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Obstacles, Financial and Industrial

The level of equipment at the starting point of rearmament was thus very low: indeed so low that measures to raise it might have had to be taken even had peace remained as unruffled as it appeared to be in the twenties. As we know now, peace did not remain unruffled. The first rumblings of the storm came from the Far East, the very region on which hitherto the entire British defence strategy had been focused. And no sooner did the shock of the Japanese action in Manchuria pass away than Hitler came to power in Germany. All through 1934 and 1935 the political configuration of the Axis was taking its final shape. In 1935 Italy embarked upon her adventure in Abyssinian, and in a short time the danger of conflict over the enforcement of sanctions appeared very serious. At about the same time Japan denounced the Treaty of Naval Limitations and embarked on unlimited naval expansion. In March 1935 Germany repudiated the Treaty of Versailles.

The comfortable assurance of security and the expectations of undisturbed peace which characterised the twenties could no longer be entertained. In March 1932 the ten-year hypothesis1 was revoked, and the Government called upon the Committee of Imperial Defence to reconsider the fundamental conceptions of Empire defence. By the middle of 1933 Germany for the first time reappeared in official discussions as a potential enemy, and in the autumn of the following year the Cabinet decided to correct in the course of the next five years the accumulated armament deficiencies, thus by implication halving the 'safe' period within which no war was expected. By 1934 the first expansion programme deserving that name began to be discussed by the Services and by the Government. In the course of the following year committees of the Cabinet and of the Committee of Imperial Defence, and in the first place the important Defence Policy and Requirements Committee, reviewed the condition of the armed forces and recommended enlarged scales of equipment for three Services. At the turn of 1935 and 1936 Hitler's remiliterisation of the Rhineland coincided with the adoption of the first rearmament programme.


From that time onwards the history of British rearmament and military production is one of continually mounting requirements, of an ever-widening scale of munitions industry and of a progressively growing output of war-stores. Where a process was so continuous and so cumulative the achievements of the initial phase were bound to be somewhat modest. But in the history of British rearmament the initial phase was not only modest but also very long. Rearmament programmes had been taking shape in 1934 and 1935, and the preliminary discussions of underlying political and strategic issues reached back as far as the turn of 1932 and 1933. Yet, until the very turn of 1939 and 1939 national efforts at rearmament remained on what may be described as a peacetime scale. By that time much time had been done to re-equip the fighting Services and more still to lay the foundations of war industry; yet to an historian viewing the period from the vantage point of 1952 the progress may well appear slow and halting.

The pace and scale of the industrial rearmament are not difficult to explain. They may well appear insufficient if set against the needs of the war years and judged by the experience of the war effort. But at the time of its inception rearmament was not designed to establish in the country any semblance of a war economy. Indeed, in the circumstances of the mid-thirties, wartime conceptions like these would have appeared both unnecessary and impossible.

To begin with, the diplomatic and strategic assumptions which until the end of 1938 underlay rearmament were not those of an eventual war. Disturbed as the international position had become, war was not yet though to be probable, still less inevitable. The state of acute crisis both over Manchuria and over Abyssinia boiled up and subsided too quickly to turn to war the plans of the Government and the thoughts of the nation. Until 1935 international disarmament was still a popular hope and still the object of British foreign policy. For at least another three years the object of the successive rearmament programmes was not so much preparation for war as the reinforcement of peace. Their purpose was to back up diplomatic efforts with a show of force and thereby to impress the would-be aggressors and to reassure public opinion at home. The early stages of rearmament were therefore dominated by the need for a 'deterrent' display—a first-line strength impressive on paper but not necessarily backed by sufficient establishments or by industrial reserves. It was not until late in 1936 that the R.A.F. began to rearm with a view to a possible conflict;2 and it was not until the end of 1938 that the danger of conflict came to be felt sufficiently urgently to accelerate the pace of rearmament and to overshadow other considerations. Indeed, the plans of the Government did not come to be shaped for a land war in Europe until the spring of 1939.


In the second place, a number of domestic factors—mostly economic and financial—combined to prevent the deployment of national resources for an all-out effort of rearmament. In resisting the demands of the Services, the Chancellors of the Exchequer sometimes made use of a purely industrial argument. Industry, they argued, would not be in a position and at the times envisaged by the Service programmes. This argument, however, took it for granted that the economy of the country could not and must not be stimulated and reshaped to suit the needs of rearmament. Had the danger of war appeared more imminent the limitations of industrial capacity would have been swept aside—as in fact they were to be swept aside at the turn of 1938 and 1939 and more still in 1940. They appeared so conspicuous and so insuperable in 1935 because the Government was not yet concerned with war.

What it was largely concerned with was the British economy convalescing from a recent crisis. Generally speaking it was the Government's policy to protect normal business from disturbance, and the official view was that economic recovery and in particular the revival of the export trade would suffered if too large a proportion of the country's economic resources were diverted to production for the Services. This view was not, of course, based on precise measurements of the resources which might be absorbed in rearmament on the scale demanded by the Services, nor was the large volume of resources still unemployed taken into account. But although not precisely measured and although imperfectly explained, the danger of economic disturbance greatly affected official thought on these matters. In addition some people also feared the 'setting-aside' of peacetime methods. If military production were greatly increased controls over industry might become necessary;  and controls, they thought, were 'premature': the country was not ripe for them and their effects on the national economy were bound to be injurious.

It is therefore no wonder that Cabinet representatives on the various sub-committees of the Committee of Imperial Defence, not excluding the Minister for Coordination of Defence himself, were compelled to issue periodical remainders of the need to conserve freedom of industrial development. When in 1936 the completion date of the first scheme for real rearmament in the air (Scheme F)3 was postponed for another six months, the delay was frankly ascribed to the policy of safeguarding industry from dislocation. As late as the autumn of 1937 the Minister for Coordination of Defence thought it necessary to remained the Chiefs of Staff Sub-Committee of the Cabinet's decision that the reconditioning of the Services was to be


carried out without interference with normal trade. On that occasion the Minister hinted that circumstances might force the Government to revise its directive, but it was not until March 1938 that the Secretary of State for Air was induced to ask the Government to reconsider its general industrial policy and that rearmament orders could claim some priority over ordinary civilian business.

More inhibiting still and much more fundamental were the difficulties of finance. Until the autumn of 1938 rearmament of the three Services continued to be limited by financial allocations, and in some fields the limits were not to be removed until the spring of 1939 of even until Dunkirk. No doubt the financial limits seem much narrower in retrospect than they must have appeared to some contemporaries, and above all the men who set them up. Measured in absolute terms or related to the financial provisions of the early twenties, the budgetary allocations for rearmament between 1935 and 1939 appear generous in the extreme. The annual cost of equipment and stores for the fighting Services rose nearly eightfold from about £37 millions in the financial year ending March 1934 to £273 millions in the year ending March 1939 and, as Table 2 shows, was strongly rising all the time. By 1938 the expenditure was far greater than that even incurred by this country in peace. To finance it the Government raised the standard rate of income tax from 4s. 6d. in the pound in 1934 to 5s. 6d. in 1936 and 7s. 6d. in 1939; and in 1937 it launched a five-year rearmament loan of £400 millions, which in its turn was raised in the spring of 1939 to £800 millions.

Estimated annual expenditure on rearmament, 1934–394


£ millions
Year ending March


Yet the financial allocations, great as they were compared with the normal peacetime expenditure on the armed forces, turned out to be inadequate in relation to their objects. They were cramping to the men in charge of rearmament and proved to be insufficient for the very purposes for which the country was rearming. The supplies they bought were not large enough either to deter the aggressor or fully to prepare this country for war.

The financial arguments employed were not in any way new. All governments, and especially all British Governments, are bound to resist additions to expenditure, and Treasury control had always been a powerful and, on the whole, a salutary brake on military extravagance. If in the early thirties the Government appeared to use the brake with great vigour, it could claim for this every theoretical and political justification. It was still engaged in fighting the great depression, and although its way of doing so might not be approved by present-day economist, it was not subject to much critical doubt in the official circles of 1935. The days of Keynes' General Theory' were not yet, and the prevalent view was the crisis had been aggravated, if not caused, by Government extravagance and could only be remedied by a drastic curtailment of Government expenditure and taxation. This was indeed the main argument against Mr. MacDonald's Labour Government and became the programme of Mr. MacDonald's National Government. And as long as these arguments prevailed new and great additions to expenditure appeared to be too dangerous for this country to adopt.

Indeed the financial dangers of excessive expenditure on rearmament continued to figure in official discussions almost to the eve of the war. As late as 1938 the Chancellor of the Exchequer, in resisting further claims of the Services, found it necessary to stress that expenditure could reach a limit beyond which it might defeat the very purpose of rearmament. Finance, he argued, was one of Britain's military resources: something in the nature of a fourth arm. Britain could not hope to match an aggressor in a lightning war, and her chances of victory rested on her ability to withstand the financial stresses of a long war. To overtax her financial resources and to undermine her financial stability for the sake of military preparedness might jeopardise her very ability to wage war.

Hence, the continuous rearguard action which the Chancellors of the Exchequer fought against the ever-rising demands of the Services. Within limits they had to give way, and the financial allocations constantly grew, but limits there always were, and for at least three years after the first rearmament programmes these limits continued to circumscribe the supply of arms for the Forces as well as the preparation of industry for the production of munitions in time of war.



The Reequipment of the R.A.F.

The financial allocations being what they were, none of the three Services was able to launch programmes of reequipment and expansion on a scale which on political and strategic grounds it thought necessary. But although for a long time no Service fared as well as it wished, some Services were impeded less than others and freed themselves earlier from impediments.

The R.A.F. was probably the first to overcome the purely financial limits to its expansion, and its rate of growth was higher than that of the other Services. At frequent intervals between 1934 and 1939 the Air Staff assessed the German position more or less accurately and uttered warnings more or less audibly. The effect of the warnings on the Government was to make it well aware of the crucial importance of the air arm. Indeed, as time went on, the dangers of air attack and the overwhelming importance of air defence appeared if anything greater than the war was to prove them to be. By 1938 the Government was sufficiently sensitive to the air dangers to give the R.A.F., and, to some extent, the anti-aircraft defences, the first claim on available resources. This meant rejecting the earlier doctrine of a 'balanced' allocation of resources between the three Services6 and allowing a clear priority to the air arm. The priority was becoming more pronounced as the crisis over Czechoslovakia approached, and at the time of Munich, all obstacles to air defences were swept away and nothing but industrial capacity limited the rate of rearmament in the air.

This position, however, was reached relatively late and by slow stages. When at the beginning of 1934 the Defence Requirements Sub-Committee considered the plans for the reequipment of the Forces, the most far-reaching and ambitious of its proposals was to equip the Air Force on a scale which would enable it to engage in sustained warfare against Germany within five years. In the spring of 1934 Mr. Baldwin announced in Parliament that the Government had decided to establish parity with Germany in the air.7 Yet neither the Cabinet nor presumably the country was as yet prepared to shoulder the financial weight of Mr. Baldwin's promised or of the Defence Requirements Sub-Committee's proposals. Even in May 1935, after Mr. Eden and Sir John Simon had travelled to the Continent and come back convinced that Hitler meant business, an additional vote of £1 million for the time being measured the financial response to the situation.8


It is possible to argue that, at first, finance was not the only limit to the expansion of the R.A.F. It is probable that in 1934 and 1935 purely technical considerations stood in the way of immediate 'all-out' reequipment. Technical progress in the mid-thirties was on the verge of new and important developments: high-speed monoplanes, all-metal construction, new engines and Service circles began to visualise the expanded air force in terms of aircraft which in those years had not fully emerged from design and development. And while the advance types—the Wellingtons, the Spitfires and others like them—were not yet available, the Air Staff were not at all anxious to encumber the squadrons with large supplies of all but obsolescent types.

So what with the financial stringency and the absence of new types, the early stages of reequipment were slow and tentative. The Air Ministry did not ask for a full-balanced air force and the Government was not very anxious to supply it. The objective of the immediate plans was merely a visible first-line capable of producing the maximum political effect both at home and abroad: to reassure the public about the Prime Minister's promises and as far as possible to impress the Italians and Germans with a show of strength. Expressed in the somewhat less direct language of the official memoranda the policy was to concentrate on the expansion of a first-line Home Defence sustained warfare within the period of five years contemplated by the Defence Requirements Committee.

Needless to say, the programme was merely the first measure of expansion and others were to follow. No sooner was it put into operation than new information of Hitler's plans revealed the utter inadequacy of the provisions so far sanctioned, and further discussions and revisions of programmes followed. It was, however, not until 1936 that a real change of principle took place. What had changed in prospects of the R.A.F. In the words of an Air Ministry memorandum of February 1936, the Air Ministry had 'pressed on with the development and production of new types' and was now able to formulate 'a much more effective programme' which it hoped could be realised by 1939.

The new programme, henceforth to be known as Scheme F, was sanctioned by the Cabinet in February 1936 and was to remain in force for two years. It marked a complete departure from the purely demonstrative principles of old and introduced the first real measure of expansion. Under its provisions the Air Force was to acquire more than 8,000 new aircraft over three years compared with the 3,800 over two years under the current programme. Moreover, what was now expanded was not the political or the propaganda effect of the


Air Force but its combatant power. Although the total provision was now much higher, the number of units in the first line was, if anything brought down while the size of reserves was greatly increased.9

Moreover, under the new programme the Air Force was not only to be expanded but was also to be effectively re-equipped with new and up-to-date types. The Hurricane, the Spitfire, the Battle, the Blenheim, the Whitley, the Hampden, the Wellington and the Wellesley were to form the bulk of the new establishment. And what from the point of view of the country's preparedness for war was even more important was the vast amount of industrial effort which the programme called forth. Its introduction roughly coincided with the appointment of Lord Swinton as Secretary of State for Air and with important administrative changes in the Air Ministry, and under the new régime the Ministry sponsored great additions to industrial capacity and gave the industry the shape which it was to keep for the next six or seven years.

Scheme F turned out to be the most long-lived of the aircraft programmes. As already mentioned it remained in force for two years, and no other scheme remained undisturbed for a period equally long. Nevertheless, even under that scheme the reequipment of the Air Force fell somewhat behind the hopes of its authors in 1936 and far behind the needs of the time and the rising demands of the Services. At the time of its demise in the spring of 1938 it had run two-thirds of its allotted span with only 4,500 out of its 8,000 aircraft delivered. An even out of these 4,500 aircraft, some 3,000 had in fact been ordered under the earlier programmes and were not of the most advanced types. In fact, at that time, the Spitfire, the Wellington, the Hampden, the Beaufort, the Defiant, the Skua, and the Lysander were not yet in production; and the Blenheim, the Hurricane and the Whitley were only just coming into service.

It is moreover doubtful whether, even had the flow of new aircraft under the programme been faster and fully up to expectations, the needs of the times would thereby have been fully met and the Air Council have remained quiescent and satisfied. The Scheme was only just sufficient to enable the country to meet the German menace as it appeared at the beginning of 1936 and to match the plans of the Luftwaffe as they were known at that time. But in the meantime both the urgency of the German menace and German armament in the air had greatly grown. Throughout 1936, 1937 and 1938 the international situation moved towards a crisis by a series of successive stages: the occupations of the Rhineland, the rape of Austria and the beginning of the Sudetenland agitation. All through this period


Germany rearmed in the air at a constantly rising rate. It is no wonder that at each sign of international trouble Germany's strength in the air had to be reassessed; and that each time estimates of Germany's air strength were revised the Air Council put forward demands for corresponding increases in the scale of British expansion.

These proposals invariably met with insuperable obstacles. Several successive programmes came up for discussion, and all of them were beyond the available financial resources. Even the great rearmament vote and loan of 7th March 1938 fell short of the needs of the R.A.F. That vote brought the total planned expenditure of the R.A.F. over the next four years to about £500 millions, but the cost of the minimum programmes which the Air Ministry had formulated at the end of 1937 was established as at least £650 millions by 1941. There was thus no chance of reconciling the Air Ministry's requirements with the financial allocations, and when on 12th March 1938 the plan came up before the Cabinet, the Secretary of State for Air had to confine himself to a request that the new requirements should be accepted as a long-term project in order that the Air Ministry should be able to extend industrial capacity. In his opinion the advantage of the proposal was that it would always be possible to slow down or halt the programme at any time.

As it turned out, the chances of halting or even of considering long-term projects were very small. In the third week of March Austria was occupied and the dangers in the air at once became more immediate and apparent. There was little time to lose, and for the first time a real note or urgency crept into the discussions did not begin at all auspiciously, and at first it looked as if the mood of urgency crept into the discussions of the air plans at the highest level. The discussions did not begin at all auspiciously, and at first time a real note of urgency crept into the discussions of the air plans at the highest level. The discussions did not begin at all auspiciously, and at first it looked as if the mood or urgency notwithstanding the Air Ministry's proposals would go the way of all previous attempts to exceed the current scale of orders. If anything the Chancellor's objections were even more radical than before, and went to the very root of the rearmament drive. He argued that the proposed figures of expenditure could not be reached unless Britain turned herself into a different kind of nation. Germany, for example, had got rid of her war debt and ad not such good social services as this country. He was therefore convinced that Britain could not do these things, and proposed to revise the whole attitude to rearmament as as to organise a small degree of expansion within the limits of the resources which were in sight.

It is difficult to say how far this argument would have been effective had time been less urgent and had finance in fact remained the only limiting factor to air expansion. As it turned out, finance was no longer the worst obstacle in the path of rearmament in the air. By the beginning of 1938 it came to be realised in the Ministry that orders for aircraft had risen to the utmost capacity of aircraft firms. The


question was no longer what the country's finances could afford but what industry could turn out. So when the committee of Ministers under the Prime Minister's chairmanship10 met in the early days of April to decide finally and urgently the scale of the aircraft programme, they were compelled to define it not in terms of finance or of Air Force establishment but in those of industrial capacity.

An entirely new principle thus entered into the plans. It was the Prime Minister's view that what was necessary then was not to relate the figures to any particular programme but to consider them as the most optimistic estimate that firms could give on the assumption that all went well. The original Air Ministry proposals required 12,000 aircraft in two years,11 and this was also the maximum which the Air Ministry and the leaders of the aircraft industry thought could be produced by that date. On 27th April 1938 Cabinet authority was consequently given to the new plans, and Scheme L of 12,000 aircraft in two years came into operation.12

The passing of Scheme L was thus a real turning point. Not only did it reflect the heightened sense of urgency in the Government Air Ministry, but it also signified the end of the purely financial checks on rearmament. The R.A.F. was the first among the Services to enter into what to all intents and purposes were wartime conditions of supply, for from now on expansion in the air was to subject only to industrial limitations: raw materials, labour and management. What is more, the industrial limitations came to be felt almost at once. The flow of aircraft production failed to keep up with industry's own forecast, and for a long time industry appeared to be all but incapable of further rapid expansion. This also was a foretaste of the industrial problems of wartime production.

The problems were not to any considerable extent those of material capacity, i.e. of factory space, plant and machinery. By the spring of 1938 most aircraft firms had travelled a long way from the state in which we found them in 1934. With the first orders under the rearmament scheme their position rapidly and strikingly improved. In 1935 and 1936 orders for the Fury helped the Fairey Aviation Company to turn the corner, orders for the Hart revived Hawker Aircraft and orders for the Harrow injected new life into Handley Page, which orders from the Kestrel prevented Rolls-Royce from abandoning the production of aero engines and started them on that road to perfection which they so successfully trod in the subsequent ten years. The British Aeroplane Company, which shared with Rolls-Royce the


main burden of aero-engine production, was also strengthened at that period. So also were the other 'family' firms, and the industry as a whole appeared to be fully stretched.

Before long, at the end of 1936 and the beginning of 1937, most of the aircraft firms began to find that the tools and floor space inherited from the 'lean years' were no longer sufficient to deal with the expanding programme, but further additions could and, in fact, were made without much strain on available resources. Early in 1936 the Air Ministry and the firms launched a number of projects for factory construction with Government assistance, and under Lord Swinton, i.e. between 1936 and 1938, much new capacity was planned and laid down with a view to future expansion. Some of the new capacity was in the nature of 'shadow schemes', i.e. conceived as contributions to the war potential. But this conception had to be modified with the further expansion of the air programmes. 'Shadow' factories had now to be reckoned as additions to peacetime capacity, and still further capacity had to be laid down. In the course of this continuous piling up of factory buildings and plant, shortages of machine tools and delays in construction were bound to occur here and there, but the factory programme as a whole was as yet well within the powers of the building industry and of the machine-tool industry in this country and abroad, and it was in fact being fulfilled more or less according to expectations.

Thus, broadly speaking, machinery and floor space were adequate for the programmes of 1936 and 1937, and together with the new schemes carried out, approved or planned by the spring of 1938, machinery and floor space were quite adequate for the new scheme of 12,000 aircraft then introduced. So generous had been the Air Ministry under Lord Swinton to schemes of forward planning and so expansive were the policies of the firms themselves that the industry was now if anything over-provided with buildings and plant. Shortages appeared where they had been least expected, partly in raw-materials but chiefly in labour. The former were due to earlier underestimates of requirements and to insufficient provision of fabricating capacity for light alloys. The remedy was to expand the light alloy industry, and this was done. Future experience was to show that even then the fabricating branches of the light alloy industry were not expanded far enough. But apart from this fault of under-provisioning, the remedy was simply and, in so far as it was adopted, sure.

More stubborn and more complicated, however, was the problem of labour. At the end of 1937 the country maintained over a million and a half unemployed, and there was some unemployment even in the engineering industry. But such was the rate of expansion in the aircraft industry that special labour problems, especially those of absorption, were becoming acute. It took longer to train the new


entrants and to assimilate them into aircraft production than manufacturers' experience of the 'lean years' had led them to expect. When in the spring of 1938 the firms promised 12,000 aircraft within two years, they based themselves largely on rough estimates of how much labour they could obtain and digest. These estimates turned out to be too optimistic. The intake of labour was well below the programme and so consequently was the output of aircraft. The programme assumed an average monthly output of 333 aircraft rising from the 210 actually produced in March 1938 to 690 by June 1939. But as in the first four or five months labour was absorbed to the extent of about seventy percent behind the estimates, at about 200 aircraft per month.13

Remedies were sought and found, and in the process of adopting them in the summer of 1938 the Air Ministry took yet another step away from the methods of peacetime production and towards those of wartime economy. We saw how in the spring of 1938 financial limitations had ceased to determine the scale of aircraft production; but with the industrial measures of he summer months came also the final end of 'business first' and of peacetime methods in general.

