Ask Ian: Going Broke Making Guns During War

From Jubs on Patreon:

“They say that ‘no one’s gone bankrupt making guns during a war,’ but is that actually true?”

It’s usually true, but not always. Even during a war, you can make enough bad choices that you can go bankrupt as a gun manufacturer, and Hopkins & Allen is a perfect example of how. During World War One they were wrangled into a contract to make SMLEs for the British which they could not possibly meet. Having already started the tooling process when that deal fell through, they were desperate for a new client, and found the Belgian government looking for arms. H&A signed a deal with the Belgian s to make Model 1889 Mausers, but underbid it and ended up losing money on every rifle that went out the door. By March 1916 they were in receivership, with the principals filing lawsuits against each other over allegedly being tricked by German spies.


  1. 1) As I learned when getting my MBA, the genius of bankruptcy is that it allows assets being used for uneconomic purposes to be redeployed to make products that are in demand and will make money – benefitting consumers and producers alike.
    2) The US arms industry got a terrible reputation with the British due to Yankee chicanery with Crimean War contracts. The classic example was that for decades Woolwich Arsenal had a pile of ten ton blocks of iron with a one inch hole bored in them – somebody who had never heard of the legendary Connecticut traders’ wooden nutmegs had signed a contract with some Yankee sharp operators to provide cannons “by the ton”. Woolwich finally managed to get rid of them during a Great War scrap drive.
    3) When war broke out, Charles Schwab, president of Bethlehem Steel, booked passage to Britain on the first available fast steamer to flog off whatever ordnance it had hanging around the back lot and secure some nice, lovely, lucrative contracts. In particular, he had four turrets and mountings and eight 14 inch guns that had been built for a Greek battleship being built in Germany (“Merchants of Death” aside, the pre-WW1 international arms trade was about as crass as was possible). With the British blockade, that wasn’t going to happen, so they were for sale. The Master General of the Ordnance picked up a few items, but since the majority were non-standard, he declined the rest. “Perhaps Mr Churchill over the Admiralty would be interested”. Mr Churchill was interested, bought the lot and used the 14 in guns ton arm shallow draft monitors to bombard German positions along the Belgian coast.

    • Yes but not only in the south. Some northern companies also went down. Some for the same reasons as Ian described. And some were even outcompetited by their own products sold at a bargain as surplus by the US government.

    • Well, ALL of the manufacturers in the south ‘went under’ a bit before, or immediately after, April of 1865. . . something about having your factory burned and machinery destroyed will slow down profits a bit for most companies.
      Other than major armories in Richmond, Atlanta, Columbia, and the captured national one at Harper’s Ferry, Southern manufacturers produced guns numbered in the hundreds, not thousands; Virtually all Southern arms were regular US ones in the ‘country’ at the time of the start of war, imported prior to an effective blockade (1853 Enfields were popular), or captured. The bigger armories used surplus, scrap, or captured parts to a great extent.
      Most Northern manufacturers waited to go bankrupt at the end of the War, when all contracts were cancelled, and marginal makers couldn’t stand the loss from taking out loans to buy needed equipment and materials for mass government contracts that instantly disappeared, making it impossible to immediately repay those loans. The companies that didn’t accept the huge government contracts to build infantry muskets tended to survive a bit easier than those who did. Some that did take them survived only because there were handy wars elsewhere to take up the slack–1866 through 1871 were VERY good ‘war’ years indeed.

    • See chapter 6 of Civil War Guns by William B. Edwards (Stackpole, 1961), which is available free here;

      The chapter title is “Rifle Muskets; Civil War Scandals”, and it goes into considerable detail about exactly how many contractors lost their shirts trying to manufacture Model 1861 Springfield .58 rifle-muskets for the Union.

      For the most part, the fault was the Federal government’s, which had so many different contracting “procedures” for such things that, as the investigating commission found, nobody, including the Secretary of War, was entirely sure how the system worked, let alone how it was supposed to work.



  2. “(…)Going Broke Making Guns During War(…)”
    Another instance of what Mark Twain described as
    Truth is stranger than fiction,
    but it is because Fiction is
    obliged to stick to possibilities;
    Truth isn’t

    This reminded me about marketing gimmick of Doctor William Christmas who managed to get paid $100,000 for his aeroplane plane design in 1923, which he claims was safest, easiest controlled plane in the world.
    It did not work as advertised.
    In reality each flight rapidly ended in obliteration, incl. death of pilot attempting to fly contraption.

