To put it simply, scrapping a warship is a way to make money, while keeping them as a museum costs a lot of money. For nations like the UK that were essentially bankrupted by the two world wars, scrapping ships served to raise funds for the government, provide jobs in the ship-breaking industry, and provide scrap metal to help industry recover.

Let's look at the British ship-breaking industry following WWII. This was handled by a government body called the British Iron & Steel Corporation (Salvage) Ltd or BISCO, which also handled the supply of other raw materials to the steel industry. Ships the Admiralty no longer needed were handed over to BISCO. BISCO would then assign the ship to a suitable breaker's yard, where the ship would be scrapped. Following this, the scrap would be sold, the costs of the demolition returned to the breaker and the remainder of the money returned to the Government. This brought in a lot of money- in 1945 pounds, scrapping a battleship would bring in £450,000, while scrapping a destroyer would bring in £30,000 ($26,000,000 and $2,000,000 respectively today). You also need to factor in the reduced costs to the Admiralty, as there was no longer a need to man or maintain the scrapped ship. This also produced a lot of scrap. Annual output from the British ship-breaking industry was about 500,000 tons, or about 3% of the output of the British steel industry. For a nation like Britain, whose industry had been devastated by the war, and which owed the US and Canada £3.8 billion (again in 1945 pounds), this was an attractive option to increase revenue and rebuild their industry.

Meanwhile, repairing and restoring ships for use as museums costs a lot of money, as does maintaining them in good condition. Restoring HMS Victory in 1922 was estimated to cost £16,000 for just the most essential repairs, while restoring her to her condition at the time of Trafalgar would cost £160,000 (1922 pounds). Converting this to today's money, this is $1,250,000 for essential repairs or $12.5 million for the full restoration. The more recent restoration of HMS Caroline, a WWI-era light cruiser, cost about £15,000,000 ($18,000,000) in today's money. Both of these ships are now in drydocks - in other words, you don't see that much of a saving in restoration costs, especially since you need to find and rent a drydock. You may also not see much of a saving in maintenance. Ships are designed to have the entirety of their hulls supported by seawater. Putting a ship into drydock for long terms can put stresses on the hull, as only some parts of it are being supported. Drydocks can also be very humid environments. This, combined with corrosive residues left behind when seawater evaporates from the hull, can cause significant corrosion. SS Great Britain, in drydock in Bristol, had to undergo an £11,000,000 ($13,500,000) restoration to remedy this in 2004-5. There is no guarantee that a ship will draw enough visitors to pay for the necessary upkeep, whether it is on land or in the water.

Since repairing and restoring a comparatively small warship costs as much as was recouped by scrapping a battleship, it's easy to see why nations with a lot of debt chose to scrap most, if not all of their warships.

Hey there,

Just to let you know, your question is fine, and we're letting it stand. However, you should be aware that questions framed as 'Why didn't X do Y' relatively often don't get an answer that meets our standards (in our experience as moderators). There are a few reasons for this. Firstly, it often can be difficult to prove the counterfactual: historians know much more about what happened than what might have happened. Secondly, 'why didn't X do Y' questions are sometimes phrased in an ahistorical way. It's worth remembering that people in the past couldn't see into the future, and they generally didn't have all the information we now have about their situations; things that look obvious now didn't necessarily look that way at the time.

If you end up not getting a response after a day or two, consider asking a new question focusing instead on why what happened did happen (rather than why what didn't happen didn't happen) - this kind of question is more likely to get a response in our experience. Hope this helps!