Munitions 9: Zaharoff And The Secret Elite

Amongst many of the allegations against Basil Zaharoff is the claim that he was an advisor to Lloyd George and influenced British foreign policy. [1] That Zaharoff was used by the Secret Elite as an arms procurer and expert is unquestioned; that he dictated foreign policy during the war is an exaggeration too far. He was never a member of the Secret Elite but had close associations with those who were, including Sir Arthur Steel-Maitland and Leander Starr Jameson. [2] Zaharoff shared a financial stake in the Sunday Times with Steel-Maitland, a Fellow of All Souls and associate of Alfred Milner, [3] and Jameson, the man whose folly brought about the fall of Cecil Rhodes. [4] He used his money to buy favour and honours. He was the richest of salesmen and had no qualms about the source of his wealth, but the extent of his influence between 1914-18 had much less impact on foreign policy than in the post war era.

What was absolutely critical was his dominance of the world of international armaments sales. The First World War represented the peak of his career and influence, and he was described as ‘virtually the minister of munitions for all the allies’. [5] Wild claims continue to circulate that every allied government consulted him before making plans for their grand attacks during the war. More convincing is the allegation that it was he who ensured that governments refrained throughout the war from attacking and destroying mines, factories, blast furnaces and armaments production sites, like Briey and Thornville in which he had an interest. [6]

As we have shown in our blogs in November 2014, Briey lay just kilometres from the French border and produced the iron and steel that provided the bulk of Germany’s armaments. It was absolutely essential to Germany’s war effort and the single most effective way to defeat her would have been to destroy it. By early 1915, the German authorities admitted that they could not last another six months in the war without the Briey supplies. [7]

At the end of 1916 Zaharoff was disturbed by the demands of the French Minister of Munitions, M. Albert Thomas, for the bombardment of the Briey mining and industrial complex. He is said to have consulted Lloyd George about the French Minister’s demands and, consequently, orders to bombard Briey were cancelled. [8] Four disastrous years later a member of the chamber of deputies, M. Eduoard Barthe, declared angrily in the French parliament that ‘either owing to the international solidarity of heavy industry, or in order to safeguard private interests, orders were given to our military commanders not to bombard the factories of the basin of Briey exploited by the enemy during the war. I declare that our aircraft received instructions to respect the blast-furnaces which were smelting the enemy’s steel.’ [9]

Tales of his Midas-like fortune lent him the aura of exaggerated power. One of the most senior foreign office career diplomats, Viscount Bertie of Thame, British Ambassador at Paris, was clearly impressed by Zaharoff,when he wrote: ‘He [Zaharoff] owns half the shares in Vickers Maxim, is the largest shareholder of the Monte Carlo Casino and has big holdings in American Railways and Steel Trust shares; I am told on excellent authority that he is worth over ten millions sterling. He is a personal friend of Walter Long, Bonar Law and Steel-Maitland and knows most of the present British Cabinet. He is said to have many of the leading French politicians in his pocket. I have known him for over ten years. I believe him to be a very just man though hard. He is anti-Semitic and his numerous enemies accuse him of being a poseur and to be prone to exaggeration. … I have a great personal regard for him.’ [10]

Many of these claims were excessive; his holdings in Vickers were moderate though his importance to the firm itself was incalculable. He did make financial loans to the casino but his syndicate only took control in the mid 1920s. [11] What is relevant here is that Walter Long, Bonar Law, Steel-Maitland, all with close association to the Secret Elite, men who held posts in Asquith’s coalition government of May 1915, [12] knew Zaharoff, and were aware of both his wealth and his international contacts. He was also a personal friend of Sir Vincent Caillard, the financial director of Vickers from 1906, and they shared a deep interest and understanding of the Ottoman Empire. Caillard had been the British delegate to the Ottoman Debt Council before taking his senior position at Vicker’s. He and Zaharoff corresponded regularly [13] and it is from the letters and telegrams that have survived the many foreign office culls over the last century that the evidence about Zaharoff’s links to two British prime ministers has emerged.

Basil Zaharoff remained a social outsider in London in 1915, but had close connections to the French prime ministers, Astride Briand and Georges Clemenceau, and the nationalist politician, and sometimes prime-minister of Greece, Eleftherios Venizelos. By 1915, Zaharoff was more attracted to social acceptance and respectability in his adopted France and in Britain too, where he sought public recognition through the honours system. This was his vulnerability; for this he willingly played a secret role to assist the allied cause. While Sir Vincent Caillard was lobbying Asquith and Lloyd George on behalf of Vickers, Zaharoff was urging his friend Caillard to get him a peerage. [14] He boasted that he could ‘make the Greek government join the Allies and start fighting the Bulgars within 20 days.’ [15] and this claim was passed to the British prime minister.

Asquith believed that it was an action worth trying, and a sum of £1,487,000 was transferred from the Bank of England to Caillard’s account at Barclay’s Bank, from where, with the approval of Asquith and Briand, it was assigned to the Bank of France and lastly into Zaharoff’s personal account in Paris. [16] Zaharoff became a paid agent of the allied governments. Not a policy maker, a paid agent. The funds were not for his personal use but to assist him to buy pro-German newspapers in Greece and bribe ‘about 45 Deputies and one Frontier Commissioner’ so that an incident could be manufactured to bring Greece into the war. [17]

It was all top secret. Neither the War Office nor the War Committee inside the Cabinet knew about Zaharoff’s mission. Whether Asquith was anxious to make a dramatic attempt to win over the Greeks before the retreat from Gallipoli or because he knew that Kitchener and the military establishment would have tried to veto the project, Zaharoff’s clandestine involvement was suppressed with a ferocity rarely seen in privileged Cabinet circles.

Asquith confided in his trusted Secret Elite secretary, Maurice Hankey in December 1915, [18] but otherwise the secret was strictly limited to Reginald McKenna, the Chancellor of the Exchequer, who had to be involved because of the enormous sums, and Sir Vincent Caillard at Vickers. Political secrets are rarely kept absolutely and Caillard in his turn confided in another ‘behind-the-scenes fixer’ Lord D’Abernon, an international banker close to the Secret Elite leader, Alfred Milner. [19] While Grey and Kitchener were deliberately kept outside this tight circle of cognoscenti, Asquith pursued this design through Zaharoff. [20]

Thus when ‘the old Greek’ [21] was seen entering or leaving 10 Downing Street, the assumption made was that he was involved in armaments business or influencing Asquith and Lloyd George to his own financial benefit. In fact a series of proposals linked to bribes and inducement were put forward by Zaharoff but that did not equate to setting policy. He was also the recipient of funds from prime minister Briand in France to counter German propaganda in Greece. [22] Zaharoff was the go-between and would-be facilitator on behalf of the pro-allied Venizelos but he was never an insider. Nor did his plans bring instant success. Greece eventually entered the war but not until May 1917, by which time many other factors had come into play. Zaharoff, of course, claimed the credit.

