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South African soldier-statesman Jan Christian Smuts. Smuts was the
author of two reports in the summer of 1917 that were critical of
the existing machinery of inter-service co-operation. He believed that
the Air Board, lacking its own professional staff, functioned as a forum
in which the representatives of the RFC and the RNAS could argue their
cases, and could neither originate nor execute a policy of its own.
Malcolm Cooper has argued that Smuts was unfairly critical of the Air
Board™s work and that the creation of the Air Ministry in November
1917 and the RAF on 1 April 1918 did not alter the existing distribution
of resources, whereby support of the army on the Western Front enjoyed
the highest priority.13
The work of the Air Ministry was not helped by a dispute between the
¬rst secretary of state, Lord Rothermere, and the ¬rst chief of air staff
(CAS), Sir Hugh Trenchard, leading to the latter™s resignation on 19
March 1918. As a press lord, Rothermere tended to treat his senior
professional adviser as he might a newspaper editor. It was only after he
was replaced by Lord Weir, a Scottish industrialist who had been con-
troller of aeronautical supplies, that the Air Ministry began to function
12
Ibid., vol. III, pp. 1135“40, 1149“53, 1169. For the myth of Lloyd George™s role in the
adoption of the convoy system, see pp. 85“6 below.
13
Malcolm Cooper, The Birth of Independent Air Power (London: Allen and Unwin, 1986),
pp. 102“7.
The First World War 55

like a normal department of state. The RAF certainly needed a safe pair
of ministerial hands as it had inherited the rivalries that had developed
between senior RFC of¬cers from early in the war in the absence of
strong central direction from London. Although Trenchard™s character
had inspired many of¬cers while he was in charge of the RFC in France,
his resignation as CAS may not have been altogether unfortunate. In
Cooper™s words, Trenchard was ˜all but incoherent both verbally and on
paper™, and ˜his in¬‚exible faith in the offensive™ led him to develop
strategy and tactics without regard to the resources available.14
Treasury control over the armed forces™ expenditure was an early
casualty of the war. The discipline of balanced budgets lapsed as war-
related expenditure was ¬nanced out of votes of credit. The Treasury
attempted at the outbreak of war to establish a standing emergency
committee, with representatives of the Admiralty, the War Of¬ce and
the Treasury, to expedite Treasury procedures. However, the War
Of¬ce declined to take part, preferring to have more or less a free hand
when placing orders. There was thus no effective way of ensuring that
departments did not force up prices by competing for the same
resources, or by offering contracts that led to unusually high pro¬ts.
Lloyd George himself, as chancellor, had no desire to limit war
expenditure, and the Ministry of Munitions was among the most pro-
¬‚igate of departments while he was in charge of it. Subsequently the
Select Committee on National Expenditure reported in October and
December 1917 that proper ¬nancial control, far from delaying the
supply of munitions, would have accelerated it by preventing waste of
material and labour, but steps to strengthen Treasury control were taken
only slowly and had no in¬‚uence on the conduct of the war.15 The
Treasury™s position was weakened further by the fact that Lloyd Geor-
ge™s successor as chancellor, McKenna, was a political lightweight and
unable to prevail over Kitchener and Lloyd George in Cabinet debates
on strategy in 1915.

Naval weapons and tactics
Wartime experience quickly exposed the hazards facing surface ships.
The ¬rst action between the British and German navies was the sinking
by gun¬re of the minelayer Koenigin Luise on 5 August, followed by the

14
Malcolm Cooper, ˜A house divided: policy, rivalry and administration in Britain™s
military air command, 1914“1918™, Journal of Strategic Studies, 3 (1980), no. 2 178“
201, at 181 and 197.
15
Kathleen Burk, ˜The Treasury: from impotence to power™, in Burk (ed.), War and the
State, pp. 84“107; Peden, Treasury and British Public Policy, pp. 114“18.
56 Arms, economics and British strategy

loss the next day of one of the British ships involved, the cruiser
Amphion, when it struck one of the mines that the German vessel had
laid. Also signi¬cant was the sinking of three armoured cruisers, the
Aboukir, Hogue and Cressy, by a single German submarine in little more
than an hour on 22 September 1914. The Aboukir was thought to have
struck a mine and the Hogue and Cressy were torpedoed when they
stopped to pick up survivors. In all 1,459 men were lost. These incidents
brought out clearly the unpreparedness of the Royal Navy for mine and
submarine warfare. The Grand Fleet™s bases at Cromarty and Scapa
Flow lacked protection against submarines and for a time the Fleet had
to take refuge in more remote anchorages, including Lough Swilly,
where one dreadnought, the Audacious, was sunk by a German mine.
Minesweepers had to be improvised from requisitioned trawlers and
drifters and from 1915 large orders were placed for ¬‚eet sweeping
minesweepers (sloops), designed on merchant ship lines and capable of
being built in six months in yards without previous naval experience.
Submarines, especially when submerged, were slower than other
warships and even on the surface were too low in the water for their
commanders to see far. Consequently attempts by either side to use
submarines in ¬‚eet actions failed. However, mines and submarines
proved to be very effective for coastal defence at the Dardanelles. The
battle-cruiser In¬‚exible was damaged and the pre-dreadnoughts Irresis-
tible and Ocean were sunk by mines while bombarding the Turkish
defences on 18 March 1915. The pre-dreadnoughts Triumph and
Majestic were sunk by the U21 on 25 and 27 May respectively,
demonstrating that the anti-torpedo nets with which the ships were
¬tted were ineffective. Despite these new dangers, capital ships con-
tinued to be seen by the Admiralty as the ultimate source of command of
the sea. In February 1917 the War Cabinet had to instruct the
Admiralty to cease work on three out of four ˜Hood™-class battle-crui-
sers, to release shipbuilding capacity required to replace merchantmen
sunk by submarines.16 At that date, intelligence reports indicated that
the Germans had ceased work on all but one battle-cruiser, which was
close to completion, in order to concentrate on building submarines.
Pre-war plans for trade defence had assumed that the German threat
would come from cruisers, supplemented by armed liners. For this
reason the Royal Navy had retained many old cruisers that required
large crews. Cruisers had the advantage that they could remain at sea for
longer than destroyers, and the twenty-six light cruisers completed
during the war were useful additions to the ¬‚eet. However, large

16
War Cabinet conclusions, 8 Feb. 1917, CAB 23/1, TNA.
The First World War 57

numbers of destroyers were needed for anti-submarine work. By stan-
dardising designs no fewer than 270 were built in the years 1915“18,
and these were supplemented by sloops and armed trawlers. Detection
of submerged submarines was made possible by the development in
1915 of the hydrophone, which could pick up the sound of a U-boat™s
engines. The earliest hydrophones could only indicate the presence of a
U-boat somewhere in the vicinity but in 1917 new hydrophones could
locate the direction in which the U-boat could be found. Radio inter-
cepts gave longer-range warning of U-boat, and indeed all German
naval, activity. As will be described below (pp. 85“6), the decisive step
towards defeating the U-boat was the adoption of the convoy system,
but the range of technical innovation employed was impressive. Air-
ships, seaplanes and, latterly, land-based aircraft were used to escort
convoys and although it appears that only one U-boat was sunk by air
attack, the effect of air patrols was to force submarines to submerge,
making it dif¬cult for them to locate their targets.17 The arming of
merchant ships could also deter submarines from operating on the
surface, and in December 1916 the Cabinet decided that guns for this
purpose were to be the top priority in allocating industrial capacity,
leading the War Of¬ce to forgo the production of 746 new guns, as well
as transferring older guns from France.18
The Royal Navy made use of mines, submarines and aircraft to carry
the war to the enemy. Although mine warfare had been neglected before
1914 and early British mines were ineffective, large mine¬elds had been
laid by the end of the war. Britain had 80 submarines in service at the
end of 1914 compared with Germany™s 38 and, although Germany built
353 U-boats of all sizes between 1915 and 1918, the corresponding
British total was a still impressive 177, including eight ordered in the
United States. From the outset of the war British submarines kept a
close watch on the German coast, where they sank a cruiser and a
destroyer in the autumn of 1914. During operations at the Dardanelles
in 1915 two old Turkish battleships were sunk within the straits by
British submarines. The Dardanelles were also the scene of the ¬rst
successful air torpedo attack, on a Turkish transport ship, by a seaplane
from a converted cross-Channel ferry. The capital ships and cruisers of
the Grand Fleet carried over 120 seaplanes by the end of the war, and in
October 1918 the ¬‚eet was joined by the world™s ¬rst ¬‚ush-decked
aircraft carrier, HMS Argus. The Royal Navy had its de¬ciencies, as

17
John Terraine, Business in Great Waters: The U-Boat Wars 1916“1945 (London: Leo
Cooper, 1989), pp. 28“33, 74“7, 90, 125“7, 149.
18
War Cabinet conclusions, 20 Dec. 1916, CAB 23/1, TNA.
58 Arms, economics and British strategy

became evident when capital ships were lost as a result of internal
explosions at the Battle of Jutland in 1916, but the British could hardly
be described as technologically conservative.
One de¬ciency was lack of inter-service preparation for combined
operations. Sir Ian Hamilton, the general in charge at the Dardanelles,
was ignorant of the existence of the armoured landing craft that Fisher
had ordered for service in the Baltic until told of their existence by naval
of¬cers of the Mediterranean ¬‚eet.19 These specialised vessels were not
available to him until over three months after the ¬rst landings on the
Gallipoli peninsula. Most troops went ashore in open boats towed by
lighters, and consequently suffered heavy casualties from enemy ¬re.

