The purpose of this memorandum is to suggest the extent to which the utilization of economic   
resources in preparation for war has retarded economic progress and reduced the scale of living of   
the world's populations. The statistical data used here, which are discussed in some detail in a   
separate memorandum, are not adequate for obtaining an exact answer to the question. In particular,   
official figures on national defense expenditures often understate the facts, since they do not   
include hidden items or indirect expenditures such as those for a military highway, a steel plant   
for armament or expenditures for stockpiling. It has been estimated that official figures of   
national defense outlays in recent years should be more than doubled to obtain an approximately   
adequate estimate of total expenditures made in preparation for wars. In spite of these limitations,  
however, the figures used here suffice to indicate broadly the degree of economic importance of   
such expenditures in recent times.
 
     
 
 
Such expenditures have tended to increase over the years, but during the latter part of the   
1930s grew especially fast. They had become so large, and the proportion of the world's economic   
resources wasted on war preparations was so high, that standards of living were materially affected.   
In some countries this was particularly conspicuous, notably Germany, Russia, Italy, and France.
 
     
 
 
The data on expenditures in preparation for war presented below are from previous studies   
based on official statistics, where these are available (Germany published no figures after 1935),   
supplemented with the most reliable data available from other sources. These data are all subject to  
the above limitations.
 
 
 
Before 1914  
     In 1913, armament expenditures, although swollen by the growing international tension,   
accounted for only a moderate proportion of national incomes in the major countries. In Great   
Britain, despite the naval building race