When Lloyd George took over at 10 Downing Street in December 1916, he used Zaharoff as it suited him, if not as a pawn, certainly as a player in a game of deadly chess. The old arms dealer proved his worth in opening back-channels which Lloyd George used to influence politicians in the Balkans. As will be detailed in a future blog, Zaharoff was sent on a clandestine mission to Switzerland in 1917, carried secret promises from the British government to the Ottomans, and was even used to mislead the Turkish government about the future of Mesopotamia and Palestine.

Zaharoff spent a good deal of time in England from 1916-1918, and his dearest wishes were granted. He was permitted an audience with King George V, who allegedly considered him a distasteful person, awarded the Grand Cross of the British Empire in April 1918, and eight months later he received his highly cherished Grand Cross of the Order of the Bath.

Of all the crimes levelled against him, perhaps the worst is that he continually sought to prolong the war for his own ends. Zaharoff boasted to the Greek prime minister in 1916 that Germany was very vulnerable and that ‘only incredible stupidity on the part of the allies could give her victory.’ He added, ‘I could have shown the Allies three points at which, had they struck, the enemy’s armament potential could have been utterly destroyed. But that would have ruined the business built up over more than a century…’ [23] As we have shown a previous blog, (Briey: 1 La Non-Defence, 12 November 2014.) Zaharoff was absolutely correct in stating that German armaments production could easily have been wiped out. He was very wrong, however, in insinuating that only he knew this. The evidence we have previously presented proves beyond any doubt that key men in London and Paris were well aware that German armaments production could have been wiped out by the summer of 1915. They had the ready means to do it, including the destruction of Briey and the blockading of German imports of materials essential to their armaments industry, but the Secret Elite very deliberately chose not to in order to prolong the war.

When Zaharoff’s advice was sought in 1917 about the advisability of bringing peace to Europe he is reputed to have insisted that the war had to be seen through, right to the end. [24] That of course had always been the Secret Elite objective; the absolute destruction of Germany. So much selfishness; so much misery. Like the vast majority of rich old men who had deliberately caused this war in which tens of millions of young men were slaughtered or badly maimed, Zaharoff died peacefully in his bed.

His final years were spent as a recluse in Balincourt (France) protected by body-guards day and night. His records and memoirs were destroyed on his orders. He went to extreme lengths to safeguard his anonymity, including the buying up of every postcard printed of his private castle in Balincourt. Inquisitive journalists and private detectives ‘disappeared’. [25] One can only hope that his obsessive fear of assassination was predicated on the realisation of the depth of the evil for which he had been responsible. Probably not.

[1] http://hansard.millbanksystems.com/commons/1922/mar/27/foreign-affairs Mr A Herbert, 27 March 1922 vol.152, cc1026-28.
[2] Carroll Quigley, The Anglo-American Establishment, p. 313.
[3] Ibid., p. 95.
[4] Ibid., pp. 46-48.
[5] Jean-Marie Moine, Basil Zaharoff (1839-46) ‘Le Marchand de Canons’ Ethnologie française nouvelle serie, T. 36, No. 1, De la censure à l’autocensure (Janvier-Mars 2006), p. 143.
[6] Donald McCormick, The Mask of Merlin, p. 206.
[7] Maurice Barres, L’Echo de Paris, 25 February to 8 March, 1918.
[8] McCormick, The Mask of Merlin, pp. 205-6.
[9] Clarence K. Streit, Where Iron is, There is The Fatherland. p. 46.
[10] Lord Bertie of Thame, memorandum on Zaharoff, 24 June 1917, TNA: PRO, FO 800/175.
[11] Zaharoff, Basil, (1849-1926) Oxford Dictionary of National Biography (ODNB) Richard Davenport-Hines, at http://www.oxforddnb.com/view/article/38270
[12] Quigley, Anglo-American Establishment, p. 141.
[13] J. Mailo & T. Insall, Sir Basil Zaharoff and Sir Vincent Caillard as instruments of British policy towards Greece and the Ottoman Empire during the Asquith and Lloyd George Administrations, 1915-18. International History Review, vol. 34. issue 4, 2012, pp. 819-33.
[14] Ibid., p. 822.
[15] Ibid., p. 826, letter to Caillard, 12 November, 1915.
[16] Ibid., p. 824.
[17] Ibid., pp. 826-828.
[18] Stephen Roskill, Hankey, vol. 1, p. 239.
[19] Quigley, Anglo-American Establishment, p. 246.
[20] Mailo & Insall, Sir Basil Zaharoff and Sir Vincent Caillard, International History Review, vol. 34. issue 4, 2012, pp. 824-5.
[21] Stephen Roskill, Hankey, vol. 1, term used by Hankey footnote page 239.
[22] Richard Lewinsohn, Sir Basil Zaharoff, p. 126.
[23] Donald McCormick, The Mask of Merlin, p. 206.
[24] Moine, Basil Zaharoff (1839-46) ‘Le Marchand de Canons’ Ethnologie française nouvelle serie, T. 36, No. 1, De la censure à l’autocensure (Janvier-Mars 2006), p. 144.
[25] Ibid., p. 140.

Munitions 8: The Strange And Unendearing Story Of Basil Zaharoff

David Lloyd George had a special friend in the armaments business about whom he was publicly in denial. [1 ] In the murky world through which the Welshman had built his political career and abandoned the principles which he once held precious, none is stranger than his relationship with the international arms dealer, Basil Zaharoff. Neither Churchill, Sir Edward Grey, Asquith or Lloyd George mentioned him by name in their biographical histories, though we should always remember that the Censor intervened to ensure that details which the state wanted to remain secret were ruthlessly expunged before publication. But Zaharoff was there, lurking in the shadows of Whitehall, dealing and double-dealing mainly through the offices of Lloyd George when he was minister of munitions and later as prime minister. Asquith, in his last months in Downing Street, and Reginald McKenna, who stood-in at the Treasury for Lloyd George, even agreed that Zaharoff should be used to bribe the Greeks into war. [2] Who was this shadowy figure from whom the public record shrank after the war?

Basil Zaharoff was born into a middle-class home in Mugla, Anatolia in 1849 and died on 27 November 1936 in the height of luxury at the Hotel de Paris in Monte Carlo. His family were Greeks living in Turkish Asia Minor where persecution of Greek Orthodox Christians threatened genocide. They fled to Qdessa in Russia, but did not stay long, returning to the Greek quarter of Constantinople when the political upheavals had settled. [3] Zaharoff knew fear and poverty in his earliest years, but language and dialect came easily to him, and proved to be important building blocks for a self-propagandist and salesman who travelled the world to sell the armaments of death.

He has been repeatedly airbrushed from history, yet was historically important. He lied frequently about his origins, his age, his education, his early life in Turkey and wherever he claimed to be from or going to, yet was accepted into the wealthiest and most powerful villas and chateauxs in Europe between the late 1880s until his unremarkable death. He revelled in the mystery he sought to create about himself, in the women with whom he claimed to have consorted, in the deals and fortunes of which he loudly boasted. He bought honours and goodwill in France and Britain by acts of ‘philanthropy’. He gave generously from his alleged vast wealth to fund university chairs in Paris and Oxford yet like many benefactor before and since, he built his fortune on the misery of war and remained untroubled by its consequences.

