THE ECONOMICS OF SHIPBUILDING AND BRITISH NAVAL STRATEGY IN THE PERIOD OF RE-ARMAMENT

Benn Mikula Department of History McGill University Montreal, Canada March 1988

A thesis submitted to the Faculty of Graduate Studies and Research in partial fulfillment of the requirements for the degree of Master of Arts. ABSTRACT

The Economics of Shipbuilding and British Na va I Strategy i nth e Period of Re-armament.

Benn Mikula McGill University Department of History March 1988

Historically, strength on the high seas had been essential to Britain's status as a great power. This sea power was based on a strong Royal Navy, merchant marine and, ultimately, a strong shipbuilding industry.

Encompassing the years 1918-1942, but laying especial emphasis on the period of rearmament in the late 'thirties, this thesis will examine the impact of shipbuilding on naval policy, and vice versa. Close attention will be paid to the impact of politics and larger economic forces on this relationship.

Such an investigation requires exploring the nature of the British shipbuilding industty; its economic fortunes; the economic and military trends of the period; as well as British diplomacy and grand strategy. As such, it is an investigation of that murky area where strategy, economics, and politics meet an area central to the conduct of total war in the twentieth century. RESUME

The Economics of Shipbuilding and British Naval Strategy in the period of Re-armament.

Benn Mikula ·Departement d'Histoire McGill University Mars, 1988

La force maritime de l'Angleterre avait historiquement et6 essentielle ason statut de grande puissance. Cette puissance maritime etait fondee d'une part sur ses forces navales et d'autre part sur la marine marchande et, par consequence, sur une puissante industrie de construction maritime.

Cette these examinera l'impact de cette industrie sur la politique navale, et vice versa, lors des annees 1918 a1942. Une emphase sera mise sur la periode de rearmement vers la fin des annees trentes. Une attention particuliere sera ponee sur l'impact sur cette relation de la politique et des forces economiques.

Une telle etude implique un examen de la nature de l'industrie de la construction maritime, son sort economique, les tendences economiques et militaires de la periode ainsi que la diplomatic et la strategie generale brittaniques. C'est done une etude de ce point vague ou s'unnissent la strategie, l'economie et la politique: un point fondamental a la guerre totale au XX:eme siecle. TABLE OF CONTENTS 0-

Preface and Acknowledgements ... i.

Chapter One The Nature of the Shipbuilding Industry ... Page 1.

Chapter Two Shipbuilding and the British Economy 1918-1936: 'We ought to 'ave listened to our Alfred' ... Page 25.

Chapter Three Diplomacy, Domestic Politics, and Naval Policy to 1938 ... Page 47.

ChapterFwr With Hands Tied and a Murky Crystal Ball: Economic Policy and its Impact. .. Page 102.

OmperFive The Juggling Act Ends: Shipbuilding Goes to War... Page 119.

OmpterSix Conclusion ... Page 154.

Bibliography ... Page 160. i.

PREFACE AND ACKNOWLEDGEMENTS

This thesis will outline the relationship between British naval strategy and the shipbuilding industry. While this relationship provides the dominant focus, it must be said at the outset that a host of complicating factors - economic, political, and military - are extremely relevant to the discussion. As such, they form an important and inseperable part of the text ..

Decision making never occurs in a vacuum; nor do policy makers ever have the luxury of addressing problems of national interest individually and in isolation from each other. In this examination of shipbuilding and naval policy, the intention is to piece together the nature and import of the relationship. To do so, it is necessary to adopt a broad perspective. As vital elements in the formulation of British policy, these issues must be investigated in relation to other elements in the grand strategic equation. This is especially true when dealing with a period as complex and myth laden as 1918-1942.

The title is best explained in terms of the densely woven web of links between strategic necessity, diplomatic necessity, economic policy and economic imperatives, industry, and politics which exist in any nation. Shipbuilding, because of its special rOle as the provider of a strategic product (ships) and major industry, is a marvellous exemplar of the workings of the British 'web'. It is also a metaphor, for in decline shipbuilding touches on Britain's fall from great power status, and speaks volumes about her relative impoverishment.

Yet while this tale may be one of largely unmitigated gloom, it is far from being one of unparallelled incompetence. It shall be seen how what is calle the British 'ruling class' conducted themselves and national policy with a ftrm and logical grip, even under the most trying of circumstances. In the end, after the fall from grace of shipbuilding and the decline of Britannia's naval power, it was the weight of outside events which proved most decisive.

As this thesis touches upon a great many subjects which it cannot stay to explicate at length, I have relied throughout on the reader's familiarity with the flow of British history in this period. Some assumptions have been made regarding knowledge of the most prominent issues of the day, both in England and abroad. Whenever economics intrudes, no special knowledge was assumed, though in the interests of clarity and brevity, extended definitions were omitted.

This murky area where politics, economics, and strategy remains as yet considerably under-examined by the historical community. Historians have lamentably tended to write purely in 11. historical terms, and the same is unfortunately true of economists. This thesis has attempted to steer clear of either extreme, and in so doing create some sort of synthesis. In terms of the precise linkage and the historical period, this thesis breaks some new ground, however to claim more would be to inflict a grave injustice on the many writers far more expert than I in this area.

For the general course of inter-war British history, I turned to the works of Mr. A.F. Havighurst and Mr. C.L. Mowat. [1] For a more specific overview of matters strategic and naval, it would be impossible not to avoid the exhaustive histories of Mr. N.H. Gibbs and Capt. S.W. Roskill. [2] In terms of books devoted purely to naval strategy, Capt. A. T. Mahan and Admiral Sir P. Gretton provide, respectively, the seminal work and the best post-mortem. The works of Admiral Sir H. Richmond are also of value. [3]

Messrs. Pollard and Robertson have surely written the complete work on British shipbuilding before 1914, while the post Great War era is covered best the volumes of Messrs. Jones and Todd. [4] The Transactions of the Institution of Naval Architects proved to be a mother lode of sensible thinking and analysis of the industry; one that seems to have been surprisingly neglected by other historians.

On a broader economic scale, the histories of Miss S. How son and Messrs. Middleton and Feinstein are by far the most original and informative sources for the inter-war period. [5] Mr. M. M. Postan's book on war production stands in a similar category. [6] Mr Corelli Barnett's challenging The Audit of War is an essential and ground breaking accompaniment to the above.

An equally ground breaking work is Mr G.C. Peden's British Rearmament and the Treasury, a work which is the authoratative source on the role of the Treasury. A third book of considerable interest to the historian of war and the economy is Mr A.S. Milward's War, Economy, and Society.

Biographies and memoirs are also most important in this area. The memoirs of the Earl of Avon and Sir Winston Churchill, whatever their faults, are most useful. [7] Similarly, Mr. K. Feiling's magnificent biography of Neville Chamberlain and Messrs. Middlemas and Barnes' study of Stanley Bald win were of particular use. [8]

The primary sources for this paper are very much of the garden variety sort: Cabinet Papers, Admiralty Papers, Documents on British Foreign Policy, and so on. The selection of secondary sources is also relatively unsurprising. The difference perhaps lies more in the mix than in anything else.

Finally, I wish to express my gratitude to the following people (however boring this may be to iii. the idle reader).

Tradition has it one should thank one's parents: in this case, an admirable idea. It was a most pleasant and satisfying diversion from the tried and true of corporate finance, and worth every bit of it.

My close friends also deserve a vote of thanks; in large measure for having abstained from becoming an anti-historical lynch mob. In the year I took to write this thesis, I am well aware of just how many times I slipped into the obscure or, dare I say it, the profoundly boring.

Finally, I wish to express my gratitude to Professor Robert Vogel, the man who rashly became my adviser. His wit and insight were invaluable, as was his sense of humour. iv.

[1] A. F. Havighurst Twentieth Cenwry Britain Harper & Row, 1962. C.L. Mowat Britain Between tbe Wars 1918-1940 Methuen & Co., 1955 [2] S. W. Roskill Naval Policy Between the Wars, Two Vols. Collins, 1968 & 197 6. N.H. Gibbs Grand Strategy, Vol. I H.M.S.O., 1976. [3] A.T. Mahan Naval Strategy Low, 1912. See also The Inftuence of Sea Power Upon History. Sir P. Gretton Maritime Strategy Cassell, 1965. Sir H. Richmond National Policy and Naval Strength••• 1928. [4] S. Pollard & W. Robertson The Britmh Shipbuilding l'nWales Press, 1957. D. Todd The World Shipbuilding Industry Croom Helm, 1985. [5] S. Howson Domestic Mmemry :Management in Britain 1918-1945 C.U.P., 1975. R. Middleton Towards the managed Economy••• Methuen, 1985. C. Feinstein The Managed Eoonomy O.U.P., 1983 [6] M.M. Postan British W. Production H.M.S.O., 1954. [7] The Earl of Avon The Edm. Memoirs: Facing tbe Dictators Cassel, 1963. Sir W.S. Churchill The Second World War, Vols. I-m Houghton Mifflin, 1948-1951. [8] K. Felling The Life ofNeville Chamberlain Macmillan, 1970. K. Middlemas & J. Barnes Baldwin Weidenfled and Nicolson, 1969. 1.

CHAPTER ONE 0 1HE NATURE OF 1HE SHIPBUILDING INDUSTRY I

The security of Britain and her Empire had, for centuries before the Second World War, been predicated on the assumption that it was necessary to possess sea-power; and on the unadulterated principle that there was a specific margin of strength, and thus safety, which it was necessary for the Royal Navy to maintain. This measure of strength could keep the seas clear for British commerce; deny the enemy those selfsame commercial and strategic advantages; allow Britain to grow strong and strike back. This margin changed as the diplomatic climate and technology evolved; as oak gave way to iron, sail to steam, as the need became to protect Antwerp from Germany and not France. The principle, however, remained steadfastly unchanging.

Essential to this strategic margin was the ability to build effective, modem warships. As such, the shipbuilding industry is a vital strategic industry. When Admiral the Earl Beatty noted at Jutland that "There's something wrong with our bloody ships to-day, Chatfield", [1] he was by the by admitting that the manner in which ships are built is just as important as the way in which they are used. Indeed this is a useful way of delimiting the topic of British shipbuilding as a strategic industry in the period 1918-1943. There was something bloody wrong with the industry. It experienced years of deprivation to 1936, and then, faced with rearmament and war, Britain's proud shipyards proved inadequate to the monumental tasks assigned them.

In order to understand the problems of this industry, its basic structure and nature must be examined. This industry imbued with the romance of the sea was governed by a number of economic facts.

These facts can essentially be sub-divided as follows. An understanding of the technical procedures relevant to the building of ships allows one to avoid facile economic judgements. An examination of the elements of the shipbuilding business - from the placing of a tender to cost structure - is vital to placing the pressures facing the industry and the response thereto in some kind of context. Finally, some grasp of the economics of the 'firm' and the industry make action or lack thereof infmitely more comprehensible. ·

Moreover, as government policy was formulated with the manifestation of these realities in mind, they become doubly important. Bottlenecks and inefficiencies take on added meaning 2. when their context is scrutinised. Waxing monomaniacal on the strategic importance of the industry without explaining its structure and nature would leave much that is important unsaid. There is little point in being the butt of Samuel Johnson's remark, "that fellow seems to possess • but one idea. and that is a wrong one". [2] In the realm of the national interest and the relevance of a particular industry - in our case shipbuilding - it never hurts to understand the other associated and equally crucial issues which impinge on decision making.

n

A finished, sea-worthy vessel is the fruit of the efforts of men trained in a variety of industrial disciplines. Steel is cast for this ship; light and mechanical engineering work in abundance are lavished on it; sophisticated electronics and navigational equipment sit cheek by jowl with the products of skilled craftsemen of wood. A considerable amount of scientific research and laboratory development related to rpopulsion, hull shape, control mechanisms and other areas underpins the whole effon. Complex cargo handling devices are placed on merchant shipping; lavish domestic comforts on liners; and delicate yet sophisticated weaponry of immense power on warships. The building of a ship is at once a son of industrial mid-level technology assembly industry, and the embodiment of high technology; it is on the one hand labour intensive, and on the other demands workers and office personnel of the greatest skill and competence.

Shipbuilding, especially in Great Britain, has its roots in a traditional craft. Even the Royal Dockyards, concerned with the fabrication of line ships since the sixteenth century, were craft shops. [3] This evolution meant that many of the industry's characteristics are historical survivals (in construction method as well as location of yard) which give it a character rather different from that of the typical engineering or manufacturing industry. Unlike industries who could build a factory and churn out a standardised product, British shipbuilders not only did much work in the open air, but also had to accommodate frequent changes in design and the necessity of production techniques far removed from those of the assembly line.

There are three principal ~tages in the construction of a ship. Each is markedly different from the others, and require the application of entirely different skills, methods, and workers.

i. Design and preparation for construction. ii. Creation of the ship's structure. iii. The fitting out of the ship and other finishing touches. 6. m

Shipbuilding has a rather special character, both organisationally and in the manner in which business is conducted. This sets it apart from the run of typical manufacturing concerns. Moreover the industry is subject to economic pressures substantially different from the manufacturer of, shall we say, Sheffield knives.

The most logical place to start an examination of the nature of the business is with the typical cost structure of a shipbuilder. As would be expected, there is some disagreement over this breakdown; nevertheless, the following two sets of figures appear to be reasonably comparable and can form a basis for discussion.

The first is from an economic historian of the period, and is somewhat vague:

input % cost of ship ------steel 15 labour 30 sub-contracted work 20 overheads 35 [14]

The second set of figures is from a 1965-66 Royal Commission of Inquiry into the industry. The figures, then, may reflect a slight change in the manner of construction and doing business, but on the whole they are the most accurate available:

(For vessels >5000 g.t.) input % of ship's cost ------shipyard overheads around 10% shipyard labour 15-20 steel 1S:. 2.0 main engine 10-15 other machinery 15-20 other hull materials & equipment around20% [15] 7. In a later chapter we shall see how in the inter-war period labour and steel costs varied wildly; even so, for budgeting purposes, this is what management could look at. (Though we shall also c see that modern management practices were scarce on the ground in places.) Given this cost structure, and the ability to schedule construction, management could submit a tender or answer enquiries on ship costs. This in itself did not guarantee anything approaching stability. As sea-borne trade occupies a sizeable chunk of total world trade - at least three quarters [16] - and sea borne trade makes use of the products of ship-yards, it does not take a great leap of insight or imagination (whichever the case may be) to conclude that the fortunes of shipbuilders are extremely sensitive to variations in world trade and ship usage.

The odd thing about the industry, one which differentiates it from its other manufacturing cousins, is that shipowners are for all intents and purposes unable to adjust shipping capacity in the short term. As ships take, at the minimum, some months to complete, fluctuations in world trade, and thus in demand for ship use, immediately reflect themselves in increased freight charges.

If one assumes that there is a certain minimum level of shipyard output, allowing say for fleet replacement, and a certain level of unused capacity [17], it is not an outrageous claim to say that the sum of these two figures does not represent more than a fraction of total world tonnage. Nor indeed do the sums, even if radically increased, for two years in a booming business cycle materially affect the total world tonnage. In effect, when times are good, or when times are bad, the construction of new ships tends to fluctuate disproportionally; even in relation to the sharp swings in world trade.

Analysis of the data has indicated that there is little evidence for supposing that the ship-owners place contracts with shipyards in anticipation of rising demand for the services of their fleet. The rule of thumb as regards new orders appears to be that freight rates have already experienced strong upward movement (with a concomittant fall in unused capacity) before new contracts are placed with the yards. This effectively predicates an increase in world, or at the very least regional trade. Jones in his 1957 study [ 18] concluded that the peak in demand for new tonnage generally is reached simultaneously with the peak in maritime freight rates. Naval orders, on the other hand, tend to be subject to more political pressures. As early as 1922 Sir Westcott Abell had enunciated a rather more simple version of this model. [ 19]

Orders placed at the top of the cycle are orders coming rather too late in the day. The extended construction period a ship requires almost invariably prevents these ships ordered at the peak of the trade boom to come into service in time. Usually they arrive in time to particpate in a cycle of 8. falling freight rates. [20] When the business trend continues downward, there is a tendency to lay up ships: usually, as would be logical, the oldest and least efficient members of the fleet. Thus orders for new ships placed in a booming trade environment tend, in the long run, to have only a regenerative influence on world fleets. Ships are ordered when business is good, they are delivered when business is turning sour, and by the time they have been fully integrated into the owner's fleet they are little more than modem replacements for (or minor increments to) existing capacity.

There are some very specific reasons for this state of affairs. Most of these reasons are financial in nature, centring as they do on the fleet owner's ability to raise the capital sums necessary to purchase new vessels; while others bespeak of a natural tendency on the part of fleet owners to avoid new orders until it looks as though existing capacity will be fully utilised. Here are the most common methods of fmancing a new vessel in the inter-war period:

- through the use of the fleet's own financial resources (largely cash reserves and amortization funds) - bank drafts or loans may be negotiated - the capital markets may be tapped in the form of a new equity issue or bond issue - the shipbuilding firm may agree to, in return for first mortgage on the vessel, a payment schedule (at fixed or variable interest) stretching over a number of years - fmance the vessel from a variety of sources over the construction life, allowing for, most commonly, five individual payments

All of these methods have one factor in common: they are most easily deployed in an environment where maritime trade is growing and freight rates are rising.

For instance, the firm's cash reserves will be healthiest after a period of healthy earnings. Similarly, the lending authorities in a bank, ever risk averse, will provide a loan at reasonable or market rates when business is good, and will demand a better rate of interest or be less amenable when business is poor. Capital markets have a similar prediliction towards paying for quality; thus an issue from a company in a booming shipping sector will be better received than the obverse. When shipping is in a slump, and the yards have a consequently diminished flow of orders they are less likely (or able) to help customers with the fmancing of purchases. Thus considerations of finance were a strong determinant in cyclical fluctuations in orders for new ships. 9. Another related consideration in the inter-war period was the rising cost of new vessels. That this was in part due to inflation, in part to advances in technology (though this had an offsetting effect on operating costs) did not eh ange the fact that new vessels cost substantially more. This c effectively made the financing process even more vital and difficult. For instance in the inter war period, the P & 0 Line made heavy use of new issues to finance new vessels, a course of action a later Chairman saw as new, as well as somewhat regretttable (a reference to the looming depression). [21]

The following figures for replacement costs illustrate the jump in prices:

Averages, by type, for original and replacement costs of tonnage lost, 1924. (£ '000)

Type Original Cost Replacement Cost ------Fast Mail & Passenger Liner 30-35 70-85.5 Passenger & Cargo Liner 20-30 50-70 Cargo Liners 12- 15 30- 35.5 Tramps 10-12 30-36 [22]

Given these various constraints in the ordering cycle, it is not hard to determine that a successful shipyard would have as hallmarks speed and reliability. Reliability, in other words, the ability to deliver the ship on time was vital, for it not only saved the fleet owner unnecessary expense, but it also allowed him to plan. If the yard could combine this reliability with speed - efficient and fast production - then the owner could bring the vessel into profitability so much faster. A yard which could build fast and on time could allow the ship owner to more easily take advantage of shifts in freight rates. As we shall see, British yards were not overly noted for these characterisitics.

Similarly, the yard's reputation for quality was a important factor in securing orders. Intangible, but nevertheless real, it often contributed to ordering decisions.

Another, very different sort of advantage, one which the British yards played to the hilt, were personal and informal relationships with fleet owners (many of whom were British). This allowed for much give and take in the production process, especially as regarded design changes. Changes once construction has begun are annoying, and cost the builder time, tempo, as well as money, but for this service some were willing to pay up to an extra 5%.[23] 10. This state of affairs meant that British yards tended to operate in a rather more unstructured environment than their continental or Japanese competitors. [24] This situation is best explained in terms ofproduct life- cycle theory. Product Life- Cycle Theory holds that firms evolve through a number of stages, or manifestations, in response to technological change and innovation.

The first stage in the cycle is known as the "innovations stage": a time when, in response to new techniques and growing demand, a number of small firms open up in or near major industrial cities. This allows technical innovation to be diffused and adopted through a process akin to cross-pollination, much as computer firms cluster in Slicon Valley or Silicon Glen today. This phase also allows the small firms access to the variety of necessary specialist services major industrial centres provide.

The second stage is termed the "growth stage". As the name would indicate, this phase witnesses the growth of small firms into larger organisms. However this growth is not accompanied by a change in the fundamental character and organisation of the company:- the tendency is rather to get more and bigger inputs for the productive process. This generally means that the firm, while now of considerable size, still makes use of sizeable amounts of skilled, craft- type labour. It is therefore unwilling to abandon those industrial centres where this skilled labour lives.

The final stage occurs when the relevant technology progresses to such a level as to render much of the skilled craft labour unnecessary. Efficient, automated productive processes allow a firm to move to comparatively low wage areas, and in the process gain the advatage of rebuilding the plant in a new, uncluttered, invarably more pleasant 'green- field' site.

The firms which move to stage three soonest generally deserve the title of technological leader; those that stay mired in the second stage become laggards. Generally, as the industry leaders capture more and more of the market, the laggards are forced to react: if only to to stay in business. Some attempt to secure a govemmentally mandated closed market, some attempt to match the changes in technology and business practice, while some go under. [25]

British shipbuilding opted to lurk in the second phase for rather longer than was healthy for it. Its performance in the inter - war years, and its wartime efforts amply demonstrated this. Skilled labour was the determining factor in the productive process (as we shall see); technology did not even stay relatively out of date, it became anachronistic; and the yards remained stuck in cramped, dirty inner city quarters reminiscent of the homes of its craftsmen. In the late 'fifties and early 'sixties, some years beyond this paper's focus, the days of reckoning came and the industry collapsed. Attempts at change were made at this late point, largely to no avail. Now 11. informed commentators such as 1be Economist periodically call for Britain to gracefully cede the manufacture of ships to others. [26]

This unstructured British approach to shipbuilding also raises a question of some importance when dealing with shipbuilding: capacity.

Capacity is an important element insofar as businessmen use it to determine production, economists use it to to determine the health of firms and industries, and politicians and historians use it to make sweeping generalisations. The trouble is that "capacity" per se has no accepted defmition. Not only is capacity measured in a number of different units, but it also revolves around questions of 'how much capacity does this firm possess?', and 'what determines capacity'. It is all rather bag-of-worms-ish, but nonetheless unavoidable.

Capacity is measured either in gross tons or deadweight tonnage. The first is a measure not of weight (as the name might lead one to believe), but of cubic capacity: more precisely, of cubic capacity in the enclosed spaces both on and below the deck of the ship. The rule is that 100 cubic feet= o111gross ton. Dead weight tonnage (dwt for the initiated) measures a ship's total carrying capacity in tons weight avoirdupois. This means that a ship is taken and loaded to its permitted load line - this means not only cargo, but fuel, fittings, passengers etc. - and somehow a dwt figure is arrived at. Here is a scale showing how gross tons and dwt not only differ • but differ substantially depending on the category of vessel.

Type of vessel Gross Tonnage Dead Weight Tonnage

...... _ ------tanker 'a' 33086 44800 tanker 'b' 74900 130 300

bulk cargo carrier 'a • 14900 39600

bulk cargo carrier I b ' 20750 53000

cargo liner 10800 16000

Queen Elizabeth 83 673 16880 [27]

This chart shows just how tricky information on comparative charts is. If one takes dwtls as the base measurement, then it would not be a tremndous gaffe to assume that tanker 'a I was much more of an effort than a 16 800 dwt passenger liner. However when one discovers that said liner 12. is the Queen Elizabeth - possibly the largest and most complex inter-war example of British shipbuilding and marine engineering - this statement seems ridiculous.

So much for capacity and its relationship to charts and graphs. However capacity has other uses. Economists, for instance, might worry about how much of British shipbuilding 'capacity' was in use at one time, and draw conclusions from this figure. The trouble is that there is really no agreement among economists over measurement and determinant factors of capacity.

Some might defme it as the tonnage which could be built if demand were sufficiently strong, and the necessary inputs (labour, capital, materials, etc.) were available on a sufficient scale to allow every berth and every worker and every machine to be fully employed. This is usually discussed in terms of a production function which represents a state of affairs where "the factors of prc.xiuction are fully employed". [28J Of course this does not take into account the fact that British shipbuilders liked to be able to make design changes; nor does it take into account the effect on costs of using out of date machinery or methods more deserving of the scrap heap than of employment. Another problem is that it is impossible, when examining highly individual creations such as British ships, to take into account the differences between an efficient mc.xiern ship (what customers want) and the largest ship a berth can handle. In any event, most firms were rather vague as to just what the largest ship a berth could handle was. [29] Indeed so many are the variables, and so vague the parametres, this form of capacity measurement is really only of academic interest.

A rather more sensible way of measuring capacity, or more correctly comparing capacity, is to place output for a given peric.xi in comparison to the highest output achieved in a given period in the past. If the period was near enough, and the business sufficiently unchanging, then changes in machinery and technique are not overly important. This is fme if one wants to compare, say, Vickers-Annstrong's 1930 figures to their 1931 figures, but it becomes rather chimerical after that. Consider how, if this technique of measurement/comparison were applied to the whole industry, just how scary the potential figures could be.

In the fmal analysis, perhaps the most logical manner to approach a firm's or the industry's capacity is to consider that the factors of production are never constant, and that capacity and output are determined by the scarcest factor. This is best demonstrated by the production constraints that began to be experienced as the aramaments program heated up in the late 1930's. [30] 13.

IV

By necessity any discussion of the structure of the British shipbuilding industry must allow sufficient space for the unions. Indeed so large do they loom that they require their own sub-section, as it were. While a listing of the plethora of combative unions may strike a rather dull note, it does serve to illustrate just how complex, in fact how very craft-based, was the whole structure of the ship-yard. So great was this complexity that eventually the unions themselves had to agree on a standard format for wage and work practice negotiation. At lesser levels they might engage in ferocious demarcation disputes, but when it came to wages this anarchy was institutionalised and channelled into a more general sort of bolshie-ness.

Unlike most other industries, the tri-partite nature of shipbuilding and the need for the deployment of myriad skills led to a situation whereby Britian's shipyards probably had at least one of everything. This became a problem when every craft, no matter how tiny, demanded the right to form their own union. What follows is a reasonably complete listing of shipyard and marine engineering unions. As this makes terribly dull reading, the casual reader can suffice it to note that this list encompasses twelve listed unions (with more lurking, unnamed).[31]

The frame turners, riveters, welders, platers, cutters and angle iron smiths clumped together in the United Society of Boilermaker & Iron & Steel Shipbuilders. This union was renowned for its unruliness and obfuscation: truly the most bolshie of an admittedly bolshie lot. Bamett has called them " ... that Old Guard which in 1960-1980 died rather than surrender.".[32]

The shipwrights and drillers, however, opted to form a completely different union. This was called the Ship-Constructors' and Shipwrights' Association.

The sawmillers and wood cutting machinists belonged to the inventively named Amalagamated Society of Woodcutting Machnists (though they began life in seperate unions).

It takes little in the way of imagination to decipher the nature of the Blacksmiths' Union, The Plumbers' Union and The Electricians' Union. Not to be left out, the cabinet makers, french polishers, painters, etc., each had their respective unions.

The design office was also unionised. Here the Association of Engineering and Shipbuilding Draughtsmen held sway. 14. Mind you matters in the engineering works were far from being as clear cut. The engineering workers tended to belong to either the Amalgamated Engineering Union or to the National Union of 0 Foundry Workers. Finally the semi-skilled workers in the yard gravitated either to the Transport and General Workers Union, or the National Union ~fGeneral and Manufacturing Workers.

All told their were about eighteen specifically shipbuilding unions (and this after the amalgamations of 1906-1910), with the specialist unions like the plumbers extending beyond the industry .[33]

In their turn, the employers banded together in the Shipbuilding Employers' Federation: an organistaion which concentrated on collective bargaining and lobbying. In the inter-war period it also helped gestate the National Sh ipbuilding Security Limited: a venture by which the industry hoped to reduce unnecessary capacity without resorting to wholesale write-downs.

Collective bargaining was a matter of longstanding practice in the shipbuilding industry. The industrial relations of the industry had, after the pell mell expansion of the pre Great War shipbuilding boom and a period of considerable industrial unrest [34], settled into a reasonably determinate pattern. Grievance procedures are an excellent example of this formalised structure.

In this example let us assume the unexceptional: some Boilermakers are peeved about something tenifically important such as the distance to the tea hut. The first stage towards a resolution of this conflict would be that a boilermaker foreman is made aware of the problem. It is his duty to bring this to the attention of management, and to arrange a meeting between the men concerned and a management representative. If this fails to secure a settlement, the process is ratcheted up and a meeting between representatives of the f1m1, a deputation from the yard employees' association, and officials from the relevant union ensues.

If the grievance is still unsettled a l.ocal Conference is convened. This requires representatives of the f1m1, local representatives of the Shipbuilding Employers' Federation, and local representatives of the unions concerned to meet and attempt to negotiate a settlement A failure at this level results in rather dramatic escalation to the national level.

If things have come this far, officials of the National Unions and the Employers' Federation in what is known as a Central Conference. A failure here requires that government mediator (often the Industry Chairman of the Ministry of Labour) is called in to preside over a Gen.eral Conference. c 15. This tendency towards national settlement of grievance and wage disputes came to its ultimate and logical end with the 1941 National Uniform Plain Tune Rates for Junior Employees. This 0 rather charming and feudal document, worked out at a General Conference, resembled the arrangements worked out of old between the King and the unruly guilds taunting him from behind their walled city. It decreed that, regardless of location or experience, junior employees were to exist under a general, fixed and uniform scale of wages and working conditions. The key determinant factor in assigning a junior employee a niche on this scale was age!

Yet however horrifying all this labour intransigence, bullying and stupidity sounds, it serves one well to remember that working in the yards was a dirty, noisy, even dangerous occupation; much of which took place out of doors in the delightful northern British climate. The communities in which the craftsmen and their families lived were usually tree-less and bleak terrace housing of varying quality. Under such circumstances small privileges can assume considerable value. The well known tribal instincts of the British worker contributed to this by preventing improvements (or original thought) through the accusation of "givin' yerself airs". These were not expensively educated economists or historians unhindered by near tribal circumstances, eager for industrial analysis. [35]

V

The fmal element in the economic environment of the British shipbuilding firm was its relation to macroeconomic policy. While later chapters will deal with economic policy as a whole, it is best to deal with one or two precise issues at this point.

In the first instance it is important to remember that the popular image of government, despite the growing strength of calls for state activism, was as the arbiter and protector of the nation's financial health. Britain was severely indebted, wracked by the need to spend scarce funds. The upshot was that British shipbuilding remained by and large unsubsidised and unprotected by tariff barriers.[36] Indeed among some at Whitehall and in Parliament, the reduction of expenditure became, until the mid 'thirties, a sort of inviolate principle beyond which all was reductio ad absurdum. [37]

This does not mean that there was anything approaching unanimity, or that the level of public expenditure on subsidies, regional handouts and social programs did not rise enormously. [38] It merely meant a conscious decision not to be overly profligate was taken and, by and large, adhered Balance of Payments Type of Balance 8 Merchandise 6 El 4 EJ lnv1s1bles 2 o~~~~~--~~~~~~ ~ Current -2 -4 ., .... ~.,.,,·'~,. -6 .... 9,"'. /.#,-,•o' . ,..,.,.;,,, ; ·~,.. · -8;--~~~~~--~,~~~~~ 1913. +9.31. 1929 1931 1933 1935 1937 0 1930 1932 1934 1936 1938 1361 17. to. In the context of the shipbuilding industry, this meant that there were unlikely to be many handouts - in spite of the furor over Jarrow- and that market forces by and large were to be the detennining factors. Part of the by and large was that in the mid thirties - when the industry was c on its last legs and was due for a shakeout destined to make the losses of the twenites seem mild - military orders stepped in to save the day for inefficient firms.

British exports in this period were largely capital and high income, high value-added goods. The overseas markets for the latter were highly income elastic, which is a rather convoluted way of saying that rather less of them were bought when other countries' economies upped sticks and dashed into recession. British imports were still mainly things like food and the raw materials needed for manufactures. The income elasticity of these imports was much lower: e.g. it was much harder to get away with not buying them, no matter how bad things got. [40] These home truths are demonstrated by the fact that in 1929 Britain's current account surplus was £96 million; whereas in 1931 she had a current account deficit of £103 million.[ 41] Effectively this shows that when times were good, when the 'twenties were roaring, Britain was exporting all sorts of manufactures, sophisticated services and capital thereby creating a lovely trade surplus. Two years later, when the world economic picture was a tad gloomier this had entirely reversed itself.

The graph on the opposite page, which shows the Balance of Payments as a percentage of Gross Domestic Product from 1929-39, show just how chaotic the trade picture was. At no time in this period is the 1913 surplus of9.3% ofG.D.P. equalled. In tandem with economic downturns. the current account (the sum of the trade in merchandise and invisible goods such as banking) slipped into deficit. The worst periods were 1929-33 and 1937-38.

These figures show that while invisibles (such as insurance, financial services, etc.) remained consistently strong earners, exports fluctuated wildly. In effect the British economy was very much export driven, and the exports by and large happened to be high-income goods.[42] This export mix also meant that Britain was unlikely to achieve full employment so long as the world economy and world trade was depressed.

Since in the int~r-war period the current account balance was often in deficit, and the war debt still a lurking threat, and at least one million were unemployed, government reflation of the economy (and this is true for substantial aid to depressed industries) could only succeed if Britain's export industries suddenly enjoyed tremendous success and/or imports were curtailed in some degree. Remember that even after 1931, when tariffs were instituted in many areas and a flexible floating exchange rate was adopted, the Treasury still had to walk the tightrope between c bringing down unemployment and trying to keep the current account in some sort of balance or 18. near balance. Huge deficits were frankly out of the question. Effectively English industry would have to restructure itself, stan exporting in greater volume, and do this all without much government assistance.

In the context of shipbuilding - an obvious contributor to exports when trade was good and ships were being ordered - this meant that there was little incentive to help it when the current account was in the black, and little room to help it when the current account was in deficit. Naval orders as a means of boosting employment (or subsidies for that matter) were regarded by the Treasury in this manner. Essentially the decision was that steps to manage the financial risks afflicting Great Britain were more important than the preservation of capacity in a strategic industry; and later this view held even when there were obvious military risks. [43] In any case, the shipyards had a reputation for sloppy management and bolshie unions: very much a case of 'high time the clean up their act' as it were. The reaction to the collapse of Armstrong in 1926-27 was very much along these lines.

An economist examining the period [44] has shown that, comparing the 1929 and 1937 unemployment figures, cyclical unemployment had been eliminated by the later date. Nevertheless there were still many hundreds of thousands unemployed: in effect the unemployment was structural to many old, export driven industries. This meant that boosting aggregate demand would achieve little more than a boosting of inflation. Moreover even were this not true, the budgetary constraints made extra expenditure like this impossible through the threat of crowding out. Given a relatively fixed money supply, an increase in bond sales to finance a higher debt could only be achieved through higher interest rates (making them more attractive to buyers); but higher interest rates would crowd out an equivalent level of private investment, which after all was interest rate sensitive. The option of printing more money raised the sceptre of the horrifying German inflation of the early 'twenties.

The government did make some stabs at responding to economic distress in areas where the export industries were hard hit; but it took the form of an inexpensive political palliative known as 'Regional Policy'. Regional policy sounded good, was less dear than the alternatives, and addressed the problems of depressed regions rather than depressed industries. In the long run, of course, it really was all quite silly. As a means of keeping expenditure lower than it might have been- usually not such a bad thing, and at the time a course of action possessing compelling logic- it was fine. Unfortuanately as a policy it did not make a terrific amount of sense, nor did it truly tackle any of the problems of decaying industries and of their present and past employees.. Here is something of the chronolgy of regional initiatives: 19. 1928 The Industrial Transference Board created to assist unemployed workers in depressed areas to move to areas of greater economic opportunity.

