Smedley Butler was a very interesting person – he was a highly decorated Marine, having earned sixteen medals at the end of his career.

After recognizing that the US government was mistreating US veteran soldiers, he wrote a book called “war is a racket”.

Here are some key take-aways from the book and the Notebook LLM summary I’ve created for it, from my memory:

• War benefits a select group of people – the ultra-rich capitalists; these are behind the racket: something which benefits the few, but damages the many.
• The ultra-rich would not advocate for war, if it was not in their interests – therefore it is important to create anti-war incentives by making it a lossy proposition to them. One way to do that would be to draft these capitalists to the front lines. Another way would be to only allow people who actually fight in the war to decide whether it should be fought.
• To avoid the US getting involved in colonial interests / extracting profits in the interest of corporations from other countries, the US military should be limited in it’s range. Certain islands should be given up.
• The US spends a lot more of tax payer’s money in order to protect the interests of the ultra wealthy, which is not even economically justified USD for USD.
• Additionally, lifes of US citizens are being endangered in this scheme.

One particular example how the American population was exploited:

The US pushed soldiers to use part of their pay to purchase war bonds. The proceedings from the war bonds were used to buy equipment for the war – Butler makes the case that a lot of that was wasted money, for example for horse saddles, or mosquito nets which were not needed. Furthermore, as the companies were paid a fixed 10 % profit margin above any production costs, and demand was sky high, they artificially pumped up pricing (and thereby absolute profits).

Meanwhile, the bonds were guaranteed by the state, with a certain percentage paid out in interest. However, they would need to be held until they matured.

When the war veterans returned and were not able to cash-in their war bonds immediately, they still needed money to feed their families.

This led them to sell at a loss to banks. Naturally, if there is a huge surge of similar items being offered, and the sellers willing to sell at a loss, these items lose value.

As these were government-backed war bonds, which the government guaranteed, they banks could just hold them and sell them at a significant profit, once the market re-stabilized.

The soldiers thus suffered twice: from the war itself, and also from the further loss of their investments – which they had been talked into by the propaganda machine of the government.

By the way, this is a classical way “Mr Market” reacts – sometimes you are able to get $100 for $75 (from the bank’s perspective in this case), in case someone else is willing to sell – or has an incentive to sell, for example financial pressure.

It is probably important for us to never get in such positions, where we are forced to sell at a loss, to always keep a reserve in order to cover dry spells.

Further interesting reading

• https://allthatsinteresting.com/the-business-plot – A Wall street scheme to launch a fascist coup in America – which Butler helped to prevent
• https://en.wikipedia.org/wiki/War_Is_a_Racket