Zaharoff had all the records and diaries which pertained to his life, destroyed. His biographer, Robert Neumann was exasperated by the lack of historical documentation. ‘You ask for his birth certificate. Alas! A fire burned all the church records. You ask for a document concerning him in the archives of the Vienna War Office; the folder is there but the document has vanished…. You obtain permission to inspect the papers in a law case….but no-one in the office can find them.’ [4] So successfully was he airbrushed from the accepted establishment history that no mention is made of him by Lloyd George in his Memoirs, and Zaharoff was ignored by almost every one George’s biographers. [5] The Times newspaper has in its accessible archives no reference to Basil Zaharoff between 11 May 1914, when he donated £20,000 to the French National Committee of Sports and 6 July 1918, when he made a ten guineas donation to a Concert on behalf of Belgium. [6] What does that tell us about his need for anonymity during the war, for Zaharoff was deeply involved in munitions and international politics during those years.

His entry in the Oxford Dictionary of National Biography is valuable because it avoids the mystique with which Zaharoff surrounded himself and itemises his early law-breaking and underhand dealings in a Turkish brothel, as an arsonist in the Constantinople fire-brigade, as an embezzler, a bigamist and an unscrupulous contractor in Cyprus before focussing on the single most salient fact. Zaharoff was an international arms dealer and, by all accounts, was very good in his chosen vocation. He began selling weapons for the Anglo-Swedish armaments firm Nordenfeldt, in Greece in 1877 but it was his salesmanship which became the trademark of corruption.

His Systeme Zaharoff included the use of large bribes to government and military officials and his technique of playing one country off against its neighbour first came to the fore in 1885 when he sold one almost unusable submarine to Greece and then two of the same type to their longstanding rival Turkey in 1886. Quick-firing guns became his chief specialism in the 1880s and 1890s. He had all of the qualities necessary to be a successful international arms salesman, including a complete lack of scruples, an ability to lie convincingly, a capacity to manipulate officials and politicians and a ready command of several languages. Crucially, and perhaps most importantly, he was a Rothschild man.

Zaharoff is credited with engineering the merger of the armaments firms Nordenfeldt and Maxim in 1888 before setting off across the world to sell their powerful new machine-gun in Russia, Chile, Peru and Brazil. [7] If Zaharoff engineered the amalgamation, it was the London House of Rothschild which issued the £1.9 million of shares and debentures to finance it. This was one of the first deals that Rothschilds undertook with Sir Ernest Cassel and marked the start of many years of direct involvement in the armaments industry. [8] Natty Rothschild retained a considerable holding in the company for himself and influenced the management and direction of the firm, for which Zaharoff was both the major international salesman and an influential broker. When Vickers took over the Maxim Nordenfeldt Guns and Ammunition business in 1896, it was once more Rothschild and Cassel, two of the most important bankers associated with the Secret Elite, [9] who financed the deal. Zaharoff became increasingly indispensable to them and was very clearly an important cog in the world-wide armaments business financed by Rothschild and Cassel.

Maxim-Nordenfelt owned a Spanish light-armaments works in Placencia, of which Zaharoff became a director in 1896. His connections in that country were cemented by a long-standing relationship with a royal duchess, by whom he allegedly had three daughters. From this vantage point he ‘created’ Vickers’ business in Spain where bribery and corruption were used on a grand scale. As a result, the Sociedad Española de Construcciones Navales, a branch of Vickers in Spain, was awarded exclusive naval construction rights for the Spanish Navy. Vickers not only sold weaponry to the Spanish armed forces but in 1909 formed a new naval arsenal in collaboration with the state. Zaharoff was also very active in Russia where, between1902–4, Vickers paid him a total of £109,000 which has a current equivalence of around £10.5 million. [10] In 1905, at the time of the Russo-Japanese War, he earned £86,000 ( an additional £8.4 million at current prices) in direct commission. Little wonder that he was hailed as Vickers’ ‘General Representative for business abroad.’ [11]

The Vickers Company records show that the ‘ever active’ Zaharoff used bribes to gain orders in Serbia, Russia and ‘probably’ Turkey. Bribes were used liberally as a part of Zaharoff’s business process when the customers were Spaniards, Japanese, South Americans, Russians, Turks or Serbs. In 1900 he was ‘greasing the wheels in Russia’ and in 1906, ‘doing the needful in Russia and Portugal, and administering doses of Vickers to Spanish friends’. [12] The British Ambassador in St Petersburg, Sir George Buchanan, assisted Vickers’ sales effort in Russia while criticising the German Krupp and French Schneider-Creusot firms for seeking to gain advantages in the same market as ‘too disgusting for words’ [13] This breathtaking hypocrisy places Vickers, their prime agent Zaharoff, and the British Ambassador right at the centre of the Russian military acquisitions which emboldened them to mobilise against Germany in 1914. Indeed, every overture to Russia made by Britain from 1905 onwards was occasioned by its value in an all out war with Germany [14] and both Vickers and Zaharoff played their part.

On the eve of the First World War Zaharoff had taken up residence in Paris. He represented Vickers on the Board of Societe Francaise des Torpilles Whitehead, and when Albert Vickers retired from the Board of the French ‘Le Nickel’ company in the spring of 1913 he was replaced by Zaharoff on account of his ‘great expert knowledge and powerful industrial connections’. [15] Le Nickel had originally been an Australian company based on the French-owned Pacific island of New Caledonia, but was bought into by the Rothschilds who had acquired most of the nickel refineries in Europe. The discovery of nickel reserves in Canada forced them into a market-sharing agreement with the American-Canadian International Nickel Company, [16] and nickel remained an invaluable asset as part of the steel-making process. The Rothschild-backed company operated two nickel plants in Britain and the cartel arrangement between Le Nickel and British nickel-steel manufacture ensured that prices were kept artificially high. [17] Thus by 1914 Basil Zaharoff, an adopted son of France, sat on the Boards of Vickers and Le Nickel, both Rothschild-financed and influenced.

Two events took place in Paris on 31 July 1914 that epitomised the chasm between good and evil. The ancient grudge of the warmonger wiped out any lingering hope by assassinating the peace-maker, while the wicked procurer was raised onto a public platform and promoted to the rank of Commander in the Legion of Honour by the French President. [18] At 9.20 pm. the charismatic French Socialist leader Jean Jaures was in the Café Croissant at Montmartre in Paris discussing the critical situation in Europe with the editors of his publication, L’Humanite. He was shot twice in the back of the head at point blank range. History has recorded the assassination as the work of Raul Villain, a 29 year old right-wing student, but no serious attempt was made to discover ‘whether any other motive power directed the assassin’s arm.’ [19] Villain was later acquitted of murder.

