In 1935, General Butler wrote that America’s brief participation in World War One had cost the US billions of dollars. “Figure it out,” he told readers –
We haven't paid the debt yet. We are paying it, our children will pay it, and our children's children probably still will be paying the cost of that war.
Those costs had been partly paid in the way that societies had always paid for the wars that their governments embark upon – in death and taxes.
Two million Americans would be conscripted at sent to fight in Europe – over 50,000 would be killed there. Taxes went up and changed for the worse. For over 50 years, the US government had been funded mainly by corporate excise taxes and tariffs on imported goods. But over the course of the war, personal income taxes were increased, and even the poorest Americans – the 47 percent of the population who only earned less than $2,000 a year – had their tax burden quadrupled.
That raised $8.8 billion in taxes – but that was not enough, so a new certainty was added to the lives of the American people. Debt. Not their own, personal debt – taken on for personal reasons – but public debt, deliberately created not to fund science or the humanities, not to improve the world for the better – but to finance the killing of young men and women on the battlefields of Europe at a scale and cost never before seen in history.
This was significant, because America was functionally debt-free before the Great War – but by the end, it created around $25 billion in long-term debt – most of which was financed by Americans themselves through the purchase of the so-call “Liberty Bonds.”
America had to borrow from its own people because, as financial reporter Matt Phillips observed in The Atlantic, “by the time the US entered the war, pretty much all the other major powers were already in it up to their necks, and thus, didn't have any money to lend.”
These war bonds seemed like not only a patriotic investment, but a safe one – they were backed by the US government, after all, and promised a substantial return averaging 4.5 percent for 20 years.
But things are rarely what they seem, and for most ordinary Americans, these “securities” would prove to be very insecure indeed. Many people would discover too late that their bonds were actually worth less than they’d bought them for – and of course, the money had already been spent.
But spent on what?
Where did the billions raised from American taxpayers and individual investors go?
Butler had served in the war, and was an insider in the military-political establishment in the lead-up and aftermath of the carnage – so he was well-placed to lodge his scathing indictment of the racketeers:
The normal profits of a business concern in the United States are six, eight, ten, and sometimes twelve percent. But war-time profits – ah! that is another matter – twenty, sixty, one hundred, three hundred, and even eighteen hundred per cent – the sky is the limit… Uncle Sam has the money. Let's get it.
Of course, it isn't put that crudely in war time. It is dressed into speeches about patriotism, love of country, and “we must all put our shoulders to the wheel," but the profits jump and leap and skyrocket – and are safely pocketed.
Butler listed the corporations that had received the bulk of the money – those who profited from making ammunition and weapons. Companies which are still in business today, still benefiting from the fortunes made in the wars of yesteryear. Companies like Dupont - which made gunpowder - U.S. Steel, and Utah Copper. Profits for these companies jumped 200 percent, causing General Butler to muse:
"Does war pay? It paid them. But they aren't the only ones."
He went on to list everything from nickel to sugar - coal, cotton, meat, and clothing – all industries whose profits increased dramatically as a result of war-time spending.
War still pays today.
According to the Costs of War project at Brown University, our latest war in Afghanistan has cost Americans $14 trillion dollars – a sum that makes the cost of World War One seem deceptively cheap. Over a third of which was paid out to military contractors. Five giant corporations – Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman – took in around $2 trillion dollars between themselves.
In 2020 alone, Lockheed-Martin received $75 billion in government contracts – over 1.5 times the combined budget of the US State Department and the US Agency for International Development. That’s not a misprint. America spends more on just one of the big players in the military-industrial complex than it does on all its diplomatic and development efforts.
Profits rose. Raytheon, which makes missiles and drones, had seen its profits declining for decades, and actually posted losses for two years before the war in Afghanistan began – but afterwards its profits increased with every year that the war dragged on. Of course, the number of civilians killed by its weapons increased, too – but that’s another story.
As political scientist William Hartung noted in his 2021 paper on war profiteering, many companies were found to have overcharged the government or committed other types of fraud – the government's own Commission on Wartime Contracting found that at least 30 percent of contract payments was lost to corruption and waste.
But this was nothing new – General Butler had observed the same things happening 75 years earlier. “Undershirts for soldiers cost 14¢ [cents] to make and Uncle Sam paid 30¢ to 40¢ each for them – a nice little profit for the undershirt manufacturer,” Butler wrote by way of an example in the textiles industries.
Here an economist might claim that higher prices were just the result of increased demand – but a great deal of that “demand” was simply invented by the corporations who stood to profit.
For example, boots were something that US soldiers needed in Europe – mosquito nets were not. But both were manufactured and sold in excessive quantities and at correspondingly large profits.
American bootmakers had already selling to both sides of the war – but they ramped up their production to do their part for the American soldiers and Marines.
