The War Business
The International Trade in Armaments
New York: Simon & Schuster
Table of Contents
Chapter 1—The Age of Arms
Part II—Free Enterprise Armed
Chapter 2—Samuel Cummings of Interarms
Chapter 3—Private Entrepreneurs, All!
Part III—Bureaucracy Armed
Chapter 4—The Pentagon Drummers
Chapter 5—The Problems of Success
Chapter 6–Competitive Governments
Chapter 7—Whatever Happened to Krupp?
Chapter 8—The Communists as Arms Traders
Chapter 9—New Eras, New Policies
This is a book about the international trade, or traffic, in armaments, with special emphasis on developments since 1945.
By international, I mean that I am concerned here more with the fact that the U.S. government exports tanks to foreign nations than I am with the fact that the Chrysler Corporation makes tanks for the U.S. government. Likewise, I am concerned more with the fact that Lee Harvey Oswald's assassination rifle was imported into the United States from Italy rather than I am with the fact that the weapon was purchased by mail order from Klein's.
By trade, or traffic, I mean the sale rather than the grant aid (or giveaway) of arms. Grant aid still plays a part in today's arms trade, and it is commented upon in the following volume wherever appropriate; but the primary thrust in recent years has been to sell arms, and it is this aspect on which I wish to concentrate.
By armaments, I mean the actual instruments used to kill people in battle: rifles, pistols, tanks, artillery, fighter and bomber aircraft, missiles, warships and explosives. Occasionally, where it seems appropriate, I have strayed from this path to include such items as engines, electronic equipment and other "nonlethal" goods. The words arms, armaments, weapons, weapons systems, hardware and ordnance are all used interchangeably even though each has a slightly different meaning.
Lest there be any misunderstanding, this is not a book about America's, or any other country's, domestic gun trade; nor does it concern itself with military-industrial complexes except insofar as they are involved in the international arms trade.
The major purpose of this book is to examine exactly how and why the post-World War II international arms trade works and to what extent the presence or acquisition of arms encourages the outbreak or the continuation of hostilities. Also of concern is the effect weapons have on a particular situation, the forces at play, and how both donor and recipient countries are influenced by the trade in arms. No true understanding of the subject is possible, nor can any corrective steps be taken, unless this is done.
The nature of the arms trade militates against the full story ever being told. There is too much at stake for the subject to become one of general conversation for those intimately connected with its operations. However, background material was made available to me from a number of well-informed individuals with the understanding that the sources remain confidential. To all of them who put their trust in me I wish to record my debt and gratitude. Their information has been extremely valuable.
Equally as valuable has been the help I received from public sources. I wish to acknowledge my gratitude to them here in detail. Almost without exception they bring to the study of this subject an enthusiasm and doggedness that I envy. My research was made infinitely more rewarding by their assistance and cooperation.
I would first like to thank Senators Clark, Dodd, Fulbright and McCarthy, and Congressmen Farbstein, Gross and Widnall for all the material they sent me. I am also most grateful for the material sent me by the late Senator Robert F. Kennedy. I am particularly indebted to Miss Amelia Leiss, Mr. Uri Ra'anan and Mr. Bart Whaley of the Center for International Studies at the Massachusetts Institute of Technology; Mr. John H. Hoagland and Mr. Erastus Corning, III, of the Browne & Shaw Research Corporation in Waltham, Massachusetts; the Honorable Alastair Buchan and Mr. Geoffrey Kemp of the Institute for Strategic Studies in London; and Mr. Kenneth M. Glazier, librarian at the Hoover Institution on War, Revolution and Peace at Stanford University, who permitted me access to their research material. I am also indebted to the (London) Sun and the Washington Post newspapers for allowing me access to their clippings, and to Herr Hans Klatte of Der Spiegel, Miss Jeanne Kuebler formerly with Editorial Research Reports, Mr. George Franklin of the Council on Foreign Relations, Mr. Joe H. Wagner of Military Export Reporter, and Miss Johanna J. Bosch of the Fellowship of Reconciliation, who helped me find special source material. To the staff of the Senate Subcommittee to Investigate Juvenile Delinquency, to Miss Alma Kieny, Special Assistant to Mr. Henry Kuss, and to Colonel Grover Heiman, Jr., and Lieutenant Colonel C. W. Burtyk of the Defense Department's Book and Magazine Division, I wish to express my appreciation for all the courtesies they extended.
I also wish to express my gratitude to Mr. Henry C. Armstrong, Mr. Stephen C. Barber of the London Sunday Telegraph, Mr. Oliver Carruthers of Gemini News Service, Miss Kay Halle, Mr. Richard Kershaw, former editor of Africa Confidential, Mrs. Elizabeth K. MacAfee, Mr. Charles Burton Marshall of Johns Hopkins University's Washington Center of Foreign Policy Research, Mr. Spencer T. Olin, Mr. George R. Packard, III, Mr. Fergus Reid, III, Mr. Andrew St. George, Mr. Neil Sheehan of The New York Times, Mr. and Mrs. D. Thomas Stern, Mr. William H. Tantum, IV, of the National Shooting Sports Foundation, Mr. Charles W. Thayer, and Mr. John S. Tompkins, formerly of Business Week. Their expertise in various aspects of the arms trade was invaluable to me.
To Miss Susanna Schroder I am most grateful for the help she gave in translating foreign language source material; to Mr. Landon Thomas, Jr., for both help in translations and financial analyses; to Mr. Michael V. Korda, my editor, and Mr. Val J. Forgett for technical assistance; and to Miss Lucy G. Carlborg and Miss Susan T. Koelle who helped me with the paperwork.
I am especially indebted to all those who offered many valuable comments and suggestions on parts of the manuscript.
