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# BRITAIN'S DEFENSE PROGRAM

## Harold Sprout

Every state allocates some portion of its national product to maintaining a military establishment. The demands of the military Services run large, at least in the greater states; and they tend to grow ever larger. In this respect, military bureaucracies behave pretty much like other bureaucracies.

Logic as well as Parkinson's Law underlies this expansive tendency. Every one of the greater states is heavily over-committed today. That is to say, each is attempting more than it can hope to accomplish with the means at its command. Every great state, by its own efforts, or in alliance with others, strives not merely to balance, but to overbalance, the forces arrayed in opposition to its demands. Such actions tend to evoke counter-actions in kind. So far the rulers of the greater states have discovered no alternative to a rising spiral of expanding armaments. These military establishments consume hugh and increasing quantities of goods and services in our era of run-away technology, and its corollary of rapid obsolescence.

However, the military Services are but one of numerous sets of consumers in the modern state. Moreover, there are never enough goods and services to meet all the demands on the national economy. In practice, who gets what and how much depends in considerable degree on governmental policies--on policies with respect to taxes, prices, wages, investment, foreign trade, public welfare and other civil functions of government, as well as decisions allocating goods and services to the military establishments.

These government decisions necessarily embody compromises between conflicting demands on the national economy. Allocations to the military Services may reflect careful and prudent calculations of what is needed to safeguard vital national interests. But that is only part of the picture! The military budget, like every act of government, reflects conceptions of what is feasible and expedient in the prevailing climate of the state's external relations and internal politics.

Conceptions of what is desirable, prudent and feasible vary widely from one country to another. Such differences can evoke irritation and dispute among allies. The views of one partner will normally have some influence on the others. But differences regarding what is needed for the common defense are not always resolved completely. Each nation's defense program is bound to reflect its own traditions and experience, and its own notions of what is desirable, prudent and feasible. It is within this frame of reference that I propose to discuss certain aspects of the military policy of Great Britain.

We may as well fact it at the outset, that British and American policies represent somewhat different approaches to military defense, to the cold war, and to

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co-existence with the Communist world. We Americans tend to look at these problems from a different geographical perspective, from a vastly greater cushion of wealth and affluence, and from a considerably greater confidence in military solutions. I shall not attempt to judge the relative merits of British and American approaches to the problem of common defense. Rather I shall attempt to give a brief report on British military policy, with some comments on, what seem to me to be, its economic, political, and military implications.

## The 1957 - Program

Each year the British Government issues a report on defense policy. This annual Statement on Defense (or Defense White Paper, as it is commonly called) performs two main functions. It informs Parliament and the country of the Government's military plans. It also serves to legitimize those plans and the expenditures entailed.

The principal features of the defense program in force today date from the White Paper issued in April 1957. The text of that document is generally attributed to Mr. Duncan Sandys who became Minister of Defense when the Macmillan Government was formed in January 1957. But it has been repeatedly asserted that the 1957-program embodies ideas and arguments contributed and firmly held by the Prime Minister himself.

The 1957-program superseded the re-armament program launched in 1950 at the time of the Korean War. Under that program, military expenditures had nearly doubled--from £861 millions in 1950, to £1,696 millions in 1956. One prime objective of the new program was to reduce substantially the level of military spending. This was to be achieved, in the main, by drastic curtailment of Britain's conventional military establishment--especially the Army and Navy, and their tactical air support.

Over a period of five years, the Government proposed to take the following steps:

(1) Conscription was to be abolished by 1962.

(2) Personnel in military service was to be reduced by 50 per cent.

(3) British garrisons overseas were to be cut down, and in some cases closed out altogether.

(4) Britain's contribution to the NATO armies in Europe was to be cut immediately by 20 per cent, with further curtailment later on.

(5) To compensate for these reductions, a "central reserve" of mobile troops was to be established in Britain, ready on short notice for airlift to trouble-spots overseas.

(6) The Navy was to be reduced and reorganized for the support of such limited operations.

(7) A "manned fighter force" was to be continued for the time being, though at reduced strength, for defense of "bomber airfields" in Britain.

(8) Civil defense was to be put on a stand-by planning basis.

(9) Research and development of nuclear weapons was to be continued

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and even accelerated, though not to the point of denuding non-military sectors of the economy of scarce scientists and engineers.

The Government supported this program on both economic and military grounds. The basic economic premise was that "Britain's influence in the world depends first and foremost on the health of her internal economy and on the success of her export trade." Hence, "the claims of military expenditure should be considered in conjunction with the need to maintain the country's financial and economic strength."

Since 1951, Mr. Sandys reported: "Defense has on the average absorbed ten per cent of Britain's gross national product." "Some seven per cent of the working population are either in the (military) Services or supporting them." The military establishment, he reported further, was consuming "one-eighth of the output of the metal-using industries, upon which the export trade so largely depends...." Military research and weapons development were engaging "an undue proportion of qualified scientists and engineers." In view of these considerations, the Government concluded that Britain's military effort exceeded the "country's capacity" to sustain over the "long haul."

Given this conclusion, the question, as the Government saw it, was where and how to economize. Their solution, summarized above, was to curtail drastically the conventional military forces and to concentrate on the development of nuclear weapons.

This decision rested upon several assumptions. The first was that projected major war, on the pattern of World War II, was unlikely to recur. The second was that any major war would involve the use of nuclear weapons. The third was that Britain would be a target of massive nuclear bombardment. The fourth, and most important assumption, was "that there is at present no means of providing adequate protection for the people of this country against the consequences of an attack with nuclear weapons." Some "proportion (of the attacking planes or missiles) would inevitably get through", causing "widespread devastation."