The transformation was reflected in the administrative changes in the Air Ministry itself. Before 1934 production of aircraft was under the authority of the Air Member for Supply and Research. As the title of the office shows, the provision of aircraft was lumped together with all the miscellaneous problems of supply and maintenance in the R.A.F. In 1934 with the beginning of the expansion came the first tentative reorganisation, and the functions of designs and development were separated out and put in the hands of the Air Member for Research and Development; and in 1938 they were combined with aircraft production under the newly-created office of the Air Member for Development and Production, with Air-Marshal Sir Wilfred Freeman in charge.14

The new office became to all intents and purposes a fully self-contained production department, the embryo of the Ministry of Aircraft Production of future years. It rapidly expanded its functions and tightened its contacts with industry. Between 1936 and 1938, while the aircraft firms could still be relied upon to fulfil their contracts more or less on time, it was not perhaps necessary for the Air Ministry to keep a close check on the industry or to help the firms to find and manage their labour, materials and capacity. By 1936 orders had become sufficiently large and relations with firms sufficiently exacting to justify the appointment of a civilian Director of Production; but his relations with the firms remained essentially those of an


expert 'go-between', capable of watching over the progress of production and supervising the placing of orders and of reporting to the Air Council all industrial problems. In 1938, however, when the industry reached the limit of its resources and began to run into all kinds of shortages, something more was needed than a mere watch over progress. So when in June of that year it became obvious that the programme was in difficulties, the Air Member for Development and Production invited a prominent railway engineer—Mr. Ernest Lemon as he then was—to accept the post of Director General of Production (D.G.P.). The new Director General, assisted by a Canadian production engineer of great resource and ingenuity, soon found himself not only mediating between firms and the Ministry in technical matters but assuming the general planning of production.

In so doing he was forced to reshape and rearrange the previous plans of the firms themselves. In the course of the late summer his department carried out a survey of the aircraft industry, and by September he was able to report to the Air Council that in his view the industry was failing in its production and deliveries, partly through shortage of raw materials, but chiefly through its inability to absorb and to train skilled labour with all the necessary speed. To enable it to complete the current programme in time its labour force would have to rise from just over 60,000 in September 1938 to a peak figure of well over 180,000 in January 1939. This would represent a monthly increase of 30,000 or fifty percent of its labour force in September. Contrary to their own hopes the aircraft firms had proved unable, and could not be expected, to assimilate new labour at a rate higher then eight percent. If war production were to be raised above the limit set by the direct recruitment of labour the previous economic assumptions and industrial methods would have to be revised.

The main point of the revision was subcontracting. In the early days of the expansion subcontracts were not planned for. At that time forcible transfer of labour and management to war production was as yet impossible and undesirable; but the alternative method, that of utilising the resources of general industry, was also thought to be of little use. The technical view, for the time being accepted by the Air Staff, was that the production of aircraft was so complicated that it could not be entrusted to firms without previous experience of aircraft production and could not therefore be distributed among the various engineering and allied trades. The future expansion of aircraft production was tom come from additional plant under the direct management of the 'parent' firms.

It was this assumption that the Director General of Production now proposed to revise. He was not in a position (and it is difficult to say whether it was his wish) to recommend compulsory mobilisation of labour or any similar emergency measures, for although


'business  as usual' no longer held back the planners at the Air Ministry, full-fledged war economy was not yet in sight. But he was anxious to exploit the possibilities of subcontracting by 'bringing the orders to the labour'. His proposal was that the 'parent' firms should entrust to subcontractors at least thirty-five percent of the outstanding orders, this increasing the additional employment of the aircraft industry itself. With these and other less radical improvements in the supply of raw materials and in the position of individual aircraft factories, it was hoped that the programme could be fulfilled in the second half of 1940, i.e. some three months later than its original date.

These hopes were to be fully realised. With the sense of emergency in the background, subcontracting and the other measures taken at the time soon began to produce results. The end of September and the beginning of October 1938 were marked by a great burst of production and by the end of the year the industry began to outstrip its own promises and programmes. In the first six months of the next year the actual deliveries, compared with programmes, were as shown in Table 3

Number of aircraft programmed and delivered respectively, January–June 1939



This period, however, belongs to the next section. The reason why it is mentioned here at all is that it concludes the initial stage in the history of aircraft production. During that stage the R.A.F. greatly expanded and reequipped itself, though it did so more slowly than its leaders thought necessary and at times even more slowly than the Government hoped and expected. The need of the period was the removal of official obstacles to the speediest possible rate of rearmament, and the Air Ministry was the first among the Service departments to free itself from the budgetary limitations. With the introduction of the Freeman-Lemon reforms it was also the first Ministry to attempt a centralised, even though rudimentary, control of industry.


From now on the official management of aircraft production and its problems took the general shape—though not yet the overall dimensions—which they were to keep throughout the subsequent six or seven years.


The Renovation of the Navy

Additions to naval strength were essential and in the years between 1936 and 1939 the Navy was greatly renovated and somewhat augmented. But compared with the Air Force the rearmament of the Navy did not go either fast or far. We have seen that naval strength—especially in comparison with foreign navies—had never fallen as low as the equipment of the R.A.F., and the leeway to be made up was by comparison small. But the cost of making it up was very high: indeed so high as to leave no financial margin for additional new construction. Expenditure on naval supplies and equipment in the five financial years ending March 1939 was over £240 millions;17 of this the bulk, more than eighty-five percent, went to new construction or to the modernisation and equipment of naval vessels. This was a large sum, but it was from meeting the full needs of the time and farther still from satisfying the Admiralty. It continued to feel the full rigour of financial limitations after they had ceased to control the expansion of the Air Force. No wonder that in naval circles the feeling that more could be done than was in fact being achieved lingered correspondingly longer.

The Admiralty's plans for expansion, unlike those of the other Services, too shape early and remained fairly constant. It unvarying aim was a 'two-power standard'.18 Long before 1936 when the 1930 Naval Treaty was due to expire,19 even in Europe shatter the comfortable international situation which had made the 'one-power standard' acceptable. Throughout the early thirties it had been assumed that the sole naval danger lay in the Far East, and that in war very small force would be needed in Home Waters and the Mediterranean. In the years following Hitler's rise to power and Mussolini's adventure in Abyssinia this assumption was no longer tenable, and much greater provision for European waters had to be planned.

The plans were at first very modest and in themselves need not have cost much. When at the turn of 1933 and 1934 and again towards


the end of 1935 the Defence Requirements Sub-Committee of the Committee of Imperial Defence was considering the programmes of the Services, it still tried to fit the naval demands into the framework of the 'one-power standard'. The prospects of German rearmament on the sea did not yet appear either high or immediate,20 and all that the Defence Requirements Sub-Committee therefore recommended in addition to the 'one-power standard' was a force sufficient to prevent the strongest European naval power from obtaining control of Britain's vital home terminal centres while the Navy was making the disposition for war in the Far East.

This added requirements meant a very small addition to the nominal strength of the fleet—a few more trade protection vessels, chiefly cruisers and destroyers.21 The financial burdens were nevertheless quite heavy, for although the total number of ships was not to be greatly increased, the approaching end of the 1930 Treaty, due to expire in 1936, as well as the changing international position, made it essential to reduce the excessive proportion of old ships. It was stated that by 1942 seven battleships, twenty-four cruisers, eighty-three destroyers, two aircraft carriers, not to mention a host of smaller ships, would be well over age and would need replacing, and that in addition a large number of other ships would have to be modernised. All this needed large sums of money: something between 250 and 300 million pounds to be spent during the five years 1934–39, or at least four time the annual expenditure on naval construction in any of the previous five years. So high indeed was the cost that the prospects of going beyond the 'one-power standard' were most unpromising, and those of adding to the numbers recommended by the Defence Requirements Sub-Committee (the 'D.R.C. standard') more unpromising still.

Yet such additions appeared very necessary and were soon to be pressed by the Admiralty. The international situation was changing very fast, and before anything could be done to achieve the 'D.R.C. standard' events made its underlying strategic principle out of date. Within a year of the Defence Requirements Sub-Committee's recommendations of November 1935 the Admiralty had to raise the whole problem anew. It reckoned with the probability that the German Navy would in a few years be so strong that the Royal Navy would be unable to defend the Home Waters in addition to the Singapore area. In fact, the reappearance of the German Navy refocused attention on the need to secure out own Home Waters, and restored


that requirement to its old predominance. A 'two-power standard' had thus become the ruling strategic concept. Naval strength was to be made sufficient:

  1. to enable us to place a fleet in the Far East fully adequate to act on the defensive and to serve as a strong deterrent against any threat to our interests in that part of the glove;
  2. to maintain in all circumstances in Home Waters a force able to meet the requirements of a war with Germany at the same time.

Included in (1) and (2) would be the forces necessary in all parts of the world, behind the cover of the main fleets, to protect our territories and merchant ships against spasmodic attacks.

Table 4 shows the number of vessels by 1942 which this standard necessitated compared with the number needed under the earlier proposals for expansion and with the existing naval strength in 1934.

The naval standards of 1934–36



Naval strength required by 1942:

Naval strength 1934
'D.R.C. standard' 1934–35
'Two-power standard' 1935–3622
Capital ships
Aircraft carriers
Flotillas of destroyers
Escort vessels, minesweepers, etc.

The figures were indeed very large. Added to the costs of the replacements proposed by the Defence Requirements Sub-Committee, the cost of new construction to achieve the 'two-power standard' proved too much for the national finances in 1936, and was to remain so to the end. Indeed, from 1936 onwards the whole story of naval requirements can be represented as a series of abortive attempts to approach the standard with insufficient financial means.

The first of these attempts came in 1935. The Government was now prepared to go as far as to sanction a general plan which was to be spread over seven annual programmes between 1936 and 1942 and which would, if fulfilled, have brought the Navy up to the extended 'one-power standard' as defined by the 'D.R.C.' formula.23 More than


that the Government was not in a mood, and perhaps not in a position, to consider. The only way in which it was able to respond to the growing pressure of the Admiralty was to agree in the following year that the approved programme should be so accelerated as to complete within three years all that industry could build in that time.24 This concession was not, however, to be take as the first step towards a 'two-power standard', and in approving it the Government made it clear that the financial and industrial principles underlying the rearmament policy in general were not thereby to be set aside. The purpose of the 'acceleration' was to establish a strong Navy as quickly as appeared practicable, without resorting to emergency measures in relation to labour or to an undue diversion of shipbuilding and other connected industrial activities from their normal channels.

This limitation the Admiralty had to accept, though only for the time being.25 In the autumn of 1937 and again at the turn of the year the Admiralty 'tried again'. In its final form the request was that the same number of ships should be built in 1938 as in 1937. The Admiralty also insisted on additional expenditure, mainly to meet higher prices and wages. These proposals, however, proved no more feasible than the previous attempts to approach the 'two-power standard', and the Chancellor of the Exchequer challenged them on the same grounds as before. But in addition he was able to point out that the naval proposals would be beyond the capacity of industry; that they would have an adverse effect on merchant shipbuilding and would create unemployment in later years. His arguments carried the day, and when at the turn of 1937 and 1938 the Minister for Coordination of Defence submitted to the Cabinet his recommendations for the 'rationing' of defence expenditure over the next few years, he definitely declared himself against the Admiralty demands.

