Vickers Advertisement from  Janes Fighting Ships1914

Over the course of the next series of blogs we will examine the armaments’ industries, their ownership by the Secret Elite and their astronomical profiteering. The role they played helped cause the war and their impact on its outcome was decisive. Do not accept the standardised history about armaments and munitions during the war without question. These industries were owned and controlled by the most important and influential men associated with the Secret Elite on both sides of the Atlantic. They had a vested interest in ensuring that Germany was crushed in a long war through which they would make obscene profits, and at the end of which the Anglo-American Establishment would control an ever increasing share of world power. It mattered not to them at the time, and it matters not to them now, that they stand condemned as capitalists ‘dripping with blood from head to foot’. [1]

Before the outbreak of war the massive rise in British naval, and to a lesser extent military, spending resulted in an equally massive increase in profits for the shareholders in armaments’ companies. The Kaiser’s naval expansion had been transformed by the rabidly anti-German lobby into a race to build ever more warships in Britain, and fear was spread like a virus which infected the minds of even rational observers. Only the occasional lone voice braved the ridicule of the raging Northcliffe press when it demanded more spending on Dreadnoughts. Lord Welby, former permanent secretary to the Treasury, understood what was happening. He protested:

Lord Welby

‘We are in the hands of an organisation of crooks. They are politicians, generals, manufacturers of armaments, and journalists. All of them are anxious for unlimited expenditure, and go on inventing scares to terrify the public and to terrify ministers of the Crown.’ [2] Lord Welby all but named the Secret Elite. These were indeed the men who planned and colluded to wage war on Germany . . . and made vast profits on the way.

The average citizen considered the chief armaments firms to be independent businesses, competing in a patriotic spirit for government contracts, but this was far wide of the mark. They were neither independent nor competitive.

John Brown & Co. advertisement_

These firms created monopoly-like conditions that ensured their profit margins remained high. In Britain, this armaments ring, or ‘Trust’ as it was known, consisted primarily of five great companies: Vickers Ltd; Armstrong, Whitworth and Co. Ltd; John Brown and Co. Ltd; Cammell, Laird and Co.; and the Nobel Dynamite Trust, in the last of which the family of Prime Minister Asquith’s wife, Margo, held a controlling interest. The ring equated to a vast financial network in which apparently independent firms were strengthened by absorption and linked together by an intricate system of joint shareholding and common directorships. [3] It was an industry that nearly bankrupted the Treasury, influenced the Admiralty, maintained high prices, manipulated public opinion and made rich people richer.

Competition amongst British armaments firms had been virtually eliminated by 1901. Across Europe and the United States, they colluded in an international combine called the Harvey United Steel Co. to minimise competition and maximise profits. The five British armaments giants joined forces with Krupp and Dillingen of Germany, Bethlehem Steel Company of the United States, Schneider & Co. of Creusot in France, and Vickers-Terni and Armstrong-Pozzuoli of Italy. [4] Harvey United Steel provided a common meeting ground for the world’s armament firms and accumulated royalties from those nations ‘sufficiently civilised to construct armour-plated slaughter machines’. [5] It was highly successful in maintaining the demand for armaments that were bought by rival governments on the basis that they could not afford to be less well armed than their neighbours. [6] These multi-national companies colluded to their mutual advantage and protection. For example the Comite des Forges which dominated French iron and steel production was connected through shareholders to the elite decision-makers who permitted the Germans to keep control of the Briey iron and steel complex in France. [7] [8]

Their trade practices were shameless. Asquith’s Treasury minister wrote in his 1910 diaries that an armour-plating ‘ring’ of munitions manufacturers was robbing the Admiralty of millions of pounds of public money by collusion and malpractice. The group charged the Admiralty from £100 to £120 per ton for steel that cost them £40 to £60 to produce. [9] He knew, but like many other shareholders in the armaments industry, did nothing to stop it. The Armaments Trust in Britain had its champions in both political parties, its friends at Court and its directors in the Houses of Lords and Commons.

Philip Snowden MP

Labour MP Philip Snowden famously said that ‘it would be impossible to throw a stone on the benches opposite without hitting a Member who is a shareholder in one or other of these firms.’ [10] The voice of the armaments’ industry was heard in the press, and its ‘apostles were in the pulpits of cathedrals and tabernacles’. [11] Incredibly the lists of armaments stockholders included the Bishops of Chester and Newcastle (Vickers), the Bishops of Adelaide, Newport and Hexham (Vickers, Armstrong, Whitworth and Co., and John Brown and Co.) Dean Inge of St Paul’s Cathedral (Vickers). [12] These hallowed Christians profited from the war while extolling it as God’s work.

