The Merchants Of Death  

Past Peak has an excellent post on the plundering going on as part of the war in Iraq. Jonathan's not talking about Iraqi oil (or even about historical relics) - he's talking about the plunder of the US Treasury. Like everything to do with the Iraq war, to paraphrase Winston Churchill, the truth is attended with a bodyguard of lies - however the idea that the massive increase in funds demanded by the air force isn't just the usual money grab by the military industrial complex but rather the money needed to gear up for a pounding of Iran is an interesting theory.

The U.S. Air Force is asking the Pentagon's leadership for a staggering $50 billion in emergency funding for fiscal 2007 — an amount equal to nearly half its annual budget, defense analyst Loren Thompson of the Lexington Institute said on Tuesday.

The request is expected to draw criticism on Capitol Hill, where lawmakers are increasingly worried about the huge sums being sought "off budget" to fund wars, escaping the more rigorous congressional oversight of regular budgets.

Another source familiar with the Air Force plans said the extra funds would help pay to transport growing numbers of U.S. soldiers being killed and wounded in Iraq and Afghanistan. [$50 billion for that — what are we here, suckers?]

"This amount of money is so much bigger than the Air Force would normally request ... it hints at a basic breakdown in the process for planning and funding war costs," said Thompson.

The Air Force's proposed emergency budget is nearly half the $105.9 billion it requested as its total base budget for fiscal year 2007, which began on October 1.

The Air Force said it asked Pentagon officials for $17.4 billion in emergency war funds in August, but was now submitting "additional requirements to cover costs for the longer war against terror," based on England's memo.

She said the service had already mapped out an expected supplemental funding request of $50 billion for fiscal 2008.

There are several ways of looking at this, none of them good. Maybe the whole system has broken down and devolved into simple naked plundering of the national treasury. But given that the brunt of the Iraq fighting and costs are being borne by the Army and Marines, we have to ask what leads the Air Force to conclude that expenditures on this scale will be necessary and justified. More to the point, what makes them think they have a prayer of selling this to Congress? The only answer seems to be: Iran. An attack on Iran presumably will start out, at least, as a massive air war. So, the USAF knows an attack on Iran is in the cards. Or — as John Robb suggests — they want the money and they'll use Iran to get it.

As usual, there is a confluence of interest groups who stand to gain from an Iran attack. It's never just one thing, one reason, one interest group. It's bad news indeed that there are powerful players (not just the Pentagon, but all the military-aerospace giants who will get the contracts) who stand to make this kind of money. That creates a nearly unstoppable constituency. It may be that some people who advocate war and stand to profit from it consciously tell themselves a hundred other reasons why war is desirable and necessary. But if humans are good at anything, they're good at rationalizing their own self-interest. And when you're talking about tens or hundreds of billions of dollars, that's an awful lot of self-interest.

The concept of the armaments industry (and the vultures that follow in its wake like Halliburton) pushing for wars has been around for a long time, even if some may view it as a form of vulgar marxism. In a recent post I mentioned a TV series called "Reilly: Ace of Spies" which featured a arms merchant named Basil Zaharoff who could be considered something of a role model for our modern day military industrialists, playing the British, French, Germans and Russians off against one another and making a fortune in the process (in some ways this behaviour may be one of the seeds that underlies some of the more far fetched conspiracy theories about the "New World Order" that involve elites causing wars betwen nations to both profit and slowly create the seeds of one world government).

Although very little could be documented, Zaharoff was viewed as a master of bribery and corruption, but the few incidents that did become public, such as the large bribes received by Japanese Admiral Fuji, suggested that a lot more was going on behind the scenes. In 1890, the Maxim-Nordenfelt association broke up and Zaharoff chose to go with Maxim. With his commissions, Zaharoff bought shares in Maxim’s company until he was able to tell Maxim that he was no longer an employee but an equal shareholder.

By 1897, the Maxim company had become important enough that it received a buyout offer from Vickers, one of the then giants of the armaments industry. This involved substantial settlements in both cash and shares for Maxim and Zaharoff. From then until 1911, while Maxim’s business enthusiasm waned, Zaharoff’s enthusiasm and portfolio of Vickers shares grew. With Maxim’s retirement, Zaharoff joined the Vickers board of directors.