For the time being the Cabinet reaffirmed that finance must decide the issue, and at the beginning of 1938 the final compromise (the result of protracted negotiations) fixed the 'ration' of the Navy at £410 millions, to be expended over the next three years.26 The new programme thus defined—to be known as the 'rationed' programme


—marked a considerable increase in the cost of naval preparations, but it fell far short of the Admiralty's unvarying aim of a 'two-power standard'. Before the end of 1938 further additions were to be asked for and further expenditure sanctioned. By August 1938 an additional £10.5 millions was sanctioned for the new construction of small ships to be made available for service within   a year. But it was not until 1939 that the whole scale of rearmament came under review and the very principles of British naval strength could be considered.27

This phase, however, belongs to the next chapter and carries the story into the war period. By comparison, the record of pre-war rearmament as told in this chapter might well appear as one of repeated defeats of the Admiralty's long-term plans and of continued failure to build-up the Navy to the strength required by the strategic position. Yet the period was by no means one of frustration. Though the Navy as yet failed to expand at a rate needed for a 'two-power standard', it did expand somewhat and, above all, its equipment was now in the process of being renovated and strengthened. Of the two million tons of effective strength of the Navy at the end of 1938 about a quarter had either been newly built or brought up to date since 1935. By the end of 1938 some 545,000 tons of naval vessels were under construction and some 125,000 tons were in the process of being modernised and refitted. In addition highly valuable industrial potential for use in war was being built up in several specialised fields. More will be said about this later.28


The 'Cinderella' Service

It was the War Office and the Army29 that were called upon to feel the full effect of the financial stringency. Budgetary allocations continued to limit the plans of the Army much more than they were ever allowed to influence the plans of either the Navy or the R.A.F. Under the existing priorities the Army was bound to take the lowest place, and that place was getting lower with each successive phase in the expansion of the Force. This does not, of course, mean that the Army was not being reequipped. As the previous table30 shows, budgetary allocations for army equipment rose from about £6.9 millions in the


year ending March 1934 to over £8.5 millions in the following year and to over £67.5 millions in the year ending March 1939, and actual provision of new equipment grew in roughly the same proportion. But even though these allocations appeared  to rise quite steeply, the share of the Army in the total expenditure did not exceed twenty-five percent until the end of 1938.31 Moreover, the additions were largely absorbed by anti-aircraft defences, thus leaving the allocations to the Army proper at a level which relatively to that of the other armed forces was even lower than the above figures suggest.

To justify the disparity, the doctrine of 'limited liability' had to be called upon more frequently and displayed more prominently as rearmament progressed. Under this doctrine Great Britain could not participate in a European war with substantial field forces. The country would not be capable of a full effort in the air, on the sea and on land, and would have to concentrate on some aims at the expense of others: the expense was to be the Army's. Early in 1935, i.e., on the eve of rearmament, the limitations inherent in the 'limited liability' doctrine were not, as yet, very rigid. When in 1934 the Defence Requirements Sub-Committee of the Committee of Imperial Defence had to formulate proposals for the reequipment of a field army of five divisions, it conceived the latter as 'a regular expeditionary force'. It foresaw that at some future point it would be necessary to support this force by contingent from the Territorial Army, and expressed the conviction that 'a force organised as above, and supported by appropriate air forces, would, as a deterrent to an aggressor, exercise an influence for peace out of all proportion to its size'.

This conception apparently continued to underlie the War Office views during 1936 and 1937. The earliest plans for industrial mobilisation and with them all the plans for the training of the Territorial Army were, to be gin with, so drawn up as to provide a pool of equipment for reinforcing the regular expeditionary force on the Continent by at least two other divisions at the outbreak of war. In fact, throughout these early discussions it was taken for granted that the British Army on the Continent would require continuous reinforcements, and what was doubtful was not so much the principle of continental involvement as the size of additional contingents. It is, therefore, not surprising that in December 1936, when the role of the Army came up for discussion, the Secretary of State for War could in a written memorandum go so far as to claim that the Government was then committed to the principle of a field army of twelve


Territorial divisions in addition to the five Regular ones. From this he went on to conclude that a future war would not be fought under conditions of 'limited liability'.

This view was not generally accepted in 1936, and even those who held it then had to be give it up before long. As the demands of air defence were becoming insistent and the cost of naval programmes was mounting, the prospects of an army adequate for war in Europe were continually reassessed. The discussion on the role of the Army which had been going on in the Committee of Imperial Defence and the Cabinet since February 1934 came to a head at the end of 1936 when the Cabinet instructed the Chiefs of Staff Sub-Committee to report on the role of the Regular and Territorial Armies in war and the priority which should be accorded to them in the placing of orders. In considering these problems the Chiefs of Staff were enjoined to pay special regard to the 'relative merits as a deterrent of a land force and an air force to be provided at an equivalent expenditure'.

On that occasion the Chiefs of Staff reported in favour of a balanced policy of rearmament under which the interests of the Army would not be entirely sacrificed to those of air defence. But with financial limitations paramount, a policy favouring the Air Force at the expense of the Army appeared to be inescapable. Reporting on the allocation of defence expenditure submitted in December 1937, the Minister for Coordination of Defence brought a whole armoury of arguments in support of the policy. He had come to the conclusion that the policy of continental commitments no longer suited Britain's circumstances and that a number of recent events in the international field justified this change of policy. He gathered that France no longer looked to Britain in the event of war to supply an expeditionary force on the scale hitherto proposed in addition to her all-important cooperation on the sea and in the air. Furthermore, he argued that Germany had guaranteed the inviolability and integrity of Belgian territory and there seemed good reasons for thinking that it would be in Germany's interests to honour that agreement. But his chief arguments were based on the Chancellor's financial thesis. Resources being limited, rearmament must be concentrated on the vital objective. Most vital of all was, of course, the survival of Great Britain herself from air attack. Next came the preservation of the trade routes and, in the third place, the defence of British territories overseas. The fourth objective which could only be provided for after the other objectives had been met was cooperation in the defence of the territories of any allies Britain might have in war. On the basis of this policy 'the continental hypothesis' ranked fourth in order of priority, and the primary role of the Regular Army became 'the defence of imperial commitments, including anti-aircraft defence at home'. The


role of the Territorial Army was to be adjusted accordingly. Instead of providing reinforcements for the expeditionary force on the Continent, it would merely be called upon to assist in anti-aircraft defence and to perform 'duties in connection with the maintenance of order and of essential services in this country in time of war.

So, paradoxically, the policy of 'limited liability' reached its furthest development in 1938, i.e. at the time when peacetime rearmament was approaching its climax and the War Office, under the so-called 'new conspectus', was formulating the first really ambitious plans of reequipment. On the 10th February 1939 the Committee of Imperial Defence confirmed that in matters of supply all war plans should be based on what might be termed a war of 'limited liability', and from the end of 1937 to the spring of 1939 the equipment of the five divisions was geared down to the level of 'colonial warfare in operations in an Eastern theatre'. According to a somewhat later War Office computation, an army thus equipped could not be used in Europe except in a defensive role and could not be brought up to full fighting efficiency without a large increase in ammunition, a partial reequipment of tank forces, and other material changes. No wonder that in February 1938 the Secretary of State for War found it necessary to issue a special warning to the General Staff that potential allies should be left in no doubt as to the possibilities of direct assistance on the part of Great Britain. It was not until the turn of 1938 and 1938 that the whole problem of 'liability' was brought up again, and it was not until the spring of 1939 that it was revised in favour in fuller continental commitments.

The field forces thus remained the least favour part of the most neglected Service. Whereas the other two Services could during the five years before 1939 engage in both reequipment and expansion, the field army with its auxiliary services were not encouraged to do anything more than to reequip themselves, and even that on an insufficient scale. The successive rearmament programmes were 'deficiency' programmes, i.e. were designed to fill gaps in the equipment and establishment of an army substantially no larger than that already in existence. Throughout the period the size of the Regular Army was taken to be more or less fixed at the level of five divisions, and the scale came to be, if anything, more narrowly defined in later programmes than it had been in the first 'deficiency' scheme.

This does not, of course, mean that the actual volume of expenditure and orders did not increase. In July 1934, when the 'deficiency' scheme was first considered by the Cabinet, its cost was put by the Defence Requirements Sub-Committee at £10 millions per annum, but this was reduced by fifty percent by the Cabinet. This figure was, however, a mere 'hors d'oeuvre'. An army, however, Ruritanian its size could not be reared on £5 millions per annum. So by the time


the first full-fledged rearmament programmes of the Forces matured, i.e. in midsummer 1936, the cost of the so-called 'deficiency' programme of the Army over the next five years was put at about £177 millions. By March 1937 the estimated requirements as submitted to the Cabinet for the same period and approved by it had grown to about £214 millions; in the autumn plans were submitted to the Cabinet for a programme of £230 millions and in addition there were extra commitments which were estimated to cost about a further £100 millions. As has already been shown,32 the plans were not allowed to rest at this high level, and having risen in the first draft of the 'new conspectus' to about £347 millions they were then cut down by March 1938 to about £276 millions.33 Yet even at that later level they stood about £100 millions higher than they had been in the 'deficiency' programme of 1936.34

Estimate of expenditure on 'deficiency' programmes of the Army for the five years beginning 31st March 1936


£ millions
Date of programme35

October 1937

March 1937
Plus additional commitments
January 1938
March 1938
Total estimate36
of which:

A.D.G.B.37 general charges and ammunition
Territorial Army:

training equipment
war equipment and reserve
Regular Field Force:

material and ammunitions

These increases however were largely due to requirements outside the main framework of the Army. As already indicated, the largest of the new requirements were those for anti-aircraft defence. Anti-aircraft defence was bound to come to the forefront as soon as the


German danger entered into the discussion of Army plans. When in the autumn of 1935 the Committee of Imperial Defence appointed a sub-committee to consider the needs of anti-aircraft artillery, its terms of reference were to plan on the assumption that the Germans would try to deliver 'a crippling air attack'. In formulating its proposals the Committee of Imperial Defence laid it down that plans for anti-aircraft defence in the event of war with Germany should be made upon the assumption that Germany might attempt a knockout blow from the air at the moment of the declaration of war. Similar assumptions continued to govern Army plans until the outbreak of war, and even beyond; and they found their most extreme expressions in February 1938 when, as already mentioned, the continental liabilities of the field forces were drastically whittled down, and the role of the Army was redefined as that of 'the defence of imperial commitments, including anti-aircraft defence at home'.38

It is, therefore, no wonder that the financial allocation for anti-aircraft defence formed a large proportion of the Army's reequipment programme and grew more steeply than most other items. The earliest requirements were defined in the so-called Brooke-Popham programme of April 1935. It envisaged in the more or less distant future a continuous defence system from Portsmouth round the eastward of London to the Tees.39 But for the time being practical recommendations were confined to the defence of the London area to be finished by 1940, to be served by the existing 3-inch 20-cwt. guns of last-war vintage and to cost £13.5 millions. From these modest beginnings the expenditure on anti-aircraft defences gradually rose to the 'Ideal Scheme' as finally adopted in November 1938.40 It owed its name to the terms of reference given to the sub-committee of the Committee of Imperial Defence in 1937 to make recommendations as soon as possible as to the 'ideal' defence it considered desirable, irrespective of considerations of supply, for the air defence of Great Britain. Yet even before then the financial and industrial needs of anti-aircraft defence formed a large and growing part of the total army requirements.


The claims of anti-aircraft defence not only absorbed a large share of the Army's financial vote, but they also enjoyed priority in the provision of actual supplies. But for the urgent requirements for anti-aircraft equipment and the sums allotted to it, the army programmes would have looked much smaller than they were. According to an approximate estimate of the expenditure of the War Office under the Defence Requirements Programme, in the year ending March 1939 some £8 millions went to the Air Defence of Great Britain (A.D.G.B.) and some £13 millions to the material and ammunition of the Regular field force, out of a total of some £44 millions for the Army as a whole. Comparable figures for the year ending March 1939 were £13 millions for A.D.G.B. and £22 millions for the field force out of a total of £67 millions. From the purely technical and industrial points of view the principal victims of these priorities were the field artillery and the medium artillery, but indirectly, through the overriding financial claims of A.D.G.B., the entire army programme was held back.