Army weapons and tactics
The historiography of the First World War has long been dominated by
the heavy casualties suffered on the Western Front. Names like the
Somme and Passchendaele are still evocative of human suffering. The
suffering seemed to be all the more deplorable since it was widely
believed that different tactics could have reduced the scale of casualties.
Churchill and Lloyd George complained that the generals had been, at
best, unimaginative, Churchill emphasising the war-winning potential of
the tank, the development of which he had encouraged while he was at
the Admiralty and the Ministry of Munitions.20 Military critics, such as
Major-General J. F. C. Fuller, who had served with the Tank Corps, and
Captain Basil Liddell Hart, who (having originally written about
infantry tactics) adopted many of Fuller™s ideas, both claimed that dif-
ferent tactical doctrines had been possible. Their ideas were popularised
by writers such as Leon Wolff, whose widely read In Flanders Fields
(1959) had an introduction by Fuller and cited four books written by
Liddell Hart.21 To Fuller, the problem was how to restore mobility in
the face of what he called ˜the defensive trinity of bullet, spade and wire™,
and he saw answers in the use of gas and tanks.22 The view that the
generals had failed to understand the nature of the warfare they were

19
Sir Ian Hamilton, Gallipoli Diary, 2 vols. (London: Edward Arnold, 1920), vol. I,
pp. 44“5, 47, 148.
20
Winston S. Churchill, The World Crisis: 1916“1918 (London: Thornton Butterworth,
1927), part I, pp. 39“62; part II, pp. 302“9, 343“8, 522“4; Lloyd George, War Memoirs,
vol. III, pp. 1469“70; vol. VI, pp. 3416“22.
21
Leon Wolff, In Flanders Fields: The 1917 Campaign (London: Longman, 1959). The
books by Liddell Hart were Reputations Ten Years After (1928); The Real War (1930);
The War in Outline (1936); and Through the Fog of War (1938).
22
J. F. C. Fuller, The Conduct of War 1789“1961 (London: Eyre and Spottiswoode, 1961),
pp. 160, 172“7.
The First World War 59

called upon to conduct was challenged in 1963 by John Terraine, who
argued that Haig had recognised that, with approximately equal
opposing forces, and with no ¬‚anks to turn, there could be no easy
victory on the Western Front.23 While some military historians continue
to regard Haig as tactically conservative, others argue that he was not as
blind to technological innovation as his critics have suggested, even if he
was reluctant to accept that the circumstances of the Western Front
drastically limited the role of cavalry.24 It would be easy to overlook the
fact that the BEF and its commander were moving along a learning
curve “ that is, increasing ef¬ciency by experience “ when engaged in a
novel form of warfare.
The British army had ample experience in the Boer War of how
accurate ri¬‚e ¬re could in¬‚ict heavy casualties and bring a frontal attack
to a halt, and the Russo-Japanese War had con¬rmed that modern
artillery could be expected to be very effective against troops in the
open.25 Even before war ceased to be mobile in 1914, troops would dig
impromptu ¬re pits. What was not anticipated was that the unprece-
dented size of the armies on the Western Front would make it possible
to build and defend continuous series of trenches from the Channel to
the Swiss border, or that ri¬‚es would be supplemented by machine guns
in the ratio of 1 to every 20 infantry by 1918 compared with 1 to every
500 in 1914.
Successful attack in these conditions depended upon suppressing the
defenders™ ¬re, from artillery as well as machine guns, and required the
massing of large numbers of guns: 18-pounders to cut wire entangle-
ments, and howitzers and heavy guns to hit trenches and for counter-
battery work. Mortars, which were well adapted to trench warfare, were

23
John Terraine, Douglas Haig: The Educated Soldier (London: Hutchinson, 1963),
pp. 481“2.
24
For Haig™s military conservatism, see Tim Travers, The Killing Ground: The British
Army, the Western Front and the Emergence of Modern Warfare, 1900“1918 (London:
Allen and Unwin, 1987), chs. 4“7, and How the War Was Won: Command and
Technology in the British Army on the Western Front, 1917“1918 (London: Routledge,
1992), esp. pp. 141, 179; Denis Winter, Haig™s Command: A Reassessment (London:
Viking, 1991), esp. pp. 162“6. For Haig™s willingness to exploit new weapons and
methods, see Michael Crawshaw, ˜The impact of technology on the BEF and its
commander™, in Brian Bond and Nigel Cave (eds.), Haig: A Reappraisal 70 Years On
(London: Leo Cooper, 1999), pp. 155“75, and Gary Shef¬eld, Forgotten Victory. The
First World War: Myths and Realities (London: Headline Book Publishing, 2001),
pp. 145“6, 261. For Haig™s belief in the value of cavalry in modern warfare, see The
Private Papers of Douglas Haig 1914“1919, ed. Robert Blake (London: Eyre and
Spottiswoode, 1952), pp. 147, 212, 226, and Sir Douglas Haig™s Despatches, ed.
J. H. Boraston (London: J. M. Dent and Sons, 1920), pp. 327“8.
25
Keith Neilson, ˜˜˜That dangerous and dif¬cult enterprise™™: British military thinking and
the Russo-Japanese War™, War and Society, 9 (1991), 17“37.
60 Arms, economics and British strategy

reintroduced in their modern form. Aircraft made a major contribution
by identifying targets that were out of sight of the gunners. However, the
attacker™s guns had to be co-ordinated with the advancing infantry, no
easy matter given the rudimentary communications available. The radio
sets available were too bulky for troops to carry into battle, and telephone
lines were vulnerable to being cut by the enemy™s artillery. Most com-
monly messages were conveyed by runners, whose information might be
overtaken by events before it reached the artillery. Indeed, lack of com-
munication could lead to infantry being left to ¬ght their own battle. For
example, at the Battle of Loos on 25 September 1915 two brigades of the
15th (Scottish) Division broke through the German front line and took
Hill 70, two-and-a-half miles beyond the British lines. Some men tried
unsuccessfully to attack the German second line, with its unbroken wire;
others tried to hold the hill against counter-attacks; all came under ¬re on
two sides from ¬eld guns and machine guns, but had no means of calling
for artillery support. The eight battalions involved sustained 4,312
casualties, over 50 per cent of their strength, in one day.26
The British artillery began the war equipped largely with shrapnel,
which exploded in the air, scattering metal fragments, and was best
suited for open warfare, rather than the high-explosive shells that could
destroy ¬xed defences. The supply of shells on the scale required by
1915 presented an unfamiliar problem. Although increased output was
achieved by mass production using unskilled workers, large numbers of
shells ¬red in 1915“16 failed to explode. However, by 1917“18 the
quality of British munitions was high (French munitions production
followed a similar learning curve).27 A further problem was the time and
effort required to take shells to the guns. At ¬rst this was done by horse-
drawn wagons or road-bound mechanical transport from pre-existing
railheads. The construction of light railways made it possible to bring a
much greater volume of shells close to the front in all weathers, and the
reorganisation of all aspects of British transportation in France by a
businessman, Eric Geddes, after September 1916 was a pre-condition of
the successful use of artillery in 1917“18.28 Even so, shells employed in
large quantities broke up the ground, making it dif¬cult for the infantry
to advance through mud. This effect could be avoided if the
bombardment was brief and accurate, to give cover to the infantry, and

26
Sir James Edmonds, Military Operations France and Belgium 1915, 2 vols. (London:
Macmillan, 1928), vol. II, pp. 191“207.
27
Trevor Wilson, The Myriad Faces of War: Great Britain and the Great War, 1914“1918
(Cambridge: Polity Press, 1986), p. 218.
28
Keith Grieves, Sir Eric Geddes: Business and Government in War and Peace (Manchester
University Press, 1989), pp. 29“39.
The First World War 61

also if it could be combined with other weapons to neutralise the
enemy™s defences.
One such weapon was gas, employed on the Western Front for the ¬rst
time by the Germans at Ypres on 22 April 1915. Chlorine was released
from cylinders and blown by the wind towards the Allied trenches. The
effect was devastating on unprotected troops: 6,000 were killed, and men
on the edge of the gas cloud ¬‚ed, leaving a front of four miles almost
deserted. However, primitive gas-masks were quickly improvised, and
the Germans had the problem that the prevailing wind was from the west.
The British ¬rst used gas at Loos on 25 September 1915, but with mixed
success, according to the way the wind blew (in some cases back into the
faces of the attackers). The introduction of the gas shell made it possible
to cover selected targets with gas, but the science of making gas-masks
kept pace with gases designed to attack the victim™s breathing system.
Only mustard gas, ¬rst used by the Germans on 11 July 1917, again at
Ypres, proved to be impossible to counter satisfactorily as it combined an
attack on the lungs, throat and eyes, with blistering of the skin. The scale
of casualties, however, was limited by the fact that the effect of mustard
gas was restricted to the immediate vicinity of the point where a shell
landed. The Germans enjoyed the advantage of having more scienti¬c
personnel for research and development in chemical warfare and it took
the British until September 1918 to make a large supply of mustard gas
shells. These, however, were used to great effect that month in the
successful assault on the Hindenburg Line.29
Notwithstanding the emphasis placed on tanks by Churchill, Fuller
and Liddell Hart, this notable British invention had its limitations.
British tanks ¬rst went into action on 15 September 1916, only nine
months after the trials of the ¬rst practical machine, and before the
inevitable teething problems had been eliminated. French tanks were
developed independently but did not see action for another seven
months, and the ¬rst two types of chars de combat were inferior to the
British Mark I in their ability to cross obstacles. The ¬rst German
tanks did not appear in action until 1918 and again cross-country
performance was poor. The British Mark I was prone to mechanical
breakdowns, especially on broken ground, as on the Somme battle¬eld,

