British and Allied war finance, 1916-1918

LONDON WAR LOAN CAMPAIGN: The lord Mayor listen s to the band of the Coldstream G uards on the steps of the Royal Exchange

This week's chapter examines British finance from January 1916 to September 1918, the growth of war expenditure, higher taxation, methods of borrowing, sales of Exchequer bonds, expansion of floating debt, national war bonds, borrowings abroad, United States loans to Allies, British and Allied borrowings in South America, Switzerland, Japan and Spain, British loans to Allies and Dominions, growth of the British National Debt and the rise in the cost of living.

A great step forward in propaganda and organization was taken in 1918. Methods of publicity were revised, and the poster appeals were made more personal and much more incisive. "War Bond Weeks" and "War Weapons Weeks" were instituted with extraordinary success. Cities and towns vied with one another in the amounts they could raise in specified periods, usually a week or a fortnight

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The coming War Loan

MR. LLOYD GEORGE'S WAR LOAN SPEECH AT THE GUILDHALL, JANUARY 11, 1917

We feel strongly that the bringing out of the Loan will do much to create a healthier feeling among financiers and investors https://www.thetimes.co.uk/article/the-coming-war-loan-zlngg8r9g?utm_source=newsletter&utm_campaign=newsletter_118&utm_medium=email&utm_content=118_18.04.2018%20War%20Finance%20(1)&CMP=TNLEmail_118918_3170185_118

Read the full story Next Thursday, it is now officially announced, will see the issue by the Government of the third British National War Loan. That it was at last close at hand was plainly indicated when the Treasury stopped further sales of the Six per Cent. Exchequer Bonds and the War Expenditure Certificates after last Saturday, and again when on Thursday the issuing of Treasury Bills was brought to an end. At the moment these steps leave the Government with no public forms of borrowing except the War Savings Certificates, which are primarily intended for the promotion of economy among “small investors”. There will be a fresh start, however, in the national loan procedure when the new issue comes next week before the public, and it is important now for all good citizens to realize not merely what their private and personal opportunities are in connexion with it as investors, but what it means too from the national point of view as a great financial instrument for continuing and winning the war. When the precise terms offered are known, and we are out of the region of the more or less speculative forecasts which have been current all this week, it will be our duty to give what guidance we can on both aspects of the new Loan. Meanwhile we think that all sound financiers are agreed that the decision of the Government to bring out a new long-dated Loan at once is undoubtedly the right policy. For the last year the Treasury has made its borrowings entirely by short-dated issues, and our floating debt has reached proportions never before thought possible. It has been a great experiment in financial policy, open to many criticisms, and looked at, in the City certainly, with constant misgivings. In its later manifestations, and particularly in the issuing of the Six per Cent. Exchequer Bonds, coincidently with the maintenance of a high Bank rate, it has, in our opinion, led to quite false ideas becoming current as to the real basis of British credit. It will be most satisfactory on all accounts for everybody to be brought back to a proper standard of the return which the Government is entitled to offer for money by means of a regular War Loan. In essentials what is needed now is a great now consolidating security, though the Loan should at the same time bring in a large addition of “new money”. It will redeem the promises given to subscribers of the last Loan and also to purchasers of Exchequer Bonds that they should be able to convert their holdings into the next long-dated issue; and it will give an attractive opportunity for the funding of as much as possible of the heavy amount now outstanding in Treasury Bills. There is indeed no “new money” in a consolidation - that can only be derived from purchasers of the new Loan who have money available which has not been already put at the disposal of the Treasury. But it is a good thing for the national finances that the redemption of the huge amounts of capital hitherto obtained by the short-dated issues, and due at present for repayment this year or at intervals up to 1921, should be put off for a longer term of years, during which the payment of interest only (subject to an arrangement, possibly for an annual Sinking Fund) will need to be provided for by the Exchequer. At the same time it is a good thing for the investors in these short-dated securities. For they will be given terms now for making their investments permanent, on British national security, representing an interest basis more profitable than they are at all likely to secure later. Apart, however, from the purely financial advantages on either side by such a process of conversion, we feel strongly that the bringing out of the Loan will do much to create a healthier feeling among financiers and investors than has prevailed for many months past. It is a regrettable fact that the promise of conversion into a later Loan, given to subscribers of the Four-and-a-Half per Cent issue in 1915, was generally understood by them at that time to be likely to mature in the early part of 1916. The issue of the Five per Cent Exchequer Bonds in December, 1915, and their eventual substitution, on an unprecedented scale, together with the later issues of Six per Cents, for any regular War Loan, without the subscribers to the Four-and-a-Half per Cent Loan being able to obtain the higher interest given on the Bonds, has been widely felt as very nearly approaching a breach of faith. It has caused suspicions of Treasury methods, the effect of which has often been mischievous. This grievance will now be removed, and the fact that the new Government starts at once with the work of setting the whole Loan situation in order, and clearing away some of the wrong ideas which have grown up in the minds of investors, will help to restore and to assure their confidence. It will help the success of the new Loan, too, that it is to be launched by a Government newly reconstituted on a basis which is universally recognized as one which “means business”. The real “business” is the winning of the war, and successful finance is as indispensable to that as any other aspect of our national effort. The nation is now to be asked to make a further great contribution to the work of winning the war out of its resources in money, and the appeal just about to be made must be heard in the same patriotic spirit which has taken our men to the trenches. We are confident that the new War Loan will so be received by the nation, and that the response will show that the nation “means business” too.

