Speeches on Questions of Public Policy by Richard Cobden
[The following speech, recommending the reduction or abandonment of Government manufacturing establishments, as impolitic and wasteful, was the last which Mr. Cobden delivered in Parliament.]
I regret that, owing to the necessity which lay on many of us to postpone the notices of Motions which we had on the paper a fortnight ago, I was not able to bring this subject earlier under the notice of the House. The question is important, not only in a financial sense, but in its bearings on the defence and security of the nation. In advocating the view that the Government of the country should not undertake to manufacture for itself that which can be purchased from private producers, I am advancing no new doctrine in this House. On the contrary, this has always been the policy of the House, and the opposite system pursued during the last few years has been in defiance of the reiterated expressions of the opinion of Parliament. I might go back to the celebrated speech of Edmund Burke on economical reform, who so long ago as 1780 laid down, in language which it is impossible to surpass, the reasons why the Government should not resort to the manufacture of its own supplies, but should depend on the competition of individual manufacturers. In 1828, before the Reform era, a Committee of the House of Commons put forth a Report, in which there is a paragraph to this effect:—
'The Committee are not disposed to place implicit reliance on the arguments which have been urged by some public departments against contracts by competition, and in favour of work by themselves. The latter plan occasions the employment of a great many officers, clerks, artificers, and workmen, and not only adds to the patronage, but to the appearance of the importance of a department. Nor can the Committee suffer themselves to feel any prejudice against the contract system, by references to some instanoes of failure. They believe that most cases of failure may be attributed to negligence or ignorance in the management of contracts, rather than to the system itself.
Now here is the gist of all I have to say. I shall only amplify this passage, and in doing so, I hope I shall not be accused of more illiberality towards the officials than was exhibited by the Committee of 1828. On various occasions this question has been partially raised in reference to particular articles, and an exceptional ground has always been alleged why we should give, for some special branch of production, a preference to the Government manufactories. The consequence has been, that step by step the departments have taken upon themselves an immense increase of manufacture. I have asked myself how is it, that while we have for twenty years, in our commercial policy, been acting on the principle of unrestricted competition, believing that that is the only way to secure excellence and stability of production, and when the private industry of the country is more equal than ever it was to the demands of the Government, how is it that the departments have been allowed to raise up these gigantic Government monopolies? I believe it is in consequence of the weakness of the Executive Government. For many years past there has, I fear, been very little control exercised by the Treasury over the various departments of the Government; and the rein being loosened, the heads of departments have taken the power into their own hands, and embarked in vast manufacturing undertakings, contrary, as I cannot but believe, to the intention of this House and the country. The result of my experience is, that there is little use in the House undertaking by Committees to correct the failures of the Executive Government. By interfering in the management of the details of the Government, you infallibly do more harm than good. You lower the Executive in the estimation of the permanent officials, and you attempt what is impossible, for the departments laugh at the idea of Parliament superintending the details of the administration. Moreover, the Government, by allowing Parliament to attempt to control these details virtually abandons its own duties and responsibilities. During the last few years we have had Committees of this House on ordnance, on plating ships, and on various other branches of Executive administration connected with the safety and defence of the country. In early years of my experience in Parliament, when Sir Robert Peel was Prime Minister, he would have resisted the appointment of such Committees as tantamount to a vote of want of confidence. He would have said, 'If you think the administration is not satisfactorily conducted by me, then you must find somebody else to undertake it.' My view is, that the House can interfere with great advantage in prescribing the principles on which the Executive Government shall be carried on; but beyond that, it is impossible for the Legislature to interfere with advantage in the details of the administration of the country. The principle I advocate is, that the Government should not be allowed to manufacture for itself any article which can be obtained from private producers in a competitive market; and that, if we have entered on a false system in this respect, we ought, as far as possible, to retrace our steps.
To give the House an idea of the extent to which the system of which I complain has grown, I will quote a few figures. In 1849-50, I sat upon a Committee to inquire into the Ordnance, and we found that the whole amount of wages then paid to artificers and labourers in the United Kingdom and the Colonies on the Ordnance Votes was 141,330l. This year I find that we have voted in corresponding votes for the wages of our manufacturing establishments, including the clothing factories, a sum of 584,000l., being more than four times the amount of the sum voted in 1849-50. The wages voted for the gun factory at Woolwich this year were 144,000l., which exceeded the wages for all the departments in 1849-50. Down to and including the Crimean war, the British Government never cast an iron cannon, or made shot or shell. Our ordnance was purchased from the Carron Works in Scotland, from the Low Moor Company, or from the Gospel Oak Works of Messrs. Walker. At the outbreak of the Crimean war, my right hon. friend the Member for Limerick (Mr. Monsell) was Secretary to the Ordnance, and I am afraid that I must charge him with having deposited the nest-egg which has produced the pernicious brood of which I am complaining. From the evidence given by the right hon. Gentleman himself, in 1854, I find that he and Captain Boxer, of the Laboratory Department at Woolwich, laid their heads together, and said, 'If we spend 7,000l. in putting up machinery, we can make our own fusees, and bouche our own shells.' That was the beginning of those acres of costly machinery which may now be seen at Woolwich. No very long time elapsed before Captain Boxer said, 'We are now prepared for making fusees, and bouching faster than we can get shells; therefore, let us make shells;' and accordingly they laid out 10,000l. in the erection of machinery for casting shells and shot. There is a very interesting narrative in the evidence before the Sebastopol Committee, and I find that the right hon. Gentleman was arraigned before that Committee for acting without the consent of his colleagues. I do not blame him for that. We were at war, and he and Captain Boxer displayed a commendable energy; but I mention these facts to show you how establishments of this kind grow. The next step, after setting up machinery for casting shot and shell, was to erect turning and boring machinery for making the guns. It was resolved, that instead of obtaining castiron cannon from the Low Moor Company, they should purchase from that concern solid blocks of iron, and bore and turn them at Woolwich. Another suggestion immediately followed:— 'We had better cast our own guns rather than buy these blocks from Low Moor;' and so the machinery was set up for that. Now came a difficulty. There are, as I have said, but two or three concerns in England from which it is safe to buy ordnance, of which the Low Moor Works are one, and the Gospel Oak Works of Messrs. Walker another. When casting a 68-pounder at Low Moor, they not only take selected qualities of their own iron, good as it is, but they use coal of a particular kind, fresh from the earth, to smelt it. That firm would not sell pig-iron to the Woolwich establishment, and the result was, that, having got the machinery for casting the guns, there was no iron fit to cast. They went into the market, and purchased the ordinary kind of pig-iron, and they made about 100 guns; but it is believed that not one of the 100 ever went into the service. They were pronounced rotten, and were never used. After 200,000l. had been spent in this way, the establishment at Woolwich for casting guns was abandoned.