1934 The Special Areas Act passed. This was an attempt to lure new and profitable industries to depressed areas via subsidy.

1936 Trading Estates were established in Special Areas as an incentive to the creation of employment.

1937 The Special Areas (Amendment) Act is passed, extending the program's scope and funding.

1939 Lord Justice Barlow recommends in his Report on tbe Distribution of Industrial Population that a form of regional policy be followed, with the government taking an active role in the siting of industry. This forms the basis for post - war policy and economic planning. [45]

The program was of limited economic value for a variety of seemingly insuperable reasons. Firstly there was a "discernible mismatch between labour shed by staple industries and that required in expanding sectors". [46] Secondly, prolonged unemployment had had a qualitative effect on the quality and employability of the local workforce. One may be right in complaining that these industries needed massive restructuring, but neither they nor the Treasury could spare the necessary funds if shipbuilding (let alone other industrial basket cases) were to be revived. Furthermore, when rearmament started, factories and labour were at times in different places.

Another problem was that at the time there were still serious gaps in micro-economic theory, making it difficult to work out and present a case for industrial restructuring; most especially when these firms returned to profitability with an increase in overseas demand. For instance classical economists had long talked of 'economies of scale' and their importance, or of 'efficient scale', but in the 1920's and 1930' these were widely discussed as being "empty boxes of economic theory". [47] The same applied to conceptions to conceptions of return on investment (there was very little in the way of formal management training in Britian at the time, and a corresponding inability to make accurate business projections).

In any event, as we shall see, the politics of the period precluded the consideration, let alone implementation, of novel solutions to structural problems. Industry tended to view overseas demand as the only problem. There was also the natural suspicion on the pan of business (among others) towards government intervention and an increased national debt. At the time there really did not seem to be much more in the way of options (save amidst the far left) bar muddling through the 20. financial minefield that Great War had passed on to the nation and hoping industry did as best it could. Any discussion of ship building in the inter - war period and its many and manifest wartime flaws has to bear the reality of the situation in mind.

VI

When Messrs. Barlow and Bentham addressed the problems of the shipbuilding industry in 1942, they were faced with a series of companies who, by and large, had themselves been walking a fine line along the precipice of business disaster for some years. That these firms had severe structural problems was a given - such problems will be examined elsewhere in this paper - but they also had operated in a rather taxing environment for some years. The very nature of building ships dictated that pure American assembly line efficiency was hard to achieve unless many many identical boats were to be turned out over a given period. The fact that the industry began as a craft had bequeathed a legacy of tiny and troublesome unions. Its growth during the anarchy of the Victorian industrial boom had resulted in cramped yards and outmoded technology. The economics of the industry and the constraints on British fiscal policy prevented much change in this state of affairs. Simple ex facto decrees that this and that in the way of deep changes ought to have been made fail to do justice to the complexity of the situation. As we shall see Mr. Barlow was presented with a desperately ill industry, and for this many were to blame. 21.

NOTES fDB. CHAPrER ~

[1] Remark to Lord Chatflled during the battle of Jutland: Another of Beaaty's battle-cruisers had just blown up, and the English shells were failing miserably. It is quoted in Winston Churchill The World Crisis vol. I, Macmillan, 1924, p. 129; see also Lord Chatfield's reminiscences on problems with ship design in The Navy and Defence volume I, Windmill Press, 1942. [2] Though this thesis is hardly meant to be Imlac to someone elses Rasselas. [3] P. Macdougall The Royal Dockyards David and Charles, 1977 passim (especially the photographs) demonstrates just how unlike a factory, and how much of a craft, the whole process of creating ships was until the mid-nineteenth century. [4] Crmd. 2937 Shipbuilding Inquiry Committee 1965-66, Report Chairman Mr. R.M. Geddes 0. B .E., henceforth referred to as the Geddes Report. P. 13. See also Pratten The Economies of Scale in the Manufacturing Industry, Cambridge, 1972, p. 132 for a comparison with the cost structure for the motor car industry. [5J Geddes Report, p. 13, gives the figure as 15-20%, whereas Parkinson, writing in N.K. Buxton and D.H. Aldcroft (ed.) British Industry Between the Wars; Instability and Industrial Development Scolar Press, 1979, p. 83. gives the figure as 30%. [6] M.S. Moss and J.R. Hume Workshop of the British F.rnpire Engineering and Shipbuilding in the West of Scotland Fairleigh & Dickinson University Press, 1977 have some marvelous archival photographs of the manner in which the towns crept up on the yards. [7] B. Jones Shipbuilding in Britain Mainly between the Wars University of Wales at Cardiff, 19 57 deals with the machinery used in a rather general way in his chapter on the construction of the ship. [8] See Wa1ker writing inK. Pavitt (ed.) Technical Innovation and British Economic Performance Macmillan, 1980, pp. 171-172. [9] C. Barnett The Audit of l\3' London, Papermac, 1987 laconically notes on page 122 and in a footnote on page 317 that the 'mate' was still kept on, even after he had become completely irrlevant. [ 10] Gun mounting required extremely specialised and large scale cranage and assembly areas. As a result it was the province of but a few firms, something often forgotten by advocates of regional policy who sought to distribute military contracts. See the description of the Parliamentary questioning following the Jarrow March in Blythe The Age oflllusion. [ 11] See note 5 for the references. [12] Jones p. 41 demonstrates using Lloyd's Register figures that oil powered marine engines were placed in only 26.1% of all vessels 100 gross tons and larger in 1922-23. This figure rose to 51.4% by 1937-38, but this still lagged behind other countries. 22. [13] F. Capie ''The British Tariff and Industrial Protection in the 1930's", p. 93, in C. Feinstein (ed.) The :Managed Economy, Oxford, 1983. [14] Parkinson writing in Buxton &, p. 83. 0 [15] Geddes Report, p. 48. [16] Various authors, Jones, Parkinson, etc., place the figure as between 70 and 80%. [ 17] The question of capacity is extremely tricky, and will be dealt with at leisure later in the discussion. For the moment let it stand that there is some slack in the system which can be taken up. [18] Jones pp. 33-37. See also the Geddes Report, p. 30. [19] Sir Westcott Abell "Merchant Shipping and World Commerce in Relation to Sea-Power" Transactions of the Institution of Naval Architects, Vol. LXIV Institution of Naval Architects, London, 1922, p. 1. [20] IBID [21] R. Edwards Studies in Business Organization Macmillan, London, 1967, chapter by the P&O CEO on his firm. [22] Liverpool Steam Ship Owners' Association, Amual Report, 1924 February, 1924, p. 14. [23] Geddes Report, p. 30. [24] IBID, & p. 45 also. [25] Jones pp. 49-50 sums up the theocy; a more analytical view of the product life- cycle may be found in any reasonably advanced price theoty text. [26] The Economist more or less mentions this in evety article to do with British shipbuilding, indeed in any article to do with shipbuilding. Representative instances are: 23rd January, 1988, etc. [27] Geddes Report, p. 168. [28] R. Dornbusch etc., Macl'OeCOilOIIlic. McGraw-Hill, Toronto, 1978, p. 463. A production function might be written as follows: x=f(vl, v2, ... , vn;-k) where x=output; vi{i = 1, 2, ... , n) is the weekly rate of input of the ith element of production (for instance a particular element of production such as steel of a specified quality, or the efforts of a skilled shipwright); -k is a vector whose elements represent the values for items such as workshop buildings, ten ton cranes, management input etc.

Asimakopolous (Microeconomics, Oxford, 1978, p. 161), from whom this function is drawn, then goes on to note that "The symbol-K represents many heterogeneous elements and cannot be expressed in such a simple fashion.". In other words, modern economists can do their sums with the aid of fancy 23. computers and econometric models:- devices the economists of the 'thirties most decidedly lacked. [29] See Geddes Report passim pp. 40-45. [30] M.M. Postan British ~ Production, HMSO, 1954, chapter one passim. [31] See Jones pp. 158-162. [32] Bamett p. 122. [33] S. Pollard & W. Robertson, The British Shipbuilding Industry 1870-1914 Harvard University Press, Cambridge, 1979, pp. 158-159. [34] mm pp. 165-167. [35] Television interview of Beryl Bainbridge, Realities, T.V. Ontario, 26th August, 1987. [36] For instance in 1921, the 'Safeguarding of Industries Act' set out a regime of duties designed to protect 'key industries'. Shipbuilding was omitted from this list. [37] See, for instance, the comments of the Hon. D. Craddick, M. P. in response Sir Alfred Y arrow's speech "Notes on our position as a shipbuilding country", Transactiom of the Institution of Naval Architects, vol. LXll, p. 61. Sir Alfred had made a number of reccomendations and predictions which had more to do with industrial restructuring than anything else (with some mention of tax policy). Mr. Craddick missed the point entirely, and instead of discussing Sir Alfred's proposals to restore the strength of the industry, he snippily noted that the deficit, through reductions, might well be £7 50 millions less this year; therefore invalidating some of Sir Alfred's conclusions. It was a sort of austerity as cure- all view. [38] Income elasticity is much better defined in Dolan and Vogt (p. G-3) as "The ratio of percentage change in the demand for a good to the percentage change in the per capita income of buyers." [39] R. Middleton Towards the Managed Economy Methuen, 1985, p. 28. [ 40] IBID, p.26. [41] a perusal of Philip Gee (ed.) The Industrial Yearbook 1922 Hammond, London, 1922 easily demonstrates this fact. Just look for the complaints by manufacturers about foreing markets and foreign competition in those markets. Shipbuilding was especially hard hit. see p. 325 "many of the foreign firms being temporarily in an advantageous position by reason of cheaper material, lower wages, longer working hours ... ". These advantages proved to be durable even after the Pound was devalued. [42] Hancock and Gowing The British Wcr Economy HMSO, 1949, p. 63 and Howson Domestic Monetary Management in Britain 1918-1938 Cambridge University Press, 1975, p. 120-122 deal with this in greaterdetail. [43] See, for instance, the references to this crisis in the November and December, 1926 editorials of The Economist. [44] Richardson The Ecooomic Recovery mBritain, 1932-39 Weidenfeld and Nicolson, London, 1967, pp. 32-39. 24. [45] see G. McCrone Regional Policy in Britian Allen and U nwin, London, 1969 and A. Hoare The Locatioo of Industry in the United Kingdom Cambridge University Press, 1983 for a more detailed discussion of this process. [46] Middleton, p. 30. [ 4 7] J. Pratten The Economies of Scale in the Manufacturing lndmtry Cambridge University Press, 1971, p. 1. 25. CHAPI'ERn\0 SHIPBUll.DING AND 1HE BRITISH ECONOMY, 1918 • 1936: 'WE OUGHT 10 'AVE LISTENED 10 OUR ALFRED'

I

"In Apri11920, all was right with the world." announced Mr. R.H. Tawney some years later, "In April, 1921, all was wrong". [ 1] Admittedly this overstates the matter, Mr Tawney was a partisan of Labour, nevertheless his remark captures something of the dramatic manner in which economic conditions suddenly went sour. This was especially true of shipbuilding.

The war ended and, some rather unruly industrial fracas' aside, the shipbuilding industry enjoyed a peacetime boom unlike it had ever enjoyed before. Shipowners were paying, for all intents and purposes, wartime prices for merchantmen with which to make good the severe losses of 1914- 1918. In 1919 the market value of a 7 500 dwt steamer was £232 000, [2] and an awful lot of steamers were coming off the slip ways. It was estimated that 2 700 000 gross tons of shipping were needed by British fleet owners, and another 2 213 000 gross tons by foreign shipping magnates, if world tonnage was to be restored to its 1914level. [3] Indeed in early 1920 Sir Jarnes Mackenzie, Managing Director ofVickers' shipyard concern at Barrow, rashly announced to the Board of Directors of the parent company that 'We are practically assured of work for ten years at Barrow, at a profit of not less than say ten per cent.". [4] Rash because this forecast was wildly innaccurate: 1921 saw many a blank page in order books and a collapse in prices. Rash because it resulted in his dismissal. He ought to have listened to Alfred.

n

Since 1945 there has been a growing body of historical literature highlighting the numerous shortcomings of British shipbuilding. In fact many before this author: have have managed the not tricky feat of relating these shortcomings fluently, well, and after the fact. This was not the case with contemporary analysts: most of the prognostications for the industry written before the fact tended to be wrong, written as they were without fear or research. One of the few to . say anything sensible after the war was Sir Alfred Y arrow, Bart., of Yarrow Shipbuilders. In 1920 he gave an address to the Institution of Naval Architects entitled "Notes on our economic position as a shipbuilding country ... [5] While the title was ponderous, the speech itself was most remarkable: rigorously analytical, wonderfully prescient, and largely ignored. 26. He began his talk by repeating the question which everyone was asking: "how long will the boom in shipbuilding last, and what will be the situation when it ends?" Having recognised that there was an abundance of rampant optimists such as Mr. Mackenzie, such an opening is already sounding something on the order of a cautionary note. Sir Alfred's answer was really quite simple: the boom will continue so long as world trade requires more in the way of tonnage, and the British yards can provide this tonnage more cheaply than foreign competitors.

World trade, he noted, is a fmancial and commercial question and must be regarded as such. The price of British built ships, however, was very much a national question dependant upon the general economic position; and more specifically upon the efficiency of British yards and allied industries.

This said, Sir Alfred ran down a list of grave problems facing the nation and the industry. His first target was labour productivity. Starting from the premise that workers must have enough to live on, he then asked "how much can we afford to pay and still stay in business?". The figures certainly did not encourage him: for instance in 1913 the weight of steel made per shift was in the ratio of England 1: U.S.A. 1.5: Germany 2. This was not solely a labour question (it was also a matter of investment in efficient and modern capital plant), nevertheless Sir Alfred saw a clear pattern of high wages and low productivity that could lead to a fall in orders, and thus employment. [6]

He then went on to discuss, at length, the serious level of national indebtedness. Using figures drawn from the Treasury returns, he discussed how this could act as a drag on the economy, but warned against short sighted punitive taxation as a means of rectifying the situation.

The third in this string of problems was, interestingly, the failure of British shipbuilders to engage in technical experimentation. It is with a tone of wonder that he reminds his audience that they have been very tardy in making use of "the advantages ot be secured by investigations carried out at the Experimental Tank at Teddington. ". He urges that scientific investigation be encouraged , however:

I venture to think that nothing will be seriously accomplished to remedy this deficiency until science is more generally taught in our schools, and to ensure this a greater number of the headmasters must be drawn from men trained in science rather than from those trained in classics. [7]

Having identified these problems, Sir Alfred then proceeded to enumerate a series of industrial 'reforms' through which the health and longevity of the British shipbuilding industry could be 27. assured. More bluntly, he hoped that the industry would restructure in such a manner as to be able to "build ships cheaper than our competitors" and to create a simation wherein shipowners were "able to order ships from us instead of from abroad". [8] 0 This required that, in the first instance, Britain keep well to the forefront of naval architecture and scientific research. Secondly he urged yard-owners to adopt the "view that among our present competitors are the U. S. and Japan (and, later on, Germany), where the most up to date equipment is to be found in their shipyards and engine works.". He urged that British shipbuilding firms must "adopt the most modem machines, and, where old ones exist which are costly to work, take Lord Fisher's advice and 'scrap the lot' ". [9]

This said, Sir Alfred went on to urge for the establishment of a dialogue with labour: a surprising thing to suggest given the inherant hostility of industrial relations in the yards. "Firms", he posited, "might take more interest in the welfare of those in their employ, and by extending more human sympathy to them in their daily business life, inspire mutual confidence.". [10]

Of course he could not leave the question of labour at that. He went on to say:

I would once more call attention to the heavy responsibility that rests upon those who make restricitions on labour, which restrain our 0 artisans from doing their very best, by insisting on arbitrary lines of demarcation, or by reducing output, or by preventing those who can and are anxious to work - both men and women - from so doing, and thus render it impossible for our shipbuilders to meet foreign competition.

This criticis~ was more than justified by the obvious stupidity of the industry's labour arrangements. His criticism of arbitrary demarcation, and plea to allow women into the yards (made at a time when of prosperity) presage some of the central problems of the industry in World War Two. What he said in a following sentence, however, proved to be wildly wrong.

In the face of these facts ... [ when] the better informed British working­ man, for the vast majority are men of intelligence, ... come[s] to the conclusion that slackness will not only imperil the nation, but will injure their fellow - workers, they will, I feel cenain, respond to the demands made upon them. [11]

The reaction to this speech by the board of commentators was rather mixed. A Member of Parliament, for instance, was mildly incensed by Sir Alfred's worries viz. the national debt. A 28. more positive reaction was from Prof. W. E. Dalby, who praised the calls for more human sympathy. Conversely, a Mr. W. Whitting supported the calls for a restructuring of business 0 practices. He criticised labour's erroneous belief that cutting output would secure an increase in employment; but then went on, rather unimaginatively, to state that he found it harder to refute union claims that greater use of piecework, and the introduction of much more in the way of modem technology and semi-skilled labour would decrease employment. [12]

Interestingly, the labour representatives at this meeting were generally more effusive in their response to this speech. It is instructive to quote the comments of one Mr. Lynn, a labour representative and visitor to the meeting; for they highlight some opportunities, nebulous as they might have been, which were squandered.

I am in what we [labour] commonly look upon as the camp of the enemy.. .I have been sitting here listening to what has been said, and the conclusion I have come to is that you fellows are not such a bad lot after all .. .I am not so particular about the figures given in the paper and the question of income tax, and all that kind of thing. What I am really interested in is the workers.

0 Mr. Lynn continued by saying that workers don't like being known as numbers, and that he was surprised and pleased that some employers don't like that either.

I am a trade unionist from the word "Go", but I draw the line at craft unions; they should have been buried long ago.

He also expressed dislike for 'Federation Men'; urging that employers and employees combine to keep them out. Furthermore, Mr. Lynn advocated

the formation of Shops Committees representative of all departments in each factory.

These committees would, along with foremen and junior management, meet the senior exucutives to discuss pressing concerns.

I believe that employers lose much valuable information through the bad practice amongst employees of keeping as much hidden from "the governor" as possible ... X Of British Shlpbui1d1ng Output Sold to Foreigners. 25

...,~ 20 ~ Cl. ...,~ ~ 0 15 0 -...,~ 0 I- 10 """0 M 5

04-----~------~----~------~----~ 1880 1890 1895 1900 1905 1910 [ 15] 30. Mr. Lynn closed by saying that since workers and mangment had fought side by side in the trenches, they ought to be able to co-operate now. You may stay in your mansion, he continued, but for heaven's sake let me better my lot. [13]

It ought to come as no great shock to the reader that the industry failed to follow this excellent advice. The rush of wartime orders and the immediate post war boom obscured serious structural flaws and the corresponding need to rectify them. Sir Alfred Yarrow was merely encouraging the progression of flnns along the lines laid out in chapter one. His words probably rang a tad harsh in the 'never had it so good' type attitude so prevalent in 1920: an attitude soon to be rudely deflated.

m

On the eve of the Great War, the British shipbuilding industry was a £48 million industry and a major employer. [14] It had grown in tandem with the doubling in world trade (and fleet size) which, interrupted by the usual gyrations, had occurred over the previous forty years. A brief examination of the statisitical record of this growth is probably the most effective method of seeing just how extensive and rapid the expansion of the industry had been.

The graph on the opposite page demonstrates how, even before the war, orders placed by foreigners in British yards fluctuated wildly; though the secular trend was downwards. This is indicative of the growth of foreign competition, and hits at some of the long term problems the British industry was required to face in the 'twenties and 'thirties. 31.

The following, more detailed, set of figures showing the relative position of the British industry sheds more light on this troubling troubling trend:

Mercantile Shipbuilding Output, United Kingdom and the World in '000 grt. 1892-1913 (adapted from Lloyd's Register) U.Kas% Year U.K. France Germ. Holland Norway U.S.A. World of World ------1892 1110 17 65 14 25 63 1358 81.7 1895 952 28 88 8 13 85 1 218 78.2 1900 1442 117 205 45 33 334 2304 62.6 1905 1623 73 255 44 53 303 2 515 64.5 1910 1143 81 154 71 37 331 1958 58.4 1913 1932 176 465 104 51 276 3 333 58.0 [16]

These other nations were playing industrial catch-up with Great Britain - often behind autarkic tariff barriers. This protectionism, however economically insensible, does not change the fact that these foreign yards tended to be better planned, equipped with more modern technology, staffed by more pliant workers, and run by better educated managers. The result was the evident rapid and dramatic decline in the relative position of the British shipbuilding industry. A tumble from roughly 82% market share (bearing in mind yearly fluctuations) to somewhere in the vicinity of 58% surely counts as a significant instance of industrial decline. The warning bells were ringing for all to hear.

Under the circumstances, the management of the British yards ought to have been pondering the fact that unless greater efficiency (and thus competitiveness) was achieved, business would continue to flow to more efficient, lower wage-rate yards abroad.

This decline in market share did not signal the immediate demise of the industry in Britain; indeed the vast majority of the constituent firms remained consistently profitable. The issue was really that a change in management and production methods was in order if British shipbuilders were to ensure their survival in the long term. By the turn of the century the nature of the world shipbuilding industry had fundamentally changed. David Landes has shown that the German yard owners, for instance, operated under an entirely different set of assumptions than did their British counterparts. These German industrialists tended to have longer time horizons than their British competitors; taking into account exogenous "variables of technological change which their British 32. competitors held constant.". [ 17] The ground had moved and it was up to the descendants of those self-taught founders of the British industry to take notice.

There were many forces preventing such industrial evolution. One such force (much praised at the time) was the close linkage between British fleet owners and the shipbuilding firms. Long term relationships developed; often resulting in the exchange of seats on the Boards of Directors. Some fleet owners even took out equity stakes in yards. Admittedly these relationships gave yards a reasonably dependable source of future orders, a more predictable earnings stream, and a marketing advantage over foreign f:ums. However they also tended to encourage a 'steady state' · view of industrial prospects, while the conservative and predictable tastes of the fleet owners discouraged thechnological innovation.

In spite of this attitude, the British yard owners continued to earn an adequate return on their capital. As they saw it, there was precious little justification for a change in their ways. Nor was management alone in perpetuating the comfortable status quo. In spite of a period of consolidation among the craft unions around the turn of the century (weeding out as it did some of the ludicrously small labour organisations without affecting the basic concept of craft unionism), the unions were also becoming very set in their ways. Heavy use of skilled labour and basically mid-Victorian technology remained the industry norm.

The market failed to discipline this inefficiency out of the British industry because rising world trade, the accompanying demand for new tonnage, and the "Naval Race" with Germany meant that even the grossly inefficient could turn a profit. Indeed generally rising demand even allowed the yard owners to grant substantial pay increases to their workers.

Real earnings of all workers vs. earnings of joiners and joiner machinemen at the Leven Shipyard: 1875-1905. (£per week)

year All workers Leven % by which Leven wages exceeded the average ------1875 £1.11 1.12 9.01 X 10 -3% 1885 1.13 1.46 29.2 1895 1.36 1.80 32.4 1905 1.42 1.91 34.5 [18]

The industry was rapidly becoming exceptional on two counts: it's technology and management practices were lower, and it's wages substantially higher than was the British norm. These rising 33. wages were reflected in the cost structures of finns in the industry.

Total labour costs as a% of total hull costs: Wm. Denny & Bros.

year % of hull cost ------1881 27.23 1890 30.73 1895 33.50 1900 35.55 1905 32.77 1910 34.92 1913 36.48 [19]

Admittedly some of this increase can be explained away by the growing complexity of ship design, and the resulting need for the workers to undertake more difficult procedures. Yet the pace of technical change is not that significant relative to hull costs. Hulls changed relatively little in the manner of their assembly in Great Britain: - they were riveted together in their berths. The increasing sophistication of naval architecture and equipment manifested itself more in the propulsion system and during the fitting out process. The hull remained a great lump of fashioned and assembled metal plates. For these reasons one can extrapolate sharply rising labour costs from the above table.

Of the industry in wartime, little need be said save that orders for warships and merchantmen flowed in at a furious clip. Government expenditures were enormous, for ships were desperately needed, no matter how inefficient the producer. The war proved to be a delaying action: a spending spree postponing the inevitable crash. For the shipbuilders and the nation as a whole, once the intoxicants of deficit spending were f'mished, the party over, and the 'high' of the boom evaporated, the hangover would prove to be apalling.

IV

The Armisitice of 1918 excited great hopes among shipbuilders world-wide that there would ensue a rash of orders to replace the war-time losses. The numbers were, theoretically speaking, there to support this optimism. On 31st October, 1918, it was reckoned that total British tonnage was fully 18% less than the pre-war total; moreover, when these calculations were restricted to ocean going tonnage, this figure rose to a startling 25% less than the 1914 total. [20] Indeed, 34. most of 1919 bore out the optimists' predictions. Demand for shipping rose in tandem with the freeing up of trade and the return to the civilian economy.

0 What defeated this earnest hope for a sustained period of orders for new vessels was the very nature of the boom and the accompanying revival in trade. The shortage of available shipping, which had become quite serious by March of 1919, was not in large part due to a shortage of ships. The exigencies of supplying the war effort had caused the postponement, on a widespread and massive scale, of all variety of repairs to vessels: so much so that it was later calculated that in February of 1919 12% of British sea-going tonnage was laid up awaiting repair. [21] The pent up civil demand for shipping was also acting as a market distortion, causing backlogs in the port. This backlog only served to aggravate the chaotic conditions in the harbour, struggling as they were to effect repairs and return to a peace-time footing. The new orders in 1919 represented an intagined, and incorrect, need.

Thus this immediate 'boom' in trade in the immediate aftermath of the war was in large part artificial. This was made manifestly clear by the fact that, starting in late 1919, world trade slowed dramatically. By that time, the backlog in trade had pretty much been cleared up. The shipbuilders were, by and large, expecting more in the way of fatter order books; while exporters were starting to notice their backlogs dry up. Even more ruinous for the industry was the fact that this boom, as booms were wont to do, ate up future orders: orders that would now be long postponed. The ensuing divergence of assumptions between exporters - who neither wanted nor needed new shipping capacity - and the optimistic management of shipbuilding firms led to a sudden glut of productive capacity. For the first time, trade flows and new maritime construction had moved dangerously out of sync. Poor planning and lack of consultation by shipbuilders and fleet-owners had exacerbated an already bad situation. To paraphrase Dorothy Parker:

Oh, life is a glorious cycle of song, A medley of extemporania, And shipbuilding is a thing that can never go wrong, And I am Marie of Roumania.

Theory tells us that a peak in new orders for merchant tonnage usually indicates an imminent decline in world trade. The artificial nature of this boom had sharpened both the upward and downward cycles of this industry.

The following figures make the point rather more prosaically. Compare, for instance, the increase of trade in a given year, the amount of newly constructed tonnage, and the amount of old tonnage consigned to the scrap heap. 35.

New New New British Broken Tonnage Tonnage Tonnage up Broken year world U.K. as% Total World upU.K ('000 tons grt) ------1913 3 333 1932 58.0% 717 246

1919 7 279 1620 22.3 637* 149* 1920 6189 2055 33.2 658 139 1921 4342 1538 35.4 674 123 1922 2467 1031 41.8 888 250 1923 2248 1440 64.1 1717 342 1924 2193 1085 49.5 1 858 373 [22]

*includes some war losses

The same commentator, writing in 1926, noted that while a coal based trade index (a measure of real economic activity he felt) was in 1920 something under half the 1913 level, exisitng world tonnage was up 22%. That year a further 5 531 000 grt were built.

Clearly, the volume of trade did not justify the amount of new construction coming off the slipways; in fact it did not justify the levels of existing tonnage. The rather rough and ready trade index just mentioned also showed that that trade did not regain its pre-war level unti11923;this qualifies as a market imbalance. Such imblanaces have a way of righting themselves through a period of industrial bloodletting. Matters were not helped by the dearth of naval orders (the consequence of budgetary tightness as manifested in the series of naval treaties).

As the last thing the world needed in 1921 was more in the way of ships, prices collapsed. A1 the same time there was a significant inflationary impact on costs. Some of the problems this posed for firms are illustrated by these figures for the cost versus market value of 7500 dwt merchant ships: 36. year cost market value ------1914 £54 375 £60000

1919 n.a. 232000 1920 225 000 105 000 1921 97 500 60000 1922 67 500 56500 1923 72188 60000 1924 68000 61500 [23]

It does not take a business titan to realise that a market which values your firm's product at less than your firm's cost is a market which might soon dispense with your firm's services. Of course the above figures are averages: a fact which means that some yards had costs well above the benchmark figure given above, whilst others had lower costs. Again, this problem will not give pause to a hypothetical business titan guessing which firms will become bankrupt. Furthermore, the years ahead were to prove just as tough. Of the 500 shipbuilding firms still solvent in 1924, a mere 360 were left a decade later. [24] Tommies on the first day of the Somme, climbers of Everest, and recipients of Edna Ferber barbs [25] were all more likely to survive than British shipyards. And yet, in the fullness of time, this carnage was proven to have been incomplete and insufficient. The survivors (with the possible exception of Vickers-Armstrong) failed to learn any lessons.

Writing in 1922, the authors of the Industrial Yearbook 1922 noted that "During the year 1921 the shipbuilding industry throughout the world may be said to have experienced the worst period in its history". [26] They went on to note that the slightly more accommodating (read lower paid) labour forces in competitor nations were mounting a serious challenge to the British industry. The figures given for the ten largest British yards show just how pathetically thin the order books of some firms had become.

Of these firms, most were to experience some form of major restructuring. Armstrong, for instance, was later merged with Vickers; Palmers Shipbuilding and Iron Company had an even bleaker future, destined as it was for effective liquidation (and status as cause celebre through its ownership of the Jarrow Yard). 37.

Production (in Industrial Horsepower) 1919-1921 often U.K. shipbuildingfinns.

Finn 1919 1920 1921 ------·------Cammell Laird & Co. 115 900 27475 110360 Richardson Westganh & Co. 80500 96270 74480 Parsons Marine Steam Turbine Co. 101300 21250 71 881 Harland & Wolff 176 250 90350 59600 Palmers Shipbuilding & Iron Co. 66000 42550 51000 Wallsend Slipway & Engineering Co. 206680 61280 50310 Vickers Limited 117 940 18475 46000 William Denny & Bros. 94800 43100 45200 NorthEast Marine Engineering Co. 69930 84320 44220 and for comparison: Bethlehem Shipbuilding Corp. (U.S.A.) 78 500 200000 592 300 [27]

The ability to weather the storm seems to have been a reflection of liquidity. Finns with available cash, and unburdened by restricitve agreements with fleet owners (regarding sales to the competition), were able to undercut their competitors and keep yards open. Some were even able to pull off the feat of raising new capital; thereby allowing the purchase of new equipment with which to raise productivity.[28]

Unfortunately this did not prove to be the beginning of a period of re-tooling and modernisation. The recognition that radical changes were in order if foreign competition was to be met was not all that widespread. Workers, as one would expect from the indutsry's unions, continued to behave equally unrealistically; striking well and often [29]. The simple fact was that as long as new machinery embodied what could be understood as the technology to improve existing engineering practices (as opposed to new methods stemming from scientific research), they were luke-warmly welcomed. It was not that the British were univentive, after all they pioneered the use of welding in 1917. Rather they were unwilling to depart from tried and true practices.

As Mr. Austen Albu described the situation: "While most criticisms have centred on poor management, bad industrial relations and low productivity, there is little doubt that there has also been a serious decline in the relative technological competitiveness of the British {shipbuilding} industry." [30] The following is a thumbnail sketch of the course of British innovation in this 38. industry. It traces the progressive waning of the British lead in both development and deployment of innovations.

Chief Country of Period Innovation first adoption.

to 1850 Iron hull. United Kingdom Seperation of cargo and passenger liners. United Kingdom High pressure steam engine. U.S.A.

to 1900 Steel hull. United Kingdom Oil Tanker. United Kingdom Use of model tanks. United Kingdom Subdivision of hull and cellular bottom. United Kingdom Screw propeller. United Kingdom & U.S.A. Compound engines. United Kingdom Water tube boiler. United Kingdom & France. Powered steering gear. United Kingdom

to 1950 Steam turbine. United Kingdom Geared steam turbine. United Kingdom Diesel marine engine. Germany Withdrawable stem gear. U .S.A. & Sweden Longitudinal framing (Isherwood System). United Kingdom All welded hull. U.S.A. & Germany Tilting pad thrust block. United Kingdom and U .S.A. [31]

This chart belies a further problem: the fact that Britain was deliberately ignoring its own inventions. Withdrawable stern gear and the all welded hull, to take two examples, were both British inventions; while it surpasseth understanding that they should be ignored, such was the case. Automatic plate cutting, another method pioneered in the United Kingdom, was adopted in its rudimentary form by British yards, but the inter war period saw no attempt to refine this method. It was left to foreign yards to take full advantage of these cost efficient and more 39. productive techniques. The typical British shipbuilder was rather like the anarchist whose bomb went off, in his hands, a mite too soon.

An even more frightening dimension to this was the slippage in the ability of British yards to implement increasingly complex new technology and prcxiuction processes. For instance when Barclay Curle Yards launched the first British ship to incorporate a diesel engine, it was only through the wholesale application of German know-how. [32] Yet this state of affairs could have been predicted even prior to 1914. A startling example of Britain's emerging technical backwardness was seen in the fact that even in 1912, Britain was buying 62.1% of all thrust shafts and 76% of all propellor shafts from her competitor in the naval armaments race: Germany! [33]

Perhaps this last problem is explained·by the pitiably small number of university graduates in related technical fields, and the failure to recruit business and economics graduates. The former you could count on one hand, while the latter were barely more numerous.

Between 1925 and 1939, 11 marine engineers and 30 naval architects graduated from British universities. During that same period, the average number of workers in the engineering, shipbuilding and metal trades stood at 1 776 500: a ratio of 1:428. [34] Equally worrying was the tendency among large segments of British industry to discount the value of a University education. In a 1918 book, Lord Leverhulme announced that university graduates were 'not a patch' on hard knocks graduates because the knowledge of book trained students was of lesser value than that of practical craftsmen. [35]

Another problem lay in the fact that those yards which did display some sense of technical avant gardism did not always enjoy anything approaching success. In 1905, William Beardmore & Company laid out a spacious and technically advanced yard on a green field site at Dalmuir. This was a text-book case of abandoning old, cramped, inefficient yards in order to boost profits through higher productivity and greater efficiency. The debt incurred became a severe drain on the firm's balance sheet during the inflationary 'twenties, and the yard. This in spite of a level of construction activity comparable to yards owned by John Brown and Fairfleld [36] This is precisely the sort of business catastrophe which bolstered the arguments of the gainsayers of innovation.

So desperate were the ~s that outbreaks of realism (usually frustrated) came from the oddest quarters. The Clydeside unions - those very men who had struck for the thirty hour week in January of 1919, walked out in in sympathy for workers at Harland and Wolff, men who revelled in the area's sobriquet of 'Red Clyde'- proved to be one such surprise. Goaded by the deepening slump and led by two Labourites (Messrs. Kirkwood and Wheatley) they became 40. proponents of industrial restructuring and modernisation. Approaching Beardmore, they suggested that the Parkhead Forge be relocated downstream, and re-equipped with the most 0 advanced machinery; they even hoped to influence the other yards in the neighbourhood to modernise too! Sadly this proposal, and a similar one to the firm of Johnson Arrol, was spurned. [37] The battle lines had been etched far too clearly, and the conservatism was too ingrained. Evidently not all the workers were quite so pigheaded as some historians would have it.