 

Tank Bank opened

ADMIRAL SIMS (United States Navy) LAUNCHING A MINIATURE WAR.SHIP ON ONE OF THE TRAFALGAR SQUARE FOUNTAINS In connexion with the War Bonds Campaign.

Two women officials were able to sit at an improvised table within the Tank, but the general comment of the curious yesterday concerned the cramped accommodation https://www.thetimes.co.uk/article/tank-bank-opened-xsprd9kfc?utm_source=newsletter&utm_campaign=newsletter_118&utm_medium=email&utm_content=118_18.04.2018%20War%20Finance%20(1)&CMP=TNLEmail_118918_3170185_118

Read the full story The Tank-War Savings Bank in Trafalgar Square is an assured success. From the hour of the opening ceremony yesterday morning until the light failed in the afternoon there was a continuous procession of people eager to buy the bonds or certificates handed out from the interior of the monster. Among the purchasers were the Prime Minister, the Chancellor of the Exchequer, Lady Rhondda, the Lord Mayor of London, Mr George Robey, wounded soldiers, men wearing the silver badge of service, artisans, and representatives of all classes of the community. If business remains as brisk during the whole of the fortnight during which the Tank is to remain in the Square the total subscriptions to the bonds received through this one channel should reach a considerable sum. The outside of the Tank and an interesting exhibition of war trophies can be seen without any cost, but a peep at the interior of Behemoth comes only to those who are ready to lend money to the country. Those who looked inside yesterday were astonished at the machinery and armament operated within so limited a space. Two women officials were able to sit at an improvised table within the Tank, but the general comment of the curious yesterday concerned the cramped accommodation for the crew, and people certainly got a good idea of the discomfort which, apart from the danger of his duties, is the lot of the soldier who goes into action on board one of these amazing landships. Before the tank opened for business the Mayor of Westminster made a speech from the plinth of the Nelson column to the crowd gathered in the Square. He said that under the direction of the National War Savings Committee they were starting a special campaign to urge the necessity of the greatest economy and the investment by people of their savings in War Bonds and National War Savings Certificates. Last week had been a great week for us, and the achievements of our troops on the way to Cambrai and in Palestine ought to spur us at home to make every sacrifice which we could to help our soldiers and sailors. The Mayor of Westminster and the ex-mayor. each bought a £50 bond at the Tank. Later in the morning the Lord Mayor called, and another purchaser was Mr George Robey, who was so impressed that he gave an undertaking to organize a theatrical, day, when members of the theatrical profession would come to buy bonds. The Prime Minister and Mr Bonar Law paid their visit shortly after half-past two. They were recognized by the crowd and heartily cheered. Both Mr Lloyd George and the Chancellor of the Exchequer bought bonds at the door of the Tank and looked at the machinery. The whole of Trafalgar Square has been turned into an advertising centre for the War Bond Campaign. Great posters around the Nelson column appeal to people to buy a bond at the Tank, and on hoardings which temporarily hide the fountains there is a display of pictures by Mr Bert Thomas. Grouped round the Tank is a collection of captured war trophies. These include a 1907 gun converted into a 1917 anti-tank gun, which was captured bv the Royal Field Artillery; a 150mm howitzer destroyed by the enemy in their retreat; a 12cm Belgian field gun siege mounting rescued from the Germans at the Somme and presumed to have been captured bv them at Liege; a 152mm Russian howitzer captured by the Germans from the Russians, and recaptured by us on the Somme; several trench mortars; Turkish field and mountain guns; a German dispensary wagon; a German travelling kitchen and many other interesting “Souvenirs”.

