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converted twin-engined light bombers. The most successful improvisa-
tion was the Bristol Beau¬ghter, which was a redesign of the Beaufort
torpedo-bomber with more powerful engines and armament, and which
later also served in the ¬ghter-bomber and anti-shipping roles.22
In early 1940 an Air Staff assessment of German aircraft production
led to concern that the RAF might be seriously outnumbered. Conse-
quently, on 15 May the Minister of Aircraft Production, Lord Beaver-
brook, and the Air Staff agreed that all aircraft development that could
not be directly related to immediate needs should be held back, to allow
a concentration of output on ¬ve types: the Hurricane, Spit¬re, Blen-
heim, Wellington and Whitley. The new heavy bombers were not
affected by this decision, and important developments took place with
¬ghter aircraft, such as the ¬tting of cannon to the Hurricane and
Spit¬re, and radar to night-¬ghters. However, work on more advanced
types was suspended for about nine months, the aircraft affected
including the Typhoon, Hawker™s intended successor for the Hurricane.
Thereafter, the Air Staff™s wish to introduce the Typhoon into service as
quickly as possible resulted in squadrons receiving an inadequately
developed aircraft, with some unpleasant ¬‚ying characteristics. It
eventually proved to be a successful ¬ghter-bomber, although a failure
as an interceptor. Both the Typhoon and its successor, the Tempest,
suffered from the long-drawn-out development of the Sabre engine
designed by Napier™s. Indeed the inadequacy of Napier™s in this respect
led to the enforced transfer of the work to the English Electric Com-
pany. Fortunately the basic Spit¬re proved to be capable of develop-
ment through twenty-two marks and two different types of Rolls-Royce
engines, the maximum speed of the 1945 mark being 454 miles per
hour, about 90 miles per hour faster that the one in service in 1940. The
Spit¬re always had the edge over the Messerschmitt Bf 109, although it
too was developed throughout the war. However, the Focke-Wulf Fw
190 gave the Luftwaffe a margin of ascendancy in ¬ghter-versus-¬ghter
combats when it appeared in large numbers in 1942.23
Germany was ahead of Britain in the development of jet aircraft. The
turbo-jet engine was invented independently in each country, the ¬rst
experimental aircraft ¬‚ying in 1939 in Germany and in 1941 in Britain,
and the ¬rst ¬ghter prototypes following in 1941 and 1943 respectively.
Fortunately the Germans, like the British, for a time gave priority to
developments for immediate needs rather than long-term projects, and

22
William Green, War Planes of the Second World War, 10 vols. (London: MacDonald,
1960“68), vol. II, pp. 4“5, 11“25.
23
Postan, Scott and Hay, Design and Development, pp. 6“8, 26.
174 Arms, economics and British strategy

then Hitler insisted that the Messerschmitt Me 262 be used to carry
bombs rather than be employed as an interceptor. The ¬rst British jet
¬ghter, the Gloster Meteor, entered service in the same year as the Me
262, 1944, but by then the only serious air threats to Britain were the
German Vergeltungswaffe (reprisal) weapons, the V1 jet-propelled ¬‚ying
bomb, which could be shot down by ¬ghters or by anti-aircraft ¬re, and
the rocket-powered V2 missile, which could not. The deployment of the
V1 and V2 was delayed by bombing their launch sites, an example
of successful employment of bombing as a defensive measure, and
incidentally of Bomber Command™s ability to hit very small and well-
concealed targets by 1944.24
Britain was also slow to develop tactical air warfare, re¬‚ecting the Air
Staff™s long-standing wish to be independent of the other services. Sir
John Slessor, the director of plans from 1937 to 1940, had delivered a
series of lectures at the Staff College at Camberley between 1931 and
1934 in which he used experience from the First World War to
demonstrate how bombers could isolate an army from its supplies and
delay its concentration.25 Nevertheless, Air Staff doctrine in 1940 held
that supply lines would be hard to hit and that battle¬eld targets were
better attacked by artillery. Consequently, when the RAF was called
upon to intervene directly in support of the BEF in Belgium and France
in May and June 1940, air crews lacked the necessary training and there
was no system in place for communication between ground and air
forces, so that hours might pass before aircraft would attack a target
identi¬ed by the army.26 The USAAF, in contrast, combined a belief in
strategic bombing with effective preparation for the employment of
tactical air power. The American attack planes, ¬rst designated as such
in 1922, corresponded in size to British light bombers, but were
designed for immediate support of ground troops, while medium
bombers were developed to attack targets such as depots and commu-
nications.27 When the RAF at last made effective use of tactical air
power, checking the ¬‚ow of supplies to the enemy™s front-line troops
prior to the battle of El Alamein in 1942, it made extensive use of
American aircraft.28 By 1944 the RAF had created a workable system of


24
Harris, Despatch on War Operations, p. 30. 25 Slessor, Air Power and Armies.
26
Richard Overy, Air Power, Armies, and the War in the West, 1940, Harmon Memorial
Lectures, no. 32, United States Air Force Academy, Colorado, 1989.
27
Wesley F. Craven and James L. Cate (eds.), The Army Air Forces in World War II, 7 vols.
(University of Chicago Press, 1948“58), vol. VI, pp. 197“201.
28
Sir Arthur Tedder, With Prejudice (London: Cassell, 1966), pp. 205“7, 342, 347“8,
354“61.
The Second World War 175

close air support which, although imperfect, was greatly in advance of
anything that the British army had enjoyed earlier in the war.29
The Air Staff also neglected the development of aircraft and weapons
for Coastal Command, which was charged with co-operating with the
navy in coastal patrols and anti-submarine operations. The four-engined
Sunderland ¬‚ying boat was one of the best in the world, but the twin-
engined Saunders-Roe Lerwick was underpowered and saw service only
brie¬‚y. The land-based Anson was too small to undertake long-range
anti-submarine patrols and was regarded even in 1937 as ¬t only to be a
trainer. The ¬rst American combat aircraft ordered for the RAF (in
1938) was the Hudson, which was originally thought of as a stop-gap
until the Blackburn Botha replaced the Anson, but the Botha was not an
operational success, leaving Coastal Command short of modern aircraft
in what proved to be a crucial period of the Battle of the Atlantic in
1940“1. Signi¬cantly, the development of the Lerwick and the Botha
had been allocated to two of the weakest aircraft ¬rms, suggesting a low
priority. The shortfall in modern aircraft could have been ¬lled with
Wellingtons and Whitleys, which were later successfully adapted for
anti-submarine warfare, but higher priority was given to the strategic air
offensive against Germany than to the needs of Coastal Command. The
most spectacular failure of the Air Ministry in relation to anti-submarine
warfare, however, was the anti-submarine bomb, which was ordered off
the drawing board in 1934 and never tested against a submarine before
the war. The bomb proved to be ineffective and had to be replaced by a
modi¬ed naval depth-charge in the late summer of 1940. It was not until
late 1941 that really effective, purpose-built aerial depth-charges were
produced in quantity. Coastal Command aircraft also relied upon visual
sighting of U-boats until aircrew were trained to use air-to-surface
radar in 1941. Unsurprisingly, the ¬rst successful attack by a Coastal
Command aircraft on a U-boat was not until November 1941. Even in
1939“41, however, aircraft could give some protection to a convoy, as in
the First World War, by spotting submarines and reporting them to
escort vessels. Coastal Command did not begin to come into its own
until 1942, by which time it was beginning to receive American aircraft
with suf¬cient range to operate far out over the Atlantic. German
admirals identi¬ed aircraft as the chief enemy of the U-boat by 1943.30


29
Ian Gooderson, Air Power at the Battlefront: Allied Close Air Support in Europe 1943“45
(London: Frank Cass, 1998).
30
John Buckley, The RAF and Trade Defence 1919“45: Constant Endeavour (Keele
University Press, 1995), esp. pp. 97, 101“6, 128“30, 166“8; John Buckley, ˜Air power
and the Battle of the Atlantic™, Journal of Contemporary History, 28 (1993), 141“61;
176 Arms, economics and British strategy

