In the present century, nations have mobilised en masse to wage total war. It is tempting to think that disruption on this scale should have had lasting effects on economic and social life. Historians and social scientists have developed ambitious theories in which war is the critical force in long-run economic social change, but these views are highly controversial. To measure the effects of war we must estimate how economy and society would have evolved in its absence and measure this counter-factual development path against what actually happened. This is a very demanding test which ambitious theories have not always passed (Milward 1970).
Learning the lessons of 1914-18, the government was well prepared in September 1939 with plans for control of key sectors (railways, shipping and agriculture) and the allocation of important resources (raw materials and labour) (Hancock and Gowing 1949:3-100). Its grand strategy was based upon time, naval strength and financial power: British plans depended on holding a German blitzkrieg in northern France. The strength of the Royal Navy was needed to guarantee British and restrict German essential imports and Britain’s overseas financial assets could be liquidated to pay for imported food, raw materials and armaments. Britain and its allies needed time to rearm in depth. At the outbreak of war Britain’s annual output of steel was barely 60 per cent of that of Germany and machine tool production was a meagre 20 per cent. The grand strategy thus implied steady progress to a full war economy, with the first priority an enormous expansion of munitions-making capacity and then rearmament in depth financed by a phased reduction of foreign currency reserves (Robinson 1951:35-7).
Everything changed in the early summer of 1940 when Germany conquered most of western Europe. Much of the equipment of the