in the case of borrowings by small States. We decided that each of the
great allied countries should contribute a portion of every loan made to
the small States who were either in with us now or prepared to come in
later on, that the responsibility should be divided between the three
countries, and that at an opportune moment a joint loan should be
floated to cover the advances either already made, or to be made, to
these countries outside the three great allied countries. That was the
only exception we made in respect of joint loans. Up to the present very
considerable advances have been made by Russia, by France, and by
ourselves to other countries. It is proposed that, if there is an
opportune moment on the market, these should be consolidated at some
time or other into one loan, that they should be placed upon the markets
of Russia, France, and Great Britain, but that the liability shall be
divided into three equal parts.
With regard to Russia, we have already advanced £32,000,000 for
purchases here and elsewhere outside the Russian Empire. Russia has also
shipped £8,000,000 of gold to this country, so that we have established
credits in this country for Russia to the extent of £40,000,000 already.
France has also made advances in respect of purchases in that country.
Russia estimates that she will still require to establish considerable
credits for purchases made outside her own country between now and the
end of the year. I am not sure for the moment that it would be desirable
for me to give the exact figure; I think it would be better not, because
it would give an idea of the extent to which purchases are to be made
outside by Russia. But for that purpose she must borrow. _The amount of
her borrowing depends upon what Russia can spare of her produce to sell
in outside markets and also on the access to those markets._
_If Russia is able within the course of the next few weeks or few months
to export a considerable quantity of her grain, as I hope she will be,
as in fact we have made arrangements that she should, [cheers,] then
there will not be the same need to borrow for purchases either in this
country or outside, because she can do her own financing to that
extent._
The two Governments decided to raise the first £50,000,000 in equal sums
on the French and British markets respectively. That will satisfy
Russian requirements for a considerable time. As to further advances,
the allied countries will consider when the time arrives how the money
should be raised according to the position of the money markets at that
time. I have said that we gave a guarantee to Russia that she need not
hesitate a moment in giving her orders for any purchases which are
necessary for the war on account of fear of experiencing any difficulty
in the matter of raising money for payments. We confidently anticipate
that by the time these first advances will have been exhausted the
military position will have distinctly improved both in France and in
Russia.
I may say that Treasury bills to the extent of £10,000,000 on the credit
of Russia have been issued within the last few days. At 12 o'clock today
the list closed, and the House will be very glad to hear that the amount
was not merely subscribed but oversubscribed by the market, because this
country is not quite as accustomed to Russian securities as France, and,
therefore, it was an experiment. I think it is a very good omen for our
relations, not merely during the war, but for our relations with Russia
after the war, that the first great loan of that kind on Russian credit
in the market has been such a complete success.
Now we have to consider the position of this country with regard to the
possibility of our gold flitting in the event of very great credits
being established in this country. The position of the three great
allied countries as to gold is exceptionally strong. Russia and France
have accumulated great reserves which have been barely touched so far
during the war. I do not think the French reserve has been touched at
all, or has been used in the slightest degree, and I think as far as the
Russian reserve is concerned it has only been reduced by the transfer of
£8,000,000 of gold from Russia to this country. Our accumulation of gold
is larger than it has ever been in the history of this country. It has
increased enormously since the commencement of the war. It is not nearly
as large as that of Russia, France, or Germany, but it must be borne in
mind that there is this distinction in our favor; up to the present we
have had no considerable paper currency, and this is the great free
market for the gold of the world. The quantity imported every year of,
what shall I call it, raw gold, comes to something like £50,000,000, and
here I am excluding what comes here by exchanges. The collapse of the
rebellion in South Africa assures us of a large and steady supply from
that country, and, therefore, there is no real need for any
apprehension.
But still it would not have been prudent for us to have overlooked
certain possibilities. I have already pointed out some of them--the
diminution of exports, the increase of our imports, the absorption of
our transports for war purposes, large credits established for our own
and other countries, and a diminution in our savings for investments
abroad. There is just a possibility that this might have the effect of
inducing the export of gold to other countries. We therefore have to
husband our gold and take care lest it should take wings and swarm to
any other hive. We therefore made arrangements at this conference
whereby, if our stock of gold were to diminish beyond a certain
point--that is a fairly high point--the Banks of France and Russia
should come to our assistance.