Naval weapons and tactics
The Admiralty was inclined to blame Air Ministry administration of the
FAA down to 1937 for the lack of modern aircraft for the ¬ve aircraft
carriers launched between 1937 and 1940.31 Nevertheless, the Admir-
alty bore some responsibility. Even under the pre-1937 arrangements it
drew up speci¬cations for naval aircraft and provided the funds for the
numbers it required. Almost all aircraft ordered for the FAA before the
war carried a crew of two or three, partly because machines capable of
bombing and reconnaissance as well as ¬ghting maximised the limited
capacity of an aircraft carrier, but also because the Admiralty believed
that naval aircraft required a navigator. It was only after the develop-
ment of electronic homing beacons and radar-equipped command and
control in 1941“2 that single-engined ¬ghters were widely used at sea.
Until then carriers relied upon anti-aircraft guns for their defence. Of
the 189 aircraft aboard operational carriers in 1939 only 12 were single-
seat ¬ghters (and these were obsolescent Gladiator biplanes), whereas
147 were Fairey Sword¬sh or Albacore torpedo-bombers that were slow
enough to carry out spotting duties for the big guns of battleships. The
only monoplanes in service were the Skua dive-bomber and its unsuc-
cessful turret-¬ghter variant, the Roc. A further source of FAA weakness
lay in the nature of the two ¬rms that specialised in designing and
producing naval aircraft: Blackburn and Fairey. Although Fairey had
been a successful designer of aircraft in the 1920s, both it and Blackburn
encountered technical problems with their more advanced designs in the
1930s. Both ¬rms received orders for a number of different types “
probably more than their design staffs could cope with. At all events, the
of¬cial historians commented that the ¬eld of aircraft development in
which ˜failures occurred and hopes were deferred most frequently™ was
that of naval types developed by Blackburn and Fairey.32 Consequently
the FAA came to rely heavily during the war on American types.
Pre-war ¬ghting instructions for the FAA required it to locate the
enemy ¬‚eet at sea and to slow it down with a torpedo attack so as to
enable British surface forces to bring it to battle. The Fairey biplanes
may have been obsolescent but they achieved all that they were intended
to do, and more. Carrier-borne torpedo-bombers sank three Italian
battleships at their moorings at their base at Taranto in November 1940;

G. H. Bennett and R. Bennett, Hitler™s Admirals (Annapolis, Md: Naval Institute Press,
2004), pp. 138, 146, 177, 179.
31
For example, First Sea Lord, Sir Roger Backhouse, to First Lord, the Earl of Stanhope,
24 Mar. 1939, ADM 205/3, TNA.
32
Postan, Hay and Scott, Design and Development, p. 133.
The Second World War 177

successfully damaged Italian warships off Cape Matapan in March
1941, enabling British surface ships to overtake and sink three 8-inch
gun cruisers and two destroyers; and during the hunting of the German
battleship Bismarck in May 1941 damaged its steering gear, preventing it
from making good its escape from the British ¬‚eet.
British aircraft carrier design compared favourably in some respects
with other navies. Whereas the hangar for aircraft on American and
Japanese carriers was part of a large, vulnerable superstructure, the
hangar in British ships was an integral part of the main structure, pro-
tected by ¬‚ash-proof lobbies, so that no British-built carrier was lost as a
result of a fuel explosion or hangar ¬re like the brand-new Japanese
carrier Taiho in 1944.33 British carriers sacri¬ced aircraft complement
for armoured protection, and whereas both American and Japanese
carriers proved to be vulnerable to air strikes, only the old, small British
carrier Hermes was lost in this way. New construction kept up with
losses: ¬ve carriers were sunk, but six ¬‚eet carriers and four light ¬‚eet
carriers had been completed by the end of the war. One omission was
the failure to foresee the part that escort carriers could play in protecting
convoys from air and submarine attack. Escort carriers could be con-
verted from merchant hulls and could be ¬tted out to lower standards
than ¬‚eet carriers, by having wooden decks, for example. The ¬rst such
carrier did not see service before September 1941. The Ministry of War
Transport was reluctant to release the large, fast ships required for
conversion, not realising that the long-term reduction in shipping losses
resulting from the operations of escort carriers would have justi¬ed the
immediate sacri¬ce of freight-carrying capacity. Consequently, most of
the Royal Navy™s escort carriers were built in the United States.
The war is generally seen as the twilight of the capital ship. Stephen
Roskill, in his of¬cial history, concluded that the navy had not achieved
a proper balance in 1939 between capital ships and aircraft carriers.34
However, no major navy abandoned the construction of capital ships
before the war, and international comparison of capital ships and air-
craft carriers launched between 1936 and 1945 (table 4.1) does not
suggest that the Royal Navy was unusually conservative. The German
navy™s ˜Z Plan™ of January 1939 aimed at having a ¬‚eet of six battleships
and two battle-cruisers, but only two aircraft carriers, by 1944.35 In


33
David Hobbs, ˜Naval aviation, 1930“2000™, in Richard Harding (ed.), The Royal Navy,
1930“2000 (London: Frank Cass, 2005), pp. 69“88, at pp. 73“4.
34
Stephen Roskill, The War at Sea 1939“1945, 3 vols. (London: HMSO, 1954“61), vol.
III, part 2, p. 396.
35
Maiolo, Royal Navy and Nazi Germany, p. 74.
178 Arms, economics and British strategy
Table 4.1. Capital ships and aircraft carriers launched or converted, 1936“45

Britain France Germany Italy Japan United States

Capital ships 6 3 4 4 3 13
Fleet aircraft carriers 24 0 1 1 16 41

Source: Chesneau (ed.), Conway™s All the World™s Fighting Ships 1922“1946.


the event, four of the battleships and both the aircraft carriers were
cancelled after the outbreak of war, to allow construction to be con-
centrated on U-boats. In 1940 the Royal Navy cancelled four out of ¬ve
of the capital ships that could not be ready by 1942. However, it con-
tinued aircraft carrier construction on a large scale. The ¬ve ˜King
George V™-class capital ships completed during the war, were not an
over-insurance against the four capital ships completed by the Germans
from 1939 (including the pre-war ˜Scharnhorst™-class battle-cruisers), or
the three capital ships completed by the Italians from 1940. Indeed,
because the ˜King George V™ class were designed within the Washington
treaty limit of 35,000 tons, they were inferior to the 42,000-ton Bismarck
and Tirpitz, and British capital ships had to go in pairs when they were
liable to meet these German leviathans. The increasing range of aircraft
and radar progressively restricted the ability of large surface vessels to
operate without air cover, but capital ships could still pose a threat in
distant waters, particularly to the Arctic convoys to Russia prior to the
sinking of the Scharnhorst by surface warships of the Home Fleet off the
North Cape on 26 December 1943, and the destruction of the Tirpitz by
RAF bombers on 12 November 1944.
Roskill™s criticism was also directed at the cost of maintaining and
modernising the older battleships. Priority had been given between the
wars to modernising the ¬ve vessels of the ˜Queen Elizabeth™ class, on
account of their high speed. Anti-aircraft guns were added, the elevation
of the main guns increased and in four cases new engines were ¬tted.
The modernisation programme was incomplete when war broke out,
but the three ships of this class that were wholly or partially rebuilt
(Queen Elizabeth, Valiant and Warspite) played a prominent part in the
war, particularly in the Mediterranean. On the other hand, the ¬ve
vessels of the ˜Royal Sovereign™ class proved to be an example of false
economy. To save money, they had been designed to be slower and
smaller than the earlier ˜Queen Elizabeth™ class, and proved to be less
adaptable to modern requirements. They were little altered by 1939,
apart from the addition of anti-aircraft guns. During the ¬rst twelve
months of the war Churchill pressed from time to time for them to be
The Second World War 179

reconstructed for coastal bombardment purposes, but the Admiralty
refused.36 On balance there does not seem to be much substance in
Roskill™s complaint about expenditure on the older battleships; indeed
completion of the rebuilding programme for the ˜Queen Elizabeth™ class
would have been money well spent.
The well-known sinking of the modern battleship Prince of Wales and
the old battle-cruiser Repulse off the coast of Malaya by Japanese aircraft
on 10 December 1941 might be taken as justifying the RAF™s position
in the bomber versus the battleship controversy between the wars.
However, British battleships survived many air attacks in the Medi-
terranean, from the Luftwaffe as well as the Regia Aeronautica, and one
must conclude that the Japanese aircrews had better training than their
Axis partners. Nor was air attack the only hazard: of the three other
British capital ships lost during the war, two were sunk by U-boats and
one, the battle-cruiser Hood, was sunk by the Bismarck™s gun¬re on
24 May 1941. The proportions for aircraft carrier losses were similar:
three to U-boats, one to gun¬re, and one to Japanese air attack. The
overshadowing of capital ships by aircraft carriers by the end of the war
was not so much evidence of the vulnerability of the former as at 1939,
as of the growing utility of the latter, as the range and performance of
aircraft and radar improved.
As regards trade protection, cruisers played less of a role than the navy
expected, particularly once improvements in aircraft and radar had
made it harder for surface raiders to evade detection after 1941.37
Contrary to the inter-war Admiralty™s expectations, the chief threat to
merchant shipping came from submarines. The Admiralty had great
expectations of Asdic, which relied upon sound waves being sent
through water. However, Asdic was practically useless if a U-boat
remained on the surface. At ¬rst the Germans were unaware of this
characteristic, and the system worked well, especially if Asdic-equipped
ships were assisted by aircraft that could spot submarines when they
surfaced. However, from September 1940 U-boats regularly used the
tactic of attacking on the surface by night, when they were able to evade
detection.38 The numbers of escort vessels required consequently far
exceeded pre-war estimates. The dif¬culties of trade defence were also
greater than expected because no one in Whitehall had anticipated that
the Germans would be able to operate from ports in western France,


