Economic Expansion and Security in Pre-WWI Europe 207 Turning next to capital,the theory predicts that these countries will experience rising difficulties in mobilizing capital and that these pressures will be most apparent in capital-intensive,naval competition.One of the most striking developments of this era was the skyrocketing cost in Britain and Germany of building warships,the most capital-intensive form of weaponry.(Although France did not play a strong role in naval competition,it experienced a similar rise in the cost of warships.Between 1890 and 1904,the cost of a French battleship rose from f93 to fl13 per ton.)47 Naval armaments generated cost pressures so severe that both governments strained under the pressure of maintaining even constant rates of construction.48 The reason most commonly cited for this development was the cost of new technology,yet technology provides only a partial explanation.New technologies often resulted in savings as superior capabilities offset higher costs.Although nickel-steel armor cost 50 percent more per ton,its superior capabilities also meant that only half as much was re- quired.50 Moreover,rising costs were evident even during periods of relative techno- logical stability.In 1891,for example,the British Admiralty estimated that 65-70 percent of the cost overruns for ships being built under the Naval Defence Act of 1889 were attributable to rising prices and only 30-35 percent to improvements in the ships.51 In Germany,the cost of three armored capital ships being purchased by the navy rose from 4.5 million marks in 1892-93 to 9.6 million marks in 1897-98.52 In fact,technological innovation was only one factor influencing the explosion in naval costs.53 In testimony before the Reichstag,Admiral Alfred von Tirpitz also blamed the rising cost of manufactured inputs,labor costs,and the ambition of pri- vate firms for profit as primary reasons for the dramatic increase in the cost of war- ships.54 Each is consistent with the notion that an expanding world economy was increasing Germany's difficulty in mobilizing capital and labor for security purposes. Likewise,the British Admiralty estimated that rising prices for manufactured inputs and labor caused the cost of a "Queen Elizabeth"class dreadnought to rise 15 per- 47.British Admiralty 1904,104-105.Naval costs also outstripped the overall growth of government expenditure.Between 1890 and 1904,France's naval budget grew by 70 percent,but overall government spending grew by only 15 percent. 48.See Ritter 1970,159:and McNeil 1982,287-88.Britain's rising budgets stemmed both from the growth of foreign naval power,requiring offsetting increases in the size of Britain's fleet,and from dramati. cally escalating costs in building and sailing individual warships.Kennedy 1976.Although the theory I present in this article is agnostic on the first source of rising British naval expenditure,it directly predicts the second. 49.Kennedy1987.230. 50.See Weir1992,31,n.86. 51.British Admiralty 1891. 52.Weir1992.25. 53.In addition,the rapid pace of technological innovation may have been as much a consequence of rising prices as it was a cause of them.For example,Admiral Sir John Fisher,who fathered the Dread- nought revolution,was appointed First Sea Lord in 1904 to rein in the naval budget.Charles Fairbanks writes,"The new ship designs were part of an overall plan to save money-a programme involving many other measures of economy,such as scrapping ships and using fewer personnel more effectively...Fisher sought to make one type of ship do the work of three,saving vast amounts of money.In all history,there have been few such radical changes in force posture."Fairbanks 1991,262;see also Sumida 1989. 54.Weir1992,45-46,88.Turning next to capital, the theory predicts that these countries will experience rising difficultiesin mobilizing capital and that these pressures will be most apparent in capital-intensive,naval competition.One of the most striking developmentsof this era was the skyrocketing cost in Britain and Germany of building warships, the most capital-intensive form of weaponry. (Although France did not play a strong role in naval competition,it experienced a similar rise in the cost of warships. Between 1890 and 1904, the cost of a French battleship rose from £93 to £113 per ton.)47 Naval armaments generated cost pressures so severe that both governments strained under the pressure of maintaining even constant rates of construction.48 The reason most commonly cited for this developmentwas the cost of new technology,yet technology provides only a partial explanation.49 New technologies often resulted in savings as superior capabilities offset higher costs. Although nickel-steel armor cost 50 percent more per ton, its superior capabilities also meant that only half as much was re￾quired.50 Moreover, rising costs were evident even during periods of relative techno￾logical stability. In 1891, for example, the British Admiralty estimated that 65–70 percent of the cost overruns for ships being built under the Naval Defence Act of 1889 were attributable to rising prices and only 30–35 percent to improvements in the ships.51 In Germany, the cost of three armored capital ships being purchased by the navy rose from 4.5 million marks in 1892–93 to 9.6 million marks in 1897–98.52 In fact, technological innovation was only one factor in uencing the explosion in naval costs.53 In testimony before the Reichstag, Admiral Alfred von Tirpitz also blamed the rising cost of manufactured inputs, labor costs, and the ambition of pri￾vate Ž rms for proŽ t as primary reasons for the dramatic increase in the cost of war￾ships.54 Each is consistent with the notion that an expanding world economy was increasing Germany’s difficulty in mobilizing capital and labor for security purposes. Likewise, the British Admiralty estimated that rising prices for manufactured inputs and labor caused the cost of a ‘‘Queen Elizabeth’’ class dreadnought to rise 15 per- 47. British Admiralty 1904, 104–105. Naval costs also outstripped the overall growth of government expenditure. Between 1890 and 1904, France’s naval budget grew by 70 percent, but overall government spending grew by only 15 percent. 48. See Ritter 1970, 159; and McNeil 1982, 287–88. Britain’s rising budgets stemmed both from the growth of foreign naval power, requiring offsetting increases in the size of Britain’s eet, and from dramati￾cally escalating costs in building and sailing individual warships. Kennedy 1976. Although the theory I present in this article is agnostic on the Ž rst source of rising British naval expenditure, it directly predicts the second. 49. Kennedy 1987, 230. 50. See Weir 1992, 31, n.86. 51. British Admiralty 1891. 52. Weir 1992, 25. 53. In addition, the rapid pace of technological innovation may have been as much a consequence of rising prices as it was a cause of them. For example, Admiral Sir John Fisher, who fathered the Dread￾nought revolution, was appointed First Sea Lord in 1904 to rein in the naval budget. Charles Fairbanks writes, ‘‘The new ship designs were part of an overall plan to save money—a programme involving many other measures of economy, such as scrapping ships and using fewer personnel more effectively . . . Fisher sought to make one type of ship do the work of three, saving vast amounts of money. In all history, there have been few such radical changes in force posture.’’ Fairbanks 1991, 262;see also Sumida 1989. 54. Weir 1992, 45–46, 88. Economic Expansion and Security in Pre–WWI Europe 207