Days before, Jaures stood on a political platform in Lyon-Vaise and urged his international socialist brothers in France, Britain, Germany, Russia and Italy ‘to come together, united, to turn away from the nightmare’ which faced Europe. He raged against war and the makers of war, and his message carried great weight. [20] Jaures was in Brussels with the Scottish socialist leader James Keir Hardie on 29 July thanking the German Social Democrats for their splendid demonstrations for peace. With impassioned eloquence he urged workers throughout Europe to rescue civilisation from a disastrous war. [21] He returned to Paris after an emergency meeting with Rosa Luxemburg and was deep in conversation about how war could be averted when his life was taken.

Shock and consternation filled the streets of Montmartre, and the Paris police reacted by throwing a cordon around the palatial home of Basil Zaharoff at 41 Avenue Hoche. [22] It may seem an odd reaction, but in July 1914, Zaharoff the arms dealer was invaluable to the French government’s war preparation, and that very day President Poincare had announced his elevation to Commander of the Legion of Honour. The irony is odious. Jaures, the peace-maker, murdered in cold blood; Zaharoff, the merchant of death, hailed as an outstanding Frenchman. In fact, Parisians were too traumatised to turn their wrath against Zaharoff, and were dragged into war so quickly that the moment for instant retribution passed without incident.

As an arms dealer Zaharoff was pre-eminent in his time but he was much more than simply a multi-millionaire international salesman whose stock-holdings crossed every important munitions company in Europe. Rarely have there been so many uncorroborated stories about someone who was later dubbed ‘the mystery man of Europe’ by Walter Guinness in the UK Parliament. This unfortunate name-tag added mystique to Zaharoff’s clandestine activities. His association with Lloyd George has been immersed in a legend that distracts from an alliance which was intrinsically linked through the Secret Elite to the war effort. Allegedly, Lloyd George had enjoyed an extra-marital liaison with Zaharoff’s English wife, Emily Ann Burrows, [23] and this purportedly gave him some kind of hold on the Minister of Munitions. There was more than this to their unholy relationship.

[1] Hansard, House of Commons Debate 7 November 1921 vol 148 cc17-18.
[2] Stephen Roskill, Hankey, Man of Secrets, vol. 1. 1877-1918 p.239 and footnote.
[3] Richard Lewinsohn, Sir Basil Zaharoff, pp. 21-2.
[4] Robert Neumann, Zaharoff the Armaments King, p. 9.
[5] Donald McCormick, The Mask of Merlin, p. 201.
[6] The Times 6 July 1918, p. 9.
[7] Zaharoff, Basil, (1849-1926) Oxford Dictionary of National Biography (ODNB) Richard Davenport-Hines, at http://www.oxforddnb.com/view/article/38270
[8] Niall Ferguson, The House of Rothschild, The World’s Banker, 1849-1999, pp. 412-3.
[9] Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins of the First World War, p. 125.
[10] Source http://www.measuringworth.com/ukcompare/relativevalue.php
[11] Zaharoff, Basil, (1849-1926) ODNB Richard Davenport-Hines, at http://www.oxforddnb.com/view/article/38270
[12] Clive Trebilcock, Legends of the British Armaments Industry, 1890-1914 – A Revision, Journal of Contemporary History, vol.5 no.4 1970, pp. 3-19.
[13] Ibid. p.18 quoting Vickers Archives; Sir G Buchanan to Vickers 20 May 1913.
[14] Docherty and Macgregor, Hidden History, p. 233.
[15] Lewinsohn, Zaharoff, p. 110.
[16] Ferguson, The House of Rothschild, p. 354.
[17] D.G. Paterson, “Spin Off” and the Armaments Industry, Economic History Review, vol 24. issue 3 pp. 463-468.
[18] Guiles Davenport, Zaharoff, High Priest of War, p. 154.
[19] William Stewart, J. Keir Hardie, p. 340.
[20] Discours de Jean Jaures, Lyon-Vaise, 25 July 1915. atelier-histoire.ens-lyon.fr/AtelierHistoire/episodes/…/5
[21] Stewart, J Keir Hardie, p. 340.
[22] John T Flynn, Men of Wealth, p. 372.
[23] McCormick, The Mask of Merlin, p. 202.

Munitions 4: Lloyd George And Very Secret Arrangements

For reasons that have not been fully examined, Lloyd George began to assume a proprietary interest in munitions. His work as Chancellor of the Exchequer ought to have kept him occupied in monetary and fiscal matters, raising war loans and extending credit, but his voice as a Secret Elite agent in Asquith’s Cabinet repeatedly brought him into conflict with Kitchener. He interfered with War Office orders, placed twenty-million pounds at the disposal of the Master-General of the Ordnance in an effort to support increased capacity from the established armaments firms and virtually freed the Ordnance Department from Treasury control. [1] He also looked for assistance from America.

The Anglo-American Establishment closed ranks behind its British associates, and the U S State Department, which had previously blocked a request from the JP Morgan banking firm to make loans to the allies, issued a press release on 15 October declaring that, on reflection, it had ‘no authority to interfere with the purchase of goods by belligerents, even of munitions, and it would be highly unneutral for it to do so’. Pressure had been exerted on the Woodrow Wilson’s government ‘to permit the belligerent nations to buy goods and raw materials in America’ [2]. And that pressure emanated directly from the JP Morgan banking dynasty, with its Rothschild connection, the powerful Pilgrims Society, which included a select ‘collective of the wealthiest figures of both Britain and the United States who were deeply involved with the Secret Elite,’ [3] and the presidential advisor, Robert Lansing. [4] Though professing an absolutely neutral stance, the door to America had been opened for the allies by President Wilson’s administration from October 1914. The question was, would the War Office use the opportunity well?

The British Cabinet Committee meeting on 21 October agreed to contact the War Office agent in America with a request for 400,000 rifles and three days later sent their representative, Captain Smyth-Pigott to New York. They did not know that Lloyd George, whom the Secret Elite had determined would have ultimate control, had already acted independently. He had sent his most able Treasury expert, Basil Blackett, to America to evaluate the logjam that had built up in military procurement. His first reports insisted that the War Office and the Admiralty had to start co-ordinating their purchasing strategies because suppliers were raising prices and playing one off against the other. [5] Lloyd George met privately in his rooms with Lord Rothschild to seek financial advice shortly before the ‘Prince of Israel’, as the Chancellor dubbed him, died. [6] and, around the same time, a further most important connection was established.

In November 1914, the Chancellor of the Exchequer contacted his acquaintance, Edward Charles Grenfell, senior partner of Morgan-Grenfell & Co., and director of the Bank of England, to discuss whether rifle production in the United States could be increased and engineering production switched to munitions manufacture. The line of contact started in the Treasury with Lloyd-George, through Grenfell to J.P. Morgan & Co., the largest investment banking firm in America and back through the same channel to London. Morgan immediately promised to liaise with two firms, Remington and Winchester, ‘friends’ of his group, and an understanding was reached. [7] Delivery would however take eleven months. [8] Trusted Secret Elite agents had created a very pro-British accord which would benefit them all.