Then came the second part of the performance. It had become necessary that the Government should obtain a supply of rifled cannon. No sooner did this necessity arise, than there were men of genius, such as Mr. Whitworth, Sir William Armstrong, Captain Blakeley, Mr. Lancaster, and Mr. Lynall Thomas, preparing to supply the want. The reasonable course would have been to have said to these inventors, 'Go on, and improve your system. Manufacture some guns, and to whichever is most successful, we will be your customer.' But the establishment at Woolwich wished to secure the manufacture of rifled ordnance, and those in authority—some of them in very high authority—seem to have lost their heads altogether, and to have gone almost crazy over Sir William Armstrong's gun. An illustrious Duke is reported to have said, that Sir William Armstrong's gun could all but speak; and another eminent officer declared it was equal to anything in the tales of the Arabian Nights. I will venture to offer a suggestion. When we have in future to make a choice of ordnance, our high officials in the army should pursue the same course they do when they hold a court-martial—let the younger officers speak first—because, when the Commander-in-Chief utters such an emphatic approbation, it is hardly likely that junior officers will be found to dissent. I would further suggest, that the authorities should in these matters follow the commercial system, and not begin to praise and puff an article before they buy it. The result in this instance was, that Sir William Armstrong—then Mr. Armstrong—resolved to make a present of his patent to the War Office. And a very costly present it was. It was assigned over to the Secretary for War, and an arrangement was entered into, which to this day I can hardly understand. It seems that Sir William Armstrong was to receive, for ten years, a sum of 2,000l. a year for superintending the working of the patent. That arrangement was antedated three years, and 6,000l. was paid down, upon which he became superintendent of the Royal gun factory, and chief engineer of the rifled ordnance department. A business was set up at Elswick, in Northumberland, by the War Office—an establishment which previously belonged to Sir William Armstrong—and we made advances in a mysterious manner to the extent of 85,000l. Immediately afterwards our officials at Woolwich set up a manufactory of the same kind, and they set it up apparently with a view of controlling the price at Elswick. It is most amusing to see the naiveté with which the leading men at Woolwich came before the Committee appointed by this House and tried to show that they were producing the gun cheaper at Woolwich than at Elswick, forgetting that the two were one and the same concern; that they were both started by the Government with the nation's capital. The Committee were evidently unable to understand the accounts of the Woolwich factory, and in their report they passed a resolution begging them to amend them. I believe that the right hon. Member for Limerick will admit that this is a fair statement of the origin and progress of the rifled Armstrong gun. It was to be made of wrought-iron, was to be breech-loading, and built up on the coil principle with bars of forged iron. It is no disparagement to Sir W. Armstrong, who is a man of great mechanical genius, to say that the general impression of scientific men has been unfavourable to his invention; unfavourable to the breech-loading principle, and unfavourable to the material of which he proposed to construct his gun. But the point to which I desire to call the especial attention of the House is this, that the Government set up a manufacture, and installed as its head the author and patentee of a particular gun. The consequence was, that Mr. Whitworth, who was then in the field, found that he had virtually to submit his gun to the inspection and approval of his great rival. There were other men as well who were candidates, but I mention Mr. Whitworth especially, because every one who knows him will allow that he is one of the very foremost practical mechanicians of the age, and everybody will admit, that any system which excluded that gentleman from competition, in a matter to which he had devoted his attention, must be a wrong system. It was not merely the mechanicians who were thus excluded. The general impression was, and is, that the great problem to solve is not so much a pattern of rifling, or a form of gun, as the material from which a gun is to be made; and we have for the last ten years been travelling in a direction which will no doubt ultimately land us in this position, that we shall have it in our power, whenever we find it advantageous, to apply steel to every purpose for which we now use iron. Mr. Bessemer was in the field with his invention for cheapening steel. We have it in evidence before the Committee on Ordnance, from Capt. Scott, that Mr. Bessemer told him he should have liked the Government to try his principle of homogeneous metal, which he and many others believe will be found better than wrought iron, but that when he found Sir William Armstrong in possession, he gave up the idea. There is also evidence that the Messrs. Walker, of Gospel Oak Works, who produced some of the best cast-iron guns, made the same remark, that, finding Sir William Armstrong in possession, they should abandon the manufacture of guns. Well, a Committee of this House upon Ordnance was appointed, and sat in 1862-3; and I must say, that on reading the details of the evidence taken before it, I was astonished at the levity with which that evidence was allowed to pass into oblivion without having been brought under the notice of the House. I call my right hon. friend the Member for Limerick, who was Chairman of the Committee, to account for the omission; and the other Members of the Committee are not altogether without blame. The evidence adduced before that Committee was of the most important, and even the most portentous character; for it transpired that we had between 2,500 and 3,000 guns upon the principle of Sir William Armstrong; that there is a confessed expenditure of 2½ millions on these guns; but I believe it was very much more; and it was admitted that 100 of these guns, of the largest size, were made before a trial or experiment was entered into. That there may be no cavilling about what the result of that Committee was, I will read a few words. The Duke of Somerset, the head of the Admiralty, in his evidence, said last year:—
'The whole science of gunnery is in a transition state, and when I was this year asked what gun I approved for the navy, I was obliged to say that I really did not know.'
