For the first time in the financial history of Great
Britain, Prime Minister Asquith declared in his Guildhall
speech of June 29, an unlimited and democratic war loan was
popularized, appealing to all classes, including the
poorest, and advertising the sale through the Post Office of
vouchers for as low as 5 shillings to be turned into stock.
His speech was intended also to initiate a movement for
saving and thrift among the people as the only secure means
against national impoverishment by the war.
A statement by Reginald McKenna, the Chancellor of the
Exchequer, in the House of Commons on July 13, showed that
approximately L600,000,000, or $3,000,000,000, had been
subscribed, making this the greatest war loan raised in the
history of any nation. The total number of subscribers
through the Bank of England was 550,000, aggregating
L570,000,000, or $2,850,000,000, while 547,000 persons had
subscribed $75,000,000 through the Post Office. Besides this
no estimate of the small vouchers taken out had been made,
and the Post Office subscriptions had not been closed. The
gigantic total, Mr. McKenna said, represented only new
money, and not any stock which will be issued for purposes
of conversion. Prime Minister Asquith's speech appears in
full below.
_In his speech in the Guildhall, London, on June 29, 1915, Mr. Asquith
said:_
This is, I think, the third time since the war began that I have had
the privilege of addressing you in this hall. On the first occasion,
as far back as September last, I came here to appeal to you to supply
men to be trained to fight our battles at the front. Today I have come
to ask you here in the City of London for what is equally necessary
for the success of our cause--for the ways and means which no
community in the Empire is better qualified to provide, to organise,
and to replenish.
This is the costliest war that has ever been waged. A hundred years
ago our ancestors spent eight hundred millions to vindicate, as we are
vindicating today, the freedom of Europe, in a war which lasted the
best part of 20 years, which brings out a rough average of
considerably less than a million pounds a week. Our total expenditure
today approaches for one year a thousand millions, and we are spending
now, and are likely to spend for weeks and months to come, something
like three million pounds a day. Our daily revenue from taxation, I
suppose, works out less than three-quarters of a million per day.
Those are facts which speak for themselves, and they show the urgent
necessity, not only for a loan, but for a national loan--a loan far
larger in its scale, far broader in its basis, and far more imperious
in its demand upon every class and every section of the community than
any in our history.
For the first time in our financial experience no limit has been
placed on the amount to be raised; and that means that every citizen
in the country is invited to subscribe as much as he can to help us to
a complete and speedy victory. I need not dwell on its attractiveness
from the mere investor's point of view. Indeed, the only criticism
which I have heard in or outside the House of Commons is that it is
perhaps a little too generous in its terms. That is a fault, if it be
a fault, upon the right side.
For L100 in cash you get L100 in stock, with interest at 4-1/2 per
cent. on the credit of the British Exchequer. The loan is redeemable
in thirty years, when every subscriber, or those who succeed him, must
get his money back in full, and the Government retain an option to
repay at the end of ten years. That is the earliest date on which any
question of re-investment can arise. Further, the stock or bonds will
be accepted at par, with an allowance for accrued interest as the
equivalent of cash, for subscription to any loan that the Government
may issue in this country throughout the war.
I want especially to emphasise that this is for the first time in our
financial history a great democratic loan. The State is appealing to
all classes, including those whose resources are most limited, to step
in and contribute their share to meet a supreme national need. The
Post Office will receive subscriptions for L5, or any multiple of L5,
and will sell vouchers for 5s. and upwards which can be gradually
accumulated, and by December 1st next turned into stock of the new
loan.
Every advantage which is given to the big capitalist is granted also
in the same degree to the smallest supporter of the country's credit
and finance. And, under such conditions, I am confident that the
success of the loan as a financial instrument ought to be, and indeed
is now, absolutely secured. (Cheers.)
This meeting was called not only to advertise the advantages of the
War Loan, but to initiate a concerted national movement for what may
be called war economy. My text is a very simple one. It is this:
"Waste on the part either of individuals or of classes, which is
always foolish and shortsighted, is, in these times, nothing short of
a national danger." According to statisticians, the annual income of
this country--I speak of the country and not of the Government--the
annual income of this country is from two thousand two hundred and
fifty to two thousand four hundred millions, and the annual
expenditure of all classes is estimated at something like two thousand
millions. It follows that the balance annually saved and invested,
either at home or abroad, is normally between three hundred and four
hundred millions.
Upon a nation so circumstanced, and with such habits, there has
suddenly descended--for we did not anticipate it, nor prepared the way
for it--the thundercloud of war--war which, as we now know well, if we
add to our own direct expenditure the financing of other countries,
will cost us in round figures about a thousand millions in the year.
Now how are we, who normally have only three hundred or four hundred
millions to spare in a year, to meet this huge and unexpected
extraordinary draft upon our resources?
The courses open are four. The first is the sale of investments or
property. We have, it is said, invested abroad something like four
thousand millions sterling. Can we draw upon that to finance the war?