March 1, 1970
Chapter 1—The Age of Arms
“The Angel of Death has been abroad throughout the land,
you may almost hear the beating of his wings."—John Bright
In the twenty-five years since 1945, there have been fifty-six wars of significant size, duration and intensity throughout the world.(1) This means that mankind faces a new and violent conflict somewhere in the world slightly more often than once every five months, any one of which is capable of provoking a holocaust. If one adds to this total all the coups, large-scale riots and clashes of unorganized, low-order violence, (2) then the total of postwar cases of armed conflicts that have had significant impact on the course of history would number in excess of fifteen score—more than one per month.
We have been inclined to view these many wars as relatively small ones, since none have involved the use of nuclear weapons; in truth, the advent of The Bomb has simply upgraded our definition of what is small. Today we are far along the way to losing our sense of proportion, for by any definition many of these wars have been quite large. For instance, bombing tonnage in the Korean War exceeded all the tonnage dropped by the Allies in the Pacific Theatre of World War II. In the "small" six-day Sinai War of 1967, more tanks were committed to battle than by the Germans, Italians and Allies together at the crucial twelve-day battle of El Alamein in 1942. And from July 1965 to December 1967, more bomb tonnage was dropped on Vietnam than was dropped by the Allies on Europe during all of World War II. (3)
One knowledgeable source estimates that today there are some 750 million operable military rifles and pistols extant in the world. In other words, there is one small arm for every adult male on earth. To this inventory of conventional weapons, one must add hundreds of billions of rounds of ammunition and other explosives; tens of millions of machine guns, mortars and antitank weapons; millions of field artillery pieces and armored tanks; a hundred thousand fighter and bomber aircraft; and tens of thousands of missiles and offensive naval craft. In the twenty-five years of the "Atomic Age," it has been these weapons that have done all the killing in the "small" wars we have experienced.
We live in an age of weapons. Never before in the history of mankind have the weapons of war been so dominant a concern as they have been since 1945. Armaments now have enough destructive power to destroy most life on earth. Their acquisition or presence determines, in large part, the makeup of governments, the course of foreign policy, the thrust of economic effort, the social climate in which man lives. No significant act of contemporary history is free of their influence. Few other concerns in the world demand so much effort, time and money.
Armaments can be used to balance international accounts and create prosperity. They are capable of cementing international relationships more effectively than any other human endeavor. They can-and do-provide work that challenges all the skills that man possesses; they create wealth for the manufacturer, the seller, the nation; they stimulate economic and social stability by the maintenance of a high and continuing level of production; and they can create an atmosphere of security and a sense of national unity, purpose and pride that is often reflected at every level of a nation's experience. In one sense, armaments are mankind's most continuing good business.
On the other hand, however useful in trade and diplomacy they may be, armaments cannot be divorced from their function of killing. They can—and do—provoke wars, ruin treasuries, bankrupt nations, destroy property and create panic. Thus, in another sense, armaments are also the world's most unsettling influence.
Man's anxiety about war and its effects has taken on a desperate quality since 1945. We have become obsessed with the question of armaments. At the highest level, this obsession begins with our concern about nuclear weapons. Millions of words have been written on test-ban treaties, space treaties, non-proliferation agreements, the establishment of nuclear-free zones; on questions of strategy, defense, the prevention of misunderstandings and accidents, and the elimination of atmospheric pollution.
Yet, once past these levels of major concern, man has displayed little interest in what is, in many ways, the most crucial postwar political fact of life: the proliferation of conventional weapons of war.
One of the major postwar phenomena connected with conventional weapons is the large trade in these items. The yearly volume is estimated to be currently $5 billion. This is more money than the entire world spent annually on defense in the early 1930's. Since 1945 the amount of military aid, whether extended as grant aid or sales, provided by non-communist countries has totaled an estimated $61 billion. Of this, the United States has given away or sold nearly $52 billion in military equipment and services, the United Kingdom has provided an estimated $5 billion, and France approximately $3 billion. The Soviet Union and Red China, and their respective allies, have delivered an additional $8 billion in arms to non-communist nations in the same period of time. (4) [Soviet and Red Chinese arms sales to their own communist allies are considered here as internal transactions and thus, with the exception of Soviet and Red Chinese aid to North Vietnam, which is treated separately in Chapter VIII, are not examined in this volume.]
If we were to plot a graph of the volume of conventional armaments given away or sold since 1945 by the great industrial powers or by private merchants, one would find that the upward curve would closely parallel the curve on the incidence of violence since 1945. At least one obvious conclusion can be drawn from this—namely, that an increase in the availability of weapons is concomitant with an increase in their use.
The upward curve of violence shows no sign of leveling off. In a speech to the American Society of Newspaper Editors in Montreal on May 18, 1966, Robert S. McNamara, then the United States Secretary of Defense, and a man who should know, said, "The planet is becoming a more dangerous place to live on—not merely because of a potential nuclear holocaust but also because of the large number of de facto conflicts and because the trend of such conflicts is growing rather than diminishing."(5)
Consider some of the political consequences that today's arms trade has produced:
The fall of Germany's Erhard government in 1966 can be blamed in large part on Bonn's purchases of American military equipment which it could not afford and did not need.
The cancellation of the Skybolt missile by the United States in 1962 was one of the contributing factors that led to Prime Minister Macmillan's resignation in 1963.
The Pakistan-India War of 1965, in which American equipment was used on both sides, produced two results adverse to United States interests: it forced Pakistan to take a more neutral position in world affairs, and it forced India to consider manufacturing nuclear weapons. Had there been no large infusion of American weapons into the area (ostensibly as a defense against communism), the war would not have taken place.
Taiwan, to cite another example, maintains a huge U.S.-equipped military establishment, the total strength of which is too large for internal defense purposes and too small for the purpose of re-conquering mainland China. No one yet has explained satisfactorily why Chiang Kai-shek must maintain (mostly at U.S. expense) such a large military force.
