THE FINANCIAL WEAPON

Lyttelton Times, Volume CXVII, Issue 17250, 18 August 1916, Page 9

THE FINANCIAL WEAPON

BRITAIN’S STAYING POWER. LORD REVELSTOKKS VIEW. An interview was given a few weeks ago by Lord Revolstoke to the. London representative of tho United Press ot America, who writes— The British Parliament recently voted another £300,000,000 for the prosedation of war, and Great Britain’s war bill is now nearly £5,000,000 a day. British politicians view the financial outlook confidently; does the business community share that view? To the layman talk of millions is a vague thing, but to those who have to deal in millions the term has a definite meaning. Thus to find out what the British business community thinks about the cost of tho war, one has to go to one who deals in big things, and Lord Revelstoko is ono of these. As active head of the great merchant bauking firm of Baring Brothers, with its world-wido financial connections, Lord Revelstoko is qualified to give authoritative judgments. Moreover, in his capacity as one of the directors of tho Bank of England, lie is brought into close touch with international finance in its broadest aspect, and his mind is of tho sort capable of taking

a comprehensive view of business conditions as a whole. I found Lord Revelstoko -willing enough to talk to an American correspondent about the economio position of Great Britain, provided that tho conversation were limited to a discussion of the financial and commercial position as it appeared to a banker and merchant who had no official status. London, ho said, like other credit centres, was unprepared for the crisis which accompanied the outbreak oi war; whatever may have been tho case in Berlin, English bankers at least had no foreknowledge of the calamity that was to strike Europe in August, 1914. But after nearly two years of a war waged in a manner far more exhausting’ than any nation had anticipated, ono can say that the edifice of credit in London stands firm, and that the delicate banking machinery works smoothly. For this the world has chiefly to thank tho courageous policy adopted by the Cabinet and the ’Treasury Department during the first months ot war. , - Emphasising the fact that this policy had been justified by results, Lord Revelstoko spoke of the way in which business is being carried on m London at this moment. London s credit is not like Berlin’s; it is being tested every day by tho standards ot other countries overseas, and if it were found wanting, the world would quickly know it. London is the centre of the sensitive network of nerves which constitute the foreign exchanges. Banks and merchants all over the world have credits in London, on which they nifty draw at any moment. London has attained its present position owing largelv to the volume of foroign trade to and from the shores of England. War tends to cripple exports because it turns productive workers into soldiers. Imports in turn have to be restricted as far as possible to the necessaries of war. Thus London stands specially to lose by a reduction in tho volume of world trade, becaus this red notion makes tho processes ot world-finance harder to carry tnrough• But despite these disadvantages, London remains tho world s financial clearing-house. How has this been done?

BRITISH NAVY’S WORK. The key to the position has been the maintenance of an export trade. Exports have been possible, to an extent beyond expectation, pavtly owmg to tho sound financial policy of tho Government, and partly to tho uso of the great reservoir of labour p'reviously untouched here, women and men who did no work before having taken the places of thoso who have gone to the trenches. But chiefly ,* the successful maintenance of exports is duo to the British Navy. No small part of the Navy’s effort has consisted in tho protection of tho world’s sea-borne comn erce, which has enabled tho City of London to do its share in the great struggle. Notably it is the Navy that lias made it possible for the Allies to obtain from America free shipments of food and munitions, and although the orders placed in America have had the effect of' creating a trade balance adverse to tho Allied countries, measures have been taken to arrest and control the fall in tho American Exchange. “I refer, of course,” said Lord Revelstoke, “ to tho ‘ mobilisation ’ of securities and to the restrictions on certain imports. In those matters tho Chancellor of the Exchequer has found tho business community a ready coadjutor, and if tho necessity for more energetic measures for the protection of our trade balance arises as time goes on, there is little doubt that a substantial and hitherto untouched reserve could be made available by a stricter regulation of our imports and a greater economy in their distribution.” „ . j Thus, the vigilance of the E leet and the early courage of tho Government’s financial policy have maintained British credit. London has been able to meet all claims on herself, has been able to borrow abroad, when necessary, on reasonable terms, and in other cases to meet in gold all obligations abroad to

ment. Nor has tho City any doubt but that tho freedom of London’s gold markot can bo maintained in tho future.

Turning, then, to the future, and Britain’s capacity for shouldering the financial burden of tho war, Lord Revelstoko spoke in a manner quietly confident:— x “ No serious business man," he said, “ will bo inclined to underrate the nature of an effort which costs the country £5.000,000 a day.. Such figures speak for themselves. But, formidable as they are, tho country is proving that it can cope with such, an expenditure. The spirit which you will come across in the business community is the same spirit which animates the rest of England, one of earnest determination to prosecute the war, however long it may last, to a victorious end. Applied to business men, this principle meanß that so long as our military authorities require l money to oarry on we shall shrink from no sacrifice in order to provide it. Tho Government will find that the civilian community 1b justv as fully and as firmly resolved on victory as the armies which are fighting our battles in the field, and I might add, ■ntertain9 as little doubt as to the ultimate result.” ADVANCES TO ALLIES. The question naturally arises whether this confidence should be modified in view of tho large advances which Great Britain is making to -the other members of the Alliance. The answer is that these advances aro included in Great Britain’s war bill, and fully allowed for therein. Tb* question of the advances to Allies is, to Lord Revelstoko, one of politics rather than of business. The city is not inclined to weigh over-nicely the respective value of the services rendered- by different nations to the common cause. All that is needed is confidence that all aro doing their best, and about that no doubt can be felt by those who know tho facts. The statesmen of tho Allied nations are working together. They allot one task to this nation and another to that. Part, but” only part, of the British share is :to finance tho Allies: over £400,000,000 was advanced to the Allies and dominions during the last financial year, and the amount is "not likely to decrease. It is a serious amount, but the bill is met cheerfully, and it is, as was said above, provided for in the British calculations.

Finally, Lord Revelstoke, was asked how London views the growing financial power of the United States. It lias been suggested that there is soma jealousy in tho City of this new arrival in the spheie of international finance. To this Lord Revolstoke, speaking with obvious sincerity, was able to give an emphatic denial. Never had the friehdship between bankers in America and England been more cordial, a fact which ho could personally confirm from tho intercourse he had had during the last six months with leading Americans. “The United States have gained greatly in financial strength since 1914. But London need not, and does not. grudge that success. American and British ideals in this respect are similar; both nations believe in using their montly power for the development of the newer countries, a development which can only increase the prosperity of tho whole world. There is room in tho field of _ international finance for the New World as well as tho Old. The association .of American capital with British experience and technical knowledge of European and Eastern conditions is one from which both parties will' derive benefit. It is to the co-operation of these two factors, to the joint endeavours of tho United States and of Great Britain, that the financial world will look when the reign of force is oyer and the hour for reconstruction arrives.”