THE COST OF WAR

Southland Times, Issue 17476, 3 April 1915, Page 11

THE COST OF WAR

TWO THOUSAND MILLION POUNDS. Till-: ALLIES’ AGREEMENT. POOLING RESOURCES. (i'rnm Our Special Correspondent;. LONDON, February 17. In the House of Commons cm Monday, February 1,7, Mr Lloyd George explained in sumo detail the agreement come to between the Finance Ministers of France and Russia and himself at the recent conference, lie described the. war as the most expensive ever waged in material and men as well as in money. His estimate of the aggregate expenditure of the Allies if hostilities continue till December next was no less a sum than ft’.ooo,IUUI.OOO. but lie told the House that Great Britain could cany on the war out of her investments for t i vet years and Franco out of hers for two or three tears. Having pointed out. amid eheers. dial an alliance for war could not lie conducted ‘‘on limited liability principles,” ho explained that while each country is to rtti.se its own loans in its own markets, if one country needs the help of another it is to he given. A joint loan is, however, to be floated for the purpose of lending to the smaller States involved on our .side, each of the three countries contributing in equal proportions . CO-OPERATION IN FIGHTING AND FINANCE. From the statement the Chancellor of the Exchequer made coiicerning the outcome of liis recent conference in Paris with die Finance -Ministers of Russia 1 and France it is clear that not only was a complete and cordial agreement reached between the respective countries as to the general principle of co-operation in linaneing the war, hut that important points of practical financial policy were decided upon. In die first place, Hie idea which had been discussed in some quarters of a great international loan for linaneing the war was rejected by all three Powers. Hut while there is to tie no great united loan for linaneing the war. there is lo he close co-operation in Hie matter of financing the necessities of the smaller States lighting on our side, and while this co-operation will not take die form of an . curly public loan, but only proportionate advances from the three countries, some day Hie matter will, of course, have to be consolidated in a permanent loan, and then will come the question of a public issue, with ; joint guarantees, etc. RFSSLVS DILEMMA. That, however, is a matter for future consideration, ami in the meantime die Finance Ministers had to find a. means of easing Hie financial position in Russia caused by an abnormally high rale of exchange. .So far as actual wealth and resources are concerned Russia is, no doubt, quite aide to paddle her own war canoe, bin she is undoubtedly being hard hit by Hie fact that her ports in die Black Sea are, for Hie lime being, useless for oversea trade through the Dardanelles being closed, while her northern ports art; iee-hound. those in die Baltic being also of very restricted value owing to die operations of Hie Gorman Navy, even if ice conditions permuted their use. lee and the war have between them practically strangled Hie Russian export trade for the time being. The net result is that, with enormous quantities of goods ready for shipment, } Russia is unable to use her exports for ■ liquidating Hie heavy payments she, has to make abroad. As a consequence the exchange lias touched a height making it only possible for Russia to effect remittances to foreign creditors at a ruinous loss. To meet this difficulty Hie British Government extended some Cl”.mill.000 of credits to Russia some time ago. and it is evident trotn the Chancellor's speech that further large credits have been granted, while it would appear that further assistance is lo be afforded through tin- issue in Russia of Russian Treasury Hills, to be at the disposal of those in that country desiring to make remittances here. Hie London I market undertaking lo accept such bills against bills of exchange due from Russian merchants. Russia collecting in her own country and giving Treasury Bills in exchange. Somewhat similar action is to lie taken by France ( whose own Idl’s. we gather, are also to be made , available here), and it is hoped that by ! this means the Russian position will be | eased pending the time when, by tlo-i r-leaso of her exports, she will he in a j position to liquidate her extraneous Ha- | bilili-s in the normal commercial man- j tier. ! •THE GOLD PROBLEM. | One very important point of the Flian- | rehoFs Statement concerned Ho- co- j operation between Hie three great bank- i I ms institutions of Hie Allied I'oweis- . ! t!ie Bank of England, Hie Bank of France, j j and the 1 rnperial Bank of Russia. ‘1 o appreciate the importance of Hits arrangement it is necessary to remeinbei ; that by undertaking to finance to a material extent the requirements of our Allies we also assume considerable responsibility. The effect of Hie large purchases by Hie Allies which may lie made in neutral countries is bound to react ■ upon the foreign exchanges on Hi is country; indeed, an enormous trade balance in favour of America has already resulted from these very purchases, and the New York exchange on London lias fallen to a point which may cause considerable gold withdrawals from London. Mr Lloyd George explained that i an arrangement had been agreed upon j whereby if England’s slock of gold di- , minislied beyond a certain poinl Hie ; shortage occasioned would, to some extent. lie tilled by supplies of metal from i France and Russia. Therefore, when noting the stock of gold held by the \ Imperial Bank of Germany of something like Cl I It,ooo,non, we must bear in mind j Ihal. in addition to our own slock of ! some t00. 000.000 of gold hero, there the j the large stores also (odd by Ho- Hanks ; of France and Russia, upon which Eng- j land will have Hie call if necessary. Mr Lloyd George, whilst using guarded j language, and leaving ns very much in i tlidark us to Hie details of some ef j the arrangements, made it quite clear i that the Allies' power for linaneing Huwar has been greatly strengthened by j a complete understanding on man; \iial I points, and that there is in be the same , close co-operation between the three Rowers in finance as there lias been in military and naval affairs. In Hie Chancellor's own words the Allies are ‘‘pooling t heir resources.” military, naval, and linaneial. _______ j