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FINANCING VICTORY: Rallying Support for America’s Wars

 

FINANCING VICTORY:

Rallying Support for America’s Wars


“ARE YOU 100% AMERICAN? PROVE IT! BY US GOVERNMENT BONDS!” This interrogational slogan was the scare tactic that the United States' government used to help finance the headfirst plunge into World War I (Hormats, 122).  Since the United States government lacked the proper funding to enter the war erupting across Europe, they should not have made the American people pay.  The government’s control over war spending only furthered the strain on hardworking Americans, allowing stockholders and business owners to profit at the expense of a harder-working lower class.   

By allowing President Woodrow Wilson to fix wholesale prices on several goods, Congress set the stage for the economic downfall of many families. Wilson established the War Industries Board (WIB) in 1917, which regulated chemicals, meatpacking, steel, and oil. Fixed prices were supposed to protect the poor, but many businesses saw ways around the low prices.  For example, companies that produced low and high quality flour discontinued the cheap line, forcing consumers to buy the higher quality product (Rockoff). The high wholesale prices meant that retail prices rose as well, without government influence.

Many rich saw their wealth increase while the poor saw their worth diminishing.  Blue collar workers (semi-skilled manual laborers, shipbuilders, metalworkers, and meatpackers) saw slight increases in their hourly wage, but housing and food prices increased, making the money saved hardly worth the new expenses.  Meanwhile, stockholders in large corporations saw huge profits, particularly in meatpacking, chemicals, oil and steel (Yarrow).  Other businesses suffered while these war-businesses flourished.
The government saw the World War as the greatest opportunity for capital that the country had ever encountered.  This prompted one of the first implementations of a progressive income tax: wealthier families paid more taxes than poorer ones. These two things set the precedent for how a war government can control businesses.  For nearly every major American war, the amount that citizens are willing to give to the war effort has been directly proportional to that war’s popularity (Hormats, 132).  And popularity     can be encouraged through propaganda.

Altogether, the war cost 35.5 billion dollars, money that could have been spent on improving conditions for the poor.  A third of the funding came from taxes imposed by the government, and the remaining two-thirds were provided through the sale of Liberty Loan bonds and Victory Loan bonds, and through public borrowing (Miller Center). American movie stars would publicize the sale of bonds at public appearances and on the street.  The U.S. government used propaganda to scare Americans into supporting a war that their country couldn’t afford.  It was often insinuated that anyone who did not buy bonds sided with Germany.  One slogan made the people's options clear: "FIGHT OR BUY BONDS!" (Hormats, 122)  

The alternative to paying for a war upfront is paying back the cost afterwards, with funds allocating from tax hikes, borrowing or elsewhere. To this day, the United States continues to borrow resources from other departments in order to finance wars on foreign soil. Wars are unpredictable, outlooks and outcomes can change every day.  Looking ahead, no country should enter into a war with economic unpreparedness. Government cannot make that decision with reliance on generous public support without the resources to back up that action.





 

Bibliography
"American President: Woodrow Wilson." Miller Center of Public Affairs. Web. 15 Oct.
2010. <http://millercenter.org/academic/americanpresident/wilson>.
"Economics of World War I." The National Bureau of Economic Research. Web. 15
           Oct. 2010. <http://www.nber.org/digest/jan05/w10580.html>.
Hormats, Robert D. The Price of Liberty: Paying for America’s Wars. New York, NY:
Times Books, 2007.
Rockoff, Hugh. "Price Controls." The Concise Encyclopedia of Economics.  Library of     Economics and Liberty. Web. 15 Oct. 2010.     <http://www.econlib.org/library/Enc/PriceControls.html>
"Woodrow Wilson." Spartacus Educational - Home Page. Web. 10 Oct. 2010.
           <http://www.spartacus.schoolnet.co.uk/FWWwilsonW.htm>.
Yarrow, Andrew L. "Selling a New Vision of America to the World | Public Agenda."
Public Agenda: Helping Americans Explore Today's Issues | Public Agenda. Web. 15 Oct. 2010. <http://www.publicagenda.org/articles/selling-a-new-vision-america-world>.
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