Great Britain, by merely selling an obsolete aircraft carrier to Brazil, can precipitate a minor inter-service civil war in that large South American country simply over the question of which service is to run the ship.
West Germany can exacerbate world sensibilities by permitting its rocket experts to work for the Egyptian government on missiles obviously designed to destroy Israel. It can further goad public opinion by offering to send gas masks to the Israelis during the six-day Sinai War of 1967.
France and Italy, with equal disdain for public opinion, sell military equipment for political and balance-of-payment reasons to the South African government.
Nor is the Soviet Union free from the consequences of arms sales. It has, for instance, witnessed pro-Soviet governments in Indonesia, Ghana and Algeria ousted by dissidents armed with Soviet weapons. It has seen approximately one billion dollars worth of its equipment either destroyed or captured by the Israelis within six days; it has then been forced to replace the equipment in order to save face and influence in the Arab world.
Consider the ironies of the arms trade today: the United States, perhaps the world's most vocal proponent of disarmament, is also the world's largest seller of arms; emerging nations, needing all the financial resources they can for capital improvements, spend their money on armaments for show; the West German government, overloaded with arms it does not need, is urged to buy more by the United States; the Soviet Union, claiming to champion the equality of all peoples, sells military equipment to South Africa; Red China, barely able to control itself internally, sends arms to rebel groups in Africa; Czechoslovakia, a communist state, sells arms to Western and nonaligned nations with old-fashioned capitalistic fervor; Sweden and Switzerland, both "neutral" nations with long histories of peace, are two of the world's most aggressive arms exporters.
The trade, or traffic, in the weapons and accessories of war, as we know it today, can be traced back to the Middle Ages. Undoubtedly instances of this trade predate this era by many centuries, but as modem man understands the term, it began with the introduction of gunpowder into Europe in the fourteenth century. The market for powder-charged weapons grew quickly. Kings and knights demanded cannons—primitive devices called "bombards"—in order to demolish hitherto impregnable battlements. Farsighted warriors began arming their troops with portable weapons, called "arquebuses," which proved highly effective in breaking up squares of pikemen and archers, and ranks of mounted knights in armor.
Such was the demand for these and other weapons that a thriving industry soon sprang up in Europe. Armorers and smithies, previously concerned with the shaping of doublets, corselets, halberds and edged weapons, began turning their attention to the manufacturing of firearms. Most weapons were made for local consumption; however, several entrepreneurs sold their wares throughout Europe, to whoever had the money to pay.
The arms industry first developed in Belgium, in the Liége area. Iron and coal were in plentiful supply, and the roads and rivers provided excellent transportation facilities. The industry soon spread up the Rhine to Solingen, through the Black Forest, over to Bohemia around Prague; then into Italy at Turin, Milan, Florence, Brescia and Pistoia; then to St. Etienne and Bayonne in France; to London and Birmingham in England; and to Seville and Toledo in Spain. These same towns and areas are still today the centers of the European arms industry.
The weapons-makers of Li ge hold a special place in the history of the arms trade, for from the very beginning they have been and continue to be the most aggressive salesmen in the world. They were so dynamic in the pursuit of profits from arms, for instance, that Charles the Bold of Burgundy, in the fifteenth century, issued an edict forbidding the Li6geois to manufacture arms. The ban was defied and Charles promptly besieged the city, captured it, burned it to the ground and slaughtered all the inhabitants who did not escape. But the arms industry there somehow survived and has thrived ever since. By the middle of the eighteenth century Liege was producing 100,000 pieces a year and was one of the largest and best-known arms centers in Europe. Today, Li ge is the home of perhaps the most efficient, inventive and aggressive arms manufacturing company in the world: Fabrique Nationale d'Armes de Guerre.
Li ge was also the city that produced the first known instance of the anti-national traffic in arms-that is, the sale of arms to a known enemy. In 1576 the Duke of Alva and his army invaded the Low Countries. The Dutch and Flemish defenders were armed with weapons manufactured in Liege. So were the Duke's Spanish legions. (6)
The beginning of the nineteenth century marks a major watershed in the history of the arms trade. Three developments at the time were to have a profound effect on the weapons business, and their influences are still very much felt today.
Prior to the French Revolution, wars were essentially private affairs in which the public at large did not participate. By current standards the armies were minuscule: only 82,000 men were involved in the Battle of Crecy in 1346; only 9,000 Americans and 8,000 French fought against 7,000 English troops at Yorktown; and Cromwell's New Model Army numbered only 20,000. The weapons used were limited essentially to six items: rifle, pistol, saber, mortar, cannon and grenade. Because the first three items were often the personal property of the individual soldier, it was possible for a wealthy man to underwrite the cost of such units.
All this changed with the rise of national armies, first created under Napoleon Bonaparte. Napoleon's legions were of a size hitherto unknown to Europeans. Troops under his command at the beginning of the 1812 Russian offensive, for instance, numbered half a million men. In 1813 over one million men were wearing the uniform of France. So large were his armies that Napoleon could declare to Prince Metternich that he lost 30,000 men a month in his campaigns, a figure nearly seven times greater than the total number of American dead in the entire Revolutionary War. What took place was, in Walter Millis' words, "the democratization of war."(7)
The second development was the coming of the Industrial Revolution. Actually the phenomena of national armies and the Industrial Revolution arrived concurrently on the world stage, for indeed the former could not have occurred without the latter. The machine was coming to the aid of war, and war was subsidizing the growth of the machine age. Large citizen armies created a heavy and instant demand for weapons and the arms-makers of Li ge, St. Etienne, Birmingham, Solingen, Turin and Toledo responded to the need. Thus developed an industry that in wartime was capable of supplying quickly large quantities of weapons to large armies fighting large battles; but, at the same time, there also developed an arms industry that never had a large enough market for its wares in peacetime (until recently). The stage was set at this point for the bitter peacetime competition among arms-makers and dealers that was to last for nearly a century and a half.