29
A. M. Low, Modern Armaments (London: Scienti¬c Book Club, 1939), pp. 108“16;
¨
Rolf-Dieter Muller, ˜Total war as a result of new weapons? The use of chemical agents
¨
in World War I™, in Roger Chickering and Stig Forster (eds.), Great War, Total War:
Combat and Mobilization on the Western Front, 1914“1918 (Cambridge University Press,
2000), pp. 95“111; Albert Palazzo, Seeking Victory on the Western Front: The British
Army and Chemical Warfare in World War I (Lincoln: University of Nebraska Press,
2000), pp. 123, 185“7.
62 Arms, economics and British strategy

and of the forty-eight available on 15 September 1916 only twenty-one
got within striking distance of the enemy. Conditions for the crew were
close to intolerable in the absence of a satisfactory cooling and venti-
lation system. Nevertheless, Haig saw enough potential in the tank to
place an order a month later for 1,000. The improved Mark IV enjoyed
considerable success when employed in large numbers and on suitable
terrain at Cambrai in November 1917, but that battle also demonstrated
that tanks were vulnerable to artillery ¬re and required support from
infantry and artillery if ground gained were to be held against counter-
attacks. The Mark V of 1918 still had limited speed “ 4 miles per
hour (m.p.h.) maximum “ and range “ about half that of a Second
World War tank “ re¬‚ecting its role as an infantry support weapon rather
than a machine designed to penetrate deep into enemy territory. The
War Of¬ce had drawn up a speci¬cation in November 1916 for a faster,
longer-range machine capable of co-operating with cavalry, and the
result was the Medium Mark A of 1918 with a speed of 8.3 m.p.h. and a
range of about 80 per cent of a Second World War tank. Even so, there
was little scope for proto-blitzkrieg tactics. Tanks placed an enormous
strain on the BEF™s logistics. They required vast quantities of fuel,
lubricants and spare parts, and could only operate close to standard-
gauge railways, a major drawback once trench warfare gave way to more
mobile operations during the German retreat in the summer and
autumn of 1918.30 In the light of experience, a report from the army™s
General Headquarters in France stressed the need for co-operation
between tanks and other arms, but added prophetically that ˜as the
speed of tanks is developed, and their machinery perfected, it is possible
ˆ
that their tactical employment may develop and that their role may
31
become more independent™.
Recent research has shown that the key tactical and technological
developments in 1917“18 related to the artillery. British artillery tech-
niques in 1914 were designed to give mobile close support to the
infantry and were ineffective against entrenched troops. In 1915“17 the
artillery ¬repower was employed in increasing amounts, but with limited
success, to destroy the enemy™s ¬xed defences. However, in 1917“18

30
D. J. Childs, A Peripheral Weapon? The Production and Employment of British Tanks in the
First World War (Westport, Conn.: Greenwood, 1999), esp. pp. 115“17; J. P. Harris,
Men, Ideas and Tanks: British Military Thought and Armoured Forces, 1903“1939
(Manchester University Press, 1995). For Haig being keen from 1916 to use tanks, but
also realising the need to work out tactics for them, see Private Papers of Douglas Haig,
pp. 159, 162, 165, 167, 269.
31
Tanks and Their Employment in Co-operation with Other Arms, pamphlet issued by
General Staff, August 1918, War Of¬ce records, series 158, ¬le 832 (WO 158/832),
TNA.
The First World War 63

improved techniques made it possible for artillery to be used to neu-
tralise the enemy, both by effective counter-battery ¬re and through the
creeping barrage which kept defenders™ heads down as the British
infantry advanced. Accuracy was improved by reliable mapping and grid
references based on both aerial and ground surveys; aerial and ground
observation during the battle, including the location of enemy positions
through ¬‚ash-spotting and the new technique of sound-ranging; the
provision of meteorological data on barometric pressure, temperature
and wind, all of which affected the ¬‚ight of shells; and measurement of
individual guns™ performance. The utility of this ¬‚ow of information
depended upon improved command and control systems. The crucial
step was the creation in 1917 of a corps-level counter-battery system
with staff dedicated to analysis and tactical application of intelligence.
The failure of the Germans to do likewise placed their artillery at such a
disadvantage that by the end of the war the British were able to suppress
the German batteries™ ¬re when attacking ¬xed positions. The lack of
mobile radio limited the ability of the British artillery to react to events
on the ground. Even so, British tanks could be protected from the
enemy™s guns during the assault on the enemy™s trenches, and the fact
that tanks could break through barbed wire and other obstacles released
the artillery for counter-battery work.32 The British army enjoyed suc-
cess in the summer and autumn of 1918 not because of any one particular
weapon, but because it was learning to combine the different arms “
artillery, infantry, tanks and aircraft “ into a single system.

Air weapons and tactics33
Britain was a major pioneer of air warfare. Radio equipment was ¬rst
¬tted to aircraft in September 1914, which facilitated co-operation with

32
Jonathan Bailey, ˜British artillery in the Great War™, in Paddy Grif¬ths (ed.), British
Fighting Methods in the Great War (London: Frank Cass, 1996), pp. 23“49; Peter
Chasseaud, ˜Field survey in the salient: cartography and artillery survey in the Flanders
operations in 1917™, in Peter Liddle (ed.), Passchendaele in Perspective: The Third Battle of
Ypres (London: Leo Cooper, 1997), pp. 117“40; Crawshaw, ˜Impact of technology™,
pp. 162“4; Paddy Grif¬ths, Battle Tactics of the Western Front: The British Army™s Art of
Attack, 1916“18 (New Haven: Yale University Press, 1994), pp. 142, 153“8; Roy
MacLeod, ˜Sight and sound on the Western Front: surveyors, scientists, and the
˜˜battle¬eld laboratory™™, 1915“1918™, War and Society, 18 (2000), 23“46; Albert P.
Palazzo, ˜The British army™s counter-battery staff of¬ce and control of the enemy in
World War I™, Journal of Military History, 63 (1999), 55“74.
33
What follows is based mainly on Sir Walter Raleigh and H. A. Jones, The War in the Air,
6 vols. and vol. of appendices (Oxford: Clarendon Press, 1922“37) and Cooper, Birth of
Independent Air Power, which is more critical of the air forces™ achievements than the
of¬cial history.
64 Arms, economics and British strategy

artillery, and the development of aerial photography made possible the
accurate mapping of the enemy™s positions. As early as February 1915
Haig praised ˜the excellent photos™ of the enemy positions obtained by
aerial reconnaissance.34 It was a logical step to arm some aircraft with
machine guns to attack enemy reconnaissance aircraft. The problem of
¬ring a machine gun through the propeller was ¬rst solved satisfactorily
by the Germans, who used a device that interrupted the gun whenever a
bullet would strike one of the blades. During the winter of 1915“16
Fokker aircraft thus equipped in¬‚icted heavy losses on the RFC. The
¬rst British aircraft designed as ¬ghters had a pusher engine, giving a
clear ¬eld of ¬re to the gunner at the front in the case of two-seaters, or
to a ¬xed machine gun in the case of the single-seat D.H.2. These
machines were less aerodynamically ef¬cient than those with engines at
the front, but proved to be good enough when produced in larger
numbers than the Fokkers to achieve air superiority in time for the
Somme offensive in the summer of 1916. Aircraft of the period were so
simple that new types could be developed within a few months and by
the autumn of 1916 new German ¬ghters, particularly the Albatros D.1,
had an advantage over Allied machines. From late 1916 the British
made increasing use of interrupter gear for machine guns and in the
summer of 1917 new British designs, including the famous Sopwith
Camel, restored the RFC™s fortunes. With a maximum speed of about
120 m.p.h. the Camel was 30 per cent faster than the D.H.2.
Tactical air power was ¬rst used, in a small way, in support of the
BEF as early as the Battle of Neuve Chapelle in March 1915. The RFC
was told to impede the enemy™s communications and, although the
bombs then available were too small to do much damage to railway
bridges and junctions, part of a train was destroyed. The then Major
Hugh Trenchard, who was in command of the RFC 1st Wing in France,
also claimed that three of his aircraft had dropped bombs on the village
of Fournes and set ¬re to a house, which was reported to be the head-
quarters of a German division.35 By the time of the Somme in 1916,
tactical air power was employed systematically against enemy road and
rail communications. Like cavalry, aircraft were not effective against
forti¬ed positions, but could be used in rearguard actions, as during the
retreat of the British Fifth Army in the spring of 1918, and were espe-
cially valuable in pursuit of a retreating enemy, as on the Salonika front
in September 1918.36

34
Sir Douglas Haig diary, 25 Feb. 1915, National Library of Scotland (NLS).
35
Haig diary, 10 Mar. 1915.
36
J. C. Slessor, Air Power and Armies (Oxford University Press, 1936), pp. 90“105.
The First World War 65