Recollect, this was after nearly 3,000 guns had been made on the Armstrong principle. His Grace also declared that we had nothing better now for close quarters than the old 68-pounder made at the Low Moor Works. And the Committee report—unanimously, I suppose—that the old 68-pounder is, therefore, the most effective gun in the service against iron plates. The Committee finally say:—
' "The Armstrong 12-pounders, although stated by some of the witnesses to be too complicated a weapon for service, are generally approved; "but that" the preponderance of opinion seems to be against any breech-loading system for larger guns."'
They recommend that the different systems should be experimented upon. And they also recommend that the accounts of the Woolwich Gun Factory should be kept in a more intelligible manner. ['No.'] These are not their words, but that is their sense. They say they cannot understand the accounts. I would just add a few words from a naval officer who has given considerable attention to this matter. Writing on the 30th of June last, Admiral Halstead thus summed up:—
'The result is, that the largest and most costly fleet of the world, intrusted with the security of the largest maritime empire, has long been presented to all but England's eyes without a gun fit for the special warfare of the day, and with special guns fit for no warfare whatever.'
I ask, is that a satisfactory state of things in which to find ourselves after spending, perhaps, three millions of money, and making nearly 3,000 of these guns? Admiral Halstead, in another letter, calls this 'the great blind jump of 1859.' What has been the result of the Committee? The consequence is, that you have had set up at Shoeburyness a stunning competitive contest between Sir William Armstrong and Mr. Whitworth; and thus, after this vast outlay of public money upon the invention of one of the competitors, you are trying which of the two has got the best gun. There might, however, be some consolation in this, if the Armstrong guns were now really being tried against Mr. Whitworth's; but what is the fact? If I am rightly informed, the original gun which we took up and have got in stock—that is, the service gun—is not the gun which Sir William Armstrong is trying. I am told that the original breech-loader, of which we have nearly 3,000 on hand, has been abandoned in this competition, and that there is another gun, of an improved construction, substituted. I saw it stated in a report of the trial in the Times the other day, that the original breech-loader is withdrawn from the competition. That is not a very consolatory circumstance in the condition in which we find ourselves.
I beg the House to consider what is meant when we are told that we have no naval gun. We have 12-pounders for the field, if we chose to go to war in New Zealand or China; but you are not to reckon on the contingency of an enemy landing here to fight you. When I speak of your having no naval guns, I mean guns to fight with. I observe that Captain Cowper Coles talks of the Armstrong 110-pounder as something to do for a chase—or, in nautical phrase, 'to tickle up a runaway.' Now, let us realise the full force of the admission that we have no gun adapted for modern naval warfare. The hon. Member for Stirling (Mr. Caird) stated the other day—and we could have no higher authority—that half the people of this country during the last three years have been fed with grain and food brought from abroad. We are in the position of a garrison depending for subsistence upon our communications being kept open. If, after all your expenditure, you have no guns for your ships to contend with against an enemy, do you suppose that your foe would be so foolish as to attempt an invasion with a view of fighting you on land? No; if they had the command of the sea they would blockade us, and starve us into submission. Our life as a nation depends on our having the mastery of our communications by sea. And yet this is the way in which those who govern us take care to keep open our communications.
Well, the whole secret of the failure is this:—The Government do not understand the functions of a buyer; the whole difficulty of their position arises from their not being able to fulfil the duty of a purchaser, in a common-sense and judicious manner. The true course to have pursued with all these scientific men, when they came with their improvements in artillery, was to have encouraged them to go on, and to have promised their custom to the most successful, or, perhaps, a very small amount of help at starting. I believe that Sir W. Armstrong only asked for 12,000l. to begin with, and that Mr. Bessemer would have commenced making his steel guns with 10,000l.; and I have no doubt that for less than 100,000l. the Government might have set half-a-dozen establishments to work, competing for the prize of supplying them with guns. That is a matter which the Government will never comprehend till this House insists that they shall buy their commodities instead of making them. If they are not capable of buying their commodities in the market, do you suppose they are competent to fulfil the far more difficult task of manufacturing them?
I wish to show you the position in which we, as a nation, are placed by these proceedings. We are in danger of seeing foreigners supplied with better armaments than ourselves from our own private workshops. The very individuals whom the Government have rejected and would not have dealings with, have set up manufactories of ordnance for themselves. Mr. Whitworth has founded an ordnance company for the manufacture of guns. I am told that Sir William Armstrong, having closed his connection with the Government at Elswick, and received 65,000l. as compensation, has set up a manufactory of guns at Elswick; and, being no longer connected with the Government, I am told that he is actually manufacturing his 600-pounders for foreign countries. Within a quarter of an hour's drive from this spot I saw, a few days ago, an establishment where steel guns—600-pounders—are being bored; and this firm, which was rejected by the Government, is, I am told, receiving orders for these monster guns by the dozen, while you are in this experimental mood down at Shoeburyness over the 70-pounder and the 110-pounder. I have now said all that I intend to say respecting this gigantic ordnance failure.