The third development to have a profound effect on the arms trade has been the fragmentation of the world. For all intents and purposes it began at the Congress of Vienna in 1815 and, ever since, has steadily increased in tempo until today there are some 130 nations, all of which buy weapons of one sort or another.
Other changes were wrought by the Industrial Revolution. One was that the increasing number of technological advances in industry as a whole vastly stimulated weapons development. Before the Age of Mechanics, for instance, improvements on a particular weapon—say, a rifle—took years, even centuries, to develop. Over one hundred years were to pass before the matchlock rifle gave way to the wheel-lock, over two hundred before the wheel-lock gave way to the flintlock and over a hundred before the flintlock gave way to the percussion-cap rifle. With the advent of the Industrial Revolution, however, innovations and improvements upon existing armaments have come about so quickly and in such volume that armies of powerful nations hardly have had time to get used to their weapons before the equipment was being discarded in favor of something newer and more up-to-date.
The British "Brown Bess" rifle, for instance, was standard infantry equipment from 1690 to 1807, perhaps a modern-day record for longevity. In the twentieth century, weapons become obsolete far more quickly. The model 1903 Springfield rifle was standard issue to United States forces for only thirty-three years; the M-1 Garand for only twenty-one. Since the end of World War II technological improvements have become so numerous that the rate of obsolescence has increased even faster. The United States Army, for instance, has had two new infantry rifles since 1957, or one every six years, and there is no sign that the latest one—the M-16 Armalite—will be kept any appreciable amount of time. In fact, so rapid are technological innovations coming onto the market today that often a new weapon is obsolescent before it leaves the blueprint stage.
Another development influencing the arms trade was the concept of the interchangeability of parts. Pioneered first by Eli Whitney and later by Samuel Colt, this practice vastly prolonged the life of a weapon. Thus an "obsolete" or "obsolescent" weapon was still very much a usable item. The 1903 Springfield, for instance, still has a practical life, if properly maintained, of at least an additional one hundred years.
One of the greatest changes wrought by the Industrial Revolution was the proliferation of new forms of armaments, a direct result of the scientific and managerial revolutions. Not only were improvements being made along the way to the rifle, pistol, saber, mortar, cannon and hand grenade, but entirely new weapons were being invented: the rocket, submarine, machine gun, tank, airplane, bazooka, recoilless rifle, flamethrower, proximity fuse, the defensive and offensive missile and the nuclear bomb. All these weapons, in turn, have experienced continuing improvements, and many of them eventually have joined old rifles, pistols, sabers, mortars, cannons and hand grenades as surplus items.
By the middle of the nineteenth century, all these developments were in an embryonic state. There was, to be sure, a lively international trade in the weapons of war, but nothing on today's scale. There was also a spirited trade in secondhand, obsolescent weapons, but again it was relatively small in volume; the problem of obsolescence usually solved itself because the unwanted equipment was absorbed by the world's growing population and by the demands of the colonies and the smaller nations. Technology was not yet so sophisticated that it forced large quantities of older equipment onto the surplus market. Competition among manufacturers was also muted somewhat because the arms industry was not yet so large that it could not readjust to civilian demands when necessary.
A number of individuals and industrial firms were active in the arms trade during this period. For instance, John Pierpont Morgan, Sr., spent part of his time during the Civil War selling arms to Union forces. One of his most celebrated transactions was in 1861 when he bought 5,000 defective Hall's carbines for $3.50 each and then sold them to General John C. Fr6mont for $22 apiece. So many of Fr6mont's men had their thumbs shot off as the result of their carbine malfunctioning that the government refused to pay the bill. Morgan sued and eventually won his case, receiving the full amount for his wares. (8)
Around the same period of time, the Winchester Repeating Arms Company contracted to supply 1,000 rifles and half a million rounds of ammunition to Don Benito Juarez, a former President of Mexico who was in rebellion against Napoleon III's puppet monarch Maximilian. Juarez hesitated to pay the sum agreed upon, and the Winchester salesman, "Colonel" Tom Addis, let it be known that unless full payment in silver was received immediately the arms were to be sold to Maximilian. Juárez capitulated to this blackmail; he paid his money and secured the arms and ammunition, and eventually ousted Maximilian. (9)
The Remington Arms Company, in the years immediately following the Civil War, carried on a spirited trade in arms; it sold 85,000 rifles to Spain in 1867; the following year it sold 30,000 rifles to Sweden and 50,000 to Egypt. France was to buy 145,000 Remingtons, Puerto Rico 10,000, Cuba 89,000, Spain another 130,000, Mexico 50,000, and Chile 12,000 rifles in the decade ahead. In 1879 Remington made handsome profits by selling to both sides in the Russo-Turkish War. (10)
The Du Pont Company was also involved in the arms trade. Most of its wares, principally black powder, were purchased by the U.S. government, but on occasion it sold its products on the international market. In the Crimean War of 1854, for instance, the Wilmington-based company supplied powder to England, France and Turkey on one side and to Russia on the other.(11)
The two most famous arms salesmen during this period, and extending well into the twentieth century, were Sir Basil Zaharoff of Vickers-Maxim and Francis Bannerman of New York City.
Zaharoff was the single most powerful private arms merchant the nineteenth and twentieth centuries have seen. He began life as a brothel tout in Constantinople and reportedly acquired his first stake by stealing 7,000 pounds' worth of securities from a Greek merchant. From there he soon became an agent in the Balkans and Near East for the Anglo-Swedish firm of Nordenfeldt. Between the time he first began selling weapons in the 1870's as a young man until his death in 1936, Zaharoff amassed an immense fortune in the arms trade and was reportedly the wealthiest man in Europe of his time.
