LONDON & BERLIN

Evening Post, Volume LXXXVIII, Issue 153, 26 December 1914, Page 2

LONDON & BERLIN

THE CITIES AND THE WAR A FINANCIER'S IMPRESSIONS. A gentleman in a position of control of one 'of the largest Australasian financial institutions gave to the Evening Post in an interview some most interesting facts that had come under his notice in London, whence he has just returned to New Zealand. One of the first things that impressed him was the stupendous monetary resources of the British nation. "It is simply amazing," he said, " where the money comes from." His peculiar position in the world of finance gave him access to circles and brought him into personal contact with men and things not accessible to the man in the street. He remarked in connection with the financial strength of Great Britain that a week before the war broke out the deposits in the Bank of England were roughly £50,000,000, and within a fortnight or three weeks of the war breaking out they were £150,000,000. "There is, too, the striking fact that whenever the Government asked for -money more is always offered than is asked for; the issues are always over-subscribed ; and, mind you, at a price that is but a shade above the normal. "We know but little or nothing of Berlinj but this we do know : that the value of the German mark at the very outset of the wjir had depreciated 30 to 40 per cent. The equivalent of a sovereign is, say, twenty marks; well, it means that for his sovereign the German Avas only able to obtain 16s. Now, take London. Gold was always obtainable for paper at the Bank of England, even the 10s and £1 notes issued by the other banks as legal tender could be and always have been exchangeable for or convertible into gold at the Bank of England if gold was demanded. After the first ten days, when people realised that this was so — that they could obtain as much gold as they wanted at the Bank of England in exchange for notes — they did not bother any more about it. They rested content with the knowledge that they could get the gold if they wanted it. A CHANGED CITY. "Before the war The City was most .strenuously opposed to the Government. To-day it does not hesitate to say that the Chancellor of the Exchequer in particular, and the Government generally, are beyond all praise for the ability and courage displayed in the crisis. Mr. Lloyd George, in facing the great and serious problem he so bravely undertook at that time, was enabled to act as he did by taking into his counsel men of pre-eminence in banking, finance, commerce, and trade, and, above all, his political opponents Messrs. Bonar Law and Austin Chamberlain. The emergency note issue and the moratorium wore not new things. They had been done before; but the new things that required courage, that had never been done before, were the discounting of pre-moratorium acceptances (amounting to hundreds of millions of pounds) and tho assumption of marine war insurance risks. The moratorium was all very well for the man who owed the money, but what about the man who held the biH? He could not pay if he were not paid. Until this bold step was taken by the Chancellor of the Exchequerthings were at a deadlock. The result ,of this master-stroke was the resumption of tho whole system of exchange. ■ And then the next bravo step — the institution of state marine war insurance. The normal rate up to 31st July for cargo at sea was 5s per cent. By 6th August the war risk rate had risen to £20 per cent, at Lloyd's, and many underwriters would not take up any business at any price. But the Government started out at £4 per cent., and the rate is now down to £1 5s per cent. " This, made it possible to resume foreign exchange and the movement of foreign prod ace from the overseas Dominions, and again business was carried i on as usual." It was learned that the unison which all men of all parties worked together in Britain was one of the greatest wonders of the age. Politics disappeared in tho broad strong light of patriotism. Ire land showed from one end of the other, Ulsterman and Nationalist, their loyalty to the King and the British Empire. Mr. Redmond was rightly regarded as a hero. The defection of Mr. Keir Hardie and Mr. Ramsay Macdonald mattered but little, but the one man who is thoroughly discredited is Sir Edward Carson. It was not asked whether the gentleman interviewed had leanings towards Homo Rule or not. The assumption is that ho had not; but his condemnation of Sir Edward Carson and the eerious dama.go he has done his cause in the eyes of both Unionists and Home Rulers, Nationalists and Ulstermen, was common talk in the city. He had missed the great chance of his lifetime of standing shoulder to. shoulder with Mr. Eedmond at a time when the latter gave unquestionable unqualified proof of his fealty, and that of his party and tho Irish Party to the King and to the flag. KITCHENER'S PERFECT MACHINE Lord Kitchener had been given credit for the perfecting of the great machinery •that was set instantly in motion on the declaration of the war. The credit belonged to Lord Ilaldane and the Committee of National Defence. Lord Kitchener, by fortuitous circumstances, was in London at tho time. He was undoubtedly the best man for the work; but into his hands was put a perfect machine, and he was, perhaps, the ono most capable of operating it. Since 1911 Britain had recognised the German menace, had discovered and remedied, too. the defects and want of cohesion in her defensive and offensive system. The attitude of Germany over the Moroccan crisis had wi ought the change. Britain became alive to the danger, and acted accordingly. She was not caught napping at the time Germany violated Belgian neutrality ; she was not unprepared. Lord Kitchener had the machine already to work when tho time came; but it had been perfected beforehand, and everyone in authority, even an the remotest part of tho British Dominions, knew what to) do, and how to act on the instant when the word came. The instructions were contained in the War Book, which was not unsealed until the word came. A LONG WAR OR, A SHOPiT? Would the war be long or short? It seemed that it would be both long and exhausting. The feeling in the City was that it would last long afer the Germans were driven well into East Prussia, long after they were driven back to the Rhine. It would be, as had been aptly said, a war of attrition. There were, however, two important factors that would operate one way or the other. Tho people of Germany must sooner or later learn the real truth of the matter, and how shamelessly they had been lied to .by tho German Government through the press. They could not know the truth, or perhaps they were only now beginning to realise H. They entered the war unafraid. They we're really self-sacrificing, genuinely patriotic, according to their lights. The German Government has denied that 25 per cent, of tho savings banks deposits have been taken for war purposes ; but it is admitted that the depositors weie encou'iiged to take up the war paper, and it is not difficult to suppose "that German.

persuasion may mean compulsion. Still, the people of Germany ( as a whole have had it firmly planted iv their minds that they are destined to be the paramount rulers of the world. They cannot understand that our British ideal is to let everyone think and act and speak as he likes, having duo regard, of course, for others. They believe that the high destiny of the German people must be attained through war. It is our duty to undo that terrible teaching, and show them that there is another way — the British way, of liberty and freedom by constitutional means. ECONOMIC PEESSURE. ' The other factor that must contribute to the ending of the war, bow soon or how long no one could say, was an economic one. We do not know how long Germany may be able to feed herself — prpbably for a very long time, perhaps quite a year ; but her industries must be at a standstill for want of raw material, thanks to the vigilance of the British Navy. Thanks to the Navy, too, British trade overseas continues with practically no interruption. The desperate efforts made by German manufacturers to trade through Switzerland and other neutral countries shows plainly enough how German trade and industry are faring. Most eloquent testimony of all were the tricks and devices (invariably detected) to obtain money from London through Swiss houses and banks. The economic pressure in Germany must be heavy by now, and it would increase. Its influence upon the war would be to end it more speedily, perhaps, than the issues of battles on sea and land.