  3. Brewster Aeronautical Company suffered similar inefficiencies during World War 2. They started by building small numbers of airplanes for the US Navy. Their Buffalo fighter was the first monoplane carrier fighter in US Navy service.
    Brewster suffered from incompetent management, shifty salesmen (Alfred and Ignacio Miranda), hostile unions, poorly trained factory workers, poor morale, possible sabotage, and quality control problems.
    After a failed attempt at ousting manager Jimmy Working, the Navy seized the factory on 18 April, 1942 and in mid-May installed an entirely new board of directors.
    Since the Buffalo proved a flop on combat, Brewster production shifted to building Chance-Vought F4U Corsairs under license.
    Brewster AC was dissolved after the end of WW2.

  4. Canadian firm National Steel Car Company suffered a similar fate during World War 2. NCC built a variety of British designed airplanes under license: Westland Lysander (1938 and 1939) as well as sub-components for Hawker Hurricanes, Hampden bombers and Avro Anson trainers. When Ottawa lost confidence in NCC’s ability to deliver, the firm was expropriated on 4 November 1942 and rolled into the Victory Aircraft consortium. VA built a few hundred Lancaster bombers which served well in bombing Nazi Germany to rubble.

  5. Another example would be Providence Tool Co which was in the late 1870s the largest rifle maker in the US. Unfortunately they had a sole customer ,Turkey, which had a payment optional practice.

  6. I honestly don’t know why people are surprised at these things, even the ones who are involved in firearms manufacturing themselves.

    Anyone with a lick of sense and some slight experience of the reality of things should have looked at that set of terms from the British and said “Thanks, but no thanks…”

    The conditions simply were not there: The technical data package, as we’d term it today, was entirely inadequate. The fact that they were supposed to be producing those Lee-Enfields in mass-production quantities on such a short timeline, with such an inadequate TDP? Should have red-flagged the whole thing, for all involved. I would wager that the guys out on the factory floor, the shop foremen and experienced machinists, were all like “WTF? What are you idiots in the front office thinking? We’ve got no way of actually doing this…”

    And, as it usually goes, the uninvolved low-level “vermin” of the company likely had it right. I’ve seen that same phenomenon several times, where the “money men” and the “managerial executive experts” got in way, way over their heads. It’s a very common syndrome, with those who don’t actually execute the “do” part of the business. You see it in construction, all the damn time. First generation of a family business? The owners and operators are intimately familiar with reality. Second generation, usually brought in laterally, from “good educational institutions”? LOL… Yeah, watch the idiocies they get up to, and how quickly the company crashes. It’s a rare firm that manages a third generation of success, and that’s usually because they’ve somehow managed to institutionalize some damn sense, somehow.

    I think it’s a marker for how we typically don’t do “organization” very well, at all. Nearly every case study I’ve seen of this sort of thing, the issues arose despite the people working on the shop floor seeing disaster coming: The trouble usually came about because they weren’t consulted, didn’t have a say in things, or the upper echelons were delusional.

    We don’t do this well, I fear. Anywhere. It’s often the same, even in fully socialist enterprises–There are parallel case studies to be found in every arena of enterprise in the former Soviet Union and other theoretically “communist” states. It’s a feature of human psychology and the way we instinctively organize ourselves, and the sad fact is, we do very little to either recognize this flaw in our worldview or compensate for it.

    Frankly, a lot of these failed firms would have been well-served to have gone down to the factory floor, shown the guys doing the work what they were proposing to accept, and then asked for a sanity check. I’d wager that the factory floor types probably would have opened some eyes, and kept the firm in business.

    I’m sure that there are equivalents of things from the other end creating problems. It’s just that they’re so rarely operable that I can’t even think of a case where the worker bees were proven to be wrong about the course that the hive was on.

    Here’s a quick clue for the managerial class: If you suddenly find that most of your “from the bottom” types, the guys who rose from the ranks, are putting together resumes or actively leaving your company? You might, I say again, might be doing things wrong. The peones usually have a much better idea of how things are actually going than the jefe types.

    • I’m wondering how many resumes and early retirements at the operational level are coming out of Ford and other car makers right now, since they’ve signed on to the “all electric by 2030” insanity.

      Managers and board members may not understand that there’s a reason lithium is called a rare earth element , but you can bet that the actual engineers do.