He was a chameleon-like character who could appear to be more French than the French, more Russian than the Russians, and more English than the English. He not only spoke eight languages fluently but was a Greek with a Russian surname who ended up becoming a French citizen and an English knight. He was also a brilliant but cold, cruel, secretive and sinister figure who had the power—which he never hesitated to use—to bring down governments, to promote arms races, to make or break kings and statesmen, to start wars. He was a friend and confidant of Lloyd George, of Clemenceau, of Greek Prime Minister Eleutherios Venizelos, of Sir Hiram Maxim, of Sir Charles Craven of Vickers, and in later years of Spanish millionaire Juan March, the Krupps and Hitler.
He was completely corrupt and unscrupulous in his business affairs. He lied, he cheated, he bribed, he stole, he broke laws. He was once able to prevent the Allies from shelling a town in German hands on the Western Front during World War I where, it was revealed later, a factory existed in which he had a financial interest.(12)
Zaharoff's big break came in the 1880's when a test was held in Vienna between the Nordenfeldt machine gun and the new machine gun invented by Hiram Maxim, an American. The Emperor Franz Josef was in attendance, and Maxim impressed him and the assembled crowd by spelling out the monarch's initials on a target with his gun. It was clear that the Maxim was the better weapon. But Maxim did not reckon with the guile of Zaharoff, who circulated among the press claiming that it was actually the Nordenfeldt gun that had proved superior and so versatile. Although Maxim won the day, Zaharoff won the orders.
Maxim was impressed with Zaharoff, and in 1888 he and the Nordenfeldt company merged their interests. This amalgamation in turn was bought by Vickers in 1897. For the next twenty years Vickers had a virtual monopoly on machine guns -and sold them throughout the world.
Zaharoff, as Vickers' chief salesman, was not above selling to both sides in a war; in fact, he raised this tactic to the level of a fine art. For instance, during World War I the Turkish guns served by German crews at the Dardanelles were of British manufacture and had been delivered by Zaharoff. During the Boer War, Zaharoff sold weapons to both the British and the rebels. His arms for the Boers were packed in piano cases and marked "ironmongery.” (13)
Throughout his life he played one Balkan country against another. On one occasion he supported Greece against Turkey, Turkey against Serbia, and Serbia against Austria. On another occasion he sold one submarine to Greece and then proceeded to frighten Turkey into buying two. Soon thereafter he convinced the Czar that all this activity on his southern flank warranted his buying four.(14)
By current standards his methods of bribery were crude. He once secured an arms order from the reluctant Russians, for instance, by leaving his wallet with a large check in it on a minister's desk. On other occasions he dispensed with a check and simply filled the wallet with a large check in it on a minister’s desk. On other occasions he dispensed with a check and simply filled the wallet with money.(15)
At the height of his powers Zaharoff held 300 directorates and had large financial interests in arms firms, banks, railroads, hotels, oil and mining concessions, and assorted factories and shipyards. At his death he held 298 decorations from 31 countries. But in spite of his wealth and honors, Zaharoff was so much the personification of human evil in the eyes of so many people that he acquired the sobriquet of "merchant of death."
Most arms merchants during the Zaharoff era were also from Europe, for that was where the business was. Friedrich and Alfried Krupp, Eug6ne Schneider of Schneider-Creusot and Skoda, and many other individuals were active peddling their wares around the Continent to eager buyers. World War I is full of examples of one nation finding its own weapons being used by its enemies. For instance, when Germany invaded Belgium, its soldiers were met by Belgians armed with German guns; when the Germans invaded Russia they were met by Russians armed with Krupp cannons; French troops in Bulgaria were bombarded by Bulgarians firing French 75's; Austria-Hungary, with its Skoda factory, faced Skoda guns in the hands of Russians. Even Switzerland, a neutral, helped this process: it sold electricity to both sides and allowed French material for the Germans and German material for the Allies to be exchanged through its territory.(16)
America had only one arms merchant of any note at this time: Francis Bannerman of New York. He differed from all the other arms merchants in that he only sold secondhand and surplus weapons. His firm, Francis Bannerman & Sons, got its start 'in 1865 when it bought at auction (and subsequently sold for handsome profits) huge quantities of surplus military equipment left over from the Civil War. The company maintained a large arsenal, built like a Scottish castle, on an island in the Hudson River not far from West Point. Bannerman furnished antiques to museums and collectors, and costumes to theatrical groups, but his primary business was to sell surplus arms to governments or interested individuals.
Bannerman sold his wares with missionary zeal and larded his sales pitch with a heavy dose of Christianity. He promoted military preparedness by noting in his catalogue that there were two swords in the company of the twelve apostles which, he added, "makes rather a good percentage in favor of weapons." The firm also stoutly defended the idea of the "Christian soldier" and claimed that when peace shall reign on earth Bannerman's Military Museum, located on Broadway in New York City, would be known as "The Museum of Lost Arts." Its catalogue once even went so far as to state: "The Good Book says that in the millennium days, swords shall be turned into plowshares and spears into pruning hooks. We are helping to hasten along the glad time by selling cannon balls to heal the sick.'”(17)
Bannerman openly advertised his wares in his annual catalogues—many of which today are collector's items—which often ran to more than 360 pages with 5,000 illustrations. Some 25,000 copies were sold each year. Perhaps the most famous catalogue was the one published in 1903 in which Bannerman outlined the scope of his operations. Speaking of purchases in 1900, he wrote: (18)
“Readers can judge the magnitude of these sales when we inform them that our purchases...amounted to over 160,000 guns, 30,000 revolvers, 10,000 saddles, 15,000 swords, 16,000 canteens, 60,000 belts, 50,000 cartridge boxes, 20,000,000 cartridges, 50,000 stirrups, 150,000 gun stocks, with hundreds of tons of gun barrels, gun parts, equipments, Gatling guns, etc., etc. Naturally, as we make this business our specialty, with thirty-six years' experience, and with the whole world for our market, we availed ourselves of this opportunity to purchase, and when other small dealers and speculators hesitated as to what could be done with such large quantities of obsolete arms, we went in and purchased nearly all the [U.S.] government offered, thus placing ourselves in position to give our customers the benefit of large assortments at lowest rates.”
