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The Business of War: Reflections on Recent Contributions to the Economic and Business Histories of the First World War

Christopher Godden
p. 549-556
Référence(s) :

Roger Lloyd-Jones and M. J. Lewis, Arming the Western Front: War, Business and the State in Britain, 1900–1920, London: Routledge, 2016, 422 pages, ISBN 978-075466613-4

Andrew Smith, Simon Mollan and Kevin D. Tennent (eds.), The Impact of the First World War on International Business, London: Routledge, 2017, 273 pages, ISBN 978-113893003-2

Texte intégral

1As a means of complementing the articles that form the main basis of this special issue of Œconomia, this short review essay considers the economic and business history of the First World War in the light of two recent contributions to the historiography. The first of theseArming the Western Front by Roger Lloyd-Jones and Myrddin John Lewis—focuses on military procurement systems in Britain during the war and the distribution of resources in the face of constantly evolving military circumstances. The second—Impact of the First World War on International Business edited by Andrew Smith, Simon Mollan and Kevin D. Tennent—offers a reconsideration and re-evaluation of the impact of the war on international (i.e. cross-border) business activity in several countries, including Britain, France, Germany, the United States, Sweden and Argentina. Neither of these very short summaries does adequate justice to two highly readable, thoroughly researched books that provide different approaches to the economic/business history of the war. In summarising the key features and findings of these books, and setting them in their historiographical context, my simple aim in this essay is to contribute to a wider appreciation of the dramatic character of state intervention and business organisation that emerged during the First World War.

1. Britain’s Duel Army during the First World War

2The argument running through Lloyd-Jones and Lewis’s book focuses on Britain’s duel army during the war—one on the battlefield (particularly the Western Front), the other on the domestic front producing munitions. Their argument is summarised in the opening pages:

To prosecute industrial war required the mobilisation of economic resources for the mass production of weapons and munitions, which necessarily entitled fundamental changes in the relationship between the state (the procurer), business (the provider), labour (the key productive input), and the military (the consumer). In this context, the industrial battlefields of France and Flanders intertwined with the home front that produced the materials to sustain a war over four long and bloody years. (Lloyd-Jones and Lewis, 2016, 1)

3Britain’s duel army was the product of the war, and Lloyd-Jones and Lewis carefully trace out the ways in which policy changes on one front (battlefield or domestic) had reciprocal effects on the other.

4The initial policy response of the British government to the outbreak of the war—captured by the famous phrase ‘business as usual’, and signifying the limited need for the state to support the war effort—reflected a view that the conflict would have little significant impact on Britain’s economic or social structures. This policy response of ‘business as usual’ did not reflect any significant adherence to the liberal philosophy of laissez-faire, but rather the implementation of military/economic calculations that had developed before August 1914. Put simply, Britain was not a war economy in August 1914, and existing military expectations regarding limited economic dislocation caused by a European conflict were driven by (a) military/economic calculations concerning existing maritime strength, and (b) expected military strategy centred around the power of the Royal Navy’s Dreadnoughts to both protect the nation from invasion and defeat Germany through a maritime blockade. This material is covered by Lloyd-Jones and Lewis in chapters 2, 3 and 4 of their book, yet the reader is left feeling that this part of their story does not differ significantly from established works by, for example, French (1982a, 1982b), McDermott (1986) and, more recently, Lambert (2012).

  • 1 On this, see French (1979) and Fraser (1983).

5The war Britain thought it was going to fight in August 1914 (economic warfare on the seas) was not the war she ended up fighting! Lloyd-Jones and Lewis show how several interconnected factors meant that pre-war British military calculations went out of the window very quickly in the early months of the conflict. These factors included: (1) the emergence of labour shortages in many sectors of the economy following the rush of men to enlist, (2) the emergence of trench warfare as the reality of military operations (as opposed to the expectations of naval warfare), coupled with the growing need for heavy artillery and high explosive shells, and (3) the limited ability of Britain’s industrial economy—particularly her munitions firms—to meet the massive demands of an expanding army engaged in static (trench) warfare. All of these issues came to a head in the spring of 1915 when public criticism of the shortage of munitions for front line troops forced the Liberal administration under Prime Minister Herbert Asquith into a war-time coalition1, while growing awareness of the need for comprehensive state economic controls led to the creation of the Ministry of Munitions under the dynamic leadership of David Lloyd George. Chapters 4 to 7 of the book explore these themes in detail, and provide the reader with a thorough understanding of Britain’s growing realisation (in 1915) about the true nature of industrial war, and the mobilisation of manpower and resources for munitions and weapons production.

  • 2 The history of the Ministry of Munitions has been covered by a number of writers over the years, in (...)