Then, as a still further proof of the necessity for the Government to know how to exercise the functions of a buyer, let me refer to small arms as an illustration. Down to about ten years ago, we bought all our muskets from contractors. The Government did not make a rifle even during the Crimean war. I may here remark, that the ordnance supplied during the Crimean war was of a very satisfactory character. The ordnance and small arms were supplied by private contractors to the army and navy, and they were spoken of in the highest terms in the report of the Sebastopol Committee of 1855, which, at the same time, contained condemnations of the commissiariat, of the medical, and other departments. As I have said, previous to 1855 we bought our small arms from private contractors. How does the House think the Government managed their purchases? I mention this as an illustration of their incompetency as a buyer. If hon. Members refer to the evidence given before the Small Arms Committee of 1854, they will find that the Government were in the habit of buying their muskets in component parts. They contracted, at Birmingham and Wednesbury and other places, for the stock with one maker, for the barrel with another, for the lock with a third, and so on, until they had about a dozen separate contracts for the component parts of a musket. All those various parts were sent to the Ordnance Depôt, and from that depôt they were given out to a distinct body of contractors, named 'setters-up,' who fitted them together, and made up the musket. Thus they who completed the musket never came into contact with the contractors for the component parts—a system most ingeniously contrived to prevent all improvement. Mr. Whitworth and Mr. Nasmyth, both eminent men, who were examined before the Committee, spoke of the absurdity of this practice, when large capitalists were ready to undertake to supply the completed article. The Government complained that they could not get muskets fast enough, because there were sometimes strikes among the workmen. They were asked, in return, 'Why do you not give orders to capitalists, who will set up machinery for making the entire musket?' and it was shown that the system of contracting for the separate parts multiplied the risk of delays from strikes, because if, for instance, the men struck who made the locks, they put a stop to the supply of the complete musket. The Government, however, could not be made to comprehend this; and what was the remedy they proposed for the grievance of which they complained? Instead of improving their mode of purchasing, they thought it would be easier for them to manufacture muskets, and therefore the Ordnance Department came before the Committee of 1854 with a plan for erecting an enormous Government manufactory of rifled small arms at Enfield. The Committee were decidedly against that project, and I am glad to see present the hon. Memder for North Warwickshire, who was a member of that Committee. They said, 'If you wish to see better machinery introduced for the manufacture of small arms, that is one question; but it is quite distinct from the question whether you are to have a Government factory;' and, in their report, they speak decidedly against the Government setting up this enormous establishment, because, they say, you will thereby extinguish private trade, which it would be well to preserve for your future necessities. The result was, that the Government sent to America to procure machinery. Colonel Colt, the American, had been in this country for twelve months at that time, and he had set up his machinery; but the Government, rather than encourage a Birmingham or a London house to enter into the trade to supply them, rushed into what has become the Enfield Rifle Manufactory. That establishment, which then contained sixty or seventy work-people, has since grown into the employment of from 1,200 to 1,500. I am not about to contend that the rifle factory at Enfield has, up to the present time, done its work badly, or that it has not been profitable. If you set up machinery which is almost self-acting, and if you give it constant employment, it is not easy to make a concern otherwise than profitable; but while doing this, you have been driving out of the trade all those who would have set up the manufacture upon an independent and more durable basis. But the future of this establishment cannot be estimated from the past, for what is now becoming the fate of the Enfield factory? You have no longer full work for it, for you cannot continue to make the one pattern which you have been continuously at work upon—the pattern of 1853. A Committee has decided that Mr. Lancaster's rifle is a better weapon; public competition showed that Mr. Whitworth's was superior; and the consequence has been that the noble Lord the Member for Haddingtonshire (Lord Elcho) has moved, in the present session, the rejection of the estimate for making Enfield rifles, because they were of an inferior kind, and therefore the manufacture ought to be suspended. If, then, these rifles are to be discontinued, and others are to be made, you will be confronted with the difficulties which await you in every Government manufactory where you are your own and your only customer. During this transition period, as your production falls off, the cost of each article increases, owing to the larger proportion of the permanent fixed charges which it has to bear. To evade this, and also in order to find employment for your work-people, you will always be liable to the temptation of going on making things which you do not want, in order to employ the people about you, and the result will be that you will be overstocked with articles which your better judgment would induce you not to buy, if you had to purchase them in the market from private producers.
I have said I do not mean to argue that making one article, and having constant employment, this Enfield establishment has not paid itself. But here are the balance-sheets relating to the rifle factory and the gunpowder manufactory adjoining, which have been laid upon the table, and upon which I wish to make one or two observations. I see they are signed 'Hartington,' as Under-Secretary for War; but I would advise the noble Lord not to put his name to any more of these balance-sheets, as I can assure him they would not pass the Bank-ruptcy Court. They are not creditable to him, and they are still more discreditable to a commercial nation like this, of which he is a representative. I wish to call attention to some facts connected with these balance-sheets. In that which is dated the 31st of March, 1863, it is stated that the articles produced in the year cost at Enfield 199,177l., while if they had been purchased from the trade the cost would have been 356,378l., showing a saving of 157,201l. Among the items are 71,590 rifles, for which it was stated the private trade would charge 63s. 1d. each. Now, a gentleman who is at the head of the trade in Birmingham informs me that a tender was actually made this year to the Government to supply rifles at 50s. each, or 13s. 1d. less than it is said the private trader would charge. Then, again, it is stated that 13,780 short rifles made at Enfield would have cost 94s. 7d. if bought of the private trade. The same gentleman informs me that a contract was made last January for the Turkish Government, through our War Office, to supply the same weapons at 65s. 9d., or 28s. 10d. less than is said here to be the trade cost. Then there are 13,000 carbines put down as costing 63s. 7d. in the private trade, but which this gentleman tells me could have been had for 50s. The amount of these overcharges upon these three items alone is 75,000l. It may be objected that the balance-sheet is for 1862-3, while the prices of the private trade which I have quoted are for this year. I put that point to the gentleman on whose authority I have spoken, and he said the articles might have been had at about the same price last year, if anybody had applied for them.
