288 Chapter EightNavy in some important technical development. Yet if borrowing to
cover excess costs went too far, interest payments alone would soon
eat seriously into current appropriations. In pursuing a go-for-broke
policy in technical matters, the Admiralty therefore found itself head
ing straight towards what would be bankruptcy for any private firm,
and that despite the upward curve of parliamentary appropriations.
Under the circumstances, parliamentary control over naval expen
diture began to dissolve. Ordinary members of Parliament knew little
or nothing about Admiralty borrowing, and, like the general public,
assumed that annual appropriations registered and regulated what was
actually spent. By 1909, the situaion had got so far out of hand that it
became necessary to find new sources of tax money to pay off past in
debtedness while simultaneously expanding the scale of naval build
ing. Lloyd George’s famous budget of 1909, with its soak-the-rich and
social welfare provisions, was the government’s answer to the prob
lem. It showed, clearly enough, that an all-out arms race could be con
ducted only by a government prepared to intervene drastically in pre
vailing socioeconomic relationships. In particular, progressive taxes,
heavy enough to effect perceptible redistribution of wealth within so
ciety, were needed to mobilize resources for public purposes on the
necessary scale. The House of Lords’ effort to block the new taxes im
posed by Lloyd George’s budget, and the quasi-revolutionary atmo
sphere that resulted from the government’s determination to override
the peers and nullify their veto, was an important element in the gen
eral breakup of liberal nineteenth-century society and institutions that
came to a head during World War I.
Financial uncertainty and disordering of accustomed patterns of
management were not confined to the Admiralty and Treasury. On the
contrary, the new arms technology also presented private armaments
firms with extremely difficult managerial problems. Feast or famine
was the usual alternative they faced. Some firms’ fat profits (Vickers
averaged at 13–3 percent dividend on its capital in the first decade of
the twentieth century)^46 were matched by the bankruptcy or
threatened bankruptcy of others. Admiralty policy in awarding con
tracts, a policy that itself wavered between narrowly pecuniary and
broader political considerations, played the decisive role more often
than not in determining which firms flourished and which would go
under.
Ordinary market behavior had only limited scope in such an envi
- Scott, Vickers, p. 81.