In comparison with A.D.G.B., the priority of coastal defence was not of the highest order and its claims on general industrial resources were not heavy. Its requirements could to some extent be provided for from old war stocks, and orders for new equipment were relatively small. Nevertheless, it was also given preferential treatment on most equipment whenever and wherever its claims happened to clash with the requirements of the Army.

On the other hand, the equipment of the field forces was to benefit greatly from the assistance, both open and surreptitious, which it received from the accepted plans of the Territorial Army. Considered as a whole, the policy of the successive Secretaries of State and the endeavours of the Director General of Munitions Production (D.G.M.P.) at the War Office41 were to use the Territorial Army as a means of creating equipment and war potential for a larger army. These ambitions were frankly avowed in the early stages of the 'deficiency' programmes of 1935–36 when the War Office proposed to equip three Territorial contingents totalling twelve divisions, in addition to the five-division contingent of the Regular Army. It will be remembered, however, that the Cabinet did not approve the programme in its original form and decided instead to suspend the whole problem of the Territorial Army for three years.42

As it turned out, the next three years saw the doctrine of 'limited liability' hardening to a degree which precluded all revival of the earlier plans for Territorial contingents. Yet in spite of the unfavourable atmosphere, the War Office was able to salvage at least a part of its Territorial plan, and thereby to add to the total volume of


orders, The concession it obtained was for training equipment. After much preliminary discussion the Cabinet agreed on 3rd February 1937 that the Territorial Army should be trained in the use of the same weapons as the Regular Army. Under the authority of this decision the War Office was able to include in its scheme of orders training equipment for the Territorial Army calculated to provide by April 1940 full equipment for two Regular divisions, and thus virtually to raise the five-division programme to something approaching a force of seven.

The War Office even succeeded in getting through a slight enlargement of the official plans of the five-division force itself. Early in 1938 the Cabinet allowed the War Office to reform the mobile division, one of the five, into two smaller mechanised divisions, and the change, though nominally no more than a reshuffle, necessitated some additional equipment. Later still, changes occurred in the size and composition of the infantry divisions and, more especially, in the establishment of the medium artillery regiments and engineer units.

More important still were the additions resulting from the War Office measures to increase the industrial facilities for armament production or, to use the technical phrase, to  'augment the war potential'. This subject, however, is sufficient important to deserve separate treatment.


The War Potential

Until well into 1938 the objects of rearmament were too uncertain, and on the whole too political, to make it possible for the Services to embark on direct preparations for war. The successive reequipment schemes, therefore, contained little express provision for creating in peacetime the basis of a war economy. It will be shown later43 that as a result of increased expenditure on armaments the munitions industry inevitably expanded, and that in some fields of production the expansion was great enough to create a true 'war potential'. Where this happened it was as often as not an indirect and sometimes even a concealed by-product of rearmament. But in general direct industrial preparations for war, such as there were, had to be carried on more or less independently of the main reequipment schemes.

Generally speaking, direct preparation for war production grew out of the routine processes of long-term strategic planning. As the thirties advanced and crisis followed crisis, the plans acquired substance and definition, and by the summer of 1939 they had become


sufficiently detailed to supply a blueprint of the entire wartime organisation of production as deployed in the opening year of the war. Yet even then war potential was still confined to paper work and produced little more than hypothetical plans. For without large orders it was impossible to bring industry to a point at which it could be relied upon to turn out great quantities of weapons at the very outbreak of war.

The story is thus largely (though not exclusively) one of government machinery and plans. The fountainhead of all the earlier plans was the organisation which in the inter-war period was primarily concerned with general consideration of the imperial strategy of defence, i.e. the Committee of Imperial Defence (C.I.D.). Under that Committee the body which took charge of the economic and industrial plans was the Principal Supply Officers' Committee (P.S.O.C.). It had been set up by a Cabinet decision in May 1924 and was reconstituted in April 1927 with authority 'to direct peacetime investigations in respect of all matters connected with supply in war'. Its principal functions, as then defined, were to prepare plans for the supply of commodities essential to a war effort; to ascertain and watch over stocks of raw materials; and to maintain a list of contractors capable of being drawn into war production. In its turn the P.S.O.C. bifurcated into the Board of Trade Supply Organisation which looked after raw materials, and the Supply Board which had the duty of planning for the production of war-stores. What this meant in practice was that the Board translated hypothetical war requirements into industrial terms, decided what materials would have to be controlled at the outset of war and, finally, allocated between the Services the productive capacity in the country. This work the Supply Board carried out through a series of Supply Committees dealing respectively with armaments in the narrow sense of the term, engineering products, shipbuilding, general stores, shipbuilding stores, petroleum-driven weapons (aircraft, tanks, road transport) and commodities of general use (e.g. food, medical supplies).44

The 'lean years' of the late twenties and early thirties were thus able to hand down to the men in charge of rearmament an embryo of an organisation for the planning of war potential. The years of rearmament saw a few additions to the machinery of economic preparation and a few greater ones to the preparations themselves. The most conspicuous change at the centre was perhaps the appointment of a Minister for Coordination of Defence in February 1936. In theory the new Minister was in charge of all aspects of rearmament


including those of war potential, and in practice he found himself involved in all the major problems of rearmament, both financial and administrative.

More closely related to the purely industrial problem of war potential was the appointment in December 1933 a small advisory group of industrialists.45 The group gave a broad assessment of the potential resources of industry for the manufacture of armaments and set out the main principles for the development of a 'shadow' armament industry. Its views were also sought by the Cabinet and the Supply Board on other aspects of industrial mobilisation. In general it made available to the Government expert opinion on industrial matters at a time when government plans could no be disclosed to the whole body of industrialists in the country. But its work was essentially advisory, and as long as the main problems were those of administrative planning the quality of the plans depended less on the expert advice of industrialists than on the activities of the official planners themselves.

From this point of view the most important changes in the machinery of preparations were the appointments which, from 1936 onwards, were made within the Service departments and especially in the Air Ministry and the War Office. In the Air Ministry the important new creation was that of the office of Director General Production. It has already been shown46 that the primary functions of this officer were to take charge of the Air Ministry's relations with the aircraft industry and to supervise the execution of the much expanded orders. To begin with it was also his function to take care of such 'war potential' as there was and all the early inquiries about production in wartime that came into his department. The Munich crisis, however, brought the subject of war potential, i.e. that of aircraft production after the outbreak of war, more forcibly to the notice of the Ministry. A more exact study of the various problems of war potential was now necessary and possible; the results of the study and the measures taken to define and to build up the 'war potential' will be discussed in the next chapter.

The administrative changes in the War Office came somewhat earlier. As the rearmament programmes were taking shape, two new appointments were made. The office of Director General of Munitions Production—a wholly new creation—and some of the activities of Engineer Vice-Admiral Sir Harold Brown, the first holder of that office, have already been mentioned.47 His primary responsibility was for the output of stores and the general execution of the rearmament programmes, but his work also had a great effect on war potential


As a by-product of the reequipment programme the armament industry grew more or less automatically, and the Director General of Munitions Production made it his business so to organise reequipment of the Army as, in fact, to create the largest possible war potential. The direct planning of war potential had hitherto been carried out by a special section of the War Office under an official who was also chairman of Supply Committee No. 1, which was concerned with planning the supply of armament stores. The appointment was made specifically in order to create in the War Office machinery for carrying out decisions of the Supply Board. The same official became Director of Industrial Planning48 in the organisation of the Director General of Munitions Production and was responsible for finding industrial capacity and for planning war potential.

So much for the evolution of the machinery. The principles on which it worked were also undergoing a change. To begin with, the actual preparations at the centre were in the nature of things very preliminary and very general. The milieu in which they were born—the Principal Supply Officers' Committee of the Committee of Imperial Defence—linked them closely with the plans and problems of the last war. The experience of the Ministry of Munitions found many reflections in the industrial plans and problems of the last war. The experience of the Ministry of Munitions found many reflections in the industrial plans of 1936 and nowhere more than in the layout of the sub-committees of the P.S.O.C. There was thus a special sub-committee to deal with gauges,49 for gauges had been a 'headache' in the initial stages of the last war. On the other hand the tank, which was to prove that most troublesome weapon of the coming war, was lumped with aircraft and mechanical transport. The experience of the last war stood out equally clearly in the projected organisation for the control of raw materials. Yet this should not be taken to mean that all the P.S.O.C. was doing was to prepare for the industrial battles of 1916. As long as the plans were general and preliminary they were bound to hark back to the historical experience of the last war; and that experience proved by no means valueless even in the later years of mobilisation;50 but as the day of mobilisation was approaching, the plans were gradually suited to the changed circumstances and to the immediate demands of the situation.

In addition, a number of practical steps in fulfilment of the plans could now be taken.51 Between 1917 and 1935 the P.S.O.C. and the Supply Board could do little more than allocate in a very general


fashion in the industrial resources of the country among the foreseeable wartime uses. By the turn of 1936–37 their preparations were sufficiently advanced to warrant more detailed planning of production, firm by firm; and it was at this point that the work was taken over by the planning officers in the Service departments, the Director of Industrial Planning and the Director of Aircraft Production among them.

From the point of view of the future, the final provisions made for raw materials were probably the most definite and concrete.52 Preparations in the field of raw materials comprised the final blueprints for future controls and measures to lay in strategic stocks. During the early years of rearmament, until 1936, plans for the acquisition of raw materials assumed that raw materials which might become critical on the outbreak of hostilities would be bought as soon as the warning of an emergency was received.53 In 1936 a radical change took place in the Government's attitude towards the accumulation of strategic reserves. Now that the requirements of the Services had grown and firms were expected to turn over to war production more quickly than had once been thought necessary, demands for raw materials in the early months of a war were bound to be correspondingly great. At the same time, with the danger of a European war taking shape, allowance had to be made for considerable dislocation in European supplies; allowance also had to be made for the possibility that the neutrality policy of the United States might deny raw materials to belligerents in a future war. The only way of meeting the new situation was for the Government to accumulate reserve stocks in time of peace. This policy was accepted by the Defence Policy and Requirements Sub-Committee of the Committee of Imperial Defence in June 1936, and within a year the building-up of reserves of a number of raw materials had begun.54

In addition to preparations at the centre the Service departments themselves did something to prepare for war production. Most of this activity grew out of the rearmament programmes of the individual Services. Rearmament in peace and industrial potential for war touched at several points. First of all there was the connection between the war potential and reserves of equipment held by the Services; secondly there was the connection between the industrial capacity created in peacetime for the purposes of rearmament and


the capacity available for the use in war. Of the two problems the former was to some extent peculiar to R.A.F. The character of air war as foreseen in 1937 and 1938 was such as to make it difficult to discuss war potential without continuous reference to stored reserves. The Air Staff expected fighting in the air to begin on the very first day of hostilities and the wastage rates to be very high. The question of supplying the R.A.F. with aeroplanes was therefore largely one of how long war industry would take to get into its stride, and of how large must be the stored reserves of aircraft if the strength of the Force was to be kept up in the meantime.

It will be remembered that substantial reserves could not be planned until Scheme F was sanctioned by the Cabinet in February 1936,55 and that even then it was by no means certain that reserves were sufficient to fill the gap. Throughout 1936 and 1937 the Director of Aircraft Production conducted investigations into the probable output of the existing aircraft industry under war conditions, the length of time it would take to reach maximum output and the consequent need for accumulated reserves. Towards the end of 1937 his tentative conclusions were that the industry might take as long as twelve months to reach maximum output, and that in the meantime a wide gap between requirements and supply would open up. He proposed that the gap should be filled by drastic increases in manufacturing capacity and the elaborate preparations for industrial mobilisation in war, such as the preliminary acquisition of additional accommodation and aerodromes, the purchase of necessary machine tools, and the provision of reserves of raw and semi-manufactured materials. Failing that much large reserves of aircraft were to be kept.

