any other quarter. But if a man will 
insist upon exposing himself, he must be content to accept the judgment 
for which he furnishes the material.

  The special point upon which Mr White has given us a text of his 
capacity to deal with economical questions is one of the simplest. He 
says that not only has the destruction of capital during war nothing to 
do with the commercial crisis or its causes, but there was no such 
destruction. We had just as much capital when we went in, and lost 
nothing by the operation. Thus he disposes of one of the chief arguments 
of the advocates of universal peace by showing that war is not expensive 
or wasteful, but on the whole rather profitable.

  If capital was destroyed, he says, it must have been either fixed 
capital or circulating capital; but we had just as much both in 1865 as 
in 1861, therefore there could have been no destruction of either.

  About a million of men were taken from productive labor and employed 
for more than four years in killing each other and laying waste a large 
portion of the country. In the South enormous quantities of property 
were destroyed, and it may be added that any "remarks" at all pertinent 
to the question must apply to the whole country and not to the North 
alone. One section was utterly impoverished and its industries 
paralyzed. Vast amounts of capital were put into munitions of war and 
equipment, which were destroyed or rendered useless on the return of peace.

  Provisions and supplies were consumed by the military forces which 
were, at least, producing nothing except bloodshed and destruction. Not 
far from $5,000,000,000 were expended by the nation and States in this 
work, and they were burdened with debts which it will take two 
generations to wipe out. And yet Mr White says no capital was destroyed. 
Where, then, did it go, and what is it that we incurred this debt for, 
which is a mortgage on our prosperity for years to come?

  Suppose it were true, as Mr White says, that we paid the cost of the 
war as it went on, and repaired the waste by putting forth new energies 
of production, so that at the end there was as much capital on hand as 
at the beginning, would that be a proof that there had been no cost, no 
expenditure of capital, and no waste? If a man has his buildings and 
stock of goods destroyed by fire, and succeeds by superhuman energy and 
the utmost use of his credit in replacing them, is that proof that he 
has lost nothing? And if he finds himself crippled and embarrassed for 
years, have his losses nothing to do with it? Are national debts 
profitable acquisitions instead of evidences of capital sunk and 
destroyed in war?

  But it is useless to combat such wild absurdities with the weapons of 
serious argument. Their bare statement is a sufficient refutation. It is 
equivalent to saying that men may leave their farms and workshops and 
engage in the business of killing each other and laying waste the 
country, may be supplied with costly appliances for the purpose, and 
supported in their destructive industry, without any cost or loss to the 
people.

  We may borrow from other countries and use up the proceeds, as a 
nation we may borrow from our own people the capital they have 
accumulated, or are able to accumulate, and sink it in this raging, 
devouring gulf of war, and take half a century to produce sufficient 
surplus to restore it, with interest, and yet there has been no 
destruction of capital.

  Our industries may be stimulated and excited to a feverish energy and 
activity to furnish the means of carrying on the war and repairing its 
waste while it is in progress and after it is over, and by this abnormal 
momentum may come to overstock the market and outrun the demands of 
consumers, and yet there has been no waste, and all this has nothing to 
do with the crisis and depression that follow.

  The sad thing about this case is the revelation it makes of the 
shallowness of those who set themselves up as teachers and guides. When 
they succeed in getting any attention as such, what a deplorable lack 
there must be in the community of real wisdom on this all-important 
subject, and of ability to judge between sense and nonsense when the 
finances are in question!

  This general ignorance and lack of judgment is our greatest source of 
danger; for the people are not dishonest, but only mistaken and deluded. 
They need enlightenment and the teachers are few. They want guidance, 
and their guides are blind. The country must be educated, and it is an 
imperative duty to expose those who would only lead it further into the 
ways of error."

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[1]
http://query.nytimes.com/gst/abstract.html?res=9A06E2DE153EE73BBC4953DFBF668383669FDE

[2] The Gathering Storm : W.S. Churchill

The multitudes
remained plunged in ignorance
of the simplest economic facts,
and their leaders,
seeking their votes,
did not dare
to undeceive them

The newspapers,
after their fashion,
reflected and emphasised
the prevailing opinions

Few voices were raised
to explain
that payment of reparations
can only be made by services
or by the physical transportation
of goods in wagons
across land frontiers
or in ships
across salt water;
or that when the goods
arrive in the demanding countries
they dislocate the local industry
except in very primitive
or rigorously-controlled societies

In practice,
as even the Russians
have now learned,
the only way of pillaging
a defeated nation
is to cart away any movables
which are wanted,
and to drive off
a portion of its manhood
as permanent or
temporary slaves

But the profit gained
from such processes
bear no relation
to the cost of war

No one of great authority
had the wit,
ascendancy,
or detachment from public folly
to declare these fundamental,
brutal facts to the electorates;
nor would anyone
have been believed if he had