The average firm's survival program concentrated not on innovation, but on brutal cost cutting. Average wages (using shipwrights as an example) fell from 91s. 3d. in 1920, stabilizing in the late 'twenties in the 55s. 1o 1/2d.- 60s. 11/2d. range. Wages did not budge substantially until re-annament started in earnest, and even then the 1938 average shipwright's salary was 68s.[38] What is interesting to note is that the rate for 1914 was 41s. 4d.: indicating that the reductions (even bearing in mind inflation) were not so severe as one might imagine. There were wholesale ftrings, and management was able to wring a 1% increase in output per man from those remaining. [39]

As they seemed wont to do, the firms were also helped by another market distortion. In the post-war years it was quite chic in practically every nation to ecourage the growth of the domestic steel industry. This created an inevitable glut, driving prices down, especially on the continent In 1930, steel plates averaging 158s. in England could be purchased (though the equivalency in quality is approximate) for 115s. in Antwerp and 116s. in Belgium. [40] As steel is an important constituent part of a ship's cost structure (see chapter one), these price discrepancies could aid the cannily managed flrm. Those British firms linked to domestic steel plants tended to suffer.

In any event, these various methods of cost reduction failed to save a substantial number of shipbuilding and marine engineering firms. Further rationalisation seemed inevitable.

V

By 1922 the worst the slump had to offer in terms of shocks was over; but the doldrums that followed brought no real relief. The artificial post war boom had sucked forward orders for vessels that were only now becoming of some use to fleet owners. While the volume of orders rose in absolute terms, the shipbuilding industry remained terribly depressed. At Vickers' Barrow Yard, "the birds were nesting in the cranes" [41]; 27% of the industry's insured workers had been layed off by July, 1921. [42] Clearly, however vague the term might be, there was an excess of capacity. 41. By this point the balance sheets of the majority of firms were exceptionally weak, and Whitehall was not well disposed to the idea of a massive (and expensive) government sponsored program of restructuring and refurbishing. The only evident method by which a number of firms might survive was rationalisation by agreement. The Shipbuilding conference opted for the latter, and decided to develop a mechanism to accelerate the process.

The scheme which caught the fancy of the industry's management was the National Shipbuilding Security Limited (the NSS). The principal aim of this organisation was to secure a base price for the assets of any finD going into liquidation. It was financed by a share offfering distributed amongst the industry, and a one per cent levy (by value) on all tonnage launched. The NSS was mandated to dispose of these assets in the most profitable fashion possible.

In a recent monograph on the industry [43] the histories of most of the major British shipbuilding f1m1s are laid out in brief. This survey shows that over twenty of these flmlS were taken over in whole or in part by the NSS. This process created some feelings of bitterness. For instance the Lithgow Group bought up the assets of many Clyde yards closed under the NSS scheme as part of its own rationalisation program. Other contentious closures included John Chambers and Oeveland Shipbuilding; but in all fairness, one was in liquidation when the NSS stepped in, and the the latter had been out of operation for more than twelve months. However the most hated action by the NSS - one which highlights the political component inherant in any history of the industry - was the liquidation of the Palmers Company at J arrow. Part of this concern was mothballed, and part sold to Vickers,owner of the Vickers-Arrnstrong shipbuilding division. Vickers-Arrnstrong, under the far-sighted direction of Sir Charles Craven, actually invested £100 000 in the acquisition: a decision which stunned the managing director, used as he was to Palmers' longstanding parsimony. [44]

To this day the whole I arrow question has the power to excite controversy. The facts were quite simple. In 1852 Mr. Palmer had laid out a shipyard at Jarrow, and for the decades until1920 the company prospered. In the tough po .st-war business climate , Palmers failed to remain competitive (the firm was notorious for its unwillingness to modernise plant or methods [45]), and business fell off. The last ship was launched at the Jarrow Yard in 1932, and by 1933 it was in bankruptcy; leaving a small army of workers unemployed in I arrow town. In 1934, the NSS stepped in.

At this point the history of Palmers becomes much more contentious. Some commentators tell their audience that, however tragic it may be, companies in free marlcet economies do go bankrupt from time to time. Those with a more specialised interest in shipbuilding will note that it was inevitable that the British industry was going to be decimated; that it was pointless to hang on to 42. such a dinosaur of an industrial sector. This is the line found among economic historians and in this week's Economist. Another point of view, the dominant one among historians in general, is vastly more emotional and often seems to miss the point.

However, because it is such a dominant view, it is perhaps the best basis from which one can examine the politics of shipbuilding and special interest; Jarrow's liquidation in 1934 unleashed a very real political storm.

One historian called the Palmer closing "an industrial Lidice" and labelled the NSS as being "notorious in the 'thirties for the way it bought up its slump-hit competitors with no thought for the many thousands of ordinary people involved, and which acted with the cold unfeeling consent of of Walter Runciman at the Board of Trade .•. ". [46]. This bloodcurdling condemnation turns the NSS into something it manifestly was not: a competing firm. It also goes a bit overboard in using Udice as grounds for comparison. Yet Jarrow was a devastated town, and the NSS did not go out of its way to help the unemployed workers. Many people were desperately angry. Most did not understand the economics of shipbuilding, and if they did it really didn't matter, for they instinctively veered towards the economics of despair. While the accusation is, to say the least, charmingly loopy, the force of passion and condemnation captures the very real sense of outrage.

The despair at Jarrow, which remained mired in a mute, fatalistic state of unemployment, percolated for the three years following the launch of the last vessel. Then the Member of Parliament for Jarrow, Miss 'Red' Ellen Wilkinson (Labour, elected 1935), wrote a book for Mr. Victor Gollancz's New Left Book Club entitled "The Town that was Murdered". In it she baldly stated that "in 1933 another group of capitalists decided the fate of I arrow without reference to the workers ... " [47]. Presumably this was her method of informing the world of the palpable tragedy of a town of disheartened, unemployed men, and the dolorous effect it had on these mens' families. In 1936, after repeated questioning in Parliament, Sir Waiter Runciman replied that J arrow must work out its own future without government intervention.

Strictly speaking, Britain was as poor (even broke, if you will) as a church.mouse. The National Government's front benches were not filled with heartless ogres, merely with men struggling with dozens of pressing needs. For instance, in the period February-July 1934, the Government had disbursed special subsidies to especially strategic or important projects totalling some £24 million (close to 4% of the year's expenditures). The Cunard Line received a subsidy towards the completion of the long donnant Queen Mary: a decision in part rationalised on strategic grounds. Other subsidies went towards meat, milk and beet sugar (this last to the tune of £5 million). [48] Under the cicumstances, the plight of Jarrow, however touching, could not be addressed in isolation. Outraged, Miss Wilkinson laid plans for an event- a march by I arrow's 43. unemployed - to turn those seemingly unfeeling Tories towards the path of justice while manipulating public opinion. On 5th October, 1936, with all the trappings of a workers' crusade, 0 the Jarrow Marchers set off. Public sympathy mounted as the marchers approached London. Even 1be Times spoke approvingly of the march. On 1st November they entered London. In the Commons, Miss Wilkinson asked leave of the House to present her petition. She stated that "The town cannot be left derelict.". There was a suitable degree of horror expressed by opposition Members regarding the iniquitous actions of private enterprise; with further calls for H. M. Government to place orders at Palmers'. It was as grand an airing as any dying area and industry could wish for, but the attention was misdirected and proved to be chimerical. Once the speechmaking was over, the whole episode came to an untidy close.

Jarrow was, on the surface at least, a debate about the fate of workers stranded by the collapse of a once proud firm. 1he debate, once unleashed, could have flowed in in two directions. There was the opportunity to address the issue of what economists now cleverly call 'sunset' industries. Oearly Great Britain had some choices to make about an industry many called strategically vital: lettting it fade, forcing it to restructure, subsidising, enacting adjustment programmes. Not particularly glamorous mind you, but the sort of debate that might have actually done some good in the long run. On the other hand there was the route the debate actually took: that of the morality play ending with the decision to continue muddling through in the best possible manner. Heartfelt emotion of this sort is always momentarily gripping, but rarely does it prove long lasting.

Palmers' closed in 1932, so the NSS really cannot be blamed for any form ofbloodsucking; Miss Wilkinson was undeniably using her constituents' plight to great political advantage. Everything she said about emotional devastation in a close-knit town was all quite true, but somehow but somehow it missed the point completely.

It missed the point because beyond the emotion, there was little in the way of substantive policy suggestions. Once the passion was spent, all the other problems, and there were many, that afflicted England crowded back into Parliamentary and public eyes. By 1936 England, in spite of a balarice of payments crisis, was no longer as concerned about economic collapse and industrial rejuvenation. 1he sceptre of war and the rearmament debate were proving to have a marvellously concentrating effect on the attentions of Parliament, the Treasury, and the public. Winston was railing against the Government in the House: besides memories of the Somme and fears of the bomber, events such as the I arrow march were losing their secular potency. 0 44.

The sceptre of war also had an effect on the surviving shipyards. They knew well that reannament and the prospect of war could mean, just like the last r:narlcet distortion created by the pre-1914 naval race, an abundance of easy profits. In many cases the likelihood of rearmament expenditure prevented the initiation of bankruptcy proceedings. In effect, the market shakeout was postponed a second time. This also helped explain the seeming callousness of the .Government. Anyone remotely connected with the reannament programme, then just hitting its stride, was aware of the enormous level of building that would flow from the Third Defence Requirements Sub-Committee naval building programme. Whitehall planners were already aware that there soon be bottlenecks of materiel and labour in the shipyards; that the Jarrow marchers would not long be out of a job.

Clearly, the most beneficial course for Great Britain to have followed would have been to use the Jarrow March to examine why the firm failed; to find ways of making the industry more efficient so that in the distant future it could survive in the international marketplace without fear or subsidy. In the near term it could help build better warships in less time and at lower cost, thereby helping to fulfil the vast naval reannament programme without disruptions in international sales. In this sense, Jarrow was the best and in some ways the last opportunity to repair the damage stemming from years of industrial decay and blindness. Within a year, reannament and looming economic crisis would subsume any such discussion and torpedoe any attempt to effect repairs.

Reannament and the ensuing hostilities were to provide the industry with both profits and modem capacity. These proved to be short term and, and were instigated by harried Admiralty officials. The year of Jarrow marked, in a concrete sense, the end of the shipbuilding industry's locust years and the start of a period of gloriously profitable chaos, but chaos is no way to run a business. Considering the importance of this industry to the very survival of the nation and the Empire, it ought to be thought of as surprising that such seat-of-the-trousers direction was tolerated. Yet England did not desire a dirigiste economy. nor the rigours of wartime controls, particularly at a time when peace seemed so precious. It was a wonderful place to live, but how drastic the changes would be when peace was shattered. 45.

[1] quoted in Ronald Blythe The Age of Dlusion Boston, Houghton Mifflin, 1964, p. 157. [2] J. Parkinson 'Shipbuilding' in Buxton & Aldcroft Brifkh Industry Between the Wars: Instability and Industrial Development 1919-1939 London, ScolarPress, 1979, p. 91. [3] Committee on Industry and Trade, vol. I, Survey ofM8al lndltitries HMSO, 1928, p. 38: [4] J. Scott Vickers, A History London, Weidenfeld &Nicolson, 1962, p. 138. [5] Sir Alfred Yarrow "Notes on Our Position as a Shipbuilding Country" Transactions of the Institution of Naval Architects Volume 62, 1920, p. 43. [6] mm, p. 50. [7] IBID, p. 51. Quoting the British Association Report on Science Teaching, 1917, he informed his audience that of 73 headmasters, 61 had literary or classical degrees, 9 had maths degrees, and a mere 3 possessed science degrees. [8] IBID, p. 52. [9] mm [10] IBID [11] ffiiD, p. 53. [12] IBID, pp. 53-54. [13] IBID, pp. 54-55. [14] J.R. Parkinson, "Shipbuilding" in Buxton and Aldcroft British lndmtry Between the War. Instability & IndustriaJ Development London, Scolar Press, 1979, p. 81. [15] Pollard and Robertson The British Shipbuilding Industry, 1870-1914 Harvard University Press, Cambridge, 1979, p. 250. [16] Adapted from IBID p. 249 which in its turn made use ofLloyd's Register. [17] quoted in Pollard and Robertson, p.4. [18] IBID, pp. 240-241. [19] IBID, p. 248. [20] A.C. Pigou Aspects of British Economic History 1918-1925 Frank Cass & Co. Ltd., London, 1971, p. 78. [21] IBID, p. 79. [22] "The Present Outlook for British Shipbuilding" in Transactions of the Institution of Naval Architects, Vol. lxvii, London, 1926, p. 2. [23] I. Parkinson in Buxton and Aldcroft, p. 91. The figures are taken from an article in the lltl I anuary 1940 Fairplay pp. 7 6-77 , and it is not clear just what is meant by standard 7500 dwt steamer, and just what allowances for profit and depreciation (if any) have been factored into the cost figure.[22] IBID for the bankruptcy figure. 0 [24] ed. Philip Gee The Industrial Yearbook 1922 HB Hammond, London, 1922, p. 328. 46. [25] Noel Coward: "Edna dear, you look almost like a man in a suit." "So do you, Noel, so do you." [26] mm pp. 326-327. 0 [27] M. Moss & J. Hume Workshop of the British Empire, Engineering and Shipbuilding in the West of Scotland p. 107 [28] see, for instance, R. Middlemas The Clydesiders Hutchison & Co., London, 1965, pp. 90-92. [29] A. Albu quoted in Walker's article inK. Pavitt [ed] Technical Innovation and Bri~h Economic Performance Social Policy Research Unit, Sussex University and Macmillan, London, 1980, p. 172. [30] N. B. Walker article noted above, p. 171. [31] D. Todd The World Shipbuilding Industry Croom Helm, London, 1985, p. 190. [32] P. Gee [ed] The Industrial Yearbook 1922 p. 334. [33] M. Sanderson The Universities and Bri~h Industry, 1850-1970 London, Routledge & Keegan Paul, 1972, p. 297. [341 mm, p. 249. [35] Todd, p. 163. [36] R. Middlemas The Clydesiders Hutchison & Co., London, 1965, pp. 97-98. [37] Parkinson, p. 88. [38] Parkinson, p. 86. [39] Parkinson, p. 89. [40] J .D. Scott Vickers: A History Weidenfeld and Nicolson, London, 1962, p. 138. [41] A. F. Havinghurst Twentieth Century Britain Harper and Row, New York, 1962, p. 161. [42] L. A. Ritchie Modern Bri~h Shipbuilding: A guide to historical documents National Maritime Museum, 1980, section one. [431 scott, pp. 218-219. [44] Scott, pp. 218-220. [45] R. Blythe The Age ofDlusion Houghton Mifflin, Boston, 1964, pp. 162 & 163. [461 mm [47] IBID, p. 164. [48] G. C. Peden British Reanmrrmt and the Treasury Scottish Academic Press, 1979, p. 68. 0

... I found myself wondering whether Roger and his associates would qualify for a footnote in history. If so, what would the professionals make of them? I did not envy the historians the job. Of course there would be documents. There would be only too many documents. A good many of them I wrote myself. There were memoranda, minutes of meetings, official files, "appreciations", notes of verbal dicussions. None of these was faked.

And yet they gave no idea, in many respects were actually misleading, of what had really been done, and , even more, of what had really been intended.

C.P. Snow speaking of a Cabinet Minister. Conidors of Power, Macmillan, 1964, p. 88.

0 47. CHAPTER THREE DIPLOMACY, DOMESTIC POLITICS, AND NAVAL POLICY TO 1938

I

One attribute of democracies is that, by and large, every politician wants to appear reasonable, sane, and imbued with a common sense devotion to his nation's welfare. That ideological purists tend to speak in these terms is more or less a given, even if what they advocate happens to fall light years beyond any definition of the word reason. Those politicians willing to compromise their principles for the sake of accommodation and re-election - this is most of them - in power make use of their (alleged) reasonableness. This is not to say that, mere years after they have adopted 'reasonable' policies, they will not be lambasted as incompetents or fools. When they are, their critics, revelling in the benefits of gloriously clear hindsight, tend to take sanctimoniousness to new heights.

In the dark days of 1940, Mr. Michael Foot (then a journalist) and two of his colleagues brought such an attack to bear on the inter-war governments in the form of the vitriolic book Guilty Men. Mr. Neville Chamberlain, Sir John Simon, and several others were singled out for particular abuse. Apparently, so the book went, these gentlemen neglected their country's security, failed to face down Hitler and the beastly fascists, and had gone a long way towards destroying this green and sceptred isle. In short order, this particular view became quite popular. Another popular image, rather more correct, is that of The Right Hon. Winston Churchill vainly agitating his vocal cords in favour of increased defence exprenditure. It all appears so very simple: the appeasers should have spent more on defence, but they did not; they ought to have been worried about Germany, Japan, and Italy, but they were not; they could have nipped the whole affair in the bud, but, insensibly, they failed to do so. The implication is that Great Britain could have been spared the ordeal of another World War had only those blind fools acted with sense and reason.

The trouble with this sort of analysis is that it fits neatly into the tradition of broomlike sweeping generalisations, largely incorrect at that, which has bedevilled the history of the 'thirties period. Prime Ministers MacDonald, Baldwin and Chamberlain were eminently reasonable men. Backed by sizeable Parliamentary majorities and faced by a fractious opposition, they governed Britain with what were at the time viewed as policies of sense, wisdom, and above all moderation. The policies of restraint and disarmament, backed so fervently by, among others, Mr Churchill in the 'twenties were replaced in the mid-'thirties by a considerable program of rearmament. Indeed 48. Mr Chamberlain was one of the first to view Germany as a revanchist threat to British security. Even more uncomfortable for the partisans of 'guilty men' history, opposition to rearmament often came from the left: the Very Reverend H. R. L. Sheppard's Peace Post Card of 1934 is a 0 simply marvellous example.

A different point of view stresses the fact that economic collapse was a real threat for a good deal of the inter-war period. The 'guilty men', excoriated as they were for military unpreparedness, also happened to loathe the prospect of being tarred as the instigators of an economic catastrophe. Had such a sorry state of affairs come to pass, undoubtedly Mr. Foot and company would still have written a 'guilty man' type book:- this time, however, the casualties mentioned would have been the victims of nasty, vicious, brutal Tory economic policies.

The intention in saying this is not to engage in a blanket defence of Neville Chamberlain or the policies of the governments in which he served. Great Britain was in large part frightfully unprepru.:ed for the Second War; that she ought not to have been so is clear enough. For instance, the Royal Navy was too small for the multiplicity of tasks at hand; the shipyards were chaotic and incapable of sufficient production. However the mere recitation of these facts does no more than recount what is now by the by detail. The intention of this chapter is rather to look at the policy prescriptions which culminated in this state of affairs: it will probe some of the roots of shipbuilding's wartime performance. It will examine the political and diplomatic imperatives dominant in the inter-war period; analyse the changes in perceptions of British national interest and strategy; probe the intellectual climate; and delineate the constraints on policy. These factors all contributed to the formation of British defence policy, particularly as regards the naval building programmes. From the vantage point of 1940 it was very easy to forget that in periods of peace, public opinion, economics and a host of other things can hinder military buildups. Danger does tend to concentrate the mind.

Consider how Cabinet Government tends to operate. All but the most idealistic and wishful will concede that Ministries resemble more a coalition of warring tribes than anything else. This is not to say, pace irate democrats, that the competition of differing interests in government is wrong, merely its existence and influence cannot be ignored. During those crucial years of the 'twenties and 'thirties several major issues, each with a powerful constituency, competed for the attentions of the Government and its fmancial bounty. For instance the repudiation by the Bolsheviks of the Russian war debt; American intansigence over the British war debt; the balance of payments crisis and the devaluation of sterling; and the threat of financial collapse were considered issues of vital concern. Many asked why unconsionably high (as opposed to higher) government spending ought to be allowed to destroy the country economically. This was, so to speak, the competition those in favour of higher military spending had to confront. There was also, of course, the 49. constituency which spoke for the great many unemployed, poorly trained Britons who did not participate in inter-war economic growth. They competed for government funds, acted as a labour bottleneck viz. rearmament, and were a complicating factor in any anti-inflationary fiscal policy. 0 Finally let us not forget that interest groups, farmers for instance, are not noted for their quietude during the budget season.

Thus bad policy deserves blame, but the attention of historians ought to be focused on the decision making process, for it is there, if anywhere, that the valuable lessons lurk. By and large, the wholesale expansion of the fighting services becomes widely popular only after the fact: e.g. when the Services are in use. Ex post blame or judgements of insufficiency will, in general, be left to others. The route that will be followed is one which explains the functioning of the body politic on the military, and the resulting impact on the navy and shipbuilding.

11

By and large people dislike war. The same might be said of poverty. Whatever romantic connotations the absence of wealth might have in some quarters, no successful politician has ever deliberately run on a platform promising more in the way of poverty. These quasi-facts have considerable significance for our discussion. A useful, initial, point from which they might be pursued is the current political debate in the United States.

Following the carnage in the stock markets of mid October, 1987, and the popular euphoria over the 'new order' of peaceful relations between the United States and Soviet Russia, the following equation became rather common. The large federal budgetary and trade deficits must be cut in the interests of preserving prosperity. It would be impolitic (in every sense of the word) to cut social spending. whereas the military is costly and an easy target Given that we are not at war, is it really necessary in any case?, etc. This breathless example of linkage is spouted by many members, reasonable men at that, of both major political parties. Another disarmament treaty following on the Intermediate Nuclear Forces agreement, this time effecting major cuts in strategic weapons, is eagerly anticipated. Education, peace, prosperity, honesty in government are the issues of the day. Much the same agenda was dominant in the post-Vietnam years of the the 'seventies.

Ironically, people commenting on the cUITent political scene reach back in history for analogies 0 to prove their point. One rather unsuccessful attempt of this sort appeared prominently on the 50. editorial page of the Wall Street Journal:

Monday's stock market crash signals that the U. S. may be facing an economic catastrophe similar to the one that followed the end of the British Empire earlier this century - unless it can immediately face up to the tough choices to slash costs, especially in government...

The author continued, tracing the collapse of Britain to the high costs of the Great War and the continuing urge in its aftermath to remain a great power with all that implied:

British leaders ... responded to the crisis not by cutting costs but by proposing expensive new spending ideas. hnportant factions of the Cabinet wanted to garrison Armenia, send troops to Afghanistan and Iraq... Domestic spending grew like topsy ... For Britain to restore its competitive position, it needed to restore the strain on its overextended resources and to lower costs ... Under pressure from the Anti-Waste League, a group of vigorous industrialists, Prime Minister Lloyd George appointed a Committee on National Economy ... to slash costs. This committee, headed by Sir Eric Geddes, made sweeping recommendations, especially for cuts in the military. Some - but not many- of these cuts were implemented. Like Grarnm-Rudman-Hollongs today, the cuts of the "Geddes Axe" were not nearly deep enough to lower costs to levels enjoyed by competitors. Then as now, resistance of spending constituencies to cost reduction predominated over efforts at reform. [1]

The importance of this article lies not in his treatment of the historical facts, which is questionable, but in the attitude he represents. It is an attitude which views defence as a 'spending constituency' on a par with any number of domestic programs. Spending is spending: particularly if it seems as though there are no potential enemies.

The weaknesses of the Royal Navy in the mid 'thirties, those deficiencies the government was spending a great deal of money to correct, dated from a time when such attitudes were very common. The fact is that, contrary to our editorialist's ideas, military spending fell dramatically after the Great War, and continued to do so right up until1934. What this means is that the historian really ought to look at those perceptions which influenced the formulation of policy: perceptions lacking the benefits of wartime hindsight, for instance. This said, let us turn to the year 1919. 51. 1919 is an unexceptional year in that it combined relief that the country was at peace (see above regarding popular dislike of war) and a desire to be wealthier (again, see above regarding attitudes towards poveny). The fact that this took place in the aftermath of both human and fmancial • carnage gave them added force. As those perceptive chroniclers of English history Sellar and Yeatman put it

Though there were several battles in the war, none were so terrible or costly as the Peace which was signed afterwards in the ever-memorable Chamber of Horrors at Versailles, and which was caused by the only memorable American statesmen, President Wilson and Col. White House, who insisted on a lot of Points, including 1. that England should be allowed to pay for the War: this was a Good Thing because it strengthened British (and even American) credit; [2]

Paying for the War, as this trenchant analysis puts calls it, was a matter of some interest to His Majesty's Government and to H.M. subjects. Unsurprisingly, people were sick of conscription, sacrifice, and a standard rate of income tax approximately five hundred per cent greater than the pre-war level. The national debt had soared above the seven and a half billion pound level: the result of the fact that roughly sixty four per cent of government expenditure for the period 1914-1919 had been fmanced with borrowed funds. [3] The relative popularity of that stalwart combination death and taxes had sunk to a new low.

The Coalition Government had been handily returned in the national election of 14th December 1918. The campaign had, naturally enough, revolved around returning England to a peacable state remote from the rigours of the controlled, wartime environment. The Government platform had stressed the need to de-control industry, and much else besides. The platform, as the campaign wore on, was extended through the addition of a plank of considerable resonance. Speaking at Wolverhampton on 24th November, Lloyd George had announced "Don't let us waste this victory merely in ringing joy bells," instead England must become a land "fit for heroes to live in.". [4] It seemed clear enough at the time that this would require placing ~provements in the standard of living above all else; after years of brutal war and ultimate victory this popular yearning seemed natural enough.

Shortly after the Government was returned a series of violent strikes broke out on the Clyde and in Belfast, almost as if to forcibly underline the nation's desires. These February 1919 strikes led the Government to convene a "National Industrial Conference". This body, the members of which bailed from industry, government and labour, advocated a minimum wage; a maximum • work week of 48 hours, and a National Industrial Council which might act in the interests of 53. perpetuating during the unfortunate tenure of Mr Churchill at the Treasury. was to become the guiding principle for defence planning until 1932.

This Ten Year Rule owed much to the Chancellor of the Exchequer, Sir Austen Chamberlain, and the Cabinet Secretary, Sir Maurice Hankey. The Chancellor, beset, you will recall, by a national debt in excess of seven thousand millions of pounds [8] opened the proceedings in Cabinet by expressing "profound shock" at the proposed naval estimate of£ 170 million. This figure was meant to support a building program designed to maintain British superiority in the face of the enormous American building program of 1916. [9] In this he was suppported by the ever sensible Sir Maurice Hankey, who in any case rued the idea of an Anglo-American naval rivalry.

These feelings were brought to Cabinet, and came to a head during the meeting of 5th August 1919. Prime Minister Lloyd George expressed concern over the level of national indebtedness, stressing that his objectives were lower government spending and higher levels of employment. The wave of labour unrest obviously bothered him on both the policy and political levels. In order to achieve these goals the Prime Minister suggested that military expenditures be cut. At this juncture Mr Waiter Long, the First Lord of the Admiralty, inteijected that such a generality was all but meaningless unless these cuts were backed up by a clear definition of national strategy. Lloyd George proved unchracteristically accommodating, for such a policy document was made ready by 12th August. Three days later, the 'Ten Year Rule' was adopted as proposed.

The wider implications of this action were perfectly clear at the time: Britain was no longer planning her military, particularly naval, expenditures in the light of war being in the forseeable future; she was thus unwilling to engage in naval armaments races. However the 'Ten Year Rule' and 12th August memorandum provided only the vaguest direction for British grand strategy. One eventuality- war- had been excluded. That left a lot unsaid. The threat of the 1916 American building programme, indeed the role of the Royal Navy in these 'peaceful' years, remained unresolved. At first the Cabinet did not appear especially eager eager to rectify this situation, though this was not from lack of advice. Viscount Grey of Fallodon suggested a special mission to Washington to negotiate the two nations' naval affairs, with the aim of bolstering the cause of peace, avoiding rivalry and solving this incipient strategic problem. Curiously, he was supported in this by a policy document emanating from the office of the First Sea Lord, Lord Beatty. This document, dated November 1919, outlined the means by which Britain could match the American fleet's expansionary ways: through a building program, a treaty, or a renewal of the Anglo/Japanese alliance. [10] The building programme envisioned was of enormous size and greater cost; the treaty envisioned saw security as achievable throughlimitations by agreement; and a renewal of the Anglo-Japanes Treaties of 1902, 1905, and 1911 would effectively negate 54. the American buildup through the latter's need to confront Japan in the Pacific. [11]

In December of 1920 the Committee of Imperial Defence (henceforth the C.I.D.) met to reconsider the situation. It was evident that, unless a treaty was signed or a new progranune of naval construction begun, by 1925 the Royal Navy could deploy but one capital ship (H.M.S. Hood) incorporating wartime experience; whereas by that same date the United States would have built 12 modern vessels displacing more than 40 000 tons, and the Japanese 16. [12] That Britain was falling behind, barring any major new construction programme, was obvious enough. The Bonar Law Committee on Shipbuilding came to much the same conclusion. The correct response was still unclear.

With the strategic jigsaw puzzle largely incomplete, the Admiralty planners grew increasingly frustrated. In I anuary 1921, as yet unsatisfied in his quest for coherant strategic thinking on the part of his political masters, First Sea Lord Beatty wrote that the Admiralty must know:

... what the political and military requirements are ... ['These] we have been unable to get for over a year, although we have asked for it, anluntil we do have some express directions from the government of the country, The Admiralty are quite incapable of producing any plan, right or wrong. [13]

The situation did not remain indetenninate for long. Into the breach strode Viscount Grey and the disciples of disarmament. In his best-selling memoirs (published some years later) Viscount Grey set out the philosophy which impelled him to propose a naval treaty with Washington and the other Powers.

[Look] not to military preparation ourselves, greater than our people will approve or can afford, but to a policy that may discourage the growth of annaments elsewhere ... Such a policy will be the outcome of right thinking about the war.

[prior to 1914] Every country had been piling up annaments and perfecting preparations for war. The object in each case had been security. The effect had been precisely the contrary of what was intended and desired. Instead of a sense of security there had been produced a sense of fear, which was yearly increasing ... preparations for war had prodw:ed 0 fear, and fear predisposes to violence and catastrophe. 56. imperatives, and the disappearance of old threats and objects of dispute. In addition the experience of the war had demonstrated that the Mahanian concept of 'force in being' had a1 to be balanced against the nation's industrial potential and the speed with which it could be mobilized. 0 In Chapter Two we noted that, at the time, British shipbuilding seemed still to be an economic force to be reckoned with, therefore the Admiralty planners had little in the way of worries about any future crash programme. The first volumes of the Carnegie Endowment history of the War, particularly Mr E. M. H. Lloyd's Experiments in State Control, demonstrate the emerging intellectual trends in this area. Furthermore, logic seemed to dictate that it was most unlikely that the United States and Japan should ally themselves against Britain: this rendered the pre-war 'Two Power Standard' somewhat anachronistic. [18]

The urge to fashion stable diplomatic arrangements was not at all confined to Great Britain. The spirit of the age spoke for such things. In any event, the invitation to attend a multi-nation conference on security and disarmament was issued on 11th July 1921. The party was given by Washington, and all the major powers were invited. The security discussions were to centre primarily around Pacific issues: the political conundrum presented by U.S/Japanese tensions and the desire of the United Kingdom to remain on good terms with both was the stickiest point here. However the new Republican administration had greater things on its mind.

The Washington Conference, often dubbed a 'naval conference', in fact begat a series of political agreements. Under pressure from the Dominion Governments, particularly Prime Minister Meighen of Canada, the British Government signed the so-called Four Power and Nine Power Treaties. These treaties placated American and Dominion fears of Japan and the Anglo-Japanese Alliance, while preventing a diplomatic rupture with that nation. At the time, it appeared a step towards the easing of tensions. The conference also resulted in the signing of a naval armaments limitation treaty. This last document limited the capital ships of the Powers to the following ratios: Britain 5: U.S.A. 5: Japan 3: France 1.75: Italy 1.75. It also called for a ten year holiday in new capital ship construction; a limitation of cruiser size to 10 000 tons with eight inch guns at best (numbers were not limited: largely due to British concerns); and a variety of confidence building measures.

The obvious implication of this last Treaty was that Great Britain would henceforth, at least in capital ships, adhere to a "One Power Standard". The C.I.D. (Committee oflmperial Defence) had hoped, under the circumstances, for a state of affairs wherein:

... our fleet, wherever situated, is equal to the fleet of any other nation, wherever situated, provided that arrangements are made, from time to time in different parts of the world, according as the international situation 57. requires, to enable the local forces to maintain the situation against vital and irreperable damage pending the arrival of the Main Fleet, and to give the Main Fleet on arrival sufficient mobility. [19]

This 'One Power Standard'. predicated upon sufficient cruiser strength and a fortified Singapore, was apparently met satisfactorily enough by the Treaty. [20] This Treaty ensured that Britain could not successfully confront both a Japanese and a European enemy, but for the time being this seemed a remote possibility. As well, the Treaty contained the tacit understanding that the United States Navy would not be regarded as a potential adversary.[21]

Domestic politics in England at this time were the scene of rather less agreement. The Committee on National Expenditure chaired by Sir Eric Geddes had published its final report. The recommendations were for drastic cuts in all forms of government expenditure. This committee has received mixed reviews. While the need to cut the fiscal burden was evident to all at the time, this committee did display "an almost obsessive concern with ways of reducing government expenditure, particularly on administration". [22] Not all the proposals were adopted (such as the call for a Ministry of Defence, a measure stoutly resisted by the services); nor were all the proposals particularly wise. Indeed this document helped ruin the Coalition; Nevertheless, cuts made were sufficiently deep to earn them the appellation of 'Geddes Axe'. One naval historian noted that "hundreds of service officers were got rid of with only a miserable pittance by way of compensation.". [23] The naval estimates, in line with the diplomatic activity in Washington, were cut by 26%. The budget cutting, particularly mof military budgets, spirit of the day is best summed up in this statement of Mr. Leo Amery to the Commons: "the time has come when the Government must say to these Departments [the fighting services] how much money they can have and look to them to frame their proposals accordingly.". [24] It was this formula which was responsible for the deficiencies that proved so difficult to overcome in the rearmament programmes of the 'thirties, but such matters still lurked in the future.

The squabbling over full implementation of the 'Geddes Axe' and other matters brought the internal divisions in the Government to a head. The famous Carlton Club meeting of 19th October, 1922 brought down the Lloyd George Coalition; eventually producing the administration of Mr. Bonar Law. Upon the latter's death, Mr Stanley Baldwin scraped by Lord Curzon to attain the premiership.

This first Baldwin Ministry did adopt a modest cruiser programme: the construction of eight was envisioned. This decision was made on the advice of the Admiralty who, opposing the views of Mr Austen Chamberlain, had stated categorically that Britain required a very strong cruiser force c in order to protect what are known in the ugly modern strategic vernacular as 'sea lines of 58. communications'. The far flung nature of the Empire and Britain's dependance on seaborne trade ensured that this would be lost on none but the dimmest.

In any event, these naval matters were lost amidst Mr. Stanley Baldwin's peculiar attempt to unite the party and secure his leadership thereof. In October of 1923 heproposed that a general election be called; furthermore he suggested that the principal Tory plank be a return to the Tariff. This turned his predecessor's promise topsy, and enraged various powerful Cabinet colleagues, including Lord Curzon and Lord Derby. Even the King questioned Stanley's judgement.

