The Worth of War (17 page)

After the war, veterans and their political supporters demanded expansion of the suffrage as a reward for their wartime sacrifices. “The soldier is as much entitled to vote as the Captain of the company or the Colonel of the regiment,” thundered the Fredericktown, Maryland,
Hornet
.
⁵⁹
Some opponents of suffrage reform argued that military service was its own reward and that the true burden of the war actually had been borne by the civilians who had been required to “pay heavy taxes to support you in the field, endure all that anxiety which the
patriot feels for his suffering country…[and had not the]…privilege of shining in the heroic page.”
⁶⁰
Members of one Pennsylvania militia company answered this argument forcefully by appearing at the polls fully armed. They were allowed to cast ballots.
⁶¹

In the late 1790s, anticipation of possible American involvement in a war against the French revolutionary regime led to another wave of suffrage expansion. In Maryland, for example, Michael Taney introduced a bill in 1797 establishing universal white manhood suffrage. Taney pointed out that Maryland militiamen might soon be called up for service. He urged the legislature to avert the difficulties encountered during the revolution, when the state had been compelled to expand the suffrage because its militiamen had been reluctant to fight unless they were given the right to vote.
⁶²
A number of states substituted taxpaying requirements for the freehold restriction, thus achieving nearly universal white, male suffrage. This process continued during the War of 1812.

War and the Making of Citizens

In wartime, a number of governments have learned that their capacity to use force abroad could be enhanced if they reduced their use of force at home. Using propaganda, welfare, and voting rights, among other tactics, at least some regimes were able to transform their sometimes-sullen subjects into citizens willing to sacrifice, fight, and die for the nation, the motherland, the fatherland, or some other imagined community. When they need popular support, states seek to transform their subjects into citizens. In Great Britain, women became citizens during World War I when the government needed their work and sacrifices in defense plants. In the United States, the Irish became citizens during the Civil War when their blood was needed to save the Union.
⁶³
In some respects, African Americans in the United States began to be treated as citizens during the Korean War, when the Truman administration added them to the military roster and sent them to fight.

Once the transformation from subject to citizen is complete, it is
usually irreversible. Citizens sometimes have rights and powers with which to guard their status and, as noted above, governments must consider where they would derive their support in the next war if they reneged upon agreements made in the previous one. Of course, governance through persuasion is still governance, and citizens who are not persuaded may still find themselves subject to the iron fist hidden within the velvet glove. Nevertheless, the almost-casual daily brutality practiced by rulers in an earlier era has, in many parts of the world, largely been banished from political life. And, for most “citizens,” this is a blessing.

Wars are often costly and futile, but in modern times war, as a phenomenon, has served as a great spur to economic development. In the modern world, military success requires a strong economic base to support the armies, weapons, training, and logistics needed to prevail in serious or protracted combat. When more developed nations face less developed foes on the battlefield, the former generally prevail.
¹
This fact has impelled quite a few regimes facing external threats to concern themselves with their nation's prosperity and level of economic development.

It might, of course, seem reasonable to assume that all ruling groups would seek to enhance their nation's prosperity and pursue policies that promote economic development. Unfortunately, however, this is not the case. Rulers often view economic change, however beneficial to the nation as a whole, as a threat to their own power and prerogatives. Take an example from the recent history of Nepal. A rural village was able to obtain sufficient funds to purchase a Swiss-made watermill capable of powering such machinery as a press to make oil, as well as a sawmill. These capabilities would have allowed the village and, indeed, the entire locality to take an important economic step forward. Unfortunately, however, the government saw the enrichment of this village as a threat to its own power and ordered the mill shut down, saying the community had no authority to undertake such a project. This action was consistent with the government's earlier opposition to roads and
schools, which were seen as possibly subversive influences.
²
Students of economic development will confirm that this is not an isolated case.