I find that you can never make the conductors of these Government establishments understand that the capital they have to deal with is really money. How should it be real money to them? It costs them nothing, and, whether they make a profit or a loss, they never find their way into the Gazette. Therefore to them it is a myth—it is a reality only to the taxpayers. Throughout the inquiries before Parliamentary Committees upon our Government manufactories, you find yourself in a difficulty directly you try to make the gentlemen at the head of these establishments understand that they must pay interest for capital, rent for land, as well as allow for depreciation of machinery and plant. There is an immense capital employed in the Enfield Rifle Manufactory. The fixed and floating capital invested in materials, buildings, machinery, and land, appears from the balance-sheet to amount to 350,000l. The private manufacturer, of course, in the shape of either rent or interest, would charge himself on the whole of the amount, or if he did not he would soon find himself in the Gazette.
There is more than want of self-respect in the departments which publish such accounts. It is an insult and an outrage to private trade to pretend to show by such fallacious balance-sheets how much the articles cost, and how much they would have cost, if they had been bought of private traders, and to make it appear that we have had all these rifles for 199,177l., while if we had bought them of private traders we should have had to pay 356,378l., or 157,201l. more. The whole amount of wages paid during the year was 135,700l. and we are asked to believe that there has been a saving of 157,201l. as compared with what would have been paid to private manufacturers. Now, we all know that for everything but labour the Government go to the same source of supply as private manufacturers do. They have not as yet established coal and iron mines of their own, and for all raw materials they have to go into the market and buy on the same terms as private establishments buy. Yet the Enfield Rifle Factory professes to have saved more than the whole amount spent in wages during the year! We all remember the story of the two gipsies who sold brooms. Says one of them to the other, 'I can't conceive how you afford to sell your brooms cheaper than I do, for I steal all my materials.' 'Ah!' says the other, 'but I steal the brooms ready-made.' Now I should like to know from the noble Marquis (the Marquis of Hartington), whom I shall persist in holding responsible for these accounts, to which he has appended his name, how he manages this great feat of commercial legerdemain.
Turning over two pages in this Report on the Government Factories, I come to the Waltham Abbey Powder Manufactory. That is an establishment with 160 acres of land, upon which they profess to grow wood for their charcoal, with water-power of immense extent, with large buildings for business and for dwellings, and, of course, with a great amount of machinery. Their business is not a large one. They return themselves as having produced in the year 14,526 barrels of powder, which they value at 34,747l. Then, after the usual memorandum, that this is exclusive of interest of capital, depreciation of plant, &c., they show that these 14,526 barrels of gunpowder, if supplied by private makers, would have cost 79,933l., so that they have effected for the Government a saving of 45,185l
Now, I say that, for a country calling itself a commercial nation, to have such accounts published and signed 'Hartington,' is monstrous; and it only shows the utter valuelessness of anything that the noble Marquis may say at that table on this subject. The noble Marquis has shown that he possesses too much ability to make these statements on his own authority; but it is clear that he recites anything that is put into his hands, and therefore what he may say at the table is not worth the slightest attention.
Now, let us see how all this is managed. The capital represented by buildings, water-power, machinery, and rolling stock is 300,000l., and no interest is charged on that. The land is worth 20,000l., but there is no item for rent. Nothing is allowed for rates and taxes, and nothing for insurance. Now, I asked a very well-informed gentleman what the custom was in the private trade with regard to the charge for insurance on a gunpowder manufactory. Of course, the Royal Exchange or the Phœnix Company would not like such risks. So I find that private traders are in the habit of allowing about 25 per cent. for insurance. Nothing of the sort is allowed for here. Enough has probably been said to show that the system on which these Government manufactories are conducted is wholly unsound; that there is an utter absence of responsibility; that there are none of those motives for saving money or avoiding losses which private individuals have; and that, wanting the motives which are necessary for human action, it is impossible that these establishments can be carried on properly.
Let me just touch for a minute upon another matter—the great clothing establishments. Earl De Grey and Ripon, as the head of the War Department, is not only the largest manufacturer of ordnance and of small arms, but he is the most extensive tailor in the world. [Laughter.] You laugh; but all these tailoring transactions are carried on in his name, and he is responsible for everything. [Laughter.] You laugh at the idea that Lord De Grey should overlook all these details; but is it not a serious thing for the country to have an immense business of this kind carried on virtually without control? About ten years ago, the system of clothing the army was changed, and, instead of clothing-colonels, we had clothing by contract. For a few years that system continued, and the right hon. Gentleman (General Peel) introduced an improvement in the purchasing department. Down to this time the custom was to contract for the clothing by piecemeal, getting the buttons, braiding, and clothing separately; but the gallant officer had contracts made for the whole garment. We were told in evidence before the Army Organisation Committee by the gallant officer, by the Commander-in-Chief, and by another witness, that the system worked very well. But there was a plot all this while to divert the manufacture of army clothing from private makers into the hands of Government officials. The plot was stealthily carried out. A small establishment was first set up at Woolwich for making clothes for the Artillery and Engineers. That establishment was to go no further. Then a small manufactory was started at Vauxhall for making clothing for the Guards.