The December Election was an unmitigated disaster for the now fractious Conservatives. A strong Labour showing and the efforts of the re-united Liberals returned a hung Parliament. This led in its turn to a minority Labour Government existing on Liberal suffrance. Mr. Philip Snowden, the new Chancellor of the Exchequer, later termed this decision to call an unnecessary election "Suicide during a temporary fit of insanity". [25]

It was, at first glance, to be thought that the fruitiest of Socialist Governments had been elected. The Prime Minister, Mr. Ramsay MacDonald, had been elevated to the Labour leadership with the aid of the 'Red Clydesiders' in his caucus; Mr. Snowden had tabled a motion in the Commons some months before the election calling for the gradual supercession of capitalism in England; and in May the Labour backbenchers had set Parliament in an uproar by rising and singing 'The Red Flag'. [26] All this considered, the complexion of the Government proved relatively innocuous. Lord Chelmsford, long known as a Tory, was named First Lord of Admiralty, whilst Lord Haldane, seeking to protect the C. I. D. from zealous pacifism or worse, accepted the post of Lord Chancellor. ·Even the first Snowden Budget received reasonably acceptable reviews.

In this context, the Admiralty pushed for continuance of the eight cruiser programme. Mr. Snowden, fmn in his opposition to this proposal, clashed in Cabinet with Lord Chelmsford. This political impasse was overcome by the combination of Lord Hankey's authoritative persuasiveness and the growingly serious level of unemployment in the shipbuilding industry. To the accompaniment of backbencher braying, authority to lay down five of the eight cruisers and two destroyers was granted. [27]

However this 'final' decision fell victim to the vicissitudes of electoral politics. The collapse of the Government in early October paved led to yet another general election. The Conservative Party, aided in the fight by Mr Sidney Reilly, the Zinoviev telegram, and fears of bolshevism, romped to an overwhelming victory: winning 414 seats and a near plurality of the electorate. 59. The Cabinet appointments made by Prime Minister Baldwin proved to be politically quite shrewd. l\1r Austen Chamberlain was installed as Foreign Secretary while the volatile Mr. Winston Churchill was offered the position of Chancellor of the Exchequer. 1he former was a competent. very pro-League of Nations man, sure to provide successes in the peace minded post-War atmosphere. Explosive Mr. Churchill was eo-opted into supporting the Government by the flattering nature of the~ appointment. and neutralized as a political threat by giving him the one Ministry he was singularly unsuited to run. His fll'st budget was balanced, and in so doing it cut expenditure on naval armaments.

In late October Mr. Austen Chamberlain secured his greatest triumph in the signing of the Locarno Pacts. These diplomatic arrangements secured French and German territorial integrity, made provisions for dispute arbitration, and ensured the admittance of Germany to the League of Nations. In light of this peaceful international atmosphere Mr. Churchill, already planning a return to the Gold Standard, was able to press for spending reductions, particularly in the Service Estimates. This Churchillian parsimony was buttressed by a 1925 C.I.D. report which noted that

1he Committee accepts the view of the Secretary of State for Foreign Affairs that. in existing circumstances, aggressive action against the British Empire on the part of Japan within the next ten years is not a contingency seriously to be apprehended. [28]

The five cruiser programme was thus whittled down to a two vessel plan, and even that struck the Chancellor as excessive. The Admiralty's case for more and better cruisers rested in part on the termination of the Anglo-Japanese Treaty having turned the fonner nation into a potential enemy, with all that that impJi:d for the security of British interests in the Far East. In an unfortunate statement, the Chancellor replied that war with Japan was unlikely "in our lifetime ". [29] As a result, spending on new naval construction in the 1925 estimates was held to six million pounds; the figure for 1926 was to be £5.4 millions. [30] The First Lord of the Admiralty, Mr. W.C. Bridgeman, was only successful in securing this by dint of threatening to resign, hinting that the Board of Admiralty just might follow him! [31]

Inspired perhaps by understandable pique, the Treasury established the Colwyn Committee: its brief was to investigate expenditure and propose means by which greater efficiency might be attained This committee, staffed by a businessman and two former Permanent Secretaries, had a great many cost cutting stricutres for the Admiralty: reccomendations which were viewed, at best, as rude and intrusive. 60. This debate over cruiser strength was canied one stage further in the preparatory discussions for the new Naval Annaments Limitation Conference due to be convened in Geneva in 1927. The Admiralty case against limitations on this category of vessel rested on calculations of ton/mileage factors: effectively the length of imponant trade and supply routes multiplied by the tonnage normally at sea. 'The resulting figure was used to calculate the number of cruisers needed for trade protection. When added to an acceptable level of 'fleet cruisers', it was shown that the Royal Navy had a much greater need for cruisers than either the United States or Japan.

Calculations Qf Cruiser~ necessary for: Trade Protection Aeet Duties* Duties Total

British Empire 25 45 70 United States 25 22 47 Japan 15 6 21

*Washington Treaty Limits (proposed) used here. [32]

These figures proved persuasive, though no doubt the Admiralty case was aided by a lull in American demands for limits on the size of cruiser forces. In fact this lull allowed the Conference to end without the signing of any substantive agreements.

Nevertheless, the yearly disbursements on new construction remained low. This did not worry the Admiralty into hysteria: the international situation did not forseeably require the major deployment of naval forces, however weak these forces were become. More threatening was the swift erosion of reserves of specialised capacity and skilled labour in the yards: reserves hithereto taken for granted. Under a policy inaugurated in the aftennath of the Washington Treaty of 1922, the Admiralty sought to maintain a nucleus of productive capacity in the naval construction field. With the industry in dire straits as regarded civilian orders, this more often than not took the form of concentrating orders with particular specialists. In 1923, for instance, Vickers (later Vickers-Armstrong) was granted a monopoly in specialised naval gun and gun mounting manufacture. [33] This programme was proven insufficient when rearmament began in earnest in the mid-'thirties, but for the time being it was the most that could reasonably be achieved. It was, in any case, an unavoidable action; for if Britain wanted to maintain the strategic capability to build warships, it had to protect some capacity. The paltriness of its funding does not negate the programme's values. [34] 61. The Contracts Department of the Admiralty, stuffed with ex Ministry of Munitions types, deployed technical cost and accounting procedures to ensure that the ratepayers did not pay monopoly prices. They also oversaw a sort of clearing house for orders, a means by which the greatest number of firms could benefit from naval orders. [35] Another stab at cost effectiveness was the amalgamation of all research and development under the umbrella of the "Scientific, Research and Experimental Department".

The decision to concentrate production capabilities with individual firms was also complicated by the accelerating pace of technical change in the design of warships. The treaties of the early 'twenties had at least given the Board of Admiralty some idea of how the navy was to be deployed (after all, it is rather difficult to design weapiiJlfor purposes unknown). At the same time, the increasing sophistication of naval technology created other problems. The Admiralty knew they wanted and needed cruisers, but given the stringent state of the Estimates, the d.ilemna of building smaller vessels with more modem technology, or larger, less advanced ships emerged. Eventually the former option was taken [36], but there remained considerable confusion. This was not assisted by the inactivity in the battered civilian industry. Electric welding, for example, was a cost effective and modem method invented but little used in Britain. As late as 1936 an industry observer, speaking of this process' use in cruiser construction, was to note:.: 'There is a tremendous lot of talk going on, and very little doin~. but it is doing that is wanted.". [37] Nor did the inter-departmental infighting with the Royal Air Force over the effectiveness of sea power (and thus budget allocation) help matters. [38]

The effects of the Washington limitations further complicated the design process. The agreed standard displacement of 35 000 tons (excluding fuel) meant that the technology deployed in battleships had to be at once light and effective. An Italian naval commentator of the day noted that the knowledge obtained in building of vessels incorporating wartime experience (such as H.M.S. Hood) clearly demonstrated that it was "impossible" to unite all the requirements of a modem battleship in anything under 40 000 tons. [39] This situation favoured the efficient scientifically adventurous.

The small coterie of British naval designers could still demonstrate originality and skill - witness the innovative H.M.S. Nelson and H.M.S. Rodney- but they were beginning to run up against the limits imposed by insufficient numbers, ancient yard technologies, and shrinking research budgets. The noted Britsh designer Sir Eustace Tennyson D'Eyncourt remarked that under the restrictive Treaty rules (in his eyes akin to those governing racing yachts) "the most ingenious designer will produce the best ship". Some years later, speaking with the voice of experience, he added a modifying proviso to the effect that Admiralty dithering over designs and the slow pace of work could certainly affect that [40] At a time when the number of university graduates in naval 62. engineering and related fields was pitiably small, when research funds were inadequate, and the level of capital investment pathetically low, British shipbuilding was faced with the task of designing lighter but stronger armour; faster loading guns; lighter yet more powerful engines; and numerous and complicated anti-aircraft weaponry. More challenging yet was tucking all these deadly gadgets into smaller, cramped vessels. That the Italians of all people should seem to be outperforming the British in these matters Oargely true at that) made the industry wince.

Certainly confusion over design helped make Admiralty building programmes more chaotic than they ought to have been, but the inefficiencies were more obvious still. It was calculated that, for planning purposes, the Board had to allow 4-5 years for the design and building of a British ship, whereas in the United States the same result could be achieved in 3 1/4 years. [41] Although here again, as the evenhanded Sir Eustace pointed out, Admiralty demands for increasingly complex, hugely expensive vessels slowed the pace of the yards down. The fact that these technology filled modern capital ships cost in excess of £7 millions to build, and quite as much again to maintain, was hardly the shipbuilders' fault [42]

The debates over the effectiveness of battleships with the bombing mad R.A.F (who, incidentally, secured control of naval aviation) further muddied the waters. The Admirals knew full well how difficult it was for a plane to fmd a moving ship, let alone sink it. Fact was that the Royal Navy became obsessed more with arguing about bombs and influencing public opinion than with innovative thinking. Naval warfare was all about winning and exploiting control of the seas; it was not an excuse to justify the battleship. The R.A.F .'s assault on the efficacy of the capital ship caused the navy to defend these vessels with a sort of stubborn vigour. They were in large measure right, for a 500 pound bomb was, in the rare instance of a hit on a moving and shooting battleship, akin to a flea's bite. However this did not end the pressure: some years later the Admiralty was forced to bow to the furor and strengthen the deck armour of H.M.S. King George V. The designers had wanted more firepower, but this desire was to remain unrequieted, for more armour meant that only ten guns could fit on board, as opposed to the original twelve. The number of guns was reduced from 12 to 10. It was hardly surprising that there were delays in this programme. In effect, "the politics caused a convergence of the terms capital ship and battleship: a blurring of strategic realities because one was a role, the other a type of ship.". [ 43] The debate in the late 'twenties operated on much the same level, if anything the confusion was even more rampant as the battle lines were but newly drawn.

The period to 1929 was thus marked by naval retrenchment, considerable confusion in procurement, and a certain lacklustre haziness in strategic and tactical planning . The last years of the 'twenties saw a consolidation of the 'One Power Standard' as defined in 1922; there was no serious political challenge to it, and a meagre flow of funds was voted towards its maintenance. 63. What little there was in the way of spare cash went towards a cautious expansion of the welfare state. [44]

This state of affairs, predicated as it was on the continued reign of peace as it regarded the Empire, was formalised in 1928. In May of that year Sir Richard Hopkins, then Controller of Finances at the Treasury, sent a memorandum on to :Mr Churchill which read in part as follows:

If a major war is to be judged as distant now as it was in 1925 ... It would be particularly useful in connexion with future Anny votes, and more particularly in connexion with Admiralty votes, to consider whether the Cabinet might not lay down an assumption that at any given date there will not be a major war for ten years from that date - the assumption to stand until, on the initiative of the Foreign Office or one of the fighting Services, or otherwise, the C. I.D. and the Cabinet decided to abrogate or alter it. [45]

This was logical insofar as, given the truth of the assumption, it was a sound basis on which to plan for the construction of vessels which often took upwards of four years to complete. Chancellor Churchill heartily endorsed this suggestion, and steamrolled automatic renewal of the 'Ten Year Rule' through Cabinet.

In a contemporary article, Sir Archibald Hurd described this state of affairs as being one wherein "The Empire, so far as naval force can defend it, now exists of sufferance.". [46] Sir Archibald argued that Britain's triumph in the Great War, and the consequent emasculation of most continental Powers' navies, had granted her the opportunity to reduce her enormous navy. Fine and well, he noted, and in this regard the Washington Conference was a boon. Beyond this point, however, the Royal Navy had been allowed to run down to a scandalous state. The figures Sir Archibald provided on naval construction knot the disparate strings of decay - the planning chaos and the parsimony - in a tight and illusrtrative manner.

Average Annual Expenditure Q!l British N.m!.Dl Construction [47]

Period Private Contractors Royal Dockyards Average spending p.a. in£ % in£ % in£ 1906-1910 7 394000 80.4 1800000 19.6 9 194 000 1911-1915 14 558 000 85.6 2443000 14.4 17 001 000 1916-1920 44106000 93.5 3 074000 6.5 . 47 180000 c 1921-1925 2959000 58.9 2060000 41.1 5 019 000 1926-1930 6504000 76.3 2 019000 23.7 8 523 000 64.

Several things stand out amidst these figures. The first is that, adjusted for inflation and the greater cost of increasingly sophisticated naval weaponry, expenditure on construction fell substantially. More interestingly, these figures highlight a postwar trend which led to the placing of an ever growing percentage of the new naval orders with the Admiralty controlled Royal Dockyards. In so doing the Board of Admiralty was acting on its plan to maintain a nucleus of skilled labour; combined with the concentration of orders with a few designated private firms, it was effectively neutering the productive warship building capabilities of a large part of the private industry. However 'concentration' here is a misleading word: in the ten year period to 1928 the Royal Dockyard Devonport saw only the construction of three cruisers, a minelayer and two oilers. [48] This was the inevitable result of low budgets. Under the circumstances it was hardly surprising that rearmament in the 'thirties was held back by firms which had been out of the game for almost a decade.

This was a baleful situation; and it was to worsen before it showed any sign of improvement.

IV

Events in 1929 were to shove British grand strategy further in the direction of disarmament. One of the last diplomatic acts of the Tory government of Mr. Stanley Baldwin was to sign the Kellog-Briand Pact. This agreement, the intention of which was (in the pleasant theory of the day) to outlaw war, was accompanied by renewed discussions between London and Washington on the prospects for another Naval Disarmament Conference. The Americans had long wanted to re-open the question of cruiser limitations, indeed of cruiser parity. This had been given a cool reception by the British negotiators in previous rounds. The authorization of a massive cruiser building programme by the United States Senate in February of 1929 changed the complexion of these talks. This Senate vote, combined with some conciliatary American overtures on the negotiability of cruiser parity led the Baldwin Ministry to move towards another conference. Asked in the House of Commons precisely what made the Government feel sufficiently secure to begin another round of disarmament, the Prime Minister blithely replied that the Kellogg-Briand Pact had greatly reduced the risk of war. [49]

Complacent, Prime Minister Baldwin dissolved Parliament and set a late spring date for the general election due that year. Displaying the political genius which had served him so well in 1923, he rallied the Tories under the slogan of "Trust Baldwin" and led them on to a thumping defeat. 65. Mr. Ramsay MacDonald was again Prime Minister, albeit this time with a stronger position in the House. The tone of British policy did not change all that dramatically. To public approval, the Chancellor of the Exchequer, Mr. Philip Snowden, noisily disclaimed against the American 'Young Plan', and the manner in which it discriminated against British interests. The new Foreign Secretary, Mr. Arthur Henderson, continued a policy stressing disarmament and international arbitration under the auspices of the League. At best, the new Ministry was a touch bolder than had been its predecessor.

In the autumn of that year, the Prime Minister went to Washington in order to undertake some informal, face-to-face discussions with President Herbert Hoover. These two men, reassured by a shared non-conformist Protestantism, became quite matey. The talks were successful (one uses the word guardedly) in that it was decided to convene a Naval Conference in London in the new year. For his new friend, Prime Minister MacDonald obligingly put cruisers on the table, thereby abandoning the Tory "doctrine of requirements": the assertion that Britain was unique in having many more global requirements, and thus needed many more cruisers. Abrogation of this principle prior even to the commencement of negotiations implied tacit acceptance of the legitimacy of America's demand for parity. This had been inherant in the Tory 'One Power Naval Standard', but they had never intended to admit it.

Under the highly effective leadersip of Mr. Dwight Morrow, the American delegation was able to secure the extension of the 1922 5:5:3 ratio from capital ships to cruisers, destroyers, and submarines. Mr MacDonald had refused the Admiralty demand for maintenance of a sufficient cruiser force. The initial request had been for a 21 cruiser building programme, but when this was refused they fell back on what was re3«fed as a final position of building up to the significantly lower level of fifteen cruisers with S.inch guns, and fourty-five cruisers with 6-inch guns. MacDonald refused even this in the face of extremely forceful American objections. [50] Mr. Morrow retorted with a proposal for an upper limit of thirty-four 6" cruisers. [51] The final agreement [52], one which enshrined the principle of Anglo-American naval parity in all classes, set out the following limits:

Category of Vessel British Empire United States Japan (in gross tons) cruiser: 8-inch guns 146 800 180000 108 400 cruiser: 6-inch guns 192 200 143 500 100450 destroyers 150 000 150000 105 500 submarines 52 700 52 700 52700 [53] 66. The discrepancies between the limits on total tonnages stemmed from a U. S. desire to have larger vessels able to operate in the larger Pacific area. The British set their priorities differently.

It would be unfair to the Prime Minister to say that these concessions were made totally without regard to strategy. Mr MacDonald was influenced by the writings of Admiral Sir Herbert Richmond, one time lecturer and commander of the Senior Officers' War Course at Greenwich. He had argued in a series of articles, later collected in Economy and Naval Security, that British sea power ought to concentrate above all on the creation of a force of fast, 6 500 ton cruisers. This option promised to combine protection of the sea lanes with economy. [54] Unfortunately the 1930 agreement brought British cruiser strength below even Richmond's minimum threshold.

Great Britain had voluntarily abdicated the role of dominant world sea power in the interests of reaching this agreement: one which was in part motivated by the looming financial crisis (see chapter four). Interestingly, Italy and France preferred withdrawal from the Conference to accepting further parity with each other.

In summing the 1930 Conference up, Lord Chatfield asserted that the agreement as signed was nothing more than "capitulation by the Admiralty to political force majeure; they were defeated by the Foreign Office and the Treasury". [55] True enough, in hindsight, but at the time there yet persisted the appearance of international peace. There were no grossly dissatisfied Powers noisily arming for revanchist adventure. Besides, to borrow Dr Kissinger's analysis, in the post 1914 strategic equation "force in being" was nowhere near as significant as a nation's industrial warfighting potential. He goes on to note that since technology was stable, and warfare required extended and very noticeable preparations, it was clear that

... the contribution that arms control could make to stability seemed marginal. Armaments, it was then correctly said, were the symptom and not the cause of tension. The best method of achieving a stable peace was to remove the causes of political conflict. [56]

This statement at once misses an important point, but captures a more fundamental one. Lord Chatfield is completely correct in perceiving this London Treaty as having brought British naval strength below a safe level when placed in the context of potential needs; especially when, contrary to Dr. Kissinger's statement, major warships took a considerable effort and much time to complete. However this beggars the point of whether armaments reduction was perceived as the best way of preventing war, or merely a side effect of preventative measures. Dr. Kissinger is entirely right in saying that removing the causes of international tension was the best way to secure peace. In the context of keeping Anglo-American relations healthy, satisfying the grievances of 67. power, and maintaining what looked like a burgeoning international cottage industry in peace treaties, the London agreement was a handy tool. For Prime Minister MacDonald it had the added advantage of saving quite a bit of money (remember the carrying charges on debt alone were £200 million per annum).

Kellog-Briand and the London Naval Conference were framed by a deepening economic crisis, both at home and abroad. The 1929 crash which floored world fmancial markets inaugurated a period in which rapidly souring economic fundamentals shoved Great Britain from weakness to weakness. Business slumped, tax receipts fell, debt servicing costs remained high, and so on through the unpleasant litany of economic depression. Unemployment rose from 1 200 000 in the fall of 1929 to 1 600 000 in the spring of 1930. This gave the nation cause for distress, and the Labour backbenches excuse for frequent and uproarious demonstrations. [57]

1930 was also the last year in which it was thought possible that the prospects for peace might actually improve. The run of diplomatic triumphs that year soon were obscured by the growing boldness of the Japanese in China and its environs. On 18th March, 1931, the Three Party Committee on Disarmament met. At this meeting Sir Austen Chamberlain expressed grave doubts about the continued validity of the "Ten Year Rule". This was the opening shot in a debate which was to run for some months; though it was intermittently obscured by the raging economic crisis it fundamentally altered British defence policy.

In July the MacMillan Report on Industry and Trade and the May Committee on National Expenditure tabled their respective reports. [58] Amidst panic stricken cries from Whitehall and the City, Sir George May's Committee forecast a budgetary deficit of £120 millions. Unemployment rose to 2 800 000, [59] and in tandem with growing havoc in world fmancial markets, a run on the Bank of England's gold reserve began. By mid-August, Chancellor of the Exchequer Philip Snowden was forecasting a deficit of £170 millions. The Government collapsed, and was replaced by a National, all party, Government. The new Cabinet was worn in on 25th August, but the crisis did not abate. Not even a month later, 21st September, Britain was forced off the Gold Standard and the value of Sterling plummetted. It had abdicated its role as the world's reserve currency.

The new government, with MacDonald as Prime Minister, was returned in the poll of 6th October. In early 1932, a rough-ish economic programme having been hammered out in Cabinet (with the free traders coming much the worse off), some official attention was again turned to strategic matters. 68. The Japanese invasion of Manchuria, the increasing power and bellicosity of that nation's officer class, and the growing strength of the National Socialists and Communists in Germany cast a disquieting pall over the international scene. When a new disarmament conference convened in Geneva in February of 1932, the world had become considerably more hostile. Nor were matters helped by the prevailing mania for beggar thy neighbour economic policies. As for international fraternalism, at no time since the war had there been less grounds for hope. It was under these increasingll gloomy circumstances that Mr Arthur Henderson, Foreign Secretary, assumed Presidency of the Conference.

V

Hearts were wavering for more reason than just vague fears of international unrest. 1931 had been had seen a number of unsettling events purely naval in content. In the United States, naval planning was now, even more than in the past, centred around the tri-partite policy structure of 'open door' trade with China, naval parity with the United Kingdom, and the inviolable Monroe Doctrine. The facts that the Japanese were being highly unruly in China ought to have provided both Britain and the United States with a common worry, however this was not to be. The anglophobic American Naval League took great offence at the County Class cruisers then being launched or undergoing trials with the Royal Navy. These cruisers, ordered from 1928 onwards (and fully acceptable under the 1930 Treaty) were badly needed, as over twenty of the fleet's cruisers antedated 1922.

These cruisers were to give the navy stellar service, for, though they had a target high sillhouette, they were of an exceptionally seaworthy design. They varied in size between the 1930 vintage H.M.S. Exeter and H.M.S. York (8 300 tons, 6 8-inch guns, and capable of 32 knots) and the 1928 vintage H.M.S. Kent, H.M.S. Berwick etc. (10 000 tons, 8 8-inch guns, and capable of31.5 knots); all but the Exeter and the York carried 8 8-inch guns. Between 1928 and 1931fourteen County Class cruisers were launched (two entered service with the Royal Australian Navy): a sizeable augmentation, but nowhere near sufficient.

The 1931launch of the so called 'pocket battleship' Deutschland (10 000 tons, 6 11-inch guns, and technologically innovative) had induced a considerable degree of international skittishness. The French, not having anything to match this new class of warship, immediately replied with their Dunkerque class of battle-cruiser. Even Britain, possessor of three powerful battle-cruisers, saw the technological advances and the strategic implications of a fleet of Deutschland type ships 0 as troubling. To make matters worse, concern over the Royal Navy was running high after the 1931 69. Invergordon mutiny over proposed pay cuts.

Q. For Great Britain, this year closed what has been called the end of a decade of international escapism. In April of 1931, Admiral Sir Frederick Field, the First Sea Lord, informed the Cabinet that the United Kingdom had

... accepted a naval strength which, in certain circumstances, is definitely below that required to keep our sea communications open in the event of our being drawn into war .. .In defensive materiel, in the modernisation of ships ... we are below the standard of the other powers. [60]

And slipping, for the Japanese naval programme showed no signs of flagging. The January, 1932 attack on Shanghai had amply demonstrated that nation's determination to act the part of rogue imperialist As the Geneva Conference assembled, the C.I.D. gravely commented that the only means by which the Japanese could be evicted from Manchuria would be by dint of war. [61] Mr Churchill's prognostication of no Anglo-Japanese war in his lifetime was looking increasingly foolish; especially when such a war was one which the British Government desperately wished to avoid.

These worries were played out in Geneva. The American delegate, Senator Watson, stoutly opposed any reduction in ship size, proposing instead limits in absolute numbers. The British wished to avoid such discussions, more so as their priorities were now the bomber threat and destabilizing ground forces. Sir Bolton Eyres Monsell, the new First Lord, used his patient diplomacy and experience of the service to dissuade British negotiators from anything rash: for instance he insisted that a capital ship limit of 25 000 tons was acceptable only if gun calibre was limited to 12". [62]

Actually, the discussions of the early months were marginally more productive than many historians have been willing to admit. There was some progress towards a toughening of the League of Nations' mandate, as well as promising (insofar as attaining agreements was desirable) starts in the various disarmament discussions. This early sense of movement was soon drawn up short by three things: trade, a vote of the British Cabinet, and the vagaries of Weimar Germany's domestic politics.

By far the most obvious was the turn of events in Germany. In May Herr Brtinig's government fell. It was replaced by an administration presided over by Herr Franz von Papen: a change which immediately imbued the talks with a more nationalist flavour. This new mood of wariness was 70. cheered on by the growing combativeness of international trade negotiators. The round of tariff hikes the Argentinians and Canadians started were continued by the Americans. The Smoot Hawley Bill passed by the Congress was a protectionist tantrum. One which was soon matched and raised by the British at the Ottawa Imperial Economic Conference.

However the least noted act was the Cabinet vote of 22nd March, 1932. On that day a C.I.D. report was tabled [63] to considerable ministerial consternation. Drawing heavily on the researches of the Chiefs of Staff, the report noted that the British position in the Far East was weak. India could, under the circumstances, easily grow restive, especially as the main fleet would require a minimum of 38 days to traverse the necessary distance to be of use. Nor were matters helped by Mr Montagu's earlier promises of Indian self determination and the increasing political turmoil in the sub-continent. In any event, the main fleet was not ready to undertake either the journey or the ensuing combat. This fish course was followed by the sherbet: a number of other glaring fault lines in Imperial defence were pointed out. The recommendations were concise, indeed they almost seemed to have been pared to the minimum so as to ensure political acceptability: the 'Ten Year Rule' must be cancelled; money must be found to strengthen the most obvious weaknesses; and fmally, none of this could afford to wait upon the outcome of the Geneva Conference. [64]

The Treasury representatives piped in to the effect that the nation needed "a period of recuperation, increased trade and employment" and that Britons "were anxious to avoid heavy expenditure on armaments": something to which all heartily assented. [65] Capt. Roskill paints this as blind Treasury intransigence, which is rather unfair, as well as being entirely oblivious to the then prevailing economic realities. The government had, after all, increased taxes the month before (a move the Economist labelled farcical) in order to keep the nation's finances on an even keel. In any event, the presentation was evidently made with considerable eclat, for its reccomendations gained considerable, and growing, currency in Whitehall.

This had the net effect of toughening the British position at Geneva. This tougher stance was reinforced by insistent French demands that Albion build up the fleet and show a tad more perfidiousness as regards an expeditionary force.[66] The burgeoning Franco/Italian impasse sounded another threatening note. The pace of the talks degenerated to a crawl. The death knell for the conference was sounded on 16th September. On that day Herr von Papen, under considerable domestic political pressure from both the left and right, walked out of the Conference in a nationalist huff. His demand for equality of rights with the other participants had been roundly ignored. c It was also in late 1932 that the Naval Intelligence Division produced a worrying analysis of the 71. Imperial Japanese Navy and its recent activities. The report laid particular stress on the recent improvements in the Japanese navy's offensive capabilities. [67]

Germany was coaxed back to Geneva in early December through a more accommodating offer (although the effective end of the 'Ten Year Rule' might have been added incentive). Yet no sooner had the German problem been resolved than the Japanese began demanding enhanced naval building limits: limits which they were soon exceeding.

Thereafter events developped considerable destructive momentum. In January of 1933, Herr Hitler became Chancellor. In February the Japanese, arrogantly incensed at the League of Nations stand against their Manchurian adventure gave preliminary notice of their intention to withdraw from membership in that organisation and, concomittantly, all of the restraints that implied. Prime Minister MacDonald attempted to save the Geneva process through the tabling of a new convention, however he was pre-empted by Herr Hitler. On 14th October, 1933, the latter gave vent to his angrily nationalist tendencies by giving notice of Germany's intention to depart from both the Geneva Conference and the League.

Some years later Sir Austen Chamberlain was to remark to an American diplomatist that such an action was a function of German insecurity: an insecurity which led them always to demand too much, to always be the destabilizing element. [68] Even at this point, it is difficult to assert that the British were unwary of German intentions. If anything, the Germans rendered themselves the object of greater mistrust than the actively aggressive Japanese. It might be surmised that this was rooted in Great Britain having just recently ended a highly sanguinary relationship with one, and a treaty relationship with the other. This axis of thought was propounded by, among others, Chancellor Neville Chamberlain, Sir Robert Vansittart (Permanent Secretary at the Foreign Office), and Sir Warren Fisher (permanent Secretary at the Treasury). [69]

The National Government's reaction to the blossoming of the German and Japanese threats followed on the heels of Hitler's decision. On 9th November, 1933 the 'Ten Year Rule' was irrevocably scuppered. Simultaneously a sub-committee was formed, and mandated to identify the major deficiencies of Britain's defences, and prepare a programme to rectify them. It was known as the 'Defence Requirements Sub-Committee' (henceforth the D.R.C.). Wasting no time, the D.R.C. convened its first meeting on 14th November, 1933, and tabled its report on 28th February, 1934. [70]

This report outlined the worst deficiencies and reccomended augmentation of all the services and the defences in the Far East. Just the worst deficiencies would require expenditure of £93 millions over five years: a figure even Lord Hankey labelled "staggering". [71] It might do the Treasury's 72. reputation some good to note that Sir Warren Fisher was a willing signatory of this document.

The report was taken under consideration on 7th March, but a decision was postponed. This was in large part so as to allow the final and utter collapse of the Geneva process before embarking on what seemed, by the standards of the previous decade, full-throated re-armamament.

This postponement had little effect on the Admiralty. The new First Sea Lord was Admiral Lord Chatfield: a man whose views on international affairs, disarmament and naval preparedness have already received some exposure. Under his leadership, the strategic guidelines of the 'twenties were pitched overboard. Planning commenced for a two-front war in Europe and the Far East: effectively a return to something like a "Two Power Standard". Fleet requirements under such a regime would by necessity mushroom; this had serious financial implications.

The Admiralty discussed this at some length in a memorandum of March 1934. The navy planners argued for a covering force in the Far East strong enough to hold its own until the European enemy was disposed of.

Underpinning these arguments was a, quite correct, view that because shipbuilding was such a lengthy process, building programmes were fundamental, long term strategic issues. Such long term horizons were common to the Admiralty and the Treasury, however it was very much a question of there being two entirely different sets of assumptions impinging on the same planning process.

The Chancellor of the Exchequer retorted that this, while strategically sound, could perhaps be pared back. He suggested finishing the Singapore fortifications, but garrisoning that base with a force of light ships (submarines and destroyers): an inexpensive gesture of good faith, flowers· instead of diamonds for the Australians. The Admiralty proposal had been to undertake £13.4 millions p.a. of new construction (Lord Chatfield wanted to add nearly 50% to cruiser strength); add £ 1. 9 millions to the Fleet Air Arm Budget; an equal sum for capital ship maintenance; £8 millions for personnel (Invergordon still loomed large); £4.4 millions to complete Singapore; and an insignificant quarter of a million pounds for anti-submarine warfare. A £72.6 millions programme all told. [72] This total was to be slashed back to something approaching affordability: i.e a grand total of £50.3 millions. But to the Treasury's mind (more of which in due course) these were numbers that went beyond the mere 'staggering'.

The other services were looking at similar deficiency programmes. When the figures for the R.A.F. plan were given to the Commons, the socialist response was to deny any need for re-armament whatsoever. [73] The D.R.C. plan was by no means the minimum acceptable to the 73. country: to some it clearly it smacked of overweaning militarism. -

Under the circumstances, public opinion being fruitily pacifist, the National Government had to tread warily as regards re-arming. Unfortuanately these same tendencies prevented any closer links with France. In February of 1934 M. Barthou, Minister of Defence, had plainly stated that France wanted security in the form of a British alliance, not further disarmament. [74] His views were rather more advanced than was politically practicable.

Cutbacks or no, all wariness aside, British actions contrast sharply with the concurrent policies of the Dominions. The Australian and New Zealand navies were granted exceedingly modest additions; while Canada blithely gutted her once proud navy.

On the continent Germany was busily rearming. The Reichsmarine's announced building plan had ballooned to a proposed ultimate strength of seven capital ships (including two of the worrisome 'Deutschland • class), eight cruisers (five of modern vintage), and sixteen destroyers (a dozen of which were to be newly lauunched). Herr von Ribbentrop blithely stated in the Times of 14th November, 1934, that German re-armament was peaceful, it was anything but a soothing balm to British policymakers. In the House of Commons, Mr Winston Churchill, who had become more aware than most, was already thundering against lackadaisical progress in stregthening the nation's defences. [75] Intelligence predicted that the Reichsmarine would continue to grow through the addition of another two pocket battleships, a cruiser, and four destroyers. [76] When this was raised in the House, the ensuing debate (with the exception of the ever excellent Winston) proved to be surprisingly subdued. The Foreign Office reports indicate that the National Socialist Government in Germany perceived this as acceptance of their naval buildup.[77]

The strategic questions raised by the fiendish pace of German rearmament gave cause for a consultative meeting between Sir John Simon and MM. Flandin and Laval. The results were entirely inconclusive, as the British yet had lingering hopes of reigning Germany short through some sort of agreement. This did not mean, however, that British re-armament was in any way going to halt. The British postion was largely a matter of juggling adverse public opinion at home, whilst seeking an agreement with Germany, and strengthening the Far Eastern front.

The National Government really had little choice in this matter. The fmancial situation was precarious; in December of 1934 Japan gave the required two years notice that it would no longer abide by the Washington Treaty limits; moreover, no matter how fast the Reichsmarine grew, it was still incomparably smaller than the Royal Navy. 74. The increasingly threatening strategic position led to a re-evaluation of the f:trst D.R.C. report in the form of a Defence White Paper. [78] The revised expenditure plans were tabled in the House on 4th March, 1935. This report was unequivocal in stressing the need to rearm.

It began by justifying this assertion. The old methods of maintaining a peaceful tenor in international relations- The League, the Kellogg-Briand Pact, the Locamo Treaty, international cooperation, and the Quadruple and Nine Power Treaties - were clearly not working. Everyone but Great Britain was re-arming.

In the above circumstance, His Majesty's Government felt that they would be failing in their responsibilities if, while continuing to the full, efforts for peace by limitation of armaments, they delayed the initiation of steps to put our own armaments ona footing to safeguard us against potential aggressors.

Furthermore:

If peace should be broken, the Navy is, as always, the first line of defence for the maintenance of our essential sea communications.

What was more, the Main Fleet was paramount in this endeavour, the capital ship was to predominate therein, and a strong force of cruisers was needed to protect trade routes. [79]

This was a reversal of the policy of a decade and more. It flatly stated that the Royal Navy must be strengthened:- and not by submarines and destroyers, but by expensive capital ships. It was a re-iteration of traditional British naval policy, and as such was a gauntlet cast down to those who presumed that Britannia no longer had a place on the oceans of the world.