6Controls in the early months of the war, particularly concerning troop transport and requisitioning, were governed by the Regulation of the Forces Act (1871) and, most famously, the Defence of the Realm Act (1914). Debates within the government over the growth of government control centred around, on the one hand, those who advocated a strong organisation that could maximise resources for the war (such as Lloyd George and Winston Churchill), and on the other, those who feared the creation of an administrative dictatorship that could bankrupt the economy (such as Reginald McKenna and Walter Runciman). Yet it was through the industrial and administrative machinery of the Ministry of Munitions that the British state obtained control over the production, consumption and distribution of goods and materials necessary for the prosecution of the war.2 In chapters 6 and 7, Lloyd-Jones and Lewis concentrate on the operations of the Ministry of Munitions, the shifting relations between business, organised labour and the state, and the formidable challenges in 1916 associated with the mobilisation of industrial resources to meet the military requirements of the offensive that turned into the Battle of the Somme.

  • 3 Looking for a moment beyond the development of economic controls, it is worth noting the wider impa (...)

7Chapter 8 makes a short detour into the subject of paying for the war—a fascinating topic, and one covered elsewhere by, for example, Balderston (1989), Daunton (1996) and Horn (2003)—while chapters 9 and 10 shift to the aftermath of the Somme, growing tensions about the allocation of manpower between military and civilian requirements (putting inevitable pressure on the state, business and organised labour), the impact of the German submarine warfare, and the economic impact of changing military demands associated with the need for aircraft, tanks and chemical weapons. The ultimate impact of new forms of intervention by the British state, forced through by brutal urgency, was felt in all areas of society, including the distribution and regulation of civilian labour (securing an adequate division of manpower between the armed forced and industry was a key aspect of state activity during the war), shipping, rail and canal transport, the building of national factories for armament production, and later, through the Ministry of Food, the consumption of all major foods through rationing and price controls.3 The final chapter details the period 1918 to 1920, concentrating on Britain’s transition from a war economy to peace economy, demobilisation and the challenges of reconstruction.

2. International Business and the First World War

  • 4 As an example of this economic history literature, see the discussion on the First World War, inter (...)

8Smith, Mollan and Tennent’s collection is intellectually challenging (more so, in many respects, than the study by Lloyd-Jones and Lewis) and, as the first study of the impact of the First World War on international business, will doubtless occupy an outstanding place in the existing historiography. The central topic of the book is addressed through two themes. The first draws on a common criticism of traditional business history, succinctly put by the editors, whereby the discipline ‘accepts the precepts of conventional microeconomics whereby ceteris paribus conditions of normality are assumed when theorising about economic actions’ (Smith, Mollan and Tennent, 2017, 2). Put simply, traditional business historians have focused on narratives of strategy-making and business policy from an inside-the-firm perspective. The external environment has had been little considered in such narratives, and change is seen to be primarily the result of management agency. In response to these limitations, Smith, Mollan and Tennent have decided to ‘write violence into business history’ (a wonderful phrase!), and so seek to better understand how businesses experienced, and coped with, the destruction, confusion and sudden discontinuity associated with unprecedented industrial warfare (Smith, Mollan and Tennent, 2017, 2). A second—and more significant—theme of the book is the desire to challenge prevailing narratives on the chronologies that structure our understanding about the transnational activities of firms, markets and networks, and the impact of the First World War on the process of globalisation. Earlier works—such as Wrigley (2000)—have assessed the impact of the First World War on the international economy, yet Smith, Mollan and Tennent’s collection takes a radically different perspective. Drawing on ideas presented in Adam Tooze’s recent book, The Deluge: The Great War and the Remaking of Global Order, 1916—1931 (2014), the contributors argue that the war did not end the process of globalisation (as has commonly been argued by some economic historians4), but rather forced the reconfiguration of globalisation in the war and early post-war period. Business models developed in peacetime suffered during the war through the disruption of established financial and trade connections and the reorientation of industry to benefit the war effort. Such disruptions could not easily be managed by grand strategies since circumstances, in the context of an unprecedented international war, were constantly in flux. The contributors to this volume provide evidence of the ways in which businesses developed necessary coping strategies, while also facing new entrepreneurial opportunities and changes in corporate organisation.

  • 5 This chapter can profitably be read in conjunction with a recent article by Phillip Dehne (2016) on (...)