As will be shown later, there is a striking similarity between Bannerman's activities and the current crop of arms traders.
Another famous Bannerman catalogue, published in 1933, noted that the U.S. government depended on Bannerman "to purchase at their sales the large quantities of obsolete and discarded goods." Of the 21,154 rifles and carbines captured in Cuba and Puerto Rico during the Spanish-American War, for instance, 20,220 were sold at auction, of which the New York company bought 18,200. Many of these weapons were subsequently sold to the Panamanians, who were in the process of winning their freedom from Colombia. (19)
"On short notice we can deliver promptly from our stock 100 high power rapid-fire guns at bargain prices," declared the same catalogue. Evidently the ability to be quick on its feet was highly prized by Bannerman. The catalogue went on: (20)
“Recently, a shipping firm in Europe gave us an order to convert a large ocean passenger steamship into a warship for a South American government. In one week the peaceful passenger ship sailed, altered by us into a man-of-war, fully armed and equipped: a record for quickness that could scarcely be beaten today in any up-to-date government establishment.”
The following passage, from the 1903 catalogue, could just as easily have been written by one of today's arms merchants: (21)
“Our customers include many of the South and Central American Governments. . . . For years we have supplied the Dominican and Haitian governments. Our largest customers are governments who, having limited financial resources, must necessarily purchase army guns and supplies at low prices, and who are not averse to adopting a good serviceable gun which has been cast aside by a richer and stronger government.
“We purchase large quantities of arms, which we hold in our island storehouse, for times of emergency, when arms are in demand, when even obsolete serviceable guns are purchased by first-class governments. . . .”
Bannerman's company still exists today, but it no longer trades in large quantities of surplus items. It limits its activities to producing catalogues of antique firearms and to finding rare military items for collectors. The firm's heyday ended with the arms it purchased after the Spanish-American War. Its activities increased somewhat after World War I, but by the outbreak of World War II it had lapsed into relative obscurity.
The two decades between World Wars I and II were a period of transition for the arms trade. It was a period that saw the impetus for arms trading shift from the private manufacturers to national governments. The shift was due in part to the belief held by many people that men like Zaharoff had been responsible for the Great War. The arms merchants were now on the defensive; a cry went up in political circles demanding more control over them. The League of Nations Union in 1936, for instance, put forward a ballot in the League itself asking for a vote on the abolition of the private manufacture of arms. It received overwhelming support; however, nothing concrete followed. There even was a resolution, put forth seriously by a U.S. congressman, that if passed would have required the wealthiest men in the United States, particularly those in the arms trade, to serve first at the danger points in a war. (22)
The League also kept two sets of statistics on armaments in the belief that with public exposure the trade would diminish. One set, compiled from 1924 to 1940, dealt with the level of armaments and details of armed forces. The other set, compiled from 1924 to 1938, was called "The Statistical Yearbook of the Trade in Arms and Ammunition" and purportedly was an effort to record and correlate all incidences of arms trading. Both were valiant efforts, but no one was impressed by them, nor did the trade wither away.
There were two major investigations of the arms industry in this period. One was the U.S. Senate Munitions Inquiry, known as the "Nye Committee," of 1934-36; the other was the Royal Commission on the Private Manufacture of and Trading in Arms, held in London in 1936. Both investigations unearthed an enormous number of unsavory practices: bribery, collusive bidding, profiteering, the violation of arms embargoes, illegal financial transactions, the production of shoddy equipment, and even sales to the enemy.
A number of businessmen involved in the trade faced interrogation by these two committees: in the United States men such as J. Pierpont Morgan, Jr., E. I. Du Pont, arms lobbyist William B. Shearer, Henry R. Carse of the Electric Boat Company, and various officials of steelmaking and shipbuilding firms; in Great Britain, Sir Herbert Lawrence and Sir Charles Craven of Vickers, among others. None of these people offered any cooperation or assistance to the committees. In fact, Sir Charles Craven deemed it wise to be flip: to a novelist member of the Royal Commission who asked him whether he thought his wares were "no more dangerous, or noxious than, we will say, boxes of chocolates or sugar candy," Craven replied, ". . . Or novels? No .” (23) Perhaps the most fatuous statement to come out of both investigations was the one made by Admiral Sir Reginald Bacon, Britain's Naval Director of Ordnance in World War I. Said he: "I have seen it stated that British ammunition was used against our troops at Gallipoli.
That is very likely—why should it not be? I think at that particular moment German ammunition was probably a little better than ours, but the main point is that, if they had not, used English ammunition, they would have used German, which would have been to the disadvantage of our troops."(24)
These two investigations sparked several other countries into holding their own inquiries, specifically Chile, Brazil, Argentina and Peru. None were to cause much of a stir. They also led to an increased interest in legislation as a means of curbing arms sales. (25) In 1933 Great Britain placed—but failed to enforce—an arms embargo on the belligerents in the Manchurian War; France, in 1935, began regulating arms exports from France to Algeria; and in the same year the Dutch and the Swedes enacted arms control measures.