In spite of absolute furor on the left, the 11th March debate in the House re-inforced this point. Four days later the French government addressed a similar issue: in a crucial vote the Chambre extended national service. The National Socialist Government could not fail to notice.

It is instructive to note that while Hitler announced the next day that, in clear contravention of Versailles limits, the Wehrmacht would expand to twelve corps, that day also saw Herr Hitler state that he was willing to negotiate naval limitations with Great Britain. Evidently the French and British messages had been digested. He was perhaps re-inforced in his accommodating frame of mind by the so-called "Stresa Front": a French/British/ltalian linkage. Even this had to be justified to the British people in basically pacifist terms. What amounted to an alliance (albeit temporary and 75. unsure) against Germany was described as seeking peace through the League: the "Stresa Front" was merely helping the League's efforts along! [80] c The actual outcome of this flurry of activity was the initiation of Anglo-Gennan discussions. Anthony Eden went to Paris late in the month in order to sound the French out on the possibility of an agreement. The French reacted with considerable equanimity, for they were reassured that a show of resolution was ahving an effect. It ought also to be remembered in this context that the 1935 Franco-Italian staff talks had been detailed and wide ranging. [81]

The Germans adopted a negotiating style based primarily on the maxim 'give us what we want or there shall be no agreement': a well known variant of the 'heads I win, tails you lose' scenario. The German contention was that if they were accorded by treaty a navy 35% the strength of the British fleet, they would abide by those limits. The debate over this contention delayed the working out of an acceptable protocol.

After some vigorous negotiating, Britain accepted the 35% limit. This applied to surface as well as submarine vessels; though in the latter instance Germany successfully insisted that the 35% limit would be adhered to only if the Britain saw to it that the 52 700 ton limit as detailed in the 1930 London Treaty was not undercut.

The German building programme was thus able to expand, for the 1934-1942 period, to include two battleships, two battle-cruisers, one aircraft carrier, four cruisers, twenty destroyers, and fourty U-Boats. [82]

Oddly enough, this Anglo-German Naval Treaty found favour with many people. Even so harsh a critic of disarmament as Lord Chatfield noted approvingly that it locked in German inferiority, thereby preventing a European naval armaments race. [83] The agreement, like any other arms reduction agreement in a democracy, proved popular with the public.

However there were gainsayers eager to make their point. The Mr Winston Churchill lambasted the agreement in the House as having accorded the Germans and the Japanese strategic freedom, if not wanton license. [84] This was a perfectly valid, indeed prescient, point, but it was devoid of any practical alternative than 'just do more'. Unsurprisingly the French saw less good in this treaty. In fact, they were frankly furious. The Admiralty too was cautious, noting that the Treaty had made strategically mandatory that parity with Japan be maintained. [85] In July, this last consideration impelled in July a slight upward revision in the latest D.R.C. plan.

0 The combination of Franch/ltalian/British solidarity, a German agreement, and money sufficient 76. to build up to the 15:10 ratio viz Japan had created a temporary strategic calm, at least on the naval front. Had this level of calm been continued vis a vis Anglo/American relations, Britain might • have felt yet more comfortable, however this was not the case. Standard Oil's incursion into Bahrain was one major irritant. Another was President Roosevelt and Secretary of State Hull's nagging bera.tements of British 'imperialism' and their childish pandering to the Irish lobby. Perhaps the biggest problem lay in financial matters. Britain had recently ceased debt repayments to the United States, resulting in passage of the Johnson Act prohibiting credit being granted to any defaultee nation. This had strategic implications insofar as it weakened Britain's warfighting potential through the partial closure of a source of supply.

The illusion of calm was further shattered by the Italian invasion of Abyssinia. As such, it is unlikely that anyone in the Admiralty, the Foreign Office, or Whitehall at large particularly cared that Italy had invaded this country. Admittedly it bestrode the Suez route, but Italy was not yet perceived as an enemy. And there was another aspect which Evelyn Waugh cheetfully noted: speaking of educated Britons he said

Those who had read Nesbitt believed that it lay below sea level, in stupefying heat, a waterless plain of rock and salt, sparsely inhabited by naked homicidal lunatics ... the editor of one great English paper believed - and for all I know still believes - that the inhabitants spoke classical Greek. [86]

In other words, not really a country worth excercising oneself over; let alone worth the expense of martial effort. The great British public, however, was possessed of a more romantic and selfless temperment. Casting off years of pacifism, they suddenly became quite vocal, indeed militant, on behalf of the Abyssinian cause, and were somewhat discouraged to fmd that their Government felt insufficiently strong to force the Italians to back down.

This dichotomy between officialdom and the public is highlighted by a discussion between Lord Hankey and Sir Samuel Hoare. Speaking on 25th November, 1935, the latter claimed that the public would demand, at the least, sanctions. That sort of action created enemies. Lord Hankey went on to protest

Although we should possibly beat Italy, we might sustain some serious losses of warships ... in view of the obscure attitude of Japan in the Far East and German rearmament in the West, we cannot afford to weaken • ourselves by such a futile war, or to make a permanent enemy of a 80. gave the fJISt hint of the impending storm: a storm not long in breaking. Messrs. Sassoon, Graves, Sheriff, Aldington, and Bartlett disgorged a torrent of literature decrying the senselessness of war. The anti-war works of Miss Vera Brittain (festarnent of Youth) and Miss Beverly Nichols (Cry Havoc) enjoyed wide popularity. So strong was the demand for writing of this kind that none other than Noel Coward, an author whose style was manifestly unsuited to the task, wrote a 'useless death in the trenches/cruel civilians' play entitled Post-Mortem. Mercifully it was performed but once: in January 1944 it enjoyed a limited run at Oflag Vlllb prisoner of war camp in Germany.

The literature, of course, merely represented some deeper currents in society. Just as C.P. Snow's Conscience of the Rich demonstrated how pervasive and fashionable leftist politics became among the younger sets, Vera Brittain's Testament of Youth captured the growing anti-war spirit of a generation that had not had to fight. The famous Oxford Union vote of February, 1933 in favour of the motion that "this House will in no circumstances fight for its King and Country." was an outward manifestation of this spirit.

It was unavoidable that these arguments should influence politics and the debate on national strategy. The National Government, already preoccupied in 1934 by the worsening world situation and the accompanying need to re-arm, were given the example of the November 1934 Putney bye-election to ponder. In that contest Labour ran a "Peace Candidate" while the Tory was equally pithy in his devotion to the white dove, and by implication, disarmament. Contemporary to this was a poll conducted by the Clifford Reader (a suburban London paper) with regard to Britons' willingness to fight to uphold the Locamo Treaty. By a margin of three to one respondents indicated a willingness to ignore treaty obligations if it meant war. [94]

Perhaps the most important subtext to this public mood is its impact on perceptions of force as means to resolve foreign policy grievances, particularly if they measured up to standards of 'legitimacy' or 'morality'. Much of the pacifist enthusiasm was predicated upon the efficacy of the League of Nations. and other international organisations and agreements, as arbiters of disputes and agents of suasion. The public distaste for 'nationalist' wars was obvious enough, but what of one which embodied a cause'! Of course, to paraphrase a modern saying, one man's crusade is another man's murderous flippancy.

The leadership of the League of Nations Union (under Lord Cecil, a Tory) faced up to this quandry with considerably greater realism than might be expected. In the Commons in July of 1919 he noted that there could be

... no attempt to rely upon force to carry out a decision of the Council 81. or the Assembly of the League. That is almost impracticable as things stand now. What we must rely upon is public opinion ... and if we are wrong about that, we are wrong about the whole thing. [95]

In the end he was wrong about the whole thing, and the cynics like Mr Churchill proved right. Nevertheless, in the halycon days of the Union, many people did not hesitate to think peace was attainable through the League; they assumed that there could not and should not be any war. In so doing they further sapped the public will and martial vigour of a nation already stunned by the enormity of its sacrifice in the Great War.

The League of Nations Union put this to the test in 1934 with their "Peace Ballot". The public was asked (and 11 1/2 millions replied) 'Do you consider that, if a nation insists on attacking another, the other nations should combine to compel it to stop by (a) economic and non-military measures? (b) if necessary, military measures?'. The response was interesting in that (a) amassed the support of 90% of those voting, while (b) only garnered a slightly greater than 50% vote.[96]

This sort of opinion mandated that the National Government pay attention. The Labour Party faced even more concentrated demands for renunciation of war: Sir Charles Trevelyan had proposed such a motion at the 1933 Party Conference. What all this meant was that the Government, attempting to rule from the centre, was bracketed quite strongly on the Left by those constitutionally indisposed towards violence, and less successfully on the Right by bedrock Tory backbenchers and Churchillian mavericks. Under the circumstances, the centre of the political spectrum lay further leftwards than had been the historical norm.

Occupying and holding the middle ground mandated that the Government pay attention to demands for forceful diplomacy and re-annament as well as for faith in international goodwill and peace at all costs. This was a recipe for confusion and unnecessary inertia. It also led to the reinforcement of rhetoric on both poles, and the consequent hardening of opinion.

Thus in 1935 Lord Lothian could say that

The central fact is that that Germany does not want war and is prepared to renounce it absolutely as a method of solving her . disputes with her neighbours provided she is given real equality. [97] • This was arguable, of course, but those who had a die-hard horror of war would not admit it. They persisted in their belief that as they hated war, so must everyone else, and the recognition of 84. state seeking to expand its influence in the world; armaments races had little causative impact on this Gennan detennination. Unfortunately for the formulation of British policy, Prime Minister Chamberlain subscribed to the theory which attributed war to impersonal causes such as 0 armaments races. [ 107] This is the most logical explanation for his forceful adherance to the use of diplomatic means to defuse the process by which German expansionism in the 'thirties moved from the simmer to the boil.

There was another more dominant aspect to the Government's strategic thinking. As other powers engaged in the arms race, the iniquity of which the 'Grey' school held would generally be accepted at home as well as abroad, so too did Great Britain. We have already seen that as Chancellor, Neville Chamberlain had recognised and sought answers to the Gennan and Japanese threats; so too did many who were later branded as arch-appeasers and 'guilty men' beyond measure. Sadly for such assailants as Mr Foot, the fact that British expenditures, as a percentage ofG.N.P., doubled between 1935 and 1937, [108] flatly contradicts such arguments.

The Ministry was merely reacting to strategic realities. Thus far it has been shown that when international threats and statements by the Service chiefs that British interests could not, under present circumstances, be protected, the Government acted. Sarajevo Fallacy or no, brute strategic assertions carried the day. What was at play was an entirely different set of strategic conceptions from those imbued with the flawed intellectual pedigree of the 'revisionist school': conceptions based on the strategic equilibrium. The bad old balance of powers.

While it may be axiomatic that opinions and views of morality given wide credence may influence policy, it would be ludicrous to suggest that they are blindly followed by decision making elites. The Cabinet was not populated by narve or stupid men, all Corelli Barnett 'ruinous legacy of the public schools' analysis aside. When presented with realities, they reacted with considerable intelligence.

The Labour Party savaged the Government in the 'thirties for adding to tensions by re-arming, while even after Abyssinia it praised most 'appeasement' type diplomatic initiatives. When war broke out, British unpreparedness they maligned with equal vigour. And there's the rub. The people with a constant strategic conception were the so-called 'guilty men'; this constant vision of grand strategy was more deeply rooted than any discordancy stemming from moral doubt.

Strategy is an indeterminate sort of thing. Grand Strategy does not have fixed laws and constituent pieces:- it is formulated in accordance to economic, political, psychological, social, legal, moral, and, military imperatives. Strategy is paradoxical and uncertain for the historian; immeasurably more so for its maker. Basically national aims and interest are sorted out and 85. policies designed to ensure their success are then created.

Strategy is thus a sort of arithmetical equation where ends and means are weighed. This demands that variables of risk and cost be allocated. Prime Minister Chamberlain certainly altered the relative weighting of these variables, but the equation remained unchanged. The risk of war and its cost (call this B) was placed next to the risk of financial collapse and its cost (call this A). In 1935 the equation ran A > B, and in 1937 it ran A < B: re-armament, disarmament, inaction, higher deficits, lower deficits, &c. &c. all had varying costs at varying times. This may be contrasted with Labour's magical ability to make A become B.

In this regard the events of 1914 taught another lesson: one of minimizing risks and costs in sufficient measure to protect national interests. The Schlieffen Plan was high risk; the trench stalemate and the ensuing "Western" strategy high cost. In general it might be argued that strategies heavy in cost demand sufficiently large resources and, in the case of a democracy, a considerable degree of political support. Those strategies top heavy with risk can get by with much less in the way of either. We have seen how the prevailing intellectual and political climate of the 'thirties tended to dismiss threats to British security. If anything, popular fears that "the bomber would always get through"- and deliver unto England horrible forms of devastation- made anything remotely warlike seem a wild and dangerous gamble. This was coupled with a dicey economic climate.

The result, perhaps inevitable, was a high risk strategy which contained as great a level of re-armament as was judged politically and economically viable. The ex post accusers of the 'guilty men' school scoffed at the unnnecessary militarism of a British Defence Estimates totalling 6% of G .N .P. in 1937; while the figure for Germany that year was 13% of a much larger Gross National Product. [109] In 1940 they screamed for actions that would have meant double the original expenditure. The high risk strategy failed, and for that, so long as the high cost alternative was impracticable, only partial guilt may be assigned. Stanley Baldwin's line viz. the replacement of a Government spending as much on defence as it could with one hostile to the whole idea of defence had infinitely more currency in 1937 than when he first uttered it thirteen years previous: something typical of his career.

Thus 'appeasement' did not mean concessions from weakness, rather it meant armed assent. A fine distinction, no doubt, but particularly suitable for the delicate logic of British politics.

IX

The crossover of the resepective risk weightings of economic collpase and militruy threat 86. occurred in 1936-1937. For instance, in the wake of the Rhineland occupation and the German intervention in the Spanish Civil War, the projections for new naval construction rose from the £64 millions of the February 1936 D.R.C. plan to the nearly twice as large figure of £110 millions. [110] Indeed the total capital cost of re-armament in the same two plans rose from £245 to £426 millions! [111] This sort of revision certainly had the power to shock. Among the freshly stunned was the new chancellor, Sir John Simon. He wrote that

We are running the gravest risks if we do not absolutely insist on correlating the rising burden of defence liabilities to the whole of our available resources. Indeed the means of correlation is, under existing practice, rapidly breaking down. [112]

Of course this was not arguing that the figures as provided by the services should be revised downwards because they were somehow wrong. Instead Sir John was begging that he not be swamped by a relentless tide of armaments spending. His rather unfortunate solution was Treasury controlled rationing: a proposal which, while sensible to an economist, was unpalatable to a serving officer. First Lord Duff Cooper and Secretary of State for Air Lord Swinton responded in Cabinet that they would provide the Treasury with two sets of Estimates: the affordable and the strategically desirable. [113] However this last assertion requires some translation: read economically desirable and militarily desirable. Happily they forgot to mention another sketch Estimate which they might have provided: the politically desirable.

The Treasury responded with the statement that, in their view, for the period 1937-1941 an average yearly sum of £220 millions could be allocated to defence from revenue, with an additional infusion of £400 millions in borrowed funds to top up the programme. [114] Further funds for defence could be secured, Cabinet was told, only by dint of higher taxes. This framework of £1500 millions, it was agreed, imposed limits on British diplomacy and , in any case, did not meet Service requirements. The Minister for Co-Ordination of Defence (a post created in 1936 after considerable Parliamentary debate on the dangers facing the nation), Sir Thomas Inskip, proposed a twofold plan. On the one hand Lord Halifax's encouraging discussions with Herr Hitler should be followed up, perhaps to the extent of negotiating a treaty on bombers; while the Service chiefs should also prepare revised estimates of required funds. [115] It is interesting to note that this discussion to place some months after the Economic Advisory Council (a Labour created sort of economic D.R.C.) had reported on incresing incidence of production bottlenecks. [ 116]

This last point gave the Treasury grounds for hope that the £1500 limit might be adhered to. On 31st Decemmber, 1936, Sir Frederick Phillips (Under Secretary at the Treasury) had written to Sir Richard Hopkins (Second Secretary) commenting on his fear that rearmament would throw 87. Britain's finances into a sea of difficulties; particularly as the inflation induced by the D.R.C. programme appeared to be gathering steam. An increase in the rate of inflation would require higher interest rates; hardly cheery news for what was a fragile recovery. In order to avoid this, he was willing to tolerate a worsening Balance of Payments. [117] In effect the £1 500 millions limit was viewed as a necessary evil.

This is no more than an attempt to regulate military spending within the bounds of resource limits (particularly in shipbuilding where no amount of money could make up for inefficient or lost capacity). It is also not the action of a Scrooge -like Treasury out to undermine the nation's defences. In fact the idea of a loan for defence was discussed and largely agreed to by the Treasury before Mr. John Maynard Keyenes aired it. [118]

In the end, the 1937 Budget included a "National Defence Contribution' (a tax on reannament profits at once politically and economically useful), as well as a rise in the standard rate of tax. The Prime Minister noted that he had risked the premiership. [ 119] This provided the context for the discussion of the revised service estimates.

Underway here was anything but a tussle between radically opposed strategic theories. Being debated was the level to which a stronger national defence - something all but the Opposition desired - should be allowed to imperil the country's finances. After all, national defeat can ensue from either military disaster or self-inflicted bankruptcy. The debate in the Government was largely, the ignorant and blind aside, a matter of deciding which was the most favourable course to chart. In another finely honed British distinction, the debate became a matter of degree. Had Herr Hitler been something other than a risk-taking, more than megalomaniac hooligan, 'excessive expenditure' on arms would no doubt be coming in for a round of criticism. Admittedly this is a far from neat correlation, but it is useful as a counterweight to some very fuzzy thinking on strategy.

The revised Service Estimates certainly indicated a desire, backed up by cogent argment, that military spending rise well above the £1500 millions proposed by the Treasury. The Admiralty indeed provided two Estimates: for the old D.R.C. Standard Fleet and a New Standard Fleet. This latter was, in the Sea Lords' view, more atuned to the prevailing military realities. Sir Thomas lnskip summed the Treasury/Service split on the weighting of economic and military variables in the following terms: the new proposals (totalling roughly £1900-2000 millions for the five years 1937-1941) presented

an inexorable and immediate choice between two courses. The first 0 involves heavily increased taxation, and a straining of our economic 89.

X

This quite natural aversion to economic suicide was nicely buttressed by the growing production bottlenecks. As far as shipbuilding went, armour plate, optical instruments, and skilled labour were the items in shortest supply. In an industry such as this, Sir Thomas Inskip told Cabinet, coercive measures for both industry and labour were needed: a most difficult course politically. [123] This point was reinforced by the ironic fact that the Government had hoped, and continued to hope, that re-armament would help with the Clyde and Tyneside voters: those benefitting from the burst in shipbuilding. [124]

These bottlenecks were in great measure due to the shell shocked state in which the industry found itself after the successive disasters of years previous. Capacity had vanished and there was little hope of quickly recovering it. A yard such as Jarrow was an antique when it was closed, and would require repairs so extensive that the return would lie years down the road from the initiation of the renovation. Nor, however, can the surviving yards shirk a fair share of the blame. The idiotic working practices under the multi-union regime were clear enough, but management's decision to pare research budgets and gut capital equipment replacement programmes had wide and hurtful effects. Given restrictive working practices and cheap and abundant labour, it made some sense to produce ships under the most archaic of (labour intensive) conditions, but this had an effect on productive efficiency.

For instance in the early 1930's British researchers pioneered the development of the efficient and militarliy useful high pressure steam engine. These trials, making use of the H.M.S. Acheron, were well publicized and ended in the incorporation of production versions into warships. Unfortunately the recipient vessels were American, not British. [125]

Another story of bumbling in the shipbuilding industry relates to production methods which might have helped build lighter, easier to maintain warships: more specifically, that old saw welding. As re-armament got under way, the Admiralty opted to engage in detailed research into the possibilities electric welding had to offer, particularly when combined with longitudinal framing. The experiments were a success, indeed startlingly so, leading the Admiralty to decide to incorporate both in the construction of the "J" Class destroyers. The shipbuilders conceded this point, as well as the fact that longitudinal framing (as opposed to the traditional transverse method) provided a lighter and stronger hull. This agreement proved to be a merely pleasant preface to the blunt assertion that longitudinal framing was more difficult to erect, and was more expensive. In any event, there was a critical shortage of trained welders; whereas the riveters and their union were making themselves rather more available. [126] 90. The economic catastrophes of 1921-1936 had transformed labour, with its restrictive and inviolable industrial covenants, into a decidedly non-fungible commodity. The drift to other 0 industries and parts of the country, or else the deleterious effects of unemployment, had created shortages which were not easily fllled. The apprentice programs in pJace could fill but a part of this demand, and in any event the unions, whose members were suddenly back in demand, were not going to bargain away their newfound hopes of prosperity by agreeing to the massive dilutions of labour required to rectify the situation.

These shortages of plant and skilled workers, and similar ones in allied industries, soon created shortages beyond armom plate and optical gear. Gun mountings, guns, and fire control gear were the next to suffer. Other companies, such as manufacturers of printing machinery, boot- and shoe- making equipment, and accounting machines were the most likely candidates here. Unfortunately these companies were all vital cogs in Britain's export industry: the earnings of which were essential in the financing ofre-annament By mid-1939 an item such as high altitude control gear was being produced at a rate sufficient only to meet 35% of the requirements for cruisers and capital ships, and a mere 10% of that needed for destroyers. [127] Clearly, the bottlenecks were more than just transitory, easily curable rigidities.

Undoubtedly this sort of reasoning assisted the Cabinet in arriving at a compromise decision on re-armament: instead of£1500 millions or £2000 millions, some £1600-1650 would be alloted for the five year plan. This decision was taken during the Cabinet meetings of 16th February, 1938, and it was by no means unanimous. Sir Samuel Hoare (the Home Secretary} and First Lord Duff Cooper both demanded that Britain's war fighting capabilities be raised to a level commensurate with the military threats she was facing: in other words, a policy of risk minimization and high cost. Their colleagues, weighing the evidence, opted for more of a gambler's strategy: hence the £1600-1650 figure. [128]

Accepted or not, the New Standard Fleet is representative of a much broader trend with profound economic and strategic implications. Both the British military and political hierarchies insisted on basing British rearmament on the Royal Navy and the Royal Air Force. With the demand flrst for bombers (remember Stanley Baldwin's "the bomber always gets through" speech at Bournemouth} and later fighters, and the ongoing demand for warships, Britain opted for a course of action which was at fll'St sight curious.

These weapons were the most sophisticated and expensive items available in the modem armoury. The production of such weapons demanded a highly developed and modern manufacturing base, a skilled workforce, skilled scientific researchers, and talented technical innovators. As has been seen, shipbuilding and many other British industries were lacking such 91. qualities in one degree or another.

What was more curious is the fact that these requirements were made in the light of the clear fact that the resources of Britain's economy were nowhere near as plentiful or resilient as those of her likely enemies. It did not take a great leap of the imagination to recognise that, given the circumstances, the expensive and sophisticated programme of rearmament decided upon would place an enormous strain on Britain's economy. The experience of rearmament made this absolutely clear, particularly when the government (naturally enough) hesitated to impose war time controls during peace. Nor were the government's advisors loath to point this out: the 'Advisory Panel of Industrialists' made this very clear in January of 1939. Noting that so long as peacetime conditions reigned, industry was doing an it could. Moreover, they said, pushing the nation into wartime controls ala 1917-1918 while peace yet reigned had an array of attached problems an its own. [129]

The reasons for this contradictory state of affairs were numerous and varied. Powerful among them was the desire to avoid having to prove the 'Westerners' right a second time. The reannament minded Tory backbenchers, as well as Winston Churchill, tended towards military options which were indirect, stressed modes of engagement other than the decisive land battle: strategies which preserved the fiction of 'Imperial' strategy. In the end, of course, --:.: riaval blockades and extended sniping at the flanks would not conquer Germany; Britain could not, as McKinder had implied, compete with Germany on the land in Europe barring another massive B.E.F.. On the other hand, Britain could not fully live up to her role as a great power unless she did just that. Yet Captain Liddell-Hart could still write convincingly of indirect strategies, and war planners could envisage mighty and successful campaigns of naval blockade, economic warfare, and aerial bombardment.

Another strong impulse towards ships and planes might be termed the •business as usual' attitude. This was another bit of self deception which held that break neck rearmament largely for the R.A.F. and the Royal Navy would not require national service and the ensuing societal dislocation. But there's the rub. Massive effort on the part of an overtaxed industry required a truly gargantuan intervention by the government into an aspects of life. Industry, labour, the whole nation had to, and were, mobilised. :Mr Corelli Barnett in Audit of 'Wr makes a good many points; the best of them rather lurks beneath the surface of the dialogue, namely that Britain had a rotten industrial structure and (whether he admits it or not) excellent administrative leadership. Germany, on the other hand, possessed a sound industrial constitution and was directed by wild eyed visionaries quite often oblivious to reality. This is ironic, because Germany - the nation better suited to shouldering the massive demands of a marine and air efpansion - chose 0 to. adopt the 'Blitzkrieg• economic strategy. This self-conscious decision by Herr Hider stemmed 92. from a desire not to squeeze the civilian sector with an unnecessary level of state intervention. This became doubly true for Hitler when it became apparent that Britain had resolved to re-arm rather than remain neutral.

Given that the British leadership regarded Germany as the most threatening potential enemy, the decision to stress navy and air force also represented a simple abdication of the strategic initiative. The possession of an adequate military striking force did not require its use, but the absence thereof surely curtailed Britain's room for strategic mana:uvre.

XI

Having outlined the flow of general policy to 1938, it is perhaps time to backtrack some years and sum up the impact of purely naval strategy on the re-armament debate and shipbuilding. This can be sub-divided into threee disitnct phases: the deficiency building programme, the quasi-two power standard building programme, and hell for leather re-armament. Each lasted roughly two years, and each was a response to the Admiralty's perception that it was between the devil and the deep blue sea; but with the unfortunate proviso that the devil kept getting bigger.

The deficiency building programme stemmed obviously enough from the discussions of the D.R.C .. The three D.R.C. Programmes comprised attempts to rectify fundamental weaknesses in the Royal Navy: in effect attempts to shore up the deterrent, not to build an adequate war fighting potential. This was predicated on two things. The first was the assumption the the international situation would, if war was inevitable, deteriorate with sufficient slowness to allow for augmentations to the fleet; sadly, this rather ignored the bottlenecks that were later to be such a problem. The other factor was the belief that the D .R. C. Programmes would add sufficient strength to revive the Royal Navy's appearance as a deterrent This was not so much planning for war as it was the strengthening of Britain's bargaining position.

This period ran from roughly 1933 to late 1935. The strategic assumptions incorporated in the second and third D.R.C. Programmes included co-operation with the French in the Meditemmean; Italian neutrality; as well as a failure of Germany and Japan to engage in major shipbuilding schemes. This particular mode of planning reckoned that to deal with Japan alone, 12 capital ships, 5 aircraft carriers, 46 cruisers, and 9 flotillas of destroyers would be required. In addition, a force of 3 capital ships and 4 cruisers would remain in Home waters to watch over a quiescent Germany. [130]

This was by necessity changed in 1935. That year witnessed the Japanese insistence on naval parity: something which was refused them, something which they got anyway by withdrawing 93. naval treaties. [130] That January had also brought disconcerting news from Germany. On the 7th, 14th, and 22nd the British naval attache in Berlin had sent the Director of Naval Intelligence a series of reports noting that the laying down of the battle-cruiser Scharnhorst in October constituted, it being three times the size of the Deutschland, a clear and irrevocable breach of treaty limits. [132] As the Anglo-German Naval Treaty followed swiftly on the heels of these communiques, Admiralty planners were now facing a far more complicated and threatening situation.

They responded with the final D.R.C. plan. This called for additions to the fleet so that it would total, among others, 2 new carriers, 70 cruisers (Lord Chatfield's desire fulfilled), 16 flotillas of destroyers, and 7 new capital aships (the rest to be refurbished). [133]

However this plan, as we have seen, soon fell victim to international circumstances. The looming threat of a two front war necessitated what was in fact a two-power (though barely) standard navy. It is thus hardly surprising that the New Standard fleet should constitute a major increase over its planned predecessor. The incipient hostilities in the Far East (including a clash between Royal Navy personnel on shore leave and Japanese police}, and the 25th November signing of the Anti-Comintern Pact by Germany and Japan gave added piquancy to this New Standard. The crises in Abyssinia and Spain during that year served to highlight the potential hostility of Italy: something which the Admiralty regarded with nothing less than horror.

New Standard versus Third D.R.C. Pro~Uamme.

Type of vessel. New Standard D.R.C. Standard Capital ships 20 15 Carriers (incl. 3 on long notice} 15 10 Cruisers 100 70 Destroyers (flotillas of) 22 16 Submarines 82 55 [134]

Describing this fleet, the Defence Plans (Policy) memorandum argued that British sea-power depended in large part on the main battle fleet, hence the inordinate share of resources devoted to these vessels. Moreover, as they took so long to build (with the converse being true for smaller vessels} it made sense to stockpile the 'big guns now'. [135] This also reflected Naval Intelligence's estimates of U-Boat construction totalling 80 to 1939. [136] In 1934 the Admiralty 94. had determined that, on the outbreak of war, a minimum of 200 000 tons of new destroyers and escorts would be needed but fast. This determination stemmed from the correct realisation that war planning would have to be based on the required number of convoys, not on the enemy's submarine strength. It might be noted that this figure, which worked out to a paltry two escorts per convoy, was based in good measure on the belief in the efficacy of Asdic and other anti-submarine weapons; weapons which proved to be highly over-rated. [137]

The Admiralty deserves blame for its over-reliance on Asdic, but it is less deserving of blame for its failure to anticipate the threat posed by wolf-pack tactics and airborne assault. In all fairness 80 submarines was hardly enough to create a sufficient threat through 'wolf-pack', nor can the Admiralty be expected to have anticipated the German conquest of both Norway and France. Indeed the greatest impediment to Britain's wartime supply was deemed to be a repetition of blocked and crowded ports. [138]

While the New Standard Programme marks the end of the second phase of rearmament, the storm of debate which at times obscured its contents marks the beginning of the third and last phase of the pre-war arms buildup. This last period lies on the other side of the cleavage between a worried but substantially equable Britain, and a tense, crisis driven nation. It was a period caught up in the successive storms of Austria and Czechoslovakia. It was also a time when, for all intents and purposes, naval shipbuilding was conducted at a furious clip; there is even some doubt as to whether a faster pace was even possible. The period and the programme took on an hithereto unknown urgency, and as such, it belongs in a section all its own. 0 [1] J.D. Davidson "U.S. Can escape Sentence of History" in the Wall Street Journal Wednesday 21st October, 1987, editorial page. Similar ideas were vented during a discussion between the Secretary of Defence Mr. Caspar Weinberger and Mr. Charles Corddrey, a journalist, on Mr. Wiliam F. Buckley Jr.'s Firing Line, Sunday, 25th October, 1987; Public Broadcasting Systtn'\ transcript available. [2] W.C. Sellar & R.J. Yeatman 1066 ol all That E.P. Dutton & Co., 1931, p. 114. [3] The National Debt totalled£ 7 832 millions on 31st March, 1920: a date by which almost all of the war expenses had been absorbed into the Government's accounts. For purposes of comparison, the pre-war national debt stood at £650 millions. These figures are from G.C. Ped.t..r) British Reannament and the Treasury Scottish Academic Press, 1979, p. 7 5. Those more enamoured of detail might turn to the relevant Cmd. Papers in the HMSO 'Accounts and Papers for 1919-1920. [4] quoted in A.F. Havighurst Twentieth Century Britain Harper & Row, 1962, pp. 150-151 [5] K. Burk "World War One Roots of Treasury Control" in K.Burk (ed.) Wr and the State George Alien & Unwin, 1982, p. 92. A.S. Milward in 1be Economic Effects of the Two Wor Wars on Britain Macmillan, 1984, p. 96, notes that Great Britain made loans of £1 419 milli

Eve's eyes opened very wide.

'Do you mean to say you gave me somebody else's umbrella?'

'I had unfortunately omitted to bring my own out with me this morning.'

'I've never heard of such a thing!'

'Merely practical socialism. Other people are content to talk about the redistribution of property. I go out and do it.'

Psmith to Miss Halliday P .G. Wodehouse Leave it to Psmith, London, 1923, page 62.

c 102. CHAPIER FOUR wrm HANDS TIED AND A MURKY CRYSTAL BAIL: ECONOMIC POLICY AND ITS IMPACf

I

By 1937 it was becoming increasingly evident that Britain's strategic needs, if not the exigencies of remaining a great power, were subjecting the nation to considerable strains. In the case of shipbuilding, a troubled industry was rescued from the commercial doldrums by these strains; however the newfound prosperity in and of itself raised new, equally threatening problems. As questions of survival gave way to constraints on production, the industry was again presented with the need to reconsider its structure, and the relation of that structure to the nation's naval requirements. Unlike the period to Jarrow- a time when British shipbuilding might, perchance, have scuttled their disdain for innovation - the period of rearmament did not afford management with the luxury of choice. The Admiralty's soaring demand for new vessels and refits simply had to be met, leaving little space for time-consuming refurbishments. Wholesale changes could thus be directed from but one place: Whitehall.

Needless to say, any number of macroeconomic affected His Majesty's Government's ability to muck about with industrial policies. Under the circumstances, the view from Number 11 Downing is more important than any Tyneside vista. That rearmament rescued shipbuilding, and then saddled it with new concerns is a given; why those problems were not 'solved' in time for war seems to be the question.

Some recent historians have whingeingly questioned the Government's failure to reorganise industry in the face of the Axis threat. This attitude implies that British industry was inefficient (if not sclerotic); that there was sufficient evidence by which such a reorganisation might be justified; that such a corporate makeover was possible. Shipbuilding is a particularly rich case in point. This new breed of historian is particularly resonant when arguing that in no other industry was the scope for implementing new methods of production, modern technology, and more reasonable industrial relations so great. Some, and Mr Barnett springs immediately to mind, make a convincing argument that in wartime all the deficiencies of the yards were laid bare, and indeed worsened. Clearly Britain's existing pool of shipbuilding resources could have been more effectively deployed. The crunch affecting available capacity and its ability to repair and undenake new construction in the early years of the war (largely before the American yards reached their stride) did have a debilitating effect on the British war effon. The Board of Admiralty had to continually revise their building plans:- never an uncommon event in war, but in the British case so great were the constraints that it appeared as though the Admiralty had developed a positive 103. mania for altering plans.

His Majesty's Government, so the argument runs, ought in peacetime to have bravely brought industry and labour into line; to have instituted the structural and managerial changes that became so desperately needed in wartime. Bottlenecks, as we saw in the last chapter, began to afflict the naval programmes quite early on. Nor did these problems of rigid work practices, archaic industrial plant, and poor management escape Whitehall's eagle eyes. The decision to take the matter in hand and move to a new and better industry could have been, but was not, made. To echo Mr Bamett again, the history of Britain's shipbuilders need not have been dubbed "The fossilisation of inefficiency". [1] There is certainly scope here for a variant on the 'Guilty Men' saw, but that would not only be unfair, it would miss certain quite fundamental points.