36
Churchill, Second World War, vol. II: Their Finest Hour (1949), pp. 393, 583, 591.
37
Bennett and Bennett, Hitler™s Admirals, pp. 100“1.
38
Roskill, War at Sea, vol. I, pp. 34, 56, 68, 130, 355.
180 Arms, economics and British strategy

spending more time in the Atlantic than would otherwise have been
possible.
What Churchill called the Battle of the Atlantic proved to be a long
struggle that was won by the Allies only because of improved techniques
for detecting and attacking submarines, and signals intelligence. The
breaking of the German navy™s Enigma code by June 1941, partly as a
result of the work of cryptanalysts and partly as a result of the capture of
signal books aboard U110 in May, made it possible to read quickly all
orders to ˜wolf packs™ of U-boats. Convoys could then be re-routed and
the U-boats attacked. Shipping losses in July 1941 were only a third of
those in the previous month. However, in September 1941 the Germans
broke the British naval code, enabling them to locate convoys, and in
February 1942 made their own code indecipherable. Then, from
December 1942, British cryptanalysts were once more able to break the
German U-boat code, to the point that by May 1943 German orders
could once more be read quickly enough for action to be taken by con-
voys and anti-submarine forces.39 However, Jock Gardner has warned
against any monocausal explanation of victory: signals intelligence was of
tactical value only when U-boats operated in groups, which they did only
in 1941 and from mid-1942 to May 1943. Other factors included more
convoy escorts with better means of detecting submarines, and long-
range aircraft equipped with radar that could locate U-boats by day and
night.40 The technology of submarine warfare moved in favour of the
Germans later in the war, ¬rst with the ¬tting of schnorkel to U-boats in
1943“4, enabling them to recharge batteries under water, and then with
the introduction in 1945 of new types of U-boats capable of high speed
under water. The Admiralty anticipated heavy shipping losses in 1945
but victory on land ended the U-boat threat.41

Army weapons and tactics
The performance of the British army in the Second World War has been
criticised on two broad grounds: ¬rst, its tactical doctrine; second, its
equipment. According to Elizabeth Kier, defeat by the Germans in 1940
was the result of the British army™s ˜defensive™ doctrine, whereby
superior ¬repower was a pre-condition of manoeuvre, the purpose of
tanks was to support the infantry, and the mobile or armoured division

39
F. H. Hinsley, British Intelligence in the Second World War, 3 vols. (London: HMSO,
1979“88), vol. II, pp. 163, 170“9, 547“53, 570“2.
40
Gardner, W. J. R., Decoding History: The Battle of the Atlantic and Ultra (Basingstoke:
Macmillan, 1999).
41
Roskill, War at Sea, vol. III, part 1, p. 18; part 2, pp. 285“6, 289“91.
The Second World War 181

was ˜more a reconnaissance unit than an independent striking force™.
She attributes defensive doctrine not only to the lack of a continental
commitment before 1939, but also to ˜civilian fear of a professional army™,
and the continuation of a military culture based on ˜the gentleman-of¬cer
over the professional soldier™.42 However, there was little evidence of
defensive doctrine in December 1940 when General Sir Archibald
Wavell launched an audacious offensive in Egypt with one armoured
division and an Indian infantry division and defeated an Italian army of
seven divisions, taking 130,000 prisoners.43 The evidence for a lack
of professionalism on the part of Regular Army of¬cers is likewise
unconvincing, being largely an impression created by Liddell Hart and
historians in¬‚uenced by him or by tank radicals like Percy Hobart.44
Reliance on ¬repower, such as the artillery bombardment that preceded
the battle of El Alamein in October 1942, was not in itself unsound.
Indeed British tanks, for all their mechanical de¬ciencies, might have
fared a good deal better earlier if their efforts had been more closely co-
ordinated with the artillery. J. P. Harris has convincingly argued that the
trouble with British tank tactics was not that the army had ignored the
ideas of tank radicals, but rather that men like Hobart, who believed that
tanks should act independently of other arms, had had too much
in¬‚uence.45
David French has recently studied the question of British army doc-
trine afresh. He ¬nds that the lesson drawn from the experience of
1914“18 was that success required the proper combination of all arms.
Overwhelming ¬repower to suppress enemy ¬re was seen as the means
to restore movement across the battle¬eld, and there was nothing
inherently defensive about such doctrine, even if it was designed to
minimise casualties. Unfortunately, until late 1942, the army lacked the
weapons to make its doctrine effective. French also attributes short-
comings in the practice of the army™s doctrine to a decentralised system
of training rather than to lack of professionalism among of¬cers. The
rapid expansion of the army after 1939 compounded dif¬culties in
training. However, he notes that at El Alamein artillery, infantry, sap-
pers and tanks were able to combine effectively in a night attack, and

42
Elizabeth Kier, Imagining War: French and British Military Doctrine between the Wars
(Princeton University Press, 1997), pp. 89“90, 93, 109.
43
I. S. O. Playfair and others, The Mediterranean and the Middle East, 6 vols. (London:
HMSO, 1954“88), vol. I, pp. 258“98, 351“64.
44
Kier cites Liddell Hart in support of her thesis four times (Imagining War, pp. 91, 100“
1, 119“20, 195n.). She also relies upon Kenneth Macksey™s Armoured Crusader: A
Biography of Major General Sir Percy Hobart (London: Hutchinson, 1967), which is less
than even handed in its criticism of those who had to deal with Hobart.
45
Harris, Men, Ideas and Tanks, pp. 289“90, 306“7, 316“19.
182 Arms, economics and British strategy

that by 1943 British ground“air co-operation and artillery support were
far in advance of German techniques. The British army™s highly cen-
tralised command and control system lacked the ¬‚exibility of German
practice, but was operating more expeditiously by 1944 than previously.
After a dif¬cult learning curve in 1940“2, the British army became
skilful enough to contribute effectively to Allied offensives in 1942“5.46
Of all the weapons in which the British army was de¬cient, none
attracted more attention than tanks. Defeats in the Western Desert in
the ¬rst six months of 1942 were attributed by the British commander,
General Sir Claude Auchinleck, to the inferiority of British tanks
compared with those of the Germans.47 As noted in chapter 3, the pre-
war development of British tanks had been far from smooth. Never-
theless, they were inferior to their German counterparts in 1940 only in
mechanical reliability. The Germans tested British tanks captured after
Dunkirk and found that the Infantry Mark II (Matilda) was immune at
longer ranges to all of their guns except the 88-mm Flak gun. They
decided to replace the 37-mm gun on their Panzerkampfwagen (Pzkw)
III light medium tank with a 50-mm weapon and to increase the armour
on it and the Pzkw IV medium tank, with the result that in 1941 the
British found that the 2-pounder tank and anti-tank gun were ineffective
except at the closest ranges. Further improvements in the guns and
armour of German tanks were made in 1942. Unfortunately, the British
had taken a decision in 1940 to go for quantity in tank and anti-tank
guns at the expense of further development, in order to replace weapons
lost at Dunkirk as quickly as possible. Production of the 2-pounder tank
and anti-tank gun was continued and the introduction of the 6-pounder
into service delayed. It was not until May 1942 that the standard cruiser
tank, the Mark VI Crusader, was ¬tted with the heavier weapon. The
Crusader was so mechanically unreliable that in the spring of 1942 it
was the subject of a special enquiry under Attlee, which concluded that
it had been placed into production too quickly before the pilot model
had been adequately tested. The same might have been said of other
British tanks, including the Cruiser Mark V Covenanter, which was
never used in battle, although 1,771 were produced, and early models of
the Infantry Mark IV Churchill. The only moderately successful British
tank in production in 1941“2 was the Infantry Mark III Valentine,
which was faster than the Matilda, which it replaced, and more reliable
than the Crusader. Even so, as with the Crusader, it had only the

46
French, Raising Churchill™s Army.
47
Sir Claude Auchinleck, despatch on ˜Operations in the Middle East from 1st
November, 1941, to 15th August, 1942™, London Gazette, no. 38177, 15 Jan. 1948.
The Second World War 183

2-pounder gun until models armed with 6-pounders were shipped out to
Egypt in time for the battle of El Alamein.48
Fortunately, the Eighth Army was able to use American medium
tanks in 1942, the Grant from May and the Sherman from October.
Both carried 75-mm guns, the Grant in a sponson with a limited arc of
¬re, and the Sherman in its turret. The Sherman was rated by its crews
as superior to the contemporary German Mark III and IV tanks. The
only British-designed cruiser tanks that were better than the Sherman
were the Cromwell, when ¬tted with a 75-mm gun, with which it ¬rst
went into action in June 1944, and the Comet, with a 77-mm gun and
new gun-laying devices, about six months later. The belated improve-
ment in British tanks followed tacit recognition that the decision in 1936
to divide development into ˜infantry™ and ˜cruiser™ types had been a
mistake. Following Anglo-American discussions in the late summer of
1942, both countries agreed that the main requirement was for an all-
purpose tank, and later British tanks combined the best features of the
infantry and cruiser types, being adequately armed and fast, and having
a longer range than German tanks. Even so, British tank crews faced a
formidable challenge when they encountered the latest German tanks in
the latter stages of the war. The Panther (42 tons) and the Tiger (54
tons) were much larger and more heavily armoured, and the Tiger more
heavily armed, than the Cromwell (28 tons) or the Churchill (40 tons).
To make matters worse, experience in North Africa of enemy anti-tank
guns, which had to be attacked with high-explosive rather than armour-
piercing shells, had led the British to adopt an American-designed, dual-
purpose 75-mm gun, which proved to be inadequate against the Panther
and Tiger. Although the problem had been anticipated and harder-
hitting 17-pounder guns ¬tted to about a quarter of the tanks employed
by the British army in Normandy, the Germans enjoyed an advantage in
tank-to-tank combat, especially given the combustibility of the Sherman
when hit by an armour-piercing shell. On the other hand, the lack of
range of the Panther and Tiger made them vulnerable when their fuel
supplies were severed, and many were abandoned or destroyed by their
own crews in the later stages of the Normandy campaign.49
Ironically, in view of the charge that British army doctrine was
defensive in nature, the de¬ciencies of its infantry weapons could be
linked to the priority given to mobility at the expense of ¬repower.