Well, there are two things to be said about any such suggestion. The
first is that our power of sale is limited by the power of other
countries to buy, and that power, under existing conditions, is
strictly limited.
The second thing to be said is this: That, if we were to try, assuming
it to be practicable, to pay for the war in this way, we should end it
so much poorer. The war must, in any case, impoverish us to some
extent, but we should end it so much poorer, because the income we now
receive, mainly from goods and services from abroad, would be
proportionately, and permanently, reduced. I dismiss that, therefore,
as out of the question.
Similar considerations seem to show the impracticability on any
considerable scale of a second possible expedient, namely, borrowing
abroad. The amount that could be raised in any foreign market at this
moment, in comparison with the sum required, is practically
infinitesimal, and, if it were possible on any considerable scale, we
should again have to face the prospects of ending the war a debtor
country, with a huge annual drain on our goods and our services, which
would flow abroad in the payment of interest and the redemption of
principal. That again, therefore, for all practical purposes, may be
brushed aside.
There is a third course--payment out of our gold reserve, but that
need only be stated to be discarded. We cannot impair the basis of the
great system of credit which has made this City of London the
financial centre and capital of the world.
There remains only one course, the one we have come here today to
advocate, and to press upon our fellow-countrymen--to diminish our
expenditure and to increase our savings.
If you save more you can lend the State more, and the nation will be
proportionately enabled to pay for the war out of its own pocket. A
second proposition, equally simple, and equally true, is this. If you
spend less, you either reduce the cost and volume of our imports, or
you leave a larger volume of commodities available for export.
The state of the trade balance between ourselves and other countries
at this moment affords grounds--I do not say for anxiety, but for
serious thought. If you look at the Board of Trade returns for the
first five months--that is, to the end of the month of May--of the
present year--you will find, as compared with the corresponding period
of last year, that our imports have increased by thirty-five and a
half millions; while our exports and re-exports have decreased by
seventy-three and three-quarter millions. What does that mean? It
means a total addition in five months of our indebtedness to other
countries of nearly a hundred and ten millions, and if that rate were
to continue till we reached the end of a completed year, the figure of
indebtedness would rise to over two hundred and sixty millions.
That is a serious prospect, and I want to ask you, and those outside,
how can that tendency be counteracted? The answer is a very simple
one--by reducing all unnecessary expenditure, first, of imported
goods--familiar illustrations are tea, tobacco, wine, sugar, petrol; I
could easily add to the list--and that would mean that we should have
to buy less from abroad; and next, as regards goods which are made at
home--you can take as an illustration beer--setting a larger quantity
free for export, which means that we have more to sell abroad, and
enable capital and labour here at home to be more usefully and
appropriately applied. That may seem a rather dry and technical
argument--(laughter)--but it goes to the root of the whole matter.
If you ask me to state the result in a sentence, it is this: All money
that is spent in these days on superfluous comforts or luxuries,
whether in the shape of goods or in the shape of services, means the
diversion of energy which can be better employed in the national
interests, either in supplying the needs of our fighting forces in the
field or in making commodities for export which will go to reduce our
indebtedness abroad.
And, on the other hand, every saving we make by the curtailment and
limitation of our productive expenditure increases the resources which
can be put by our people at the disposal of the State for the
triumphant vindication of our cause.
I said our cause. That, after all, is the summary and conclusion of
the whole matter. We are making here and throughout the Empire a great
national and Imperial effort, unique, supreme. The recruiting of
soldiers and sailors, the provision of munitions, the organisation of
our industries, the practice of economy, the avoidance of waste, the
accumulation of adequate war funds, the mobilisation of all our
forces, moral, material, personal--all these are contributory and
convergent streams which are directed to and concentrated upon one
unifying end, one absorbing and governing purpose.
It is not merely with us a question of self-preservation, of
safeguarding against hostile design and attack the fabric which has
withstood so many storms of our corporate and national life. That in
itself would justify all our endeavours. But there is something even
larger and worthier at stake in this great testing trial of our
people.
There is not a man or a woman among us but he or she is touched even
in the faintest degree with a sense of the higher issues which now
hang in the balance, who has not, during this last year, become
growingly conscious that, in the order of Providence, we here have
been entrusted with the guardianship of interests and ideals which
stretch far beyond the shores of these islands, beyond even the
confines of our world-spread Empire, which concern the whole future of
humanity. (Cheers.)
Is right or is force to dominate mankind? Comfort, prosperity, luxury,
a well-fed and securely sheltered existence, not without the
embellishments and concentrations of art and literature, and perhaps
some conventional type of religion--all these we can purchase at a
price, but at what a price! At the sacrifice of what makes life,
national or personal, alone worth living. My Lord Mayor and citizens
of London, we are not going to make that sacrifice (loud and prolonged
cheers, the audience rising and waving their hats). Rather than make
it, we shall fight to the end, to the last farthing of our money, to
the last ounce of our strength, to the last drop of our blood. (Loud
cheers.)