The United States, in 1934, placed an arms embargo against Bolivia and Paraguay, belligerents in the Gran Chaco War. The following year, as the result of numerous congressional efforts to throttle the trade by American firms, and in keeping with the country's desire to withdraw from world affairs, a Neutrality Act was passed. Its two major provisions prohibited the sale of arms to belligerents and set up a licensing system subjecting export sales to government scrutiny. In 1936 the act was renewed, and was revised three years later when hostilities broke out between Germany and Poland.
In spite of these efforts, the trade continued to prosper, though at a level far reduced from pre-World War I days. British, Czech and French companies sold arms to either the Chinese or the Japanese, or both, in the Manchurian War; Italy exported arms to Turkey, Rumania, Finland and several South American countries; American firms succeeded in outflanking the embargo against Bolivia and Paraguay. Vickers (at this point called Vickers-Armstrong) held a financial interest in several foreign subsidiaries of German arms manufacturers; it was also a partner with Schneider-Creusot in Rumanian and Polish arms companies. Most surprising of all, Germany, prohibited by the Treaty of Versailles from manufacturing arms, was reported to be the chief source of arms for thirteen countries by 1929, twenty-two countries by 1930. The Czechoslovakian arms industry was to experience boom times in the 1930's as the result of large orders from Germany, then in the process of rearming under Hitler.(26)
Private entrepreneurs still had considerable freedom of action between the wars. Colonel George Burling Jarrett, perhaps the world's leading authority on armaments,* tells the story of an Englishman who made a fortune in the 1930's selling miscellaneous equipment in the Orient.
[* Colonel Jarrett is a legend in his own lifetime. He began collecting arms in 1915 and by 1945 had amassed 9,000 pieces—everything from Sopwith Camels to a complete set of German rifles manufactured between 1865 and 1945. The collection, which would be worth over a million dollars today, was broken up in 1950, much of the priceless material ending up as scrap. Jarrett's greatest moment came in 1941-42 when he was the ammunition adviser to the British in North Africa. The British were short of 75 nun tank ammunition, and they turned to Jarrett for help. He heard that there was some superior quality German 75 mm ammunition that had been captured at Tobruk; but, he was informed, the shells would not fit the Allies' guns because the rotating band was too large. Undaunted, Jarrett set up a mobile machine shop on the banks of the Suez Canal; each shell was mounted on a lathe and the rotating band was turned down by Royal Ordnance Corps technicians. He knew that the German 75 mm ammunition became fully armed when rotated at 1,500 rpm, so he kept the lathes turning no faster than 400 rpm. There were no accidents but, he told me, "It scared the life out of a lot of people." These shells, some 17,000 pieces, were to play a vital part in later battles of the North African campaign.]
On one occasion this intrepid individual—"a first-class crook," according to Jarrett—sold the Chinese some German 7.92 mm rifles he had acquired from the Poles, plus seven million rounds of Russian 7.62 mm ammunition, neither of which, even to a novice, are complementary. He then bought a batch of old British uniforms, replaced the brass buttons with wooden ones, and sold them to the same customer. The brass buttons, sold elsewhere, brought in more profits than all the uniforms were worth.
Whatever may have been the condition of the arms trade between the two great wars—on the defensive, struggling to survive, carrying on with more subtlety—it changed forever in 1940 when
President Franklin D. Roosevelt, fearing a Nazi conquest of Europe, approved the transfer of fifty American destroyers to Great Britain in return for rights to build military bases on British territory in the Western Hemisphere. The United States, after abstaining for years from the arms trade, now opened the doors of its arsenals. In March 1941 the doors were flung wide open with the passage of the Lend-Lease Act. This piece of legislation empowered the President "to authorize the manufacture of defense articles . . . for any foreign government whose defense he deemed vital," and to "sell, transfer title to, exchange, lease, lend . . . to any such government any defense article."
By the end of World War II the United States had given away $48.5 billion worth of arms and military supplies to 48 nations. The bulk of it went to Great Britain ($32 billion), the Soviet Union ($11 billion) and France ($3 billion). (27) The purpose of this aid was to help our allies carry some of the load in the war. It helped save the lives of American soldiers, although there is no way to measure how much. There was no thought at the time of being reimbursed for the material, and to this day very little has been paid back. The United States is still paying—in interest charges on the national debt—for its generosity.
The postwar growth in the arms trade stems from three pressures. The first was a direct response to the Soviet expansionist policies under Premier Stalin. Stalin wished to foment rebellion in the colonies and in the newly independent states, and the major tool he used was aggression, both overt and covert. The United States had no alternative but to contain this threat; to do it, Washington began a large-scale arms distribution program known as Military Aid. Anyone who wished to defend themselves against communist aggression could get arms from the United States. Thus there grew up a large trade in arms, flowing from U.S. arsenals into many countries threatened by communism.
The second pressure is a by-product of the central arms race between the Western and Eastern camps. As each side has improved its weapons, its inventories and armories have become cluttered with equipment that was obsolescent by their own standards but was otherwise quite serviceable. Rather than destroy this equipment, the arms-producing nations have passed it on to other nations.
The third stems from an enormous thirst for armaments in the third world. In the short span of 25 years, the number of sovereign nations has increased from 55 to 130. Only 13 of the 130 manufacture armaments in any variety or quantity: Belgium, Canada, Communist China, Czechoslovakia, France, Israel, Italy, the Soviet Union, Sweden, Switzerland, the United Kingdom, the United States and West Germany. Thus there are 117 nations—most of them poor, unstable and weaponless—that rely on outsiders to provide them with virtually all their military requirements. The demand for arms since 1945 among these countries seems insatiable. The pressure for weapons has been so strong, in fact, that the rate of obsolescence has not kept pace with demand. The world's leading military and industrial powers, therefore, find themselves more and more filling orders not with their castoff items but with brand new equipment.