48
Playfair, Mediterranean and the Middle East, vol. II, pp. 173“5, 341“5; vol. III, pp. 214,
434“43; Postan, Hay and Scott, Design and Development, pp. 334“9.
49
John Buckley, British Armour in the Normandy Campaign 1944 (London: Frank Cass,
2004); French, Raising Churchill™s Army, pp. 100“5; Postan, Hay and Scott, Design and
Development, pp. 329“30, 341.
184 Arms, economics and British strategy

British infantry were outgunned by German infantry with heavier
machine guns and mortars, which led to a natural reluctance to advance
unless artillery support was available to suppress the enemy ¬re.50
Fortunately, the British artillery had a reliable and robust weapon in the
25-pounder ¬eld gun, which had been ordered in 1938. On the other
hand, the medium and heavy guns available in 1939“40 were moder-
nised First World War weapons and it was only in 1942 that the pro-
duction of new models enabled the British to achieve artillery
superiority, and even then the range of their howitzers was often too
short for effective counter-battery work.51 The disadvantage of earlier
reliance upon older medium and heavy guns was, of course, com-
pounded by the RAF™s lack of interest in tactical air power before 1942.

War economy and ¬nance
As will have been apparent from the survey of armaments and tactics,
war was more than simply an industrial undertaking. Its outcome,
nevertheless, depended upon mobilising economic resources to secure
the output of munitions, all the more so if inferior quality of weapons
had to be compensated for by quantity. However, the Second World
War, even more than the First, also made immense demands on the
nation™s scienti¬c resources. The technology of war, particularly but not
only with regard to electronics, was constantly changing. Britain was
fortunate in being able to draw upon both the scienti¬c and industrial
resources of the United States. However, transatlantic links were not all
one way. Radar was invented ¬rst by the British, although its subsequent
development in the United States was impressive. The best American
¬ghter aircraft, the P-51 Mustang, used the Rolls-Royce Merlin engine,
and the ¬rst American jet ¬ghter was designed around an imported de
Havilland engine.52
David Edgerton sees the dominant feature of the war economy as the
expansion of a greatly enlarged military-industrial complex. Although
overtaken by the United States during the war, Britain was the world™s
leading producer of aircraft and warships in 1940. Yet in the summer of
1939 Britain had set about creating industrial capacity to supply an
army much larger than had been planned earlier “ hence the creation of

50
French, Raising Churchill™s Army, pp. 86“9.
51
J. B. A. Bailey, Field Artillery and Firepower (Annapolis, Md: Naval Institute Press,
2004), pp. 290, 303“21.
52
Craven and Cate (eds.), Army Air Forces, vol. VI, pp. 218“19, 328; H. Duncan Hall,
C. C. Wrigley and J. D. Scott, Studies of Overseas Supply (London: HMSO, 1956),
pp. 386“413.
The Second World War 185

a Ministry of Supply in August 1939 to meet the army™s needs. A
Ministry of Aircraft Production followed in May 1940. Both ministries,
like the Ministry of Munitions in the First World War, recruited busi-
nessmen. However, there were other links between state and industry.
Edgerton estimates that perhaps half of all munitions were produced in
government-owned factories built since the 1930s, or with specialist
machines supplied by the government. Private ¬rms acted as agents
managing government factories, an arrangement that persisted into the
1960s. Shipyards were modernised during the war, largely at govern-
ment expense, with a remarkable extension of welding in place of riv-
eting being the most visible evidence of progress. Defence-related
research and development expanded, building upon the pre-war
experimental facilities of the defence departments and their links with
the arms industry and the universities. The pre-war military-industrial
complex had already developed Asdic and radar, and the number of
researchers employed or paid for by the state expanded markedly after
1939. Scientists became established in Whitehall no less securely than
the better-known example of economists.53
The input of science and technology could be crucial to the quality of
munitions, as the example of radar and other electronic aids showed in
weapons developed for air defence, strategic bombing or anti-submarine
warfare. Thus comparison of the effectiveness of war production in
different countries, or even as between different years, is far from easy,
and certainly not reducible to counting aircraft, guns or ships. After the
war German admirals complained that Germany had lagged behind
the Anglo-Saxon powers in the development of radar in the war at sea;
the same was generally true in the air war.54 This Allied advantage
in¬‚uenced the performance of aircraft and ships in ways not revealed by
the usual indicators of armament or speed.
Even when one has apparently comparable statistics, as for aircraft
production, the totals have to be broken down, given the very different
requirements that Britain and Germany had for aircraft capable of co-
operating with the navy or army. Table 4.2 gives ¬gures for output of
¬ghters and bombers, the two principal combat categories, and when
reading them one should remember that the relative cost of ¬ghters and
bombers was roughly in the ratio 1:4. Britain overtook Germany in total
production in 1940, and in bomber production in 1941. Germany
overtook Britain in total production in 1944, on account of a huge surge
53
Edgerton, Warfare State, chs. 2“4. For shipyards, see Lewis Johnman and Hugh
Murphy, British Shipbuilding and the State since 1918: A Political Economy of Decline
(University of Exeter Press, 2002), esp. p. 82
54
Bennett and Bennett, Hitler™s Admirals, pp. 180“1; Overy, Air War, pp. 201“2.
186 Arms, economics and British strategy

Table 4.2. British and German aircraft production, 1939“44

Total Fighters Bombers

Britain
1939 7,940 1,324 1,837
1940 15,049 4,283 3,488
1941 20,094 7,064 4,668
1942 23,672 9,849 6,253
1943 26,263 10,727 7,728
1944 26,461 10,730 7,903
Germany
1939 8,295 1,856 2,877
1940 10,826 3,106 3,997
1941 11,776 3,732 4,350
1942 15,556 5,213 6,539
1943 25,527 11,738 8,589
1944 39,807 28,926 6,468

Sources: Postan, British War Production, pp. 484“5; Webster and Frankland,
Strategic Air Offensive, vol. IV, pp. 494“5.

in ¬ghter production. Germany had also produced more bombers than
Britain in 1943, but whereas 4,615 of the British output had been heavy
bombers, only 261 German machines came into this category, on
account of delays in developing the He 177.55 The patterns of output
also re¬‚ected strategy: in Britain™s case, emphasis on defensive ¬ghters
in 1940, but increasing emphasis on bombers for the air offensive
against Germany; in Germany™s case, increasing emphasis on ¬ghter
production in response to the Allied air offensive. Output, and the
industrial investment necessary to achieve it, could also reinforce
strategy. When the question arose of whether the strategic air offensive
should continue, given that resources might be better employed in
preparing for a second front, the Air Staff was able to point out in
February 1942 that the aircraft industry was committed to the pro-
duction of heavy bombers, and that a change of policy would disrupt
output and reduce pressure on Germany.56
The statistics for tank output seem to show Britain lagging behind
Germany (table 4.3). However, British production was on the basis of
supplying 55 divisions, including those of the dominions and allies, and
most of these units were only being formed in 1939“40. Germany used
136 divisions against France and the Low Countries in May 1940; by

55
Postan, British War Production, p. 485; Green, Warplanes of the Third Reich, p. 343.
56
Webster and Frankland, Strategic Air Offensive, vol. I, p. 330.
The Second World War 187

Table 4.3. Production of tanks and self-propelled artillery on tank chassis, 1939“44

Supplied from overseasa
UK production Germany

1939 969 0 1,300
1940 1,399 0 2,200
1941 4,841 1,390 5,200
1942 8,611 9,253 9,200
1943 7,476 15,933 17,000
6,670b
1944 5,000 22,100

Notes: a Almost entirely from United States, as most Canadian production was retained in
Canada for training or shipped to the Soviet Union.
b
First six months only. Part of British allocation from production in the United States was
diverted to the American army in the latter part of year “ H. Duncan Hall, North American
Supply (London: HMSO, 1955), p. 416.
Sources: Central Statistical Of¬ce, Statistical Digest of the War, p. 148, for British ¬gures,
including overseas supplies; Overy, Why the Allies Won, p. 322, for German ¬gures.



