{mosimage}Mankind has claimed a variety of reasons and justifications when declaring war on each other. Human rights and freedom have often been the focus, while skeptics claim a more financial motive.

Colonialism and conquest, the thinking behind the great medieval European wars and conflicts, were to expand empires. While expressing that this was done under Divine direction, the motive had a more ‘earthly’ origin.

As explorers discovered other resources in an ever-expanding world, they sought to claim them for their financiers and themselves. Unfortunately, the new peoples they encountered became a resource. The birth of the slave trade brought low cost labor and allowed land barons to expand.
The humanitarian issues breached in the slave trade of the 1800’s nearly tore apart the United States in its Civil War of 1861-1865. Southern plantation owners rebelled against the ban on slavery, promoted by then President, Abraham Lincoln, and supported by the northern states.

Historically, so-called winning countries have experienced post-war booms in their economies. After World War II, 1941-1945, the United States experienced a post-war surge now referred to as the Fabulous Fifties. Jobs were plentiful, returning servicemen received preferential hiring, and women had started to enter the work force voluntarily after it being a wartime necessity. The advent of a two-income home created a whole new financial and sociologic dynamic.
While some women entered the workforce, others took advantage of the prosperity to have children. A generation called the baby-boomers, (now approaching retirement age), was born.

How does the stock market react during wartime? Our most recent experience was with the events of the World Trade Center bombing in 2001. This was a particularly unusual event because it not only represented an open act of war, but also was targeted at the American financial/commercial world.
In the Iraq War on Terrorism, which is ongoing, the statistics take a turn from the historical trend. Perhaps due to the number of countries involved and the unclear resolution. The total stock market returned between 2001-2003 was 11.18%, with an annualized return of -13.78%. The US was also coming into a slight recession so this may have affected the percentages.
In World War II, the stock market yielded an annualized return of 12.1% with a 98.1% yield over the entire duration of the war. During the Korean Conflict, specifically in the years 1950-1953, the total stock market Return was 70%, with an annualized return of 18.85%. In, l963 to 1975, the Vietnam War period, yields were 3 % annually and 51% overall.
With trade embargoes.
As noted during the Vietnam and Iraq War, when a country is divided as to its role in these conflicts, this lack of confidence has a profound affect on stock market performance.
World trade has changed the face of war. With the post cold war boom of international trade, new tactics are taken before resorting to armed conflict. The purse strings of international trade are tightened when countries have other differences that are not resolved through direct negotiations. While warring nations used to seek the complete defeat of each other, now the ‘war’ begins with economic sanctions. Often the sanctioning country seeks support of other nations in pressuring its nemesis. Unfortunately, these economic sanctions have not been terribly effective because supposed allied countries do not often participate, weakening the effects of embargoes.
While many motives stand for resorting to war, it is evident that financial gain has been a historical result, if not a partial motive itself.