In the run up to the war many armaments firms merged and the market became dominated by a few large companies. Britain’s firms were only surpassed in size by Krupp, the mammoth German firm. The major arms companies in Britain before the war were Vickers Sons & Maxim Ltd, Armstrong and Whitworth, and Coventry Ordnance Works. Other companies included Scottish shipbuilders John Brown, and William Beardmore and Company. Armstrong was founded in Elswick, Tyneside in 1847, and received its first contract with the War Office in 1854 for submarine mines.1 Vickers began dealing in armaments in 1888, yet by 1914 almost equalled Armstrong in size.2
The quarter century before the First World War was ‘a classical period of expansion for the private armament industry’.3 The 1889 Naval Defence Act ‘sparked an immense bout of warlike expenditure on the part of the continental powers.’ This sequence of events highlights the ‘unusual market-expanding effect by which production in the armament sector merely calls forth more production,’ embodied in the German Navy Acts of 1898 and 1900.4 The armaments race from 1910 onwards also increased profits for private arms firms. In the summer of 1914, the interest paid on armament shares grew, and with the coming of war, a number of prominent bankers, and many people associated with the government, increased their holdings. Sir Basil Zaharoff, who sold arms for Vickers, was one of the wealthiest men in Europe after the war5.
- Kenneth Warren, Armstrongs of Elswick: Growth in engineering and Armaments to the Merger with Vickers (London, Macmillan Press Ltd. 1989) 4-12 ↩
- Clive Trebilcock, The Vickers Brothers, Armaments and Enterprise 1854-1914, London, Europa Publications Ltd. 1977, 26 ↩
- Trebilcock, The Vickers Brothers, 53 ↩
- Ibid, 56 ↩
- Union of Democratic Control, The Secret International ↩
In 1889 Vickers bought the Naval Construction Company of Barrow for £425,000 and acquired its subsidiary the Maxim-Nordenfelt Guns and Ammunition Company for £1,353,334. Armstrong had a chance to purchase Maxim-Nordenfelt but let it slip to Vickers.1
Armstrong consumed a rival manufacturer, Whitworth in 1897, consolidating itself into larger firm in order to maintain its leading position in arms manufacture.2 The new company name was now ‘Sir W. G. Armstrong Whitworth & Company.’3
Immediately after the Boer War in 1902, Vickers acquired Woosley Tool & Motor Company for £160,000 and Electric & Ordnance Accessories Company for £110,000.4
In 1905, Vickers’ rivals in armour manufacture, John Brown and Charles Cammell joined with Laird and Fairfield shipbuilders to set up the Coventry Ordnance Works.5
In 1907, in an attempt by Vickers to protect themselves from competition in the post-Boer war market, they bought Beardmore’s, who rendered all their artillery tenders to Vickers in exchange for technical guidance from Sheffield. As a result, Beardmores was no longer a rival, instead they served as a ‘valuable defensive screen for the larger firm’ and a ‘means of curtailing Armstrong’s activities.’6
- Kenneth Warren, Armstrongs of Elswick, 51 ↩
- Clive Trebilcock, Legends of the British Armament Industry 1890-1914, A Revision (1970), 13 ↩
- Warren, Armstrongs of Elswick, 61 ↩
- Union of Democratic Control, The Secret International, 1932, 8-9 ↩
- Stevenson, Armaments and the Coming of War, 27 ↩
- Trebilcock, The Vickers Brothers, 92 ↩
Until the late 1890s, Armstrong was ‘the outstanding British armaments firm’ whose only main rival was the German firm Krupp. However, by 1896, Vickers had become the ‘only firm in the world able to build a battleship, supply armour plate, engines, guns and mountings and send the vessel out to sea complete’. Vickers had the ‘immeasurable advantage in the 25 years up to the First World War’ of being the ‘new company’ in armaments.1 The pre-war mergers helped Vickers to challenge Armstrong’s unique position.2
Vickers Key Facts
By 1905, in terms of capital, Vickers ranked sixth amongst British companies with £7.4 million.3
Between 1900 and 1910, Vickers received over £1 million worth of contracts for ordnance.4
Vickers was very profitable. Its total capital issued increased between 1886 and 1914 from £750,000 to just over £7 million.
Armstrong Key Facts
By 1905, in terms of capital, Armstrong ranked eleventh amongst British companies with £5.3 million.5
In 1913, Armstrong – Whitworth employed 26,561 workers. By 1915 this had risen to 47,583, and 78,000 in 1918.