As one more illustration of the fallacious grounds on which these Government manufactories are established, I will give a brief extract from the evidence given before the Committee on Contracts, which sat in 1858, by Sir Benjamin Hawes, then permanent Under Secretary at the War Office—and we all know that a permanent official often knows more than his chief. He handed in what he was told to give as the cost price of a soldier's garment. There happened to be a man of business on the Committee—my hon. friend the Member for Newcastle-under-Lyne (Mr. Jackson)—and he, mistrusting the calculation, took the subject in hand, and cross-questioned the witness:—
'You have given the Committee the actual cost to the Government of the clothing and the making of the clothing for one man?—Yes. Independent of all departmental charges and so forth?—Yes. These charges would be plus salaries?—Yes. Plus interest of capital?—Certainly. Plus rent?—Certainly. Plus damage, and every other contingency?—Yes. And carriage, and ink, and pens and paper, and all necessaries for conducting the business?—Yes. Therefore that is not a fair return of what it costs the nation, because, if you have to pay those charges in addition, those prices are not the actual cost to the country?—They are not. So that the return is a fallacious one?—It is not a complete one.'
I will read another extract from the evidence of the same witness. In justice to my late friend, Sir Benjamin Hawes, I must add that he never contemplated the creation of a Government clothing establishment on its present gigantic scale. Alluding to the manufactory of clothing for the Guards, which had been established the previous year at Vauxhall, he recommended only a slight extension of the factory, so as to supply a regiment or two of the Line. He is asked—
'As I understand you, it is not proposed that that establishment should be extended so far as to make all the clothing for the army, but only a portion of the clothing of certain regiments, in order to give you a test as to the price?—Certainly; I hope never to see a great Government establishment for clothing the army. The more such establishments are used for the purpose of obtaining information and obtaining models the better; but I look with some apprehension upon all great Government establishments.... It is very desirable that a Government establishment should produce the minimum, and the private trade of the country should produce the rest.'
At the very time this evidence was being given, when the House would have refused to sanction a large extension of the clothing establishment, the plot was all laid for getting into the hands of the War Department the manufactory of the clothing of the whole army, with a slight exception. An enormous building has been erected at Pimlico—put up, I believe, upon most costly ground, the item of ground-rent being between 2,000l. and 3,000l. a year—and they now make there the clothing of every regiment, and manufacture everything, with the exception of the tunics, for about fifty battalions, which comprise, perhaps, one-tenth of the whole supply of clothing for the army; I suppose this exception is maintained in order to enable the noble Marquis to tell this House that the department has not a monopoly. The accounts rendered of this Clothing Department are most fallacious. I find that about 15,000l. a year for fixed charges and interest of money have never been brought into the account at all, and that there is no allowance for rates and taxes. Taking into consideration the waste and fraud to which an establishment for a trade like that is so peculiarly susceptible, when the materials used are cut up into pieces, I must say that it is one of the most unwise and injudicious undertakings that could have been entered into.
I have already said, you never find with respect to those establishments that anything is put down for rates, taxes, lighting, or charges of that kind. There is a fallacy in this. If the tailoring business is carried on by the Government, somebody else is deprived of it, who would have paid rates and taxes, including the income-tax. Let us suppose the extreme case, that all the manufactures of the country were carried on by the Government, and that they were all exempt from taxation, how would the Chancellor of the Exchequer get his revenue?
I now come to the management of the Royal Dockyards, to which the remarks I have made apply with greater force than to any other department. We have had repeated debates on that subject, and Committees and Commissions have reported on it without end. The tendency of our debates during the last few years has been to prevent, if possible, the Admiralty from continuing to make things which we knew were of no use—to prevent them from building wooden ships, when everybody knew that iron ships would be wanted—and great three-deckers, when all scientific men were aware that they would be mere slaughter-houses, if opposed to modern combustible missiles. What, in the mean time, has been the tendency of the Admiralty! The heads of the dockyards have been endeavouring to counteract Parliament by securing votes for timber in every possible way, and even by buying timber with money voted for iron ships, in order that, having the timber on hand, there may be an excuse for using it for the purpose of building obsolete vessels of war.
I have spoken plainly with respect to the right hon. Member for Droitwich (Sir John Pakington) and the noble Lord the Secretary of the Admiralty, and I hardly know which to blame the most for bringing in Estimates which they must have known entailed an improper waste of money. If I blame the noble Lord most, it is because I know that he knew better. But, after all, there is probably something to be said on the other side. If you will have these enormous establishments employed for one customer only, you are always in danger, in seasons of transition, of having a great number of workpeople thrown out of employment. This operates on the feelings of humane men, who are responsible for their subsistence, and induces them, under the guidance of their feelings, and against their better judgment, to manufacture articles which ought not to be made at all. There is no doubt that we have been spending millions of money on the construction of valueless vessels, and that you have from fifty to a hundred great wooden ships which ought never to have been in existence, and will never be of any use, but which were in great part built because you have a system which compels you to find employment for your men. If, instead of being builders, you had been buyers of ships, does any one suppose that you would have purchased one of those useless and obsolete wooden vessels? I speak to hon. Gentlemen on the other side of the House in the confidence that they will co-operate with me on this occasion. They are said to favour large votes for the military and naval services. But no party in the House is interested in the waste of public money on these establishments. They find me but little disposed to vote money for the army and navy; but I am always for paying the men well, and I would give them more money than they get now, though I should certainly be satisfied with fewer of them; but you cannot indulge in more liberality towards the men while you tolerate the waste and extravagance of keeping up these large manufacturing establishments; for all these charges come under the head of Army and Navy, and swell up, in the eyes of the country, the amount expended on the services.