Of course, particularly benign regimes or those like the commercial oligarchies that ruled the early-modern Netherlands or post-revolutionary United States, might be naturally inclined to focus on national prosperity. Many rulers, however, seem more interested in their own welfare and power than the economic welfare of the nation. Imperial China's mandarins, as we saw in
chapter 1
, viewed exploration and the potential for transoceanic trade as politically disruptive and put a halt to China's early lead in these areas. Many ruling groups have seen economic development mainly as a source of instability and a threat to their own power. When, however, regimes face strong external challenges, they may see matters in a different light. Threats from other states can force even the most conservative regimes to bolster their own economic strength, whatever internal challenges this may pose, lest they be defeated by stronger foes. As Paul Kennedy observed, “The largest and most sustained boost to the financial revolution in Europe was given by war.”
³

ENGLAND

Precisely this calculus prompted Britain's rulers to launch a “financial revolution” in the late seventeenth century that paved the way for England's eighteenth-century industrial revolution. During the seventeenth century, Britain was regularly embroiled in wars. These included conflicts with Spain and France, the wars of the Three Kingdoms, the Commonwealth Wars with Holland and Spain, the Anglo–Dutch wars of Charles II, the two rebellions faced by James II, and unremitting warfare during the reigns of William III and Anne.
⁴
This century of warfare convinced Parliament and the British Crown that major financial changes were needed. As Mark Kishlansky noted, “War finance was no longer an extraordinary expense that members of Parliament were occasionally summoned to provide: it was central to the workings
of the royal budget.” This fact “drove the modernization of taxation, credit, and finance.”
⁵

Britain's ensuing financial revolution entailed the construction of a stable structure of public revenue and credit to replace the patchwork of taxes and borrowing that had characterized public finance in the early modern era. This financial revolution was a direct response to Britain's military needs and challenges in the seventeenth century. One building block of this new fiscal structure was the establishment of a central bank, the Bank of England, to facilitate raising long-term loans at a lower rate of interest than the short-term debt to which the government had frequently resorted. The bank was founded in 1694 as a temporary wartime expedient following the crushing defeat of the English fleet by the French in the 1690 Battle of Beachy Head in the Nine Years' War between the French and an English–Dutch alliance. Their victory gave the French temporary control over the English Channel and seemed to pose the threat of a French invasion of England. The feared invasion never came to pass, and the British fleet in the Channel was reinforced. Nevertheless, the Beachy Head defeat convinced the British government that it must build a far more powerful fleet if it was to secure its position of power in Europe.

The cost of building a fleet capable of wresting control of the sea from France and protecting English commerce from privateers, while meeting other government needs as well, was estimated to be the enormous sum of £1.2 million. The government had already borrowed heavily to fight the French and to battle an Irish revolt instigated by the recently deposed James II. As a result, William III's government found itself unable to borrow more money except at usurious interest rates. The solution, first proposed by Scottish banker William Paterson, was to identify a group of wealthy individuals who would subscribe to the loan. In exchange, these individuals would be incorporated as the “Governor and Company of the Bank of England,” entitled to an 8 percent annual dividend on their investment, and given substantial control over the government's credit as well as the sole right to issue bank notes (later called
pounds
) in England. Within two years of its
founding in 1694, the bank had loaned the Treasury 1.2 million and issued £887,000 of notes to private customers.
⁶

During this same period, changes in the law promoted the development of joint stock companies and the emergence of a market in government and private securities. Just between 1688 and 1695, the number of joint stock companies in England increased from 22 to 150.
⁷
Stock in these companies quickly came to be publicly traded and soon were the foundation for a liquid securities market in which company stocks, long-term bonds, and other investments could be traded.
⁸
The existence of a secondary market encouraged investors to purchase bonds and stock and effectively lowered interest rates for both the government and the private sector.

To bolster its creditworthiness, the government also rationalized its system of taxation and placed it primarily under the control of the Treasury. The state's ability to borrow, of course, depended upon its creditors agreeing that it had the means and intention to pay its obligations. Reform of the British tax system in the years preceding the Glorious Revolution of 1688 and proceeding more quickly during the Nine Years' War (1688–1697), helped to create this necessary level of investor confidence.
⁹
Prior to 1688, tax collection was supervised by a hodgepodge of local government officials, private tax farmers, parliamentary appointees, and a small number of royal officials. The result was that some taxes were seldom collected and no single body could coordinate government income with government expenditures to provide an overall picture of the government's financial status.
¹⁰
After 1688, however, the government began to replace old taxes and confused modes of collection with a unified system of customs, excise, and land taxes collected by trained and closely supervised royal officials. The result was a steady and dependable flow of revenue that financed the government's expenditures and convinced creditors that the purchase of long-term government securities was a safe investment.

