the national income.
 
     
 
 
In the United States, not directly influenced by the European tension, national defense   
expenditures in 1913 were modest. Less than one percent of the national income was devoted to   
defense.
 
     
 
 
Even allowing for the possibility of important omissions from the official data, these figures   
are surprisingly low. They seem to contradict the impression, prevalent at the time, that defense   
outlays were extremely burdensome. The apparent contradiction is resolved when it is remembered   
that national budgets in those days were relatively small, and people not accustomed to anything   
like the heavy taxation of the present day. Immediately prior to the first World War, Great Britain   
was devoting over 40 percent of its budget to preparedness for war, while Germany was devoting   
nearly 60 percent. Such expenses for military or naval establishments undoubtedly tended to limit   
the amount of money which governments could devote to more humanitarian purposes.
 
     
 
 
In terms of dollars the amount spent by the world in 1913 directly on war preparations was   
about $2.5 billion.
 
 
 
Recent Years  
     From 1920 to 1984 the relation of defense expenditures to national incomes was not materially   
different, so far as the available data indicate, from that prevailing in 1913. Expenditures expanded   
during this period, but national incomes also grew. Outlays for war, though great in absolute   
amount, were still not large enough to exercise a major retarding influence on economic progress.   
In value, world expenditures as reported fluctuated around $4 billion per year from 1925 to 1934.
 
     
 
 
Since that period, however, the situation changed rapidly, as shown in the following tabulation: