By JOHN BATES CLARK

Columbia University

There are effects of war which are more tragic than the economic burden it will place on future generations and there are some that are more morally revolting; but there are none which will last longer or do a greater total amount of harm. What we chiefly need to know is in what condition nations will find themselves when they have added, let us say, fifty billions of dollars to their previous debts and have, at the same time, greatly reduced their power to pay debts. Some of the effects of this burden in fettering and crushing the life of the future will transcend all economic measurements, much as do the killing, maiming, and general ravaging that have already gone on. Only the purely economic effects lend themselves to measurement, and a few principles applying to these are what this paper will attempt to state.

War is a stupendous phenomenon of Economic Dynamics, and yet it apparently reverses the ordinary economic processes in a way that should put it beyond the application of the principles of our science. Only in a department of economics devoted to the destruction of wealth and life would it seemingly find a place. For competitive production it substitutes competitive destruction. It depletes shops and crowds barracks, the occupants of which strive to outdo each other in putting out of existence products and producers. Its tools are guns, shells, dreadnaughts, and the like, and its labor is maiming and killing.

It is decapitalization on a vast scale. In place of voluntary abstinence for the benefit of the future it puts a reckless bartering away of the income of the future to make possible a prodigal expenditure in the present. The war fund, when secured, reverses the effect of ordinary capital, in that it is spent at once instead of being embodied in a self-perpetuating fund, and the spending of it intensifies a work of destruction carried on by a kind of human effort which itself is the reversal of ordinary labor. The soldier and his tools are the antitheses of the workman and his tools in their future effects as well as in their present ones, since they reduce the number and efficiency of future laborers who must help to pay the debts now created. Loans for warfare first put a heavy tax on the product of future industry and then destroy much of the power to pay it.

It is all under the sway of a highly organized competition which, in its effect, is the reverse of the ordinary kind. Striving to undersell rivals is striving to promote the welfare of the public more than rivals are promoting it and it does nothing to rivals directly. Indirectly it forces them also to do their utmost to serve the public, and the whole process makes for a fruitful industry now and a more fruitful one hereafter. Competitive maiming and killing blight present and future.

War raises to an extreme limit that discount on future values, or premium on present ones, that has played so large a part in recent economic theories, and that too in spite of the fact that what is sacrificed in the future is the means of maintaining life and welfare and what is secured in the present is the means of destroying both of them. It makes future life-sustaining goods of much less present value than present life-destroying goods. Apparently an amount of suffering and death now is worth vastly more than an equal amount of happiness and life hereafter. Even the honored and lamented Minister von Böhm-Bawerk never postulated that relation of present and future. It is no ordinary economy that would starve men hereafter in order to kill men now.

Is warfare then entirely outside of the realm of true economics? Has the Science of the Organized Production and Use of Wealth no place for the belligerent action which is now going on, and do its principles remain at present largely in abeyance? To say this would imply a highly inadequate view of the scope of our science. Warfare finds a place within it, and the treatment of it falls in one or two generic divisions of Economics as broadly conceived.

There is a place in the science for the private contentions that are involved in defining and vindicating the ownership of wealth— that is, in maintaining the institution of property. It is a crude institution in primitive times and is maintained in rough and irregular way. The club of the owner does the work of that of the policeman. International rights today are like the individual rights in their crudest stage and are attacked and defended in a similarly lawless and violent manner. There is a clear analogy between the economic effect of what a savage does in defending his hut and what a nation does in defending its domain.

If we cease to think of nations and look at individuals only, we shall find them doing much which reverses the productive process in the same sense in which warfare does so. Wealth consists in things which are capable of ownership, and in a rude society

ownership is precarious and is preserved by personal vigilance and much fighting. The production of wealth would amount to little if whatever a man might get as his share another could seize with impunity. The effective utility of anything that can be stolen ad libitum is practicaly nil, and preventing this nullifying of utility is an operation as truly economic as is creating it.

Over individuals there is now a state with its courts, its legislature, and its police power, which save them from the necessity for much fighting. Over the states themselves, even in what passes for high civilization, there is no such efficient government, and the defense of their territories and other possessions has to be done in the primitive, cave-dwelling fashion and with a vast destruction of life and wasting of goods; and yet this is the only ultimate resource which the world at present has for keeping the lands and goods of nations in that condition of ownership which is necessary in order that their service-rendering powers may be developed.