For centuries the possession of modern armaments has been a symbol of power, and it is therefore not surprising that there is a strong and universal desire to demonstrate independence with an expensive array of such fancy hardware as jet fighters, missiles and tanks. Yet it is precisely these new nations—which can least afford this equipment—that actively engage in shooting wars. Fifty-four of the fifty-six "small" wars since 1945 have been fought in the underdeveloped areas of the world. Ironically, most of the weapons these poor, unstable nations buy are prestige items, not particularly suited to defending their territory.
This need for arms is so urgent that it overrides all other considerations. Dean Rusk, then the Secretary of. State, put it best in a television interview on January 3, 1965. Said he: "I recall that at the United Nations General Assembly at a time when they were voting unanimously for disarmament, seventy members were at that moment asking us [the United States] for military assistance "(28)
Thus the doors to America's, arsenals did not close with the end of World War II. Lend-Lease expired at the end of June 1946, but through a variety of legal authorizations and expedients arms worth $800 million were sent to China between 1946 and 1949 to bolster the forces of Chiang Kai-shek. In the Middle East, beginning in 1947 with the Truman Doctrine, the United States gave military assistance to Greece, Turkey and Iran, all of which were under intense Soviet pressure.
In 1949 the North Atlantic Treaty Organization came into being in order to protect Europe and the West from the expansionist designs of the Soviets. Later in the same year the Mutual Defense Assistance Act was passed by Congress; it was to become the basis for all subsequent U.S. military assistance legislation: that is, the Mutual Security Acts of 1951 and 1954, as amended, and today the Foreign Assistance Act of 1961, as amended.
The Korean War, which broke out in June 1950; accelerated America's military aid program. The war caught the U.S. government short of supplies, and industry was ordered to step up its output to meet the needs of the moment. By the end of the conflict the productive capabilities were so large, and the surpluses so vast, that the United States with little strain began supplying military equipment not only to our European allies but to other nations around the globe which appeared to be vulnerable to communist incursions.
With the Cold War at its height, the United States undertook to assume the role of protector of the entire free world. It was not a conscious policy at the time, but in retrospect it is clear that that is what it amounted to. No other country or combination of countries could have undertaken the job. The United States had already signed the Rio Pact in 1947, which declared that an attack on any American state would be considered an attack on all and that collective action would be taken to repel the aggression. In 1954 it became the leader in establishing the Southeast Asia Treaty Organization; it then encouraged the formation of, but did not join, the Central Treaty Organization (formerly the Baghdad Pact); it signed bilateral aid treaties with the Philippines, Korea and Nationalist China, among others; it established military bases in Spain and North Africa, and along with them went U.S. economic and military assistance; and it encouraged the rearming of both West Germany and Japan as early as 1954. All this activity led to a heavy outlay in military equipment.
U.S. military aid, both grant aid and sales, since 1945 has averaged more than $2 billion per year. It rose to as much as $5 billion in fiscal year (FY) 1952 and fell to as low as $831 million in FY 1956. (29) The number of recipient countries rose from 14 in 1950 to a peak so far of 69 in 1963. In all, some 80 countries have received a total of approximately $50 billion in American military aid since the end of World War II. Except for 11 hardcore communist countries and certain nations tied closely to either Britain or France, very few nations have never received military aid of one kind or another from the United States. (30)
The fact that the United States has pumped some $52 billion worth of arms into the world market in the last 25 years is obscured by the sheer size of the figure. Put another way, it means that between the years 1950 and 1966, for instance, the U.S. government either gave away or sold 9,300 jet fighter aircraft, 8,340 other aircraft, 2,496 naval craft of all types, 19,827 tanks, 448,383 other combat vehicles, 1,445,194 carbines, 2,152,793 rifles, 82,496 submachine guns, 71,174 machine guns, 30,668 mortars, 25,106 field guns and howitzers, and 31,360 missiles of all types. One must add to these totals billions of rounds of ammunition and other explosives, thousands of supporting systems such as computers and radio sets, and millions of man-hours of training sessions both in the United States and in the recipient countries. (31)
This arms traffic is increasing in tempo. For instance, from 1945 to 1955, the world's arms markets were dominated by the United States and Great Britain alone. Both gave away or sold military equipment at an average yearly rate of $2 billion and an estimated $400 million, respectively. But then the Soviet Union entered the picture in a big way in 1955, and every year since has scattered an average of $500 million worth of additional arms around the world. Soon thereafter, a revitalized France broke into the market; she is currently selling another $400 million worth of arms each year. Ironically, it was America's economic aid under the Marshall Plan that hastened France's return to the arms sales field.
In the last seven years West Germany, Czechoslovakia, Belgium, Sweden, Switzerland, Israel, Italy, Canada and Communist China have all plunged into the field, offering a variety of military wares to whoever shows interest. If military training programs and technical support from industry are included, the world's arms trade today runs to $5 billion a year, more than double what it was two decades ago. It is estimated that the market will double again by the early 1970's.
During the first ten years after 1945, the United States and Great Britain gave away most of their obsolete equipment. But by the mid-1950's it became apparent that more and more of the recipient countries were economically capable of paying their own way. Pressure was soon brought to bear, first in Washington and later in London, to sell military equipment (both obsolete and new) in order to recoup as much as possible of the high research, development, production and operating costs of the weapons. As other countries entered the arms trade it occurred to them as well that selling arms was a convenient and lucrative method of bringing in hard currencies. Not only did arms sales unclutter inventories, bolster allies, offset opponents and curry favor with neutrals, but it was—and still is—an easy way to balance the budget, to eliminate trade deficits, to ensure full employment. Thus today the arms trade is considered by most governments involved to be a moneymaking proposition, not an exercise in charity and military self-interest as it was twenty years earlier.