This story was originally published by 24/7 Wall St.
Declared an official holiday in 1971, Memorial Day honors those who have given their lives in service to the United States. While the human toll is always great, wars also cost treasure as well as blood.
Many factors can affect the cost of waging war. Using a report from the Congressional Research Service, 24/7 Wall St. reviewed the most expensive wars in U.S. history. While the Mexican-American War cost just $2.4 billion, or 1.4% of GDP in 1847, spending on World War II accounted for nearly 36% of GDP in 1945, or $4.1 trillion. These are the most expensive wars in U.S. history.
Many early wars in U.S. history resulted in the acquisition of land. The Mexican-American War in the 1840s yielded much of the territory that makes up the present-day Southwest. Similarly, the Spanish-American War prior to the start of the 20th Century ended with U.S. control of Guam, Puerto Rico, and the Philippines.
In every conflict before World War II, nearly all of the country’s defense budget was spent on direct conflict — classified as wartime spending. For example, the U.S. spent 1.1% of GDP in 1899 to fight the Spanish-American War, and just 1.5% of GDP was spent on total defense spending.
That trend largely changed at the start of the Cold War. The persistent threat of military conflict ensured that the U.S. would be ready for war at any time, as the Space Race and nuclear armament became national priorities in both the U.S. and the Soviet Union. As a result, wartime spending and defense spending began to diverge. During the Korean War, for example, war costs accounted for just 4.2% of GDP in 1952, while total defense spending represented more than 13% of GDP in the same year.
Comparing war costs over a 235-year period can be difficult. While the report attempted to correct for inflation by calculating each war’s cost in fiscal year 2011 dollars, inflation adjustments do not account for advances in technology. It is entirely possible that wars also became more expensive over time as the sophistication and cost of technology increased.
To determine the most expensive wars in U.S. history, 24/7 Wall St. used a 2010 report from the Congressional Research Service entitled “Costs of Major U.S. Wars”. The report does not include veterans’ benefits, interest on loans used to finance the war, and assistance to allies. Additionally, the report attempts to capture the increase in military expenditures during wartime and does not include the costs of maintaining a standing army in peacetime. The report also presents both military costs and defense spending as percentages of GDP in the year of peak war spending. War cost figures for the War on Terror were updated to reflect expenditure after 2010.
These are the most expensive wars in U.S. history.