By T. Hunt Tooley from "Merchants of Death Revisited: Armaments, Bankers and the First World War"
We may certainly say the First World War had many "causes," both proximate and distant. But arms manufacturers and salesmen were in the special position, both before and during the war, of playing the double role of monopolistic, rent-seeking, state-supported "bureaucrat-businessmen" at home, and freewheeling, all's-fair-in-love-and-war competitors abroad. In great measure because of this role, their influence on the coming and conduct of the war was enormous. Before the war, they helped create an increasingly unstable atmosphere in the world at large, first pushing in various ways for war, and later lobbying for its continuation, and eventually for American intervention once the Allies seemed exhausted enough to negotiate a peace. . .
Many of the arms merchants of the Great War had laid the basis for their twentieth-century wealth in the nineteenth century and even earlier. The Du Pont family arms business stemmed from a powder factory opened in 1802. The Krupps had a small steel business until the middle of the century. Thomas Vickers served an apprenticeship in the Krupp company and subsequently followed the Krupps in producing first peacetime products, and then, from the 1860s, armaments. The Vickers firm was as colorful and as sinister, perhaps, as any of the arms producers, at least after joining competition and the scandals produced by some of the company's leaders. Most of the other great arms companies behaved in the same way.
As they did so, arms merchants almost always used the nature of their trade to achieve monopolistic relationships with governments and a free hand at fixing prices and delimiting markets throughout their industry. By 1905, Du Pont provided all the powder ordered by the United States government, and the company was able on its own to "fix" prices across the board. The government charged Du Pont with violating antitrust laws in 1907, calling for price-fixing and related practices to stop, but by this time, Du Pont had eliminated most American competitors with the assistance of the government. The company supplied an enormous share of the gunpowder used by the Allied forces in World War 1.
One key to the success of all the arms merchants was that they held few national prejudices when it came to selling munitions and arms. So, for example, Irénée du Pont in some cases supplied both sides with munitions in the Latin American wars for liberation after the Napoleonic period. The Krupp family followed a similar pattern, as did Schneider-Creusot in France. The Vickers Company, the most politically powerful arms company in Britain, under Sir Basil Zaharoff's leadership supplied weapons to both sides in the Boer War, despite the company's position as a kind of national treasure.
[Banking connections were, of course, critical to both the survival and success of arms makers.] All arms makers have important financial connections. [For example, in America, the companies were a component of a larger economic universe.] In the Morgan group were to be found the Du Pont Company, the Bethlehem Steel Corporation, the U.S. Steel Corporation, together with copper, oil, electric appliances, locomotive, telephone and telegraph interests. This tie-up also leads over into the great banks, including the National City, Corn Exchange, Chase National, etc. It was the Morgan group of corporation clients and banks which dominated the American arms industry.
Despite this tendency to supply all comers, the great arms companies all managed to secure a role as staunch patriots who enjoyed a special place in the "national" economy. Alfred Krupp had expanded the family steel business to arms production by the 1840s, and was selling cannon abroad. When the Prussian army underwent reorganization in the late 1850s and early 1860s, it adopted the new Krupp artillery. The company ballooned, through the Wars of Unification, from a small plant at Essen covering two and a half acres and employing a few dozen workers to a complex of 250 acres which employed 80,000 workers in 1914. The Krupp concern indeed, while continuing to sell weapons abroad, became a kind of unofficial part of Imperial Germany's government, protected from both economic competition and the scandals produced by some of the company's leaders. Most of the other great arms companies behaved in the same way.
As they did so, arms merchants almost always used the nature of their trade to achieve monopolistic relationships with governments and a free hand at fixing prices and delimiting markets throughout their industry. By 1905, Du Pont provided all the powder ordered by the United States government, and the company was able on its own to "fix" prices across the board. The government charged Du Pont with violating antitrust laws in 1907, calling for price-fixing and related practices to stop, but by this time, Du Pont had eliminated most American competitors with the assistance of the government. The company supplied an enormous share of the gunpowder used by the Allied forces in World War 1.
Similarly, the Schneider family of the French company Schneider-Creusot came out of the French defeat at Prussia's hands in 1871 with huge profits. Having supported Napoleon III, the company was now equally supportive of the various Third Republic governments, especially those of a nationalist coloring. Meanwhile, the company relied on the state to suppress strikes and manage discontent at its factories, as it supplied the army with weapons. The Schneiders eventually managed to place one of their own, Eugene Schneider, in the Chamber of Deputies, where he served throughout a period crucial to arms makers: 1900 to 1925. Hence, a pattern is clear: increasingly close association with the state, especially from the period of intense nationalism following the 1860s, and a tendency toward gaining access to public support for private profits.
Already high before World War I, profits soared during it. Before the third year of World War I, Krupp had more than doubled its huge profits of the immediate prewar period-to the level of 66 million marks annually. In Austria-Hungary, Škoda likewise doubled its profits during the early war years. On the other side of the Atlantic, profits surged still higher. U.S. Steel netted $105 million annually before the war, $239,653,000 during it. Du Pont's numbers in the same two categories were $6,092,000 annually before the war, to a staggering yearly average of $58,076,000 during the war. These results were repeated in dozens of smaller and subsidiary arms companies throughout the belligerent countries.
The internationalization of boards and companies allowed banks and arms companies to have a purchase on any situation, no matter what ties of "loyalty" might be invoked. At the same time, their more-or-less constant relationship with any foreign government to which they sold arms allowed them easy access to the local press. Influencing the populace, and hence public policy, through propaganda became commonplace. When a war scare was needed, it was quite possible to create one by maximizing reports of existing tensions in the press.
[Did the arms lobby and their financial backers, the "Merchants of Death", cause World War One?]
A caricaturized version of the "Merchants of Death" thesis has tended to be the popularly known version, and in this version, arms merchants caused the war. Historians can and still do discuss the causes of World War I, but none would hold that any single cause could have touched off this great catastrophe. As Ludwig von Mises, a profound student of war and its causes, wrote in Human Action:
People do not drink intoxicating beverages in order to make the "alcohol capital" happy, and they do not go to war in order to increase the profits of the "merchants of death." The existence of the armaments industries is a consequence of the warlike spirit, not its cause.
Excerpted from Professor's Tooley's article in the Journal of Libertarian Studies, Winter 2005. Full article HERE.
Also, see our earlier article on the Nye Committee's pursuit of the "Merchants of Death" HERE.
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