      • Fewer than there should be, to be honest.

        The whole “Green Energy” deal is going to be having an unfortunate collision with reality in very short order, and all the people responsible for it are going to be doing their best to ensure that they remain free from accountability and consequence, just as the various bright lights behind the “War on Terror” paid zero price for their varied and sundry failures. Or, people like Fauci and the rest who failed us during the AIDS crisis and onwards.

        The crisis of modern civilization is the crisis of accountability. It’s not that the people in charge got things wrong, it’s that they’re not paying any price for having done so. Look at the assholes in the EPA who killed a few thousand miles of the Colorado River through sheer feckless incompetence when they breached that mine containment: What happened to them? They all got promoted, and were even allowed to award themselves generous performance bonuses.

        We’re only getting away with this because there’s so much excess slack in the system. When that’s all expended and used up? LOL… Gonna be an ugly crack of the whip, darlings…

        • I’ve come to the conclusion (at age almost-65) that the problem is a fundamental difference in the objectives of engineering schooling and management schooling.

          Engineering is all about results being what’s called for. “How can we make this work and deliver the product the buyer wants or needs?”

          Note that “want” and “need” are not always the same thing. The Army needed a rifle like the M16 for the infantry for killing enemies on the battlefield in all sorts of climates, but Ordnance wanted a rifle like the M14 for beating those nasty Marines at Camp Perry every summer. Ordnance very nearly won that one, mostly by cheating shamelessly and afterward telling Congress “I do not recall” something like 200+ times. (No, the latter is not a recent development.)

          Which brings me to management schools. The philosophy there is “How can we get money and influence without actually delivering anything”. The objective is to screw the “customer” at every opportunity to maximize “profit”, which may take the form of influence over even filthy lucre. The customer is a mark to be defrauded, thereby proving to “management” that they are innately smarter than said customer and unarguably superior to same.

          To engineers, the customer (or end user) is someone they want to do their best for. It’s a matter of ethos.

          To managers, the customer is someone they want to defeat at every opportunity. To prove that their colossal egos are in fact a realistic self-assessment. Everything is a zero-sum game to a “manager”, and for him to win, everybody else has to lose.

          Check out the management of virtually any company (or nation state) today, and where you find “management specialists” in charge you will invariably find a small, insular group with advanced university degrees and an utter and complete contempt for anyone not a member of their little “club”.

          Things began to go downhill in the 1950s, when we made the assumption that there was such a thing as an “administrator” who could run anything, regardless of what it was, whether or not they had any actual knowledge in that area. All they needed to know was how to “administrate”. It was a mistake religious orders made in the late (or High) Middle Ages, and the results for the next half a millennium were not what they wanted. (Thirty Years’ War, etc.)

          Philosopher-kings, actual or self-anointed, make terrible leaders. No matter what they are trying to “lead”.

          Happy New Year.



          • Spot on!

            I won’t go on about it here because this is a gun blog, not an aviation blog, but if you want a poster child for engineer culture vs manager culture, look no further than the recent/current travails at Boeing!

          • Food for thought, eon.

            I would frame the issue differently, however: The problem isn’t in the eternal struggle between “management” and engineering. Engineers are just as prone to performing stupidities as anyone else.

            The real issue, so far as I can see is the way things are increasingly insulated from consequence. Doesn’t matter which part of the equation is getting it wrong, when the people doing the calculations are ignoring the actual output coming out of the algorithm, substituting their own fantasies for what is real.

            I think the problem is the same one I identified in a lot of the training events run by various bright lights in the Army: An utter lack of fidelity between the simulation and actual reality. That’s where the trouble lies; too many of the people running things have never had an up-close and personal encounter with reality, and they’ve also never ever had to face the consequences of that encounter. They’re allowed to build up these entirely false and delusional ideations about the nature of things, and when they try using those cloud-castle mental constructs out in the real world, and things go wrong… They are never forced to adjust their constructs to accommodate reality or adapt to it.

            Today’s delusional manager is the product of yesterday’s poorly conceived and badly executed training simulation. They’re allowed to create these false constructs and then continue to act on them as though they’re working, when in fact, they are not.

            Lysenko was a prototype for a lot of what is happening around us. Look at the whole thing with FTX or Theranos; consider how all of those “smart” people got taken in, and how very little reality intruded into events until the whole enterprise collapsed under the weight of it all.