Armstrong’s profits between 1910 and 1915 doubled from £500,000 to £1 million, with profits remaining at £1 million until the end of the war.6
Arms firms before the war cooperated together within an armament ring, which was a combination of armourers drawn up in order to best profit from the contracts to supply the War Office and Admiralty.David G. Anderson in British Rearmament and the ‘Merchants of Death’, The 1935-36 Royal Commission on the Manufacture of Trade in Armaments, (1994) p13
Arms firms often had national names and special connections but tended to organise themselves into international rings and link with other closely related industries, such as chemical or explosive production. In 1901 Vickers joined the large international armament trust, the Harvey United Steel Company (1901- 1913,) comprised of the chief armament firms in Britain, Germany, France, Italy, and the US.1
Vickers and Armstrong ‘pooled designs and parcelled out the leading export markets’. Many arms and shipbuilding firms were interlocked in ownership and shared directors. The Admiralty’s design and procurement branches, for instance, exchanged personnel with arms firms at the most senior level.2
Vickers and Armstrong collaborated on design in the early 1900s, most notably with Canadian orders for twelve batteries of new field guns worth £200,000.3 This was due to an agreement in 1902 between Vickers and Armstrong to freely exchange their designs for British work, therefore abdicating their royalty rights, which was the first step in the process of wide-ranging cooperation. By 1914, Vickers and Armstrong were working together to win contracts in the naval trade, with Vickers securing the lion’s share.4 In 1915, with financial assistance from the Admiralty, Vickers and Armstrong established a new torpedo factory near Lancaster.5
Vickers and Armstrong also collaborated when it came to foreign markets, and their combined selling power helped them win contracts. Between 1900 and 1914, Vickers and Armstrong won £34.87 million in sales and 63% of total business in combined markets of South America, East Asia, Turkey, and Greece.6 In 1912, Chile bought two dreadnoughts and six destroyers from Armstrong, Vickers, and Coventry Ordnance Works at a cost of £7 million.7 Vickers and Armstrong won the Chilean warship contract by working together. Armstrong formally took the order, and under the terms of the agreement, Vickers enjoyed a share of the returns and the work. Combined, Vickers and Armstrong had a 63 percent share of the market in ships and ordnances, worth £40 million.8 In February 1913, Vickers propositioned Armstrong into an agreement of an ‘equal share of business in all parts of the world’, which Armstrong agreed to.9 The arrangement between Vickers and Armstrong was very secretive in nature, and although Vickers wanted Armstrong’s contacts, they did not always want their active participation10.
A British group consisting of Vickers, Armstrong, and John Browns was developed by Vickers in 1908. They dealt mainly in Spain and Turkey, with Armstrong providing the hulls, Brown providing armour, and Vickers ordnance, mountings, and engines.11
- Union of Democratic Control, The Secret International, 6-10 ↩
- Stevenson, Armaments and the Coming of War, 28 ↩
- Trebilcock, The Vickers Brothers, 79 ↩
- Jonathan A. Grant, Rulers, Guns, and Money, The Global Arms Trade in the Age of Imperialism, London, Harvard University Press 2007, 145 ↩
- Warren, Armstrongs of Elswick, 191 ↩
- Grant, Rulers, Guns, and Money, 145 ↩
- Ibid, 169 ↩
- Trebilcock, The Vickers Brothers, 122-123 ↩
- Ibid, 95 ↩
- Ibid, 125 ↩
- Ibid, 125 ↩
Both the Admiralty and War Office encouraged the establishment of Coventry Ordnance Works as they hoped the new company would put a check on the dominance of the two largest firms. In response, Vickers and Armstrong campaigned jointly to exclude Coventry. It was reported that they cut rates in order to ‘stifle the development of competition for gun work which Coventry took up for the first time in connection with the rearmament of the field artillery’. Coventry Ordnance Works, however, still managed to obtain a valuable chunk of the artillery rearmament programme.1
The War Office gave most of their contracts to the state owned Royal Ordnance Factories rather than the private firms, although the Admiralty both spent more on equipment and placed a greater number of orders with private industries. Between 1909 and 1914, four fifths of artillery pieces for the army, and their ammunition came from the Royal Ordnance Factories. However, the 18 and 13 pounder quick-firing guns were a composite design using parts produced by Armstrong, Vickers, and the Royal Ordnance Factories. Vickers and Armstrong both pleaded that they and the Woolwich Arsenal should monopolise production in order to recover development costs, but the War Office insisted that the Coventry Ordnance Works would take a share of the orders.2 Woolwich could not provide enough breech-loading guns, and therefore the Admiralty drew in new armour-plate and ordnance manufacturers.
Despite the close co-operation between Vickers and Armstrong the younger firm began to dominate. Their marine hardware was preferred by Brazil, Turkey, Spain, Russia, China, and Japan, who together made up the world’s major importers of arms.1 Coventry Ordnance Works were not considered as serious competition prior to 1914, while Armstrong’s recent record of product innovation had been poor, they offered virtually no new weapons to compete with Vickers.2 In the 1920s during the post-war slump for the armaments industry, a weakened Armstrong would be rescued through a merger with Vickers, financed by the government.