We have also made arrangements whereby France should have access to our
markets for Treasury bills issued in francs. We have also initiated
arrangements which we hope will help to restore the exchanges in respect
of bills held in this country against Russian merchants, who, owing to
the present difficulties of exchange, cannot discharge their liabilities
in this country. They are quite ready and eager to pay, they have the
money to pay, but, owing to difficulties of exchange, they cannot pay
bills owing in this country. We therefore propose to accept Russian
Treasury bills against these bills of exchange due from Russian
merchants, Russia collecting the debts in rubles in her own country and
giving us the Treasury bills in exchange. We hope that will assist very
materially in the working of the exchanges. It will be very helpful to
business between the two countries, and incidentally it will be very
helpful to Russia herself in raising money in her own country for the
purpose of financing the war.
We also received an undertaking from the Russian Government in return
for the advances which we were prepared to make, that Russia would
facilitate the export of Russian produce of every kind that may be
required by the allied countries. This, I believe, will be one of the
most fruitful parts of the arrangements entered into. An arrangement has
also been made about the purchases by the allied countries in the
neutral countries. There was a good deal of confusion. We were all
buying in practically the same countries; we were buying against each
other; we were putting up prices; it ended not merely in confusion, but
I am afraid in a good deal of extravagance, because we were increasing
prices against each other. It was very necessary that there should be
some working arrangement that would eliminate this element of
competition and enable us to co-ordinate, as it were, these orders.
There will be less delay, there will be much more efficiency, and we
shall avoid a good deal of the extravagance which was inevitable owing
to the competition between the three countries.
I have done my best to summarize very briefly the arrangements which
have been entered into, and I would only like to say this in conclusion.
After six months of negotiation by the cable and three days of
conferring face to face we realized that better results were achieved by
means of a few hours of businesslike discussion by men anxious to come
to a workable arrangement than by reams of correspondence.
Misconceptions and misunderstandings were cleared away in a second which
otherwise might take weeks to ferment into mischief, and it was our
conclusion that these conferences might with profit to the cause of the
Allies be extended to other spheres of co-operation. [Cheers.]
Britain's Unsheathed Sword
By H.H. Asquith, England's Prime Minister
Stating the estimated costs of the war to Great Britain,
outlining the operations of the French and British allied
fleets in the Dardanelles, declaring the Allies' position in
retaliation for the German "war zone" decree against Great
Britain, and reaffirming the chief terms of peace, stated in
his Guildhall speech of last November, on which alone England
would consent to sheathe the sword, the following speech,
delivered in the House of Commons on March 1, 1915, by Prime
Minister Asquith, is one of the most important of the war.
_In Committee of Supply._
_Mr. Asquith, who was loudly cheered on rising, moved the supplementary
vote of credit of £37,000,000 to meet the expenditure on naval and
military operations and other expenditure arising out of the war during
the year 1914-1915. He said:_
The first of the two votes which appear upon the paper, the one which
has just been read out, provides only for the financial year now
expiring, and is a supplementary vote of credit. The vote that follows
is a vote of credit for the financial year 1915-1916. I think it will
probably be convenient if in submitting the first vote to the committee
I make a general statement covering the whole matter. I may remind the
committee that on Aug. 6 last year the House voted £100,000,000 in the
first vote of credit, and that on Nov. 15 the House passed a
supplementary vote of credit for £225,000,000, thus sanctioning total
votes of credit for the now expiring financial year of £325,000,000. It
has been found that this amount will not suffice for the expenditure
which will have been incurred up to March 31, and we are therefore
asking for a further vote of £37,000,000 to carry on the public service
to that date. If the committee assents to our proposals it will raise
the total amount granted by votes of credit for the year 1914-1915 to
£362,000,000. I need not say anything as to the purposes for which this
vote is required. They are the same as upon the last occasion. But I
ought to draw attention to one feature in which the supplementary vote,
which comes first, differs from the vote to be subsequently proposed for
the services of the year 1915-1916. At the outbreak of the war the
ordinary supply on a peace basis had been voted by the House, and
consequently the votes of credit for the now current financial year,
like those on all previous occasions, were to be taken in order to
provide the amounts necessary for naval and military operations in
addition to the ordinary grants of Parliament. It consequently follows
that the expenditure charged, or chargeable, to votes of credit for this
financial year represent, broadly speaking, the difference between the
expenditure of the country on a peace footing and that expenditure upon
a war footing. The total on that basis, if this supplementary vote is
assented to, will be £362,000,000.