Nations, indeed, make war in order to extend their sovereignty over new territories, as well as to add to their wealth, and this purpose may be accomplished without directly wresting lands and goods from private owners. Mere addition to their power is one of the purposes in view. The wealth which comes from extending dominions is also a leading object. What is here claimed is that a condition in which national territories were free plunder would make even private property insecure, and that, in their manner of guarding what they have of both dominion and property, nations are like men in a low stage of evolution.

It takes no sharpness of vision to see that the possession or control of territory is the leading issue of the present war, and the defense of territory is a latter-day illustration of the violent and costly protective operation which, through many centuries of savage life, made the other economic processes possible. Granted that international law is imperfectly observed and without courts or police for applying and enforcing it, and international faust recht becomes, in a broad sense, an unavoidable economic phenomenon, though it is the most wasteful and irrational one that still survives. It falls in that generic division of economic effort which confers on goods the basic quality of appropriability. It is so crude a part of a system of world economics that every discharge of a forty-two centimetre gun calls imperiously for courts and laws of nations which would remand such diabolical agencies to

the limbo of a savage past. Better instrumentalities for accomplishing the same purpose are the supreme need of the world.

We have then to study the cost of performing, in a crude, blundering, and savage way, one of the primary economic functions, and the vast amount of that cost is due, not to the fact that the function is performed, but to the murderous way in which this is done. If it were not done at all-if national possessions had no protection-the state of the world would be even worse than it is. Warfare, though not a reversal of the whole economic process, is such a mode of performing a part of it that, if humanity is incapable of improving on the method, it should surrender its tenancy of the earth and let some other animal type evolve, through the aeons of the future, to a position of supremacy.

Of the economic costs due to war some are incurred while it is in progress and some in the longer intervals of peace. Of those of the former kind-the only one here discussed-some fall first on governments and then on the people, while others fall directly on the people, through the stoppage of production and the direct destruction which campaigns involve. In measuring today the entire effects of the present war on the belligerent countries one would have to ascertain how much wealth they will have left when the war is over and compare it with the amount they would have had if this war had not occurred and the accumulation due to peace had continued. The difference between these gross amounts is chargeable to the war; it can be measured only when hostilities are over and then only approximately.

That which it is most important to know is in what conditions the nations will find themselves if the struggle shall continue for a given period, say a year, longer. Forecasts of this kind, guesses though they be, the nations are compelled in some way to make, and it is these which enter into the problem of offering or accepting terms of peace.

From a moral point of view, and even from a military one, killing men is worse than destroying property; but in a baldly economic calculation it is not so. If war reduced all classes of a population alike, it would, on Malthusian principles, increase the earnings of the surviving laborers. Actually, however, it works selectively, killing and disabling the most productive workers and, by this effect, it will lessen the average per capita efficiency of a people. Not till new generations shall mature will this loss be made up. If war reduced capital only and all laborers survived

without injury, the earning power of an individual would be lessened more disastrously than it is. With the reduced capital a shrunken working force can create more wealth per capita than the full original number could have done.

War debts will clearly be the greatest economic disaster of the future that will be traceable to the present war. They will burden workers, somewhat through indirect taxes and much more through the prevention of measures of reform and improvement. There is a long list of costly things that labor has already demanded and will insist on when the war shall be over. Interest on debts, war pensions, and further outlays for armies and navies will absorb the greater part of what the countries can afford, and many reforms will have to wait. The states may be unable to pay what they will cost, even though they may be in danger of revolution if they refuse to do it. This evil, like others, will vary directly as the duration of the struggle and the status of humanity for a century will depend on the question how long it will last. Are there any clear economic principles which will determine the length of the war?

The defense of property by club law could not by the most liberal use of terms be rated as a part of a general wealth-creating process unless it were subject to some self-terminating principle. It is worth while to apply a simple formula, suggesting those of Economics, to the problem of fixing a natural period beyond which beings endowed with reason should not be expected to prolong a war.

Earlier wars have often been decided by military genius and high strategy still has its great importance, but if it is true that, in our day, the decisive fact is usually what, by a euphemism, is called "attrition"—the killing and disabling of men and the destruction of resources-we may confine our brief study to a war of this type. Uniform losses on the two sides must increase the preponderance of the one that has the stronger force and the larger equipment. If a million men are a unit and there are a hundred and fifty such units on one side and a hundred on the other, the original preponderance is as three to two, while after each party has lost fifty units the ratio becomes two to one. With only twenty-five more taken from each force it becomes three to one, and it is as five to one after a total loss on each side of eightyseven and a half. Of course, exactly the same principle applies to a superiority in resources. In the latter stages of a war that