Final answer:
The saying reflects the Song Dynasty's diplomatic and resource-conscious approach to military matters, favoring strategic non-military investments over extensive military expansion.
Step-by-step explanation:
The saying "Do not waste good iron making nails; do not waste good men making soldiers" reflects the attitude of the Song Dynasty toward their military. The Song Dynasty, led by Emperors Taizu and Taizong who were former military men themselves, emphasized a government policy of Confucian pacifism. This policy aimed to secure the state by diplomatic means, such as making payments to potential adversaries to prevent attacks or encourage them to confront mutual enemies, rather than expanding the military extensively.
The leadership believed that the overextension of the military had led to the downfall of the Tang Dynasty by draining resources to pacify areas inhabited by non-Chinese peoples unwilling to adopt Confucian values. Hence, the Song Dynasty chose to invest more in other areas of governance and to maintain a smaller, yet capable, military force.