Butler observed that these companies “sold Uncle Sam 35 million pairs of hobnailed service shoes,” even though America had only fielded 4 million troops. “My regiment during the war had only one pair to a soldier,” he wrote – which helps explain why 2,000 Americans ended up suffering from “trench foot,” a painful condition which could lead to gangrene and amputation. Where were the rest? Bought and paid for, but never shipped where they were needed.
But if US troops didn’t have a spare pair of dry boots, at least they didn’t have to worry about malaria-bearing mosquitos, which were only a problem in places like the Middle East and Africa.
“On the actual Western Front,” observed Dr. David Payne, “the ground was so torn up and polluted by men, munitions and toxic gas that the potential breeding places were largely unsuitable” for the type of mosquito which carries malaria. As a result, he said, there were no malaria epidemics on the Western Front during the World War One.
But that didn’t stop the war profiteers, who apparently had a lot of mosquito netting that they wanted to sell. “They sold your Uncle Sam 20 million mosquito nets for the use of the soldiers overseas,” said General Butler.
There were pretty good profits in mosquito netting in those days, even if there were no mosquitoes in France. I suppose, if the war had lasted just a little longer, the enterprising mosquito netting manufacturers would have sold your Uncle Sam a couple of consignments of mosquitoes to plant in France so that more mosquito netting would be in order.
Airplane engines that never left the ground, wooden ships that didn’t actually float, and giant wrenches too large for any nuts in existence outside of the giant hydroelectric turbine at Niagara Falls – of this latter example of grift, Butler noted that when the war ended, “it was indeed a sad blow to the wrench manufacturer. He was just about to make some nuts to fit the wrenches. Then he planned to sell these, too, to your Uncle Sam.”
Today, the situation has only gotten worse.
While just a small fraction of the $14 trillion spent during the war in Afghanistan was actually spent in the war zone, the $108 billion that was spent there was still far too much.
Forty percent of that money went to 14 big defense contractors – Raytheon and Lockheed-Martin among them. Each raked in over a billion apiece. But 34 percent went, well… even the government is not sure, or won’t say. The recipients are labeled merely “Undisclosed” or “Miscellaneous” in the official records.
“Surges in spending at various points in the war resulted in a great deal of money flowing too quickly into unknown hands,” wrote Heidi Peltier, a researcher at Brown University. She quoted the"Afghanistan Papers" published by the Washington Post which in 2019, which had observed that corruption was the inevitable result. “There was so much excess, financed by American taxpayers, that opportunities for bribery and fraud became almost limitless.”
World War One, bloody as it was, lasted just four years, of which Americans fought only in the last four months. At its end, the Senate convened a committee to probe America’s road to war, and the wartime profiteering – but the war in Afghanistan went on so long that various similar committees and oversight agencies had time to convene and report while the money was still flowing, while the military-industrial complex “turned blood into gold,” as General Butler put it. Their reports make it clear that lawmakers knew what was happening, but turned a blind eye and did nothing to stop the military money machine.
History Repeats Itself
The Senate committee determined, in the wake of World War One, that America had entered the war to protect its banking sector, and that the arms industry had both lobbied for war, and engaged in price-fixing to maximize its profits at the taxpayer’s expense.
A second committee was subsequently formed to consider how best to limit profits in wartime – but it’s plain to see that nothing came of that. In any case, General Butler noted:
The plan does not call for any limitation of losses – that is, the losses of those who fight the war… There is nothing in the scheme to limit a soldier to the loss of but one eye, or one arm, or to limit his wounds to one or two or three. Or to limit the loss of life.
There is nothing in this scheme, apparently, that says not more than 12 per cent of a regiment shall be wounded in battle, or that not more than 7 per cent in a division shall be killed.
Of course, the committee cannot be bothered with such trifling matters.
As we will see in the next chapter, when it comes to considering the losses sustained in war, today the US Congress still cannot be bothered to set any real limit on how many American troops must die or how much money will be wasted on wars that yield great profits for a few corporations – while making large swathes of the world more dangerous for all who live there, Americans included.
Nor does it set any limits on the losses that must be sustained by the civilian populations of the countries where we make or support war – no limit on the numbers of men and women and children, of babies and the elderly who are killed by American military personnel – and no limit on the civilians who are killed with the bullets and bombs proudly stamped “Made in America” that have been provided, at a nice profit, to our various 'allies' around the world.
Maybe the reason that today’s Congress is even less interested than its predecessors is because the war profiteers have learned from the public relations black eye they received after World War One.
They now know that they cannot just take, take, take – they need to give something back. Which is why weapons makers have spent $2.5 billion on lobbying American politicians over the past two decades. They deploy 700 lobbyists per year – more than one for every member of Congress – to make sure that the money keeps flowing, and the hard questions don’t get asked.
The kind of questions that we’ll answer in the next chapter – if the “Big Five” make the profits, who pays the costs?