The ¬rst recorded bombing raid on a city occurred on 13 August
1914, when a German machine dropped two four-pound bombs on a
Paris suburb. Aircraft in 1914 had engines of only 70“100 horsepower
(h.p.) but as engines of 250 h.p. or more were developed it became
possible for aircraft to carry bombs each weighing 112 pounds (up to a
total of 1,792 pounds in the case of the twin-engined Handley Page
0/400 of 1917). Strategic bombing can be traced, in Britain™s case, to a
raid by three small RNAS aircraft on Zeppelin sheds at Friedrichshaven
in November 1914. However, it was not until the spring of 1917 that the
RNAS received the Handley Page 0/400, and the RFC did not order
these machines until the autumn of that year. Until that date British air
raids on Germany were on a very small scale.
Meanwhile, Britain experienced air attacks by Zeppelins, beginning
with a raid on East Anglia on 19 January 1915. By the standards of later
wars, little damage was done, although the smallest Zeppelin could carry
3,000 pounds of bombs. Nevertheless, public opinion demanded
countermeasures, and anti-aircraft guns, searchlights and aircraft were
deployed. The Zeppelins relied on highly in¬‚ammable hydrogen gas to
keep them aloft and were soon restricted to operating at night at alti-
tudes from which accurate bombing was impossible. A number were
brought down by defending aircraft from the autumn of 1916, leading
the Germans to adopt heavier-than-air machines instead. The twin-
engined Gotha carried only a 900-pound bomb load, but with a max-
imum speed of 87.5 m.p.h. was harder to locate or destroy than a
Zeppelin. From May 1917, raids by day as well as by night by Gothas,
supplemented by some four-engined Staakens with 2,200-pound bomb
loads, forced the British to create an elaborate system of air defence for
the London area, including sound-detectors, height-¬nders and barrage
balloons, as well as more powerful searchlights and anti-aircraft guns,
and more ¬ghter aircraft. The keys to success were effective intelligence
and command, control and communication systems. Signals intelligence
provided forewarning of when enemy raiders were taking off and
sometimes of their direction, if they used radio in ¬‚ight. Sound-detectors
on the coast gave further early warning and observers reported on the
progress of raiders over land. Major-General Edward Ashmore, the
commander of the London Defence Area in 1918, was able to plot enemy
aircraft on a map at his headquarters. The main differences from the
system used in 1940 were the absence of radar with which to detect the
direction of enemy aircraft before they came within the limited range of
coastal sound-detectors, and the lack of lightweight radios to enable
¬ghter aircraft to receive directions from ground control. As a result
there was heavy reliance on patrols and on average only 3 per cent of
66 Arms, economics and British strategy

¬ghters that took off intercepted an enemy. Even so, the defences took
their toll and the Germans abandoned daylight raids. Finally, on the night
of 19 May 1918, six of twenty-eight bombers were brought down, and
four more crashed on landing owing to fog. Raids ceased thereafter
because the German high command decided that the bombers could be
put to better use on the Western Front.37
Britain™s main attempt at strategic bombing followed the creation in
May 1918 of the Independent Air Force. Although this strike force was
based in France, most targets were in German Lorraine or the Rhine-
land, as even the best bombers available lacked the range to reach the
Ruhr. Moreover, whereas German bombers attacking England had a
reasonable chance of escaping detection or interception until they
crossed the coast, British bombers had to cross the enemy front line, and
then occupied territory, where their movements could be reported by
telephone. Heavy losses were suffered from German ¬ghters during
daylight raids, and heavy bombers like the Handley Page 0/400 tended
to be used only at night, when accurate bombing was dif¬cult. Fast,
single-engined bombers could be operated by day, but the D.H.4™s
bomb load was only about one-third of the Handley Page 0/400, and the
D.H.9™s about a half. Nevertheless, the commander of the Independent
Air Force, Trenchard, became convinced of the merits of strategic
bombing. Early in November three new, four-engined Handley Page
V/1500 machines were being prepared for a raid on Berlin, with reduced
bomb loads to enable them to carry more fuel, but hostilities ceased
before they could be used. The impact of both British and German air
raids on industrial production was negligible, and civilian casualties
were mercifully low compared with the Second World War: 746 deaths
in Germany, and 1,414 in Britain. In the opinion of the of¬cial historian,
H. A. Jones, the main effect of strategic bombing was that it forced the
enemy to use resources for air defence that might otherwise have been
deployed elsewhere.38 Aerial reconnaissance and tactical operations in
support of the army and air escorts for convoys were more signi¬cant for
the defeat of Germany. Notwithstanding the creation of the RAF, air-
craft were not yet able to offer an independent strategy as an alternative
to land and naval warfare.

37
John Ferris, ˜ ˜˜Airbandit™™: C3I and strategic air defence during the ¬rst Battle of
Britain, 1915“18™, in Michael Dockrill and David French (eds.), Strategy and
Intelligence: British Policy during the First World War (London: Hambledon Press,
1996), pp. 23“66; Barry D. Powers, Strategy Without Slide-Rule: British Air Strategy
1914“1939 (London: Croom Helm, 1976), pp. 14“74.
38
Cooper, Birth of Independent Air Power, pp. 134“6, 138; Raleigh and Jones, War in the
Air, vol. V, p. 153; vol. VI, p. 152.
The First World War 67

War economy and ¬nance
With the exception of major warships, the armaments available in 1914“
18 were suitable for mass production, making war a gigantic industrial
undertaking. Britain had the largest shipbuilding industry in the world,
but even so it was dif¬cult to meet the requirements of both the Royal
Navy and the merchant navy when the latter was suffering heavy losses
from submarines. British steel production in 1914 was only about half of
Germany™s, and domestic output had to be supplemented by imports
from the United States and Sweden. Munitions production involved
equipping new factories with machine tools, and once more the shortfall
in British output had to be made good with imports, mainly from
American sources.39 The munitions requirements of the army, which
increased in size from 734,000 men in August 1914 to a peak of
3,858,000 in March 1918 (or 5,560,000 if troops from the Empire are
included),40 were far beyond what the pre-war armaments industry
could supply. New manufacturing capacity had to be created not only
for guns and shells, but also for chemicals and optical glass, two sectors
of industry where Britain had come to depend on imports from Ger-
many before 1914. The Ministry of Munitions provided ¬nancial and
technical assistance, and in 1916 the Department of Scienti¬c and
Industrial Research was created to promote research not only directly in
universities and elsewhere but also indirectly by encouraging industries
to set up research associations.41 Barnett is correct to point out that the
war revealed the extent to which Britain had fallen behind other
industrial countries in a range of advanced technologies, including air-
craft engines, electrical goods and scienti¬c instruments.42 On the other
hand, it was normal in the international economy for countries to spe-
cialise in the production of some products and to rely upon imports
for others. For example, in the cases of optical glass and scienti¬c
instruments, France had also become dependent upon imports from
Germany for a range of specialist items, although France was a net
exporter of optical glass and had pioneered the manufacture of scienti¬c


39
Ministry of Munitions, History of the Ministry of Munitions, 12 vols. (London: HMSO,
1921“2), vol. II, part 1, p. 58; vol. VII, part 2, pp. 1“2, 9, 19“20, 71, 78“9; vol. VIII,
part 3, pp. 38“9, 50“1; vol. XII, part 1, p. 110.
40
War Of¬ce, Statistics of the Military Effort of the British Empire during the Great War 1914“
20 (London: HMSO, 1922), pp. 30“7.
41
Roy and Kay MacLeod, ˜War and economic development: government and the optical
industry in Britain, 1914“18™, in Winter (ed.), War and Economic Development, pp. 165“
203.
42
Barnett, Collapse of British Power, pp. 83“9.
68 Arms, economics and British strategy

instruments.43 Nor was British industry found wanting in every respect.
Barnett draws attention to delays in tank production caused by poor
quality of castings of track-links and a lack of engines, but once these
dif¬culties were overcome heavy engineering ¬rms were able to respond
well to orders for tanks, the skills required being similar to those for
producing railway locomotives. Whereas British tank production in
1916“18 totalled 2,619, design and industrial delays limited German
output to 20, all in 1918.44
The British aircraft industry in 1914 consisted of small ¬rms with no
experience of mass production, and had to expand to sustain an increase
in ¬rst-line aircraft from 113 aeroplanes and 6 airships in August 1914
to 3,300 aeroplanes and 103 airships by November 1918, with an
attrition rate on the Western Front that averaged 670 aeroplanes per
month in 1918 owing to enemy action or accidents. Unplanned growth
and competing orders by the War Of¬ce and Admiralty led to a situation
in January 1917 in which the RFC and the RNAS between them used
seventy-six different airframe designs and ¬fty-seven different types of
engine. After the Ministry of Munitions took over procurement in
December 1916 a policy of standardisation reduced the number of types
in production by September 1917 to fourteen airframes and thirteen
aero-engines, with a consequent increase in economies of scale and in
output. Although problems in developing more powerful aero-engines
and in introducing new types of aircraft into service led to production
falling below targets, output of aircraft doubled from 14,832 in 1917 to
30,782 in 1918.45 The British aircraft industry was not alone in
encountering problems in developing more powerful aero-engines.
Similar dif¬culties were experienced in Germany, and whereas the latest
German ¬ghters in 1918 used 180 h.p. engines, British designers were
able to exploit the 230 h.p. Bentley Rotary 2. Likewise, whereas the
Gotha bombers had 260 h.p. engines, Handley Page bombers had the
360 h.p. Rolls-Royce Eagle VIII. Over the war as a whole, as table 2.1
shows, British output of airframes exceeded German output. The
Germans were unable to take full advantage of the superiority of their
Fokker ¬ghter in 1915 because they failed to manufacture it in large

