ABSTRACT
Other historians have drawn a sombre picture of the economic impact of rearmament implying that the producers of peace goods were starved of resources. In the absence of detailed input-output data, the difficulty lies in exposing structural shifts in the economy away from peace to defence goods production. The example of the metal-working machine tool industry illustrates this point. In 1948, the dependence of this industry on defence expenditure was less than 1 per cent (see Table 9.1). In this period, defence procurement was restricted to the limited acquisition of new weapons, research and development contracts, and repair work.9 Rearmament led to a renewed expansion of the defence production capacity and the replacement of existing machinery in Britain. Therefore, machine tool manufacturers were indirectly affected by the increase in defence procurement. Indeed, the production statistics for certain engineering products reveal that the production of metal-working machine tools increased remarkably during the Korean war rearmament (see Table 9.2). From the available figures, this steady expansion was exceptional in the period. The positive impulse of the Korean war rearmament programme strengthened the competitiveness of British metal-working machine tool manufacturers comparing favourably with the American producers in terms of production costs. Compared to other machinery production, the metal-working machine tool industry's productivity levels were relatively high. On the world market, British producers of metal-working machinery remained competitive in this period.10 Overall, the machine tool output expanded 30 per cent in the first year and 60 per cent over three years during the Korean war rearmament.11 In spite of this impressive increase in machine tool production, British defence contractors imported almost £15 million worth of machine tools in 1951 and £30 million in 1952 "... from the United States and Europe for the equipment of armaments factories."12 Indeed, Britain became the largest importer of metal-working machine tools from West Germany in 1951 and further increased its imports in 1952. The additional demand from Britain and the United States contributed to the remarkable stability of West German machinery export in this period.13