            I don’t think you can blame management alone for the issue. These idiots are all walking off the edge of the metaphorical cliff in lockstep, entirely oblivious to the laws of gravity and common sense. There’s a deeply-set cultural issue at play here, one that the engineering staff is just as prone to. Look at the recent intrusion of Diversity-Equity-Inclusion into the STEM fields, which should be purely objective. It’s a mass mania, much like the Tulip Craze or any one of the other delusional events in our history. The underlying facts are there for anyone to see; what isn’t there is the willingness to look at them and take effective action based on the reality that gets exposed.

            And, a lot of this goes right back to the lack of fidelity with the real world in our training simulations that we call “school”. You don’t ever see things set up such that there are actual consequences for anyone involved: How many teachers get evaluated and fired because their “Whole Language” fantasies fail to actually produce kids who can read at grade standard?

            Frankly, I think we’d do a lot better at things if we were a lot more ruthless and honest about providing consequence for failure. I mean, think about it: Which teacher, these days, is more likely to get fired? The one boinking their students, the one espousing lunatic ideas about gender and DEI issues, or the one whose students never meet any of the standard learning objectives for their instruction?

            My grandmother taught grade school in a one-room school in Eastern Oregon, to poverty-stricken timber workers and rancher’s kids. The conditions were abysmal, compared to today’s teaching environment. Yet… All of her students learned their basic academic skills. All of them. If they hadn’t, then she’d have been out on her ass, and would never have been able to go on to college to get her certification to teach in high schools as she did, later on.

            There was pretty good fidelity between simulation and reality, for her. Today? Not so much. And, that’s the damn problem, I think.

            I don’t think the issue is so much the polyvalent MBA or administrator, so much as it’s the utter failure of the people running the schooling to inject one whit of reality in their instructional programs. If they were, then you wouldn’t have these arrogant sods coming out and saying that they can administer or manage anything, without practical experience in the specialist field they’re trying to manage. I’ve met guys with MBA degrees who were good, and I’ve met ones that were horrible. The problem isn’t the MBA; it is the lack of fidelity between the training/education and the real world. If you had good fidelity, none of those guys would be leaving those programs with the typical arrogance and blindness to consequence we see all around us. Whatever that feature is, and I think it comes down to drawing too much of a line between “train/educate” and “reality”, it’s the root of the problem more than anything else is.

      • “(…)Ford(…)all electric(…)”
        That is ironic, considering that Henry Ford himself detected that
        A road car could not run on a trolley even if trolley wires had been less expensive; no storage battery was in sight of a weight that was practical. An electrical car had of necessity to be limited in radius and to contain a large amount of motive machinery in proportion to the power exerted. That is not to say that I held or now hold electricity cheaply; we have not yet begun to use electricity. But it has its place, and the internal combustion engine has its place. Neither can substitute for the other—which is exceedingly fortunate.
        from My Life and Work by Samuel Crowther and Henry Ford available at Project Gutenberg

        • Ford had it right, then, and the underlying facts still haven’t changed. Even the most modern batteries cannot compete with liquid hydrocarbon fuels in terms of energy density, convenience, and the installed base of infrastructure.

          Wait until these idiots actually have to face the reality of what it will take to put several 40 amp charging stations into every single home and apartment. They won’t be able to do it, without exponential expansion of the grid and all the generation capacity they’ll need. The raw materials alone are daunting enough that I don’t think we’d be able to do it by the turn of the next century, let alone by 2030.

          What they should be working on are rectified low-pollution liquid hydrocarbons that could be slipstreamed into the existing infrastructure we already have. All the other solutions are madness personified, because of the resource expense and sheer idiocy. Hydrogen, for example? As a gaseous fuel, that crap is so expensive and difficult to handle that it’s not even funny. I don’t see gaseous hydrogen or even chilled liquid hydrogen ever being a good candidate for transportation the way hydrocarbons are.

          Of course, a lot of the problems go away when you start storing that hydrogen with the necessary carbon… 🙂

    • S&W’s first mistake was designing it around their own .35 S&W cartridge. Their second was then trying to redesign it around the larger and more powerful 9 x 19mm with no prior experience with same.

      Their last and biggest mistake was trying to covert a blowback self-loading (semi-automatic) carbine to selective-fire.

      In the case of the Light Rifle, S&W started with a set of assumptions that turned out to be almost 100% incorrect, and never changed what they were doing when reality refused to cooperate.



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