The first decade of the twentieth century was a time for many European armies to rebuild and modernize. Germany and England both saw an especial need for improved naval units. Vickers and Zaharoff were there, willing and able to accommodate both sides. After its disastrous defeat by Japan in 1905, Russia too had a need to rebuild its navy, but the nation was beset by a wave of chauvinism that required a domestic industry for the rebuilding. Zaharoff’s response was to build a huge Russian arms production complex at Tsaritsin as a subsidiary of Vickers. The opening of Russian tsarist archives after World War I led to some insights into the tactics of the arms industry. One 1907 letter, in particular, was written from the Paul von Gontard factory (a secretly controlled Vickers company in Germany) to a Vickers associate in Paris recommending that press releases go out to the French press with suggestions that the French improve their military to meet the threats of military build-up in Germany. These French newspaper articles were read into the record of the Reichstag, and were followed by a vote to increase military spending. All this worked to the advantage of Zaharoff.


In the years immediately preceding World War I Zaharoff’s fortunes grew in other areas to support his arms business. By purchasing the Union Parisienne Bank (which was traditionally associated with heavy industry) he was better able to control financing arrangements. By gaining control of the daily newspaper, Excelsior, he could be assured of editorials favorable to the arms industry. All he needed now were honours. Setting up a retirement home for French sailors leads him to membership in the Legion of Honour, a chair in aerodynamics at the University of Paris makes him an officer, and on July 31, 1914, the same day that Jean Jaurès was assassinated, Raymond Poincaré signed a decree making him a commander of the Legion of Honour. In March 1914, Vickers would announce the coming of a new era of prosperity.

Vickers of England alone would, during the course of the war, produce 4 ships of the line, 3 cruisers, 53 submarines, 3 auxiliary vessels, 62 light vessels, 2,328 cannon, 8,000,000 tonnes of steel ordnance, 90,000 mines, 22,000 torpedoes, 5,500 airplanes and 100,000 machine guns. By 1915, Zaharoff had close ties with both Lloyd George and Aristide Briand. It is reported that, on the occasion of one visit with Briand, Zaharoff quietly left an envelope on Aristide Briand’s desk; the envelope contained a million francs for war widows.

One of Zaharoff’s tasks during the war was to ensure that Greece became involved in the war on the Allied side. That would help to reinforce the eastern front. On the surface, this seemed impossible since King Constantine was himself a Hohenzollern and brother-in-law to the Kaiser. Setting up a press agency in Greece to spread news favorable to the allies led, within a few months, to Constantine’s being deposed in favour of Prime Minister Venizelos.

With the war’s end, The Times estimated that Zaharoff had sacrificed £50 million for the Allied cause, ignoring that this was but a small fraction of his commissions. He was made a baronet, and could now be called Sir Basil Zaharoff.

This sort of behaviour would presumably make Basil one of the "Merchants Of Death" - the subject of US Senate hearings in the 1930s into the activities of the munitions industry in the US during World War 1, run by a Senator named Gerald Nye (described in a book named "Merchants of Death Revisited: Armaments, Bankers, and the First World War" which seems to have been influential even in Libertarian circles - see here [pdf] for a lengthy review).

On a hot Tuesday morning following Labor Day in 1934, several hundred people crowded into the Caucus Room of the Senate Office Building to witness the opening of an investigation that journalists were already calling “historic.” Although World War I had been over for 16 years, the inquiry promised to reopen an intense debate about whether the nation should ever have gotten involved in that costly conflict.

The so-called “Senate Munitions Committee” came into being because of widespread reports that manufacturers of armaments had unduly influenced the American decision to enter the war in 1917. These weapons’ suppliers had reaped enormous profits at the cost of more than 53,000 American battle deaths. As local conflicts reignited in Europe through the early 1930s, suggesting the possibility of a second world war, concern spread that these “merchants of death” would again drag the United States into a struggle that was none of its business. The time had come for a full congressional inquiry.

To lead the seven-member special committee, the Senate’s Democratic majority chose a Republican—42-year-old North Dakota Senator Gerald P. Nye. Typical of western agrarian progressives, Nye energetically opposed U.S. involvement in foreign wars. He promised, “when the Senate investigation is over, we shall see that war and preparation for war is not a matter of national honor and national defense, but a matter of profit for the few.”

Over the next 18 months, the “Nye Committee” held 93 hearings, questioning more than 200 witnesses, including J. P. Morgan, Jr., and Pierre du Pont. Committee members found little hard evidence of an active conspiracy among arms makers, yet the panel’s reports did little to weaken the popular prejudice against “greedy munitions interests.”

The investigation came to an abrupt end early in 1936.

