594 TRANSACTIONS OF SECTION Fn 



•depend largely upon the aid of our Government in providing material aid for 

 ■carrying on the war in various ways. Two illustrations, however, may be given 

 from official sources of our financial arrangement with France and Russia. 



On February 15, 1915, Mr. Lloyd George, as Chancellor of the Exchequer, 



■explained the arrangements made by him with the French and Russian Finance 



Ministers. The three Ministers decided that each coimtry should raise money 



for its own needs within its own markets, except in the case of borrowing by 



■ the 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 m 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.' 



32,000, OOOZ. had been advanced to Russia, and Russia had shipped eight 

 millions in gold to England. In order to meet the difficulties of exchange 

 ■which prevented Russian merchants discharging their liabilities in this country, 

 Mr. Lloyd George had arranged to accept Russian Tieasury bills against the bills 

 due from Russian merchants, Russia collecting the debts in roubles in her own 

 country. 



The second illustration is taken from a speech made by the French Minister 

 of Finance on June 3, describing the arrangement made by his Government 

 with the British Government. M. Ribot reckoned that France would be spend- 

 ing almost 2^ millions sterling a day during the next three months, and he 

 admitted candidly the great difficulty of finding that enormous sum, since both 

 revenue and subscriptions to Treasury or National Defence bonds were coming 

 in badly. M. Ribot estimated that the French Government would have to pay 

 some sixty millions sterling to the United States, Canada, and England during 

 the next six months. He proposes to pay this sum by a plan which the Statist 

 considers excellent. The British Government has agreed to take 60,000,000/. 

 of French Treasury bonds, repayable one year after peace, at a rate of discount 

 equal to that which our own Government pays upon its own Treasury bonds, 

 which is a very moderate one. In return the French Government agrees to 

 .advance to our Government twenty millions sterling in gold. By taking pay- 

 .ment in this way the Statist says, somewhat optimistically, that our Government 

 .assures the exchange with tlie United States. . 



It is also to be noted that much money has been raised and expended for 

 the benefit of refugees from the allied nations and in other ways for the relief 

 tof those affected by the War. 



The actual closing of the Stock Exchange and the subsequent great restric- 

 ■tion of its operations have prevented any direct subscriptions in the English 

 anarket to loans to friendly foreign countries, and for some time to come such 

 ioans could only be floated successfully under exceptional conditions. 



IV. War Measures and Currency. 



(i) Effect of Assistance by the Government to Banks and Financial Houses in 



August, 191^. 



With the effect of Government assistance to banks and financial houses 

 we have already dealt in our 'Summary of Emergency Measures.' The main 

 purpose of these measures was to prevent a serious derangement of credit and 

 to injpart a momentum to its machinery which would enable it to resume its 

 operations. The banks were largely dependent on the accepting houses and the 

 bill-brokers, the bill-brokers were dependent on the accepting houses, and the 

 accepting houses were dependent on their foreign correspondents, who were, 

 owing to the breakdown of the exchanges, unable to send the expected remit- 

 tances. 



The first measure put into force was the Bill Moratorium proclaimed on 

 Sunday, August 2, and subsequently extended. The proclamation enabled 

 acceptors to postpone for a month payment of any bill accepted before August 4, 

 on reacceptance for the amount plus interest to the new date of payment at the 

 Bank Rate current on the date of reacceptance. This proclamation gave breath- 



