The Arms Industry: From Bazil Zaharoff to Ray Brown
The affairs of arms manufacturers and their agents have for many years been a fertile field of investigation for social reformers who look for the cause of human suffering and social chaos in the activities of evil men. The recent appointment of Ray Brown to the new government post of Head of Defence Sales, for example, let off a storm of protests by government back-benchers. An old bogey was raised in a question by Labour M.P. John Rankin: —
“Is my Right Honourable Friend aware that the appointment of Mr. Brown seems to be similar to a former appointment, that of Sir Bazil Zaharoff, who earned a reputation in this country and in the Labour movement for his nefarious practices which were widely condemned by every member of the Labour movement?”
A brief study of the development of the arms industry over the last hundred years will show the points of similarity.
The second half of the 19th century was a period of rapid technical advance in armaments. The industrial revolution produced the coal, iron and steel, chemical and mechanical engineering industries which were to make this possible. The Industrial Revolution was itself part of the development of a society where antagonisms made arms production a necessity.
For about 300 years naval warfare had changed little. It was fought in wooden sailing ships carrying bronze cannons with the winds and human energy as their only sources of power. Between the Crimean War and the end of the century great changes took place. Steam powered, armour-plated ships built with rifled steel guns capable of hurling shells of three-quarters of a ton many miles with great accuracy. Armoured plate became thicker and tougher as the guns became more powerful. At the end of the century the torpedo shattered the supremacy of the battleship. On land similar advances were made by artillery. In small arms the machine gun, developing from hand operated models to the Maxim automatic, gave the infantry far greater firepower. The railways also made it possible to deploy men and war materials rapidly.
The great technical development of the advanced countries and the consequent rapid increase in production provided not only the wealth, but also the source of frictions which were to make increased arms expenditure necessary. One result was the intensified rivalry in the search for markets for the increasing volume of commodities. There were many chances for the weapons to be proved in battle; the American Civil War, Franco-Prussian War, Boer War, Russo-Japanese War and so on until the First World War.
The great arms manufacturers were drawn into the industry by the prospects of greater profits. The steel and heavy engineering industries were in the second half of the 19th century plagued by fluctuations in the demand for their goods. Expansion during boom time and prospects of bankruptcy during slumps made it urgent that their activities be diversified. The British government, in order to have the latest technical developments incorporated in the weapons of its armed forces, placed orders for components such as gun barrels with the Sheffield steel makers and later for the complete guns. It was in this way that pickers came into the industry. Their activities grew as they took over a shipyard at Barrow and the Maxim Machine Gun Company. By 1914, Vickers had grown to an international combine, whose products ranged from complete battleships to machine guns. Armstrongs, a general engineering firm in north-east England, also became a giant of the arms industry. Krupp in Germany and Schneider in France were their main rivals.
Like any other commodity, armaments were—and are—made to be sold profitably. Governments were usually the customers and the industry’s sales methods were tailored to suit the markets. The major manufacturers had well staffed branch offices in the capital cities that offered the best prospects of sales. These offices were private diplomatic missions in close contact with the government; some were reputed to have greater knowledge of local politics than the official embassies. Where local conditions demanded it, bribery and corruption were used.
Zaharoff, whose early life was spent in the Balkans, started his career in the arms industry as the Balkans agent for the Anglo-Swedish firm of Nordenfeld. Among their products was the first commercial submarine. His first success was the sale of one of these to the Greek Navy in 1877 followed by an order for two from the Turkish Navy. This was the start of Zaharoff’s reputation for playing one nation against the other; for exploiting a rivalry which already existed. Zaharoff was well equipped for his job; he was fluent in several languages, a great charmer, had a wide knowledge of the world and politics, all of which he applied with great success to his job. He quickly became Nordenfeld’s agent for the whole of Europe.
In this new capacity Zaharoff was up against Maxim’s, whose machine gun was far superior to Nordcnfeld’s. Zaharoff tried every dirty trick in the trade to win orders for his firm but they were of no avail against the superior product. The result of the clash was the merger of the two firms with Zaharoff looking after the sales and Maxim’s the technical details. Later in the 1890’s, Vickers took them over and it was with Vickers that Zaharoff reached the height of his career. His activities look him all over the world, negotiating orders wherever the demand occured.
Vickers at this lime obtained large shares in a number of overseas arms companies including some in Spain. Italy and Japan, as well as contracts to manage the government dockyards of Russia and Turkey. Other international activities included membership of a syndicate of British, French, German and American firms to divide territories and profits and to pool patents for armoured plate; licensing a German firm, Deutsche Wallen, to manufacture and sell machine guns with shared profits in certain markets; an agreement whereby Vickers made and sold Krupps time and percussion fuses. There were also gentlemen’s agreements with Armstrong to avoid clashing in foreign markets.
It is probable that Zaharoff had a hand in negotiating many of these agreements, which were, after all, normal business arrangements. He was also credited with controlling sections of the foreign press and of getting into the confidence of the world’s leading politicians. His tactics included philanthropy; grants to set up aviation studies at one university, financing literary prizes and establishing homes for disabled sailors. It was rumoured that he was one of the richest men in the world and had control of the world’s armament industry. When he died in 1936, he left only £1 million which is far from making him one of the richest men but very good for a salesman.
