According to Oliver Stone and Peter Kuznick in The Untold History of the United States (2012), North Dakota Senator Gerald Nye persuaded the Senate Foreign Relations Committee in 1934 to investigate the enormous profits made by American weapons makers during the Great War.
Amplifying public indignation, Fortune magazine ran an article in March of that year, claiming that it had cost the US Treasury $25,000 to kill an enemy soldier in 1917-18: “Every time a burst shell fragment finds its way into the brain, the heart or the intestines of a man in the front line, a great part of the $25,000, much of it profit, finds its way into the pocket of the armament maker.”
The hearings were long and acrimonious, dragging in representatives of weapons manufacturers and the banks which financed them. Nye wanted to nationalise the industry. President Roosevelt asked his Secretaries of War, State, Labor, Agriculture, Navy, Army, Treasury, and the Export Import Bank to come up with a plan to end war profiteering. Steep taxes on war profits were proposed. The public, isolationist and mired in the Great Depression, generally supported each suggestion, but weapons manufacturers, banks, and the conservative press were fiercely resistant.
US industry links with Nazi Germany
As the hearings wore on, the panel began to unearth industry tie-ups with industries in Nazi Germany: IBM was helping Dehomag to manufacture punch cards. GM was making aircraft engines for the Luftwaffe at its German subsidiary Opel. Ford was a major shareholder of the chemical maker I G Farben, which was secretly collaborating with Bayer, Hoechst, and BASF to manufacture Zyclon B gas to exterminate Jews in concentration camps.
Not only Hitler but also Franco were beneficiaries. Ford, GM, and Firestone made trucks, tyres, and machine tools for the fascists in the Spanish Civil War. Texaco provided Franco with all the oil he needed to prosecute the War.
Up to the attack on Pearl Harbour in December 1941, US industry and banks remained enmeshed with German war industries. The 250 US firms which owned more than $450 million of German assets included Standard Oil, International Harvester, Eastman Kodak, Gillette, Coca Cola, Kraft, Westinghouse, du Pont, United Fruit, GM, Ford. US banks financing the industry included Mellon, Harkness, Vanderbilt, Whitney, and Morgan. But public support for the Senate hearings fizzled out as isolationism gave way to war fever.
Contrast American public moral conscience of the 1930s over weapon exports to the lack of it today. William Hartung of the Centre for International Policy in Washington claimed in a recent article in the staff of War is Boring that the international weapons trade in 2014 was worth $70 billion. The US exported more than 50 percent of this. Russia was next, but far behind at around 14 percent. In his first six years in office, President Obama oversaw weapons contracts with foreign powers worth $190 billion worldwide.
Scrutinising the arms industry today
At present, the world has many threats, and it is good business for weapons manufacturers to focus on them and exaggerate them. For they drive weapons exports, and their continuation sustains manufacturers’ profits. Lockheed currently derives 25 percent of its revenues from exports of warplanes and missiles, and Boeing 30 percent. Boeing continues to sell its popular 40 F-18 Hornet aircraft to keep its St Louis production line open. General Dynamics’ tank plants in Ohio and Michigan will be kept solvent by further overseas sales.
The richest markets for US exports of military aircraft, helicopters, warships, defence systems, and munitions are currently in the Middle East – Saudi Arabia, Israel, Kuwait, and US allies in Syria. Other opportunities are in Europe, particularly Poland and the Ukraine (fuelled by the new Cold War with Russia); North Asia (over concerns in South Korea, Japan, and Taiwan about North Korea’s nuclear weapons program); and in South-East Asia (due to expanding Chinese claims in the South China Sea). Current best prospects for multi-million dollar sales of US high technology military equipment in South East Asia are Indonesia, the Philippines, and with the recent lifting of the US arms embargo, Vietnam.
According to Hartung, 36 US allies no longer need State Department licences to import US weapons systems. This eases smuggling networks’ access to weapons for companies in client states, and proliferation of weapons systems among sub-state forces.
Hartung correctly sees the US President, members of his Executive, and military commanders as agents for the manufacturers. After retiring from the armed forces, many officers graduate to careers in the weapons industry. Most members of Congress represent states containing weapons and associated industries, making them enthusiastic supporters of US arms exports.
Does any part of the American Congress or government reflect the kinds of public concerns in the 1930s? Yes, but those with a conscience are depressingly small, and their concerns do not resonate across the whole of the arms industry. For example, a small group of Congressmen have taken a stand against the sale of US-made cluster munitions to Saudi Arabia. They include J J Conyers Representative for Michigan, Chris Murphy junior Senator from Connecticut, and Kentucky Senator Rand Paul.
But their other political concerns are widely disparate, and they do not appear to have the capacity or will to object to other aspects of weapons manufacturing. Rand Paul, for example, belongs to the Tea Party, and has a very conservative agenda.
In sum, there is no congressional groundswell against the industry as a whole. Given current tensions in the international community in which the weapons manufacturers are complicit, the arms trade will continue to expand, and with it the global arms race, the growth of profits to manufacturers, and prospect of multiplication of human casualties.
Richard Broinowski is a former diplomat and current President of the Australian Institute of International Affairs in New South Wales.
Originally published 16 August 2016 in John Menadue’s blog, Pearls and Irritations.