Thus, in response to wartime needs, by the end of the seventeenth and beginnings of the eighteenth centuries, the British government had built a firm tax base and institutions that provided an adequate
supply of money and credit to wage war. This England did with considerable success over the next several decades, building a fleet that gave Britain naval superiority over almost any possible combination of its European rivals. During the Seven Years' War, for example, the Royal Navy easily swept the French from the seas.
¹¹

England's financial revolution spurred its subsequent industrial revolution in two ways. First, the establishment of the Bank of England, the expansion of the banking industry, the development of firm state control over the money supply, the enhanced credibility of government debt, and the expansion of the securities market were all essential preconditions for commercial and industrial development.
¹²

Second, the wave of military—especially naval—construction made possible by the financial revolution served as what William McNeill called “a great bellows” for the expansion of commerce and industry. To begin with, contracts for supplying the British navy with supplies expanded commercial activity throughout the British Isles and even as far away as New England and Canada, where timber for masts was purchased. Provisioners of meat, beer, and biscuits for the Royal Navy fed a population of as many as 60,000 sailors. This stimulated the growth of commercial agriculture in several parts of Great Britain and Ireland, as well as promoting the expansion of commerce and market relations throughout the realm.
¹³
Subsequently, a decade of war against revolutionary and Napoleonic France produced enormous demand for a variety of commodities, particularly those made of iron such as artillery. The production of cannons led to the development of a new industry based around coke-fired blast furnaces.
¹⁴
Improvements in iron production, in turn, helped bring about improvements in steam engines, innovations in railways, and, subsequently, the construction of iron ships.

FRANCE

French industrial development was, in turn, spurred by the obvious military advantages that industrial innovation gave her British rivals. For example, in the 1780s the British introduced superior techniques for smelting iron. Using a process known as “puddling,” British ironmasters were able to melt iron inside a coke-fired furnace in such a way as to remove impurities that made it possible to shape it to any desired form or thickness at a relatively low cost. The iron was then passed through heavy rollers that eliminated the need for the expensive and wasteful hammering that had previously been needed to shape it.
¹⁵
This process was useful in the manufacture of a variety of products, one of which was cannons. Using the puddling process allowed the economical manufacture of large numbers of very efficient artillery pieces, including some small enough to be easily transported on the battlefield.

Observing this British development, the French sought to improve their own artillery by building a smelting plant employing the latest British technology. The plant was to be linked by canal and rivers to a naval gun foundry. The idea was obviously to allow the French navy to use British technology to build large numbers of its own inexpensive guns for its ships and harbor defenses.
¹⁶
The technology would, of course, also have civilian uses.

Imitation was not a one-sided affair. French military innovations such as heavily armored warships were also copied by the British, and this naval design, in turn, became the basis for the steel-hulled commercial vessels that replaced the wooden hulls that had been the mainstays of ship design for centuries.

In its efforts to compete with Britain, France was hampered by an antiquated financial system unable to support increasing levels of military spending, to say nothing of industrial and commercial development. For example, during most of the eighteenth century, French warship design was as good as, if not better than, that of the British. France, however, had difficulty financing the construction of enough
ships and guns to match the British effort. The chief problem was France's lack of an institutional equivalent of the Bank of England, after the 1720 collapse of the
Banque Royale
, to provide long-term financing for naval and other expenditures. As a result, when the French built or repaired a warship, purchased provisions for crews, moved a fleet from one station to another, and so forth, the government was forced to secure short-term credit at high rates of interest. Thus, the British were able to build and operate warships far more economically than the French, an ability that more than compensated for the higher quality of French ships.
¹⁷

One expedient to which the French government resorted was inflation of the currency, which, over time, led creditors to demand ever-higher interest rates on government loans.
¹⁸
In the 1770s, even the French government's ability to obtain short-term credit was compromised when an acute shortage of tax revenue relative to growing military expenditures forced the government to suspend payment on most of its loans. This effective default meant that the government was, for a time, unable to secure new credit at even the most usurious interest rates.
¹⁹
And, of course, the government's financial distress led it to call for the Estates General to help it raise money, setting into motion the events leading to the French Revolution.