In view of this expectation, the "overriding consideration...must be to prevent war rather than to prepare for it." For this purpose conventional land, sea and air forces would not suffice. Such forces, in the Government's view, have very little deterrent value. "The only safeguard against major aggression is the power to threaten retaliation with nuclear weapons."

As for defense against a Soviet attack on Western Europe, an attack that did not extend immediately to Britain herself, the 1957-Defense Statement was vague. It was recognized that such an attack would constitute major aggression. It was also recognized that a Soviet invasion might not involve the use of nuclear weapons, at least at the outset. In such a contingency, the Government's position was that the "frontiers of the free world, particularly in Europe, must be firmly defended on the ground."

The 1958-Defense Statement dealt more specifically, and rather differently, with this question. The Government concurred in the strategy of NATO which

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is "based on the frank recognition that a full-scale Soviet attack could not be repelled without resort to a massive bombardment of the sources of power in Russia."

Given a strategy of nuclear deterrence, Britain's choice lay between providing its own nuclear weapons system or depending on the United States. The Government rejected outright the second choice. Britain, Government spokesmen insisted, "must possess an appreciable element of nuclear deterrent power of her own."

The argument for this position came out more explicitly in the subsequent debates in Parliament. Dependence on American weapons was conceived to restrict Britain's choice and initiative. Moreover, American interests were not identical with Britain's. Britain needed its own deterrent, it was argued, against the possibility of future American withdrawal from Europe or other American decisions adverse to Britain. More generally, possession of its own nuclear deterrent would give Britain's voice greater authority in diplomacy.

Mr. Macmillan has put it this way. Possession of an independent nuclear deterrent "gives us a better position in the world.... It puts us where we ought to be, in the position of a Great Power. The fact that we have it makes the United States pay a greater regard to our point of view, and that is of great importance." (Times. 2-24-58)

The refusal of the United States, in 1956, to support the Anglo-French action on Suez has perhaps made British statesmen especially sensitive on this point. But British unwillingness to become an American satellite long antedates Suez. Recently, Lord Attlee, restated the grounds for the original British decision in the late 1940's, to go ahead with an independent nuclear weapons development. "We couldn't get cooperation with the Americans.... And they were inclined to think they were the big boys and we were the small boys. We just had to show them they didn't know everything." (Listener. 1-22-59)

The 1957-White Paper promised a substantial reduction of military expenditures for the year ahead--a saving calculated to exceed £200 millions. Beyond that the Government was cautious. But confidence was expressed that the "new plan, when it is fully implemented, will further appreciably reduce the burden on the economy." As a result, it was predicted, both "exports and investment" would "gain."

## American Reactions

Publication of the 1957-Defense Statement evoked a storm of protest and recrimination in the United States. James Reston (of The New York Times) reported that "the Pentagon" was "startled" and dismayed. "Even prior official knowledge here of what London was planning did not quite prepare this capital for the bald official proclamation that the British Government did not think it could defend its islands in an atomic war...." (4-5-57)

Several senators denounced the White Paper. One of them deplored what he called "Britain's resignation from the role and responsibility of a major world

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power." Others reproached Britain for making a public display of defeatism. However realistic the British stand might be in fact, some American officials were reported to fear that the British announcement would only "stimulate the growth of neutralism in Europe." The Western Allies, it was argued, should "work and plan hopefully toward an effective defense against hydrogen weapons rather than proclaiming, and thus encouraging, a sense of hopelessness among the people." Some critics even feared that Britain's action might destroy the Atlantic Alliance. And there was widespread complaint that Britain was simply shifting its burden to the already overburdened taxpayers of the United States.

Perhaps the most intemperate attack was the one that asserted: "The British Government is plunging from one extreme to another. Last fall it went into a Suez war on the theory it was strong enough both to master the Middle East and defy the United States and the United Nations. Now it plans to cut its total armed forces almost in half within five years and depend on the overloaded United States for even more defense of Britain and the world.... The irresponsible length to which the British Cabinet is willing to go is revealed in its astounding announcement abolishing con- scription three years hence." (Manchester Guardian. 4-11-57 and 4-6-57; and Sunday Times. 4-7-57)

The outcry in America well illustrates how difficult it may be for peoples, even those with common language and a similar cultural heritage, to appreciate each other's images of events and of the shapes of things to come. To The Times (of London), "the feeling in the Pentagon that the (British) Government are being defeatist in regarding Britain as indefensible", illustrated "the effect of distance on military thinking. Yesterday (The Times continued) global war seemed suicidal only for the Continent; today it seems so for Britain; tomorrow it might be even for America." (4-6-57)

Implicit in this comment of The Times is the general thesis that British attitudes and policies can be appreciated only in the light of British geography, British experience, and British interpretations of conditions and events.

No brief review can do justice to this essential background, but some account of it is basic to an understanding of Britain's defense program and military policies.

## Background of the 1957-Defense Program

Britain's historic military system, as is well-known, was founded upon the concept of command of the sea. By the end of the Napoleonic Wars, the Royal Navy had demonstrated its capacity to perform four related functions:

(1) To prevent military invasion of the British Isles;

(2) To protect the inflow of essential supplies into Britain from overseas;

(3) To cover the movements of British troops to battlefields overseas; and

(4) To drive enemy shipping from the main sea routes, and cut off enemy countries from seaborne supplies and assistance.

This system of defense was perfected in an era when Britain's only danger- ous rivals were European states. In the main, those European powers could gain access

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to the oceans only through narrow seas--the Channel, the North Sea, the Strait of Gibraltar, and later the Suez Canal and Red Sea. By winning control of those strategic bottlenecks of seaborne traffic, the British Navy commanded the ocean portals of Europe. The same pattern was duplicated on a lesser scale in the Indian Ocean and in other distant seas.