1941 the German army had a total of 208 divisions, of which 167 were
full strength.57 Very roughly, one would expect German output of tanks
to be three times British output, if the German army were to be as
mechanised as the British, but this ratio occurred only in 1944. Indeed,
from 1941 to 1943 the total number of tanks supplied to the British army
from American and United Kingdom sources exceeded total German
production. Whatever may have been the problems with the quality of
tanks available to the British army, there was no lack of quantity.
The issue of quality is one of the themes of Barnett™s controversial
study of Britain™s war-time industrial performance, The Audit of War, in
which he compares Britain very unfavourably with Germany and the
United States in the design, development and production of tanks and
aircraft.58 As the review of weapons in previous sections shows, there
were serious problems of quality with British tanks, and most of Bar-
nett™s criticisms are justi¬ed, although he underestimates the problems
faced by companies that were expected by the War Of¬ce and the
Ministry of Supply to be able to switch from manufacturing motor
vehicles or steam locomotives to designing and developing armoured
¬ghting vehicles. The successful design of the Cromwell and Comet
tanks, by the Birmingham Railway Carriage and Wagon Company and
Leyland Motors Ltd respectively, in the latter part of the war suggests

57
R. A. C. Parker, Struggle for Survival: The History of the Second World War (Oxford
University Press, 1989), pp. 28, 67.
58
Barnett, Audit of War, pp. 143“58, 161“4.
188 Arms, economics and British strategy

movement along a learning curve. Production of the Cromwell provided
a striking example of opportunity cost when allocating plant and labour.
The Cromwell Mark III used a 600 h.p. Meteor aero-type engine and
output was governed by the number that the Ministry of Aircraft Pro-
duction was willing to make available to the Ministry of Supply. Con-
sequently, Liberty engines of 375 h.p., which happened to be available,
were used for a Mark II Cromwell that was slower than the Mark III.59
In the case of aircraft, Barnett makes the British performance seem
worse than it was by using selective comparisons. For example, he lists
six unsuccessful British types of aircraft: the Sabre-powered Hawker
Typhoon and Tempest, and the Westland Welkin ¬ghter, the Bristol
Buckingham medium bomber and the Vickers Windsor and Warwick
heavy bombers. On the other hand, he mentions only two German
failures, the Heinkel He 177 heavy bomber and the Junkers Ju 288
medium bomber, without commenting on the fact that the failure of the
Heinkel machine deprived Germany of the means of conducting stra-
tegic bombing.60 There were other unsuccessful German designs.
Focke-Wulf attempted to develop an all-wood ¬ghter, the Ta 154, with
a view to conserving steel and light alloys, and as an answer to the
British Mosquito; however, production had to be abandoned, owing to
problems in procuring suitable wood glue and in arranging satisfactory
sub-contracting of wooden components.61 Other spectacular failures
included Messerschmitt™s attempt to develop a replacement for its Bf
110 twin-engined ¬ghter, the Me 210, which was abandoned on
account of its poor ¬‚ying characteristics after 554 had been completed
or were in various stages of construction, and the Me 410, production of
which was ended within two years of it entering service on account of its
vulnerability to American ¬ghters. The Arado Ar 240, which was to
have had night-¬ghter, high-speed bomber and reconnaissance versions,
was abandoned because of its ¬‚ying characteristics and teething pro-
blems after a handful of the reconnaissance version had been produced.
The Heinkel He 162, which Barnett describes as one of the ¬rst jet
aircraft in service, was issued to squadrons in 1945 but pilots were
instructed to avoid combat pending completion of trials and it never saw

59
Lord Weir to Minister of Supply, n.d. but autumn 1942, Weir Papers 21/2, Churchill
College, Cambridge.
60
Barnett, Audit of War, p. 147. For the problems with the British aircraft mentioned, see
Postan, Hay and Scott, Design and Development, pp. 126“32, who point out that the
Welkin was not a complete failure (it did not go into service because the threat it was
intended to meet, sub-stratosphere bomber attacks, did not materialise), and the
Buckingham was similar in performance to its American contemporary, the Douglas
Invader, and suffered in comparison with its British contemporary, the Mosquito.
61
Green, Warplanes of the Third Reich, pp. 241“5.
The Second World War 189

action.62 It is in the nature of developing advanced aircraft that not all
will succeed, and on balance the British aircraft industry does not seem
to have been more prone to failure than the German.
Sir Alec Cairncross, having compared the British and German aircraft
industries, concluded that German ¬rms had more skilled staff and
superior development facilities, but the planning of aircraft production
was certainly no better in Germany and in some respects, for example
gaps in production runs, a good deal worse. The British practice of
continuing production of obsolescent types was not entirely wasteful,
since use could be made of them as glider-tugs or trainers, for example.
Neither Britain nor Germany, Cairncross thought, could compare with
the United States as regards boldness in planning, speed of execution, or
productivity.63 Edgerton has pointed out that the American aircraft
industry™s superior productivity re¬‚ected longer production runs and
that, while German productivity was higher than British in 1944, when
the Germans had concentrated production on a limited range of aircraft,
the reverse was almost certainly the case earlier in the war, when British
output exceeded German output. Studies of the Luftwaffe have con-
cluded that from the 1930s, and for much of the war, the Germans
made sub-optimal use of their resources for aircraft production by
failing to achieve a rational allocation of work to design teams, by setting
unnecessarily high standards for manufacturing minor ¬ttings, and by
wasteful use of raw materials, especially aluminium.64
The scale of British war production was related to strategy. From
September 1939 to May 1940 some industrial capacity was reserved for
exports to help to pay for essential imports in a three-year war. In May
1940 the danger of defeat was so pressing that Beaverbrook, the minister
of aircraft production, claimed absolute priority over other calls on
industry. In 1941 the shortage of tanks and anti-tank guns in the
Western Desert became almost as much an emergency requirement as
aircraft had been the year before, and Beaverbrook, transferred to the
Ministry of Supply, once more tried to maximise production. Unfor-
tunately, his reliance on hustle rather than planning, however appro-
priate for running a newspaper like the Daily Express, which he owned,
could be disruptive when it came to supplying the needs of the air force
62
Ibid., pp. 58“62, 366“73, 610“14, 658“63.
63
Alec Cairncross, Planning in Wartime: Aircraft Production in Britain, Germany and the
USA (Basingstoke: Macmillan, 1991).
64
Edgerton, ˜Prophet militant™, Twentieth Century British History, 2 (1991), 373“4;
Edward L. Homze, Arming the Luftwaffe: The Reich Air Ministry and the German Aircraft
Industry 1919“39 (Lincoln: University of Nebraska Press, 1976), pp. 189“91, 212“16,
261“7; Williamson Murray, Luftwaffe (London: Allen and Unwin, 1985), pp. 93“9,
128“9.
190 Arms, economics and British strategy

and army. Targets set for aircraft production were too ambitious and
had to be scaled down; improvisation replaced organisation, and the
aircraft industry ceased to pay attention to instructions from the min-
istry, proceeding on the basis of doing the best they could, like self-
employed tradesmen. It was not until after Beaverbrook had left the
Ministry of Aircraft Production in May 1941 that planning could ensure
that there was consistency in programmes for aircraft and components.
Production did rise in 1940, but it was rising before Beaverbrook took
over, and during 1941 bottlenecks sprang up, mainly on account of
maldistribution of components and materials.65 As for tank production,
no amount of hustle could produce a quick solution to the problems of
poor design and inexperienced manufacturers.
From March 1941, with the passing of the Lend-Lease Act, British
war production could take increasing account of what could be better
supplied from the United States. The falling off in British tank pro-
duction after 1942 re¬‚ected the fact that it was no longer necessary for
Britain to be self-suf¬cient; on the other hand, continued British pro-
duction was a necessary insurance against a shortfall in American
deliveries. Likewise the fact that British steel production peaked in 1942
and declined by 9.8 per cent by 1944 re¬‚ected the shipping shortage,
which made it more sensible to import ¬nished steel from the United
States than to import more bulky iron ore.66
As in the First World War, the key factor of production was labour.
The introduction of conscription in April 1939 made it possible to
register all workers and to prevent skilled labour and other reserved
categories of men being recruited by the services, in contrast to what had
happened in 1914“15. A ceiling of about 2 million was placed on the
size of the army in 1941, to ensure that it did not drain manpower from
munitions production. Under the Emergency Powers (Defence) Act of
22 May 1940, the minister of labour and national service could direct
any person in the United Kingdom to perform any work in any place,
and, although Bevin used his powers with moderation, labour was
transferred to munitions work from ¬rms producing consumer goods.
From 1941 the Board of Trade had powers to close factories so as to
concentrate production of the reduced volume of consumer goods in
fewer ¬rms and to release more labour for munitions work. To prevent
munitions production being disrupted, Bevin took powers in July 1940
to refer disputes causing strikes or lockouts to compulsory arbitration.

