The period 1919–1935 was a difficult one for Armstrongs and Vickers. With the end of the war domestic and international demand collapsed, and the firms were left with significant excess armament capacity and mounting financial problems. Armstrongs and Vickers responded by diversifying into other businesses, but with limited success. The contraction of the market led the two armaments firms to merge. The Great Depression further eroded military spending and dashed hopes of expanding exports. In the early to mid-1930s three things happened simultaneously: the international situation deteriorated, arms control proceeded but did not solve international insecurity, and there was growing public ire about the past behavior of armament firms. The subsequent Royal Commission into the armament firms cast Vickers in a very negative light and the firms were threatened with nationalization, something neither the firms nor the government wanted. The intervention of Sir Maurice Hankey in defense of the firms proved vital in heading off nationalization. The interwar period was therefore an extended existential crisis for Armstrongs and Vickers.

Discusses the origins of the Armstrongs and Vickers firms and their shifts into armament production. In trying to make domestic sales Armstrongs and Vickers encountered three main challenges in dealing with the British Government. First, the primacy of laissez-faire ideology within the Government, especially in the Treasury and the Foreign Office and Diplomatic Service. Second, the class prejudices of the southern elite dominating the British Government. The governing elite’s distain for trade made it difficult for armament firms to get any help, though the Admiralty and sometimes the War Office needed their products and so dealt with them. Third, departments such as the Foreign Office and Diplomatic Service were disinclined to deal with trade, preferring to focus on high politics. In response, Armstrongs and Vickers developed strategies for the domestic and international markets: building and maintaining relationships with British elites, including through exchanging personnel with the government and supplying intelligence; building and maintaining relationships with foreign elites, including using agents for diplomacy, and bribes to facilitate sales; excluding competitors from the domestic market; if exclusion failed, then cooperating and colluding with other armament firms; diversifying when sales were scarce; providing finance to secure international sales; and innovating to generate sales.

This chapter examines the records of Armstrongs and Vickers in selling armaments in Asia over a century. As part of their foreign policy strategies, the firms built diplomatic relationships with states in the region– independent of the British Government– using their own agent-diplomats and reaped impressive rewards for their labors. At the start of the Armstrongs pioneered many gun and warship deals with China (aided by Sir Robert Hart) and Japan. Armstrongs created lasting relationships with key Chinese and Japanese government officials, hosting numerous delegations, and many of the firms’ management received state decorations for their services. The relationship between Armstrongs and China spanned more than six decades and survived several changes of regime. After Vickers moved into warship production just before the turn of the century, they also began to secure lucrative contracts in the region, sometimes competing with Armstrongs and sometimes allying with her. Business was interrupted by the Great War. Weapons ordered by Siam before the war were delivered afterwards. In the interwar period armament sales did not match their previous levels, though Vickers-Armstrongs vigorously pursued Chinese sales.

Armstrongs and Vickers faced multiple challenges during the period 1901–1918. They experienced a surge in artillery orders for the Boer War and were criticized by the government for the pace of their response, leading to prickly relationships with the War Office. The end of the war saw a precipitous decline in orders, leaving Armstrongs and Vickers with excess capacity. With domestic austerity crimping Admiralty procurement plans, the two firms sought sales abroad, but with limited success as the recession hit globally. The two firms collaborated on their negotiations with the British Government over royalty payments as they looked for rewards for the risks they had taken. They also colluded on setting international prices. Both firms diversified into motor car production and aircraft development and began to create international subsidiaries and partnerships. With the deterioration in the international environment a new surge in orders looked inevitable, though the British Government was slow to give orders to industry, precipitating the 1915 “shell crisis,” and public criticism of the firms. Initially the firms struggled to produce sufficient armaments and the government became deeply engaged in industrial planning. Production of artillery, ships and aircraft was ramped up dramatically at the firms.

Over the century considered here there were two overriding problems for Armstrongs and Vickers in doing business with the Ottoman Empire. First, the Empire’s constant indebtedness; they always needed loans to buy weaponry and had a habit of falling behind in payments. Second, the British Government followed its own diktats and would annoy the Ottoman rulers. Therefore Armstrongs– and later Vickers– despite pursuing independent policies, were often disadvantaged by being seen as British firms, showing the limitations of the firms’ independent diplomacy and marketing. Armstrongs through its alliance with Ansaldo– accidentally– discovered a route around the problem of guilt by association, and for a short time profited handsomely from that strategy. Having battled with Germany to secure plum contracts, on the eve of the Great War the British Government thwarted Turkey by commandeering the Sultan Osman I and the Reshadieh dreadnoughts built by Armstrongs and Vickers. This affected relations with Turkey until she joined the Allies in World War Two, after which she got British Export Credits. Postwar Turkey was granted American military aid, closing the market to Vickers-Armstrongs.