The alternatives were very obvious, but the Director of Aircraft Production's memorandum of December 1937 was probably the first occasion on which they were defined for the benefit of the ministers. The harassed ministers understood them only too well and were only too ready to take refuge in them, for they offered them an obvious way of making present cuts in aircraft more palatable by offering prospects of future increases in industrial potential. At the end of the discussions of the winter of 1937–38 the Minister for Coordination of Defence recommended that the reserves held in peace should be made up by increases in war potential. Needless to say the proposals invited a rejoinder from the Air Minister, but in the end they prevailed, though in a somewhat modified form. The reduction of reserves to nine weeks was accepted, but an exception was made for fighters, trainers and overseas squadrons, i.e. the types which would have to be actively engaged from the very outset of war.


In reality this cut in reserves did not turn out to be as permanent as the Air Ministry feared. No sooner was the decision taken than the crisis of the spring of 1938 intervened and the emergency programme L of 12,000 aircraft superseded all previous aircraft programmes. The figure, it will be remembered, represented what the industry thought it could produce56 and was settled without direct reference to firstline aircraft or reserves, but if carried out in full it would provide reserves on an ample scale. On the assumption that the firstline strength would remain at 2,373 aircraft as under the current Air Ministry programme, the provision of reserves to the extent of 225 percent as hitherto would have required 7,717 aircraft in all. The balance between that number and 12,000 added a further margin of safety to the Air Ministry plans.

Much more complicated was the problem of war potential in the narrower sense of the term. The main problem was obvious enough. It was essentially one of developing in wartime the specialised capacity already available. The aeroplane with its accessories was the sole weapon of the R.A.F., and the problem of war potential was overwhelmingly that of preparing the largest and the quickest possible expansion of the aircraft industry in wartime. This meant maintaining in time of peace a large aircraft industry for, in the opinion of the Air Ministry, so specialised was the manufacture of aero engines and airframes that nobody except the aircraft firms themselves (perhaps the motor industry in the field of engines) could be relied upon to provide a wartime potential. This was one of the reasons why through the 'lean years' the Air Ministry endeavoured to keep in being a nucleus of aircraft and engine-making firms; and this was also the reason why for the Air Ministry the problem of war preparations largely narrowed down to the creation of additional floor space, plant and machining capacity in the aircraft industry and in a few selected motor car firms.

In trying to do this the Air Ministry was favoured by the existence of a small but important trickle of civilian demands for aircraft and by somewhat more liberal allocation of funds than that available to the other Service departments. Manufacturing capacity in the aircraft industry and its ancillary branches did, therefore, expand faster and further than in the armament industry in general. As far as the admittedly imperfect returns at the Ministry of Aircraft Production (M.A.P.) could be trusted, the floor space at the main aircraft contractors' works occupied in actual production rose between August 1938 and September 1939 from five to eight million square feet. In addition to the 'shadow' factories originally conceived as contributions to war potential, a certain amount of hidden capacity also


accumulated in the aircraft factories. Extensions of factories were all based on a more generous allowance of floor space per worker than was strictly necessary either for current output or for output projected for the opening months of war. Above all floor space, and to a smaller extent machining capacity, had been added on the basis of one-shift working; whereas plans of industrial mobilisation invariably assumed at least two shifts both in the machine room and on the assembly floor.

As a result, by the beginning of 1939 the Air Ministry in making its plans could count on a very considerable reserve of capacity for airframe production. By that time however other gaps in the potential capacity of the aircraft industry had revealed themselves and the Ministry set about repairing them in the hope of having the potential capacity fully balanced by the beginning of war. More about this will be said later.57

The problem of war potential presented itself somewhat differently at the War Office. In the first place the problem of reserves did not occupy a very prominent part in its plans for army supplies. The 'deficiency' programmes of 1935–36 and, to a less extent, the subsequent rearmament programmes were primarily conceived in terms of 'capital stock' of equipment and not of those of current wartime expenditure. So small were the Army's programmes and so utterly disproportionate were they to be the probable needs of an arm at war, that as yet little could be done to accumulate in peacetime a cushion of stocks, i.e. reserves large enough to cover the initial wastage in time of war and to bridge the gap between the outbreak of hostilities and the full mobilisation of war industry.58

Preparations for war could, therefore, mean only one thing: as rapid and as wide an industrial mobilisation of resources as possible. But here too the problem differed from that of the Air Ministry. The Air Ministry, dependent as it was upon a single and highly-specialised form of armament, could base its plans upon the peacetime nucleus of a specialised aircraft industry. Not so the War Office. It could not achieve its objectives merely by increasing the productive capacity of existing armament firms. So small was the peacetime output of armaments and so diminutive was the scale of the armament industry compared with the probable demands in war, that the only solution lay in drawing into war production the entire industry of the country, and more especially its engineering and allied branches. A further argument in favour of this solution was that the range of army stores was less uniform than that of the R.A.F., and that he requirements did not converge upon the assembly of a single master


weapon like the aeroplane. There was, therefore, little opportunity and little need for directing war production into the single channel of the existing specialist firms.

That is how the problems took shape in the new Directorate of Industrial Planning.59 Its duties were accordingly defined as the survey of industrial capacity of the country and its preparation for the production of army weapons in war. From this point of view its work was part of the activities of the Supply Board in surveying the industrial capacity of the country and allocating it to the individual Services. But in addition to its contribution to the general survey, the Directorate had to compile a more detailed register for army uses and what degrees of reorganisation would in each case be required. The Directorate also did much to accelerate the compilation of 'process manuals'60 with instructions for the making of armament stores and with advice and instructions on factory layout. This work was well advanced by the spring of 1939.

Above all, the register of firms available for munitions orders—the so-called List 392 or Capacity Register as it came to be generally known—which the Supply Committees had been gradually compiling61 now took the shape which it was to preserve throughout the crucial years of industrial mobilisation. In its original form the List was not, and could not serve as, a perfect guide for the distribution of orders among firms. A report on War Office organisation compiled in February 1942 by a special committee under the chairmanship of the Director General of Army Requirements drew attention to the incomplete analysis of capacity at the outbreak of war. The same report, however, made it clear that an analysis of capacity and a compilation of a complete register would, during the war, have to be decentralised by areas. Only by decentralising the work would it be possible in wartime to ascertain where new contracts could be placed and to set afoot without much delay discussions with individual firms as to how and when capacity could best be switched from civilian to war production. These objectives List 392, even when duly supplemented, could not wholly fulfil, but it proved invaluable as the basis for the immediate allocation of capacity between the supply departments and continued to be used until the end of 1942 as an aid to the placing of orders with individual firms. By that time the Central Priority Department of the Ministry of Supply, and with


it the List it administered, had been absorbed into the Ministry of Production.62

The discussions with individual firms and the measures taken to prepare them for war production were closely linked with orders under the current rearmament programmes. The War Office and, more especially, its new Director General of Munitions Production, did not accept the diminutive scale of provision so far sanctioned as in any permanent, and frequently used the existing programmes as stepping-stones towards greater rearmament to come. Even without transcending the broad limits of the current programme, and War Office was now and again able to create some war potential as a by-product, so to speak, of its rearmament orders. A little war potential was also being created by a few orders placed in addition to current orders under the reequipment scheme. Orders for tanks, fire control equipment, small arms ammunition, gun barrel forgings and a number of other stores were often placed with the view of creating a war potential.

In general, however, orders under the reequipment scheme were too small to make an appreciable difference to the country's industrial preparedness. So small were some of them and so short was the period for which they were sanctioned that without the guarantee of further orders industrial firms refused to shoulder the necessary risk and expense. Over and over again in his communications to the Secretary of State for War the Director General of Munitions Production stressed the need for larger orders for 'long-term programmes of equipment' or for 'continuation orders'. As late as the autumn of 1937 he could, in a note to the Secretary of State, quote several examples of important orders which either could not be placed at all or were placed with difficult owing to the absence of long-term requirements. The most notable instance was that of the all-important shell forging scheme at Stewarts & Lloyds which was to become one of the main sources of shell production in wartime. The firm could not accept the proposals except on a programme much longer than that which the existing five-division scheme allowed.

On one occasion—in the autumn of 1936—an important order in excess of authorised quantities had to be placed on the person initiative of the Director General of Munitions Production. At that time the War Office depended for gun production on the R.O.F.s, Vickers-Armstrongs and William Beardmores & Company, whose total capacity was insufficient to meet the requirements of field guns and anti-tank guns under the existing programme. So when, therefore, in October 1936 a group of Sheffield firms agreed to undertake


the forging of gun barrels, the D.G.M.P. decided to seize the opportunity and to place with the firms an order for forging equivalent to 500 guns, mostly anti-aircraft, at the estimated cost of £1.2 million. This appeared to be the smallest practicable order, but it was in excess of the number for which authority was available and could be obtained in time. The breach of financial authority could perhaps be excused by a genuine misunderstanding in the War Office about the relevant Treasury decisions, but a breach it nevertheless was, and the Treasury was compelled to call the D.G.M.P.'s order in a spirit of person concession, or as the Treasury letter put it ' as a Christmas present' to the D.G.M.P. It was not until July 1937 that a formal Treasury letter approved orders for 200 new anti-aircraft guns out of the 500 required. The approval carried a proviso that no forgings for 25-pounder field guns were to be included.

The incident is cited here as evidence of the obstacles which lay in the way of increased orders and enlarged industrial capacity. In the end the necessity for excess orders and enlarged industrial capacity. In the end the necessity for excess orders and for continuation orders on 'industrial grounds' was somewhat half-heartedly accepted. In July 1937 the Defence Plans (Policy) Sub-Committee of the Committee of Imperial Defence decided to authorise the Treasury to consider and sanction particular orders submitted by the War Office which went beyond the approved programme if it were satisfied that the order offered sufficient economic advantages. In reported this decision to the Army Council the Secretary of State for War interpreted it to mean that orders could now be placed if it could be shown that otherwise the firms would be unable to produce economically. Needless to say, these instructions could not be interpreted as liberally by the Treasury as they were by the War Office, and by no means all the proposals for additional orders passed through its scrutiny. But although authorised extensions were few, they helped to prepare industry for future production on scales greater than those for the current rearmament programmes.

In this respect even more important were the so-called 'educational' orders, a device which could boast of a difficult and protracted history. The idea of 'educational' orders was in itself very simple one. As long as the preparations were confined to coordination and schemes for the future, they were bound to remain ineffective, for it was often not possible to prepare and educate industry for war production without placing special orders. In this context special orders meant orders in addition to those which came to industry under the rearmament programmes, since current rearmament orders were often insufficient to prepare the firms for the full flow of wartime production.


This is in fact how the question presented itself to the planning authorities from the very outset. In November 1936 the Principal Supply Officers' Committee recommended that where the needs of the war potential were in excess of the needs of the reequipment programmes the orders should be based on the former. In the words of their memorandum:

the creation of a war potential of the size demanded by the War Office hypothesis for armament stores cannot, we think, be brought about by any other means than by the placing or orders in peacetime so that firms may equip and train themselves and their labour, and by the provision of additional plant so that selected firms can swell their output in emergency far beyond the capacity demanded by the peacetime orders they are engaged in fulfilling. Unless, therefore, further action is taken without loss of time on a wider basis than that covered by the Deficiency Programme, there appears to be serious risk that, in certain vital branches of supply, the 'war potential' created by that programme will be the 'war potential' actually available for the Government as on the 1st April 1939. It would, accordingly, seem that, in the placing of orders under that programme, the needs under the war hypothesis of the Service departments, where greater, should be taken as the basis, e.g. in regard to equipment of firms in advance with the necessary machine tools, jigs and gauges.