65
Cairncross, Planning in Wartime, pp. 7“8, 12“13; Postan, British War Production,
pp. 116, 118, 124, 137“8; Ritchie, Industry and Air Power, pp. 229“30, 234“8.
66
Central Statistical Of¬ce, Statistical Digest of the War (London: HMSO, 1951), p. 107.
The Second World War 191

To prevent disruption from poaching or turnover of labour, no worker
could leave or be dismissed from any factory scheduled by the Ministry
of Labour and National Service without the minister™s consent after
March 1941. Conscription of labour was introduced gradually by age,
skill and gender, with conscription of women being delayed until the
end of 1941, when Bevin felt that public opinion was ready for a mea-
sure that even Hitler did not impose on Germans.
These powers made it possible to allocate labour according to the
needs of strategy. In May 1940 aircraft production was given the highest
priority for new war workers, but this made for shortages in other pro-
grammes, besides reducing pressure on aircraft ¬rms to adopt dilution.
Consequently at the end of September 1940 the War Cabinet decided
that labour must be allocated in proportion to all approved programmes.
Manpower budgeting, together with allocation of materials and indus-
trial capacity became the basis of planning the war economy.67 How-
ever, manpower budgeting was not an exact science. The labour
required to meet the services™ requirements had to be estimated on the
basis of past experience of production, tempered by the knowledge that
man-hours employed in making, say, an aircraft would fall as ¬rms
moved along a learning curve in its production; and by a known ten-
dency of ¬rms and departments to overstate their needs. The ¬nal
outcome of the manpower budget was decided by the Prime Minister,
and therefore re¬‚ected his view of strategic priorities.68
It was one thing to mobilise labour; quite another thing to ensure that
it was used ef¬ciently. Dilution, especially in engineering and ship-
building, raised endless problems. Barnett, with some justi¬cation, is
highly critical of the shipbuilding industry™s reluctance to accept changes
necessary to increase productivity even in the worst days of the Battle of
the Atlantic.69 The industry had responded to the inter-war depression
by closing surplus capacity, but with only a very small rise in pro-
ductivity in yards that remained open; indeed, output per man in the
late 1930s was very little, if at all, above what it had been before the First
World War.70 Bevin™s negotiations with the shipyard unions to secure
the optimum use of scarce skilled labour during the war ran up against
distrust that dilution would lower wages and create unemployment once

67
Bullock, Life and Times of Ernest Bevin, vol. II, chs. 1“6; Hancock and Gowing, British
War Economy, chs. 11 and 15; P. Inman, Labour in the Munitions Industries (London:
HMSO, 1957), chs. 7“8.
68
Wilson, Churchill and the Prof, pp. 104“11. 69 Barnett, Audit of War, ch. 6.
70
J. R. Parkinson, ˜Shipbuilding™, in Neil Buxton and Derek Aldcroft (eds.), British
Industry between the Wars: Instability and Industrial Development 1919“1939 (London:
Scolar Press, 1979), pp. 79“102, at p. 87.
192 Arms, economics and British strategy

Table 4.4. Numbers of days lost in strikes and lockouts in all industries and services, and the
percentage of these that were in coal-mining, 1914“18 and 1939“45

(™000) (%) (™000) (%)

1914 9,878 37.6 1939 1,356 41.7
1915 2,953 55.6 1940 940 53.7
1916 2,446 12.7 1941 1,079 31.0
1917 5,647 20.7 1942 1,527 55.0
1918 5,875 19.8 1943 1,808 49.2
1944 3,714 66.8
1945 2,835 22.6

Source: Source: Department of Employment and Productivity, British Labour Statistics:
Historical Abstract 1886“1968 (London: HMSO, 1971), p. 396.

peace returned. Even when he had the support of a national trade union,
he might be de¬ed by its members at shipyard level. For example, the
¬tters at Newport, in South Wales, insisted throughout the war on
working in pairs, as was their custom, although in every other yard in the
country a ¬tter would work with a semi-skilled mate.71 Matters were
worse in coal-mining, where output actually fell during the war, partly
on account of miners being allowed to move out of the industry in 1940,
when export markets in Western Europe were lost, but also because of
the inheritance from the inter-war depression of an ageing and dis-
affected workforce.72 Coal lost more days of work on account of strikes
than any other industry. In industry as a whole strikes were more fre-
quent than they had been in the First World War, but they tended to be
resolved quickly, so that the average annual loss of working days in
1939“45 was about half that of 1914“18. As in the First World War,
industrial relations deteriorated the longer the war went on (see table
4.4); hence a series of white papers in 1944 aimed at maintaining morale
by promises of universal social insurance, a national health service, and
high and stable employment after the war.73
One group of producers who fared well during the war were farmers,
whose share of national income rose from 1.2 per cent in 1938“9 to 2.4 per
cent in 1944“5. Agriculture had been depressed before the war and the
rapid increase in farmers™ incomes helped to ¬nance the increase in output
necessary if the government™s target of a 25 per cent reduction in food
imports was to be achieved. In fact the eventual reduction was 55 per cent.

71
Bullock, Life and Times of Ernest Bevin, vol. II, pp. 61“2.
72
W. H. B. Court, Coal (London: HMSO, 1951).
73
Paul Addison, The Road to 1945: British Politics and the Second World War (London:
Jonathan Cape, 1975), pp. 215“25, 240“8.
The Second World War 193

To save shipping space, the Ministry of Agriculture directed farmers to
concentrate on the production of grain, and guaranteed markets and
prices. Agriculture showed that the pro¬t motive and state direction could
be successfully combined to create a more ef¬cient sector.74
On the other hand, it was realised that pro¬ts in industry might
undermine support for the war effort from trade unions or the wider
public. The September 1939 budget introduced an excess pro¬ts tax
(EPT) levied at 60 per cent of pro¬ts in excess of a standard based on
pre-1938 pro¬ts. The Treasury was aware that raising EPT to 100 per
cent would remove all ¬nancial incentive from businessmen to make
more ef¬cient use of resources or to take risks with new investment,
since any pro¬t arising from reducing costs would be taken away.
Nevertheless, it was necessary to offset the Emergency Powers
(Defence) Act of May 1940, with its controls over labour, with a
declaration that there would be no pro¬t from the national emergency,
and EPT was raised to 100 per cent. The 1941 budget restored some
incentive to make more ef¬cient use of capital by promising that 20 per
cent of EPT paid during the war would be repaid afterwards, provided
that the refund was ploughed back into a business.75 Even so, there was
a strong incentive for businessmen to negotiate contracts that would
cover their costs plus a standard pro¬t, and to be content with managing
government factories rather than take risks. Cost-plus was not a good
basis for increasing productivity of labour or plant, making it all the
more important to try to increase productivity through contract proce-
dures that allowed for technical costing by government agents. The view
of the of¬cial historian of contracts and ¬nance is that the system
worked in war-time.76 However, a cost-plus mentality may have taken
root in ¬rms in the aircraft and other industries that would make them
less competitive in peace.
As in the First World War, the Treasury saw the purpose of war
¬nance as the adjustment of production and consumption so as to
maintain essential supplies for the civil population, while securing the
largest possible proportion of national income for the government. In
1939 the Treasury thought that at least one-half of national income
should be made available for government needs.77 Table 4.5 shows that


74
Keith A. H. Murray, Agriculture (London: HMSO, 1955), pp. 241, 290, 340, 374“5,
378“9.
75
Peden, Treasury and British Public Policy, pp. 319, 321, 324.
76
William Ashworth, Contracts and Finance (London: HMSO, 1953), esp. p. 242.
77
Sir Richard Hopkins, ˜Draft statement on war ¬nance for the National Joint Advisory
Council on 6th December 1939™, T 175/117, TNA.
194 Arms, economics and British strategy

Table 4.5. Percentage shares of national income (NNP), 1938“45

Government Government Net non-war
military civil Consumer capital
expenditure expenditure expenditure formation

1938 7 10 78 5
1939 15 9.5 73.5 2
À16
1940 44 8 64
À17
1941 54 7 56
À12
1942 52 8 52
À12
1943 56 7 49
À12
1944 54 7 51
À10
1945 49 7 54

Source: Sidney Pollard, The Development of the British Economy 1914“1990 (London:
Edward Arnold, 1992), p. 174. ª Edward Arnold (Publishers) Ltd.

this target was achieved, partly by a drastic reduction in the consumer™s
share of output, and partly by disinvestment: ¬rms™ depreciation funds
were diverted to government loans; plant for civilian use was not
replaced; and railways and roads were allowed to deteriorate. However,
whereas most of the reduction in the consumer™s share of output in the
First World War had been brought about by in¬‚ation caused by gov-
ernment borrowing (and in¬‚ation had fuelled industrial discontent over
wages, causing strikes and disrupting production), ¬nancial policy in the
Second World War reduced in¬‚ation to a minimum. High taxes on
income reduced consumers™ spending power, while price controls and
rationing ensured that essential goods remained affordable and available.
˜Luxuries™, including alcohol and tobacco, which had little or no weight
in the Edwardian working-class cost-of-living index that was still in use,
were taxed heavily to reduce the spending power of people not affected
by income tax. Keynes used national income analysis to advise the
chancellor on how much should be raised from taxation and savings.
However, the disincentive effect of high rates meant that income tax
could not be raised further after the 1941 budget, when the standard rate
reached 10s (50p) and the top marginal rate of income tax plus surtax,
paid by the very rich, was 19s 6d (97.5p). The introduction of pay-
as-you-earn (PAYE) made it possible to tax working-class wage-earners
in a way that had not been possible in the First World War, and the policy
of stabilising the cost-of-living index encouraged some moderation on
the part of trade unions in their demands for higher wages.78


