Why government money changes naval innovation

Government funding changes the risk a firm has to carry. Earlier naval research was largely financed by manufacturers, with governments often arriving at procurement or offering facilities for trials. A commercial firm needs a likely return and risks bankruptcy if an ambitious project fails. Improving a 12-inch gun into a 13.5- or 14-inch weapon is consequently a safer proposition than jumping straight to 18 inches. A public research fund can absorb failures that private investors would reject, including work that only becomes useful through a later adaptation. The counterfactual moves some of that risk onto the Admiralty so builders can advance more quickly.