I wish to ask why we should not take advantage of the present time, when passing from wooden ships to iron ships, and do with the hulls of vessels what you do with your marine steam-engines—buy them, keeping up the Government dockyards only, as far as might be wanted, for repairs. Where would be the risk or inconvenience from such a change? Do you think that the ship-builders in private yards could not perform the work as satisfactorily as the Admiralty? There are, I believe, at this moment upwards of 500,000 tons of shipping building in private yards; and during the last year there have been building in this country fifteen ships of war, of an aggregate of nearly 40,000 tons, for the Governments of the following countries:—Denmark, Italy, Spain, Russia, Turkey, China, Prussia, Peru, Portugal, and two rams supposed for the Confederate States. With the exception of a small vessel of 500 tons, which is of wood, all these ships, I am told, are being built of iron. Do you suppose that the private builders, who are constructing ships to this enormous extent, cannot build the hulls of your vessels of war? Why, you already procure from private manufacturers the most important part of your steamers, that which requires the greatest skill and the most reliable probity in its production. You get your steam-engines wholly from private establishments. I remember sitting on a Committee upon the Navy in 1848, when we were just in time to prevent the Government Dockyards from commencing the construction of steam-engines. The rule laid down, and ever since acted upon, was, that the Admiralty should repair their engines, but not make them. This has been found to succeed most admirably; it is the only branch of your naval construction about which you never hear any complaint. No Committees of this House have been called for, no blue-books have been required, for improving the construction of marine steam-engines. The difficulties in the dockyards have been in connection with the building of the hulls of ships. Why should not the plan which has worked so well with the engines be equally applicable to ships? This is a most opportune time for making the change, just when the armour-clad vessels are coming into use. At the present moment you have no means of making iron-plates for the armour-ships, but I have no doubt that, if the House permitted, the authorities of the dockyards would get up plans for having iron rolled in those establishments.
There is an old plea for maintaining these Government establishments on a small scale, upon the ground that you may be able to manufacture a little, so as to serve as a test and a check upon contractors. Such a course might have been to some extent unobjectionable formerly, when there were few competitors; but we live now in a time when such a check is unnecessary; for are not great shipbuilders, great gun-makers, and large tailoring establishments, better checks upon each other, through the force of competition, than you can possibly be upon them? If the accounts in the Government establishments are honestly made out, then you will find that the Government, carrying on a small business without the usual motives for economy, produces things at a very dear rate, and the contractors will expect to be paid at this price, which you say should be the model one. If, on the other hand, the accounts are made out like those to which I have referred, and private producers are expected to compete on such terms, then every respectable manufacturer will throw aside the invitations for contracts with disgust and scorn, and refuse to have anything to do with such departments. But is not the fact of the perfect success of your marine engines, without any such check as is proposed, a sufficient answer to this plea? Surely, the great waste which we know to have been so long taking place is a sufficient motive for a change. I was talking the other day to an eminent practical shipbuilder on this subject, and this is the substance of what he told me:—
'There has been expended in wages to artificers, naval stores, for the building, repairing, and outfitting of the fleet, steam machinery, and ships built by contract, new works, improvements, and repairs in the yards, from 1859 to 1863 inclusive (five years), 24,350,000l. Taking into account the values of all the iron-clads built and building, and giving a large sum for useless constructions of wooden ships, and making a liberal allowance for equipment and repairs, still there will be left more than ten millions out of the above sum, for the expenditure of which a private shipbuilder could assign no rational purpose.'
I remember the noble Lord the Secretary to the Admiralty saying, some time back, that he could not trace several millions of the Estimates in any results to be discovered in the dockyards, and I suppose my friend the shipbuilder has been engaged in a similar search.
It has been said, that if we retain the powers of production in our Government establishments, and a war breaks out, we shall have the means of bringing all these powers to bear on the preparation of our armaments. There is, I think, a great deal more to be said on that score, in favour of my plan of giving the work to private establishments. If our private shipbuilders were employed by our own as well as by foreign Governments, then we should have a dozen or a score of large firms engaged in constructing ships of war, not only for ourselves, but for half the world. In the same way, if the Government merely kept the factory at Woolwich for repairs, or let it, and gave orders to private houses for the supply of their artillery and ammunition, you would have half-a-dozen or half-a-score, as the case might be, of great establishments producing these articles for our own and foreign Governments. In the present very low state of civilisation, in which no country feels itself safe, particularly if a weak Power, but when, fortunately for humanity, there is a principle developing itself in mechanical science, which gives a great advantage to those who act on the defensive, especially against an aggressor from a distance, I am inclined to think there would be constantly a very great demand for munitions of war by foreign countries—South America, for instance, Japan, and others, who would arm themselves, in order to be safe against attack. And I am not prepared to say they would not do well in thus arming themselves, because the stronger a Power is, the less temptation does it offer to outrage. What, then, if you pursued the course I recommend, would be your position? In case of a war breaking out, you could prohibit the exportation of ships of war and munitions of war, and you would be instantly put in exclusive possession of the whole of the resources of all the private establishments which were previously working, not for you alone, but for foreign Powers as well; while, on the other hand, the foreign Governments would find themselves cut off from the supplies on which they had been relying. I can imagine no contrivance by which you could place yourself in so advantageous and economical a state of preparation for war as this.
