the manufacturer, but the bulk of the subsidies were paid not
directly to steel manufacturers but to shipowners and mine-
owners, and in bearing the actual cost of submarine losses at sea.
The total amount paid directly or indirectly as subsidy to steel
production costs in 1918 reached 45 million pounds sterling.
The only other way in which the stabilization of prices could have been obtained was for the Government to have bought the whole output of iron and steel, and to have sold it to the user; and if the complete character of the control had been envisaged at the outset it is possible this plan would have been adopted; but as control was at first only partial, while the maintenance of private commerce remained important, it was impracticable.
The case of steel is the most representative example of the numerous controls exercised by the Ministry over a wide field, touching the economic life of the community at many points.
Before the Ministry came into existence, some measure of regulation had been adopted in the case of several non-ferrous metals and chemicals. At an early stage in 1915, for example, the Government purchased the whole output of wolfram (the ore used for making tungsten, which is the alloy used in high- speed steel) from imperial sources. The list was added to continuously throughout the war, until at the Armistice it in- cluded aluminium (the demand for which enormously increased owing to its use in aircraft, in fuzes, and as a chemical element in smoke powder), antimony (used as an alloy of lead for making shrapnel bullets), chrome ore (the material for the alloy in chrome steel), copper, brass, lead, nickel (for nickel steel and rifle bullets), mica (for magnetos), platinum, potash, resin, shellac, tin and zinc. The long list of the explosives department included acetate of lime, acetic acid, acetone, glycerine, bleach, chlorine, ether, benzol, coal tar, creosote, nitrate, pyrites and sulphuric acid. The new process for making cordite, which was developed at the Gretna factory, was one of the main causes which brought alcohol under control, and ultimately stopped its production for non-industrial purposes; while the control of sulphuric acid, together with the scarcity of nitrate, quickly brought the whole supply of fertilizers within the domain of the explosives depart- ment, since control of one or two materials inevitably leads to the control of competing materials. Thus the department be- came responsible for the supply of superphosphates and basic slag, nitrate and sulphate of ammonia, and potash.
Several of these commodities differed from the case of steel in the fact that the article was imported on a large scale in the form in which it was commonly sold in England. Regulation, therefore, commonly started in two ways: the fixing of a maxi- mum price and the control of importation by licence. The Government early exercised a large influence on the market by reason of very large contracts which it placed abroad, but these were not always sufficient to give adequate control. Hence orders were made under D.O.R.A., giving the Government the right to commandeer all imports on private account. Even this was not always sufficient, since the existence in the country of a large stock of material made allocation difficult and created a small but free market which had a disturbing effect on price. Hence the further step was necessary of prohibiting purchase and sale except under licence. Finally, in all cases where home production was a substantial element, as for example in the case of alcohol, glycerine, etc., the Government commandeered the whole of the internal output. Certain cases, however, such as pyrites, followed the steel precedent, since the stabilizing of the price of sulphuric acid meant that, as the cost of transport and insurance of pyrites from Spain increased, the Government had to bear a large part of the cost of the material.
The period under consideration marked the transition in the great majority of cases from the looser form of control by maximum price to the more complete regulation of all dealings in the commodity and the commandeering on Government account of total available supplies.
Foreign Orders and American Intervention. When it was decided to place new heavy-shell orders abroad, considerations of finance, together with the desire to avoid becoming too dependent on a country which at any moment might ban the
export of munitions, led the Ministry to place as large a propor- tion of orders as possible in Canada. The failure of the new rifle plants erected in 1915 to make delivery in time to relieve the rifle shortage led to special negotiations for reduction in these contracts, and arrangements were ultimately entered into, under which the total to be delivered was reduced from 2,500,000 to 1,200,000. This, together with other orders, meant that in 1916 the British Government was buying large quantities of material but not much finished munitions from America. When America entered the war, representatives of the Ministry ac- companied Mr. Balfour to the United States with the object of giving the U.S. Government the benefit of British munition experience, endeavouring to coordinate the programmes of the Allies, and arranging for any change that might be called for in the organization of the munitions office in America. The Ameri- can departments were not in fact sufficiently organized as to personnel or duties to enable these objects to be carried very far at that date. In May 1917, Messrs. Morgan gave notice to terminate their commercial agency, and offered to place their organization at the disposal of the U.S. Government. As a temporary arrangement they offered to continue to place orders for the Allies at a reduced commission, but it early became evident that every order would involve negotiations with the Government for financial approval as well as for the necessary priority and export permits. It was clear that these duties could not be appropriately undertaken by an American organ- ization, and on the recommendation of the Balfour mission a British munitions representative was sent out to take charge of a mission in Washington, whose duty would be to carry on nego- tiations with the American Government for the necessary sup- plies. This officer subsequently became part of the American war mission under Lord Northcliffe.
Assistance to Russia. In the autumn of 1916, serious attention was devoted to the possibility of remedying the disparity in the material resources available on the Russian compared with the western front, the need being emphasized by the arrest of the successful offensive of Gen. Brusilov as soon as his troops came up against fortified positions which could only be overcome by heavy artillery. From the beginning of the war, Lord Kitchener had made great efforts to persuade the Russians to place orders abroad, and direct assistance in this task both in England and America was subsequently given by British organizations and British credit. But the possibility of direct material assistance was very limited. Russia was a non-industrial country taking part in a war which was being largely fought by mechanical appliances, and in particular, on the vast extension of the east- ern front, by modern means of transit. Russia was ultimately defeated by the failure of her inadequate railway system, which was called upon (i) to provide mobility for the troops at the front, (2) to bring food from the interior of Russia for 15,000,000 men and large numbers of horses normally living on the local produce of the soil, (3) to supply coal and steel from the Caucasus to the munition areas of Petrograd and Moscow which normally got supplies via the Baltic or by the Polish frontier, (4) to carry imports from the ice-bound ports of Archangel and Vladivostok. From Vladivostok it required 120 locomotives to maintain one train a day to Moscow; and though new rolling-stock and engines were put on rail in the Far East, by Christmas 1916 there had accumulated 600,000 tons of war material, including tens of thousands of tons of barbed wire, though many miles of the front had no wire defence at all.
The munitions representatives who accompanied the Allied mission to Russia in Jan. 1917 found that, in spite of the comple- tion of the railway from the ice-free port of Murmansk to Petrograd, the ports and railways of Russia could not deal with more than 3,500,000 tons of imports (including coal), compared with minimum demands for 13,000,000 tons. A careful pro- gramme based upon the former figure was drawn up, including a substantial supply of heavy artillery and aeroplanes, and a permanent mission was stationed in Petrograd to assist in trans- port and in the training of personnel, but the revolution pre- vented the programme from being carried out.
