Financing the War.

Press, Volume LII, Issue 15700, 20 September 1916, Page 6

Financing the War.

Towards thfi'end of July, Mr Asquith moved for n rote of credit for £450,000,000. This was estimated to last until the end of next month, and the total voted sinco the war began now amounts to tho stupendous total of £2,832,000,000. It appears that

out of this amount moi'c than £600,000,000 —nearly equivalent to the English National Debt beforo tho war —has been lent to Allies and tho Dominions. An interesting fact made known by Mr Asquith, in reply to a question, is that tho loans generally are made on Treasury bills, which are to bo re-discounted tip to a certain period, but not a long period, after tho declaration of peace. This means that we shall have to borrow money largely at the conclusion of tho war for the purpose of funding our floating war debt, and it is doubtless in view of this fact that tho Now Zealand Government are prudently accumulating a reserve in England. It is certainly a very strong argument in favour of our restricting expenditure and s&ving as much as possible to meet the pinch when it comes. Mr MeKenna stated that the bills which represented the money lent to the Dominions and Allies bore no fixed rate, which varies according to the rate for money current in Great Britain. The Government takes from the various borrowing countries bills repayable in London. The terms on which the advances are made aro not identical in every ease, but the general rule is that no profit is made out of the transaction, the English Government being repaid a rate of interest about equivalent to that at which it has itself had to borrow the money. Tho English Government itself ' has about £531,000,000 worth of Treasury bills outstanding, and tho probability is that when the Allies and Dominions at the end of.the war redeem the loans made to them by the' British Government, the latter will use the. money to pay off its own floating debt.