For reasons the validity of which the committee has recognized on
previous occasions, I do not think it desirable to give the precise
details of the items which make up the total, but without entering into
that I may roughly apportion the expenditure. For the army and the navy,
according to best estimates which can at present be framed, out of the
total given there will be required approximately £275,000,000. That is
in addition, as I have already pointed out, to the sum voted before the
war for the army and the navy, which amounted in the aggregate to a
little over £80,000,000. That leaves unaccounted for a balance of
£87,000,000, of which approximately £38,000,000 represents advances for
war expenditure made, or being made, to the self-governing dominions,
Crown colonies, and protectorates, as explained in the Treasury minute
last November, under which his Majesty's Government have undertaken to
raise the loans required by the dominions to meet the heavy expenditure
entailed upon them on the credit of the imperial exchequer. In addition
to that sum of £38,000,000 there has been an advance to Belgium of
£10,000,000, and to Serbia of £800,000. Further advances to these allies
are under consideration, the details of which it is not possible yet to
make public. The balance of, roughly, £28,000,000 is required for
miscellaneous services covered by the vote of credit which have not yet
been separately specified.
I think the committee will be interested to know what the actual cost of
the war will have been to this country as far as we can estimate on
March 31, the close of the financial year. The war will then have lasted
for 240 days and the votes of credit up to that time, assuming this vote
is carried, will amount to £362,000,000. It may be said, speaking
generally, that the average expenditure from votes of credit will have
been, roughly, £1,500,000 per day throughout the time. That, of course,
is the excess due to the war over the expenditure on a peace footing.
That represents the immediate charge to the taxpayers of this country
for this year. But, as the committee knows, a portion of the expenditure
consists of advances for the purpose of assisting or securing the food
supplies of this country and will be recoverable in whole, or to a very
large extent, in the near future. A further portion represents advances
to the dominions and to other States which will be ultimately repaid. If
these items are excluded from the account the average expenditure per
day of the war is slightly lower, but after making full allowance for
all the items which are in the nature of recoverable loans, the daily
expenditure does not work out at less than £1,200,000.
These figures are averages taken over the whole period from the outbreak
of the war, but at the outbreak of the war, after the initial
expenditure on mobilization had been incurred, the daily expenditure was
considerably below the average, as many charges had not yet matured. The
expenditure has risen steadily and is now well over the daily average
that I have given. To that figure must be added, in order to give a
complete account of the matter, something for war services other than
naval or military. At the beginning of the year these charges are not
likely to be very considerable, but it will probably be within the mark
to say that from April I we shall be spending over £1,700,000 a day
above the normal, in consequence of the war.
Perhaps now I may say something which is not strictly in order on this
vote, but concerns the vote of credit for the ensuing year, which
amounts, as appears on the paper, to £250,000,000. The committee will at
once observe an obvious distinction between the votes of credit taken
for the current financial year and that which we propose to take for the
ensuing year. As I have already pointed out, at the outbreak of war the
ordinary supply of the year had been granted by the House, and
accordingly the votes of credit for 1914-1915 were for the amounts
required beyond the ordinary grants of Parliament for the cost of
military and naval operations. When we came to frame the estimates for
the ensuing year, 1915-1916, the Treasury was confronted with the
difficulty, which amounted to an impossibility, of presenting to
Parliament estimates in the customary form for navy and army
expenditure, apart from the cost of the war. All the material
circumstances have been set out in the Treasury minute of Feb. 5, and in
principle have been approved by the House. As the committee will
remember, the total of the estimates which we have presented for the
army and the navy amount to only £15,000 for the army and £17,000 for
the navy, and the remainder of the cost of both these services will be
provided for out of votes of credit, and the vote of credit now being
proposed provides for general army and navy service in as far as
specific provision is not made for them in the small estimates already
presented. This vote of credit, therefore, has two features which I
believe are quite unique, and without precedent. In the first place, it
is the largest single vote on record in the annals of this House, and,
secondly, as I have said, it provides for the ordinary as well as for
the emergency expenditure of the army and the navy. The House may ask on
what principle or basis has this sum of £250,000,000 been arrived at. Of
course it is difficult, and indeed impossible, to give any exact
estimate, but as regards the period, so far as we can forecast it, for
which this vote is being taken, it has been thought advisable to take a
sum sufficient, so far as we can judge, to provide for all the
expenditure which will come in course of payment up to approximately the
second week in July--that is to say, a little over three months, or
something like 100 days of war expenditure.