Confident of their Navy's ability to repeat the achievements of the Napoleonic period, if put to the test of war, nineteenth-century Britons went about their business. They built up the world's leading industrial economy. Their investments accumulated in the new countries beyond the seas. London became the business and financial center of the world. The combined power of fleets and finance sustained a system which approached, even if it never quite attained, the dimensions of a political world order.

All this was accomplished without the expense of a huge military establishment on land. The British Army, manned by volunteers, garrisoned the overseas colonies and naval bases, and provided the nucleus for greater forces if needed. The Navy provided the shield behind which Britain could mobilize the greater land forces that would be needed in case of major war in Europe or beyond the seas.

New machines insidiously eroded the foundations of this global sea power. These new machines included the automotive torpedo, the internal combustion engine, submarine torpedo craft, the oil-fired boiler, railroads, hard-surfaced roads and motor vehicles, aircraft and aerial bombs, and many other fruits of the accelerating technology of the nineteenth and twentieth centuries.

Because of these technological advances, Britain in the Second World War came perilously close to irreparable disaster by blockade and bombing. This was achieved, moreover, without a single hostile battalion landing on British shores. And it was achieved before the advent of the far more destructive atomic bomb, first used against Japan in 1945, and possessed by the Russians since 1949.

Simultaneously, events were eroding the economic foundations of Britain's world position. The Second World War in particular made deep inroads on the foreign investments which had long played an important role in balancing Britain's international accounts. The blitz inflicted heavy damage on Britain's productive plant. The war delayed replacement of damaged, worn-out, and obsolescent equipment. The war further disrupted established foreign markets, and stimulated growth of competing industries in countries formerly dependent on Britain for many or most of their manufactures.

Formidable economic problems confronted Britain after the victory. Loans and subsidies, chiefly from the United States, helped to meet the postwar economic crisis. But these only partially relieved the strain under which the British economy has operated most of the time since 1945.

Largely for this reason, it would appear, British military forces were allowed to run down for several years. The Czech crisis of 1948, the formation of the

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Atlantic Alliance, and then the outbreak of fighting in Korea in 1950 temporarily checked this run-down. A re-armament program was undertaken on the hypothesis that Korea might be the opening campaign of World War III. Within a few years, British military expenditures more than doubled from the low point of 1948. Though the pace slackened after the Korean truce, military spending continued to rise. This was attributable in part to inflation. But it was attributable also to heavier outlays for nuclear research and weapons development, as new inventions multiplied and the cold war continued unabated.

The initial British response to the advent of nuclear weapons was to graft these onto the traditional military establishment and strategy. As late as 1948--three years after a single low-yield atomic bomb wrecked Hiroshima--the annual Defense Statement argued that "new scientific developments do not modify the basic principles of defense policy...." The Labor Government, then in office, appeared to assume that conventional land and sea forces, supplemented by well-tried methods of civilian defense, could repel any future assault on the British Isles, keep the country's economy running, maintain the inflow of food and raw materials from overseas, and provide the margin of time required to mobilize for total war.

The Conservative Government, formed in 1951, carried on with pretty much the same doctrine. The Defense Statement of 1954 introduced the idea of "broken-backed" warfare. This was an attempt to reconcile with conventional doctrine the accumulating evidence of the destructiveness of nuclear explosives. It was now accepted that a future war would probably open with a "period of intense atomic attacks." These would inflict "great destruction", but might fail to produce "decisive results." The fighting would then "decline in intensity", as the "opposing sides would seek to recover their strength." Assuming some such sequence of events, it was very essential to have a conventional military establishment, "capable of rapid mobilization", to carry on after the atomic bombardment subsided.

The concept of "broken-backed" warfare was omitted from the Defense Statement for 1955. Instead, great emphasis was put on the enormous destructiveness revealed by the thermo-nuclear bombs tested by the United States. Much was made of the effects of blast, hear, and radioactive fall-out. The deterrent threat of massive retaliation was stressed more heavily; and Britain's intention to build its own thermo-nuclear deterrent was asserted.

Nevertheless, it was reiterated, Britain's "long-term policy remains unchanged." In a major war, the argument ran, the Royal Navy would still be "required to contain and destroy enemy forces at sea so as to allow movement of supplies and troops and to give both our land and our air forces support...." Britain would "still need troops on the ground to hold the enemy well to the east in Europe in the vital initial stage of a war." Home defense, both military and civilian, would be "no less vital than before." Finally, the "discharge of our many overseas commitments in cold war conditions must continue to absorb a large share of the resources which we can make available for defense."

This hybrid system--nuclear weapons and a strategy of massive retaliation grafted onto the traditional military system--was reaffirmed in 1956. Britain

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"must make a contribution to the Allied deterrent commensurate with our standing as a world Power." Britain must also possess conventional forces sufficient to deal with "outbreaks of limited war." And these forces must be "capable of playing their part effectively" in case of "global war."

The great unresolved issue was how to do all this without bankrupting the economy. The 1956-White Paper noted that "the maintenance of British forces overseas involves a heavy charge on the balance of payments." Military demands were encroaching on "exports" and on the "re-equipment of British industry." Especially worrisome was the encroachment of the military establishment on "our limited resources of scientific manpower" and on the "manpower available for the tasks of civil industry." Finally, the White Paper warned in 1956: "the burden of defense cannot be allowed to rise to a level which would endanger our economic future."

Public conviction that this was precisely what was happening spread rapidly during 1956. Daily and weekly newspapers were all but unanimous in demanding military retrenchment. Mr. Macmillan, then Chancellor of the Exchequer, was applauded for saying that Britain was carrying two rifles instead of one; that is to say, the United Kingdom, in comparison to Western Europe, "was devoting nearly twice as large a share of her resources to defense." *The Financial Times*, in particular, hampered home the thesis that the military budget must come down, or Britain would be ruined.