9In twelve chapters presented under three sections—entitled ‘Shifting Globalisation: Europe’s Hegemony Challenged’, ‘New Opportunities: Trans-Border Innovations in Wartime’, and ‘Postwar Reconstruction and Its Financing’—the contributors discuss the interconnected effects of the war on businesses and the process of globalisation. Several chapters in particular standout. Richard Roberts has brought the financial crisis of 1914 back to the attention of scholars through a number of recent works (2013, 2014, 2015), and in his essay in this book he surveys the ways in which policies implemented by allied, neutral and belligerent countries throughout the world in the summer of 1914 successfully averted a global financial crisis. Another fascinating chapter, by Andrew Dilley, concentrates on the British Chamber of Commerce, imperial policy and the political economy of globalisation during the war. In these 21 pages, Dilley charts the impact of the war on ideas about economic and geopolitical governance, and the active role of business associations in developing and framing a new political economy (the new protectionism) that would benefit British trade.5 A third chapter of great interest, and one that can profitably be read in conjunction will Dilley’s, is Clotilde Druelle-Korn’s contribution on the early history of the International Chamber of Commerce (ICC). Officially founded in Paris in 1920, the ICC’s role was to bring businessmen of different nationalities together (again, undermining the idea that globalisation was halted in 1914), and Druelle-Korn explores its pioneering role in working with international bodies, such as the League of Nations, to help shape international integration. Two other chapters of note—both covering the related theme of reconstruction and finance—are Volker Berghahn’s study of the US banker, Frank Vanderlip, and efforts made between 1918 and 1922 to establish a ‘peace loan’ that would assist reconstruction in war-torn Western Europe, and Trevin Stratton’s investigation into the shifting centre of global finance during the war (from London to New York), and the emerging international financial architecture and organisation of Wall Street banks in the early 1920s to facilitate foreign lending. Finally, note should certainly be given to the chapter by Trevon Boyns (serving as another challenge to the idea that 1914 marked the end of globalisation), which offers a thorough account of how the war promoted the rise of US scientific management techniques and practices in both Britain and France.

10All of the remaining, highly readable chapters have a very strong international flavour, and cover the impact of the First World War in holding back economic development in the Anglo-Egyptian Sudan (by Simon Mollan); the role of the war in transforming (rather than destroying) the process of globalisation in the Argentine grain trade by compelling changes in the operations and networks of large grain trading companies (by Phillip Dehne); collaborations brought about by the war on the R & D capabilities and business activities of the US multinational, DuPont, and the French multinational, Comptoir des Textiles Artificiels (by Jackie McGlade); the growing reliance of Hungary on the British capital markets during the inter-war period (by Neil Forbes); discussions about national varieties of capitalism and the growth of corporations in Weimar Germany (by Leslie Hannah); and the role of the war in accelerating Sweden’s industrialisation and the rise of SKF, a Swedish multinational and manufacturer of ball-bearings (by Jason Lennard and Eric Golson).

3. Concluding Comments

11What conclusions are suggested by this brief overview of recent work on the economic and business histories of the First World War? In the constant flow of studies on the First World War, these two books stand out—but for very different reasons. In terms of the British war effort, the work by Lloyd-Jones and Lewis offers a solid, broadly conventional story of business activity, state intervention, and the means by which Britain mobilised resources to prosecute the war. For example, Lloyd-Jones and Lewis note in their conclusion that ‘[t]he lesson of the Great War was that the British achieved victory only by exploiting the manufacturing resources of the nation’ (Lloyd-Jones and Lewis, 2016, 387). The usefulness of book is clear (particularly to a readership unfamiliar with the topic), but its overall work follows very familiar themes of political and economic upheavals arising from war mobilisation, and the trade-off between the quantity and quality of munitions. It is worth nothing here that Lloyd-Jones and Lewis’s book forms part of the ‘Routledge Studies in First World War History’ series, and so sits alongside similar specific studies that have a ready audience interested in the military, political, cultural and sociological impact of the conflict. In contrast, Smith, Mollan and Tennent’s collection forms part of the ‘Routledge International Studies in Business History’ and, as such, sits alongside texts covering a much broader range of themes such as industry, corporate networks and the evolution of modern business practices. However, Smith, Mollan and Tennent’s comparative study is much more than a work of conventional business history. It is a necessary and important corrective to standard impressions about globalisation and the differences that the war made to international economy/business activity. It is a valuable contribution to the history of the First World War, and one that has the potential to radically revise our understanding of the international business and political economy in the war and post-war period. In contrast to Arming the Western Front, the vibrant quality of the central argument in Smith, Mollan and Tennent’s collection demonstrates the clear potential for further innovative research into the economic/business history of the First World War. This is a book that deserves a much wider audience than it will, alas, probably receive.

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Bibliographie

Adams, R. J. Q. Delivering the Goods: Reappraising the Ministry of Munitions, 1915–1916. Albion, 7: 232-244.

