Proceeding now to take up this matter in detail, we shall first attempt to set forth the facts as to war taxation.
| UNITED STATES | |||
|---|---|---|---|
| Monthly Expenditures exclusive of the principal of the public debt and of postal expenditures | Monthly War Expenditures[19] | Average Daily War Expenditures | |
| Million $ | Million $ | Million $ | |
| April 6—30, 1917 | 279 | 219 | 8.0 |
| May, 1917 | 527 | 467 | 15.0 |
| June, 1917 | 410 | 350 | 11.7 |
| —— | —— | —— | |
| Total April 6—June 30, 1917 | 1,216 | 1,156 | |
| July 1917 | 662 | 602 | 19.4 |
| August 1917 | 757 | 697 | 22.5 |
| September 1917 | 746 | 686 | 22.9 |
| October 1917 | 944 | 884 | 29.5 |
| November 1917 | 986 | 926 | 30.9 |
| December 1917 | 1,105 | 1,045 | 33.7 |
| January 1918 | 1,090 | 1,030 | 33.2 |
| February 1918 | 1,012 | 952 | 34. |
| March 1918 | 1,156 | 1,096 | 35.9 |
| April 1918 | 1,215 | 1,155 | 38.5 |
| May 1918 | 1,508 | 1,448 | 46.7 |
| June 1918 | 1,512 | 1,452 | 48.4 |
| —— | —— | —— | |
| Total for fiscal year, 1918 | 12,697 | 11,977 | |
| July 1918 | 1,608 | 1,548 | 49.9 |
| August 1918 | 1,805 | 1,745 | 56.8 |
| September 1918 | 1,557 | 1,497 | 49.9 |
| October 1918 | 1,665 | 1,605 | 51.8 |
| November 1918 | 1,935 | 1,875 | 62.5 |
| December 1918 | 2,061 | 2,001 | 64.5 |
| January 1919 | 1,962 | 1,902 | 61.4 |
| February 1919 | 1,189 | 1,129 | 40. |
| March 1919 | 1,379 | 1,319 | 42.5 |
| April 1919 | 1,429 | 1,369 | 45.6 |
| May 1919 | 1,112 | 1,052 | 33.9 |
| June 1919 | 809 | 749 | 24.9 |
| —— | —— | —— | |
| Total for fiscal year, 1919 | 18,505 | 17,785 | |
| Total April 6, 1914 to June 30, 1919 | 32,428 | 30,918 | |
[19] Obtained by deducting 11/12 of the annual (peace) expenditures for 1915—1916 exclusive of postal expenditures, i. e. 11/12 of $1,008—287 millions—60 millions. Secretary Glass in his letter of July 9, 1919 to the Chairman of the Committee of Ways and Means excludes postal expenditures in the first column, but fails to exclude them when making the deduction for peace expenditures. He consequently arrives at the figure of 30,177 billions as the cost of the war; making allowance for this fact, and using the final corrected figures, we reach the figure of $32,261,000,000 as the cost of the war to June 30, 1919.
WAR TAXATION IN OTHER COUNTRIES
Great Britain, as the wealthiest country at the outbreak of the war, endeavored to raise as much as possible from taxation. From year to year, as the expenses mounted up, more and more demands were made upon the taxpayer. But the expenditures for the war were so enormous that it soon turned out to be impracticable, even with the best of will, to secure more than a comparatively small proportion of the total cost from taxation. The figures usually advanced by the various Chancellors of the Exchequer and repeated parrot-like by most commentators take the proportion that total taxes bear to total expenditures. This method of calculation, as will be seen from the table, shows that almost a quarter of the total expenditures, or to be more exact, 24.9 per cent., was derived from taxes. These figures, however, err doubly. In the first place the significant problem is to ascertain the war expenditures, not simply the total expenditures. These can naturally be obtained only by deducting from the annual total expenditures the sums equal to the peace expenditures, i. e., the expenditures for the last full year of peace. In the second place, what is significant is not the total taxes, but the war taxes; that is, the proceeds of the additional taxes raised during the war. These again can be obtained only by deducting from the total tax revenue the proceeds of the taxes during the last full year of peace. If then we endeavor to ascertain how much of the war expenditures were met by war taxes—and this is really the important problem—we find that, immense as were the burdens resting upon the British taxpayer, the percentage of war expenditures raised by war taxes is much smaller than is usually stated. As a matter of fact, in the first year of war only a little over 7 per cent. of the total war expenditures were raised from taxes. With every succeeding year the percentage increased until the last year of war, 1918—19, a little over one-quarter of the war expenditures were met from war taxes. For the entire five years the proportion of war taxes to war expenditures was slightly over 17 per cent.
In the other belligerent countries the showing was by no means so good. France struggled under a double difficulty. In the first place France was invaded at the very outset of the war, and the territory occupied, although relatively small in extent, represented the richest and the most industrially developed part of the country. This operated largely to reduce the ordinary revenues. In the second place the resultant economic confusion, as well as the general political situation, made it very difficult to impose any new taxes at all. The consequence was that for the first three years of the war, the tax revenues of France did not even suffice to defray the ordinary peace expenditures.
After a little while, indeed, France found it possible to levy some war taxes; but these were exceedingly slight compared with what had been accomplished in Great Britain. The result is that the new war taxes of France were only just about sufficient to make up the deficit on the ordinary peace budget—a deficit caused chiefly by the devastation of the occupied territory. In France, therefore, we may say that as a result no part of the expenditures was met by war taxes.
In Italy the situation was a little better. Italy had not been invaded and its financial situation was not so desperate as that of France. Moreover, Italy entered the war somewhat later and did not have to endure a strain for so long a time. Italy consequently proceeded as soon as possible to levy new war taxes; but as Italy had always been relatively overtaxed, as compared with Great Britain, it was not feasible to do as much. As a result, the war taxes levied by Italy were just about sufficient to pay the interest on the war loans. While Italy, therefore, did better than France, she also was not able to defray any of the war expenditures proper out of war taxation.
The condition of Russia soon became worse than that of France and Italy, and even before the October revolution, Russia was able to put very little reliance upon revenues from war taxation.