While the problems were microeconomic in nature, the solutions resided in the rarified atmosphere of Treasury economic planning. Leaving aside the obvious point that government intervention in specific industries has a spotty and unfortunate history, it must be made clear that any design to revamp Britain's shipyards was subject to a numerous and compelling series of larger constraints. In the first instance there was a natural disinclination on the part of all kinds of Britons to interfere in a wholesale manner with the lives and livelihoods of their fellow islanders. Implicit in the critical stance outlined above national acceptance of the state's wholesale intrusion into other people's lives: a characteristic which ought to be mercifully lacking in a democracy. State bossiness with a vengeance, and this does not include services such as the N.H.S., was even unpopular among many British socialists, particularly if they were of organised labour. Restructuring od shipbuilding would have altered the fabric of whole communities. Only extremists of the ilk of Stafford Cripps and Oswald Mosley advocated this sort of behaviour, and were consistently unable to win lasting and widespread support for their proposals. [2]

Part and parcel of this is also a trite, but surprisingly overlooked, strategic point. If Britain decided to preserve her tolerant democracy, with all of its flaws and glaring stupidities, then that was tantamount to a societal goal. In 1936, any call for the creation of a war economy would have seemed absurd: contemplate for a moment the prospect of a politician publicly suggesting that entire industries be, forcibly if necessary, reorganised along war-winning lines. The response would have been derisory. Imagine further any right thinking politician, not far removed from another appointment with the voters, persisting in this quest. It is a most unlikely proposition. A writer who has put more effort into formalising this idea within the context of economic strategies, noted that

The strategic aim of defence against an enemy is not served if the 0 demands made on the economy change society and the political system 104. so much that it is no longer the same as the one originally to be defended. [3]

A home truth, certainly, but one well worth stating regardless. However obnoxious the then current state of British shipbuilding might seem, it possessed a certain inertia which sixteen years of commercial trauma had not destroyed. If the solution lay in London, then it is necessary to delve a bit deeper into the influence of economics on shipbuilding, and on the fonnulation of naval strategy.

Parliament and Whitehall are not noted as tremendous repositories of fortunetelling and divining. As such, it surpasseth all reasonable understanding that Government policies should have reflected a correct appreciation of and a radical response to shipbuilding's wartime problems. In any case, a more salutary line of enquiry would be into the macroeconomic constraints that affected official policy towards the industry.

The aspect to this discussion is the fact that inter-war macroeconomic trends affected Great Britain in a different and milder fashion than was the case with the vast majority. of industrial nations. In the United Kingdom, the depressions of 1929-1932 and 1937-1938 were milder and more narrowly focussed than, for instance, simultaneous troughs in economic activity in the United States. A complicating factor was, to make use of the current parlance, the 'North/South divide' in England: the South and East were by and large much better off than the North. This was in great measure a function of the concentration of failing, middling technology industries (such as shipbuilding) above the Humber. By virtue of this divide, and the wildly different imperatives it engendered, there came to exist a dysfunction in the national debate over economic policy. In the end, the concerns of the City of London proved the most cogent..

The problems facing Treasury decision makers were essentially ones of financial policy and confidence building. The varying degree to which business activity suffered was a matter of lesser, though hardly unimportant, concern. This rendered it imperative that the dominant thrusts in policy making should be towards balanced budgets and a positive balance of payments. Additionally, there was nothing the Treasury could do to unma.k.e the business cycle. If economic downturn, with its related surge in welfare disbursements, happened to coincide with the need to spend more on defence, this was neither more nor less than an instance of the disagreeable unrepealability of the laws of economics. Naturally these concerns had an effect on naval policy; usually in the form of tighter than desired budgets.

The second aspect to this discussion is the nature of the policy making debate in the 'twenties 0 105. and the 'thirties. While the National Government was heavily Tory, its policies were to the soaking side of what is in current parlance the "Wet". The various Cabinets were chock full of gradualists, moderates:- people willing to see all sides of any question. By and large, politicians of this era eschewed bold policies. The impression given by then current atlases of the vast scope, strength, and solidity of the Empire provided a psychological cushion which disallowed inventive thinking. This was particularly true of the National Government (which, after all, included the Conservative and Unionist Party), the economic policies of which tended towards a combination of tinkering and a borrowed belief in extending the welfare state. The Loyal Opposition was made of stemer stuff, issuing frequent calls for radical social change. But Labour was original only in that Socialism was untried; it had yet to be proven faulty. In principle, the Labour Party was devoid of ideas regarding economic efficiency. The nature of the movement decreed that its goals should be redistributive rather wealth creating. In modem terms, and the parallell is inexact, no one was proposing 'Thatcherite' prescriptions as a way of curing the rot in industry. In practice, the British electorate desired little more than employment, peace and quiet.

Once real strategic threats began to develop in the early 'thirties it was essential to gain backing for rearmament. The peace activists on the Left had to brought on board; thus labour could not be regimented and work practices altered, especially with unemployment as bad as it was. After all, 'watch on the Tyne' is at least as catchy a phrase as 'watch on the Rhine'. Those on the Right, fearful of financial collapse, had to be brought to adopt the free spending, increasingly indebted, rearmament policies; thus industry could not be bullied or controlled. The Left despised armaments and power politics on principle and the Right detested the fiscal irresponsibility deficits implied. Unfortunately for the Government, both shades of opinion had to accept a programme which contradicted these very principles. Any bold new policy of industrial restructuring was bound to upset one or the other: a tiff the Government could well do without if it were to fulfill its defence plans. There was an ineffable distaste for political confrontation.

Macroeconomic constraints and the political need for moderation thus exerted profound influences on economic policy. As in naval policy and diplomacy, economic policy should not be discussed in a realm of crystal balls and after the fact judgements. The freewheeling sloppiness inherant in parliamentary democracy ensures as one of its blessings that the sort of bossily radical restructuring for war cannot take place in peace. There were deep political, psychological, and economic imperatives acting on politicians a the time. That Britain's political leaders were incompetent augurs is irrelevant .

0 106.

n

The high ground of economic thought in the inter-war Treasury was occupied by the theoreticians of "the quantity theory of money". Paring it down to its essentials, this theory held that on a secular basis, the supply of money detennined the general level of prices, and that the 'real' forces of productivity detennined the levels of employment and income in the economy. [4] Central to this was a belief in the Gold Standard: an effective method by which the supply of money, and thus inflation, might be controlled. In those days before an indexed system of transfer payments, inflation and unemployment were equally tenifying. 1be ruinous German inflation of the 'twenties, and the general impoverishment it left in its wake, amply demonstrated this fact.

It was a time when fiscal prudence yet held sway, and few politicians expressed the desire to saddle future generations with debt. They were periodically reminded of this as Great War debts came due: for instance the 1928 3 1/2%, £350 millions series of war loan. [5] So powerful was this morality of 'pay as you go' that even a Liberal pamphlet, published in 1930 at the height of the Depression, could confidently state that unemployment was attributable to the fact that

we are seeking to ensure to the nation a standard of living higher than our present national effort and efficiency justify. [6]

There was also a cogent theoretical side to this belief. Known as the balanced budget multiplier, a theoretical justification for taxing sufficiently to cover expenses was implicitly accepted. Basically this theory held that the government could deploy money more effectively than taxpayers: the transfer of funds to the government, who would spend it all, from consumers, who would engage in some saving, was thought to be more efficient

Britain, it cannot be adequately stressed, was deeply in debt. New responses to economic depression, such as President Roosevelt's quasi national-socialism, required some sort of room for manreuvre. Between 1932 and 1939, President Roosevelt and the largely unencumbered American Government doubled the federal debt This amounted to an increse in the ratio of debt to gross domestic product from 0.334 to 0.446. In Great Britain during the period 1933/34 to 1938/39, this figure never dropped below 1.53. [7] Moreover, public spending, particularly transfers, increased during the inter-war period; and Tories, from Winston to Neville, eagerly • increased social spending in response to a growing awareness that it was politically and morally expedient to do so. Public spending after 1918 ran at a rate approximately 150% greater than in 109. Writing in the Times, Mr Keynes (himself a member of the E.A.C.) went on to state somewhat more forthrightly his belief that

we are more in need today of a rightly distributed demand than of a greater aggregate demand; and the Treasury would be entitled to economize elsewhere to compensate for the cost of special assistance to the distressed areas. [15]

Keynes, the Treasury, indeed everyone involved in economic policy-making, were desperate to avoid another sharp slump, and were casting about for a methods so as to avoid one. Keynes and his reflationary ideas were gaining wide and growing currency, when the rearmament debate began to impinge on the discussions. By and large economists and military men had argued out their plans in seperate worlds, and never the 'twain did meet. After 1936 this was no longer possible. The curious confluence of the desire to reflate and the need to rearm brought Sir Richard Hopkins and John Maynard Keynes together. The Defence Loan of £400 millions was not quite what Keynes had in mind - it was, after all, the Treasury's response to the problem of financing rearmament without crippling taxation [ 16] - but it was not unacceptable to him. Keynes had argued (he called it 'the liquidity trap') that lowering rates in the face of decelerating growth rates and increasing fears of recession would not be enough, that it would be akin to pushing on a string. The D.R.C. Programmes pre-empted him.

Tre Economist might argue that

To pay for rearmament as far as possible out of direct taxation ... would be at once to put a healthy restraint on the abnormal profits that now seem possible, to assist the national finances, and to make it possible later on to borrow for public works. [ 17] but it was generally conceded, as evinced by the line "borrow for public works" that some deficit spending was needed: preferably public works as it was more 'targetted'.

Be that as it may, the Government did in 1937 levy a 4-5% tax on rearmament profits. This was known as the 'National Defence Contribution', and was greeted with howls by the business community.

This raises an interesting point. While the need for some pump priming was by now generally accepted, its scope was never as large as the estimated costs of rearmament. Thus the £1500 and £1650 programmes of 1936 were within the bounds of what the Treasury considered reasonable, 110. and Keynes desirable, they did not match the full expectations of the C.O.S. Even here, the Governor of the Bank of England was unenthusiastic about the full reach of the February, 1937 Defence Loans Bill. [18]

The problem became should rearmament and rearmament borrowing be allowed to affect the normal course of trade and, as a result, Britain's balance of payments. The official historians of the British war economy have said that

1935 [was] a watershed separating two contrasted historical landscapes: on one side ... a tranquil country in which people move withou hurry, and on the other side lies the dangerous land of haste and struggle. [19]

Many people referred to fmance as the 'fourth arm' of defence during this period, and there was no shortage of volunteers to argue its case alongside those of the fighting services. In 1935, Britain's current account had struggled into. surplus, but under the impact of rearmament, it slipped back into ever worsening deficit. [20]

Basically, rearmament savaged the merchandise trade balance because the necessary rise in employment and production necessitated a corresponding a rising level of imports, particularly the raw materials, machine tools, and other goods essential to the Defence Programmes. At the same time, profitable exports of manufacturing were falling because capacity was being diverted to produce new weaponry. This was a recipe for Balance of Payments nastiness; one which could become even more bitter were the deficit to require net inflows of foreign capital. Buying foreigners' goods and borrowing their money is perfectly acceptable if this consumption is used to build up productive, wealth creating capacity with which to repay these debts. British rearmament was not doing this in the most effective manner, for it circumvented the market's ability to an efficient allocator of capital. When the bottlenecks in armaments industries began to produce inflation, the state of Britain's economy began to look decidedly shaky.

While England was comfortable with her level of gold reserves at this time, there was still the threat that a series of bad balance of payments figures could lead to capital outflows. These could only be staunched by raising rates (which could hurt sectors of the economy) or by cutting spending (militarily unfeasible and, given 1.8 million unskilled unemployed, socially impossible). The imposition of drastic currency controls would in all likelihood have failed. Added damage would have been the destruction of the City of London as an important financial centre: an unwise move as the City gave Britain a net surplus in invisibles, (one half of the trade balance). 111. The 1937 Budget addressed this problem in the following way. The capital account was bolstered by a series of luk:ewann controls on capital: foreign equity issues by British flnns were banned, the purchase of foreign securities by Britons was forbidden, (these two policies were designed to keep capital in), and dollar denominated bonds were issued in Canada. [21]

Recalling 1920 and the manner in which inflation, under pressure from the combination of repealed controls and the massive wartime debt, had threatened to mushroom, the Treasury opted to fmance reannament beyond the £400 millions Defence Loan out of revenue. Taxes, of course, could only rise so high; and that level was seemingly reached, with much grumbling by taxpayers, when the standard rate was upped from 4 and a half shillings on the pound in 1934, to five and a half in 1938. [22] The London Bourse greeted all this economic juggling by moving steadily downwards from 1936 on: surely an indication of nervousness and doubt over the economy's prospects. [23] Even with servicing costs on the National Debt having declined to £205.7 millions by 1936 [24], there was a finite level of debt that could accumulate without sending markets into absolute panic.

Sir Frederick Phillips, head of the Finance Division at the Treasury and architect of the budget, looked askance at all this chaos. Writing to Sir Richard Hopkins (Second Secretary at the Treasury), he said the "need to reann [is] already causing certain difficulkties in connection with the Budget, the Balance of Payments, a shortage of skilled labour and of certain kinds of raw materials." He proposed that armamanets spending be henceforth financed as far as was possible out of revenue, otherwise inflation could slip the reins. [25] From this stemmed the decision to ration reannamentflnance, Sir Thomas Inskip's row with the Admiralty, and a good deal of misunderstanding.

Those who saw the wider picture - the Hopkins of the world - recognised that there were decisive economic limits to British reannament The room for manreouvre was such that only a narrow path between military unpreparedness and financial collapse existed, and that it must be walked with immense circumspection. Under the circumstances, it is not surprising that those concerned solely with military matter should grumble of Treasury parsimony, while those employed in the formulation of economic policy should wonder at the Services' desire to live beyond the country's means. While they never stared at each other in mute incomprehension, there was a occasional frostiness to the discussions. To paraphrase Hugh Gaitskell, it was a two way street of expertise without loyalty, and loyalty without expertise.

0 112.

m 0 In the 'thirties, as today, one man's 'wetness' is another's pragmatism. Auberon Waugh defmes the attitude as a combination of 'acting against one's interests' and 'the inability to make oneself unpleasant in order to get anything done.' [27] What has come to be called 'appeasement fits this mould, though it is instructive to note that 'appeasement' was applied to the economic, as well as the diplomatic sphere.

The desire not to upset anybody can be the result of any number of motivations. It can be caused by an incapacitating inability to assert oneself, it can also be the result of an absence of options. In the case of British economic policies in the 'thirties, it was a case where both applied.

There were any number of motivating factors. The experience of the General Strike of 1926, constant warnings from the business community, and the dicey economic situation forced the Government to adopt a very neutral and inoffensive attitude. Overt hostility on any front - the economic, labour relations, business confidence - could have consequences which could imperil rearmament, the economy, and quite possibly the electoral future of the ministry. Starting from Milward's premise that one aim of defence is to preserve the structure of the society so defended, 0 this is not an entirely illogical reaction.

Residual guilt over the carnage of the Great War, and the deprivations of working classes also played their role. The spate of commissions on conditions in the mines, Jarrow, and the very real plight of the unemployed did have an effect. Just as there was a Sarajevo fallacy operative in the diplomatic world, another fallacy - the guilt of capitalism and capitalism's overseers - had acquired a certain general currency. This was complicated by purely emotional factors. Lord Stockton (then Harold Macmillan) never tired of excoriating everyone in the nation except the working man. As a Subaltern on the Somme, he formed a quite understandable bond with his working class; an affinity which translated itself into a tendency to overlook many of labour's failings, and hold an onion to your eye whenever they were mentioned.

This manifested itself in what came to be called 'The Planning Movement'. Mr Macmillan set forth the Planners' programme in his 1927 book Industry and the State. Asserting that out and out variants of capitalism and socialism were both severely flawed, he concluded that a 'Middle Way' was possible. This "Middle Way' was to take the form of a supercharged industrial policy, a scheme of labour relations lying half-way between the free for all of capitalism and nation-wide collective bargaining, and protection. The 1928 Balfour Committee on Industry and Trade 113. (Cmd 3282) gave these calls added, quasi-officially sanctioned credibility. Macmillan's 1933 Reconstruction: A Plea for a National Policy added fuel to the fire.

These ideas were treated with considerable respect by the three National Government Premiers. [28] MacDonald proved to be anything but a frre eating Labourite, while Baldwin and Chamberlain were, at best, milk and water Tories. This economic frothiness should in no way be confused with the Keynesian concern over macroeconomic planning and management of aggregate demand. The partisans of "Planning" were eager to muck about on the microeconomic level, dispensiong government orders as well as largesse.

This movement, for those dissatisfied with British industry of the day, ought to be viewed as all to the good. The 'planners' were eager to revive declining industries and turn them into competitive collections of British enterprise once more. Refurbishment of industry was precisely what shipbuilding required, as well as being what it eventually received from the government in wartime. Yet as is so often the case, this sort of re-injection of industrial vigour was not something the 'planning movement' was to provide.

The trouble was that this sort of muddling down the middle, dispensing funds and vasgue directions by fiat, was open to the worst sort of abuse. It was Butskellism in all but name: lightly meddle in the market place, and be open to all varieties of political pressure (particularly from outraged yard owners and incensed unions). Not only was there little money with which to effect grand reforms, but the proposed solutions more often than not tended to reiforce the status quo. The interested parties, mired in the past, had little incentive to destroy vested interests. Those outside the industry were even less likely to show the neccessary reformist zeal. As far as this goes, the British disease received official endorsement in the 'thirties. As if this weren't bad enough, recent economic studies have shown that this kind of pre-Butskellite compromise intervention is by far the most inefficient type of policy, particularly in the labour market. [29]

As for the question of compelling labour and industry to reform so as to better fight a war, here the Government stood on much frrmer ground. The experience of the Great War taught the Government a number of valuable lessons. In 1929, a Treasury Memorandum on "The courses of Prices in a Great War" was distributed as a basis for planning. This document laid out principles of "drastic taxation, a borrowing policy purged so far as possible from all inflationary expedients, control of prices, profits, wages, inputs, and consumer rationing." [30] However the discussion revolved around the question of how soon after, not before, the commencement of hostilities these controls should be implemented.

Provision for the control of Labour halted at the 'Schedule of Reserved Occupations": a sort of 114. labour management roster. It fell far short of industrial mobilisation, and though the Great War had demonstrated the need for such a form of compulsion, the prevailing psychological mood of the country was set against it. The trends in economic thought and popular opinion were thus combined in a belief that well enough ought to be left alone. [31]

For a Tory to suggest the implementation of labour controls, or contemplate legislation limiting inefficient labour practices, he would have to have been either very brave or very rash. Not only would it lead to labour unrest beyond the norm, and lose the Tories much of their working class vote, but it could provide excellent cause for further defections from the National Government. As the party's leadership was firmly entrenched in support of 'Planning' and assorted other 'Wet' policies, it was unikely that he would have gotten even this far. Labour sponsorship of such legislation is even more implausible.

As for industry, compulsion was no more popular than among the Trades Unions. Forcible reorganisation was perceived as accruing to it an inevitable series of dreadful consequences: loss of investment, capital flight, &c. &c. In war industrialists had proved more than willing to accept government control, many even entered the Civil Service for the duration. However in peacetime, there was no enthusiasm for the creation or extension of a proto- war economy.

The rearmament bottlenecks cast all these issues into sharp relief. In late 1936, Sir Thomas Inskip submitted a memorandum to Cabinet outlining his thoughts on the 'Defence Programme' and its relation to industry and labour. [32] He began by reasserting the principles of the programme: namely to make good the nation's military deficiencies, create extra capacity (including a shadow industry) should war come, and do this without impeding the course of normal trade (thereby avoiding economic catastrophe). These are the sum parts of the delicate balancing act.

Admitting that the pace of rearmament was flagging as capacity was reached, he proceeded to examine the option. In the end he argued that new machines were needed, more training was necessary, night shifts should be instituted, but that the basic structure should remain unchanged. Rebutting those who argued for a thorough shake-up, he asserted that a change over to a 'war footing' would further slow rearmament due to the loss of production during conversion. Forcing some firms into war work, while allowing others to remain outside government control, without compulsion, "would be difficult, if not impossible." Finally he stated that government control during peace could cause "grave discontent and indeed such a feeling of injustice that it could only be resorted to in circumstances of extreme necessity." [33] The alternative to clogged and anarchic production was, quite simply, too ghastly to contemplate. 115. A year later Sir Thomas Craven, the energetic head of Vickers·Armstrong (shipbuilding), wrote to Sir Thomas Inskip in order to tell him:

• At present we are endeavouring to carry out an intensified armament programme without interfering with the internal or external trade of the country.

He continued by noting that this would have been fine had rearmament begun during a slump, but trade was picking up and companies were keen to regain market share and profits lost in the disastrous recent past. He continued

You will remember that we discussed briefly dilution of skilled labour as a possible means of overcoming the difficulty ... a tremendous amount has been done ... [and] so far the Trades Unions have generally accepted the position and have not raised obstacles to this de·skilling operation, but they have made it clear that they are opposed to any form of real dilution. [34]

In this management was being more co.aperative than labour: after all, there were still hundreds of thousands of unskilled, unemployed men who could benefit from the work and also speed up rearmament. Unfortunately this was unacceptable to the Trades Unions. Poor capital plant. Poor unions. Poor Britain.

In the end one is almost tempted to wonder why Britain did not tum in an utterly catastrophic performance in the Second War. With all these constraints, it is indeed a testimony, complimentary at that, to what is sometimes called the 'ruling class' that they managed to pull off what they did: substantial rearmament without economic collapse. The skills required of British policy makers in the 1930' went beyond what was considered the norm, for in addition to all the attributes needed for successful government, they were required to be consummate jugglers as well.

In the case of shipbuilding this was even more true. The industry was admittedly in a mess, but the constraints on reform were enormous. Whatever the wartime consequences may have been, in 1936 or 1937 or 1938, there was no way that a costly and politically divisive programme to restructure the shipbuilding industry could have turned into a major policy goal. The balance of payments problem; the problems of rearmament finance; the fears of inflation, of labour unrest; • the need to rally the nation behind the Ministry's policies were all deeply compelling issues . 118. [23] Howson, pp. 153-154. [24] Richardson, p. 76. [25] T.175/94, 31st December, 1936, quoted Howson & Winch, p. 143. [27] Auberon Waugh as interviewed by Robert Fulford, T.V.O., 20th August, 1987. [28] S. Glyn & 1. Oxborrow Interwar Britain: A Social and Economic History George Allen & Unwin, 1976, pp. 140-142. [29] L. Camfors & 1. Drifill Centralisatioo of Wage Bargaining and Macroeconomic Perfonnance Economic Policy No. 6, Cambridge University Press, April, 1988. The authors' conclusion is, in a nutshell, that a country can benefit from either a centralised or a decentralised wage bargaining ssystem, depending on certain societal characterisitics. The worst of all possible options is something in the middle. [30] Hancock & Gowing, p. 51. [31] IBID, p. 58. [32] Cab 24!265; C.P. 297(36). [33] IBID, pp. 3-4. [34] quoted inN. Gibbs Grand Strategy Vol. I HMSO, 1976. 119.

CHAPTER FIVE THE JUGGLING ACT ENDS: SHIPBUILDING GOES TO WAR

I

In the general interest of clarity, the course of British naval rearmament has been divided into three distinct phases: the rectification of past deficiencies, the construction of a margin of strategic safety, and the final bid to build as many warships as was practicable. If one accepts that the proposal of the 'New Standard Fleet' inaugurated this last phase, and then makes the further assumption that the reigning chaos in international affairs was reflected by matching confusion in the naval builiding programme, then discussion of maritime strategy and its shipbuilding adjunct from 1937 onwards must centre primarily on diplomatic events.

What this last phase really encompassed was crisis. Diplomatic crises, military crises, and shipbuilding crises. The metaphor of the domino chain, while tired, is particularly apt: diplomacy, strategy, and war production proved particularly reactive to each other. The painfully obvious weaknesses of the British economy and the fighting Services produced diplomatic results, which in their turn influenced the direction of national policy, which ultimately led to massive demands being imposed on industry. As has so often been the case, this proved to be especially true in shipbuilding.

What set this tense and frenetic time apart was the British insistence that, however desirable the continuance of peace might be, there were certain ne plus ultra lines crossed only at the expense of active antagonism. Prime Minister Chamberlain, saddened by the implications yet confident in the morality of his choice, drew one such line after the German absorption of Czrchoslovakia. Herr Hitler made a gross miscalculation, and a Britain less than prepared for hostilities resolved, if need be, on war. In the face of successive military catastrophes, Prime Minister Churchill drew another such line: he steadfastly resolved to accept nothing less than victory, regardless of the tremendous sacrifices required. This immense exertion included hithereto unparalleled demands on the nation's shipyards: an endeavour in which the industry, particularly labour, was shown to be less than co-operative. The failure to adapt to the urgency of the situation resulted in changes by diktat; though in the case of shipbuilding, the force of the diktat was deemed effective only for the duration. 120.

The irony is that, though the Prime Minister held up victory as the most laudable (and only) goal, the changes effected during a crisis were undertaken only on a basis of immediate repeal come the new annisitice day. British diplomacy was relegated to the graceful management of decline; the Royal Navy was forced to relenquish the strategic legacy of Nelson, and allowed only to retain his honour; Britain's shipyards gleefully immediately returned, unchanged, to their ruinous old ways. The virility wasted away with the war, while the addiction remained untreated. In 1945 the only call was for an immediate 'fix'.

The ineffable sadness of this withering, while it touches one, is still largely irrelevant. Logic decrees that stress be Jaid on motivations rather than results. Stolid grace under pressure is worthy of some admiration; but it is the causes of decline which demand investigation.

As such, the years 1937, 1938 and so into war represent the end of the tiring and difficult juggling act of the 'twenties and the 'thirties. The cups and saucers whirled, glinting, in the arclights; the admiring audience of world powers remained convinced the show would never end. When it did, the din of breaking china and the whirl of glittering shards proved equally spectacular, though not quite in the same sense as before.

11

While the New Standard Fleet demarcated the time of naval catch-up and the era of building pretty much up to capacity, the strategic plans of which this fleet was a part had undergone a similar change at a somewhat earlier time. If it was anything, the New Standard Fleet was nothing more than the recognition of prevailing trends in international affairs. The rough outlines of armed appeasement (better termed a weapons buying spree with a smile), and a heavily airborne and naval warfighting potential were fmnly bashed into shape at this point. Until Abyssinia, foreign affairs had at least retained the appearance of manageability. Thereafter diplomatic agreements assumed more the character of delaying devices than of honourable international accommodation.

It has already been noted that the Italian invasion of Abyssinia led to some incredibly perverse results. This nation, little more than a fractious medieaval kingdom, became an item of contention only because the powers had unwisely accorded it the protection of the League's Covenant. Neither the French nor the British leaderships were inclined to risk anything for the continued integrity of this strategically unimportant kingdom; however, as is so often the case, 121. the unintended result was to destroy the apparently burgeoning British, French and Italian entente. Fully recognizant of the possible damage to the Stresa Front, the National Government was goaded into active opposition by well-meaning domestic political opinion. The danger posed by Hitler's Germany, and the tremendous potential of Italy as a military counterweight, were only too clear. Picking a fight with Mussolini over his Ethiopian adventure was deemed (remember the comments of Lord Hankey) to be the height of stupidity.

Unfortunately and awkwardly, the British populace chose to endow Ethiopia with their favour and moral support. Nor was this sort of opinion unrepresented in Cabinet: Mr Anthony Eden, the Foreign Secretary, stoutly condemned not only Italian iniquities, but also the inaction of his Cabinet colleagues. It was all very true that Italy ought not to have invaded Emperor Selassie's dominions, but given British weaknesses there was no call to be foolish about it. [1]

Pushed into restricting flows of oil to Italy, the National Government soon discovered that their sanctions were a miserable failure; except insofar as they served to antagonise Italy. Signor Mussolini, already attracted by the out and out boldness of Nazi Germany, viewed this British furor as reason to scuttle the Stresa Front. This coup de bravura left the Suez route, indeed the whole Mediterranean theatre, dangerously exposed; while in no way diminishing the German or Japanese threat. The French Government was predictably and understandably furious, as a result, they opted not to assist the British in further anti-Italian endeavours. When Herr Hitler thrust the Wehrmacht into the Rhineland, the favour was heartily reciprocated. [2]

This excercise in emotive diplomacy allowed the British voting public to wallow in outraged righteousness, and in purely moral terms they were correct to do so. The other side of the equation was more tragic. The inability to differentiate between gradiations of evil had produced some very dangerous results. Had it been argued that Signor Mussolini's pathetic adventurism was tolerable in the interests of reigning in Hitlerian lunacies, then British diplomacy and strategy would have had infinitely more room for manreuvre. It was not so deemed, and British naval building plans had once more to be ratcheted upwards

Faced with this situation, Neville Chamberlain noted that

I believe that the double policy of rearmament and better relations with Germany and Italy will carry us safely through the danger period... [3]

Anthony Eden also endorsed this double policy. In November he told his constituents that

Our frrst task is to equip ourselves as a nation so throughly and so 122. strongly that the whole world may see that we mean what we say, and that our conceptions of international order have behind them adequate force. · [ 4]

His remarks were given added force by the erection of the Berlin-Rome Axis that same month. When Berlin and Tokyo signed the Anti-Comintem Pact some weeks later, the desperation of the situation became increasingly clear.

The point has already been made that the British reaction to these threats was concise and logical. Defence expenditure was raised to the maximum level allowable without destroying the economic fabric of the nation. These funds were by and large channelled into the national deterrent (the R.A.F.), and the guardian of the nation's ocean lifeline (the Royal Navy). Seeing as how defence expenditure could not be raised to a level commensurate with what the Service Heads deemed absolutely necessary, it was resolved that war should be avoided until such time as rearmament was complete. Diplomacy was utilised in the cause of winning time: concessions, while influenced by other factors, would nonetheless stem from a weighing of the national interest, not moral cowardice or guilt.

This was an exceptionally telling consideration in the years 1936 to 1940. This was the time when the rearmament programme was in its infancy. In the case of the navy, as we shall see, most components of the New Standard Fleet had yet to be finished in the fall of 1939!

Interestingly, while the Cabinet was wholeheartedly behind rearmament, it was split over precisely manner of exploiting the opportunities it afforded. Neville Chamberlain championed the view that it could have a salutary effect on Italy; possibly warming relations. His view gained wide currency, even managing to rally the once defiant 'Old Tories' behind this policy (largely because it was what they had been saying for years). [5]

This view was not so farfetched as it might seem. In March of 1937, Sir Edward Drummond in Rome telegraphed his superior at the Foreign Office, Mr Anthony Eden. Noting that the rearmament programme "has come as a shock to Italy", and that Italy was still leery of ending up at war with Britain, he hinted that this show of re~olve had caused Rome to give serious thought to the question of regaining British friendship. [6]

Mr Eden took this under advisement, but summarily failed to incorporate it into his view of the world. He still argued in Cabinet, with that fine disregard for shades of evil and the ultimate security needs of the country, that Italian adventurism in Spain and Africa must not be tolerated. 0 [7] This view managed to generate some debate, though the Foreign Secretary was never in the 123. ascendant. This was probably due to the fact that the Board of Admiralty tended to chirrup in certain cheering statements such as the "country is defenceless so long as major forces are locked up in the Mediterranean" and Britain "can only fight Germany by weakening [the] position vis a vis Italy". [8] And, given that Herr Hider had begun to snarl and adopt more threatening postures, if there was the smallest danger of war with Germany "we ought at once to disengage ourselves from our present responsibilities in the Mediterranean, which have exhausted practically the whole of our meagre resources." [9]

The use of the word meagre is highly important. The February, 1936 decision to build seven new capital ships, four new carriers, five new cruisers per annum, etc, would relieve the situation; but only by 1941. Until that date, this enormous lead time ensured that Britain would remain weak. Even at the end of 1937, eighteen months into the programme, only four Arethusa Class cruisers (5 220 toons with six 6-inch guns), and one flotilla of Hero Class destroyers had come off the slipways. Britain's relative strength had actually declined because the battleships H.M.S. Queen Elizabeth, H.M.S. Warspite, and H.M.S. Valiant were undergoing extensive refits. [10] Nor was any quick improvement anticipated. The King George V Class of battleship was slow enough to build; the Lion Class- designed with the large Japanese capital ships in mind- slower yet. At 40 000 tons, and carrying nine 16-inch guns, these monsters would take well into the 'forties to complete. c This was, of course, without factoring any delays in production into the equation. As early as 1st February, 1937, Sir Thomas In skip, Minister for Co-Ordination of Defence, was growing rather worried. He saw the problem as increasingly serious, and deserving of immediate governmental attention. [11] Another related problem missed by Sir Thomas was Admiralty inefficiency: shipyards were complaining of delays caused by ponderous methods of inspection, approval, and testing. [12] Given the political and economic constraints, this last was the only problem for which the solution was easy.

The looming problem that ships, while budgeted for and ordered, would be slow in entering service, provided a morbidly piquant addendum to already gloomy discussions of the strategic situation. The February, 1937 Chiefs of Staff Report - in itself litde short of a horror story - made this staggeringly clear. In descending order, the C.O.S. came up with a list of threats. In brief, the dangers were: security of the United Kingdom against Germany; security of Empire interests in the Far East against Japan; security of British interests in the Mediterranean and the Middle East; security of India against Soviet aggression. This report did not so much discuss how these were to be adequately protected, but rather which were to enjoy limited defence.[13]

0 Quite naturally, the defence of the realm was to take precedence. This gave the management of 124. events in Europe, and military preparedness in this theatre, assumed an overwhelming importance. Since 1936, and this situation was unlikely to change until late 1939, the Royal Navy had made it clear that in the event of war with Germany "the only naval forces immediately available in Home Waters" were one 6-inch gun cruiser on 48 hours notice, 13 antique and four modern destroyers, and 9 submarines on 3 to 7 days notice. If Gibralter's forces were factored in, this order of battle would be augmented by a battle-cruiser, another 6-inch gun cruiser, and a squadron of Fleet Air Arm flying boats. [14]

Under these taxing conditions, Neville Chamberlain had little choice but to declare that Britain possessed "widely separated interests in three parts of the world; and, as we could not be as strong as we would like to be in all these theatres simultaneously, the question was one of priorities." [15] Without an understanding of this attitude, and the diplomacy which was its outwards manifestation, the years 1937 to 1939 seem utterly incomprehensible.

As it stood, Britain was spending £1500 millions (which soon became £1650 millions) on defence: which was sufficient to scare the economists. It was also sufficient to secure for 1937 the laying down of three battleships, two fleet carriers, seven cruisers, two flotillas (making 16 vessels) of destroyers, half a dozen sloops, and seven submarines. [16] The yards were also engaged in refitting three Queen Elizabeth Class battleships and the battlecruiser H.M.S. Renown. Until the time when these vessels, and the equally large orders for the following years, entered the line, Britain's strategic integrity depended on an aging pool of capital ships: two of the Nelson Class (vintage 1927 -the best year thus far for quality battleships); five Royal Sovereign Class (circa 1916-17, and capable only of 21 knots); a pair ofunmodernized Queen Elizabeth Class vessels (launched 1915-1916); two battle-cruisers from the early 'twenties; and five carriers (of which only one carried more than fifty planes). In the air, the situation seemed more ominous still: Britain's 48 modern bombers were matched by 800 German counterparts. [17]

This was the situation as Britain moved into the crucial year of 1938. It was a bleak picture, and one offering little in the way of diplomatic options. With Germany as the clearest threat to the integrity of British freedoms and national power, it was clear that all other concerns, however important, must pale in comparison to smviving the German challenge. As such, it is worth looking at the last hurrah of internationalism: the Roosevelt proposals of late 1937.

