Prior to the war, as a supply industry, shipbuilders were acutely aware of periodic booms and slumps in demand. Shipping capacity cannot easily be adjusted to changes in demand, and fluctuations in world trade (to which shipbuilding is highly vulnerable) are immediately reflected in the level of freight rates, and consequent laying up of ships when rates prove unremunerative. In the short term, war at least promised some consistency of demand and an expectation that demand would probably increase as the war was prosecuted. This, to an extent, compensated for the loss of export markets in this sector, but did not apply to the mercantile-only yards which were not as well equipped as the larger mixed naval and merchant establishments. The latter’s share of warship contracts after the Naval Defence Act of 1889 grew in the naval race with imperial Germany. In the period 1901–13 the private sector built around 60 per cent of warships, and from 1902 all main engines for the Royal Navy and for foreign account. The rest were constructed in government-controlled and administered Royal Dockyards, two of which, Portsmouth and Plymouth, built battleships.1 The latter, however, did not have to bear contractions in demand, as the private shipbuilders did.2