How We Find Money for the Allies.

Pukekohe & Waiuku Times, Volume 5, Issue 135, 21 January 1916, Page 3 (Supplement)

How We Find Money for the Allies.

I CAN THE LOANS BE REPAID AND HOW?

By JOSKI'H KING, M.P. (From "Tit-Bits.")

(The son of a wolf-known Surrey Congrogationaliet, Mr. Joseph King, II P for North Somerset, the writer of the following striking article was intended in the first place for the Chmih. He ultimately drifted into social work and journalism, and, as a member of a London Board o. Guardians, tin. Surrey Countv Council, and other local bodies, lie has done much valuahlo «ork He wdl always be remembered for the assistance he rendered m founding the Mansfield House University Settlement, Mr. K:ng has written ranch on German affairs, gaining specia 1 knowledge ol our enemy when studying at the Universities of Giessen and Berlin. He has represented Noith Somerset since MO, and is fifty-five years of age.)

BRITAIN'S FLEET AND FINANCE. Britain plays in this war two parts essential to the success of the antiGerman Powers. She controls the seas by her Navy; she finances with loans and gifts her Allies. Thus she does just what she did in the great European wars of 1793 to 1814. when the French Revolution and tke Napoleonic' menace which followed it, plunged all Europe in a long war. Then Brita n ruled the seas, and she gave great loans (never repaid) to Prussia, Russia, Austria, Spain, and, indeed, to most countries of Europe except France, Holland, and Denmark. The Fleet and finances of Britain d.d as much to cnisb Napoleon as his own pride, a Russian winter, and the exhaustion ef France. 1-20 YEARS AGO AND NOW. The parallel between then end now is striking. It throws light on what Britain may expect as one of the costs of victory.' Yet there are contrasts, too. Then, every advance of money to a Foreign Power, whether by way of .subsidy or loan, was by resolution of the HoiWe of Commons, and its amount was put in a Bill passed by both Houses of Parliament. Now, who knows what our loans and advances to our Allies are? The countries receiving our support are hardly named, and the amount of the support only stated occasionally and in vague terms. It is known that the amounts now being dispensed are very great. In the years of the great French War (1793-1814) Britain advanced £46,500,000 to her Allies; but in little over twelve months of this war she has advanced ten times as 'much, about £450,000,000, to her Allies. The Prime Minister, on September loth last, stated that over £1,500.000 was daily being advanced to the Allies, and that Britain's total expenditure was about £5,000,000 daily. PLAYING THE RICH UNCLE'S PART. Certain things compel Britain to pay the debts of her Ally nephews. Russia is economically backward, undeveloped. cut off from her Western friends, yet needing munitions from Japan, America, and from England (when the ice of Archangel's long winter does not prevent it). Italy is economically poor, not rich in natural resources, and not yet recovered from the strain of the war in which she conquered Tripoli. France, though very rich in accumulated wealth, has sent eveiy available man into the field, has stripped herself of workers in her industries, and, when the war started, she was not free of financial embarrassments and scandals. Belgium has an outcast Government, without means to collect her taxes. Serbia is in perilous and piteous state. AH Britain's Allies, save Japan, need, and have received, British money. EXTENT OF BRITAIN'S FINANCING. How is this money conveyed to these Allies? Of course, not by actually sending gold, or bullion, to the borrowing country. It is done by opening credit accounts or arranging for payments for goods or services. For instance, if France needs beef from Argentina to feed her soldiers. Britain may arrange the payment and book a debit against France accordingly. Or. if Russia needs rifles, cartridges, and other equipment from the United States, Britain may undertake to settle the payment, and book a debit against Russia accordingly. In£somc few cases cash may actually pass: it is said that Italy received several millions of gold when entering into the

war. Bui such cases are exceptional. Thus a large mountain of Allies' indebtedness to Britain is mounting up. At the increasing rate of war expenditure Britain, in a year's tune, will probably hare not less than £1,000.000,000 sterling owing to her for her loans to her Allies. Assuming that the war lasts till August, 1916, these loans will amount to £1,000,000,000. This means £50,000,000 a year for interest and repayment. Who will pay this? Will her Allien be able to pay Britain? Or will Britain lie left to hear the burden? i 1 THE OBLIGATION- OF THK ALLIES. I What conditions or terms have been ' agreed upon in making these loans and i in accepting them? Has a clear treaty or agreement been signed, formally fixI ing the mutual obligations ? Are there ' conditions, involving definite things if the Allies win. transfers of territory. imposition of indemnities, future taxation, regular rates of interest, and repayment within a given time? ._ The people and Parliament are left in the dark. Yet these questions are obviously most important and fraught with future fears. CONDITIONS OF REPAYMENT. Tt is clear that whatever moral indebtedness to Britain for her loans exists, yet repayment to her must depend, in a great measure, on the circumstances at the end of the war. Assuming the victory of the Allies, will rich territories like Loraine, Alsace, Prussian Poland be taken from Germany? Will similar losses of territory be inflicted on Austria-Hungary and Turkey? If so, then these countries will hardly he able to recover sufficiently to* pay any large indemnities. If indemnities, periodic payments of large sums over a series of years, are imposed on Britain's enemies, these will, obviously, be given in the first place to restore ravaged France, Poland, Serbia, and Belgium; then what will be over to cover repayment of British loans? Again, if the Allies decide after the Avar to have no trade dealings with Germany, and to refuse to supply from their colonies and possessions the raw materials of her manufactures, while they at the same time refuse to restore her old captured colonies, Germany will be kept in such an impoverished, hopeless condition that she may be unable to pay the demanded indemnities. METHODS OF POSSIBLE REPAYMENT, If, happily, after the war Britain's Allies arc both anxious and able to repay her generous loans, how can this be done? It might be done by allocating to her the proceeds of certa n taxes, dues, or services, such as certain customs, monopolies, dues on harbours, etc., or receipts from railways, etc.: or again, by grants of colonies; or by taking up in London a loan which would he a Foreign Government obligation. There are obvious difficulties in all these courses. Moreover, trade will be had, commerce disorganized, capital enormous, the whole world exhausted and altered. The hope for repayment to Britain will deepnd, in the long run, on her and her Allies coming out of the war successful, with harmony unbroken, each with clear objects and aims which do not conflict. and not too exhausted or stricken to be unable to repair in a few years of peace and progress the ravages of war. Those are large conditions, but. in spite of all the discouraging features of the hour. they are not unattainable. Tt would be humiliating if. after the war, Britain is left to find £00,000,000 to 1 n 100.000,000 every year, the cost of the loans to her Allies.