These proposals managed to split the Cabinet. The President's proposal, which marked the American trend towards more overt internationalism, consisted in large part of forming a league of democratic states (ranging from the U.S.A. to Sweden) through which the nasty, "infected" states might be quarantined. 125. The Foreign Secretary thought this a most useful proposal. Envisioning it as means by which both Hitler and that "tough and clever opportunist" Mussolini might be contained, he urged that the National Government react quickly and warmly. [18] This was an entirely ludicrous proposal, for Roosevelt was himself subject to a woolly antipathy to Britain grounded in a strong dislike of imperialism. Moreover, his Secreatary of State Mr Cordell Hull, and the Assistant-Secretary ("the saturnine homosexual [Mr]Sumner Welles"), were virulently anti-British. [19]

The Mr Eden and a few other enthusiasts aside, the Roosevelt proposals were greeted with barely veiled contempt. Hitler mocked them, and the French were sceptical. [20] Prime Minister Chamberlain dealt with the American plan by saying

I read Roosevelt's speech with mixed feelings ... seeing that patients suffering from epidemic diseases do not usually go about fully armed... [21]

The incipient split between the Prime Minister and his Foreign Secretary was painfully clear. Most of the Government rallied around Chamberlain, while Eden received support largely from the opposition (who were still, at this late date, voting against the Service Estimates).

The significance of this frivolous American offering lies in Chamberlain's reaction. It was clear that the National Government was not one to grasp at naive interpretations of foreign policy. The residual guilt over the nation's losses in the Great War, and any "Sarajevo fallacy" angst, were more than outweighed by hard considerations of national interest. In terms of naval strategy, the ten year building holiday enshrined in the 1922 naval agreements had proved to be a vacation from the needs of reality. The situation was now being rectified, but slowly.

It was in this context that Mr Churchill directed his thunder at the Government front benches. In naval matters, at least, he was satisfied with the rearmament programmes. [22] The Tory M.P. Admiral Sir Roger Keyes only moved to join Churchill's eclectic party of mavericks when he became convinced that the furious pace of current naval shipbuilding was too slow. [23]

Ill

The diplomatic happenings of 1938 have acquired their own mythology; a mythology, as such, of extremely dubious value. A legitimate case may be made that 'appeasement' was more the excercise of power politics than any sort of craven collapse. That a weak Royal Navy was brandished during the run-up to Munich is alone sufficient to disabuse people of the traditional 126. image of National Government cowardice. On 16th January, 1938 the Prime Minister wrote a letter. In it he argued that

Meanwhile, as a realist, I must do what I can to make this country safe... They [the English] are perfectly aware that, until we are fully rearmed, our position must be one of great anxiety. [24]

This was not a man who harboured any illusions about Hitler and his desires. Even the decided non-fan Anthony Eden accorded the Prime Minister that; noting in his memoirs that he caught the latter reading Stephen Roberts' The House That Hitler Built. The ensuing conversation revealed that Chamberlain saw negotiations as essential to saving Britain from military catastrophe; essential only in that they were all that lay at hand in the contest with the dictator. [25] If Chamberlain had any illusion, it was that people really did not want a war wherein the worst victims would be the old and the young. Every normal person did in fact agree with this: the failure lay in not recognising how abnormal the fanatics of the Axis were.

The same month as this last letter, Hitler secured his control of the Wehrmacht. The vastly trumped up Fritsch affair was used to cow the army into accepting his aggressive plans viz Austria. A new High Command was created, Herr Schacht was turfed from the Economics Ministry, and Herr von Neurath from the Foreign Ministry. It was obvious that this purge • amounted to a sweeping away of the remaining restraints on Hitler's bold foreign policy. The British reaction to the mounting danger was threefold. On the one hand, the National Government actively began to court Italy (in the hope of luring her back to the Anglo-French fold). This sparked an enormous crisis in Cabinet. Count Grandi, the Italian Ambassador in London, had been relatively accommodating; at least sufficiently so to make further discussions worthwhile. The Foreign Secretary, already smarting at Chamberlain's spurning of the October, 1937 Roosevelt proposals, expressed grave doubts as to Italy's honesty.

The 18th February discussions, in which the Prime Minister participated, included a statement by Count Grandi to the effect that with the Germans at the Brenner Pass, Italy was faced with two potential great powers as enemies. This was, of course, unnaceptable in the Count's eyes. Later in Cabinet, Prime Minister Chamberlain spoke warmly of continuing with the process. The Foreign Secretary balked at this, and subsequently resigned. The enormous publicity surrounding the resignation of a man identified with "facing the dicatators", gave credence to the illusory impression that Hitler had British policy in his pocket. [26]

In fact Anthony Eden's resignation was not even highly regarded among the maverick Tory 127. back-benchers. The day after Eden's resignation speech, Mr Leopold Amery rose in the House to express his surprise at the ex-Secretary's persistent championing of the bankrupt and disastrous League of Nations policy which regarded Japan, Germany, and Italy as equal outca~ts. He went on to say that had this resignation come in 1937, perhaps the Italians might have been won round, Austria might not have been bullied, and the prospects for saving that country so much the better. [27]

The second British reaction to the Austrian crisis consisted of an approach to France; Premier Chautemps was engaged in conversations over possible joint action against Germany. The French response was extremely timid. M. Guy la Chambre (Minister of Air) informed his British colleagues that, in his eyes, war with Germany would lead swiftly and surely to the destruction of the French Air Force. However this was a peripheral issue to the French Cabinet; it was made clear that Austria was simply not an issue over which France would go to war. [28]

Finally the National Government made allownces for another increase in defence expenditure. The Fourth White Paper on Defence (tabled 7th March, 1938) made it plain that the rearmament programme was now going to cost £1650 millions or more: an increase of at least 10 per cent. In the case of the Admiralty, the naval programme was already set to run more than £88 millions above the projections of the year before. [29]

The House was told that Britain

... ought to make it known that our desire for peace does not signify a willingness to purchase peace to-day at the price of peace hereafter. [30]

Shortly thereafter, Hitler annexed Austria. There was little Britain could do. Her Air Force was weak, and her navy still pathetically unprepared.

Encouraged by the success of the Anschluss , Hitler began laying plans for the absorption of Czechoslovakia. The British reaction was hardly one of supine indifference; the armaments programme was accelerated, and the overtures to Italy became more intense.

As for rearmament, the limits had by and large been reached. A perusal of the Admiralty's Estimates make this point with considerable clarity. The interminable scrapping between First Sea Lord Mr Duff Cooper and Sir Thomas Inskip at the Ministry for the Co-ordiantion of Defence was by and large meaningless. They both agreed that expenditure on new warships and refits should be increased, and that large sums should be borrowed for selfsame purpose. The difference lay only in degree, and a fine one at that; for unlike Duff Cooper, Sir Thomas had the economy to worry about. The fmal figures for 1937-38 and 1938-39 were as follows; 128. The Navy Estimates and Actual Expenditure: 1937-1939.

Net Estimate in 000' s £ Net Expenditures in OOO's of£

1937-38 78 065 from Revenue + 27 000 from the Defence Loan ::;: 106 065 in total 78 259

1938-39 93 707 from Revenue + 30 000 from the Defence Loan = 123 707 in total 96 396 [31]

It was not that the political will to build a strong defence was lacking. Quite the contrary. The deficiencies lay entirely in the province of an industry no longer sufficient in scale or technology to achieve the set goals.

A legitimate criticism might be made that, on strategic grounds, the decline of the industry in the 'thirties was a national catastrophe, and, as such, should reflect opprobrium on the government of the day. On the other hand, paying for the upkeep of an industry in which England no longer had a comparative advantage could have had an insidious effect on the economy. Classical economic theory holds that if an industry like shipbuilding is ailing, and the disease looks terminal, then far better to let it die: the alternatives would prove hurtful to the nation as a whole. Strategic logic holds that letting warfighting capacity (eg shipbuilding) disappear, particularly if it is needed, is sheer insanity. Total war was the point where classical economic theory and traditional strategy were forced to confront each other, and adapt to circumstances. The tragedy is that, in both being right, they both became debased. This is the charming legacy of total war.

In any case, in the spring of 1938 there was little that could be done to repair the mistakes of ten years previous. The Great War, the manner in which Britain chose to fight this last war, and the conduct of British policy in the 'twenties and 'thirties were unchangeable realities. The truly important item for investigation is the conduct of policy within the context of these limitations.

As he was so inextricably bound up with British diplomacy, and as he had the support of both Cabinet and backbenches, it once again worth quoting the Prime Minister on the situation. In late March Hitler was already making threatening noises at Czechoslovakia, and the danger of war was on the rise. Seeing this, Chamberlain wrote that 129. . .. with Franco winning in Spain, ... with a French government in which one cannot have the slightest confidence, and which I suspect to be in closish touch with our opposition, with the Russians stealthily pulling all the strings to get us involved in a war with Germany •... and fmally with a Germany flushed with triumph, and all too conscious of her power, the prospect looks black indeed. [32]

What was more, one had only to look at a map to see that there was precious little France could do militarily to save Czechoslovakia. Chamberlain mooted the idea of a "Grand Alliance", but at the present deemed it impossible to erect: a feeling of sufficient power to dissuade him from his first impulse of offering a guarantee to Czechoslovakia. [33]

There was another aspect to this; one more emotional, and less understandable. The whole post-1918 push for national self-determination was acting against Czechoslovakia's best interests. Though herself a progeny of Versailles, as well as a curious amalgam of peoples. the dominant Czechs made an effort to adopt a reasonable and tolerant attitude towards minorities. [34] Unlike the bigoted and warlike Poles and Hungarians. the Czechs made an honest attempt to create a nation. Unfortunately, no matter what internal policies were adopted, the depression and the prevailing intellectual climate accorded all species of nationalist extremist far more respectability than was deserved.

These tendencies Hitler was able to exploit with considerable skill. While fellow travellers on the Left spent the 'thirties absolutely blind to the horrors of Stalinist Russia. those on the Right paid far too much attention to spurious theories of national self-determination. As such, Hitler's call for the integration of Sudeten Germans into the Reich could just possibly be justified.

The National Government, however, was making no such assumption. The threat posed by Hitler was foremost in Ministers' minds; thus when the Anglo-Italian discussions began to bear fruit, the interest was intense. Following Eden's dramatic resignation, the Anglo-Italian talks proceeded to the point where on 16th April the two nations undertook not to expand naval bases in the Red Sea or the Eastern Mediterranean without first informing the other.

When on 2nd August Count Oano (the Italian Foreign Minister) proposed a series of confidence building measures, these were taken quite seriously. These measureswere to consist largely of exchanges of military information.

0 Asked to comment on these proposals, the Chiefs of Staff replied that such exchanges could be highly beneficial. The C.O.S. Report made three main points. Firstly, better relations with Italy 130. were needed to maintain secure communications along the Suez Route. In the second instance, the dangers of war with Germany and/or Japan were multiplied by the existence of a hostile Italy. Finally, there was the time factor: at least two years were needed before the level of naval and air reannament was to anywhere near sufficient. [35]

As Hitler's demands on Czechoslovakia grew increasingly extravagant, Great Britain began to soberly contemplate the possibility of war. In the late Spring a purchasing mission was despatched to the United States to secure war planes for the R.A.F. Simultaneously, the 'escalator clause' in the 1936 Naval Treaty was invoked. And while First Lord Duff Cooper and Sir Thomas Inskip engaged in catfights, the Admiralty Programme for 1939-1942 was set at £410 millions. [36] Additionally, the ship completion situation was improving: one carrier was nearly fitted out, and five cruisers and two flotillas of destroyers looked set to come off the slipways as well. Unfortunately, all this represented little more than the beginning of re-equipment and expansion. There were still major deficiencies.

While the Defence Policy Requirements Sub-committee deemed the progress, from a technical point of view, "satisfactory", no material improvement in fleet strength had occurred. It is important to note that the "satisfactory" refers to progress given the level of bottlenecks in skilled labour, gun mounting capacity, etc. [37] The chancey state of shipbuilding did not permit a slowdown in the pace of orders. Starting in mid-summer, H.M.S. Lion and H.M.S. Tememine (two of the enonnous Lion Class of battleship), one carrier, seven cruisers, and a flotilla of destroyers were placed on order.

By necessity, this period involved a good deal of re-evaluation in the naval programme. It has already been seen that the various bottlenecks were preventing all of the allocated funds form being spent. The Admiralty's response was to institute various correctives.

For instance, in the realm of gun mountings and armour plate, steps were taken to boost production. The rub was that current demand for armour plate was actually higher than total English capacity had been in 1918! In that year, capacity had stood at 60 000 tons p.a.; the influence of the 'Ten Year Rule' was such that this fell to a mere 3 000 tons p.a., and that only by grace of Admiralty cosseting. Capacity slowly rose to 7 000 tons p.a. by 1935:- a lot of armour when considered by bulk, but piddling when one bears in mind that as much as 30 per cent of a 35 000 ton battleship could consist of armour plate. [38] By mid-1938, the Admiralty had undertaken to expand production at The English Steel Corporation, Beardmores, and Browns; but with annual orders now running at 170 000 tons, this expansion of capacity was little more than a joke. Foreign orders were considered, but Krupps (Germany) and Schneider (France) were too busy meeting national demand, and the Americans were extremely difficult to deal with. 131. In the end 65 000 tons were purchased in Czechoslovakia. Interestingly, deliveries continued until the outbreak of war. [39]

It was interesting to note how even international tensions of the severest sort failed to impede trans-national sales; how even at this late date, economics and strategy still retained some independence. This question of armour plate also reiterates the oft-stated point that Britain in the late 'thirties was not supine. Rather she was re-arming vigorously; the delays stemmed from mistakes and disasters of many years before.

As far as the ever problematic question of gun mountings went, the Admiralty attempted to expand capacity beyonf Vickers-Armstrong's overloaded yards. Four other firms were overhauled with the aid of the Supply Board, however this only went a short way towards relieving ths shortages of 4-inch, 4.5-inch, and 4.7-inch mountings. The most pressing need was for 14-inch mountings, for which the Admiralty had little choice but to remain dependant on the Barrow and Elswick yards. Beyond expansion of capacity, the inspection and alteration processes were speeded up (particularly useful since so many of the mountings were of new design), the drawing departments were made more efficient, and the dilatory approval procedures were tightened. Further attempts were also made to recruit skilled labour, and improve the deliveries of the vital machine tools.

For merchant shipping it was also a time of heightened planning. Even during the inter-war economic slumps it had been assumed that there was a sufficiency of available British and British-controlled shipping. This deduction was arrived at through the recognition that even between economic crises there were still a great many empty British merchant vessels. In 1938 it was calculated by the relevant officials that the existing merchant fleet could haul some 48 million tons of dry cargo per annum. In the months before Munich the questions was raised as to whether this was sufficient to meet Britain's wartime needs. Some very rough calculations produced a 'necessary' figure of 47 million dry tons of imports p.a.; but as it turned out, existing capacity was more than enough, providing as it did an excess margin of roughly 11 million tons of dry cargo. [40] Furthermore, Britain had 438 000 gross tons of cargo laid up; an added buffer for wartime. [41]

Thus in the run up to war, Great Britain did not suffer unduly from any shortages of low technology yards for merchant ship construction: all the problems lay at the more complicated and expensive end of the industry. Unfortunately these less efficient yards produced slower, non-standard ships: a source of many future difficulties. The other great shortage was of fast troop-ships: it was reckoned that liners would be pressed into service (as the 'Queens' were to such great success), but there were only so many of these afloat. To build more would invariably detract from the naval building programme. 132. IV

Part of the horror surrounding the Munich affair stems from the hideousness of not having a choice. Having read over the documents of the period, it is arguable that Prime Minister Chamberlain's diplomatic escapades were the outward display of a deeply troubled man. He was not only troubled at the prospect of going to war - a war he knew was bound to give scope to all variety of human beastliness - over the boundaries of a polyglot nation. Tirls was the Neville Chamberlain who recoiled at the thought of needless human suffering. Yet there was another side to his character. As Neville Chamberlain the statesman, he had a deep awareness of just what the looming war represented for Great Britain: at best national impoverishment, at worst actual defeat. He was a man who could tally up a balance sheet, and the conclusions he reached no doubt contained an element of despair. In this he was quite unlike the indomitable Mr Churchill, who never once gave thought or credence to the limits of British power, or the failures of the national spirit. Tirls not unjustifiable crisis of confidence was the Prime Minister's greatest weakness.

Where did this queasiness come from? Clearly its roots lay in the economies of earlier years; but these could not be entirley rectified, no matter how powerful the desire. The lurking sense of weakness inherant in the post- Great War juggling act were replaced in 1935 and 1936 by a more acute sense of the danger.

As early as September of 1937, the military and the Foreign Ofice had been saying that Germany was basically unattackable. [42] Much of British policy for the coming years was adumbrated in this assessment. By year's end, the Cabinet was lugubriously taking note of this, while simultaneously having to face the fact that "the limitations which finance imposes on National Defence place a heavy burden on diplomacy ... " [43] This, and the loss of Italy as a potential ally, played itself out in the form of a timid reaction to the Anschluss. The justification that it was merely Germans uniting with Germans can be described only as lame and blindly supercilious.

By 1938 the vast potential for disaster was painfully obvious. Equally painful were the limits placed on rearmament (the one obvious remedy) by the dictates of fmance and domestic politics. However it was precisely at the time of Munich that the Chiefs of Staff elected to make it plain just how unprepared for war England was.

As Germany grew increasingly hostile towards Czechoslovakia, Cabinet was told that all of the services were extremely weak. Indeed, the whole reannament programme necessitated a lull 0 while the old was scrapped and the new added. Such a lull came in 1938-1939. It was as the Czechoslovak crisis inched towards the boil that the Service Chiefs stated the facts of British 133. military power without any hint of equivocation.

No sooner had Austria been absorbed into the burgeoning German Reich than the Nazi 0 propaganda factory began to chum out an endless series of calls for the "salvation" of their Sudeten bretheren. In Great Britain, this German shouting was the backdrop to which they read the 21st March Chiefs of Staff appreciation of the military situation. It made gloomy reading, containing as it did a recounting of the production delays and slowdowns which have already been made familiar in this chapter. That same week, the Prime Minister had (correctly if unfittingly) informed the Commons that one had but "to look at the map to see that nothing France could do could possibly save Czechoslovakia from being overrun by the Germans." [44] Nor was he alone in holding this view: the French were particularly keen to make this point clear. [45]

In this context, Chamberlain's Birmingham speech of 17th March, 1938 seems much clearer. Appeasement, he said, was not a happy term, nor "one which accurately describes its purpose." It is often forgotten precisely how belligerent British policy was in this period. For instance the building programmes proceeded with all due speed, and the Admiralty was pushing thousands of merchant marine officers through special war training courses. [46]

On the diplomatic front, Britain felt obliged in May to warn Berlin that she was most unlikely to stand aside in event of war. In April the agreement with Mussolini was signed: the intention clearly being to try and wean the Italian dictator away from his more uncivilized German compatriot. As the summer war on, and Herr Hitler became increasingly fiery, the Admiralty began laying down and elaborating war fighting plans with the French navy. A good many other, obvious preparations for war were underway. This was a sufficient show of resolve to convince General Halder and a good many other senior German officers that the dangerous Austrian upstart ought to be removed. [47] That they got their wires crossed in communicating this plot to the British is one of history's great tragedies, but it in no way invalidates the proposition that Britain appeared very willing to go to war.

With the diplomatic barometer careening wildly stormwards, the First Lord, Mr Duff Cooper, won approval for his suggestions to bring the navy to readiness. On 9th September, 1938, four fleet destroyer-minelayers were placed in full commission, and the Fleet Minesweeping Flotilla was brought up to full complement and placed under the Commander in Chief of the Home Fleet. When these actions were announced on the 12th, the German Naval Attache swiftly appeared, demanding to be told just what was meant by this action. His report was written in record speed, and copies were quickly despatched to both Berlin and the National Socialist Party c rally at Nuremberg. [48] 134. This was a risky game, given British weaknesses. In fact, it was the more dangerous part of the formulation worked out by Sir Thomas Inskip in July of that year:

Either we must shape our policy to avoid the double contingency for which the New Standard Fleet is proposed or else we can decide that ... we must attempt to cany out that policy with more slender resources than those deemed adequate by the naval experts. [ 49]

In September the C.O.S. Secretariat also produced two papers entitled 'Measures to improve the preparedness of the three Services' and 'Naval measures to impress Germany'. The upshot of these reports was that the Reserve Fleet required two weeks if it was to go to war. [50] At the same time, Cabinet was given copies of "Appreciation of the situation in the event of War with Germany": a report which made exceptionally depressing reading. [51]

The Ministers were treated to the following scenario: Italy was potentially hostile, and a strong Mediterranean Fleet was thus necessary; the Japanese were extremely hostile; the attitude of the U. S. S. R. was incalculable, particularly as regarded India; Palestine was likely to remain a troublespot; the U .S.A. was unlikely to enter a war should one break out; and, if war came, Spain would be implicitly hostile. The Mediterranean, the Suez Route, India, Singapore and the Far Eastern Colonies, Gibralter: all were dangerously exposed.

To complicate matters, it was to be expected that a strong naval challenge would be mounted by German submarines and surface raiders. Cabinet was informed that the only hope of avoiding an air offensive was if the Luftwaffe was directed against Czechoslovakia. Uttle hope was offered by an economic blockade of Germany: Hitler had amassed sufficient commodity stocks for three months. As for the Far Eastern Front, it was made clear that the only way a sufficient force could be despatched to Singapore would be by dint of abandoning the Eastern Mediterranean.

The closing paragraphs expressed the futility of the situation:

It is our opinion that no pressure that Great Britain and France can bring to bear, either sea, or land, or in the air, could prevent Germany from over­ running Bohemia and from inflicting a decisive defeat on Czechoslovakia ... Moreover war against Japan, Germany, and Italy simultaneously in 1938 is a commitment which neither the present nor the projected strength of the defence forces is designed to meet, even if we were in alliance with France and Russia, and which would, therefore, place a dangerous strain on the c resources of the Empire. [52] 135. Of course the British, and more particularly the French, had overestimated Germany's strength 0 and capabilities. Shortly before this report was issued, the French Chief of Air Staff, General Vuillemin, had been thoroughly fooled by a Goebbels inspired tour of the Heinkel factory, and the clever disguising of an experimental fighter as operational one. [53] The Czech fighting services would probably have acquitted themselves much better than the tense British and French analysts expected: the German Generals had certainly been concerned.

Nevertheless, it was the 14th September report which was believed in London. While this is entirely regrettable, all it does is prove the need for an effective, well-funded intelligence service; preferably operating with as much leeway as possible. Sadly, Britain was lacking such a service. On 15th September, having never flown before, Neville Chamberlain boarded a plane for Germany. In his plane also went Sir Horace Wilson and Mr William Strong of the Foreign Office. In his heart went an earnest desire to avoid what would surely be a catastrophic war.

The three braved the Hitlerian beast in his lair, and emerged convinced that the German dictator would fight. [54] Taking Hitler's proposal of self-determination for Sudetan Germans back to London with him, Chamberlain began to agonise over the whole affair. The French proved willing to accept Hitler's proposal, however they were upstaged by another ultimatum from Berlin. The next day Cabinet decided to mobilise the Fleet. In so doing they were well aware that the Service chiefs had stated that war could not come at a worse time, that the Fleet had only ten capital ships in service, that South Africa and Canada looked unlikely to back the Mother country, and that air defences were still weak. [55]

Hitler's ensuing actions can either be seen as backing down in the face of British escalation, or as transparent manreuvre gladly and shamelessly accepted by the British. Either way, brinksmanship with the fleet was followed by a conference. To turn down such an offer, given the circumstances, the attitudes, and the information available at the time, could easily have been deemed the height of folly.

Of course the Tory mavericks in the House were right about the outcome of the conference: it was a scandalous abandonment of Czechoslovakia. A staunch and democratic ally was immeasurably weakened, and its army lost to the democratic order of battle. The citizens of Czechoslovakia were doomed to suffer under dictators, the only difference being that the Sudetans came to endure the vileness of National Socialist rule before the rest of their countrymen.

If this was done out of fear, then it was capricious and cowardly. If it was a calculated ploy to gain time for rearmament, then it was a mendacious and cynical betrayal of an ally. If it was 136. done out of blindness, then it was an (unlikely) example of extreme stupidity and culpability. Whatever it was is largely irrelevant. The Prime Minister has ten capital ships and a few modern fighter aircraft with which to confront three seemingly over-armed enemies. That works out to three and a bit capital ships per front, and change for aircraft. At that point, Britain was out numbered and (considering some of the ten were antique Royal Sovereign Class battleships) outclassed in every theatre. [56]

Suffice it to say that there was a good deal of talk in the government benches over the strategic value of the Munich accord. To many Tories, this accord was the only sensible alternative to letting Czechoslovakia fight Germany alone, and facing Hitler with the Services in a state of carastrophic unpreparedness. Sir Henry Page Croft told the House that as the French would at ~st remain on the defensive, and Stalinist Russia's only recent military experience involved the slaughter of its own officer corps, Britain alone was facing up to Germany. [57] If this smacks of anything, it is calculation rather than appeasement.

Prime Minister Chamberlain ultimately lacked the nerve to forcibly slap down Herr Hitler; it was a species of inaction buttressed by some fairly convincing evidence. It also stemmed from a certain reluctance to war against Germany in the cause of Sudetan Germans. Winston Churchill was sufficiently brave and resolute, as the Parliamentary record shows, to have ignored glaring naval and air weaknesses in the cause of facing down Hitler. To him, moral failure was far more debilitating than any deficiencies in strategic weapons such as capital ships. At the time, his country did not share this belief. Mr Churchill was entirely too correct:

This is only the beginning of the reckoning. This is only the frrst sip, the first foretaste of of a bitter cup which will be proferred to us unless, by a supreme recovery of moral health and martial vigour, we arise again and take our stand for freedom as in the olden time. [58]

V

Following the Munich agreements, Mr Duff Cooper left the Admiralty in disgust. Mr Duff Cooper's argument was that war would have been justifiable on the grounds of denying Germany control of the continent: hardly the speech of a man disbelieved the realities of power politics. [59] That he had served succesfully and well as First Lord for three years also says something of c the tenor of the Cabinet. 137. His replacement as First Lord, Lord Stanhope, was faced with the task of continuing the naval building programme, but also of evaluating the Fleet's performance during the Munich mobilisation. This mobilisation had raised a number of questions concerning the efficiency of the fleet The investigations conducted by the increasingly harried Admiralty revealed that £65 1/2 millions would be required to repair the deficiencies in materiel. The Treasury allowed that £45 1/2 millions of this could be provided out of the 'ration' over the coming two years. [60]

This period right after Munich also witnessed another change in the naval building programme. The new Admiralty Sketch Estimates (the basis for discussion in Cabinet) asked for two battleships, one aircraft carrier, four large cruisers, two flotillas of destroyers, twenty three escorts, a dozen Motor torpedo boats, and the conversion of a dozen trawlers to anti-submarine vessels. It is sometimes noted that the following February, Sir John Simon (Chancellor of the Exchequer) succeeded in cutting this Estimate by one battleship and two cruisers. [61] This fact, true in a skeletal sense, is supposed to prove how blind and intransigent the Treasury was.

The reality was somewhat different. The decision was made not only to delete three large ships, but also to increase the number of escorts to forty, and add to the programme 56 'Whalecatcher Type' corvettes. These changes reflected two things: the bottlenecks slowing down British naval building, and the fact that Cabinet had a surer tactical grasp than the Admiralty in the area of protecting merchant shipping.

The Admiralty was asking for large vessels: it was concentrating on building up the battle fleet and the cruiser force with which to track down commerce raiders. However this Admiralty/ Cabinet disagreement is not so simple as it seems. The Cabinet was pre-occupied with Germany, and in consequence tended to emphasise a war fighting posture distinctly North Atlantic in orientation. The Admiralty, on the other hand, was equally concerned with the threat posed by the Italian and Japanese battle fleets. This reflected the Royal Navy's more global concerns; hence the desire to build more large capital ships than the Cabinet might perceive as wise.

However there was another element in the debate over the number of large warships to build. These vessels, as should be plain by now, were enormously complex to build, suffered from production slowdowns, had to be concentrated in the larger and more advanced yards, affected other rearmament programmes, and took a long time to enter active service. It is instructive to remember just what was involved in a single battleship 14-inch gun mounting: this piece of machinery weighs over 1 500 tons and is the size of a four story house, all of it machined to within l/1000 of an inch. It incoporates four elevators to carry the 3/4 ton shells, each broken into vertical/lateral/vertical sections, and an amazing series of delicate control mechanisms. It 0 was made of specialty alloys: materials both costly and in short suppply. By contrast, a 'Whalecatcher' Type corvette was cheap, used inexpensive garden variety steels, and was 138. extremely simple to build.

0 Given that the sceptre of war with Germany far from disappeared after Munich, circumstances dictated that fleet strength be raised, and fast. Since cotvettes and escorts were easy to build, and required only the services of the less technologically advanced yards. These were precisely the yards which were not participating fully in the rebuilding boom, the yards which did not require scarce skilled labour. The use of such yards to build many simple vessels could boost fleet strength in short order. This had been made abundantly clear to Cabinet by Sir Thomas Inskip's "Committee on Defence Programmes and Acceleration".[62]

These smaller vessels also were meant to seiVe as anti-submarine, merchant-escort vessels. The Admiralty, as was natural with the proud overseers of an ancient and honourable batde fleet, preferred to think in terms of hunting submarines, tracking down surface raiders, and destroying enemy capital ships in open batde. This was natural in a navy, these sort of activities justified their existence, and allowed them to make use of the glamorous big ships in the manner they were designed for: surface engagements. This is also understandable in light of the prevailing strategic theories: in spite of Sir Julian Corbett and Admiral Sir Herbert Richmond, and their more unorthodox ideas, the Royal Navy remained committed stalwarts of Alfred Mahan and the deep blue sea.

The experience of the Great War ought to have made the Royal Navy extremely chary of the U-Boat. They managed to avoid facing this unpleasant and unglamorous reality through a deep-seated belief in the Asdic sonar system. As late as October, 1938, with the German U-Boat programme on an announced plan of expansion, the Defence Plans Sub-committee was told

Should Germany make vigorous use of her available submarine forces, our counter-measures should enable us to prevent her from obtaining any marked success, although we must expect losses in the initial stages. [63]

This optimism was wildly misplaced. It allowed the Admiralty to pursue building plans which placed more strain than alternate programmes on the shipbuilding industry, and which in any event neglected an important threat to British shipping. In this light, the Cabinet decision on February, 1938looks exceptionally wise: the Fleet was to receive ships in a hurry, and these ships were to prove extremely necessary.

However, there is another point that must be made here, for on the score of Asdic the c Admiralty also deseiVes a strong vote of recognition. This device was developed over the course of twenty years, incorporating not only some advanced scientific investigation, but a dogged perseiVerance in the face of less thoughtful cost cutters as well. It was a triumph of British 139. science, and its failings in no way detract from the achievement As Sir Wisnton Churchill was to write "The Asdics did not conquer the U-boat; but without the Asdics the U-boat would not have been conquered." [64] It just goes to show how impossible it actually is to plan for the war one eventually has to fight.

With the Cabinet paying a good deal of attention to strengthening Britain's defences, the First Lord took it upon himself to inform Parliament of a simple truth. On 2nd November, 1938 Lord Stanhope rose in the Lords to denounce Winston Churchill as "responsible for the weak state of the defence services because of his economising" policies while Chancellor in the 'twenties. On 5th November, Mr Churchill's disengenuous reply was published in 1be Times. He argued that the Navy "is the only one of our defence forces which is in a high state of efficiency and which is far stronger relative to Europe than in 1914." [65] Of course in 1914 Japan was not directed by a band of fanatical, short sighted militaty anarchists with an enormous fleet at their beck and call.

This exchange is useful in delineating some of the crucial issues regarding naval policy and shipbuilding. There was a recognition, not always clearly stated, that the naval holiday of the 'twenties and early 'thirties now seemed a holiday from reality. Similarly, at the time of the holiday, plans to build enormous fleets had smacked of unreasonableness. In early 1939, most everyone (at least on the Government benches) was determined to repair the situation; the differences were by now largely ones of apportioning blame and choosing between types of vessel.

The early part of the year was also spent by the Government in an attempt to detach Italy, and the naval threat she represented to the Empire, from the embrace of Germany. Chamberlain did not have quite so many illusions about the Italians as some, notably the Earl of Avon, have suggested. [66] The sad reality of the strategic situation was that Britain had to make such an overture. It proved to be a disappointing failure.

When in March Rider absorbed what remained of Czechoslovakia, and Italy invaded Albania, Great Britain resolutely faced up to the imminence of war. A guarantee was given to the surpirsed Poles: a matter more of indignation than of strategic wisdom, for there was even less Britain could do to help Poland than had been the case with Czechoslovakia. In any event, to use an oft quoted phrase, the die was cast.

It was clear that delays and extended programmes were no longer practicable. The Admiralty brought its Operational Intelligence Centre to full readiness, as well it initiated a survey of Royal Navy commanders across the globe so as to make informed war -fighting plans. Similarly, 0 Anglo-French naval co-operation was brought to a new and more detailed level. 140. As far as the programme of construction went, the question was now one of speed and capacity. rather than of finance. On 21st February the Prime Minister informed the House that the Defence Loan was to be doubled in size to £800 millions: a sum large enough to strain the 0 productive capacity of British industry. In March, with the need for haste uppermost, the decision was taken which postponed a 'Lion' Class battleship, with the capacity instead being devoted to the construction of a smaller, less complex vessel incorporating the spare guns and gun mountings of the 'Queen Elizabeth' and 'Revenge' Classes. This was particularly helpful as gun mountings were the province really only of a few yards, and the most advanced of them - Vickers-Annstrong at Barrow- was already working at capacity. [67]

This hybrid vessel is somehow a fitting metaphor for the state of the Royal Navy and the yards which supplied it. Layed down in the tense and frenetic pre-war days and built during the chaos of wartime, it combined a hull of later and more dangerous vintage with guns constructed at a time when the Royal Navy enjoyed heady dominance of the oceans. By the time it was launched in 1945, it was a floating encapsulation of the glory and the fall of British naval power.

Other decisions included additions to the building programme in all categories of vessel. Moves were also made to increase yard capacity: in July the C. I. D. authorised measures which were to add one slip capable of holding a 'King George V' Class battleship, as well as sufficient plant for two more 'Lion 'Class battleships. [67] The Admiralty was also fortunate that in the first nine months of 1939, 256 730 gross tons of naval construction came came the slipways. This compares favourably with the 60 980 launched in 1938: a clear demonstration of just how much of a lull that last year was. [68] This also freed up a good deal of building capacity, a fact of no small importance.

In spite of this hopeful news, the First Sea Lord Admiral Backhouse remained downcast about the Royal Navy's strength. In December of 1938 he had said

1939 will be a bad year ... The fact of the matter is that we cannot be be strong everywhere. Things have been allowed to go back too far... Things will be very different at the end of 1941. [69]

What was the precise building situation in 1939? It has been shown that the war planners were not concerned overmuch with the level of merchant shipping available. The merchant fleet was composed of 1 975 vessels displacing between 3 000 and 10 000 gross tons, 197 vessels displacing 10 000 to 20 000 gross tons, and 42 vessels of over 20 000 gross tons. [70]

Since the Admiralty planners had worked out that the existing level of tonnage was suitable for British needs for at least the early portion of war, capacity and launchings were allowed to swing to naval construction. This is best illiustrated by labour flows: while roughly 49 000 shipyard 141. workers were employed on new merchant construction in 1938, by September of 1939 this figure had fallen to about 26 000. [71] Had the Government not created the Consultative Committee to oversee ship construction shortly before the outbreak·of war then, said one of its leading lights, "there would have been very few workers remaining on the merchant side of the industry". [72]

Admiral Backhouse's gloomy prognostication was based far more on the state of the naval programme. The survey of naval officers around the globe, and the resulting appreciation of the strategic situation, had resulted in the creation of a series of force requirements. For instance this appreciation declared Home Waters the "decisive theatre", stating that a minimum six capital ships would be required in this area if the German 'pocket battleships' and Schamhorst Class battlecruisers were to be contained. Similarly, the minimum British force required to safeuard the Far Eastern colonies and Australia and New Zealand consisted of seven capital ships, one fleet carrier, eight cruisers, and three flotillas of destroyers. [73] Moreover if Italy was to become an enemy, then the Mediterranean would also require a strong naval force.

