Can the U.S. Afford another War?

W.D. Gann was one of the brightest, most innovative and most successful trader on Wall Street in the first half of the 20th century. Even today his name and status among the great traders and market technicians of the past is legendary. Few there be who can mention the name of Gann without speaking almost reverently of him, so great is the reputation that precedes him. To get an idea of just how extraordinary was Gann's track record and success rate, an Internet search tailored to seek out criticism of Gann's writings, trading methods, and track record could find no such references anywhere on the World Wide Web. In our world of today where nothing is above reproach or criticism, to be able to boast of such a feat is simply incredible.

Keeping in mind the exceptional abilities and breadth of thought that Gann possessed, something that he wrote just over 50 years ago once again has currency and is extremely valid to our present state of affairs, a time in which fear, terrorism and the specter of war are all casting their dark shadows over our land. The writing in question was written as an appendix to one of his final books just before his death in the 1950s, a volume entitled "45 Years in Wall Street," published in 1949. In a chapter entitled "Can the United States Afford Another War?" Gann outlines a powerful argument in answer to this vital question, a question that is once again being asked today. His ideas from back then are extremely valuable counsel for us as we once again face the problems faced by Americans a generation ago.

At the time Gann wrote this chapter, the United States was preparing for what was then seen as an inevitable war with Russia. In 1949 alone 15 to 16 billion dollars was spent in military preparations for such a war. World War II had just ended and the nation was still exhausted from the long and arduous affair, yet Washington had begun efforts at preparing the citizenry for another world war (one which fortunately never came about). Gann asked the question, "If we fought two wars to end wars and are now getting ready for another war, would that end war for all time? It would not; because wars have never settled anything and until men learn to settle differences without resorting to war, there can be no permanent peace."

Continued Gann, "War is a destructive, losing business. It costs the manhood of a country as well as the vital food products and necessities from manufacturing lines. The United States now has a debt of over 250 billion dollars [1949]. How can the United States afford to fight another war? Where would they get the money to finance it? Who would or who could afford to buy the bonds to finance another war?" Each of these questions are worth pondering over as we face the prospects of another great war in the Middle East.

Gann pulled no punches when he wrote this next statement: "If we go into another war, it simply means complete bankruptcy and destruction of the United States. Wars are too costly. The United States is already mortgaged for more than can be liquidated, considering all government and private debts. What we need in Washington is men of vision and brains who will talk and work for peace and not waste money and prepare for war." Would that Gann's message of over 50 years ago could be read in the halls of Congress and disseminated to all the heads of state and chief military leaders of today! If the U.S. was "mortgaged for more than can be liquidated" in 1949, then how much more so today in 2002 when the national debt is nearly 6 trillion dollars. In Gann's day most people didn't even know what "trillion" meant!

Liberty and security are two words that are thrown around quite a bit in the popular press today, especially when used to justify going to war. But those who favor another U.S.-led war would do well to consider what Gann wrote back in 1949: "Why did we go to war in December 1941? Because our liberty was threatened and was insecure, we risked our lives and our resources to win a war and make our liberty secure. We thought we were making it secure. But is it secure? And do we have the liberty that we had before the war? We do not, because the New Deal is taking the liberties away as fast as they can. The New Deal continues to talk of security. They are going to take care of people from the cradle to the grave; provide social security, provide medical treatment, provide everything." Worth noting is that Social Security has become one of the top expenses in the national debt in the 50 years since Gann wrote this.

Gann pulls no punches as he asserts, "Security breeds defeat and worklessness. The country worked hard and risked everything when they were insecure. A man will work harder and make greater progress when he is insecure, and it is better that he is that way. If the government could provide everything for the people, which, of course, is impossible, it would then create nothing but a nation of loafers and everything would soon go to decay." What this country needs is not more promises, but more production. The problems of this country can only be solved by more work and more saving, not by less work and more pay. If we are to have a free and independent country and retain the liberty for which our forefathers fought, then the rights for all must be equal."

Continuing along this theme, Gann asked rhetorically, "What caused France to lose the war? It was union labor and communism. The workers would not work and produce. The result was France lost the war because the German people were not only willing to work, but they were forced to work and produce, and they won the war against France. Who gives to union labor the rights not enjoyed by capital or the private citizen? The law makers, who are elected by the people. They make laws to favor those whom they think can keep them in power? Is this justice? Is this liberty?"

Gann then goes on to address the concerns of American stock investors and property owners, namely, "What effect would war have on the price of stocks and on the real estate market?" His reply to this question is just as pertinent now as it was then. Answers Gann, "It all depends upon the price stocks are selling at the time war should start. It is my opinion that another war would be very bearish on stocks and might mean that the government would confiscate all stocks as well as other property, because with the present heavy debt it might be impossible to sell bonds to finance another war. In a case of this kind the government would have to resort to any means to obtain funds to finance a war."

He added this word of warning, "Neither this country or any other country can stand another war without becoming bankrupt, and civilization could go back hundreds of years. We should all hope, pray, and vote for men who will keep us out of war."

Not content with simply outlining the problem, Gann also provided the solution to the war conundrum. "Wars in any country can be prevented," he wrote. "People have the right and have the power in their own hands to stop war. If our lawmakers can be prevailed upon to pass a law that no government can go in debt or sell bonds for war purposes, there certainly would be no war. If the government had to start a war out of its income and not go in debt there would be no war. It has not right to go into debt and to risk the people's lives and their money and mortgage their future. Nothing can be gained by war. This country needs to get on a cash basis and spend only its income and let that income be an excuse for cutting down government expenses."

Can he get an "Amen!" anyone?