There is, however, another reason why the two systems of partially manufacturing for yourself as a Government, and partly purchasing from private traders, will not harmonise. The heads of your manufacturing departments must virtually be the buyers of such commodities as their departments want. Colonel Dickson, the head of your rifle manufactory at Enfield, or somebody under him, practically makes all the purchases of small arms; and there have been repeated complaints from Birmingham of the unfairness of a rival manufacturer being constituted the 'viewer' o the rifles supplied by private contract. At Woolwich, there was an extraordinary example of this state of things, when Sir William Armstrong had to judge the quality of the productions of his competitors. The head of a manufacturing department has always an interest in giving a preference to his own productions or inventions, and disparaging those of outside rivals. There was the case, for instance, of Captain Cowper Coles's turret ship. That was the invention of an outside man; and there is no doubt there has been an unseen, but a felt reluctance on the part of the dockyard people, to carry it out speedily. I live near Portsmouth, and have myself observed what has been going on. It is nearly four years since Captain Coles proposed his plan to the Government. It is more than two years since they began to cut down and plate the Royal Sovereign, in order to convert it into a turret ship. In the mean time, Mr. Reed comes into power. I will not say a word in disparagement of that gentleman. I have no doubt he is a man of talent. We, who sometimes complain of routine, have no right to object to an outside man stepping into a high place in the service on account of his assumed abilities. Mr. Reed, however, must be more than a man, he must be an angel, if he did not feel that his importance and value at the head of the construction department of the Navy would be enhanced by his producing something which should be better than Captain Cowper Coles's invention, and should be completed earlier. So he sets to work on the Research. I am no authority on these matters; but I hear an universal opinion that Mr. Reed's immovable square battery is anything but an improvement on Captain Cowper Coles's revolving turret. The world have decided that question, as is shown by the course taken in America, and by the orders received here from foreign countries. But what are the facts? Mr. Reed's vessel, the Research, though designed later than that of Captain Cowper Coles, was launched and at sea considerably in advance of the Royal Sovereign. Now, I am not making any attack on individuals; I am only illustrating the working of a system. If, instead of a construction department in your dockyards, you had a buying department, then Mr. Reed, or Admiral Robinson, or whoever were the heads of it, would seek out such men as Captain Cowper Coles, or the hon. Member for Birkenhead (Mr. Laird), and confer with them, would look abroad and avail themselves of inventions and improvements as they arose, without any feelings of rivalry arising from their own personal interest as inventors.
Before I conclude, I must impress on the House the absolute necessity there is for a thorough reform of the buying department of the Government. Do not call it a contract department. That is the old name which was used as an excuse for ignorance and incompetency, when officials gave out contracts according to a red-tape rule, taken, perhaps, from a pigeon-hole where it had lain for fifty years, and scarcely to be understood by the modern manufacturer. If a firm was doing a prosperous business with private customers, it would have nothing to say to such a contract, and it went to some one who had nothing better to do, and who hoped he might possibly make something of it. A person sent me from Manchester a copy of the specification for a tender for tarpauling, in which the most minute particulars were set forth in a tone of dictation, that, if it were not ludicrous from its ignorance, would be really insulting to any respectable manufacturer. It was just such a circular as a man of large business would throw into his waste-paper basket; and it contained a requirement that the canvas should be sent for inspection before being tarred. So that, as my correspondent said, he was expected to send all the canvas from Lancashire to London, and then to convey it back again; when, if it had been required that a strip should have been left untarred, it would have answered the purpose. Why should they not have devised a means for clearing off part of the tar themselves? This is a specimen of the way in which the Government contracts are entered into. I would have all that altered. But my plan involves no disparagement of the services of those able men now in your employ; you will want all the brains you have in your constructing department for your buying department. I have no doubt that Colonel Boxer, Mr. Reed, and the other heads of the different manufacturing departments, would make most excellent buyers. If they are not competent for that, I would employ men who are, and I would pay them on a far higher scale than you pay the heads of your departments, for you cannot have men fit to be trusted to go into the market and buy things in the way in which they ought to be bought, unless they are placed in a position to be above all temptation. Therefore, I would have men of the utmost capacity; but I should lay down this condition, and insist upon it—that if you cannot in England buy what you want, it is you yourselves who are to blame, and not the producers of the country. England is now sending abroad 150,000,000l. sterling worth of productions every year. There is not a shilling's worth of that produce that would be bought here if it could be obtained better and cheaper elsewhere, and yet it continues to be bought in larger quantities every year. If you hear anything disparaging to our modern mode of conducting business, that such and such articles are not made so strong and durable as they were at former times, laugh at all such shallow criticisms. The manufacturers here produce for others just what they wish to buy, although, in consequence of the more rapid changes of fashion, it is certainly not the habit of our daughters to wear silk dresses of the strength which were worn by their grandmothers. Then I say, that if in a country which produces every year 150,000,000l. sterling of manufactured articles for exportation, the Government fail to obtain the 10,000,000l. or 15,000,000l. sterling worth of goods which they want, be assured that it arises entirely from their incapacity to buy them. You must have men selected for their ability to buy the commodities you want. If you consult such great wholesale houses as Leaf's and Morrison's in the City, whose buyers purchase millions' worth of articles in the course of the year, they will tell you at once, 'We can do with comparatively inferior men to sell our goods, but we get the best men we can to buy them.'
I will conclude with a remark in reference to the present state of our armaments. When I consider what has been done in the Armstrong guns, and our armaments generally, I regard it as a deep discredit to the Government of the country, and of itself it ought to compel a change in the system. You have invited this disgraceful state of things by undertaking to do that which you ought never to have attempted. We are governed in this country—I do not use the word invidiously—by a class, and it is a very narrow class indeed, which forms the personnel of our Administrations. I do not complain of that, inasmuch as our manufacturing and trading community do not seem disposed to educate their sons to compete for the prizes of official life; but I wish you to bear in mind, that by such a neglect and mismanagement as you have fallen into in regard to your artillery and ships, you may produce the most serious consequences. I know of nothing so calculated some day to produce a democratic revolution, as for the proud and combative people of this country to find themselves, in this vital matter of their defence, sacrificed through the mismanagement and neglect of the class to whom, with so much liberality, they have confided the care and future destinies of the country. You have brought this upon yourselves by undertaking to be producers and manufacturers. I advise you in future to place yourselves entirely in dependence upon the private manufacturing resources of the country. If you want gunpowder, artillery, small arms, or the hulls of ships of war, let it be known that you depend upon the private enterprise of the country, and you will get them. At all events, you will absolve yourselves from the responsibility of undertaking to do things which you are not competent to do, and you will be entitled to say to the British people, Our fortunes as a Government and nation are indissolubly united, and we will rise or fall, flourish or fade together, according to the energy, enterprise, and ability of the great body of the manufacturing and industrious community.
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