War has always been expensive. That basic truth runs through the centuries with troubling consistency. Ever since humanity invented the art of cheerfully gutting one another in an organised fashion, it has had to invent, in parallel, the art of financing its deadly pastime. Because, paradoxically, destroying sometimes takes more resources than building. It’s obvious to any third-rate fund manager in town, but it isn’t common knowledge.

Let’s take a (big) step back. In Antiquity, the business model of war was brutally clear: you plundered the defeated enemy. Simple, efficient, direct. Carthage learned this the hard way after its defeat by Rome in the First Punic War. The Treaty of Lutatius (241 BC) forced the merchant city to pay a crushing tribute of 3,200 talents of silver - around 82 tonnes of precious metal, payable over ten years with 1,000 talents up front. A colossal sum for the time, equal to several years of revenue for the defeated power. And as if that weren’t enough, Rome also seized Sicily, the breadbasket of the Mediterranean and a strategic trading crossroads. A double whammy: pay up and lose your sources of income. That was the price of peace, or rather the cost of defeat. War paid for itself, provided you won.

In the Middle Ages, things got more complicated. The Crusades needed considerable funding, and sacking Jerusalem was no longer enough. In 1188 came the Saladin tithe - not the first tax in history, but the first military levy raised simultaneously and centrally in several European kingdoms, to fund the Third Crusade. Ten per cent on income and movable goods - a tax shock that caused such an outcry in France that Philip Augustus had to suspend it as early as 1189¹¹. The unpopularity of war taxes, already. The Templars, half monks, half bankers (and a third half monk, for good measure), developed with the Hospitallers a banking system ahead of its time: letters of exchange, secure deposits, international transfers¹². A knight could deposit his gold in Paris and withdraw it in the Holy Land. Globalised finance in the service of holy war - the first multinational bank of the Middle Ages was born.

The 17th and 18th centuries brought a revolution: the birth of modern public debt. In 1694, the Bank of England was founded with a clear mission - lend to the government to fund the war against France. It was the birth certificate of the permanently borrowing state. Wars were no longer paid for only with gold from the royal coffers or the blood of the enemy, but with promises of future repayment. A major innovation that made it possible to mobilise enormous resources... and to hand the bill to the next generations. France, stuck in its absolute monarchy, resisted the model for a long time and only created a genuinely consolidated debt after the Revolution.

Then came the Napoleonic Wars, the apotheosis of a system in which, in the formula of the Emperor himself, war feeds war. Napoleon turned Europe into a cash cow: forced contributions, organised looting, systematic requisitions. Prussia had to pay 311M francs after Jena, Austria bled 75M and then a further 164M¹³. French armies lived off the conquered land, turning occupation into a business model. But the machine had its limits: when the Grande Armée pushed into Russia in 1812, it ran into scorched earth. The Russians burned their own harvests and emptied their stores. Nothing left to loot, nothing left to requisition. The system collapsed in the snow. And the Empire with it.

But it was the war French songwriter Georges Brassens declared his favourite, 1914-1918, that marked the point of no return. America’s Liberty Bonds drew more than 20M subscribers¹⁴, while France’s Bons de la Défense nationale (National Defence bonds, nicknamed Ribotins after the finance minister Alexandre Ribot) covered more than 75% of war spending by 1917¹⁵. Every citizen became a creditor of the warring state. Patriotic propaganda replaced plunder, with one message: your money for victory. An Italian poster urged people to give their money for victory, because victory means peace, with a cannon resting on a pile of coins. The posters showed smiling soldiers, not the astronomical bills piling up.

An unrelated illustration that wandered in by mistake

Then came the rout across the Rhine. German hyperinflation in 1923 revealed the dark side of this new world. To pay the war reparations imposed by the Treaty of Versailles (132bn gold marks), Germany ran the printing presses to the point of absurdity. One dollar was worth 4.2 trillion marks in November 1923. Germans carted their wages around in wheelbarrows. Fortunes evaporated, the middle class was wiped out. War debt itself became a weapon of mass destruction, an economic one this time. That monetary disaster remains etched in Germany’s collective memory and would feed, among other factors, the rise of Nazism.

And finally, enter the sacrosanct Americans. Bretton Woods, in 1944, tried to rebuild a stable monetary order on the smoking ruins of the war. The ultimate paradox: just as the world was finishing destroying itself, it planned its financial reconstruction. The dollar, backed by gold, became the reference currency. The institutions created at the time (the IMF, the World Bank) were meant to stop economic imbalances from degenerating into armed conflict again.

Noble intention, mixed results.