With the Royal Commission now behind them and the Depression receding, Vickers-Armstrongs was once again able to fully focus on business and the needs of their customers. They began to rebuild their exports, but then the international market was reluctantly put aside for British rearmament in anticipation of renewed conflict. Vickers-Armstrongs faced a tsunami of orders across all areas of their business and initially struggled to meet British war needs but ultimately rose to the occasion. Vickers-Armstrongs employees served in government and the firm also oversaw shadow factories in addition to significantly expanding its own production. Their interwar investments in tanks and aircraft were vital to the British war effort, and the Supermarine Spitfire became iconic. In the aftermath of the war a familiar threat to the future of the firm reemerged: nationalization. Vickers-Armstrongs were unable to prevent it and the English Steel Corporation was nationalized by the Labour Government, complicating Vickers-Armstrongs operations. However, when the government fell, the incoming Conservative Government enabled denationalization of English Steel, returning it to the Vickers-Armstrongs fold. The era closes with rearmament for the Korean War.

This chapter recounts the domestic and international strategies Armstrongs and Vickers used in seeking armaments sales. They used strategies of cultivating relations with domestic and international elites (facilitated abroad by ambassador-agents and bribery), trying to exclude competitors from markets, cooperating and colluding with firms they could not exclude, diversifying during order famines, providing financing, and innovating to have attractive armaments to sell. Considering the independence and power of Armstrongs and Vickers, the book shows that for much of the century the firms were independent actors because the British Government was guided by laissez-faire and class prejudices and took no interest in the firms’ survival. In parallel, Armstrongs and Vickers pursued independent foreign policies that sometimes angered the British Government. Turning to the power of armament firms, Armstrongs and Vickers did occasionally demonstrate some “relational power” in their dealings with the British Government. However, they rarely got what they wanted from their negotiations with the state, so even their “relational power” was limited. Armstrongs and Vickers had tried to get more weapons spending and to prevent enquiries into their behavior; however, they failed, showing they did not wield “agenda setting” power. “Ideological” power was completely beyond armament firms.

With Sir William Armstrong modernizing the Woolwich Arsenal, his colleagues formed the Elswick Ordnance Company to manufacture Armstrongs Guns exclusively for the government. When Woolwich could manufacture the guns itself, Elswick’s contract was canceled. Sir William resigned and returned to Newcastle and Sir W. G. Armstrong & Co. was formed. Denied domestic orders, the new firm began selling abroad, facilitated by the Armstrong Gun’s reputation. Armstrongs developed the Staunch gunboat to carry their guns and moved from muzzle-loading to breech-loading guns. Armstrongs generated sales around the world, enabling the firm to survive a seventeen-year domestic order drought. Talent at Armstrongs was now sought out by the Admiralty, and personnel exchanges began. Armstrongs was the dominant British player in the armaments market until the 1880s, when Vickers emerged as a challenger. Vickers built its steel business, and developed new products and an entrepreneurial culture. Vickers successfully moved into producing marine propellers, steel for guns, and then armor, winning government contracts. Vickers then bought Maxim Nordenfelt and the Naval Construction & Armaments Company of Barrow, giving it the ability to build complete battleships. Now both Armstrongs and Vickers were engaged in complex negotiations with the government over their patents and royalties.

British armament firms operating in Latin America and elsewhere got very little help from their home government; they were on their own. They were also operating in very changeable political conditions, with many states in the region experiencing regular internal power shifts, including naval revolts and coups. There was also a lot of interstate rivalry, presenting many sales opportunities. The inhibitor to making arms sales was Latin American indebtedness. States needed loans to buy weapons but also often defaulted on them. Bribery was also a necessary lubricant of trade in the region. The Latin American market was therefore an exhilarating mix of risk and reward for Armstrongs and Vickers. Sales began in the 1880s with a controversy over the Chilean Esmeralda when war broke out with Peru. The British Government detained the ship, though Armstrongs had broken no rules. Argentina, Brazil, Chile and Peru all became important Armstrongs’ and Vickers’ customers until the Great War saw the firms focus on British needs, ceding the market to America. There were few British armament sales in the interwar years. After the Second World War Vickers-Armstrongs and the British Government worked together on arms sales, ignoring the “Gentleman’s Agreement” with America.

Discusses the selection of Armstrongs and Vickers for this study, and the availability of rich archival sources. Provides an overview of the relationship between the British state and armament firms over 1855 to 1955. Records a gradual shift from the government and firms being independent of each other to becoming interdependent. Discusses Katherine Epstein’s assertion in Torpedo that there has been a British Military Industrial Complex since the 19th Century. Considers works from David Edgerton and Edward Packard making a similar case for the inter-war period. Considers the contemporary critiques of the armaments trade, which focused on the independence of armament firm “merchants of death,” rather than identifying collusive relationships with the British state. The chapter then lays out a framework for assessing the independence and power of Armstrongs and Vickers in their relationship with the British Government. Establishes six propositions about the firms’ power and independence that are tested through the book.