The Suez crisis evoked still more insistent demands for military reform. On January 2, 1957, Drew Middleton (of *The New York Times*) reported from London that the Government was making a reassessment of Britain's "overseas commitments and economic resources." There is "ample reason to believe", he said, that the Government is "considering a reduction of its international responsibilities." The future of all British military establishments was said also to be "under review."

*The Manchester Guardian* declared that a "satisfactory rate of industrial investment can be achieved only by cutting the defense budget...." (1-21-57) A feature article in *The Daily Telegraph* argued that the military establishment was consuming resources, labor and skills, all desperately needed for expansion and modernization of the export industries. The military budget would have to be cut. The only way to do this without increasing the country's peril was to concentrate on nuclear weapons and cut conventional forces to the lowest point consistent with maintaining order in the remaining colonies. (1-22-57)

*The News Chronicle* reported that "defense scientists have decided" that it is "impossible to defend Britain against rocket attack in an atomic war"; and that it would take only two or three H-bombs to make the country virtually uninhabitable. In consequence, *The Chronicle* predicted, Britain "is giving up defensive weapons almost completely" and is going over to a strategy of deterrence. (1-23-57)

*The Daily Herald* delivered a blast from the Left, against military conservatives who blindly ignored or stubbornly refused to recognize that there is no tactical defense against the H-bomb and ballistic missiles. *The Herald* demanded drastic

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curtailment of conventional forces and pooling of nuclear research and weapons development with the United States. (1-23-57) "Nothing alters the fact," The Herald argued on another day, "that Britain needs a great transfer of energy to the export drive, and a big saving on...armaments." (2-5-57)

Early in 1957, the newly-appointed Defense Minister, Mr. Duncan Sandys, conferred in Washington. The London newspapers carried full accounts of these conversations. From their accounts it seems clear that American officials were explicitly warned of the impending changes in British military policy. Hence their outcries after the event may well have expressed anguish, but scarcely the surprise which was so carefully simulated in their statements quoted in the American press.

## Critique of the 1957-Defense Program

### The Economic Argument

The economic argument in support of the 1957-Defense Program rests upon the premise that military spending at an average rate of ten per cent of Britain's gross national product exceeds the country's "capacity" to sustain over the "long haul."

In computing this average, Mr. Sandys chose the five-year period, 1952-1956. During that period, military expenditures, expressed in current prices, rose from £1,575 millions, to £1,696 millions. This represented an increase of about 7.5 per cent. In the same five-year period, Britain's GNP increased from £13,990 millions, to £18,268 millions, an increase of about 30 per cent. Thus, in terms of current prices, Britain's GNP expanded relatively four times as fast as British military expenditures between 1952 and 1956.

This differential rate is reflected in the declining ratio of military expenditures to GNP after 1952. After a rapid rise from 1950 to 1952, this ratio declined steadily between 1952 and 1956. This early rise and subsequent decline is shown year-by-year in the following table:

Military Expenditures Expressed as a Percentage of GNP

<table><tr><td>1950</td><td>7.0%</td></tr><tr><td>1951</td><td>9.0%</td></tr><tr><td>1952</td><td>11.3%</td></tr><tr><td>1953</td><td>11.0%</td></tr><tr><td>1954</td><td>10.0%</td></tr><tr><td>1955</td><td>9.5%</td></tr><tr><td>1956</td><td>9.3%</td></tr><tr><td>1957</td><td>8.3%</td></tr></table>

During the period 1952-1956, the price trend was upward. Inflation is estimated to have been about 15 per cent. Thus, in real terms, the rise of Britain's GNP was perhaps nearer to 15 per cent than to 30 per cent. If we assume, in the absence of evidence to the contrary, that the prices of military goods and services increased at about the same rate as the average represented by the price index, defense

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expenditures increased only half as much as the general price level. That is to say, the
<u>real purchasing power</u> allocated to military purposes may have been actually less in 1956
than in 1952, less by as much as seven per cent, or more.

Sandys was correct in stating that defense had cost ten per cent of GNP on the average, during the preceding five years. But that statement concealed the trend in the ratio of defense expenditures to GNP, a trend, I repeat, which had been steadily downward since 1952. Sandys also ignored the declining purchasing power of the funds allocated to defense during the same period. (Finally, it may be noted parenthetically, the ratio of military spending to GNP was considerably lower in Britain than in the United States, a fact reported in the British press, e.g. *Financial Times*. 1-17-57) In the light of these findings, Americans might be tempted to conclude that Sandys' thesis regarding Britain's capacity to support a defense program was much too conservative.

Before accepting this conclusion, one should consider two other ques-
tions: First, does the British economy present features which, in an economic sense,
more narrowly limit military spending that is true of the United States? Second, did
Sandys mean by "capacity" something besides mere <u>economic</u> capacity? I think the
answer to both of these questions should be yes.

Let us consider first certain features of the British economy. In 1956,
the distribution of total goods and services in the United Kingdom was reported to be
as follows:

Personal consumption-------------------- 52%
Exports of goods and services------------ 19%
Investments, fixed and in stocks-------- 14%
Government expenditures: non-military----- 9%
Government expenditures: military--------- 6%

(Source: Official Handbook, 1958)

This distribution of goods and services can be more easily visualized by
the following "pie-chart":

In any economy, there are two ways to increase the goods and services
to one set of consumers. One way is to reduce the share to other categories. The

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second way is to increase the total available; that is, to increase the size of the pie to be shared.