The Bush family tends to crop up quite a bit whenever military industrial complex shenanigans are analysed, so I wasn't entirely unsurprised when I was researching all this to see Dubya's great grand-daddy Samuel Prescott Bush pop in the cast of characters fronting the Nye Committee hearings.

In the spring of 1918, Bush became chief of the Ordnance, Small Arms, and Ammunition Section of the War Industries Board of Bernard Baruch - a close associate of E.H. Harriman and Clarence Dillon - with national responsibility for government assistance to and relations with weapons companies including Remington (at the time controlled by Percy Rockefeller- who along with Averill Harriman took time to arrange for Harriman's and Bush's sons Bunny Harriman and Prescott Bush to be admitted to Yale University's Skull and Bones in 1916.) Remington dominance of ammunition and small arms contracts during World War I continued during Bush's government service and many years beyond. Samuel Bush was a close advisor to President Herbert Hoover.

During the height of American isolationism, a Senate Munitions Inquiry, often called the Nye Committee after its chairman, Senator Gerald Nye, critically examined the military-industrial complex of government agencies, corporations, labor unions, and banking. The Nye Committee has been portrayed as a naive isolationist search for evil arms dealers ("Merchants of Death") who caused wars, underplaying the social, intellectual, political, and cultural currents of the 1930s which have more recently been re-examined (see reference Coulter). The Committee was formed in August 1933. It examined World War I military-industrial finances in January and February 1936. In spite of this second historical connection, most of the records and correspondence of Samuel P. Bush's arms-related work with the government were destroyed at the National Archives, in order 'to save space'.

I'm never quite sure how much I should believe of anything published by the Centre for Research on Globalization, but there is also an interesting piece there on the Bush family connection to the merchants of death story (presumably if you can have the far left and the Libertarians agreeing on a subject you can probably discount any entrenched biases overwhelming the facts) and its continuation onwards into World War 2.

The nightmare for the world began in 1915, with the establishment of an unholy partnership between the U.S. Government and the ‘War Industries Board', for-runner of America's present day 'military-industrial complex'. Some of those seated on the board of directors were Samuel P. Bush, great grandfather of George W. bush, and so-called chief of Ordnance for the Small Arms and Ammunition Section, Wall Street banker Clarence Dillon, Samuel Pryor, executive committee chairman of Remington Arms, and Bernard Baruch, who, as head of the War Industries Board profited in excess of $200,000,000.

The members of the Board aptly came to be known as the "Merchants of Death." Using the facade of government to legitimize their operations, the War Industries Board represented the big munitions makers of the day who dispatched agents around the globe to sell the weapons and materials of war to both sides of any conflict. They bribed government officials and used their corporate influence and capitol to increase international tensions, which in turn generated demand and maximized profit.

It was during the First World War that Samuel P. Bush and the other board members amassed fortunes selling the weapons and materials of war not only to America but also to Germany. Most of the records and correspondence pertaining to Samuel P. Bush's activities on the War Industries Board were later burned mysteriously, "to save space" in the National Archives. When their business venture officially ended on November 11, 1918, some 37,508,686 human beings had been killed. It set a dangerous precedent for the destiny of America and the destiny of civilization itself. A small group of corporate manufactures, bankers, and industrialists had formulated a devilishly effective method by which profit is extracted from human suffering, war, and death, and their dark technique would be repeated and refined.

In 1922 while George Walker, was president at W. A. Harriman & Co, Averell Harriman went to Berlin to set up a branch bank for the company. While in Berlin Averell Harriman met with Fritz Thyssen, prime sponsor of the German politician Adolph Hitler. It was at that time that preliminary arrangements were made to establish a bank for Thyssen in New York. Two years later, in 1924, W. A. Harriman & Co. formally began the Union Banking Corporation in Manhattan, chiefly to handle German funds supplied through the Thyssen-owned Nazi front Bank voor Handel en Scheepvaart (BHS), in the Netherlands, for the mass purchase of American commodities. The W. A. Harriman & Co executives labeled these dealing as the "Hitler Project".

On May 1st 1926 Prescott Bush, grandfather of George W. Bush, close friend of Bunny Harriman and fellow Bonesmen from their Yale class of 1917 joined W. A. Harriman & Co. as its vice president under the bank's president and his father-in-law George Walker. In that same year an associate of Prescott Bush's father, Samuel P. Bush, and “Merchants of Death” board member Clarence Dillon, acquired $70 million dollars from Fritz Thyssen to set up a massive organization named the Vereinigte Stahlwerke (United Steel Works Corporation, or the German Steel Trust). This would become Germany's largest industrial corporation.