 

War saving - hints for country districts

THRIFTY SCOTTISH CHILDREN INVEST IN WAR BONDS. Gathering in the second £5 ,000 from children of the Newbattle School, Midlothian, whose fathers were mostly miners.

Stamps can even be sold by tradesmen's carts on their rounds or by the village shop, if this can be arranged https://www.thetimes.co.uk/article/war-saving-hints-for-country-districts-2zbvg7f72?utm_source=newsletter&utm_campaign=newsletter_118&utm_medium=email&utm_content=118_18.04.2018%20War%20Finance%20(1)&CMP=TNLEmail_118918_3170185_118 The object of this article is to put forward a few suggestions, which are the result of personal experience in war savings work in town and country. In a city or borough there is little difficulty. It is easy to get people together, there are plenty of halls and places of assembly, and caterers for public amusement are most patriotic in helping. Cinema companies I have found particularly helpful. There are also ready-made organizations, large industrial establishments, and, above all, a mayor and corporation, upon whom everything depends. Competition between different boroughs is a fine incentive. In the country there are few such facilities, and everything is against the enthusiast who knows how important war savings are to enable us to stay the course and win. The first difficulty, getting people together, can be surmounted by occasional lectures on the war, which always seem to be popular, especially if lantern slides are shown. There is usually a lantern in, or within borrowing reach of, most villages, and someone to work it. The National War Savings Committee, Salisbury-square, EC, lend excellent sets of slides, with appropriate printed lectures on (1) The War at Sea; (2) The War on Land; (3) The War in the Air; or (4) Money and the War. From personal experience I can vouch for their popularity, and the committee send them carriage free, with OHMS labels for their return from the nearest railway station. Better still, of course, is a small cinematograph, but they are expensive. They might be within reach of rich people in a county who are anxious to help; but the War Savings Committees already do so much work without pay that they cannot be asked to buy such an instrument. One would be enough for a large group of villages, if anyone would be willing to take charge of it, and arrange for loans to lecturers. Having once got an audience, it is easy to interest them, and explain what a war of endurance really means; the literature supplied by the War Savings Committees is very useful for facts, but reading it out is of no use; the speaker must master the facts, and put his own personality and enthusiasm into his talk. If he is a local man, well known and trusted, so much the better. The two principal questions he must be prepared for are (1) Whether the money can be got back at any time for an emergency. People who live from hand to mouth are obliged to ask this. It is, of course, as easy to get it back as it is from the savings bank; and (2) whether it is a safe investment, because the interest seems too good to be true after the experience of savings banks. A POPULAR SCHEME If 50 members can be got to join, Scheme 5 is a good one, because people like to stick on their own stamps and keep their own cards. If one village cannot get 50 members a small group can, as long as a good treasurer and energetic secretary can be found. When once started, the great thing is to farm out the sale of 6d coupons to as many people as possible, so as to make it easy to get them before the sixpences are spent on other things. They can even be sold by tradesmen’s carts on their rounds or by the village shop, if this can be arranged. If really good and sympathetic collectors can be found they do good, but such folk are scarce. Scheme 2a is good for smaller societies. In both these schemes members get much more interest on their war saving certificates than the ordinary public, because the society draws and gives them the interest on all tho sixpences they collect before these amount to 15s 6d, the value of a certificate. Schools, with their ready-made organization, are a great help for starting societies, because many parents, who think it mean to save for themselves, want to do so for their children. Everything depends upon the sympathy and work of the school staff. The help of all existing organizations, provident clubs, slate clubs, goose clubs, and the like, should be enlisted; also the Boy Scouts. If such societies cannot be run for want of a treasurer and secretary, or because members are prejudiced against them, there is always the Post Office scheme to fall back upon. Then the postmaster does all the work: but as the local post office results are not reported by villages, the local figures are not scored in returns, and the great incentive of competition is lost. Perhaps the National Committee may some day find some way of getting over this difficulty. There is little doubt that if some leading weekly journal with a wide circulation in the counties could occasionally publish statistics showing, for each county. the percentage of the population who are members of a War Savings Association, and the average number of certificates purchased per member, competition would be as great an incentive to saving in country districts as it has been in the boroughs; but this is not desirable until full and trustworthy statistics, including Post Office figures, can be obtained. It is clear that we may have in prospect a real war of endurance before we can expect to reach the ideals - security for ourselves and our Allies and freedom for the human race from Prussian domination - for which we are fighting. Voluntary saving and living on the simplest possible scale will be of the utmost importance, both to win the war and to avoid the most appalling distress in the country in years to come, even after we have emerged victoriously from the great crusade.