The total in Britain has been increasing. Allowing for inflation, the real increase seems to have been about 15 per cent between 1952 and 1956. Moreover, as previously noted, the proportion allocated to military purposes was slowly declining throughout this period. The argument for cutting the military budget turns out, therefore, to be an argument for increasing the share of GNP allocated to other than military consumers.

The priorities most frequently emphasized, both by Government spokesmen and by the press, were exports and investments. At some risk of elaborating the obvious, let us consider briefly the basis of these priorities.

Britain is a densely settled, highly industrialized country. Most of the working population are engaged in manufacturing, trade and finance. Only five per cent work in agriculture, forestry and the fisheries combined.

Britain is also relatively poor in indigenous economic resources. The British economy depends heavily on imports. About 50 per cent of all food is imported. Coal is the only abundant raw material. Total imports--chiefly foodstuffs and raw materials--have regularly exceeded 25 per cent of GNP in recent years.

These imports are paid for mainly by exports of goods and services. Writing for The District Bank Review in the spring of 1957, John Jewkes, Professor of Economic Organization at Oxford, characterized as "precarious" the conditions "from which we suffer in paying for what we get from abroad." He continued: "Comparing 1939 with 1955, in pounds sterling of unchanged value, our gold and silver reserves are now about five-eighths, our total overseas investments perhaps one-half, our returns on overseas investments perhaps three-fifths of what they formerly were. Hanging over our heads are the short-term external liabilities, standing mainly to the credit of sterling area countries, which are about three times as large as prewar; and £2,000 millions of long-term dollar debts which have been incurred since 1945." (March issue, 1947)

Given Britain's dependence on imports, the economy's ability to meet the various demands for goods and services depends, first of all, on maintaining correspondingly high exports of goods and services. To do so requires not only that goods and services be available for export; but also that they compete successfully with the offerings of foreign competitors.

In order to keep British prices competitive in foreign markets, numerous conditions are necessary. One of these is that British equipment and methods of production must be kept efficient and up-to-date. We in America tend to forget how much Britain still suffers from the consequences of World War II. In 1957 there were still thousands of bombed buildings to repair or replace. There were still large arrears of depreciation to make good. It was estimated in 1956, that "total disinvestment at home and abroad" (as a result of the war, and not including "private...dwellings and

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household goods") amounted to...about one-quarter of the estimated total capital wealth of Great Britain in 1945." (G.D.H. Cole, *The Postwar Condition of Britain*, p.103)

Moreover, we in America tend also to forget that almost every piece of equipment manufactured in Britain--every new lathe, press, die, generator, tractor, etc.--contains an important amount of imported materials. Hence, modernization and expansion of British industry not only requires allocation from current output to investment; it also involves consumption of large quantities of imports. Nor is that all! Most of the goods exported to pay for imports of raw materials also contain imported materials themselves. These, in turn, require a higher level of exports. This spiralling effect presents a problem of special difficulty for countries so dependent on imports as Britain is.

The need for expanding investments and exports was constantly emphasized during the debate on economic and military policies, which continued throughout 1956 and 1957. The links between investments, exports and imports were reiterated again and again. And it was also widely argued that the only way to expand those allocations--to investments, to exports, and to imports--was to reduce military expenditures.

This last argument rests upon an important premise--a premise that was rarely made explicit--that it would be politically inexpedient to make deep cuts either in personal consumption or in government spending for non-military purposes.

If one could disregard political expediency, personal consumption offered possibilities for retrenchment. In 1956 personal consumption accounted for over half of all goods and services distributed in the United Kingdom. In comparison with most countries--the United States being a notable exception--the average standard of living in Britain is high. But the British people in the 1950's were just emerging from fifteen years of austere living--the years when rationing, high purchase taxes, high income taxes, stringent credit restrictions and other controls severely curtailed personal consumption.

In a masterpiece of understatement, Professor Jewkes (previously quoted) commented wryly that "efforts to cut down consumption might encounter stronger... psychological resistance in 1957 than in 1939." My own personal impression, in 1955, and re-enforced in 1957, was that British consumers were "fed up" with controls. Austerity had become an odious word. Everywhere I went, I found people hungry for better houses, new furniture, more kitchen equipment, motor vehicles, and all the other material amenities--not only hungry for these things, but impatient with government policies that withheld them.

Under the conditions of nearly full employment then prevailing, British consumers--despite the controls--were putting heavy pressure on their economy. Increased spending for personal consumption, like investment in industrial equipment, requires larger imports of food and raw materials. The imported materials that go into personal consumption, no less than those that go into new factories and machinery, must

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be paid for by greater exports of goods and services. And, to emphasize a point pre-
viously made, increased consumption of imported materials for whatever purpose, requires
greater exports, since the exports too contain a considerable percentage of imported ma-
terials on the average.

What I have said with respect to personal consumption probably applies
with equal force to government spending for non-military purposes. The British rail-
ways, coal mines, public housing projects, road works, etc., all consume large quanti-
ties of goods. And in 1957, there were strong political as well as economic arguments
for maintaining, or even increasing, expenditures in this sector of the national economy.

The military services, as frequently emphasized, were also heavy consumers of imported materials. They were reported to be taking "one-eighth of the output of the metal-using industries, upon which the export trade so largely depends...." And Sandys could have added, those same metal-using industries were among the heaviest consumers of imported raw materials.

Thus one might visualize the British economy as an intricate system, providing goods and services to meet the demands of several more or less distinct markets (or categories of consumers). As previously noted, the five main categories were, in order of magnitude in 1956:

(1) The personal consumption market;

(2) The export market;

(3) The domestic capital market;

(4) The civil governments, national and local; and--

(5) The military Services.