Just as the profits of war never went to the ordinary people, so the profits of preparing for war were channelled into the pockets of the private investors. State-owned arsenals, dockyards and factories like Woolwich were deliberately run down, and five-sixths of the new naval construction contracts were awarded to private firms in 1911. Despite the protests from local Labour MPs, orders placed by the Admiralty or the War Office went mainly to the great armaments companies on whose boards senior military figures regularly sat. Even though the private Birmingham Small Arms Company produced rifles at a cost in 1911 of four pounds three shillings and nine pence, while a similar rifle made at the government’s Enfield works cost only two pounds eighteen shillings and two pence halfpenny, the contract went to the private firm. [13] Despite this, tenders bid by private companies won lucrative contracts. These often appeared to be pitched at a lower price, but turned out to be higher once ‘general indirect expenditure’ was added. [14] At every turn the tax-payer was roundly abused by the armaments industry.

Woolwich Arsenal main gate 1914

The state-owned ‘Royal’ Arsenals at Enfield, Waltham and Greenwich operated well under capacity, causing serious local unemployment. With capital investment at a stand-still, these facilities could not keep pace with the newest technological developments. They were allowed to fall into disrepair while private armaments’ companies thrived. Given that the men in Asquith’s inner-cabinet, Grey, Churchill. Haldane and Lloyd George knew that war with Germany had been planned in conjunction with the Committee of Imperial Defence and the War Office, their refusal to increase production in the government’s own arsenals raises further questions. Who was calling the shots? Clearly not the people’s representatives in government.

The huge expansion in the building of warships in the pre-war years allowed the shareholders in Armstrong, Whitworth to receive twelve and a half per cent dividends with a bonus of one share for every four held. [15] From the turn of the twentieth century, the dividend never fell below 10 per cent and on occasions rose to 15 per cent. Investments in armament shares provided windfalls for the well-to-do and the influential. In 1909, the shares list of Armstrong, Whitworth boasted the names of 60 noblemen, their wives, sons or daughters, 15 baronets, 20 knights, 8 MPs, 20 military and naval officers, and 8 journalists. Shareholder lists showed a marked connection between armaments’ share-holding and active membership of bodies like the Navy League, which promoted ever greater warship construction. [16]

Meanwhile Asquith’s government found every excuse to allow senior military and civil service executives with insider information to take jobs in the armaments’ industry. In January 1913 complaints were lodged in Parliament that Sir William Smith, who had recently retired as Superintendent of Construction Accounts was to take up the post as a director of Armstrong, Whitworth and Company. The prime minister responded by correcting the record. Smith had ‘simply been retained by the firm for rendering it professional assistance on any point on which it may desire his services.’ [17] What a pathetic argument. The scandal continued.

Small arms ammunition factory in Birmingham 1914

Armstrong, Whitworth and Co. shamelessly employed Rear Admiral Sir Charles Ottley as their defence advisor. [18] That the former Director of Naval Intelligence and Secretary to the Committee of Imperial Defence was ever in the employment of an armaments giant tells its own story. With senior employees comprising retired military, naval and civil servants of the highest rank, the armaments’ firms possessed secret information which was kept from members of the cabinet and heads of government departments. Ottley was conversant with all of the military and naval plans for war with Germany down to the last detail. He knew of the secret ‘conversations’ and the plans for the British Expeditionary Force. The advantage he brought to Armstrong, Whitworth and Company was priceless and his intimate connections within the Secret Elite enabled them to apply political pressure to gain forthcoming orders.

It was a scandalous arrangement, but one that has unfortunately continued ever since.

[1] John Maclean
[2] Cited by Gordon Macdonald MP HC Deb 08 March 1932 vol 262 cc1717-69.
[3] George Herbert Perris, The War Traders: An Exposure, p. 9.
[4] H. Robertson Murray, Krupps and the International Armaments Ring, p. 3.
[5] J.T. Walton Newbolt, How Asquith Helped the Armaments Ring, p.8.
[6] The Secret International: Armaments Firms at Work, p. 10.
[7] Donald McCormick, The Mask of Merlin, p. 206.
[8] See blogs 48-51, 12 November 2014 to 3 December 2014.
[9] Edward David, Inside Asquith’s Cabinet, p. 86.
[10] Hansard, House of Commons Debate, 18th March, 1914; cols. 2134–40, Vol. 59.
[11] J.T. Walton Newbolt, The War Trust Exposed, pp. 4-16.
[12] Ibid., pp.15-16.
[13] Hansard House of Commons Debate, 13 June 1911, vol. 26, cc1459-97.
[14] Ibid.
[15] Perris, The War Traders, p. 4.
[16] Ibid., pp. 4-6.
[17] The Times, Report on Parliament 8 January 1913.
[18] Newbolt, War Trust Exposed, p. 17.