The First World War caused the expansion of the arms industry so that a large part of world industry was geared to supplying the combatants. The war provided the incentive to develop Switzerland’s aluminium and hydro-electricity generating industries: Japanese industry prospered greatly and expanded. The opposing forces faced each other with international armaments. ‘The world’s navies were clad with Krupp’s patented armour plate. The armies used machine guns operating on principles developed by Maxim. The torpedoes were Whitehead’s design.
Once the war was over the accounts had to be settled. Krupp’s and Vickers were in dispute over royalties on fuses and Vickers and Deutsche Wallen were in dispute over royalties on machine guns. Business, in other words, as usual.
The ending of the war produced the very situation—the slump—which the arms makers had tried to safeguard by joining the industry. Their activities had expanded continuously for many years during the pre-war arms race and during the war had expanded much more again. In Britain, there was a boom in engineering and ship-building for two or three years after 1918, then the slump came with production and prices dropping drastically. Both Vickers and Armstrong had tried to diversify their activities into a wide variety of products from locomotives to sewing machines, but to no avail. By 1925 they were both in great difficulties and outside experts were called in to advise. The two firms were merged and Vickers-Armstrong struggled on for many years before another arms race restored their profits.
In the slump, these two mighty firms were powerless. Their best salesmen could not revive the market. Their close contacts with the great politicians and military leaders of the world could not help them. In fact, capitalism mastered them and not the other way round.
Various efforts were made by the League of Nations to regulate the arms industry but with little success. Many hooks were published during this period exposing the arms industry. They were useful in showing the workings of the industry but their solutions limited to such useless measures as nationalisation and international commissions to control sales. Disarmament conferences were piecemeal affairs, trying to limit the number of battleships and cruisers, weapons which were on the way out.
The arms race before World War Two was concerned with aircraft, tanks, armoured cars and submarines. The industry became more subject to government control. Instead of setting the pace with design and innovations, it became more and more dependent on working to government specifications.
The Second World War saw the introduction of some of the war material with which we are familiar today—electronics in radar and rocket guidance, rockets and the atom-bomb.
The atom-bomb could only be developed by governments; it required far greater resources than any private firm could muster. The IJSA was the first to produce it, over a million men being involved in this project. In spite of the greatest secrecy about its production, there are now five countries openly making this weapon. The main rivalry since the Second World War has been between the USA and Russia. There has been a continuous high level of spending on arms, including a race in the production of nuclear weapons and the aircrafts and rockets to deliver them. This rivalry is now carried on into space.
The expense of this development can only be borne by the giant nations such as the USA and Russia. The former great nations are now left well behind.
Since the war the international arms trade has continued. The Nato and Warsaw Pact alliances provide large markets, as do the new independent countries many of which spend over 30 per cent of their budgets on so called defence. For all the government control, the internationalisation of the industry is still there. The British Hawker Hunter and Canberra aircraft and the American F104 have been built in many countries. The Russian MIG fighter is built not only in Warsaw pact countries but also in India.
The arms trade has continued to flourish but the British capitalists’ share of it has declined steadily. Russia and America now oiler a far more attractive range of goods and are also better organised to take advantage of the market. Russia’s triumphs include breaking into the Egyptian, Cuban. Indonesian and Indian markets. Private enterprise USA is also showing the way by having a government sales organisation with Henry J. Kuss in charge under the title of Deputy Assistant Secretary of Defence for International Logistics Negotiations. Kuss is a career Civil Servant and The Observer (15.5.66) reported, “Last year he was given a medal by McNamara for selling 9,000 million dollars worth of arms since his appointment in I960.” He also forecasts a booming market. “Mr. Kuss was recently quoted as saying that over the next ten years about 100,000 million dollars would be spent in the free world outside the United States on military hardware.” (Financial Times, 22.12.65).
This brings us back to Mr. Ray Brown and his job of expanding Britain’s arms sales. Despite such promising markets, only £125 millions of British arms are being exported each year. The Labour Government are hoping that an increase in exports will help to solve their balance of payments problem. At present, Mr. Brown must he a little confused with his job. as there are certain promising markets out of bounds: South Africa and Spain, for instance. The conditions for sale to America must be hard to swallow: no doubt the Labour conscience would he calmed if the arms were only used for peaceful purposes like strike breaking or quelling riots.
And this brings us back to the agony of the Left. Mr. Rankin sees a similarity between the roles of Zaharoff and Brown. Of course there is: the only difference being that Zaharoff worked for Vickers and not (as Mr. Rankin thought) for the Government. The conditions of 1966 may require different selling techniques to 1906 and, as men, Zaharoff and Brown may be as different as chalk and cheese but the essential features are the sun. Weapons of war are made to be used and their effects will be the same whether gentlemen or rogues sell them or whether it be governments or private firms that employ the salesmen.
JEF