43
Mari E. W. Williams, The Precision Makers: A History of the Instruments Industry in Britain
and France, 1870“1939 (London: Routledge, 1994), pp. 72“8.
44
Barnett, Collapse of British Power, pp. 84, 86; Childs, Peripheral Weapon? pp. 34“5;
Ministry of Munitions, History of the Ministry of Munitions, vol. XII, part 3, pp. 49“50,
58, 62“9, 93; B. T. White, German Tanks and Armoured Vehicles 1914“1945 (London:
Ian Allan, 1966), p. 22.
45
Cooper, Birth of Independent Air Power, pp. 87, 90“3, 142. For the airframe and aero-
engine industry, see Peter Fearon, ˜The formative years of the British aircraft industry,
1913“1924™, Business History Review, 43 (1969), 476“95.
The First World War 69

Table 2.1. Aircraft production, 1914“18

Great Britain France Germany

Airframes 55,093 67,982 47,637
Aero-engines 41,034 85,317 40,449

Source: Raleigh and Jones, The War in the Air, vol. of appendices, p. 154.


numbers, monthly output never exceeding thirty-six. In 1917“18 the
German industry likewise lacked the resources to produce Gothas in
quantity.46 As table 2.1 shows, British output of aero-engines lagged
behind that of France, but this shortcoming could be made up by
imports: 16,987 of the engines required for British airframes (or 29 per
cent of the total procured) were acquired in this way.
The crucial decisions regarding the scale of Britain™s war effort came
in two stages. First, Kitchener was allowed in August 1914 to recruit a
mass army of volunteers, without a clear idea of how big it would
become or any economic analysis of what would be required to maintain
a force of a given size over the period of three years that Kitchener
expected the war to last. The government™s economic policy in 1914“
15, as articulated by the President of the Board of Trade, Walter
Runciman, was that war should interfere with trade and industry as little
as possible, so that Britain could support its allies with loans or subsidies
and by supplying munitions. It was only after August 1915, by which
time Kitchener had decided to raise the army™s establishment to seventy
divisions “ a force that could be sustained only by conscription “ that
ministerial committees discussed what kind of war Britain should wage.
McKenna, the chancellor of the exchequer, and Runciman, argued that,
if more men were taken from industry, Britain would be unable to
produce either munitions for her allies or the exports needed to pay for
essential imports. McKenna believed that Britain could wage war for ten
years, if industry were left alone, but that conscription would lead to
national bankruptcy. On the other hand, Lloyd George, now minister of
munitions, believed that an enlarged army was necessary to prevent
defeat, and hoped that victory could be won before the end of 1916,
before bankruptcy intervened.47


46
For the German aircraft industry™s problems, see J. H. Morrow, German Air Power in
World War I (Lincoln: University of Nebraska Press, 1982).
47
French, British Economic and Strategic Planning, pp. 51, 64, 110“13, 126“32; David
French, British Strategy and War Aims 1914“1916 (London: Allen and Unwin, 1986),
pp. 116“22, 129“31; Gilbert, David Lloyd George, 1912“1916, pp. 226“30.
70 Arms, economics and British strategy

On this occasion, an economist was involved: John Maynard Keynes,
who had been recruited from Cambridge to serve as a Treasury of¬cial,
provided a brief on 23 August 1915 for the Chancellor, in which he
argued that, with the British economy at full employment, any diversion
of manpower to the army would be an alternative, and not additional, to
subsidies. He reckoned that the current level of subsidies to France
represented the output of 500,000 men, and those to Italy the output of
1 million men.48 Keynes™ calculations were not ¬‚awless, as they made no
allowance for the possibilities of increasing productivity as output rose
and as restrictive practices were abandoned, or of releasing men from
industry by employing women. Nevertheless in broad terms he was
correct, in that Britain later became dependent ¬nancially upon the
United States. His arguments seem to have had little impact on min-
isters™ deliberations. A Committee on War Policy, chaired by Crewe,
took the view in September 1915 that it was unlikely that the British
government™s credit, and therefore its ability to borrow in America,
would collapse so completely as to force the country to withdraw from
the war. In February 1916, Asquith, Austen Chamberlain (the Unionist
secretary of state for India) and McKenna, forming the Cabinet Com-
mittee on the Co-ordination of Military and Financial Effort, concluded
that it would be possible to place an army of sixty-two divisions in the
¬eld, with three months™ reserves, plus ¬ve divisions at home, without
reserves, but only at the cost of some disruption of export trades and by
adopting ¬nancial expedients that could only be sustained for a short
period. In agreeing to this scale of military effort, ministers were gam-
bling on early victory, and were also moving inexorably towards con-
scription, as only thereby could the ˜wastage™ (casualties) in such a large
force be replaced. The ¬rst Compulsory Service Act came into force on
2 March 1916.49
The most pressing problem early in the war was the supply of shells.
The British, like the French and Germans, had not anticipated the rate
of consumption reached in the ¬rst two months of the war and in
subsequent battles. Historians long took Lloyd George at his own esti-
mation as the man who solved the problem by bringing businessmen

48
J. M. Keynes, ˜The alternatives™, 23 Aug. 1915, reprinted in Collected Writings of John
Maynard Keynes, 30 vols., ed. Elizabeth Johnson and Donald Moggridge (London:
Macmillan, and Cambridge University Press, 1971“82), vol. XVI, pp. 110“15.
49
˜War policy: report™, 6 Sep. 1915, CAB 27/2, and ˜Report of Cabinet Committee on the
Co-ordination of Military and Financial Effort™, 4 Feb. 1916, CAB 27/4, TNA. For
McKenna™s failure to persuade his Cabinet colleagues to relate strategy to what the
national ¬nances would sustain in a long war, see Martin Farr, ˜A compelling case for
voluntarism: Britain™s alternative strategy, 1915“1916™, War in History, 9 (2002),
279“306.
The First World War 71

with their entrepreneurial skills into a new Ministry of Munitions, which
he headed. More modern research has shown that the great increase in
output in 1915 and 1916 was largely the result of initiatives taken earlier
by Kitchener. The War Of¬ce placed contracts in 1914“15 that were
greater than the established arms ¬rms could ful¬l, which encouraged
them to enlarge their own plant and to subcontract to ¬rms not hitherto
engaged on armaments work. Kitchener was willing to bring in busi-
nessmen to help organise supplies, taking advice from Allan Smith,
secretary of the Engineering Employers™ Federation, Sir Percy Girouard,
managing director of the Armstrong works at Elswick, and George
Macaulay Booth, a Liverpool shipowner. Under their guidance, muni-
tions contracts were spread widely to engineering ¬rms, which were
encouraged to pool resources on a regional basis. Deliveries increased
from 2 million shells in the eleven months to the end of June 1915 to
14.5 million shells in the six months to the end of December 1915; of
the latter, 11.8 million were the result of orders placed by the War Of¬ce
and only 2.7 million by the Ministry of Munitions. Allowing for the
inevitable lag between orders and production, these ¬gures suggest that
Lloyd George was not wholly responsible for the increase. While his
dynamism did make a difference, the broad outlines of munitions pro-
duction had been established before the creation of the Ministry of
Munitions.50
The key factor of production was labour, especially skilled labour.
Reliance on uncontrolled voluntary recruitment to the army led to a loss
of 20 per cent of the male labour force in manufacturing and mining by
July 1915, a proportion that rose with conscription to 45 per cent by July
1918.51 Within these broad ¬gures were losses by May 1915 in indus-
tries directly concerned with war production: shipbuilding 16.5 per
cent, iron and steel 18.8 per cent, small-arms manufacturers 16 per
cent, and chemicals and explosives 23.8 per cent.52 Early in 1915 the
War Of¬ce began to release skilled men who had enlisted, and those
engaged in arms production were issued with badges to free them from
popular pressure to volunteer. The labour shortage could only be
overcome, however, by breaking work processes hitherto done by skilled
workers into simple stages that semi-skilled or unskilled workers could