Government policies profoundly affect the allocation of goods and ser-
ices among these five markets. In time of war or other acutely felt peril, one standard
will prevail. Under less critical conditions, or conditions felt to be less critical,
different standards prevail. This applies with special force to widespread public con-
victions as to what constitutes a tolerable minimum of personal consumption. No re-
presentative government will, or can be expected to, disregard such convictions com-
pletely.

As a foreign resident in Britain in 1957, after the Suez crisis had quieted
down, I could sense very little anxiety regarding foreign affairs. I gained the definite
impression that local problems were crowding foreign dangers from most people's atten-
tion. They seemed to be much more troubled about taxes, inflation, hire-purchase,
wages, conscription, and other problems close at hand, than about Russia, communism
or the H-bomb. One was even tempted to speculate that the Government's future de-
pended more on improving the British style of living, than on pursuing a vigorous for-
eign policy, contributing more to Western defense, or otherwise preparing for hypothet-
ical perils overseas. It also seemed to me that the leading politicians had accepted
this state of affairs and come to terms with it.

If these personal impressions were sound in the main (and I recognize,
of course, that I may have been mistaken), it was unlikely that the Government in 1957

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would dampen down consumer spending any more than was deemed absolutely necessary to protect the balance of payments. It seemed rather more likely that controls on personal consumption would be relaxed somewhat and that the state-owned industries and welfare services would be maintained.

If, for reasons of political expediency, the Government hesitated to cut back consumer spending or the non-military spending of public authorities; and if, for economic reasons, it was felt necessary to stimulate investments and exports--if this order of priorities was to prevail--then the only recourse was to cut the military budget, or at least to prevent its upturn as seemed imminent in the winter and spring of 1957.

Arguments for cutting the military budget were cast mainly in terms of economic necessity rather than political expediency. But, as *The Economist* emphasized, there was "no economic reason why, if people are willing, Britain should not adjust the level of consumption to a defense budget of £1,700 millions or more." But, *The Economist* continued, there was no "political backing for it....The background against which any Minister of Defense operates--especially after the military fiasco of Suez--is the widespread conviction that most of the taxes extracted from the country under the Attlee (military program)...have gone down the drain." (4-13-57)

Military retrenchment continued through 1958. That year the Defense Statement re-emphasized that "maintenance of a stable currency and a healthy economy is an indispensable element in national defense" in this "period of protracted international tension." To this end, the Government announced a further small cut in the military budget.

During 1958 and 1959, Britain's balance-of-payments position improved substantially. In the words of Sir Oliver Franks, Chairman of Lloyds Bank, Britain is benefiting from a "combination of stable prices for our exports with lower prices for primary products" which have to be imported. This state of affairs is highly advantageous to Britain, though ruinous for most of the under-developed countries. How long it will continue is debatable. But the effect, while it lasts, is of course to increase Britain's ability to pay for imported foodstuffs and raw materials.

The Government has seized this opportunity to reduce taxes, relax credit, and otherwise to stimulate saving for investment and also spending for consumption. But, to quote again from *The Economist*, "the Chancellor has not allowed to the defense departments the additional real resources which some of the civil spending departments are to enjoy." The military budget this year (1959) does show a slight increase, about £20 millions. But this "extra for defense", *The Economist* predicted, would "be more than absorbed by increases in prices, service pay and pensions. In real terms, in fact, spending on the army is taking a small but quite significant cut." (2-14-59)

These budgetary allocations indicate something about the political climate of Britain today. Perhaps even more indicative is the content and tone of public discussion of the Government's fiscal policies. Tax reductions and other incentives to saving for investment--but also to spending for personal consumption--have been widely applauded in the press, as a means of combatting the moderate recession which afflicted

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the British economy during 1958. But I have seen no statement pointing out that increased spending for military purposes would also have a stimulating effect on the economy. It is as if there were a settled, if tacit, consensus in Britain that spending for defense shall not rise much above a ceiling of around £1,500 millions, under existing conditions domestic and international.

However, there is one respect in which the Government's caution on military spending may have more economic justification than first meets the eye. Military spending, perhaps rather more than civilian consumer spending, involves making industrial commitments that require considerable time to carry out. The British economy, far more than most others, is "at the mercy of the vagaries of world trade", as one commentator recently put it. A slump in British exports, or an upturn (not unlikely) in the prices of primary products, could erase the gains of recent months, and even lower dangerously the level of Britain's ability to import the raw materials on which her industry so heavily depends.

> I have previously quoted Professor Jewkes' comment that "the critical weakness of (Britain's) present power to mobilize resources for any extraordinary purpose lies in the precarious conditions from which we suffer in paying for what we get from abroad...."

Speaking to the same point, another commentator noted in 1957, that Britain's monetary reserves, in 1938, could have purchased 12 months' supply of imports; in 1945, 6.5 months' supply; in 1956, only 2.5 months' supply. Since then, as I have said, Britain's position has improved, at least temporarily. But it still remains true that Britain is critically dependent on current exports of goods and services to pay for imports. That is to say, Britain is extremely vulnerable to adverse changes in the terms of trade.

Economic caution and fiscal prudence, as well as political expediency, thus appear to underlie the British Government's policy of military retrenchment. The weighting of economic and political factors in the Government's calculations would be difficult, probably impossible, to ascertain. But their combined effect on military defense has been, and continues to be, severely restrictive.

## Critique of the Defense Program

### The Military Argument

The military provisions of the defense program, launched in 1957 and slightly modified in 1958 and 1959, have evoked much more controversy than the ceiling imposed on military spending. Controversies over these military provisions fall mainly into two categories: on the one hand, broad issues of grand strategy; and, on the other hand, technical questions regarding allocation of funds among the different military Services, design of equipment, operating plans, etc. I can touch on only a few of these issues in the time remaining.

With regard to basic principles, the Government still stands firmly on the theses laid down in 1957. These include:

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(1) A major war would probably open with a shattering bombardment with nuclear weapons.