While past performance is no guide to future returns, as they say in the financial planning industry, I wouldn't be entirely surprised if some of the old strategies are still being put into play, however I haven't come across any good research looking at the big picture. Mother Jones did have an interesting article on one particular "merchant of death" named Victor Bout a while ago though.

The U.S. government has for years kept in its sights one of the world’s most notorious arms traffickers, Victor Bout. Known on both sides of the Atlantic as the "merchant of death," Bout has been implicated in running guns and missiles to combatants across the world, from the Taliban and Northern Alliance in Afghanistan to the UNITA rebels of Angola and the teen-age army of Liberia’s former tyrant, Charles Taylor. He has been blacklisted by the U.S. Treasury from doing any business in the United States, faces an arrest warrant for money laundering in Belgium, and was aggressively pursued by the Clinton administration. "We were trying to take him out of business," says Witney Schneidman, an Africa expert who worked in the State Department at the time.

But now the Bush administration has hired at least one company tied to Bout's network for the war effort in Iraq. Records obtained by Mother Jones show that as recently as August, Air Bas, a company tied to Bout and his associates, was flying charter missions under contract with the U.S. military in Iraq. Air Bas is overseen by Victor Bout’s brother, Serguei, and his long-time business manager, Richard Chichakli, an accountant living in Texas; in the past, payments for Air Bas have gone to a Kazakh company that the United Nations identifies as "a front for the leasing operations of Victor Bout’s aircraft."

Concerns about Bout’s work for the United States date back to May, when Senator Russ Feingold asked the Pentagon and the State Department to scour their files for any evidence of contracts with companies tied to Bout. An inquiry conducted by the State Department found, according to a State Department source, that "there were allegations that raised our concerns, and we shared those concerns with the Department of Defense." Months later, however, the Pentagon has yet to respond, and officials there would not say whether they are looking into the State Department’s concerns.

Tom Engelhardt and Nick Turse also have an interesting piece at Lew Rockwell (presumably also published at TomDispatch) which mentions the Nye hearings and notes such a thing would be unthinkable in the US Senate today.

Alliant Ammunition and Powder Co. is also making certain that, as the years go by, ammo-capacity won't be lacking. In February 2005, Alliant was awarded "a delivery order amount of $19,400,000 as part of a $69,733,068 firm-fixed-price contract for Services to Modernize Equipment at the Lake City Army Ammunition Plant" – a government-owned facility operated by ATK. Alliant notes that this year it is churning out 1.2 billion rounds of small-caliber ammunition at its Lake City plant alone. But that, it seems, isn't enough when future war planning is taken into account. As it happens, ATK and the Army are aiming to increase the plant's "annual capacity to support the anticipated Department of Defense demand of between 1.5 billion and 1.8 billion rounds by 2006." Think about it. In this year, alone, one single ATK plant will produce enough ammunition, at one bullet each, to execute every man, woman, and child in the world's most populous nation – and next year they're upping the ante.

The Military-Corporate Complex's Merchants of Death

Once upon a time, a company like ATK would have been classified as one of the world's "Merchants of Death." Then again, once upon a time – we're talking about the 1930s here – the Senate was a place where America's representatives were willing to launch probing inquiries into the ways in which arms manufacturers and their huge profits as well as their influences on international conflicts were linked to the dead of various lands. Back then, simple partisanship was set aside as the Senate's Democratic majority appointed North Dakota's Republican Senator Gerald P. Nye to head the "Senate Munitions Committee."

While today's fawning House members can barely get aging baseball heroes to talk to them, the 1930s inquiry hauled some of the most powerful men in the world like J.P. Morgan, Jr. and Pierre du Pont before the committee. Even back in the 1930s, however, the nascent military-industrial complex was just too powerful and so the Senate Munitions Committee was eventually thwarted in its investigations. As a result, the committee's goal of nationalizing the American arms industry went down in flames.

Today, the very idea of such a committee even attempting such an investigation is simply beyond the pale. The planning for futuristic war of various horrific sorts, not to speak of the production and purchase of weapons and ammunition by the military-corporate complex, is now beyond reproach, accepted without question as necessary for national (now homeland) security – a concept which long ago trumped the notion of national defense.

Well - I did have a monster omnibus post planned for tonight, but I've been sidetracked a bit delving into this bit of history - sorry if you were after some energy news - I'll get back onto more core topics tomorrow (though some tangentially relate to this I guess)...