50
Hew Strachan, The First World War, vol. I: To Arms (Oxford University Press, 2001),
pp. 993“8, 1067“71; Chris Wrigley, ˜The Ministry of Munitions: an innovatory
department™, in Burk (ed.), War and the State, pp. 32“56.
51
P. E. Dewey, ˜Military recruiting and the British labour force during the First World
War™, Historical Journal, 27 (1984), 199“223, at 204.
52
R. J. Q. Adams, Arms and the Wizard: Lloyd George and the Ministry of Munitions
(London: Cassel, 1978), p. 72.
72 Arms, economics and British strategy

cope with, a development known as ˜dilution™. By this means almost 2.5
million workers were absorbed into the industrial labour force between
the outbreak of war and July 1918, not far short of the ¬gure of 2.8
million men from industrial occupations who enlisted. Some 31 per cent
of the new industrial workers were women but the majority were men
drawn from non-industrial occupations.53 By 1918 the mobilisation of
manpower in Great Britain had gone as far as it could without adversely
affecting the output of essential industries, and shipbuilding and coal-
mining had to be protected from the demands of the army for recruits.54
Changes in work practices were not without dif¬culties in industrial
relations, and in March 1915 Lloyd George, still chancellor of the
exchequer, negotiated the so-called ˜Treasury agreement™ with trade
union leaders whereby there would be dilution and compulsory arbi-
tration to avoid strikes for the duration of the war, in return for
restriction of pro¬ts on munitions contracts.
Pro¬ts were essential to encourage ¬rms to switch to munitions work,
given that Britain was still a capitalist, and not a command, economy,
notwithstanding extensive powers granted to the government under
Defence of the Realm Acts from 1914, which were used, for example, to
requisition the output of jute sacking required for sandbags, or the
Munitions of War Act of July 1915, which gave legal force to the
Treasury agreement. Under the Munitions of War Act pro¬ts of
munitions ¬rms were limited to a standard rate “ normally the average of
the net pro¬ts of the last two pre-war years “ plus 20 per cent, the
balance being paid to the Treasury as munitions levy. In September
1915 an excess pro¬ts duty was imposed on all ¬rms whose pro¬ts
exceeded their pre-war income-tax assessment, the rate being initially 50
per cent, but raised to 60 per cent in 1916 and 80 per cent in 1917.
However, the Ministry of Munitions and the Inland Revenue were not
given powers to inspect ¬rms™ books, and businessmen were generally
able to charge prices that left them with the same pro¬ts as they would
have had if taxes on pro¬ts had not existed.55 High prices were accep-
table to the Ministry of Munitions since its primary concern was with
production, and in the absence of balanced budgets there was no
restraint on its expenditure.


53
Jon Lawrence, ˜The First World War and its aftermath™, in Paul Johnson (ed.),
Twentieth-Century Britain: Economic, Social and Cultural Change (London: Longman,
1994), pp. 151“68, at p. 158.
54
Keith Grieves, ˜Lloyd George and the management of the British war economy™, in
¨
Chickering and Forster (eds.), Great War, Total War, pp. 369“87.
55
Sir Josiah Stamp, Taxation during the War (Oxford University Press, 1932), p. 216.
The First World War 73

Lloyd George did not take the advice of Treasury of¬cials in 1914 to
rely as much as possible on taxation to pay for the war. Theo Balderston
has estimated that the annual average rate of borrowing between 1914/15
and 1918/19 was 57.3 per cent of national income in 1913, not much
lower than the corresponding ¬gure of 62.0 per cent for the Reich and the
states in Germany. However, Britain was able to escape some of the
worst in¬‚ationary effects of de¬cit ¬nance because of the greater will-
ingness of money markets to hold British securities compared with
German securities.56 Even so, retail prices doubled in Britain during the
war. There was no shortage of cash, because the Treasury printed new
currency notes in whatever quantities were required by the joint-stock
banks and their customers. Monetary in¬‚ation began when the govern-
ment borrowed from the Bank of England on ways and means advances
and used them to pay contractors and creditors by cheque. Once the
cheques were cleared, the joint-stock banks found that their holdings of
cash at the Bank of England and their liabilities to depositors had
increased in equal amounts. It was unpro¬table for the banks to hold
cash reserves of more than a fraction of their liabilities, and collectively
they were willing to lend to their customers or the government sums of
several times the original amount that the government had borrowed
from the Bank of England. Money lent to the government would be spent
by it, and would then return to the banks, and would be lent again.
As the Permanent Secretary of the Treasury, Sir John Bradbury, told
the Cabinet in March 1915, the problem of war ¬nance was how to
adjust production and consumption so as to maintain essential supplies
for the civilian population, while securing the largest possible proportion
of output for the government. Consumer spending could be reduced
either by taxation or by rising prices. (In an era before large-scale con-
sumer credit it was assumed that interest rates acted only on invest-
ment.) Direct taxation was increased in stages: the standard rate of
income tax from 1s 2d (5.8p) in 1913/14 to 6s (30p) in 1918/19, and the
top rate of income tax plus supertax from 1s 8d (8.3p) to 10s 6d (52.5p)
over the same period; but direct taxation of the working classes, who had
been below the income-tax threshold before the war, proved to be dif-
¬cult both politically and administratively. The Treasury thus came to
rely on in¬‚ation rather than taxation to curb consumption.57 With

56
T. Balderston, ˜War ¬nance in Britain and Germany, 1914“1918™, Economic History
Review, 42 (1989), 222“44.
57
Martin Daunton, Just Taxes: The Politics of Taxation in Britain 1914“1979 (Cambridge
University Press, 2002), pp. 38“49; Peden, Treasury and British Public Policy, pp. 83“95;
R. C. Whiting, ˜Taxation and the working class, 1915“24™, Historical Journal, 33 (1990),
895“916.
74 Arms, economics and British strategy

Table 2.2. GDP and government and consumers™ shares of GDP, 1913“20

Index of GDP Central government
Calendar at constant expenditure as Index of consumers™
year factor cost percentage of GDP expenditure

1913 100.0 7.5 100.0
1914 101.0 13.2 100.5
1915 109.1 38.6 102.6
1916 111.5 44.2 94.1
1917 112.5 45.7 86.7
1918 113.2 44.7 85.9
1919 100.9 27.8 98.3
1920 94.8 17.6 98.5

Source: C. H. Feinstein, National Income, Expenditure and Output of the United Kingdom,
1855“1965 (Cambridge University Press, 1972), tables 4, 7 and 12.



so much money in the hands of the commercial banks the Bank of
England™s conventional method of discouraging bank lending, by raising
Bank rate, was ineffective. The rate of interest was determined by what
was necessary to persuade the banks to hold their reserves in the form of
short-term (three to twelve months) Treasury bills, peaking at 5.58 per
cent for three-month bills in 1916. Private investment was discouraged
by requiring Treasury approval from 1915 for new capital issues on the
stock exchange. Domestic issues fell to a very low level, and most foreign
issues were war loans for allies.58
Table 2.2 shows that an increasing share of national output did go to
the government. More regular employment and the ability of trade
unions to demand higher wages initially bene¬ted the working classes,
but the average consumer™s expenditure fell in real terms after 1915.
Industrial relations deteriorated, as workers claimed wage increases to
keep up with prices, or became more willing to listen to radical shop
stewards who articulated their grievances.59 Despite the problems of
dilution, fewer working days were lost through strikes in 1915 and 1916
compared with 1914, but between 1916 and 1917 the total rose from
about 2.5 million to nearly 6 million.60 The creation of a Ministry of
Labour out of the Board of Trade™s Labour Department at the end of
1916 was in recognition of the importance of industrial relations in

58
E. V. Morgan, Studies in British Financial Policy 1914“1925 (London: Macmillan, 1952),
pp. 143, 153, 263“5.
59
James Hinton, The First Shop Stewards™ Movement (London: Allen and Unwin, 1973).
60
Department of Employment and Productivity, British Labour Statistics: Historical
Abstract 1886“1968 (London: HMSO, 1971), p. 396.
The First World War 75
Table 2.3. Balance of payments on current account, 1914“18

Visible trade Invisible trade Government payments Current
abroad (net) (£m.)a
balance (£m.) balance (£m.) balance (£m.)

À170 þ315 À20 þ125
1914
À368 þ395 À50 À23
1915
À345 þ520 À50 þ125
1916
À467 þ575 À80 þ28
1917
À784 þ580 À204
1918 0

Note: a Expenditure by armed forces in countries where they were operating, plus
expenditure in other countries (mainly the United States) on supplies shipped direct to
armies and therefore not included in the trade returns, minus gifts from abroad from 1914,
minus expenditure of American troops in Britain in 1917“18.
Source: Morgan, British Financial Policy, p. 341. ª Palgrave Macmillan.


maintaining war production.61 Discontent over food prices and
shortages was tackled by another new ministry, the Ministry of Food,
which eventually introduced a bread subsidy in the autumn of 1917 and
rationing in 1918. A new Food Production Department of the Board of
Agriculture was given powers in 1917 to require farmers to plough
grassland so as to increase the output of grains and potatoes. Never-
theless, grain imports continued to be necessary. State control of
international purchases from 1916 and co-ordination of Allied pur-
chases and shipping in 1917“18 helped to keep the rise in world prices
within reasonable bounds.62
Munitions orders placed with British ¬rms diverted output from
exports. Orders placed abroad likewise contributed to a deteriorating
balance between imports and exports of goods (the visible trade bal-
ance). However, invisible exports from services increased in value,
mainly due to increased earnings by shipping companies as freight rates
rose. Even taking into account expenditure abroad by the armed forces,
Britain managed an overall surplus on its current external payments
down to 1917 (see table 2.3). Within this broadly satisfactory position,
there was the problem of ¬nding dollars with which to ¬nance purchases
in the United States. As table 2.4 shows, the British government
borrowed large sums abroad (mainly from American private investors

61
In the event the simultaneous creation by Lloyd George of a Ministry of Labour and a
Ministry of National Service confused manpower and industrial relations policy; see
Rodney Lowe, ˜The Ministry of Labour, 1916“1919: a still, small voice?™, in Burk (ed.),
War and the State, pp. 108“34.
62
Kathleen Burk, ˜Wheat and the state during the First World War™, in Dockrill and
French (eds.), Strategy and Intelligence, pp. 119“38.
76 Arms, economics and British strategy

Table 2.4. Balance of payments on capital account, 1914“18

Net decrease (þ)
Government Government or increase (À) Net export (þ) Net decrease (þ)
loans to borrowing in private or import (À) or increase (À)
allies, abroad investment of gold and in short-term
etc. (£m.) (£m.) abroad (£m.) silver (£m.) credits (£m.)