But Kitchener would not have it. The War Office complained loudly about this civilian arrangement and Kitchener contacted J P Morgan directly, demanding that the order be cancelled. In his view, munition supply was still War Office business and no-one else’s. Lloyd George was furious; Edward Grenfell, outraged. The carefully planned Trans-Atlantic accord appeared to have been smothered by Kitchener’s intervention, but the Chancellor had powerful friends on both sides of the Atlantic. Grenfell complained bitterly that ‘the manner in which the War Office have dealt with the proposed rifles contract with Morgan, Grenfell and Co, will have a detrimental effect on Public opinion in America.’ [9] It was always a good line to take. American public opinion mattered to the British government. That same day Lloyd George smoothed Edward Grenfell’s ruffled feathers by stating that Kitchener’s communication to Morgan was based on a regrettable ‘misapprehension’ and asked for Morgan’s cooperation’ [10] Subsequent orders were placed with Morgan’s chosen men without War Office interference.

Lloyd George’s next tactic was to use his valued associates from his days as President of the Board of Trade. The British Embassy in Washington had reported that a large number of purchasing agents were abusing their position and accepting ridiculously high prices for goods bought in America, so Sir George Macaulay Booth of the shipping company, Alfred Booth and Co. was dispatched to the United States to assess the extent of the problem. Here he found that British buyers were paying thirty-seven shillings for coats that could have been procured for twenty-four shillings.

The British Ambassador, Spring Rice, recommended that J P Morgan be appointed sole purchaser to protect British interests, and Booth returned in mid-November to report to Kitchener and Churchill, as well as the Board of Trade, that there was an over-riding need for a sole purchaser…and that it should be Morgan. Booth was well aware that in addition to his dominant position in American banking, Morgan controlled a vast tonnage in International Maritime Marine, and an alliance with him would guarantee the use of Booth’s ships in the allied interest. Apparently historians have concluded that it is not exactly clear ‘just which cabinet minister formally asked which British or American Morgan partner to take on responsibility, [for munitions] or when.’ [11] It was clearly Lloyd George. He had the confidence of the Secret Elite and they had facilitated the arrangement.

As a result, a purchasing contract was signed in January 1915 between J.P.Morgan and the British Treasury, appointing the New York firm as its sole purchaser in the United States. It should hardly be a surprise. Morgan was intimately linked to the Secret Elite, [12] had offices in London (Morgan-Grenfell and Co,), Paris (Morgan, Harjes & Co.) and New York, (J.P.Morgan and Co.) and E.C. Grenfell personally acted as the go-between. This was not the usual order of business. Under normal circumstances the British Embassy in Washington would have been the point of liaison. What emerged was unprecedented. Control over the spending of thousands of millions of British tax-payers’s pounds was placed in the hands of an American plutocrat and his British agent in London.

Each morning, Edward Grenfell called at the Bank of England with the latest pound-to-dollar exchange quotations from America. He would discuss this with the joint-permanent secretaries at the Treasury before walking back to his office in Old Broad Street. There, he had the orders of the day encoded and sent by secret cable directly to New York. And here again we find that Secret Elite agents operated above the law of the land, out-with the knowledge of the British cabinet, in contravention of the Defence of the Realm Act and over the head of the official censor. Lloyd George permitted Edward Grenfell in London, access to an unrestricted direct cable to J.P. Morgan in New York so that its messages were more secure and absolutely secret. [13]

Ponder for a moment on this unique arrangement. Unrestricted coded cables were sent on a daily basis to a New York banking company agreeing purchasing orders, banking instructions and exchange rates. Taking this line of argument one step further, the men who created and ran the Federal Reserve System were in cahoots with the British central bank to agree the values of their respective currencies without the scrutiny of any political or democratic agency. The Secret Elite, as embodied in the whole Anglo-American Establishment, was absolutely in control. It could be argued that the British economy was being run from J P Morgan’s offices in New York. Is there any clearer example of what was called ‘the Money Power’?

Questions were asked in Parliament when rumours of the government’s agreement were leaked to the press. Morgan was known to favour his own or associated companies to the exclusion of others, a practice which ran contrary to public policy and could adversely affect British manufacturing interests. The MP for Newry, John Mooney, alleged that Morgan companies were buying up goods and selling them on to the British government at higher prices. [14] But to no avail. The deed was done. The public new nothing of this. Indeed no-one knew of this most secret arrangement.

If we take one step back and look at these arrangements in the cold light of reflection, Lloyd George’s interference in armaments and munitions dated from September 1914 when he informed the War Office that he, as chancellor, had set aside £20 million to finance extensions to factories for the production of armaments. His consequent disgust at their intransigence in contacting the armaments ‘trade’, as he called it, to push forward additional supplies of ‘guns, rifles and ammunition’ has been well documented. [15] That he was the first to register serious concerns about the likelihood of a severe shortage of munitions, [16] arguing vehemently against Kitchener in Cabinet meetings that War Office practice was outdated, is in itself interesting. His informants were ‘prominent industrialists’ from ‘all over the country.’ [17] In other words, Lloyd George was the armament trusts’ voice in Cabinet. His confidence was such that he could initiate orders and organise processes, sanction agreements and by-pass War Office restrictions in the knowledge that he would be supported. Little wonder Kitchener felt undermined.

Lloyd George was also in a unique position compared to other Cabinet ministers. He knew of the frequent requests from Sir John French for more shells for his howitzers; requests that became the theme of ‘almost daily telegrams’ from the front. [18] While Kitchener was concerned about the unprecedented rate at which shells were being ‘expended’, urging Sir John French to economise, Lloyd George met with representatives of Vickers, Armstrongs, Beardmore and the Coventry Ordnance to promise them that the government would find the money to increase their capital expenditure on munitions. [19] That money would come from America. Much of that money would be spent in America on armaments and component parts and be paid for, eventually, by the British tax-payer.

So, who did Lloyd George represent?

[1] Michael and Eleanor Brock, HH Asquith, Letters to Venetia Stanley, p. 267.
[2] Kathleen Burk, Britain, America and the Sinews of War, p. 14.
[3] Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins of the First World War, p. 312.
[4] See blog post Lusitania 8, published 18/05/2015.
[5] Kathleen Burk, War and the State, The Transformation of British Government 1914-18, p. 89.
[6] David Lloyd George, War Memoirs, Vol. 1,  p.70.
[7] Kathleen Burk, Britain, America and the Sinews of War, p. 14.
[8] J P Morgan, New York, to E C Grenfell, 11 November 1914, PRO LG/C/1/1/32.
[9] Edward Grenfell to Mr Lloyd George, 13 November, 1914, PRO, LG/C/1/1/33.
[10] Lloyd George to Mr Grenfell, PRO LG/C/1/1/34.
[11] Kathleen Burk, Britain, America and the Sinews of War, p. 18.
[12]  Docherty and Macgregor, Hidden History, pp. 212-214.
[13] Kathleen Burk, War and the State, The Transformation of British Government 1914-18, p. 90.
[14] Hansard House of Commons Debate. 20 April 1915, vol. 71, cc175-6.
[15] David Lloyd George, War Memoirs, vol. 1, pp. 79-80.
[16] Richard Toye, Lloyd George and Churchill, p. 133.
[17] Lloyd George, Memoirs, p. 82.
[18]  Ibid., pp. 86-7.
[19]  Ibid., p. 89.

