Q. What ways were money raised for World War 2?

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A. Wars are expensive. Most often even victor nations come out of war much weaker than they entered due to the financial strain.

For example, note WWI. Here, Germany lost, of course, and came out much weaker. However, economic problems abounded in France and Britain, problems still not resolved by WWII, despite massive money transfers from the USA and Germany to these two nations.

All nations must thus raise money to fight wars. Typically this is first done via taxation. All manner of taxes are placed - on capital, on income, on the movements of money, on transportation, on imports, on exports. Ultimately you get to a point where it is not wise to raise tax rates further since the income so generated begins to fall due to collapsing economic activity.

Thus nations then turn to other methods. In the USA and Britain this was largely through war bonds. These are government debt instruments, ie, a promise to pay back the money in the future, with interest. Naturally the government does not want to pay back the money any more than any other debtor so wishes. Thus governments ALWAYS start a program of inflation which is used to debase the currency and make debt repayment cheaper. Certainly the USA did this after WWII and Vietnam. It is likely going on right now to pay for the Iraq war.

Back to WWII, these bond drives typically use movie stars and other celebrities to pursuade people to 'invest' in the bonds. Every manner of pursuation is used - religion, patriotism, coercion, etc. In WWI, people were actually put in prison in the 'freedom loving' USA just for refusing to invest 'voluntarily' in these bond drives. Other nations use similar methods of coercion to sell bonds, thus they become another method of taxation.

If taxation and bond drives don't gather enough funds to finish the war job, then out right confiscation begins. Some nations such as Russia and Germany made little pretense of taking what they needed for the war effort, preferably from minority peoples or conquered territory, but from their own ethnic group if necessary. Even the USA, with its vast wealth, confiscated private property at will during the war, starting with the minority Japanese-Americans.

Another form of confiscation is to use rationing. All nations used this method in WWII. For example, the USA set up a vast network of government workers to process ration cards and enforcement. This method reduces the amount of goods that people can buy, thus leaving them with much excess cash for which there are no goods to buy. This excess money can then be siphoned off via higher taxes, bond drives, donations, etc.

In the end, the combination of inflation, high taxes, bond drives, confiscation, and rationing impoverishes the population to such an extent that there is nothing left to give. Germany supposedly had used up almost its entire national account of capital by the end of WWII, every mark having been taxed, confiscated, or donated for the war effort. There was nothing left. Russia and Britain were not far behind. Japan was collapsing economically too. Finland and Australia were forced to demobilize before the end of the war due to impending economic collapse.

The USA came out of the war with a larger economy due to vast slack in industria, agricultural, and mining capacity prior to the conflict, but this is the exception to war, and unlikely to be repeated by any nation for the foreseeable future.