À144 À51 þ70
1914 0 0
À298 þ53 À17 þ11 þ274
1915
À530 þ319 þ104 þ10 À28
1916
À563 þ532 þ57 þ3 À57
1917
À297 þ381 þ13 À9 þ116
1918

Source: Morgan, British Financial Policy, p. 341. ª Palgrave Macmillan.


down to the United States™ entry into the war, and then from the
American government). Dollar securities held by British subjects were
requisitioned and sold or used as security for loans, and some gold was
shipped across the Atlantic. Even so, the Treasury was able in
November 1915 to predict, accurately, that Britain would exhaust her
gold and dollar reserves early in 1917.63
The strain on the sterling:dollar exchange rate re¬‚ected not only
Britain™s requirements for imports (themselves largely the result of the
enlargement of the army) but also the fact that she carried out her
traditional function of paymaster of the coalition. Britain™s ¬nancial
strength meant that she could raise loans in New York on more
favourable terms than Russia or her other allies, apart from France, and
even France had exhausted her credit in New York by May 1916.
Britain therefore borrowed in New York, and then extended credits to
her allies to enable them to obtain American supplies.64 As table 2.4
shows, Britain™s loans and subsidies to her allies exceeded her borrowing
abroad except in 1918, after Russia had withdrawn from the war and
when the United States had taken over responsibility for lending all
dollars required for purchases in America. These transactions weakened
Britain™s ¬nancial strength after the war: Britain received no repayment
at all from Russia and very little from France and the other Allies, but
the United States expected war debts to be repaid in full.
Financial relations with the United States were crucial to the Allied
war effort. The ¬rst British orders were placed in October 1914; the ¬rst

63
Peden, Treasury and British Public Policy, p. 106.
64
Kathleen Burk, Britain, America and the Sinews of War, 1914“1918 (London: Allen and
Unwin, 1985).
The First World War 77

loan was raised from private sources through the New York bank of
Morgan™s, which acted as the British government™s agent, in July 1915.
In the autumn of 1916 the British blockade, involving as it did the
blacklisting of American ¬rms trading with Germany, led to Congress
threatening reprisals. The Foreign Of¬ce convened an interdepart-
mental committee to consider how far Britain was dependent com-
mercially and ¬nancially on the United States. Keynes told the
committee in October that of the £5 million which had to be found daily
for the prosecution of the war, about £2 million had to be found in
North America (chie¬‚y the United States, but also Canada) and that in
future about four-¬fths of this sum would have to be borrowed. He
warned that a statement from the American government disapproving
such loans would make it impossible to raise the necessary dollars, and
advised that ˜the policy of this country towards the USA should be so
directed as not only to avoid any form of reprisal or active irritation but
also to conciliate and to please™.65 As it happened, following a statement
by Morgan™s that short-term British Treasury bills would be issued to
American banks without limit, the Federal Reserve Board warned
American investors in November to be careful about buying British
government bonds. The Board had consulted President Wilson, who
had stiffened the warning, as a means of bringing diplomatic pressure to
bear on the Allies at a time when he was seeking to mediate between
them and the Central Powers. The warning led to a temporary fall in the
British government™s credit in New York, and a sterling crisis.
Fortunately for the British, the Federal Reserve Board was persuaded
to modify its warning after the American government had broken off
diplomatic relations with Germany on 3 February 1917 on account of
the latter™s submarine campaign. Even so, by mid-March the Treasury
had little more than a month™s reserves of gold and dollars in New York
with which to meet its commitments. After the United States declared
war on Germany on 2 April the American government took over the
responsibility for ¬nancing purchases for the Allies, but was only per-
suaded to lend money to support the sterling:dollar exchange rate after a
further sterling crisis in July 1917. Niall Ferguson believes that the
importance of American money to the Allied war effort has been
exaggerated, given that Britain lent more to its allies than the United
States lent to Britain, but he does not explain how Britain™s ¬nancial
strength would have enabled her to purchase supplies in North America

65
J. M. Keynes, ˜The ¬nancial dependence of the United Kingdom on the United States
of America™, 10 Oct. 1916, reprinted in Collected Writings of John Maynard Keynes, vol.
XVI, pp. 197“8.
78 Arms, economics and British strategy

without borrowing dollars, especially once the balance of payments on
current account moved into de¬cit in 1918.66 Britain became wholly
dependent on the United States government for dollars in the course of
1917“18. In the absence of American loans, the sterling:dollar exchange
rate would have depreciated, making imports of munitions, food and oil
from dollar sources more expensive, and forcing Britain to exhaust her
limited dollar resources more quickly or to employ scarce shipping to
import from more distant sources, such as Australia or India, where
sterling would be accepted. Either way, Britain™s war effort would have
fallen below the level achieved in 1917“18, although by how much it is
impossible to say.

Naval strategy
In the circumstances, a blockade had to be applied with discretion,
notwithstanding the Royal Navy™s command of the sea. American tol-
erance of British interference with neutral shipping was initially linked to
the provisions of the Declaration of London (see pp. 44“5), but became
greater once American business pro¬ted from Allied orders and
Germany alienated American opinion by resorting to submarine war-
fare. It is best, therefore, to follow British naval strategy as interaction
between command of the sea, protection of British shipping, and the
waging of economic warfare on Germany.
German hopes that the Royal Navy™s superiority in numbers over the
High Seas Fleet could be eroded by a war of attrition, using mines,
submarines and surface torpedo-craft, were disappointed by the British
strategy of a distant blockade. British light cruisers and battle-cruisers
did appear in force in the Heligoland Bight on 28 August 1914, when
they sank three German light cruisers and a destroyer without loss.
However, thereafter Jellicoe, the commander of the Grand Fleet, kept
his capital ships well clear of the German coast. Signals intelligence
enabled him to respond to sorties by the High Seas Fleet. An attempted
raid by three German battle-cruisers and an armoured cruiser in the
Dogger Bank area on 24 January 1915 was intercepted by British battle-
cruisers for this reason and the armoured cruiser Bluecher was sunk. The
only major ¬‚eet action was the Battle of Jutland on 31 May 1916, when
Admiral Reinhold von Scheer attempted to in¬‚ict losses on Admiral
David Beatty™s force of battle-cruisers and fast battleships by luring it
into a pursuit of German battle-cruisers until it ran into a line of U-boats

66
Niall Ferguson, ˜How (not) to pay for the war: traditional ¬nance and ˜˜total™™ war™, in
¨
Chickering and Forster (eds.), Great War, Total War, pp. 409“34, at p. 423.
The First World War 79

supported by the High Seas Fleet. The U-boats played no part in the
action and, while in pursuit of Beatty™s ships, von Scheer ran into the
Grand Fleet and escaped only because Jellicoe chose not to risk a night
action when the danger from torpedoes would be greatest. Jellicoe™s
caution was reasonable because he was, as Churchill remarked, ˜the only
man on either side who could lose the war in an afternoon™.67 The
British suffered heavier losses than the Germans “ three battle-cruisers,
three armoured cruisers and eight destroyers, compared with one battle-
cruiser, one pre-dreadnought battleship, four light cruisers and ¬ve
destroyers “ but retained a numerical superiority that ensured the
Germans could not break the distant blockade. The battle illustrated the
shortcomings of Fisher™s concept of the battle-cruiser as a lightly
armoured, big-gun vessel. As Beatty memorably remarked after two of
his six battle-cruisers had been sunk early in the action, ˜something is
wrong with our bloody ships today™.68 British ships were vulnerable to
explosions because cordite was handled in bags, whereas the Germans
used canisters and cartridge cases. However, after Jutland it was decided
to increase substantially the armour provided for the battle-cruiser
Hood, then under construction.
The threat to British trade from German surface ships was quickly
dealt with, there being no German cruisers left on the high seas within
eight months of the outbreak of war. In August 1914 in the Medi-
terranean the battle-cruiser Goeben and the light cruiser Breslau, evaded
British warships and took refuge in Turkish waters. The next most
powerful German force overseas was Vice-Admiral Graf von Spee™s
squadron of two armoured and three light cruisers in the Far East. Von
Spee prudently evaded the Japanese navy and crossed the Paci¬c to
operate against British shipping off South America, while dispatching
one of his light cruisers, the Emden, to the Indian Ocean. As a result of
the Royal Navy™s strategy of concentrating its best warships in home
waters, the British South American squadron under Rear-Admiral
Christopher Craddock had only two old armoured cruisers, a light
cruiser, an armed merchantman, and a slow pre-dreadnought battleship.
Craddock chose to attack von Spee with his cruisers, and lost both
armoured cruisers and his life at the Battle of Coronel on 1 November
1914. This blow to British prestige was speedily revenged by the
dispatch of two battle-cruisers under Vice-Admiral Sturdee to the
Falkland Islands, where they were joined by other British cruisers. At