Munitions 3: Fighting For Control Of Supplies

Despite all the advantages which private British armaments companies enjoyed, the supply of guns, shells and ammunition was hindered by the infighting, lack of co-ordination and traditional red-tape that haunted the War Office when war broke out. Richard Haldane’s reforms from 1906 onwards had created the small, well-armed British Expeditionary Force, but leadership of the army was controlled absolutely through the ‘Roberts Academy’ [1] which remained wedded to the primacy of cavalry regiments and was rooted not in the coming war, but in the Boer War. Britain’s reserves of shells in 1914 were reckoned to be two and a half times greater than they had been in 1899. [2] The requirements had been based on guess-work and assumptions, covering a notional supply for four major battles of three days duration each over the first two months. [3] No-one suggested otherwise in August 1914. Lloyd George’s later condemnation of the War Office was biased. He blamed their failures on ‘traditional reactionism’ which based future wars on past, but irrelevant, glories. [4] But take care. As we will show in future blogs, Lloyd George had his own vested interest in painting a ‘history’ which flattered his insight and actions.

While the volunteers pressed themselves through recruiting stations in the vain expectation that they would see off the Germans before Christmas, little thought had been given to the fact that there were insufficient rifles, cannon, machine guns, mortars, uniforms or basic equipment on hand for the eager young men who signed in droves. The stark truth that you will rarely read in history books is that the Cabinet anticipated around 100,000 volunteers when Kitchener’s campaign began in 1914, but the swell of public enthusiasm obliged them to raise the limit to 500,000 and then beyond.

Of volunteers there was no scarcity. But what use was this, even had they been given competent leadership from their Generals, when they did not have explosive shells, sufficient machine guns, aircraft or artillery?

There were horses; 25,000 in 1914 and over half a million had been used by the end of the war. When horses and men faced explosive shells and machine-gun enfilades, the result was inevitable. The Roberts Academy, so trusted by the Secret Elite, proved inadequate for the task. They had prepared for the wrong war. Of course Sir Henry Wilson had liaised with his French counterparts, and his regular visits to Flanders and the North of France between 1908-1914 identified precisely where the BEF would go, but they failed collectively to anticipate the nature of this twentieth century war.

The national arsenals, (they were called Royal Arsenals) at Woolwich, Enfield Lock and Waltham Abbey had been in decline since the end of the Boer War and much of their machinery was run down. [5] The private munitions companies had largely specialised in ship-building and naval contracts but Vickers at Newcastle, Armstrong, Whitworth at Elswick and the Birmingham Small Arms Company also diversified into other engineering ventures including motorbikes, cars and airplanes. On the one hand the potential for increased production existed in theory, but the practice turned into a nightmare of red tape, tradition, pig-headedness, self-interest and greed.

War Office procedures choked under the volume of newly placed orders. The Ordnance Department had only ever dealt with a small circle of approved contractors and was reluctant to expand its suppliers. The years of underinvestment in the Royal Arsenals reaped an embarrassing dividend. They were not fit for purpose. Privately, many of the recognised contractors accepted orders that they could not complete within the required timescale and, at the same time, committed themselves to undertake massive additional orders from the Russian government. Greed is a powerful master, and these men were in a position to maximise the benefits for themselves, so the armaments’ ring talked of the risk of over-expansion. What would happen to them if they built new factories and the war was indeed over by Christmas?

The mind-set of the Roberts Academy had been moulded by the criticism made during the Boer War that the War Office had not provided sufficient shrapnel. It was outstandingly the most effective shell in the open veld.

The western front was a completely different battleground. It quickly became a stalemate. The high explosive shell, used to such shattering effect by the German howitzers, had not been part of their original strategic thinking. [6] Mobility and speed of action dominated the ‘Roberts Academy’ pre-war plan. Shrapnel was the undisputed shell of choice and in consequence, the demand for high explosives was originally relegated to around 30% of total orders. Ironically, despite years of careful preparation, the British Army was not as well equipped for the war that lay before it, as had been presumed. In August 1914, all of the British Army’s 13- and 18-pounder guns were entirely supplied with shrapnel. [7]

And it only got worse. Shrapnel had no effect whatsoever on well constructed parapets, deep trenches with blockhouses, on machine-gun posts or barbed wire defences. By the first week in September the General Headquarters in France was requesting supplies of high explosive shells which simply did not exist. Repeated pleas for increasing numbers of this ordnance were specifically made on 15th and 21st September, 1914. The army claimed that they desperately needed 50% of their shells to be high explosive but the War Office treated their requests as if the men in the field were over excitable schoolboys. The grounds on which the Ordnance Department based this attitude was that ‘the nature of these operations may change as they have done in the past.’ [8] But just how far was munitions shortage a reality?

In one critical area there was never a shortage; indeed, there was constantly an oversupply. When shell shortage was proclaimed a national ‘crisis’ in 1915, a focus manufactured by the Northcliffe press to damage the Asquith government and deflect attention from military failures, historians and journalists followed this explanation unquestioningly. Truth to tell, there was an abundance of shells; for Dreadnoughts and battleships. [9] The navy claimed its long-assumed priority over shells and the cordite required to fire these immense projectiles over five to nine miles. Early in 1914, the Admiralty agreed to raise the number of rounds from 80 to 100 per gun on battleships and to 110 per gun on battle cruisers.

In fact, by 1916, 8-gun battle cruisers were stocked with fifty per cent more ammunition than they were designed to carry. [10] Churchill was obliged to recognise the navy’s over provision in October 1914 by permitting the transfer of 1,000 tons of cordite to the army. [11] Yet over-supply to the navy was not meaningfully reduced. The Armaments companies continued to produce their heavy calibre shells despite the fact that there were very few naval engagements which would have consumed the ammunition. The navy continued to have priority over the army with the private producers and while there were perceived shortages on the western front, stocks hoarded by the Admiralty were ‘bountiful’. [12] Clearly heavy calibre explosives were being produced in great quantities, but not for the army, for whom the word ‘shortage’ had become a mantra.

High explosives were deemed to be the technological panacea, [13] and the lack of these became the ready excuse for failure. It also became an integral part of the problem. If the only solution to stalemate on the western front was even more extravagant use of heavy artillery, then the more these great guns blasted, often aimlessly, the more they accentuated the shortage. With governments ever willing to throw increased expenditure at the perceived ‘solution’, the armaments trusts could only reap untold profits. Kitchener believed that the shortage was exaggerated, but his generals in the field became fixated by this god-given ‘reason’ which rationalised their failures and justified their strategies. At every turn they wanted more.

