Profiteering in World War I

Updated on March 28, 2018
Rupert Taylor profile image

I've spent almost half a century writing for radio and print—mostly print. I hope to be still tapping the keys as I take my last breath.

While young men and women fight and die for ideals there is never a shortage of people who see war as an opportunity for profit. America’s first President understood this when, in 1778, he remarked, “There is such a thirst for gain [among military suppliers] … that it is enough to make one curse their own species, for possessing so little virtue and patriotism.”

A 1919 cartoon from Life. The businessman tells the veteran "The war is over my boy. Forget it."
A 1919 cartoon from Life. The businessman tells the veteran "The war is over my boy. Forget it." | Source

A Pointless War

The Great War was great for industrialists; grim for everyone else.

As the world mourned the 18 million dead created by the conflict people began to wonder “What was that all about?”

A cynical view developed that the purpose of the war had been to enrich the manufacturers of the machines of war. Or, was it more of a realistic appraisal?

In 1934, Fortune Magazine ran an article that put forward the notion that the war was all about money.

“According to the best accountancy figures, it cost about $25,000 (about $450,000 today) to kill a soldier during the World War,” was the opening sentence.

“There is one class of Big Business Men in Europe that never rose up to denounce the extravagance of its governments in this regard - to point out that when death is left unhampered as an enterprise for the individual initiative of gangsters the cost of a single killing seldom exceeds $100.”

Source

Capitalists, said Fortune, are in the business of killing, from iron smelters to arms manufacturers, and from meat packers to the bankers that fund them all.

The magazine was not alone in its assessment. In 1935, retired U.S. Marine Major General Smedley Butler wrote a short book entitled War Is a Racket.

The opening lines are: “War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.” (More of Butler's commentary is in the video below).

Canadian soldiers in the trenches of World War I would have understood that connection between the grasping for profit and the misery of their lives in the trenches.

The Malfunctioning Ross Rifle

For two years, Canadian soldiers had to struggle with a weapon that was sub-standard and cost many of them their lives.

Colonel Sam Hughes was Canada’s Minister of Militia and Defence from 1914 to 1916. As the Canadian Broadcasting Corporation reports in a People’s History Page, “Profits for Lives,” “He insisted on equipping the army with the [Ross] rifle. Hughes granted a subsidy of $18 million to Charles Ross, the Canadian manufacturer of the rifles.”

Not incidentally, perhaps, Ross and Hughes were friends.

The Ross rifles jammed, their bayonets fell off, and sometimes the bolt flew backwards into the face of the soldier firing the gun. Hughes stubbornly refused, against the advice of many experts, to withdraw the rifle from service. It was finally ordered out of action, not by Hughes, in 1916, by which time Ross had made a fortune.

Canadian soldiers exchange their malfunctioning Ross rifles for the much better Lee-Enfield .303.
Canadian soldiers exchange their malfunctioning Ross rifles for the much better Lee-Enfield .303. | Source

Sam Hughes and Military Procurement

From his ministerial position, Hughes was in charge of procurement for Canada’s military, and the Ross rifle was not the only shoddy item he bought.

As Ian Miller points out in his 2002 book Our glory and our Grief: Torontonians and the Great War, Sam Hughes “awarded contracts to powerful friends, often accepting inferior products for Canadian troops.”

One result of this is recorded by canadiansoldier.com: “Canadian pattern boots issued early in the First World War were, like many items of Canadian dress in 1914, not equal to the rigours of service life. The soles of these early boots were prone to dissolving in wet conditions.”

For his services to the war effort Sam Hughes was honoured by being made a Knight Commander of the Order of the Bath, in August 1915.

Sam Hughes.
Sam Hughes. | Source

Joseph Flavelle Replaces Hughes

After the fiasco of the Ross rifle and a general air of corruption and profiteering surrounding military procurements, Joseph Flavelle was brought in to clean up the mess.

An able businessman, having made a fortune in meat packing, the Canadian Encyclopedia writes that as “Chairman of the Imperial Munitions Board in WWI, Flavelle converted a scandal-ridden and inefficient industry into a vast, well-organized operation.”

But, Flavelle came unstuck when one of his own companies was labelled a war profiteer by Saturday Night magazine over selling canned meat to feed Canadian soldiers. The Canadian Broadcasting Corporation records that “The accusations arose from the fact that Flavelle’s pork trading business, the William Davies Company, had earned a profit of nearly 80 percent in 1916 and again in 1917.”

Joseph Flavelle insisted he was innocent and, though an inquiry exonerated him personally, the sordid affair stuck to his reputation.

He said “Shall we close this chapter. It is all over except the unfortunate remembrance in every part of Canada that I am to be remembered after the war as a profiteer.”

Source

Bonus Factoids

Of course, the grubby business of churning profit while young people die on battlefields is behind us. No it’s not.

In May 1934, James D. Mooney, President of the General Motors Overseas Corporation met with Adolf Hitler. The two men hatched a deal that was central to the Nazi plan for rearmament. Through its German division, Opel, GM would build much of the machinery of war that would enable Hitler to carry out his murderous rampage through Europe.

The Ford Motor Company was eager for a piece of the action as well. Here’s a 1998 report from The Washington Post: “When the U.S. Army liberated the Ford plants in Cologne and Berlin, they found destitute foreign workers confined behind barbed wire and company documents extolling the ‘genius of the Fuehrer.’ ” U.S. Army investigator Henry Schneider commented that the German arm of Ford served as “an arsenal of Nazism, at least for military vehicles.”

Corporatewatch maintains scrutiny on war profiteering in the modern age. On its website it reports that “within days of the American occupation of Iraq, Bechtel of San Francisco, California, was hired to repair the power system, telephone exchanges, and hospitals.” This happened just a few weeks after the company’s main shareholder, Riley Bechtel, became a member of President George W. Bush’s Export Council “to advise the government on how to create markets for American companies overseas.” And, globalexchange.org reported on the activities of a Halliburton subsidiary, the company of which Vice President Dick Cheney had been CEO: it “had overcharged the U.S. government some $61 million for fuel deliveries from Kuwait to Iraq. In January, Halliburton admitted to the Pentagon that two of its employees took up to $6 million in kickbacks for awarding a Kuwaiti-based company with work in Iraq.”

As long as there has been war there has been profiteering; it continues today but with bigger numbers.

Sources

  • Our glory and our Grief: Torontonians and the Great War.” Ian Miller, University of Toronto Press, 2002.
  • “Boots.” Canadiansoldiers.com, undated.
  • “On Veterans Day, Remembering the War Profiteers of WWI.” Charles Davis, Telesur TV, November 11, 2015.
  • “War Is a Racket.” Major General Smedley Butler, Feral House, 2003.
  • “Nazis Rode to War on GM Wheels.” Edwin Black, San Francisco Chronicle, January 7, 2007.
  • “Ford and GM Scrutinized for Alleged Nazi Collaboration.” Michael Dobbs, Washington Post, November 30, 1998.
  • Corporatewatch.org.
  • “Call Congress: Raise Hell about Halliburton’s War Profiteering!” Global Exchange, June 16, 2004.

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