78
Peden, Treasury and British Public Policy, pp. 320“7.
The Second World War 195

It is dif¬cult to see how much more could have been done to divert
spending power to the government. Certainly Churchill, advised by
Lindemann, believed that the maximum tolerable limit of mobilisation
had been reached by the latter part of 1942.79 International comparisons
by Harrison show that Germany and the Soviet Union, and even the
United States from 1943, mobilised higher proportions of domestic
resources for the war than Britain. However, the totalitarian states could
adopt methods that no free society would accept, and Germany was able
to conscript labour throughout occupied Europe. The sacri¬ces made
by the American population were less than those by the British because
the United States could increase its national income by mobilising
resources still unemployed or underemployed from the depression. In
1943 Britain mobilised a higher proportion of her labour force for war
production and the armed forces than the United States, and more for
war production and almost as much for the armed forces as Germany.80
Altogether Britain sacri¬ced the equivalent of 18.6 per cent of her pre-
war wealth between 1939 and 1945, the largest element being external
disinvestment.81
Such mobilisation was possible because sea power enabled Britain to
take full advantage of an international division of labour in the world
economy, importing food, raw materials and munitions. British strategy
always relied upon being able to mobilise overseas resources, but the
sources of external ¬nance varied over time. There were four ways in
which Britain could ¬nance purchases abroad. First, she could earn
foreign exchange by exporting goods and services, but it was inevitable
that earnings would cover a declining proportion of purchases as Britain
mobilised her industry for war production. Second, she could use her
gold reserves which, notwithstanding the decline in 1938“9, were still
greater than in 1914, but were small in relation to the purchases that
would be made in a long war. Third, the government could take over
British-owned foreign securities, and obtain foreign exchange via the
dividends, or by selling the securities, or by using them as collateral for
loans, but Britain had already reduced her stock of foreign securities in
the First World War. Finally, she could borrow, either by persuading
countries to accumulate sterling in London, typically by holding
Treasury bills, or by raising loans outside the sterling area; however,

79
Wilson, Churchill and the Prof, pp. 97“8.
80
Mark Harrison, ˜Resource mobilization for World War II: the USA, UK, USSR, and
Germany, 1938“1945™, Economic History Review, 41 (1988), 171“92, at 184 and 186;
Hancock and Gowing, British War Economy, p. 371.
81
Stephen Broadberry and Peter Howlett, ˜The United Kingdom: ˜˜victory at all costs™™ ™,
in Harrison (ed.), Economics of World War II, pp. 43“80, at p. 69.
196 Arms, economics and British strategy

under the Johnson Act, she could not borrow in the United States, by far
the most important overseas source of munitions.
The accumulation of sterling balances in London represented trans-
actions that were not by any means restricted to supply of goods for the
British war economy. Most of India™s sterling balances were the result of
an agreement between the chancellor of the exchequer and the secretary
of state for India in February 1940 whereby the British Treasury would
pay the whole of the extra cost of Indian forces (compared with peace-
time) while they were serving abroad, plus the cost of military stores
supplied by India to British forces in the Middle East. The cost of
maintaining India™s forces rose rapidly after the entry of Japan into the
war, and India™s sterling balances increased from £295 million in mid-
1942 to £1,138 million in mid-1945, and a further £300 million was
transferred from the United Kingdom to India by the sale of securities
held by UK residents. Middle Eastern countries also accumulated
sterling balances through the supply of goods and services to British
forces. As regards food and raw materials for the United Kingdom, the
important parts of the sterling area were Australia, New Zealand and the
African colonies. Munitions and machine tools for British production of
munitions had to be sought outside the sterling area, North America
being the only practical source of supply, besides also being a more
economical source of food and raw materials than Australasia from a
shipping point of view. Canada™s economy was closely linked to that of
the United States, and before the war she had ¬nanced a de¬cit in her
balance of payments with her southern neighbour by a surplus in her
balance of payments with Britain. Consequently, Canadian supplies had
to be paid for partly in gold and American dollars, to cover the Canadian
de¬cit. Canada, not being a member of the sterling area, was less willing
than other dominions to allow Britain an unlimited overdraft, and
British purchases were paid for partly by the sale of Canadian securities
held by UK residents.82
The biggest problem, however, was ¬nancing British purchases in the
United States on the cash and carry basis that prevailed in 1939“41:
Britain™s gold and dollar reserves fell from £519 million in September
1939 to £108 million by the end of 1940; and American securities
owned by British residents were requisitioned and sold as fast, and
perhaps faster, than the New York stock market could absorb them.83
Initially the intention had been to spin out the reserves over a three-year
war and purchases of American munitions were limited as tightly as
possible, so as to allow scarce dollars to be spent on machine tools and

82 83
Sayers, Financial Policy, chs. 9“12. Ibid., pp. 369“70, 496.
The Second World War 197

raw materials for munitions production in Britain. On 30 January 1940
Britain™s total requirements in the United States for the ¬rst twelve
months of the war were estimated at £197 million, of which aircraft
accounted for 11.7 per cent and other munitions 6.1 per cent, whereas
machine tools accounted for 21.8 per cent and cotton 13.2 per cent.
Britain was also heavily dependent on American petroleum, which
accounted for another 15.2 per cent of projected dollar expenditure in
1939“40.84 Faced with imminent defeat in the summer of 1940, British
purchasing policy changed drastically and dollars were spent freely. The
ending of ¬nancial caution was encouraged by signs that American
opinion was shifting in favour of the Allies and that it was almost certain
that credit would eventually be made available. French contracts were
taken over after France asked for an armistice. In July 1940, at a time
when American ¬rms were producing about 250 aircraft a month for
British contracts, with a projected peak of 700 a month, it was agreed to
place orders for an additional 3,000 a month from January 1941. This
enormous increase was beyond the current capacity of the American
aircraft industry, but British orders encouraged an expansion of capacity
that was to serve the United States well when it entered the war. The
loss of army equipment at Dunkirk made orders for tanks and anti-tank
guns, ¬eld artillery, anti-aircraft guns and small arms a matter of
urgency. However, the Ministry of Supply was more cautious than
Beaverbrook™s Ministry of Aircraft Production and the scale of orders,
although vast, was suf¬ciently limited to ensure that the supply of
machine tools and raw materials required for production in Britain
would not be diverted to American ¬rms.85
The immediate supply of aircraft and munitions available in the
United States was at ¬rst of limited value both in terms of quality and
quantity. It was not until 1941 that the Americans had ¬ghters in pro-
duction that were comparable to British or German ¬ghters of 1939
vintage.86 The 150 Brewster Buffalos that were delivered to the RAF in
1940 were rejected for European operations and sent to the Far East, as
were Curtiss Hawks delivered as part of the residue of French contracts.
From 1941 American ¬ghters served in the Middle East, in the ground
attack role, but the Merlin-powered P-51 Mustang, which was more
than a match for German ¬ghters, was not delivered to the RAF until
1944. The quality of American bombers was at least equal to European
standards, but they were available only in small numbers until 1943 and

84
Hancock and Gowing, British War Economy, p. 106.
85
R. Duncan Hall, North American Supply (London: HMSO, 1955), pp. 146“53, 158“77.
86
Craven and Cate (eds.), Army Air Forces, vol. VI, esp. pp. 211“15, 218“19.
198 Arms, economics and British strategy

did not conform to Bomber Command™s view of what was required for
the strategic air offensive against Germany. Most were employed in the
Middle or Far East, or by Coastal Command. Although $120 million
were allocated in July 1940 to the purchase of 2,000 medium tanks in
America, the only machines available for early delivery were light tanks
and, as noted above, the ¬rst American medium tanks did not reach
Egypt until May 1942.87
As had been anticipated in June 1940, President Roosevelt found a
way round the Johnson Act once the US Treasury and American public
opinion were satis¬ed that Britain no longer had the means to pay
dollars for her purchases. On 17 December 1940 he came up with the
idea of Lend-Lease, whereby munitions, raw materials and even food
would be handed over to Britain, if the President decided that they
would thereby best be employed for the defence of the United States.
It was not in America™s interests that Britain should be defeated by
Germany. Equally, however, the Roosevelt administration was not
averse to pursuing American interests by securing concessions from
Britain. The US Treasury was suspicious of the way in which the ster-
ling area operated to Britain™s advantage in international trade, and the
US State Department hoped to press Britain into abandoning imperial
preference. Under the Lend-Lease Act of March 1941 Britain had to
provide the United States with ˜direct or indirect™ bene¬ts in return for
supplies, and in subsequent negotiations Britain was pressed to agree
not to discriminate against American exports. Churchill secured a
statement from Roosevelt that the Americans did not require a com-
mitment to the abolition of imperial preference in advance of the signing
of the Mutual Aid Agreement of 1942, but under the agreement both
countries committed themselves to work for the elimination of all dis-
crimination in international trade. Meanwhile, Britain had had to state
in September 1941 that it would not export any goods that embodied
materials supplied under Lend-Lease, thereby making it easier for
American ¬rms to take over British markets. The Secretary of the US
Treasury, Henry Morgenthau, ensured that Britain would continue to
be ¬nancially dependent by limiting any rise in Britain™s gold and dollar
reserves. In June 1941 Britain™s gold reserves had reached a low of £65
million. By the end of 1942, however, as a result of expenditure by
American forces in Britain and in the sterling area, the reserves stood at
£254 million. Thereafter, the US Treasury checked the rise in the
reserves by reducing the range of food and raw materials covered by


87
Hall, North American Supply, p. 175.
The Second World War 199

Lend-Lease.88 The price of Churchill™s policy of victory at any cost was
a weakening of British power, through the accumulation of sterling
balances and the loss of overseas assets and markets, and consequent
dependence upon the United States.