There was an impasse. Kitchener’s War Office wanted to retain full control of munitions. They were suspicious of offers from American companies or orders placed in America by British government agents. Likewise they had no faith in dozens of smaller engineering companies across Britain which offered to switch production under license. Kitchener’s stubborn Master General of Ordnance, the man at the War Office who had to approve all orders, Sir Stanley von Donop, insisted that only firms experienced in the delicate operation of arms manufacture, firms that had a skilled workforce capable of safely producing the guns and shells, should be used.

The men who controlled the private armaments firms, their supply, manufacture and price, effectively a sub-set of the Secret Elite, were determined to secure their stranglehold by taking control away from the War Office. But how? Lloyd George found a way. Despite Kitchener’s objections, the government set up a Cabinet Committee in October 1914 to examine the issues of munitions’ supply. Absolute control did not immediately pass from the War Office, but within eight months Kitchener would be sidelined.

When Lloyd George, as Chancellor of the Exchequer, met on 13 October with the major representatives from Armstrong, Vickers, the Coventry Ordnance Works and Beardmore, he offered them a blank cheque. Incredibly, the nation had been held hostage. Lloyd George promised that the British taxpayer would cover whatever the cost of extending production lines, building new factories or investing in new machinery, irrespective of how long the war lasted. He committed the government to compensate them and any of their sub-contractors for any subsequent loss. The War Office protocols to protect the public purse were torn to shreds. Not surprisingly the open cheque-book had a miraculous effect. The merchants of death immediately promised to increase output by every possible means. For example, artillery gun production, which was doubled from 878 to 1,606, was to be completed no later than August 1915. [14] These great firms owned and run by self-serving capitalists who boasted their patriotism in parliament, pulpit and the press, were literally subsidised by the government to increase production and make outrageous profits. The Secret Elite removed the impasse.

What price patriotism?

[1] For detailed information about the Roberts Academy, the privileged post-Boer War clique which dominated military strategy and planning in the year before the First World War, see Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins of the First World War, pp. 194-202.
[2] Ministry of Munitions, vol. 1. pt. 1, p. 21.
[3] Hew Strachan,The First World War, vol.1: To Arms, p. 997.
[4] David Lloyd George, War Memoirs of David Lloyd George, Vol. 1, p. 75.
[5] Hansard House of Commons Debate, 13 June 1911, vol. 26, cc1459-97
[6] Lloyd George, Memoirs, pp. 76-7.
[7] Strachan, The First World War, vol.1, p. 1000.
[8] Lloyd George, Memoirs, p.84.
[9] Strachan, The First World War, p. 998.
[10] Nicholas A Lambert, “Our Bloody Ships”, Journal of Military History, 1998, p. 36.
[11] Ministry of Munitions, vol 1, pt. 1. p. 96.
[12] Jon Tetsuro Sumido, British Naval Operational Logistics, 1914-1918, Journal of Military History, vol. 57, no. 3, July 1993, p. 453.
[13] Strachan, The First World War, p. 1001.
[14] Lloyd George, Memoirs, p. 89.

Munitions 2: Vickers, Rothschilds And The Death Of Patriotism

Vickers, the world renowned armaments giant, began life in 1828 as a steel foundry. It grew through a number of acquisitions into a vast concern with ordnance works in Glasgow, factories at Sheffield and Erith, and naval dockyards at Walney Island. It typified how the Secret Elite classically invested in armaments and munitions and, though their names never appeared on the register at Company House or on the factory gates, their domination represented a mosaic of amalgamations, take-overs, and buy-outs which concealed their influence and ownership.

In 1885, Vickers set up the largest forging press ever made to enable it to manufacture heavy marine work  in Sheffield, [1] and the first armour plate for warships soon followed. By 1888, the company stretched its tentacles north towards the Naval Construction and Armaments Co. of Barrow-in-Furness which had itself expanded into the construction of submarine torpedo boats under license from the Nordenfelt Guns and Ammunition Company. [2] In that same year, Rothschild issued £1.9 million of shares to finance the merger of Nordenfelt with the Maxim Gun Company. Nathan Rothschild retained a substantial shareholding in the new Maxim-Nordenfelt combine and ‘exerted a direct influence over its management’. [3] The scene was set for Vickers to become the major British armaments giant. Guided and financed by Rothschild and another Secret Elite financier, Sir Ernest Cassel, Vickers absorbed the Naval Construction and Armaments Co., and the Maxim-Nordenfelt armaments conglomerate in 1897 to become Vickers, Sons and Maxim. The expanded company could then build and equip the largest battleships in the world. [4]

The significance of the Maxim-Nordenfeldt takeover lay in the fact that Vickers gained control of the world’s deadliest machine gun.  Highly accurate, and able to fire 600 rounds per minute, the Maxim was described as ‘the key to European hegemony.’ Vickers offered every lethal weapon in its arsenal – from machine guns to battleships – to any customer with the means to pay. It sold the 37 mm Nordenfelt-Maximm or “QF 1-pounder”, better know as the pom-pom to the Boers during the Second Boer War (1899-1902) and a variety of armaments to both sides in the Russo-Japanese War (1904-5).  [5] Essentially, their salesmen and agents helped manipulate nations into wars and supplied all sides with the weapons to fight them. [6] They were indeed, Merchants of Death.

Vickers had been launched on the international road to prosperity by funding from Rothschild and Cassel, two bankers who held sway at the very heart of the Secret Elite. [7] The Rothschilds had always understood the enormous profits generated by the armaments industries, and financing wars had been their preserve for nearly a century. Bankers, industrialists and other members of the Secret Elite, the men who planned the destruction of Germany, had carefully positioned themselves to make massive profits from it. War, any war, was a means of garnering wealth. But the stealth with which they created a vast network to produce armaments beggars belief. Firms which were apparently independent were strengthened by absorption, and linked together by an intricate system of joint shareholding and common directorships.

In addition to ownership of the Naval Construction Co., of Barrow, the Maxim-Nordenfelt Co., and the Electrical Ordnance Co. Ltd., Vickers held half the shareholdings of their supposed rivals Beardmores (shipbuilding and engineering), as well as directorships in Cammell, Laird and Co., (shipbuilding), Whitehead and Co., (torpedo manufacture), the Chilworth Gunpowder Co., and the Harvey Armour-Plate Co. [8] Each of these in turn owned shares in associated subsidiary manufacturers so that the entire gamut of armaments production became an interwoven tapestry of Secret Elite vested interests. It was a massive, illegal and secret cartel which no-one dared challenge.