67
Churchill, World Crisis: 1916“1918, part 1, p. 112.
68
Andrew Gordon, The Rules of the Game: Jutland and British Naval Command (London:
John Murray, 1996), p. 120.
80 Arms, economics and British strategy

the Battle of the Falklands on 8 December, von Spee was outgunned
and all of his squadron was sunk, except the light cruiser Dresden, which
was subsequently scuttled. If Jutland exposed the limitations of the
battle-cruiser concept, the Falklands illustrated its strength as a fast
capital ship capable of protecting distant interests.
Meanwhile, the Emden had been highly successful, sinking sixteen
British merchant ships and also, in a raid on the British port of Penang, a
Russian cruiser and a French destroyer, before being sunk by the Aus-
tralian cruiser Sydney. The Emden had some in¬‚uence on Admiralty
thinking on cruiser warfare as late as the 1930s. However, the other
isolated German raiders were much less successful. The totals of mer-
chant ships sunk in 1914 by the light cruisers Karlsruhe and Koenigsberg
were ¬fteen and one respectively, and those of the armed liners Kaiser
Wilhelm der Grosse and Cap Trafalgar were two and nil respectively. The
Karlsruhe sank after an internal explosion and the Koenigsberg was
blockaded in the Ru¬ji River in German East Africa, where it was
destroyed by British monitors in the following year. The armed liners
were intercepted and sunk while coaling, suggesting that the lack of
secure bases was the fundamental reason why German surface raiders
had little impact on British trade. The Germans had some success
between December 1915 and February 1918 with cruises undertaken by
small converted merchant ships; three of them, the Moewe, the Wolf and
the Seeadler accounted for ¬fty-six Allied ships between them, besides
those sunk by mines laid by them. However, two other such raiders
achieved no success before being sunk, and the Germans did not persist
with these operations. Nevertheless, the Admiralty devoted many ships
to the search for surface raiders. Indeed the Admiralty™s strategy of
patrolling trade routes and stationing additional cruisers at focal points,
rather than organising convoys with escorts, probably accounts for the
cruiser shortage that Marder attributed to Fisher™s pre-war policy of
scrapping ships that were too old to ¬ght and too slow to run away. The
sinking of the British cruiser Pegasus (completed 1898) when it con-
fronted the Koenigsberg (1907) in September 1914, and the losses of
Craddock™s Good Hope (1902) and Monmouth (1903) at Coronel to von
Spee™s Scharnhorst and Gneisenau (both 1907), could be attributed to a
number of causes, but a common factor was rapid obsolescence brought
about by international competition in warship design. Retention of even
older cruisers would have exposed the Royal Navy to further such losses.
Cruisers were required to impose the blockade of Germany, although
much of the work of boarding and checking merchant ships in northern
waters was done by auxiliary armed boarding vessels. Indeed, the Tenth
Cruiser Squadron patrolling the waters between Scotland and Norway
The First World War 81

provides another example of the limitations of older ships retained by
the Admiralty. The squadron™s eight ˜Edgar™-class cruisers (completed
in 1893 or 1894) were not up to the strain of working in the heavy seas
encountered in the area and were withdrawn after less than four months,
to be replaced by armed merchant cruisers. German merchant ships
quickly disappeared from the high seas, but the political problems of
regulating neutral trade with Germany remained.
Although the British government had not rati¬ed the Declaration of
London, it hesitated to impose an unrestricted blockade, for fear of
neutral, and particularly American, opinion.69 Policy was devised jointly
by the Foreign Of¬ce, the Board of Trade and the Admiralty until the
creation of a Ministry of Blockade in February 1916. An order in
council on 20 August 1914 stated that the Declaration of London would
be observed with certain exceptions, notably that conditional contra-
band (food and clothing) intended for the use of the enemy would be
liable to capture, regardless of the port to which a neutral was bound.
Ships™ papers were to be examined for evidence of the cargo™s ultimate
destination and the cargo could be detained until the neutral govern-
ment concerned gave an assurance that the goods would not be
re-exported to an enemy power. Using the spurious pretext that all food
supplies in Germany were under government control, the British were
able to impose the beginnings of the ˜hunger blockade™. However,
according to the terms of the Declaration of London, Germany was still
free to import non-contraband raw materials, such as cotton, which was
used for smokeless explosives, provided they were carried by neutral
ships. A large part of the American cotton crop of 1914 went to Ger-
many, but hostilities were not then expected to last long and the British
authorities felt that the trouble that would be caused in the United
States by declaring cotton to be contraband was not worthwhile. It was
not until October 1914 that copper, iron ore and rubber were declared
to be contraband, and cotton was not added to the list until August
1915, by which time Allied munitions contracts ensured that the loss of
the German market would not be felt in America.
Meanwhile, the Allies had been given the opportunity to tighten the
blockade by invoking their right of reprisal against German submarine
attacks. The ¬rst British merchant ships had been sunk by U-boats in
October 1914. At ¬rst there were few incidents and U-boat captains
gave crews warning to take to their lifeboats. However, on 4 February
69
What follows is based largely on A. C. Bell, The Blockade of the Central Powers 1914“1918
(London: HMSO, 1961), originally printed in 1937 for of¬cial purposes only; and Eric
Osborne, Britain™s Economic Blockade of Germany 1914“1919 (London: Frank Cass,
2004).
82 Arms, economics and British strategy

1915 the German government gave notice that the waters around the
British Isles would be treated as a war zone in which every merchant
ship encountered would be sunk, without it always being possible to
ensure the safety of passengers and crew. The effect on neutral opinion
was adverse, for whereas Allied blockade measures involved property
and could be contested in prize courts, a submarine blockade frequently
led to the loss of life. The British felt able to issue an order in council on
11 March 1915 prohibiting any merchant ship from sailing to or from
any German port, and claiming the right to con¬scate any enemy goods
even if a merchant ship had left a neutral port. It was not possible to
enforce this prohibition in the Baltic, but a series of agreements were
negotiated with neutral countries adjacent to Germany whereby they
promised not to re-export imported contraband goods.
When the Germans undertook what is usually called the ¬rst
˜unrestricted submarine warfare™ campaign in the spring of 1915 they
had only about twenty-¬ve U-boats available to enforce their blockade,
or an average of six at sea each day. Moreover, the campaign was not in
fact unrestricted. In response to a warning from the United States that
Germany would be held accountable for any American ships or lives
lost, the German government announced that submarine commanders
would be ordered not to attack neutral ships, provided that they could
be recognised as such. After American lives were lost when a U-boat
sank the British liner Lusitania on 7 May, the Germans undertook not to
attack passenger ships. The arming of merchant ships and the use of
Q-ships, decoys disguised to look like harmless tramp steamers but
carrying concealed guns, made it hazardous for U-boat commanders to
surface to sink smaller ships with their guns and forced them to use their
limited supply of torpedoes, which they would have preferred to keep for
bigger targets. As it happened, for twelve months from September 1915,
apart from a brief period in the spring of 1916, the Germans restricted
operations to avoid incidents involving Americans. An attempt to
tighten the submarine blockade in the spring of 1916 resulted in the loss
of more American lives when the French cross-Channel steamer Sussex
was torpedoed on 24 March 1916, and a month later the submarine
campaign against British trade was suspended.70
Nevertheless the increase in U-boat activity in 1916 made it easier for
the British to stiffen their blockade. An order in council on 30 March
made contraband liable to capture if found on a neutral vessel bound for
a neutral port but destined for the enemy; another order on 7 July

70
Paul G. Halpern, Naval History of World War I (London: UCL Press, 1994), pp. 291“
308.
The First World War 83

removed the remainder of the restrictions imposed by the Declaration of
London. Hostile destination of contraband cargoes was presumed to
exist until the contrary was shown. A vessel carrying contraband was
liable to capture if the contraband formed over half the cargo. Moreover,
at the end of February the leading German and Austro-Hungarian
agents in Scandinavia, Holland, Portugal, Spain and Greece were put on
blacklists, and all consignments to these persons or ¬rms were liable to
capture. Finally, in July, the British published a blacklist of neutral ¬rms
(including certain American companies) that were suspected of dealing
with the Central Powers and with whom they forbade British ¬rms to do
business, denying them access to British coal and shipping. As noted
above (p. 77), this step led to a deterioration in Anglo-American rela-
tions that was healed only after the United States broke off diplomatic
relations with Germany. By July 1916 the blockade had probably been
tightened as much as neutral opinion would tolerate, and was beginning
to in¬‚ict real damage on the German economy at a time when it was
strained by harvest failure, high expenditure on armaments, and in¬‚a-
tion. The ¬nal tightening of the screw came with America™s declaration
of war in April 1917, after which the only major gap in the blockade was
the import of iron ore from Sweden.
The impact of the blockade could only be expected to be severe from
the winter of 1916“17. Earlier, even when German war production was
affected by lack of raw materials, German science could ¬nd solutions.
For example, the blockade denied Germany imports from Chile of
nitrates, but the nitrogen required for explosives manufacture could be
obtained from the atmosphere using the Haber/Bosch process. Likewise
wood or other cellulose material could be used as a substitute for cotton
in the manufacture of smokeless powder. These processes tended to be
slower than those with the original raw material but, as in Britain,
munitions production was given priority over civilian consumption. The
impact of the blockade was greatest in its effects on the diet of the
German population. The absence of imported fertilisers and the loss of
manpower and horses to the army led to a 30 per cent fall in harvests of
all grains in 1917.71 There were serious food shortages in the so-called
˜turnip winter™ of 1916“17, and during 1917 and 1918 of¬cial rations

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