(2) There is no tactical defense against such a bombardment.

(3) It is doubtful whether Britain could survive that kind of attack.

(4) It is fruitless to contemplate a second, so-called "broken-backed" phase, fought with conventional land and naval forces after the nuclear bombardment subsided.

(5) Hence, Britain's grand strategy should be to prevent such a war, rather than to attempt to devise ways of fighting it.

(6) To this end, highest priority should be given to the apparatus of massive retaliation.

(7) In order to advance along these lines without increasing total military spending, the conventional military forces--Army and Navy, and their tactical air support--have to be drastically reduced, and reorganized for strictly limited operations.

The 1957-program's major premise stands unshaken today. No one has rebutted convincingly, and very few have challenged, the Government's thesis that Britain is indefensible against the "consequences of an attack with nuclear weapons." Moreover, there has been very little disposition to dispute the Government's thesis that threat of massive retaliation--the doctrine of nuclear deterrence--should remain an ingredient of Western defensive strategy.

What is more in dispute is whether Britain's small stockpile of thermo-nuclear weapons contributes significantly to the prevention of a major war. Also in dispute is whether less money should be spent on nuclear weapons, and more on the Army and Navy, and their tactical air support. A third issue under discussion is whether the available forces are most advantageously distributed between Europe and the Colonies and elsewhere beyond the seas. Finally, lurking constantly in the background, is the question whether the ceiling imposed on military spending prevents Britain from covering adequately all of her vital defensive commitments at home and overseas.

Those in Britain who criticize the priority which the Government has steadfastly given to developing a separate nuclear weapons system, argue somewhat as follows: The Soviet Union has achieved substantial parity with the West in capacity for massive destruction. To the resulting stalemate, Britain's small stockpile of nuclear weapons makes no significant contribution. For better or for worse, according to this argument, it is the American Strategic Air Command that immobilizes Soviet planes, missiles and armies.

In reply to the Government's argument that Britain needs its own nuclear deterrent against the contingency of U.S. failure to come immediately to the rescue in case of major Soviet assault on Europe, British critics contend that such a contingency is inconceivable. They reject the analogy, sometimes cited, of American failure to support Britain on Suez. That analogy, they argue, is misleading and irrelevant.

British critics of the deterrent-first policy have repeatedly asserted that prestige considerations, not military need, underlie the Government's insistence on

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building up and controlling its own nuclear deterrent. One of the most respected of these critics is Mr. Alastair Buchan, formerly military correspondent of The Observer, and now Director of the British Institute for Strategic Studies. Buchan has declared that this policy is popular with both major parties because "it fosters the belief however illusory...that Britain could, if the need arose, pursue a foreign policy fully independent of the United States." (Observer. 4-21-57) How much the prestige factor has counted, it would be difficult to say. That it has been continuously present seems to be indicated. You will recall the statements by Lord Attlee and Mr. Macmillan, which I quoted earlier.

Mr. Anthony Head, former Minister of Defense, has attacked the Government's priority to nuclear weapons from another direction. He has compared the strategy of nuclear deterrence with French faith in fixed fortifications before World War II. Nuclear deterrence, in Mr. Head's view, is in danger of becoming Britain's "Maginot Line." In concentrating so heavily on the assumed deterrent effect of counter-striking power, he finds Britain in the 1950's like France in the 1930's, in danger of ignoring or disregarding "some other but vital form of defense." (House of Commons, Official Report, p.1170. 2-25-59)

Be that as it may, the high priority given to the nuclear weapons program, in conjunction with the ceiling on spending for all military purposes, appears to have impaired the efficiency as well as the size of the Army and Navy, and certain branches of the Air Force. This retrenchment has had the effect of casting doubt on Britain's ability to cover important commitments, to NATO in particular.

The impact of British military policy on NATO has troubled British as well as foreign critics of the 1957-program. This aspect has received a great deal of attention. For example, in the defense debate in the House of Commons in February 1959, one member charged, that "the Minister of Defense so far...has deliberately chosen to rely completely on the ultimate deterrent and has shown no initiative to must- er the resources of Europe in a joint effort to make NATO efficient and collective. He has in fact done the very opposite. By his insistence on reducing British forces in Germany, he has undermined confidence and respect for this country, and, instead of encouraging other European countries to bring their forces up to strength, he has led them on the retreat." (Thomas Steele (Labor). Official Report, p.1309. 2-26-59)

In fairness it should be noted that the Government has emphatically denied such charges. The 1959-Defense Statement and the Government speakers in Parliament are specific on this point. Britain adheres to the principle of the "collective defense of the free world." But it remains the thesis of the Government, that Britain can make a more effective contribution to the common defense by strengthening its capacity for massive retaliatory attack with nuclear weapons, than by stationing more Army divisions in Germany.

Controversy over the priority given to strategic weapons has spread to the question of so-called tactical nuclear weapons. This feature of NATO strategy envisages use of atomic artillery and other nuclear weapons against armies in the field. One British politician who has spoken out firmly for this is Mr. Joe Grimmond, leader

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of the Liberal Party. Mr. Grimmond sees no alternative but "to depend in the short... run on atomic tactical weapons", if outnumbered NATO armies are to have any chance to halt a possible "massive" Russian invasion of Western Europe. (Official Report, p.1197. 2-25-59)

The Government's position on this issue is somewhat ambiguous. British troops in Germany are said to be trained in the use of nuclear weapons. But the Defense Minister has refused to draw any sharp distinction between strategic and tactical uses of weapons. The same weapons, he argued in reply to Mr. Grimmond, could be used in battle against invading armies, and also against the industrial cities far in the rear, from which those armies draw their support. Nor did he think that classifying weapons as tactical or strategic would diminish the risk of bringing on a general war. In case of attack, "our aim (he said) would be to use as much force as was necessary to repel aggression...."