Their behaviour during the Russo-Japanese war provided a perfect template for future tactics. Secret Elite bankers had provided Japan with high-interest-yielding loans to build a modern navy with which to attack Russia. The greater part of that victorious Japanese navy was constructed by the British yards from which the Secret Elite made even more profits. The Japanese people were, of course, left to foot the bill. After the Russian fleet had been destroyed at Tsushima, Russia was provided with high-interest-bearing loans of £190,000,000 to rebuild her navy. Much of the construction work went to factories and shipyards owned by the Secret Elite. And so the cycle repeated itself, with the Russian people left to pay the price. [9]  It was no different in Britain where the ‘naval race’ produced millions of pounds of profits for the owners and shareholders in armaments while the cost was met by the ordinary tax-payer. Little wonder that Nathan Rothschild was an enthusiastic supporter of increased naval construction. [10] Every dreadnought built increased his income.

One of the most enduring deceptions perpetrated by the Secret Elite before the war was in regard to Italy. Although they knew otherwise, [11] it was widely propagated that as a signatory to the Triple Alliance with Germany and Austria-Hungary, Italy would have a dangerous naval presence in the Mediterranean when war broke out. All comparative naval statistics on the combined size of opposing fleets given in Parliament or the British press before 1914 included Italian warships [12] and torpedo-boats alongside the German and Austrian totals. By adding the Italian numbers to the total they presented a far greater naval threat than existed, and consequently promoted the need for greater warship construction in Britain and France to meet that threat. They studiously ignored the irony that it was British armaments firms who owned the very yards that were building those warships for Italy. [13] The British Armstrong-Pozzuoli Company, on the Bay of Naples, employed 4,000 men and was the chief naval supplier to Italy. The Ansaldo-Armstrong Company of Genoa, which belonged to the same British firm, built dreadnoughts and cruisers for Italy even although it was regarded as Germany’s ally. [14]

Vickers was also an important supplier to the Italian navy through combination with three Italian firms that constituted the Vickers Terni Co. In addition to being defence director of the parent company, Rear Admiral Ottley was a director of the Armstrong works at Pozzuoli. Ottley again. Surely he should have been charged with treason? Here was the former Secretary to the Committee of Imperial Defence, the most secret of all government committees, whose duty was to advise the prime minister on sensitive matters of defence and war, accepting payment as a director of a company in a country allied to Germany. But it was precisely because Ottley had held that position that he knew Italy would not join Germany in a war against Britain. Given that he had insider information about the real alliances made by King Edward VII, Ottley was in a uniquely privileged position. How much did he share with his fellow directors at Vickers? How much was such information worth to them when Vickers invested in Pozzuoli?

 

Such corruption was bad in itself, but worse still was the fact that both Vickers and Armstrong (the other British armaments giant) held a large proportion of the shares of Whitehead & Co., the torpedo manufacturer at Fiume in the Austro-Hungarian Empire. During the war, Labour MP Philip Snowden angrily stated in the House of Commons: ‘Submarines and all the torpedoes used in the Austrian navy, besides several of the new seaplanes, are made by the Whitehead Torpedo works in Hungary … They are making torpedoes with British capital in Hungary in order to destroy British ships.’ [15] Between 1914-1918, those Whitehead torpedoes were also loaded into the tubes of German U-Boats and used against British shipping. Individuals in the warm comfort of Westminster or their exclusive London clubs or grand gothic cathedrals, profited from the torpedoes that sent thousands of brave British seamen to cold graves in the Atlantic. These shareholders made untold fortunes on the products of death and misery. How bitterly shocked would the widow of a seaman drowned when his merchantman was sunk in the North Atlantic have been, had she ever learned that both the British company which made the weapon, and the German company which held the license for its construction, earned dividends from its sale?

This was the modus operandi of the armaments industry universally. Patriotism was not in their vocabulary; massive profit most certainly was. In America, the Du Pont company monopolised the supply of gun-powder and fixed the price accordingly. The Schneider Company had likewise bought its way into a similar position in France to the extent that Eugene Schneider also served in the Chamber of Deputies in the French Assembly. Coal and Iron were similarly monopolised in France where the Comite des Forges was dominated by the De Wendel family. At one stage the De Wendel’s had representatives in both the French Assembly and the German Reichstag. Krupps had promoted itself as the Kaiser’s armaments maker and had doubled its profits in the immediate pre-war period, as had Skoda in Austria-Hungary. [16]

Armaments firms prostituted their services across all national boundaries, shared patents and profits, and were intrinsically linked to the Money-Power, the banking fraternity which financed wars. [17] Vickers had been financed by the Rothschilds, Du Pont by J.P. Morgan and Co., and Schneider was directly associated with Credit Lyonnais and the Banque de l’Union Parisienne, as was the Austro-Hungarian Skoda company.  Krupps had been rescued from financial disaster in the 1870s and its first public bond was issued through Deutsche Bank in 1879. [18] The symbiotic relationship between Armaments and the most powerful banks was one which closely involved Secret Elite members and associates like Rothschild, Sir Ernest Cassel and JP Morgan.

In 1921, a sub-committee of the Commission of the League of Nations concluded that armaments firms had been active in the decades before the war in fomenting war scares and in persuading their own countries to adopt warlike policies that increased their spending on armaments. They were found guilty of bribing government officials both at home and abroad, and of disseminating false reports about the military and naval programmes of various countries in order to stimulate armament expenditure. The litany of accusations further indicted them for influencing public opinion through the control of newspapers in their own and foreign countries. The ring was directly criticised for all these activities and not least for ensuring the outrageous price of armaments. [19]

Nothing of any consequence was done about it.

[1] The Times, 5 January 1885.
[2] The Morning Post, 21 February, 1888.
[3] Niall Ferguson, House of Rothschild, The World’s Bankers, 1819-1999, vol. 2. p. 413.
[4] The Times, 17 November, 1897.
[5] Engelbrecht and Hanighen, Merchants of Death , Ch 1X p. 2.
[6] Webster Tarpley, George Bush, p. 15.
[7] Gerry Docherty and Jim Macgregor, Hidden History, The Secret Origins Of The First World War, p. 141.
[8] George Herbert Perris,The War Traders: An Exposure, p. 9.
[9] Walton Newbold, War Trusts Exposed, p. 7.
[10] Ferguson, House of Rothschild, vol. 2. p. 413.
[11] Docherty and Macgregor, Hidden History,  p. 76.
[12] Hansard House of Commons Debate 7 July 1913, vol. 55. cc10-11.
[13] Walton Newbold, How Europe Armed for War, pp.76-77.
[14] Perris, War Traders, p. 10.
[15] Hansard House of Commons Debate 5 May 1915 vol 71 c1091.
[16] T. Hunt Tooley, Merchants of Death Revisited, p. 39.
[17] Ibid., p. viii.
[18] Jeffrey Fear and Richard Kobrak, Banks on Board, German and American Corporate Governance, 1870-1914 in Business History Review 84,  pp. 703-736.
[19] The First Sub-Committee of the Temporary Mixed Commission of the League of Nations, Report A.81. 1921, p. 5.

Munitions 1: Jobs And Profits For The Boys

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:

‘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.

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.

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.

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.

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 http://www.rcgfrfi.easynet.co.uk/ww/maclean/1918-sfd.htm
[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.