To meet these demands, the Royal Navy had a dozen battleships and three battle-cruisers: barely enough to meet the numerical demands and, when one considers that included in the dozen i.. were the five Royal Sovereign Class ships, technologically quite inadequate. [74] In 1939, the five King George V Class battleships and the two Lion Class battleships were still under construction, as were the six fleet carriers of the Illustrious Class. The situation was no better with smaller vessels: for instance twenty seven cruisers of the Town, Dido and Fijii classes remained. It was much the same in every other category. [75] Still, the situation was better than it had been the year before.

VI

At this point, it might be useful to look at the administrative apparatus erected to oversee the British shipbuilding industry. The lead times, often measured in years, inherant in shipbuilding, as well as the labour and machine bottlenecks of 1936 onwards, necessitated some sort of official control.

The structure of control over naval shipbuilding did not really change between peace and war. The Board of Admiralty was the body which came to corporate decisions, decisions which were then represented to the Cabinet by the Minister (the First Lord of the Admiralty). The senior service officer on the Board was the First Sea Lord. Two of his subordinates held direct c responsibility for supplying the navy and building its ships: the Third Sea Lord (the Controller of the Navy) was responsible for naval construction, both in private industry and the Royal 142. Dockyards; while the Fourth Sea Lord was responsible for the procurement of supplies. Their activities were guided by the naval policy set down by the Civil Lord, but in practice, barring 0 anything overtly political, responsibility for contracts was devolved unto the Pennanent Secretary. (A Permanent Secretary is the highest ranking civil servant of any given Ministry.)

It was not until the late spring of 1939 that any similar control was set up over merchant shipbuilding. As we have seen, it was then that the Chamberlain ministry chose to create the Shipbuilding Consultative Committee. This Committee, containing representatives of the Board of Trade, the private shipbuilding industry, and the Admiralty, was set up as a subordinate element in the C.I.D. structure. Its purpose was to review the prevailing situation in the industry in light of labour and capacity constraints, and anive at a joint merchant and naval building programme. By and large, its first plan was worked out backwards: the types and numbers of vessels were calculated in accordance with what was typically built at the various yards. At this early stage, it was not really practicable to re-tool yards for new types of construction. [76]

Certain types of merchant vessel, usually the most common of its kind, were selected as prototypes. Standardisation was by and large restricted to machinery and equipment Design changes which made the production of standard types of vessels were encouraged, as were methods to cut back on the need for rolled steel sections and specialty pipes. Nevertheless, the Consultative Committee came to the conslusion that the most expedient merchant building plan would be the annual construction of a cross-section of the the existing British merchant marine. [77]

In the months following Munich, there had been a good many calls for a joint Ministry of Supply for the services. This suggestion was particularly resented by the Admiralty, who made the case that the "continuity of relationship" between user, designer, and producer was crucial. The Admiralty managed to retain control of production, but it required a fight.

A month after the outbreak of war, the Ministry of Shipping was created. This automatically disrupted the Consultative Committee, making some new arrangement necessary. The Minister of Shipping made the initial suggestion that the Consultative Committee be reformed, and placed under the chairmanship of Sir Amos Ayre, head of Merchant Shipbuilding, but the Admiralty (not surprisingly) turned this down. The upshot was that a department of Merchant Shipbuilding and Repair was created, and its head elevated to the Board of Admiralty. This had the practical effect of allowing the Third Sea Lord and his new rival to confront each other at the same table.

There was one factor complicating these arrangements. The fear of air raids had resulted in 0 several thousand Admiralty officers being foisted on the town of Bath, whereas before the war the Admiralty had been conveniently concentrated at Whitehall. The arrangements at Bath seemed 143. designed to frustrate the logical operation of the department: when the Director of Navy Construction had to meet with the Director of Navy Contracts - a not infrequent occurrence - he was forced to leave the Grand Pump Hotel and troop to the less inviting surroundings of a suburban girls' school. This constituted nothing less than "a permanent strain on the working of the Admiralty machine." [77]

The administrative structure in place, let us turn to the actual direction of the wartime shipbuilding industry and its efforts.

vn

It is inevitable that war should disrupt even the best laid production plans. In the case of British shipbuilding, the extent to which this happened was dramamtic. From the very outset of the war with Germany, the shipyards were swamped by ever increasing waves of repairs and refits.

The experience of combat led serving officers to demand, and get, a whole variety of modifications and new equipment for their vessels. The experience of attack by the Luftwaffe led to calls for more short range anti-aircraft weaponry, as well as greatly improved splinter protection. Even though the early months of the war were marked by relative restraint and inactivity on the part of the U-boats (full scale submarine warfare was only inaugurated by directive 'Weser Excercise'on 1st March, 1940), the Royal Navy soon found the need for more radar equipment and acoustic mine-sweeping gear. [78] All of this placed a burden on the shipyards, frequently requiring the diversion of the most skilled workers. This was particularly true of the new electrical equipment and rewiring essential to the operation of advanced naval technology.

As for repairs, between the declaration of war in Spetember and the New Year, 111 naval ships suffered accident or weather damage, and a further twenty suffered the effects of enemy action. During 1940, this figure rose to 470 naval vessels, of which half were damaged by enemy action. [79]

The third factor complicating achievement of the building programme was the sudden need for conversion of small colllllleicial vessels into fighting craft. Trawlers were converted to minesweeping and anti-submarine roles, other small craft became boom defence or fishery protection vessels; in April to June of 1940, 234 such conversions were canied out. [80]

What was the net effect of all this surplus and surprising actiyt? The men:;hant programme, 0 which had a 1940 target figure of 1.5 million g.r.t., soon fell far behind. The naval programme Naval ShipiJuildiaa: 1st&: 2ad Half, 1941.

1941 11

0 50 100 150 200 250 300

·ooo Gross Tons [86] 145. fared even worse. It was anticipated that in 1940 213 ships displacing 264 000 gross tons would be launched: the actual figure turned out to be only 126 ships displacing 172 000 tons. By 1941, the Admiralty was forced to abandon any ideas they might have held of building up a 'balanced fleet'. [81]

If 1940 destroyed any semblence of order in the bulding programmes, the year 1941 threw the shipyards into chaos. It was a year of heavy losses in the fleet, a year when the Clyde was subjected to a 'Blitz' all its own, and a year when the Britain was sustaining more casualties in the Battle of the Atlantic than she could possibly build or repair. In only two months of 1940, and two again in 1941, did British, Allied, and American monthly men:;hant ship losses drop below a quarter of a million gross tons. From mid 1940 to mid-1941 the losses but once dropped below half a million tons per month. What this meant is that every month British and friendly fleets suffered a net diminution: in other words ships were being sunk faster than they were built! [82]

In Britain, merchant shipbuilding was given priority: labour was transferred and in the interests of making steel available for merchantmen, the Royal Navy cut its building plans by 12 escort destroyers, 20 Whalecatchers, and 19 submarines. Warships also suffered when armour plate was diverted in the Summer of 1940 to the Army's tank programme. [83] Another problem 0 was the continual need to build more escorts and minesweepers to protect these men:;hantmen: in the Summer' of 1940 it was estimated that another 436 escort destroyers would be needed, by the Autumn of 1941 this figure had risen to 720. [84]

With all this furious activity in other areas, the Admiralty also found itself starved of shipyard workers. To December, 1940, the Admiralty was only allocated 58% of the workers it requested. [85] The chart opposite shows just how drastically naval construction was deviating from the (already revised) programme.

Given the growing inability of the British yards to meet demand, Prime Minister Churchill was moved in December of 1940 to write President Roosevelt to ask for aid. Noting that at best Britain could build 1 250 000 tons per annum of merchantmen, he said

To ensure final victory, not less than three million tons of additional merchant shipping capacity will be required. Only the United States can supply this need. [87]

0 Lend Lease was the answer to this request, and Lend Lease was responsible for allowing the British shipyards to concentrate on building ships for the Royal Navy: ships to replace the Royal 146. Navy's heavy losses in 1941 and 1942. In January of 1941 the President had ordered 200 emergency merchantmen of Kaiser design for Britain. Soon after the signing of Lend Lease, this order was boosted by an additional 300 vessels. By year's end the order had swelled to over 1 200. [88] The U. S. yards were also to become instrumental in repairing British ships: in the last three quarters of 1941, over 430 000 dead weight tons of British merchantmen per month were being mended in the U. S. [89]

When Japan created her own Far Eastern war in December of 1941, the strain on British shipbuilding grew even more, as did the dependency on the United States for non-naval ships. London to Brisbane via the Cape (the Mediterranean, even with a British fleet, was not entirely safe) was a route totalling over 13 800 miles. Many ships had to traverse this route, often with the reduced cargoes distance and the convoy system requires; the casualties they suffered were high. No matter what the effort by Britain, the demands of this sort of naval war could simply not be fulfilled domestically.

Thus the circumstances of war hindered the construction of ships by Britain, and the sheer scale of losses often meant that production became little more than a vain game of catch up. All of this should be remembered when assessing the industry, however it ought also to be remembered that the British yards were never working up to their full potential. This was the other aspect of the industry in war.

VIII

On 21st June, 1941, Sir John Wardlaw-Milne, Chairman of the Select Committee on National Expenditure, tendered his re,Port to the Prime Minister. Some of the more interesting conclusions reached were that

... the country is not getting the production that it should and that is possible with the labour supply currently av:ailable ... The bulk of the people are working well, but there is a distinct element, particularly among the young people, men especially, which is not pulling its weight.

The Essential Works Order is not working well ... It is far too cumbrous ... and is really only being applied on the one side, in favour of the workers. The position of the employer is almost helpless; he has lost control of his labour, discipline has largely disappeared ... 147. The Minister of Labour has the power [to rectify this situation] and should excercise it impartially against both employers and employed. At present he is not doing so. [90]

This was, in spite of the harsh letter in which Mr Bevin stormed back at his accuser, a perfectly accurate analysis of the labour situation. To poison an already unpleasant brew, the unions in wartime refused to concede any of their ludicrous and anachronistic peacetime working practices. Sir James Lithgow, the Controller of Merchant Shipbuilding, wrote that the unions remained mired "in the worship of the status quo". They froze "at their source most efforts to adopt modem methods", preferring instead to make "extravagant claims for compensation in piece-rates". [91] Another channing wartime trait was the utter inability to break down, let alone bend, the fantastically inefficient demarcation lines between crafts.

In May 1943 a ship's officer summed up the workmen labouring on his damaged vessel with the words "What they're supposed to be doing, I don't know. They're never working when I see them." The officer satirically estimated that perhaps one in ten shipyard workers could actually be expected to live up to their name and work. [92]

This sort of obstreperousness was a remnant of depression, clannishness, and poor union/management relations. All of these were symptomatic of the years before 1939. The only trouble was that this absurd set of attitudes was carried over into war and defended with a blind and furious intransigence. In so doing, they were aided and abetted by Mr Bevin and all the rest of the Labour ministers. The economically naive and quite partisan Mr Hugh Dalton illustrated this Labour inability to understand efficiency by saying "Lyttleton [!] ... talked a lot of capitalistic hot air about the need to approach the question 'from the point of view of industry ... '". [93] It was a damaging sort of blindness, particularly in wartime when decisions could cost people not their dividends, but their lives.

Nor was management pure of the industry's sclerotic distemper. As in pre-war years, the majority of them remained incompetent planners, as well as being completely unable to deploy labour to its best advantage. [94] Even those managers thoroughly cowed by the unions accepted the need to overhaul production in wartime.

This disgraceful state of affairs was the result of the industry's many longstanding problems: secular economic decline, unions unwilling to modernise, poorly trained management, a rotten 0 structure, and the bitterness which was the legacy of these factors. Also to blame was the hectic pace of shipbuilding and the poor conditions which went hand in hand with the 148. demands and hardships of war. Yet absolutely none of this was forgivable.

It was inevitable that the industry would continue along blithely unchanged, unreformed, and always demanding more labour until a ne plus ultra line was crossed. Eventually, the Government took a look at the labour input, the pathetic results that these thousands of workers produced, and decided this could simply not continue.

There were a number of Committees of Inquiry: Mr Bentham, for instance, reported on the disgraceful state of the industry's antique capital plant. However the body which tackled most directly the problems of British shipbuilding was Mr Robert Barlow's 1942 "Inquiry into the use of labour in shipbuilding and shiprepairing establishments including H.M. Dockyards." [95]

The final report was issued 13th June of that same year. As has been the case with so many official documents of this period, it was not a happy read. Its terms of reference had this committee both enquire into the labour situation, the prospects of dilution and the employment of women, and the obstacles thereto, as well as the "extension of payment by results". [96] It is worthwhile noting that two of the five panel members were labour leaders.

The Barlow Committee was very diligent, visiting every major shipbuilding centre in the country, as well as every type of shipyard. Their investigations revealed a shockingly ill run and, more surprisingly, ill informed industry.

For instance , the Admiralty had failed to take either management or labour into its confidence, and as a result many people were poorly informed of the gravity of the situation. [97] Such habits of non-communication were also holdovers from the grey inter-war years.

This problem, however, paled in comparison with the problems of discipline and absenteeism. The committee found ample evidence that in many yards 10% of production time had been institutionalised into extended breaks! As for discipline, the panel members deemed it poor, especially among the younger worker. They also discoverd the widespread prevalence of absenteeism. In addition to reiterating the need for greater flows of information, it was politely and circuitously suggested that Mr Bevin do his job. [98]

The workforce was described as being equally unwilling to work overtime: an unwillingness masked by lame statements that the pace of work was arduous as is, statements some unions even disagreed with. [99]

The investigations into the capital plant of these yards resulted in a call for sweeping 149. modemizations. This was no more than stating the obvious. The committee also noted that modernization could effect a manifold improvement in labour productivity. [100]

Dilution, it was noted, has made partial but insufficient progress. The unions were unwilling to accept this; in spite of the Government's passage of a Bill enforcing all the absurd pre-war work practices! [101] It was as though the Churchill ministry had elected to apply a particularly virulent form of appeasement to the craft unions. As for the employment of women, management and unions were united in their hostility to the idea: it was perhaps the one thing they could agree upon. [102] Finally, the Committee members stated that, in spite of union opposition, payment by result should be extended in the industry. The text does not seem overly hopeful on this point.

In effect, rearmament profits and the spur of war had proved utterly incapable of shifting the industry out of the slothful Victorian morass it inhabited. In consequence, the nation was suffering.

The Barlow Committee's report was instrumental in creating the Shipyard Development Committee and the plan of re-equipment it oversaw. This modernization programme involved the wholesale introduction of modem methods and machinery into the yards. Welding, automatic rivetting, prefabrication, large cranes, new machine tools: large doses of each were given to the yards. In 1942, the Admiralty was to spend £1.245 millions on new plant and equipment; this rose to £4.002 in 1943, and £4.090 in 1944.

The musty cobwebs of three decades neglect were swept away, though never in their entirety. For all the investment, the industry remained doggedly inefficient. For instance, where pneumatic rivetting was introduced early in the war, eliminating the need for a rivetter's 'mate', unions and employers agreed to keep the latter on anyways. "As a Mass-Observation Report in 1941 noted, this person 'has nothing to do now, except to sit all day beside the riveter. He draws full wages."' [ 104] During the work of the Shipyard Development Committee, it was "found that many of the machines which had been reported as ripe for renewal were either not working at all or were working on jobbings gathered in from other engineers in the neighbourhood": in other words a complete deception and waste of the Committee's time, as well as the potential misuse of a valuable machine tool. [105] The mind boggles.

If the hybrid H.M.S. Vanguard was a floating recollection of the muddle in British shipbuilding, and a symbol of the loss of maritime supremacy, then the rOle of British 0 shipbuilding after 1942 provides the final ironic capstone.

Once the decison had been made to invade Europe, and in so doing deploy a massive 150. man-made harbour, British shipbuilding entered on what was at once a highly challenging and most bizarre enterprise. The design for this 'synthetic' harbour- known as a 'Mulberry'­ included 'Bombardon' breakwaters, 'Phoenix' caissons, and Lobnitz pierheads. These mammoth structures, which required tons of steel and enormous numbers of man hours, were required in great number: the 1944 plan called for the construction of 113 Bombardons, 149 Phoenixes, 23 pierheads, and 6 roadways. [106]

It was clear that these complex constructions would have to be built in England: they simply could not be towed across the Atlantic. The overriding importance of 'Overlord' meant that, whatever the diversion from other programmes, Britain's shipyards must build the Mublbeny harbours. The irony is double. Vast resources were devoted to building a piece of maritime engineering destined for complete uselessness once the invasion had been completed. These vast resources, effectively the backbone of British maritime power, were being devoted to the construction of a project meant to serve the army. The continental commitment had even succeeded in sucking naval power into a subordinate relationship.

Not that this really mattered after America assumed the role of shipbuilder to the Alliance. The British yards still produced ships, but they had been proved incapable of meeting the needs of a maritime empire and great power with far flung interests. But then Britain in 1943 was no longer really capable of acting the part of a great power. The demands of total war, and certain economic realities, had ended Britain's days as the most powerful nation of the western world. Just as British shipbuilding passed the baton of world leader to the United States, so too did Britain pass on her crown. The twenty five year juggling act had ended. It did not end with anything so spectacular as collapse or barbarian invasion. Instead Britain elected to build a welfare state and discreetly abandon the power and glory of world dominance.

Ironically, after umpteen mergers, nationalisations, and bailouts, it was shipbuilding which sputtered on the longest: by the end of the 'seventies only a rump remained. This industry, so symptomatic of, and so involved in, the process of declining British power, lingered on like the dinosaur it had become. While the rest of Britain belatedly chose to adapt to the new challenges of its new status, this industry continued to display a suicidal tenacity so remarkable one would almost wish to applaud.

0 151.

[1] A. Krishtalka The Old Tories and British Foreign Policy 1930-1939 PhD. Thesis, McGill University, 1984, Vol. 11, pp 860- for the details of the Abyssinian debate. For a more popular view of the affair, se D. Reed Insanity Fair Jonathon Cape, 1938. [2] R. Young In Command of France: French Foreign Policy and Military Planning 1933-1940 Harvard University Press, 1978, esp. pp. 194-198. [3] K. Felling The Life ofNeville Olambertain Macmillan, 1970., p. 319. [4] The Earl of Avon The Eden Memoirs, Facing the Dictators Cassel, 1963, p. 478. [5] Krishtalka, pp. 859-864. [6] [R2183/1/22] dated 25th March 1937. [7] Avon, p. 590. [8] CAB 24/261 [C.P. 105(36)] [9] IBID [10] S.W. Roskill The \\3- a Sea Vol. I H.M.S.O., 1954, pp. 577-579. [11] CAB 24/261 [C.P.40(37)], esp. p. 11. [12] N.H. Gibbs Grand Strategy Vol. I H.M.S.O., 1976, p. 360. [13] Gibbs, p. 409 quoting C.I.D. 1305-B. [14] Enclosure to Cab 24/261 [C.P. 105(36)] [15] Quoted Gibbs, p. 402. [16] S.W. Roskill Naval Policy Between the Wars Vol. I Collins, 1968, Appendix C. [17] C. Barnett The Collapse of British Power Eyre and Methuen, 1977, pp. 408-410. [18] Avon, pp. 421 & 492 on. [19] P. Johnson Modem Times Harper & Row, 1983, p. 345. [20] Young, pp. 149-151; Johnson op cit. [2l] Feiling, 325. [22] M. Gilbert Winston S. ChurchiJI Vol. V, The Prophet ofTrudl Houghton Mifflin, 1977, p. 1018. [23] Krishtalka, p. 730. [24] Felling, p. 323. [25] Avon, pp. 570-571. [26] Avon, p. 616; A.F. Havighurst Twentieth Century Britain Harper & Row, 1962, p. 269. [27] Debates of the House of Commons, Fifth Series, Vol 322, 80-84. [28] Young, pp. 196-198. [29] CAB 24/278 [C.P.170(38)]. [30] Chamberlain to house, 7th March, quoted Felling, p. 340. 0 [31] Roskill Naval Policy... Vol. I, adapted form Appendix D. [32] Feiling, p. 347; indeed it was the French who made this clear. See Young, p. 201 for French reservations over the advisability of going to war over Czechoslovakia. 152. [33] mm. [34] "Nationality Policy of the Czechoslovak Republic" [C3640!1941/18], dated 26th April, 1938. The Sudetan Germans would appear to have enjoyed a considerably greater degree of civil liberties than their Reich-bound fellow Germans. [35] [R5523/l/22] C.O.S. Sub-committee of the C.I.D., 12th August. Circulated as 1347-B. [36] Gibbs, p. 355. [37] Gibbs, p. 357. [38] Gibbs, p. 358; see also Sir Eustace Tennyson D'eyncourt's comments on Major Fea's paper on naval design after the Washignton Conference: Transactions of the Institution of Naval A:rchiteds vol. lxiv. [39] Gibbs, pp. 358-360. [40] C.B.A. Behrens Mf.ftbant Shipping RI the Demands ofWir H.M.S.O., 1965, p. 36. [41] Behrens, p. 21. [42] Sir N. Henderson (Berlin) to Mr Eden: [C6212/136/18]. [43] Cabinet Conclusions, 22nd December, 1937: [C42/42/18] [ 44] Havighurst, p.271. [45] Young, p. 201, also p. 210 for Daladier's feelings on the danger of risking war with Germany. [46] Roskill Naval Policy•.• Vol. IT, p.427. [47] The definitive chronology and analysis of this plot may be found in Peter Hoffmann's 1be History of the GErman Resistance 1933·1945 MacDonald and Jane's, translated 1977. See pp.99-128; see also pp. 128-153 for the continuation of this plot after Munich. [48] Roskill Naval Policy••• Vol. IT, p. 439. [49] CAB 24/278 [C.P.170(38)], paragraph 57. [501 mm, p. 440. [51] CAB 24/278; [C.P.199(38)]; dated 14th September, 1938. [521 mm, pp. 29-30. [53] H.M. Mason The Rise of the Luftwaffe Ballantine, 1973, pp. 244-246. [54] C.L. Mowat Britain Between the Wars 1918·1940 Methuen & Co., 1955, p. 589-590. [55] Roskill Naval Policy•.• Vol.II p. 442. [56] miD, Vol. I, Appendix B. It is also worth quoting Winston Churchill on the Royal Sovereign Class: "Throughout the war the Royal Sovereigns remained an expense and an anxiety. They had none of them been rebuilt like their sisters the Queen Elizabeths ,and when ... the possibility of bringing them into action against the Japanese Fleet. .. presented itslef, the only thought of the Admiral on the spot, of Admiral Pound and the Minister of Defence, was to put as many thousands of miles as possible between them and the enemy in the shortest possible time." The Gathering Storm Houghton Mifflin, 1948, p. 467. [57] Krishtalk:a, pp. 750-760. 153. [58] Omrchill op cit., pp.327-328 has an abbreviated version of the text which is, naturally, repeated in full in the Debates of the House of Commons, Fifth Series, Vol. 339: 359-73. [59] Debates of the House of Caommons, Fifth Series, Vol. 339: 32-40. [60] Roskill op cit. p. 445. [61] mm p. 450. [62] miD, p. 452, the Committee was created 26th October, 1938: hardly the act of blind appeasers. [63] D.P.(P)2, para. 17, quoted in Gibbs, p. 432. [64] Churchill op. cit., p. 164. [65] Quoted in M. Gilbert, p. 1018. [66] The Earl of Avon, op cit.; for Chamberlain and Inskip's distrust of the Italians, see Cabinet Conclusion 6(38), also quoted in Documents on British Foreign Policy Second Series, Vol. XIX, ·Appendix II. [67] see J .D. Scott Vickers, A History Weidenfeld and Nicolson, 1962. [67] Gibbs, p. 355. [68] Gibbs, p. 358. [69] ADM 1/9767, quoted Roskill Naval Policy ••• Vol. 11, p. 432. [70] D. Todd The World Shipbuilding Industry Croom Helm, 1985, table 4.5, p. 164, adapted from various issues of Shipbuilder. [71] Sir A. Ayre "Merchant Shipbuilding during the War" Transactions••• Vol.lxxxvii., p.2. [72] mm [73] Roskill Naval Policy ••• Vol. 11, p. 477. [74] Churchill, Appendix A, Book II. [75] Adapted from Roskill 'm~' a Sea Vol I, appendix A-. [76] Ayre, p. 3. [77] Ayre, p. 4; the Cabinet discussion of the need to increase tonnage, and the resulting decision to develop a 'standard' vessel is to be found in CAB 66, W.P.(39)36.7. [77] J.D. Scott & R. Hughes The Administration ofWr Production H.M.S.O., 1955, p. 86. [78] M.M. Postan British Wcr Produdion H.M.S.O., 1954, p. 61-62. [79] mm [80] mm [811 mm, pp63-64. [82] D. Matloff Strategic Planning for Coa1itioo Warfare Department of the Army, 1955, Appendix H-1. [83] Postan, pp. 65-66. [84] Postan, p. 470. [85] Author's calculation's based on figures provided by Postan, p. 205. 0 [86] Taken from Postan, p. 294. 154. [87] W.S. Churchill Their F'mest Hwr Houghton Mifflin, 1949, p. 564. [88] D. Leighton & R. Coaldey Global Logistics ad Strategy Department of the Army, 1955, p. 59. [89] mm. p. 60. [90] CAB 66, W.P.(41)171. [91] J.M. Reid James Litbgow, :M'a*r of Work Hutchison, 1963, p. 201. [92] C. Bamett The Audit ofW. Papennac, 1987, quoted p. 121. [93] ed. B. Pimlott The Second World W. Diaries of Hugb Dalton Jonathon Cape, 1986, p. 701. [94] Bamett, op. cit., p. 120. [95] ADM 1/11892. [96] ffiiD, Terms of reference. [97] mm, # s. [98] mm. #6. [99] mm, #7. [100] mm, # 9. [101] mm. #11. [102] miD, #13. [103] Postan, p. 204. [104] Bamett Audit••• p.122. [105] ADM 1/12506, letter dated 14th Jabuary, 1943. [106] R.G. Rupenthal Logistical Support of the Armies, Vol. I Department of the Army, 1953, p. 279.

0 155.

Chapter Six Conclusion

What does this relationship between economics, shipbuilding, and British naval strategy tell the historian? Most important is perhaps the principle that while sound economics and sound strategy are not always one and the same, unsound policies in either realm can have catastrophic results. The logical extension of this is the proposition that great power status cannot be perpetuated in the face of either economic or strategic weakness.

Great Britain was a maritime power. Her fleets, naval and merchant, were essential not only to her safety and prosperity, but to those of the Dominions and the colonies as well. It does not matter overmuch that history has disproven Alfred Mahan's assertion that control of the seas and far flung colonies could produce a great power. In the case of Britain, there was a strong element of truth in this. The Royal Navy was the outward manifestation of British pride, a deterrent to potential agressors, and the guarantor of Imperial integrity. The merchant marine was at once the symbol and the carrier of Britain's vast wealth. Navy and merchant marine both depended on shipbuilding to supply them with the vessels they required.

After the Great War, the exigencies of economic downturn, domestic politics, and diplomacy began to exert profound pressures on British policy-makers. In effect, circumstances were dictating that Britain could no longer remain a great power and economically stable, save by dint of great sacrifice and radical change. For a time, the illusion that these mutually incompatible states could exist side by side was maintained: if anything, the British Empire in 1919 appeared stronger than ever. The reality was far grimmer.

Britain was indebted, subject to economic pressures, battered by downturns in the business cycle, and increasingly unable to afford great power status in the expensive age of total war. It was at precisely this time of weakness that she was confronted by first one , then two, and finally three threats to her national security.

An enormous national debt and economic weakness led to the need for reduced expenditures. War weariness and the perfectly understandable desire for peace, stability, and prosperity made impracticable any programme of wholesale changes. American pressure and the realities of finance combined to reduce the navy and end the Japanese alliance. When Japan came under the control of ultra-militant, hyper-nationalist military cliques, the Far East was placed in peril. 156. Similar economies, made logical by the demilitarised state ofWeimar Germany, allowed British naval strength to decline in home waters. Good intentions and faith in disarmament compounded this slippage. When Herr Hitler abruptly gained control of Germany, and challenged this British dominance, the Western theatre was once again placed in danger.

British public morality and support for the League of Nations conspired to turn Italy from a potential friend into a likely enemy. British strategic weaknesses further encouraged this trend. It was thus that the Suez route and the Mediterranean possessions were threatened.

The fact that the British economy was teetering on the brink of depression made it impossible to devote the vast resources needed to meet the Axis challenge. Similarly, the abandonment of the Gold Standard in 1931, and the subsequent end of the Pound as a reserve currency, marked an equally dramatic decline in the relative economic position of the nation. Shipbuilding itself was an industry surviving only in the most precarious of manners.

Economic disaster rivalled strategic disaster for dominance of the government's agenda. For a time the former won out; as a result shipbuilding was allowed to continue its decline while the Service Estimates remained stagnant. This was all done in the interests of economic security.

In the early to mid 'thirties, these threats came to be in approximate balance. This state of affairs ensured that no one was satisfied; not the Admiralty, not the shipyard owners, not the City. When it became clear that the strategic threat to the nation far outweighed any danger of further depression, priorities tilted decisively towards rearmament.

Yet even this did not improve the general level of satisfaction. The shipyards grew busy, and yet history and entrenched attitudes ensured that inefficiency would persist, particularly since domestic politics precluded both radical restructuring and a further severe shakeout. In any case, from 1936 onwards, the yards were so busy with the naval building programmes that restructuring would have been a time consuming diversion, however useful in the long run. Yet even here, the Admiralty planners remained unsatisfied, recognising the need for an even larger fleet.

However when the limits imposed by finance were removed, a shortage of capacity intervened to prevent shipbuilding of sufficient scale and speed. The increasing size and complexity of warships merely aggravated the situation. In effect, inefficency and naval reductions cut the industry's capacity, a fact which rebounded some years later to impinge on the formulation of naval strategy. 0 A further factor, one which ties these threads together in a tighter Gordian knot, was the fact 157. that Great Britain stood to gain absolutely nothing, either from expensive armaments building or from war. Her enemies, by contrast, remained convinced that war could not but be to their benefit.

The Second War threw these weaknesses into high relief. Inefficiency, dilapidation, and excess demand relative to the industry's capabilities threw this vital industry into chaos. Barring the intervention and aid of the United States, this situation could easily have contributed to national defeat. Fonunately the Grand Alliance cushioned Britain' overall strategic decline, American industry filled Britain's orders, and Allied navies helped shroud the more specific loss by the Royal Navy of maritime dominance. Nor was Britain able to deploy her industry and merchant marine so as to finance the war through trade: in this, Lend Lease with its restrictive trade clauses, proved a severe hindrance.

The demands of total war had proved excessive for Britain's resources. In absolute terms, the Royal Navy of 1940 was more powerful than ever; in relative terms, it had become enfeebled. Similarly, the absolute output of the shipyards in wanime was impressive, but their performance relative to the American shipbuilding was dismal.

The imponance of naval strategy and shipbuilding in the years to 1918 cannot be denied: a fact which makes the process all the more dramamtic. The juggling act of two decades and more was an extremely impressive bit of legerdemain: great power status was perpetuated without a great deal of naval power. That Britain still managed to appear a power equal to the U.S.A. in 1945 was a falsehood the British people chose to ignore. Not that it mattered, by 1945 Britain was reconciled to loss of Empire.

Moving from the general conclusions, the period 1918-1942, and more panicularly the rearmament years, offer some specific lessons to the makers of grand strategy.

Grand strategy comprises the direction of every element of national power in the pursuit of that country's declared strategic goals. In the naval context, it means that shipbuilding and the merchant marine stand alongside the navy as tools of national policy. In the case of inter-war Britain, cenain considerations affecting the naval component of 'grand strategy' can be discerned.

In the first instance, let us look at the role of the navy in deterrence. After the Great War, deterrence came to include, more than ever before, estimates of a nations shipbuilding and ship 0 repairing capabilities. On a purely quantitative level, Britain was well placed; yet the abundance of empty yards proved deceptive. When new orders, refits, and other tasks created production 158. blockages, it was discovered that no amount of spare capacity can substitute itself for productivity and efficiency. This was a lesson the Royal Navy and merchant marine learned to their misfortune.

Hitler's maritime challenge to Britain, largely a guerre de course based on the U-boat, proved that even a surfeit of ships and capacity is of no use if they are the wrong types of ships. Lion Class battleships, while necessary from the standpoint of the battlefleet in 1937, would have been of little use in the Battle of the Atlantic.

Just as it was demonstrated that the right mix of vessels was as important as numbers, so it was shown that international prestige and actual capabilities have to be kept roughly in line, or the consequences could be fateful. Britain managed in the inter-war years to preserve the Royal Navy's reputation as the strongest fleet in the world. Unfortunately, it proved impossible to maintain the navy at a strength commensurate with this reputation. When H.M.S. Prince of Wales and H.M.S. Repulse were sunk off the coast of Malaya, the damage to the Royal Navy went far beyond the actual military value of the losses.

Another important element is the relationship between naval and economic policies and public opinion. Elected governments tend to be responsive to the wishes of their electorate. When this conflicts with strategic needs, to wit Abyssinia, there is often little choice but to bow to popular demands. In the case of Tory ministers, it was the lesser of two evils: an egregious mistake now, or the utter catastrophe of a Labour administration later.

Nor should the question of inter - service and inter - ministry arguments be ignored. The unnecessary confusion caused by the Admiralty/R.A.F. bid for dominant status tended to invoke service loyalty over strategic sense. Particularly apt in this case are the entirely erroneous claims made by the Royal Air Force for the efficacy of bombers against capital ships. As for the supposed Treasury/Services split, it existed more in the imagination than in reality:- finance was more a 'fourth arm of defence' than many have cared to admit.

This raises the interesting question of civilian scapegoats and military failures (as well as the obverse). In the case of the Battle of the Atlantic, the over reliance on Asdic and the failure to include sufficient escorts in the building programmes were far more to blame than failure to devote adequate financial resources to the navy. The 1939 decision to delete a battleship from the building programme, and add many more escort vessels, proves that naval officers are not always possessed of the truth. The opposite applies in the case of the 1930 limits on cruisers accepted by the Labour government of the day. c Looking at it from the perspective of forty some years on, it is only too easy to point out 159. glaring mistakes, erroneous assumptions, and missed opportunities of the period. That shipbuilding was devastated in the 'twenties and the Royal Navy allowed to decline below a level of minimum safety are obvious points. And yet the results are, in one respect, not as important as the motivations.

As has already been said, the number of constraints on British policy between the wars was immense. These constraints prevented most policies - naval, economic, even as regards shipbuilding - from finding their optimum level. In a democracy these constraints were such that the wonder lies not in their existence, but that the British 'ruling class' managed to cope with them as well as they did. It has been called a juggling act in this thesis, and indeed that is what it was: a juggling act of unmatched dexterity and unparallelled skill. Policy in a dangerous world often revolves around the art of survival, and in the fmal analysis Britain survived the tempest.

In spite of the fact that it involved repairing the mistakes of fifteen years, despite the gross and rampant inefficiency, it cannot be denied that Britain made an heroic effort before and during the war. Unfortunately the task at hand was greater than any level of effort Britain might conceivably have produced. Yet the effort was made, and Britain did emerge victorious. If her shipbuilding industry and navy were no longer commensurate with the needs of world power, it was an irony for which she cannot be faulted.

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