These recommendations do not appear to have received direct Cabinet authority but to have been adopted by the Cabinet and its committees as a general principle. This attitude was not perhaps clear enough to justify in every case changes in the scale of War Office requirements sufficiently drastic to bring them into line with the hypothesis of a war potential, but it established the principle of 'educational' orders. In the end the need for these orders came generally to be accepted, and became an organic part of War Office programmes. By the end of 1937 the War Office estimate of the cost of these orders was about £13 millions compared with £130 millions of the total Army vote under the various rearmament projects. This amount was later cut down to £7 millions.

Yet even 'educational' orders were not enough. For some purposes special factories had to be erected in peacetime, and expenditure on these in the end accounted for the bulk of the sums allowed for industrial mobilisation. The need for creating some capacity for meeting peacetime the enormous wastage of consumable stores in war had been foreseen from the outset. Here and there the need could be met by facilitating the extension of existing factory space, plant and machinery by means of special orders or of a little financial assistance. But in some important branches of war production, e.g. those of explosives, ammunition and guns, the industrial facilities in existence were so small in relation to the probable wartime needs that the mere extension of existing factories would have been of little


use. If the production of ammunition for the war potential was to be more than a paper scheme it was necessary to erect in peacetime a number of factories for explosives and propellants, for fuses and other ammunition components and also for filling and for gun barrels.

Some new factories were in fact necessitated by the needs of the 'deficiency' programmes and the Air Defence of Great Britain, and most of the new factories created provided some additional capacity for the war potential, though the additions were not always part of the original plans. In general the provision for war potential had to be excluded from all projects for factories submitted to the Treasury for approval. The planners often designed factory sites and services on them on a scale sufficient to allow for immediate expansion in war, but they had as a rule to agree to the postponement of all work that could be done during the first year of war. Yet by September 1939 a considerable wartime reserve for the making of explosives and the filling of ammunition had come, or was coming, into existence. The new explosives and filling factories had been planned on the assumption that they would replace the vulnerable capacity at Woolwich, Waltham Abbey and Billingham. But in the event, the 'vulnerable' factories continued to operate, thus providing substantial additions to the capacity planned for the 'deficiency' programmes and the Air Defence of Great Britain. No such reserves could be built up in the purely engineering branches of production; yet so conservative was the planning of R.O.F.s under the 'deficiency' programmes that with growing efficiency and economy in their use they were bound to provide facilities well in excess of their planned output in peacetime.

Some war potential, moreover, was overtly planned. Despite formidable obstacles, both financial and industrial, the War Office continued to press for immediate provision for war potential, and at some points it was able to secure small gains. Thus soon after the passing of the programme of 1936 the War Office adopted for its factory programme the hypothesis of one Territorial contingent requiring the equipment of two Regular divisions, in addition to the Regular five divisions. This hypothesis continued to condition the factory programme for the war potential long after it had been abrogated for the Army plans as a whole. Hence by April 1937, i.e. the time when the Cabinet ruled against the accumulation of reserves and potential for extra divisions in time of peace, the Director General Munitions Production could report to the Secretary of State for War, that in many cases the capacity then available was already sufficient for the war wastage of the Regular contingent and of the Air Defence of Great Britain, and that additional capacity would presumably be made available by a number of new factories then 'in hand'. The Director General of Munitions Production expressed his fears that the Cabinet decision if strictly interpreted might


be read as precluding the provision of any further capacity including many of the factories in course of construction. Fortunately the decision was not so interpreted, and though new construction of war potential in excess of that strictly inherent in the five-division programme was disallowed, the financial allocation for that construction rose from about £17 millions in November 1935 to well over £42 millions in March 1937. Of the latter over £24 millions was represented by the cost of new R.O.F.s, and this rose again by some £6 millions by April 1938. In this way by the spring of 1939, under the auspices of a diminutive army programme, a specialised industry for the making of armaments came into existence. The events of the next two years were to show the new capacity still woefully unequal to the task of supplying a large army at war. But it was very much large than the rudimentary war industry in 1935 and sufficiently large to provide a firm foundation for the great expansion to come.

At first sight the problems of war potential for the Navy need not have worried about the Admiralty unduly. The problem of reserves, so complicated elsewhere, was confined to ammunition and similar stores. And although the meagre financial allocations in the 'lean years' did not allow, at that time, for the carrying of stocks for the opening period of the war, the position had been fully restored by 1938. The problem of war potential proper appeared more or less solved by the vast reserves of shipbuilding capacity. Yet looked at more closely the Admiralty's needs of increased industrial resources were almost as great as those of any other Service, even though they were most felt in the specialised fields of equipment outside the main field of shipbuilding proper. By a policy which dated to the first years of the Washington Treaty of 1922, the Admiralty maintained in being a nucleus of specialised capacity in industrial fields which otherwise would altogether have been abandoned through lack of civilian demands. This nucleus proved an important starting point. In order to meet the needs of the 'accelerated' and 'rationed' programmes63 the Admiralty had to find or to create further additions to its specialised capacity, and in so doing it made an important contribution to war potential.

As has just been said, the effect of the Admiralty orders was felt least in the shipyards themselves. Throughout the interwar years the Admiralty assumed that the general shipbuilding capacity in the country would be sufficient not only to meet the needs of the naval programmes in peacetime but also to provide a reserve for war. In this respect the position in 1938 was somewhat less favourable then it had appeared in the twenties. As has already been shown the number of berths declined in the early thirties, and the equipment of


some shipyards had become badly out of date.64 Yet on the whole the assumption still held good throughout the years of rearmament, the real problem was not so much that of berths, slips and plant, as that of labour. The size of the shipbuilding labour force which stood in 1935 at about 100,000 grew by 1939 to about 140,000, but the increase was insufficient to meet the expansion in general shipbuilding and still less the needs of the naval programmes. Skilled labour was especially short, for new entrants were few and other branches of the engineering and armament industry continued to steal skilled labour from the shipyards. By 1938 all the capacity in the yards that could be employed on new construction was fully engaged, and it was becoming clear that with the supplies of labour then available production in war could develop only at the expense of some of the peacetime projects or of merchant shipbuilding.

Another problem of war potential which the peacetime measures did not radically solve was that of gun mountings. It had always been understood that gun mountings presented one of the most difficult supply problems of naval construction. The Admiralty depended for the supply of guns on private firms, and in the absence of commercial demand for guns in peacetime privately-owned capacity was very exiguous. The chief suppliers were Vickers-Armstrongs, and the dwindling of naval orders at home and abroad since the end of the war made it impossible for them to maintain intact the specialised equipment and to keep together a sufficient number of skilled gunmakers. The firms were also allowed to dissipate much of their earlier strength in the design of guns; and designs which were slow to mature were bound to retard production and delivery.

The Admiralty was thus very conscious of the unsatisfactory prospects of gun production. So even in the 'lean years' it had tried to maintain and improve the existing facilities, and for that purpose had agreed in 1923 with the principal makers, Vickers, acting in the spirit of the agreement, modernised their plant and were in 1935 engaged on several expansion projects. Yet all these measures were short of what the new naval programmes appeared to require. The Admiralty estimated in 1936 that under the reequipment programme sanctioned the requirements of gun mountings—in that year estimated at 5,325 tons—would fully engage the existing capacity and that by 1939 well over 11,000 tons would be needed. Steps were then taken to create further capacity, but a 'bottleneck' in gun mountings nevertheless developed, and by the beginning of 1938 deliveries were running at least three months late. For this the novelty of designs and the multiplicity of new types of gun mountings


were sometimes blamed; the priority accorded to guns for the air defence of Great Britain was also held responsible. But the chief impediment was the shortage of skilled labour. This shortage of skilled labour. This shortage continued to be felt throughout the early rearmament period, and in the end the entire naval programme had to be retimed to fit in with the flow of gun mountings.

Almost equally intractable turned out to be the supply of fire control gear. The Admiralty's demands for the equipment were large and growing; in addition the War Office also wanted it in considerable quantities. On the other hand production facilities, though just sufficient for the naval needs before 1932, were already strained between 1932 and 1935, and additional capacity to meet the requirements of the reequipment programmes was obviously needed. As part of the subsidised nucleus four firms making fire control equipment and instruments for the Navy were retained in the years immediately following the Washington Treaty. The Admiralty's endeavours to harness additional firms met from the outset with difficulties. The declared Government policy was not to interfere with the normal commercial business firms met from the outset with the normal commercial business of firms, especially of those working for export, and it so happened that the most suitable firms were precisely those which were at the time fully occupied, such as the accounting and tabulating machinery. Certain other firms, such as electrical manufacturers, tool makers and instrument makers, were either unsuitably organised or unprovided with the type of labour most needed. In the end, however, the Admiralty succeeded in enlarging the nucleus of its contractors by drawing on the resources firms for sub-contracting. Yet from the middle of 1938 onwards it was becoming increasingly apparent that in spite of recent additions output was insufficient, and by early 1938 fire control gear became as serious a cause in the delay of the general programme as gun mountings.

This failure could be blamed on a number of causes, but whatever the cause it was not of the kind that could be obviated in time for the current programmes. The only possible remedy was yet additional industrial capacity. So early in 1938 the Admiralty tried again to call into existence further additions to plant. This it succeeded in doing, but the new capacity could not bear fruit at once and shortages were expected to continue. For example, but the middle of 1939 the principal items in the high-altitude control equipment for cruisers and battleships were to be forthcoming at the rate of about thirty-five percent of the requirements, and certain items for the high-altitude control gear for destroyers and sloops only to the extent of about ten percent. Nevertheless, much had been achieved by 1939.


What was virtually a new precision light engineering industry had come into being, and where only four firms were engaged in 1936, twenty-eight were now employed with a total capacity nine times that of 1936.

Preparations were equally advanced, while shortages proved less intractable, in the supply of armour and guns. In naval circles armour was always regarded a potential 'bottleneck', and the developments which followed the First World War boded ill for the future. At the end of 1918 armour was being produced at the rate of 44,000 tons per annum, and the five firms producing it were capable of turning out as much as 60,000 tons. As a result of the Washington Treaty, however, only three armour-making firms stayed in the business and the total capacity in the country fell to about 3,500 tons. This was just enough for such naval construction as went on between 1925 and 1931, but after 1931 a steep rise in requirements appeared probable (the official expectation was that under the new treaties new battleships might again come into the naval programme) and to meet it the Admiralty had to subsidise the erection of new armour-making plant in a number of steel-making plants for an additional 18,000 tons. Yet even this addition was insufficient to meet the needs and requirements of the 'D.R.C.' programme of 1935.65 Under that programme it was estimated that requirements would rise from some 22,000 tons in 1936 to about 42,000 tons in 1939. The Admiralty therefore instigated a number of further extensions in armour-making capacity in June 1936, and when these proved insufficient, still further additions in 1938. At the same time over 12,500 tons were purchased in Czechoslovakia.

All these schemes, needless to say, took a long time to mature. By the end of 1937 even the first of the additions, that of 18,000 tons, was not yet available in full; some of the capacity sanctioned in 1938 was not full in operation until well into the war; and of the Czechoslovak order only 10,000 tons had been delivered by the time war broke out. Yet by 1939 the supply position had greatly eased off. The shortages elsewhere, above all in gun mountings and fire control gear, were delaying construction to an extent which made it possible to scale down the demand for armour. In fact potential capacity was now much beyond the current need at its reduced level. The capacity available by mid-1938 could in wartime be worked up to about 62,000 tons per annum, and this was expected to cover the larger part of wartime demands as then envisaged.