Grand strategy: the period of the Anglo-French alliance
Anglo-French war plans prior to September 1939 had been based on the
assumption that blockade would be as potent a weapon as it had seemed
to be in 1916“18. It was expected, therefore, that the Germans would
seek an early victory before blockade could wear them down. British
and French planners thought in terms of a long war, in which they would
follow a defensive strategy in the opening phase, gaining time in which to
mobilise their superior resources, including those of their empires, and
moving to an offensive strategy only when the balance of power had
shifted decisively in their favour. The RAF intended to bomb the
enemy™s manufacturing resources as part of the wearing-down process.
The British expected the Germans to attack the United Kingdom and its
trade routes by air and sea, as well as France by land, and notwith-
standing the commitment made early in 1939 to send the BEF to France,
most of the RAF would remain in the United Kingdom. The Luftwaffe
was expected to in¬‚ict heavy civilian casualties with high-explosive
bombs and to use gas to terrorise the population.89 Churchill was con-
cerned as late as July 1941 that there should be no shortfall in British
production of gas.90 In the event, neither side used gas against cities.
Too much was expected of the blockade, no doubt because the
Germans had been inclined to exaggerate its effectiveness in the First
World War. The Nazi“Soviet Pact on 23 August 1939, and more par-
ticularly the Soviet“German trade agreement of 11 February 1940,
raised the issue of how effective sea power alone could be in preventing

88
Alan P. Dobson, US Wartime Aid to Britain, 1940“1946 (London: Croom Helm, 1986);
Sayers, Financial Policy, chs. 13“15, and p. 496.
89
Chiefs of Staff, ˜Planning for war with Germany™, DP (P) 2, 15 Feb. 1937, CAB 16/
182, and ˜European appreciation, 1939“40™, DP (P) 44, 20 Feb. 1939, CAB 16/183,
TNA are the key British documents. For French strategy and its in¬‚uence on British
´
thinking before the war, see Robert Young, ˜ ˜˜La Guerre de longue duree™™: some
re¬‚ections on French strategy and diplomacy™, in Adrian Preston (ed.), General Staffs
and Diplomacy before the Second World War (London: Croom Helm, 1978), pp. 41“64,
and Talbot C. Imlay, Facing the Second World War: Strategy, Politics, and Economics in
Britain and France 1938“1940 (Oxford University Press, 2003), pp. 17“20, 27“33, 42“
50, 84“106. For the scale of expected air raid casualties in Britain being far in excess of
what actually occurred, see O™Brien, Civil Defence, pp. 96, 392“3, 677“9.
90
The Churchill War Papers, ed. Martin Gilbert, 3 vols. (London: Heinemann, 1993“
2000), vol. III, p. 954.
200 Arms, economics and British strategy

the Germans gaining access to raw materials. At ¬rst the British Min-
istry of Economic Warfare did not believe that the Soviet Union™s
normal exportable surplus would be of major assistance to Germany,
but by March 1940 it was warning the Cabinet that the effect of the
blockade might be largely nulli¬ed by Soviet supplies.91 A fundamental
problem with Allied strategy during the ¬rst seven or eight months of the
war was the lack of military activity to make the Germans use up stocks
of strategic materials. The RAF refrained from strategic bombing,
nominally in response to an appeal to the combatants by President
Roosevelt, but in reality because of the need for more time in which to
prepare, and the French army remained inactive behind the Maginot
Line. Germany was able to import Swedish iron ore and to bring suf-
¬cient political pressure on Romania to ensure that the latter continued
to export oil to her, despite Allied attempts at pre-emptive purchase.92
The Allies™ strategic position, therefore, was by no means as favour-
able for the conduct of a long war as pre-war planners had hoped. On
the plus side, the Allied navies were able to prevent German surface
raiders doing much damage to trade. The German pocket battleship
Deutschland was recalled from the North Atlantic in November 1939
after sinking only two merchant ships, and its sister ship, the Graf Spee,
was scuttled on 17 December after an unsuccessful engagement
with three British cruisers, having accounted for nine merchant ships.93
The threat from submarines was also contained, mainly on account of
the small number of U-boats available in the winter of 1939“40, and the
defective torpedoes with which they were armed.94 The new German
magnetic mine accounted for more merchant ships than the U-boats in
the last two months of 1939, but by the end of March 1940 the Royal
Navy had developed effective countermeasures.95 The sinking by a
U-boat of the battleship Royal Oak at Scapa Flow on 14 October 1939,
and the threat of air attacks, forced the Home Fleet to leave its main base
until adequate defences were in place in March. Nevertheless, the Allies
enjoyed the bene¬ts of command of the sea. A BEF of 158,000 men had
been safely transported to France by 11 October, and the delay in active
operations on the Western Front gave a much needed breathing space in
which to make up de¬ciencies in equipment and training.


91
W. N. Medlicott, The Economic Blockade, 2 vols. (London: HMSO, 1952“9), vol. I,
pp. 312“13, 315“26, 403“5; Imlay, Facing the Second World War, pp. 122“3.
92
Medlicott, Economic Blockade, vol. I, pp. 141“8, 250“9.
93
Roskill, War at Sea, vol. I, pp. 112“21.
94
Bennett and Bennett, Hitler™s Admirals, pp. 61“2.
95
Roskill, War at Sea, vol. I, pp. 99“102, 106, 126“8.
The Second World War 201

Even so, there was growing unease, particularly in France, that time
might not be on the Allies™ side. French intelligence assessments exag-
gerated the rate at which Germany was expanding her army and air
force, and French munitions production was behind schedule, parti-
cularly as regards aircraft. The more France turned to American ¬rms to
make up the shortfall, the less likely it was that her gold and dollar
reserves would be suf¬cient for a long war. French planners seem to
have been more pessimistic than the British Ministry of Economic
Warfare about the effectiveness of blockade. French intelligence
believed that the Soviet Union and Germany were working together as
allies, and accordingly the Soviet Union tended to be viewed in Paris as
a potential if not actual enemy. These ideas reached British military
planners through the joint Allied Military Council, and by March there
were doubts on both sides of the Channel about the long-war strategy.96
It is against this background that one can begin to understand how
plans came to be made that would have involved hostilities with the
Soviet Union. As early as January 1940 the French were preparing staff
studies of how Soviet oil production could be disrupted, and by March
´
the Armee de l™Air had a draft plan for bombers based in Syria to attack
Baku and other targets in the Caucasus, where 90 per cent of the Soviet
oil industry was situated. Paul Reynaud, who became the French
premier on 21 March, pressed the British at the Supreme War Council
later that month to give the project their support. Chamberlain, how-
ever, con¬dent that German and Soviet interests were fundamentally
incompatible, believed that the costs of a war with the Soviet Union
would outweigh the potential bene¬ts and a decision was deferred.97
The Soviet invasion of Finland on 30 November 1939 also led to
plans that might lead to a wider con¬‚ict. At the Supreme War Council
on 19 December the French premier, Edouard Daladier, advocated
sending an Allied expeditionary force to Finland via Narvik, both
to assist the Finns and to counter German and Soviet designs in
Scandinavia.98 The War Of¬ce began to explore the possibility of
sending supplies and troops across Norway and Sweden, using Narvik as
a base. Churchill, as ¬rst lord of the Admiralty, had since September
unsuccessfully advocated laying mines in Norwegian waters to prevent
the Germans importing Swedish iron ore through Narvik during the
winter months, when Swedish ports on the Gulf of Bothnia were
blocked by ice. He was quick to see that, once established at Narvik, the
96
Imlay, Facing the Second World War, pp. 54“6, 58“63, 109“15.
97
Ibid., pp. 70“3, 123“5.
98
Patrick R. Osborn, Operation Pike: Britain versus the Soviet Union, 1939“1941 (Westport,
Conn.: Greenwood Press, 2000), pp. 41“2.
202 Arms, economics and British strategy

Allies could cut off the Germans™ imports of iron ore even more effec-
tively than by purely naval action. He was aware that Germany might
invade Scandinavia, but claimed in a Cabinet paper on 16 December
that the Allies had ˜more to gain than lose by a German attack upon
Norway or Sweden™.99 On 2 January 1940 the Chiefs of Staff warned the
War Cabinet against what the CIGS, Sir Edmund Ironside, privately
called ˜this half-cock scheme™, on which he commented prophetically: ˜It
is the Dardanelles over again.™100 Halifax, the foreign secretary, feared a
hostile reaction in the United States to any breach of Norwegian neu-

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