"If it were a small frontier incident, it might be dealt with by something not much more than a police action. If it were larger but still a localized aggression, it might be repelled by conventional forces, if necessary supported by tactical nuclear weapons. On the other hand, if it were an all-out offensive, it would no doubt be necessary to have an all-out counter-attack with strategic nuclear weapons."

Sandys thought it would be "quite impossible in advance to determine the dividing line" between the tactical and strategic use of nuclear weapons. And he seemed to be sceptical of attempts to limit war by restricting nuclear weapons to so-called tactical objectives. (ibid., p.1421)

Another facet of the Government's program--reduction of forces in the Colonies and in the more distant seas--has also come under severe criticism. The argument here has been that British forces of conventional (that is, non-nuclear) types are needed to maintain order and to put out so-called "brushfires" during the critical period of transition from colonial rule to viable independence. Premature withdrawal or insufficient force on-the-ground to perform policing functions creates, according to this argument, an ideal condition for Communist infiltration and subversion of native regimes and societies.

Similarly, some critics contend, Britain needs visible symbols of military power "to show the flag" in numerous distant places, the Persian Gulf, for example. For this function, it is argued, forces "on the ground" may be vastly more effective than a mobile reserve poised in Britain thousands of miles away.

Actually, the order of priorities has shifted considerably since the defense program was launched in 1957. The Army is to be stabilized at 180,000 instead of 165,000 as envisaged two years ago. The Navy's role and needs are being revised upwards. One gets the impression--an impression admittedly difficult to pin down--that the nuclear weapons program is not being pushed as hard as originally planned.

Withdrawals or reductions of forces stationed permanently in distant regions have been less drastic than envisaged in 1957. The token British battalion in

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Korea has been withdrawn. The bases in Libya, Jordan, and Ceylon have been closed. So have certain dockyards. But new bases are under construction in the Maldive Islands (in the Indian Ocean) and near Nairobi (in East Africa). Moreover, there appears to be a firm policy to maintain a naval task force in the Indian Ocean. In a current study of British deployment, an American Army Officer, Lt. Colonel DeWitt C. Armstrong, has come to the conclusion that recent withdrawals and redeployments have been primarily from bases which for military or political reasons, or both, are deemed to have become untenable or otherwise to have lost their value.

The mobile central reserve, which in the 1957-plan was largely to supplant permanent overseas bases and garrisons, has apparently developed more slowly than expected. Today this project is still not fully implemented, it would appear. One apparent source of delay has been the seeming impossibility of stretching the Army's shrinking manpower to cover all the functions to be performed. Shortage of funds appears to be another cause of delay. The cost of providing adequate air transport for the central reserve, within any near future, plainly exceeds the budgetary limits which the Government has set on military spending.

Alongside such retrenchment as has been imposed on the conventional forces, one discovers evidences of some bold and imaginative planning. One project is the development of one or more naval-commando task forces. Such a task force consists of an aircraft carrier, the usual supporting craft, and a so-called commando-carrier from which marines can be put ashore anywhere by helicopters.

Along with this project, plans are going forward for more afloat-support. This takes the form of providing more ship-borne machine shops and other facilities, to free naval task forces as much as possible from dependence on dockyards and other permanent installations on land.

All of these projects require great quantities of new equipment. These demands are super-imposed on the re-equipment needs of all three Services, but of the Army in particular. Critics this year have made much of delays in providing equipment. The Government has described new weapons, new transport, and other new equipment on the way. But in almost every instance, Parliamentary critics have forced admission that the new equipment will not be ready until next year, or the year after, or even later. Faulty planning may account, in some degree, for these delays. But again the root cause seems to be the ceiling on military spending.

This budgetary limitation aggravates the effect of steadily increasing prices for new equipment. These higher prices reflect not merely inflation, but also more complex engineering. On this point, it was stated recently that present costs run "ten, twenty, or thirty times more than the (cost of) comparable weapons twenty years ago." Take just one example: the amount of electronic gear that goes into tanks, ships, planes and missiles. It has been estimated that a pound of military electronic gear costs more today than a pound of gold.

Running through the defense debate this year, and through most of the commentaries in the press, is a recurrent theme--too much to do, and too little to do it.

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To quote again from Colonel Armstrong's fruitful study of British redeployments:
"British strategists are thinking expansively again, well beyond the available means....
If Britain keeps her defense spending at about the current level... these things cannot
all be done in any worthwhile fashion. To continue the postwar pattern of over-extension,
by skimping on the component parts, would insure that none would be substantial enough
to hold up under real stress."

This is clearly the central issue of British military policy in 1959. For
economic and political reasons (which I have dealt with previously), the Government
has set a more or less firm ceiling on military spending--at around £ 1,500 millions.
But, £1,500 millions a year simply will not build a significant stockpile of strategic
nuclear weapons, and at the same time provide a strong contingent of ground forces
for the NATO shield in Europe, and adequate additional forces to meet Britain's impor-
tant, if gradually diminishing, commitments in the Colonies and elsewhere beyond the
seas.

Confronted with serious imbalance between its commitments and its
military resources, several courses are open to a government. It can, of course, drift
along, hoping for something to turn up. Or it may re-cast its military power and
strategy into new and more effective patterns. Or it may re-define, or even abandon,
some of its commitments. Or it may strive, by diplomatic or other means, to reduce
international tensions, and thereby lighten the pressure on its military forces. In the
recent record of British statecraft, this outside observer finds evidences of all these
approaches. In such activities, the problem of military defense merges into the broad-
er problems of domestic politics and foreign diplomacy.

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