We Are All Implicated in the Gun Industry

We Are All Implicated in the Gun Industry

We Are All Implicated in the Gun Industry

Since the industrial revolution, arms manufacturing has been central to our economy—changing that won’t be easy.


Thanks to the heroic determination of high-school students, the gun-control movement is on the march in the United States. Companies around the country are distancing themselves from the NRA. Yet media giants like Amazon and Apple still purvey NRA propaganda; major financial companies like Visa and MasterCard keep facilitating gun sales; and the storied insurance company Lloyds of London persists in insuring the NRA and gun shows.

The immovability of these big targets makes clear the challenges of a consumer-boycott strategy against an industry historically at the heart of modern life. Arms manufacturing has been entangled with our financial system from the beginning, and excising it from the economy will not be easy.

Britain’s military engagements and colonial excursions in the 18th century helped drive industrialization. Military contracting fueled the development of metallurgical industries. In 1752, Birmingham boasted that “above Twenty thousand Hands” were employed “in useful Manufactures…greatly serviceable to the Government.” The town worked to quash any legislation threatening its booming firearms industry, convinced that injury to it would damage the entire region, throwing a “considerable…portion of its population” out of employment.

Britain’s biggest gun-making firm was owned by Samuel Galton Jr. Galton was a Quaker, and the Religious Society of Friends is a sect known for its pacifist commitments. In 1796, responding to concerns raised in his church, Galton defended his business by arguing that there was no industrial work he might do that did not in some way contribute to war. Indeed, fellow Quakers in town included families like the Lloyds, his iron suppliers, whose war profits laid the foundation of Lloyds Bank. Galton’s logic did not persuade the Quaker church; he was officially disowned. The church refused to receive “further Collection from him or to admit his attending our Meetings,” but he defiantly continued to attend the worship, and the Quaker Ackworth School and other Quaker charitable organizations continued to accept his donations. Meanwhile, as war with France went on, the Galton gun fortune skyrocketed. The family used this wealth to establish a bank in 1804. The Galton bank later merged with Midland, now part of HSBC.

Soon after, government-spawned innovation in firearms manufacturing again drove industrial revolution. After decades of patient investment, the US federal government enabled the production of firearms with interchangeable parts. The resulting “American System of Manufacture” was adopted in machine-tool, sewing-machine, and other industries. British gun makers followed suit, adding bicycles, cars, and other essential modern goods to their offerings. At the end of the 19th century, global arms sales were thriving. European and American arms companies obtained banking partners that gave loans to client states. Cartels formed as business alliances emerged to divide up world markets.

In the early 20th century, the French arms maker Paul Allard of Schneider-Creusot reminded critics that his factories had long been oriented toward the “whole industry of metallurgy and mechanical construction,” with only periodic focus on war matériel at the government’s behest. The science-fiction writer H.G. Wells likewise pointed out that the profits of arms trading accrue not only to arms makers but to “thousands of persons of all ranks of life,” “as lesser shareholders,” even when they are “quite innocent of any desire to slaughter their neighbours.” Moreover, he noted, arms manufacturers made other products, too. In 1935, a British Royal Commission argued that the line between military and civilian manufacturing was so blurry that it was impossible to say who was and who wasn’t making arms. Parts used in arms manufacturing often also had uses in other goods. Like Galton, the commissioners saw the entire economy as ineluctably involved with arms production, recognizing that “large numbers of people, of all classes…by reason of their employment, their business interests or by the holding of shares, may have a financial interest in war or the preparation for war.”

Despite the historic reality of the centrality of arms-making to the evolution of modern industry and finance, we often echo the Quaker church that scorned Galton and imagine arms makers as especially scandalous “merchants of death.” Andrew Undershaft in George Bernard Shaw’s 1907 play Major Barbara was the ultimate caricature of the malevolent arms maker. Today, we focus on the villainy of the NRA and the politicians in its pocket. This outlook shapes strategies like pressuring companies that partner with the NRA to cancel their discounts to NRA members.

The NRA certainly is villainous. But Galton had a point, too. The rest of us remain systemically implicated, even if we don’t buy or invest in firearms.

In 2007, Remington, a firearms maker central to America’s industrial history, was bought by Cerberus, a private-equity firm. After Sandy Hook, public-pension fund investors like the California State Teachers’ Retirement System pressured Cerberus to dump Remington. Failing to find a buyer, Cerberus moved the gun maker into a “special financial vehicle.” Meanwhile, it profited from booming gun sales—panic purchases in anticipation of new controls. Cerberus has earned nearly $20 million in advisory and other fees from Remington since 2007, apart from the more than $60 million return on equity in 2012.

Meanwhile Remington borrowed millions from Huntsville, Alabama, where it opened a plant on the understanding that the loan would be forgiven if the company brought enough jobs. Remington also borrowed money to buy out those who wanted to divest. Some of its debt is held in funds managed by JP MorganChase.

Remington has now filed for bankruptcy, and Cerberus will finally lose control of it. The bankruptcy proceedings presume that someone will buy Remington—possibly another gun maker like Sturm & Ruger. In the meantime, Remington is assuring employees and shareholders that its operations will go on as normal.

Its interim owners include JP Morgan Asset Management. Bank of America and Wells Fargo currently fund the revolving loan of about $200 million that allows Remington to borrow for operations.

Gun-control advocates speak of pressuring banks like JP MorganChase and Wells Fargo to refuse to allow their services to be used for firearms sales, but these banks are themselves deeply invested in the gun business. Moreover, thousands of employees; law, advertising, and insurance firms; materials and parts suppliers; and retailers remain implicated in Remington, too.

Meanwhile, the public at large remains an indirect patron of the very gun makers that it asks banks and companies to shun. Forty percent of firearms manufacturers’ profits in the United States come from government contracts, including military arms and law-enforcement arms bought by state, county, and municipal forces with our tax contributions. Through our support of armed policing and American military engagements abroad, we enable these purchases.

It is certainly a positive step that financial firms like Blackstone Group and BlackRock Inc. are culling gun companies from the portfolios of clients who do not wish to invest in them. But Galton’s question has been lost: What of all the other ways in which we remain complicit in firearms manufacture?

Divesting from firearms alone will not wash the blood from our hands. We must rethink our commitment to a mutually terrorized public and mutually terrorized system of “global security.” Galton may have been too easy on himself, but he was right that by focusing on his particular culpability, his accusers obscured the larger scandal of their civilization’s dependence on arms.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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