As regards the daily rate of expenditure--I have dealt hitherto with the
expenditure up to March 31--the War Office calculates that from the
beginning of April, 1915, the total expenditure on army services will be
at the rate of £1,500,000 per day, with a tendency to increase. The
total expenditure on the navy at the commencement of April will, it is
calculated, amount to about £400,000 per day. The aggregate expenditure
on the army and the navy services at the beginning of 1915-1916 is
therefore £1,900,000 per day, with a tendency to increase, and for the
purpose of our estimate the figure we have taken is a level £2,000,000 a
day. On a peace footing the daily expenditure upon the army and the navy
on the basis of the estimates approved last year was about £220,000 per
day. So that the difference between £2,000,000 and £220,000 represents
what we estimate to be the increased expenditure due to the war during
the 100 days for which we are now providing.
There are other items belonging to the same category as those to which I
have already referred in dealing with the supplementary vote with regard
to advances to our own dominions and other States for which provision
has also had to be made, and the balance of the total of £250,000,000
for which we are now asking, beyond the actual estimated expenditure for
the army and the navy, will be applied to those and kindred or
emergency purposes. Before I pass from the purely monetary aspect of the
matter, it may be interesting to the committee to be reminded of what
has been our expenditure upon the great wars of the past. In the great
war which lasted for over twenty years, from 1793 to 1815, the total
cost as estimated by the best authorities was £831,000,000. The Crimean
war may be put down, taking everything into account, at £70,000,000. The
total cost of the war charges in South Africa from 1899 to March 31,
1903, was estimated in a return presented to Parliament at £211,000,000.
In presenting these two votes of credit the Government are making a
large pecuniary demand on the House, a demand which in itself and beyond
comparison is larger than has ever been made in the House of Commons by
any British Minister in the whole course of our history.
We make it with the full conviction that after seven months of war the
country and the whole empire are every whit as determined as they were
at the outset [cheers] if need be at the cost of all we can command both
in men and in money to bring a righteous cause to a triumphant issue.
[Cheers.] There is much to encourage and to stimulate us in what we see.
Nothing has shaken and nothing can shake our faith in the unbroken
spirit of Belgium, [cheers,] in the undefeated heroism of indomitable
Serbia, in the tenacity and resource with which our two great allies,
one in the west and the other in the east, hold their far-flung lines
and will continue to hold them till the hour comes for an irresistible
advance. [Cheers.] Our own dominions and our great dependency of India
have sent us splendid contributions of men, a large number of whom
already are at the front, and before very long, in one or another of the
actual theatres of war, the whole of them will be in the fighting line.
[Cheers.] We hear today with great gratification that the Princess
Patricia's Canadian regiment has been doing, during these last few days,
most gallant and efficient service. [Cheers.]
We have no reason to be otherwise than satisfied with the progress of
recruiting here at home. [Cheers.] The territorial divisions now fully
trained are capable--I say it advisedly--of confronting any troops in
the world, [cheers,] and the new armies, which have lately been under
the critical scrutiny of skilled observers, are fast realizing all our
most sanguine hopes. A war carried on upon this gigantic scale and under
conditions for which there is no example in history is not always or
every day a picturesque or spectacular affair. Its operations are of
necessity in appearance slow and dragging. Without entering into
strategic details, I can assure the committee that with all the
knowledge and experience which we have now gained, his Majesty's
Government have never been more confident than they are today in the
power as well as the will of the Allies to achieve ultimate and durable
victory. [Cheers.] I will not enter in further detail to what I may call
the general military situation, but I should like to call the attention
of the committee for a few moments to one or two aspects of the war
which of late have come prominently into view.