Broadly speaking, the capacity for guns grew in a somewhat similar fashion. In theory the most difficult problem of all was the provision of heavy guns. It was, therefore, in this field that the


Admiralty planners were most active in the early years and that some subsidised nucleus capacity (mostly at Vickers-Armstrongs) survived from the 'lean years'. The Admiralty endeavoured to add to the manufacturing facilities by subsidising additions to plant at Vickers-Armstrongs and elsewhere. Yet, even with these additions, capacity proved no more adequate for the needs of the reequipment scheme than was the nucleus capacity in other specialised fields. In the course of 1937 a crisis appeared to be developing which threatened to add to other delays in shipbuilding. On the average the last turret had to be installed some twelve months before the completion date of a battleship, and heavy guns and gun mountings had to be ready some months earlier still, this the shortages appeared to threaten future construction for a long time ahead. When, however, in the spring of 1939 the position was again reviewed it turned out that the supplies of heavy guns as well as those of armour were greatly eased by failures in other directions. Owing to the postponement in the delivery dates of gun mountings, the whole timetable of completed ships had to be spaced, and the Admiralty found itself with a flow of heavy guns roughly adequate for the programme and a considerable war potential in hand.

By comparison with supplies of guns of the largest calibres those of the standard medium size, and especially of 6-inch guns, were adequate throughout the early rearmament period. Certain other calibres, especially those of 4-inch and 5.25-inch, were in short supply throughout owing to the great demand for them for anti-aircraft roles. New capacity was laid down in 1936 and 1938, but the naval demand for anti-aircraft armament continued to rise more steeply than the output of the new plant, and in addition the Admiralty had to compete in this field with the demands of other Services.

There were also bound to be some delays and difficulties over the supply of light automatic guns and mountings. The demands of the three Services for 20-mm. and 40-mm. guns were not standardised; each Service singled out for special preference a favourable light gun of its own. This and the general shortage of manufacturing capacity for automatic guns of these calibres prevented the Admiralty from getting its Oerlikons as early as it needed them;66 and this also meant that the capacity for production in wartime was not made ready beforehand.

In this way the story of the war potential which rearmament created was as much one of light and shade as that of rearmament itself. The capacity made available by the spring of 1939 fell short of the full demands of war production just as the actual scale of rearmament fell short of the full 'two-power standard'. Yet here as in


other respects the Navy had a great advantage over the other Services. Its production in wartime had not to be raised so high compared with its peacetime scale (or to put it differently, its peacetime scale was not so markedly below war needs) as to make the shortcomings in war potential difficult to make good. In fact, it has already been indicated that the principal measure which the Admiralty eventually took to meet the needs of the Navy in war was to suspend some of its peacetime projects.67 This course as not open to the R.A.F. and certain not to the diminutive Army of 1938.


Contents  *  Previous Chapter (I)  *  Next Chapter (III)


1 See p. 1.

2 See p. 15 for the aircraft programme approved in 1936.

3 See p. 15.

4 Figures in this table are taken from the Annual Estimates and include gross estimated expenditure on warlike stores, factory construction and plant, works, buildings and land, research, inspection and general stores such as furniture, camp equipment, etc. They do not include military expenditure on food, clothing, medical and educational services, payment of personnel, etc. Owing to differences in methods of calculating the estimates the figures for the Services are only roughly comparable. (Note: Table 1, p. 2, showed only direct expenditure on warlike stores.)

5 Figures for R.O.F.s relate only to expenditure on factory construction and plant. Other capital expenditure and the cost of stores supplied from trade or from R.O.F.s are included in the other three columns.

6 See p. 29.

7 H. of C. Deb., Vol. 286, Col. 2078, 8th March 1934.

8 1935 Air Estimates for Vote III—Equipment.

9 They were to cost £50 millions compared with £1.2  millions under the earlier programme, and this was calculated to be sufficient to equip the R.A.F. with total reserves to the extent of about 225 percent of first-line aircraft.

10 Appointed at the Cabinet meeting of 6th April 1938. Its members were the Prime Minister of the Chancellor of the Exchequer, the Minister for Coordination of Defence and the Secretary of State of Air.

11 These proposals envisaged a metropolitan air force of 2,373 first-line aircraft with reserves by 31st March 1940.

12 Revised in September 1938. See Appendix 3, Table F.

13 Monthly output 1938: April 158; May 213; June 163; July 210; August 202. See Appendix 4.

14 The appointment was announced in the House of Commons on 27th June 1938. See H. of C. Deb., Vol. 337, Col. 1532.

15 Monthly programmed figures under Scheme L as revised in September 1938. See Appendix 3, Table F.

16 See Appendix 4.

17 See Table 2, p. 12.

18 Unlike the 'two-power standard' of pre-1914 which implied the British Navy was equal to the combined naval forces of any other two powers, the 'two-power standard' now did not take into consideration the largest naval power (U.S.A.), but was confined to naval requirements necessary to protect British interests simultaneously against Japan in the Far East and Germany in Europe.

19 See p. 3.

20 By the time of the Defence Requirements Sub-Committee's third report in November 1935 the prospects of German rearmament were recognised and the committee recommended that a 'two-power standard' should be aimed at. It was, however, primarily concerned with the next three years, and as little progress could be made towards a new standard of naval strength during that period, the committee limited its recommendations to the existing approved standard of naval strength, i.e. the 'D.R.C. standard'.

21 See Table 4, p. 25.

22 As stated in 1936. In 1938 requirements for a 'two-power standard' in 1942 were revised as follows: 21 capital ships, 31 aircraft carriers, 90 cruisers, 21 destroyer flotillas, 73 submarines. For the estimated requirements in 1939 see p. 58.

23 The so-called 'Deficiency' Programme of November 1935. See Appendix 1, Table A.

24 The 'Accelerated' Programme of 1936. See Appendix 1, Table B.

25 The Admiralty could still claim to be accelerating the 'D.R.C.' programme, while in fact working up to the 'two-power standard'. After the 1937 programme, however, it would no longer be able to represent its intentions as mere modifications of the 'D.R.C' proposals, for to do so would mean to agree to stop all new construction in a year or two hence, i.e. immediately after, as a result of the acceleration, the ships built to the 'D.R.C.' programme were laid down.

26 Nominally this meant an increase of at least £200 millions over the limits as settled and defended by the Chancellor of the Exchequer throughout the earlier discussions. But a great deal of the increase was accounted for by the higher costs of labour and materials which had risen twenty percent above those of 1935, by the much enhanced requirements for anti-aircraft defence of ships and coastal installations, and by defence measures other than new construction. The new programme was to cost £60 millions in 1939 and in that year it was to contain two capital ships, four cruisers and at least fifty-six destroyers, minesweepers and fast escort vessels.

27 The naval programmes of new construction approved between 1936 and the outbreak of war are summarised in Appendix 1, Table B.

28 See pp. 4751.

29 In view of the strong emphasis put on the anti-aircraft defences and the special treatment meted out to the Air Defence of Great Britain (A.D.G.B.), the term 'Army' in this and subsequent chapters is meant to exclude the Army's contribution to the anti-aircraft defences in so far as it can be differentiated from the anti-aircraft elements of the field army.

30 Table 2, p. 12.

31 Allocations to the Army expressed as a percentage of the total estimated annual expenditure on rearmament (excluding R.O.F.s) were as follows:

1934 19 percent
1936 20 percent
1938 25.5 percent
1935 20 percent
1937 21 percent
1939 26 percent

32 See p. 30.

33 See Table 5.

34 The figures for 1936 are not fully comparable with those of 1937–38 for the latter include the cost of the proposed expenditure on improved accommodation and a few other smaller items of the same kind which were not included in the earlier estimates. These items amounted to about £5 millions in March 1938. In any case these figures being in the nature of forward estimates do not measure exactly the actual expenditure of the War Office. This is more accurately reflected in the previous table of annual expenditure. (See Table 2, p. 12).

35 Only the March 1937 and March 1938 programmes were approved by the Cabinet.

36 Includes expenditure on industrial mobilisation, improved accommodation, etc.

37 Air Defence of Great Britain.

38 See p. 29.

39 An air defence zone had formed part of the defence of Great Britain since 1923, but in the absence of the necessary equipment its creation was little more than an item in the strategic plan.

40 The intermediate stages were as follows. By June 1936 the C.I.D. approved in principle a more modern and costlier version of the Brook-Popham plan which was estimated to cost £30 millions and met with the usual financial obstacles. In August 1936, however, the Cabinet finally approved the so-called 'accelerated' version costing £29 millions, and further small orders for guns were authorised during 1937 to facilitates provision of capacity. The 'Ideal Scheme' matured in June 1937 and entailed approximately doubling the scale approved under the Brook-Popham programme; 1,264 guns instead of 608, 4,704 searchlights instead of 2,547, 1,200 instead of 600 light anti-aircraft guns, and its cost was estimated at about £46 millions. It was, however, not until 7th November 1938 that the full requirements of the 'Ideal Scheme' were accepted by the Cabinet, and its full effects were not to be felt until 1939.

41 See p. 36.

42 See pp. 2930.

43 See pp. 4647.

44 In addition the Supply Board set up two sub-committees, one in 1929, dealing with gauges (see p. 37 below), and another in 1932, dealing with machine tools which had caused special difficult during the First World War. There was also a separate Contracts Coordinating Committee.

45 See also p. 392.

46 See p. 21.

47 See p. 33.

48 See p. 42.

49 See p. 35.

50 Although the History of Munitions, produced by the Ministry of the Ministry of Munitions after the 1914–18 war was not designed as a blue-print for future mobilisation and, as a whole, was unsuited for use as a manual, certain parts of it were carefully studied in the inter-war years and introduced the official plans.

51 See p. 42 for an account of the industrial survey which was undertaken, and the earmarking of firms.

52 This subject will be dealt with in more detail in the forthcoming volume in this series on the Control of Raw Materials by J. Hurstfield.

53 A special Anticipatory Purchases Sub-Committee of the P.S.O.C. was set up in 1931 to prepare a schedule of materials for anticipatory purchases to to make arrangements for purchase in time of emergency.

54 The materials concerned were aluminium, magnesium, high carbon, ferro-chrome, molybdenum, tungsten, vanadium, amber mica, antimony, pyrites and magnesite. As it was found difficult to obtain reserves of amber mica, it was recommended that research should be conducted into the use of alternative materials. For further discussion on stockpiling, see next chapter, p. 89.

55 See p. 15.

56 See p. 18.

57 See Chapter III, Section 3.

58 Fuller provisions for wastage were, however, made in post-Munich programmes, see p. 132.

59 See p. 37.

60 The 'process manuals' were at that time being compiled and published by the Directorate of Ordnance Factories.

61 The original List 392, dated 26th January 1934, showed the provisional allocation of firms to Supply Committees up to 30th December 1933. This list replaced the former 'Black List', i.e list of firms allocated to more than one Supply Committee which had been issued periodically since July 1930. See also p. 35.

62 See p. 258. In July 1943 the Ministry of Production decided to abandon the work of keeping the List up-to-date and proposed to preserve it as it stood on 1st January of that year for purposes of reference by any department. Any further records of firms in the engineering industries were to be kept on a regional, and not a national, basis.

63 See pp. 2627.

64 See p. 4.

65 See p. 24.

66 The first Oerlikon 20-mm guns to be made in Great Britain were not ready until March 1941.

67 See p. 48.

Transcribed and formatted for HTML by David Newton, HyperWar Foundation