Adams, R. J. Q. 1978. Arms and the Wizard: Lloyd George and the Ministry of Munitions, 1915–1916. London: Cassell.

Balderston, Theo. 1989. War Finance and Inflation in Britain and Germany, 1914–1918, Economic History Review, 42(2): 222-244.

Daunton, Martin. 1996. How to Pay for the War: State, Society and Taxation in Britain, 1917–1924. English Historical Review, 111(443): 169-216.

Dehne, Phillip. 2016. The Ministry of Blockade during the First World War and the Demise of Free Trade. Twentieth Century British History, 27: 333-356.

Findlay, Ronald and Kevin H. O’Rourke. 2007. Power and Plenty: Trade, War and the World Economy in the Second Millennium. Princeton: Princeton University Press.

Fraser, Peter. 1983. The British “Shells Scandal” of 1915. Annales Canadiennes d’Histoire, 18(1): 77-94.

French, David. 1979. The Military Background to the “Shell Crisis” of May 1915. Journal of Strategic Studies, 2(2): 192-205.

French, David. 1982a. British Economic and Strategic Planning, 1905–1915. London: Allen & Unwin.

French, David 1982b. The Rise and Fall of “Business as Usual”. In Kathleen Burk (ed.), War and the State: The Transformation of British Government, 1914–1919. London: Allen & Unwin, 7-31.

Grieves, Keith. 2000. Lloyd George and the Management of the British War Economy. In Roger Chickering and Stig Förster (eds), Great War, Total War: Combat and Mobilization on the Western Front, 1914–1918. Cambridge: Cambridge University Press, 369-388.

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Lambert, Nicholas. 2012. Planning Armageddon: British Economic Warfare and the First World War. Cambridge, MA: Harvard University Press.

McDermott, John, 1986. Total War and the Merchant State: Aspects of British Economic Warfare against Germany, 1914–1916. Annales Canadiennes d’Histoire, 21(1): 61-76.

Roberts, Richard. 2013. Saving the City: The Great Financial Crisis of 1914. Oxford: Oxford University Press.

Roberts, Richard. 2014. “How We Save the City”: The Management of the Financial Crisis of 1914. In Nicholas Dimsdale and Anthony Hotson (eds), British Financial Crises Since 1825. Oxford: Oxford University Press, 94-115.

Roberts, Richard. 2015. “Run on the Bank”: Covering the 1914 Financial Crisis. In Steve Schifferes and Richard Roberts (eds), The Media and the Financial Crisis: Comparative and Historical Perspectives. London: Routledge, 227-244.

Tooze, Adam. 2014. The Deluge: The Great War and the Remaking of Global Order 1916–1931. London: Allen Lane.

Wrigley, Chris. 1982. The Ministry of Munitions: An Innovative Department’. In Kathleen Burk (ed.), War and the State: The Transformation of British Government, 1914–1919. London: Allen & Unwin, 32-56.

Wrigley, Chris (ed.). 2000. The First World War and the International Economy. Cheltenham: Edward Elgar.

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Notes

1 On this, see French (1979) and Fraser (1983).

2 The history of the Ministry of Munitions has been covered by a number of writers over the years, including Adams (1975), Adams (1978), Wrigley (1982), and Greaves (2000).

3 Looking for a moment beyond the development of economic controls, it is worth noting the wider impact of other elements of Britain’s war-time state. One example here would be anxieties over the expansion of state controls (particularly through the Defence of the Realm Act) concerning the political and civil right of British citizens and the principles of Parliamentary Sovereignty.

4 As an example of this economic history literature, see the discussion on the First World War, inter-war commercial policy and deglobalisation in Findlay and O’Rourke’s book Power and Plenty: Trade, War, and the World Economy in the Second Millennium (2007, 429-472)

5 This chapter can profitably be read in conjunction with a recent article by Phillip Dehne (2016) on the evolution of the Ministry of Blockade and the role of the war in tearing apart the principles of Free Trade in Britain.

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Référence papier

Christopher Godden, « The Business of War: Reflections on Recent Contributions to the Economic and Business Histories of the First World War », Œconomia, 6-4 | 2016, 549-556.

Référence électronique

Christopher Godden, « The Business of War: Reflections on Recent Contributions to the Economic and Business Histories of the First World War », Œconomia [En ligne], 6-4 | 2016, mis en ligne le 01 décembre 2016, consulté le 21 août 2017. URL : http://oeconomia.revues.org/2519

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Auteur

Christopher Godden

University of Manchester, christopher.Godden@manchester.ac.uk

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Les contenus d’Œconomia sont mis à disposition selon les termes de la Licence Creative Commons Attribution - Pas d'Utilisation Commerciale - Pas de Modification 4.0 International.

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