208 International Organization cent in 1912.55 The admiralty attributed this development to the "boom in trade," which caused a"marked advance in the cost of shipbuilding and other materials."56 More generally,the rising cost of producing weaponry forced the capital abundant states to abandon their domestic monopolies over arms production in the last two decades of the nineteenth century.Converting the state-run armories to the produc- tion of steel guns had become too expensive to be politically sustainable,sparking the dramatic growth of private arms firms as these states turned to private industry to supply their armaments needs.57 Yet private arms firms were not perfect instruments of government policy.Armaments production was a risky business in which govern- ment contracts were subject to the whims of international politics.These firms weighed the value of government contracts against the profits that could be earned elsewhere and were often reluctant to sacrifice these profits for uncertain or fickle armaments orders,thus forcing states to compete with other customers.s Creusot,for example, refused to expand its artillery-making capacity,forcing the French army to wait over three years for its order of 105-mm howitzers,thus exacerbating one of the army's many weaknesses on the eve of the war.59 One consequence of the growing reliance on private capital was that"governments needed the arms firms more than the arms firms needed governments."And,as adequate productive capacity became ever more expensive for states to maintain,they found themselves forced to permit (and even promote)the private export of armaments,establishing a pattern of arms trading in which private armaments firms became major conduits of weapons,technology, and productive capacity to capital poor states.5!At best,this was an ambiguous devel- opment for the security of the capital abundant states.Although arms sales were useful for diplomacy,the international activities of these firms often contradicted the political and security interests of their govemments and promoted the diffusion of capital and technology to other states.62 Austria-Hungary:Mixed Effects Abundant in labor but scarce in land and capital,Austria-Hungary,the theory pre- dicts,will experience increasing difficulties in mobilizing labor and decreasing diffi- culties in mobilizing capital.Although overlain by this disintegratingempire's nation- alist conflicts,this pattern appears evident in its security politics.Because the absolute size of its army was govered by a numerical ceiling set in 1889,Austria-Hungary 55.British Admiralty 1913a. 56.British Admiralty 1913b. 57.See McNeil 1982,269-85;and Stevenson 1996,14-30.Again,the most commonly cited reason was the cost of steel-gun technology.But it is plausible that rising capital costs were also a contributing factor. 58.Joll1992.148. 59.Porch1981,24243 60.Joll 1992,150.Stevenson argues that the relationship was less one-sided because the specialized investments required for arms production made industry dependent on government orders.Stevenson 1996.1440. 61.Stevenson 1996.37. 62.See Joll 1992,149;and Trebilcock 1973.cent in 1912.55 The admiralty attributed this development to the ‘‘boom in trade,’’ which caused a ‘‘marked advance in the cost of shipbuilding and other materials.’’ 56 More generally, the rising cost of producing weaponry forced the capital abundant states to abandon their domestic monopolies over arms production in the last two decades of the nineteenth century. Converting the state-run armories to the produc￾tion of steel guns had become too expensive to be politically sustainable, sparking the dramatic growth of private arms Ž rms as these statesturned to private industry to supply their armaments needs.57 Yet private arms Ž rms were not perfect instruments of government policy.Armaments production was a risky business in which govern￾ment contracts were subject to the whims of internationalpolitics.These Ž rms weighed the value of government contracts against the proŽ ts that could be earned elsewhere and were often reluctant to sacriŽ ce these proŽ ts for uncertain or Ž ckle armaments orders, thus forcing states to compete with other customers.58 Creusot, for example, refused to expand its artillery-making capacity, forcing the French army to wait over three years for its order of 105-mm howitzers, thus exacerbating one of the army’s many weaknesses on the eve of the war.59 One consequence of the growing reliance on private capital was that ‘‘governments needed the arms Ž rms more than the arms Ž rms needed governments.’’ 60 And, as adequate productive capacity became ever more expensive for states to maintain, they found themselves forced to permit (and even promote)the private export of armaments, establishing a pattern of arms trading in which private armaments Ž rms became major conduits of weapons, technology, and productive capacity to capital poorstates.61 At best, this was an ambiguous devel￾opment for the security of the capital abundant states. Although arms sales were useful for diplomacy, the international activities of these Ž rms often contradicted the political and security interests of their governments and promoted the diffusion of capital and technology to otherstates.62 Austria-Hungary: Mixed Effects Abundant in labor but scarce in land and capital, Austria-Hungary, the theory pre￾dicts, will experience increasing difficultiesin mobilizing labor and decreasing diffi￾cultiesin mobilizing capital.Although overlain by this disintegratingempire’s nation￾alist con icts, this pattern appears evident in itssecurity politics.Because the absolute size of its army was governed by a numerical ceiling set in 1889, Austria-Hungary 55. British Admiralty 1913a. 56. British Admiralty 1913b. 57. See McNeil 1982, 269–85; and Stevenson 1996, 14–30. Again, the most commonly cited reason was the cost of steel-gun technology. But it is plausible that rising capital costs were also a contributing factor. 58. Joll 1992, 148. 59. Porch 1981, 242–43. 60. Joll 1992, 150. Stevenson argues that the relationship was less one-sided because the specialized investments required for arms production made industry dependent on government orders. Stevenson 1996, 14–40. 61. Stevenson 1996, 37. 62. See Joll 1992, 149; and Trebilcock 1973. 208 International Organization