THE STATE AND THE ARMS INDUSTRY
CONTROL of the manufacture of arms and control of the traffic in arms are two different questions which must be clearly distinguished.
The one raises domestic problems, the other ..inter- national. At the same time the two are closely related, and it was natural that consideration of both should be entrusted to the Royal CoMmission whose report was published on Monday. But it was equally natural that tks majority of the Commission's recommendations (which it is satisfactory to note were unanimous) should deal with the domestic problems. The objections to the traffic in arms, the report justly observes, could best be diminished by the limitation of arms by international agreement —for the smaller the volume of munitions a nation required the less would be its need to make purchases abroad. The Commission is content in existing circumstances to register approval of the proposals laid before the Disarmament Conference in 1934 by the United States (and not then found entirely acceptable by the British Government), providing for international supervision of both manufacture of and trade in arms, licensing both of factories and of all imports and exports, and full publicity at every stage. All that need be said about that is that the subject has been repeatedly thrashed out at Geneva and that draft conventions are in existence ready for signature and ratification as soon as the nations are ready to sign and ratify.
Meanwhile, the Commission was obviously right to concentrate primarily on the control of the manu- facture of arms in this country. Considerable anxiety has been felt about the principle of private manu- facture, partly because of the reference in the Covenant Of the League of Nations to its admitted evils, partly because of the instinctive response to the appeal to " take the profit out of war," partly because of evidence forthcoming from time to time (particularly in the course of the investigations of the so-called Nye Committee of the American Senate) of the methods " employed by armament firms in certain Countries-to create an atmosphere making for an increase of national armaments and a consequent demand for their wares. To that may be added the fact that in this country the question has to a certain extent a party aspect, for Labour, which stands for the nationalisation of the means of production and exchange, must necessarily be solid for the nationalisation of this particular industry. The Commission, however, declares against nationalisation, and for reasons with which it is hard to quarrel. The essential feature of the arms industry is that in the national interests it must be capable of great and rapid expansion in moments of emergency. There must be a large reserve of both special plant and specialised 'labour, over and .above normal peace- time needs, constantly available. That is achieved at present partly by the existence of a constant demand for arms from foreign Governments and partly through the adaptability •to war needs of machinery •designed primarily for • peaceful industrial products. The motor-engine factories now turning out aeroplane- engines are an obvious case in point. Nationalisation to be complete would have to be carried far; • But if nationalisation is to be set aside the need for a strict control of the munitions industry becomes the greater, as the Royal Commission has fully recog- nised. Its report comments on the tendency of the chairmen of munition-producing companies to regard their industry as being on the same footing as any other. It is not. In the first place it is in a peculiar sense vital to the nation's safety, and in the interests of efficiency and co-ordination the Commission is clearly right in recommending the appointment of a Minister with executive powers, both in peace-time and war-time, to supervise supply, with special powers in relation to manufacture and costing, and over the issue of licences for export. Production of all types of armament in Government yards and factories would still continue, providing by example and comparison a valuable check on prices and quality.
A second fact to be taken account of in relation to the armaments industry is the average citizen's natural repugnance to the idea of inflated profits and generous dividends being derived from the produc- tion of instruments for the destruction of human life. The American phrase " merchants of death " has been driven to a standstill by the type of journalist to whom the hackneyed cliche appeals, but there is just enough truth in it to justify its coinage. A great deal of nonsense has been talked about the profits of armament firms. So far as this country is concerned their balance-sheets in the last dozen years have given their shareholders singularly little satis- faction. But there are exceptions to that, as the recent boom in aircraft shares has testified. On all grounds the Royal Commission has done well to recommend that the profits of armament firms be restricted in peace-time (and a fortiori in war-time) to a rate sufficiently reasonable to leave the public no ground for suspicion or criticism. Provision Should be made, in equity, for averaging lean :years with fat years, but the principle is undoubtedly right. Whether, on the other hand, " conscription of industry " in war-time is the only possible way to limit salaries as well as profits may well be doubted.
There is one point at which the two questions of manufacture of arms and the traffic in arms interlock, That is in the case of export. In the larger sense the traffic in arms must be made a matter of inter- national agreement, but meanwhile steps can profit- ably be taken by exporting countries like our own to keep a check on foreign orders. The Commission proposes the adoption of a more effective system than exists at present, recommending (obviously with the international conventions on dangerous drugs as model) that every application for an export-licence shall be backed by a certificate from the foreign Government to whom the arms arc to be consigned. This means that each individual application for a licence would be adequately scrutinised, and that the system of " open licences," particularly liable to abuse in the case of a war-instrument so mobile as an aeroplane, would be abolished. The adoption of this, and the rest of the Commission's reeommenda- tions—aniong • which may be noted with special approval-- the proposal that Government officials, whether serving or retired, should only accept service with armament firms with the -special permission of the Minister in charge of their Department—would considerably reassure the public.
And it needs reassuring. The abuses with which arma- ment firms in other countries have admittedly been identified have not been proved to exist here, and there is no reason, apart from one bad case of attempted bribery reported by the Commission, to believe that they do exist. But this is, it must be repeated, an industry in many respects unique. If private manu- facture is not necessarily an evil—and it is not, so long as war as an institution continues—the possi- bility of evil is always there, and it is proper to guard against it rigorously. There is not one of the strictly moderate and practical recommendations of the Commission—with the possible exception of the conscription of industry—which the Government can afford to ignore. This report must not be pigeon-holed.
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