lOO ECONOMICS OF THE WAR. 



In nearly all cases the Colonies are developing, and there- 

 fore absorbing large amounts of capital, for which they come 

 to the Mother Country. Colonial credit was good. 



The gold from South Africa, the grain from Canada, wool 

 and meat from Australasia, cotton, grain, etc., from Egypt and 

 India were all-important factors in supplying the requirements 

 of the thickly populated European countries. 



To summarise, the above nations were all in a flourishing 

 condition. They had each a reasonable army and a fleet to 

 protect them against any foreseen aggression. Their poi)ulation 

 and wealth were increasing on normal lines. 



Immediately war broke out one item of their resources at 

 once assumed immense importance, and that was the provision 

 they had made for war. To keep a large standing army, to 

 ])rovide food and arms for the possible mobilisation of all 

 available forces, to provide for a large and important navy, and 

 for the recent developments in air-ships and aeroplanes, means 

 a great tax on the resources of a country. All countries have 

 appreciated the necessity of making sacrifices in this direction, 

 and in many cases, Avith the idea that such sacrifices were un- 

 necessary. 



The brains that are devoted to the invention of engines of 

 destruction could be better utilised in evolving inventions of 

 direct benefit to humanity. The years given to military service 

 by conscripts in those countries where service is compulsory 

 could be better employed in fitting the individual for his ulti- 

 mate si^here in life. It is only natural, then, that a nation 

 should hesitate at the sacrifice necessary for its security. In 

 practice, it is often extremely difficult to persuade an individual 

 to insure against contingencies and nations have shewn the same 

 hesitanc}^ 



The first eftect of the declaration of war was to paralyse 

 the foreign exchange markets. London, being the clearing- 

 house of the world for the exchange market, suddenly found 

 that some of the spokes of the wheel were broken, and until, 

 speaking figuratively, the wheel could be adjusted, it caused 

 great disturbance, to such an extent that a moratorium had to 

 be proclaimed at most of the large centres of the world, and to 

 avoid a panic at the Stock Exchanges all the bourses were 

 closed. The Bank of England rate jumped suddenly on the 

 29th July from 3 per cent., and rose rapidly in two or three 

 days to 10 per cent. 



On August 8th it was reduced tg 5 per cent., a more or less 

 normal rate. Fortunately, so far as London was concerned, the 

 August Monday Bank Holiday intervened, which gave the Gov- 

 ernment and the financial heads a day or two to consider the 

 situation, and they very wisely extended the Bank Holiday 

 from the Monday until the following Friday. ]\Ieanwhile, 

 many arrangements were made, and by the time the Banks re- 

 opened on the Friday the situation had been explained to the 



