The Life and Letters of Walter H. Page, Volume II

by Burton Jesse Hendrick

It is not improbable that the only way of maintaining our present preëminent trade position and averting a panic is by declaring war on Germany. The submarine has added the last item to the danger of a financial world crash. There is now an uncertainty about our being drawn into the war; no more considerable credits can be privately placed in the United States. In the meantime a collapse may come.

PAGE.

Urgent as this message was, it really understated the desperate condition of British and Allied finances. That the warring powers were extremely pressed for money has long been known; but Page's papers reveal for the first time the fact that they were facing the prospect of bankruptcy itself. "The whole Allied combination on this side the ocean are very much nearer the end of their financial resources," he wrote in July, "than anybody has guessed or imagined. We only can save them.... The submarines are steadily winning the war. Pershing and his army have bucked up the French for the moment. But for his coming there was more or less danger of a revolution in Paris and of serious defection in the army. Everybody here fears that the French will fail before another winter of the trenches. Yet—the Germans must be still worse off."

The matter that was chiefly pressing at the time of the Balfour visit was the fact that the British balances in the New York banks were in a serious condition. It should always be remembered, however, that Great Britain was financing not only herself, but her Allies, and that the difficult condition in which she now found herself was caused by the not too considerate demands of the nations with which she was allied in the war. Thus by April 6, 1917, Great Britain had overdrawn her account with J.P. Morgan to the extent of $400,000,000 and had no cash available with which to meet this overdraft. This obligation had been incurred in the purchase of supplies, both for Great Britain and the allied governments; and securities, largely British owned stocks and bonds, had been deposited to protect the bankers. The money was now coming due; if the obligations were not met, the credit of Great Britain in this country would reach the vanishing point. Though at first there was a slight misunderstanding about this matter, the American Government finally paid this over-draft out of the proceeds of the first Liberty Loan. This act saved the credit of the allied countries; it was, of course, only the beginning of the financial support that America brought to the allied cause; the advances that were afterward furnished from the American Treasury made possible the purchases of food and supplies in enormous quantities. The first danger that threatened, the isolation and starvation of Great Britain, was therefore overcome. It was the joint product of Page's work in London and that of the Balfour Commission in the United States.

III

Until these financial arrangements had been made there was no certainty that the supplies which were so essential to victory would ever leave the United States; this obstruction at the source had now been removed. But the greater difficulty still remained. The German submarines were lying off the waters south and west of Ireland ready to sink the supply ships as soon as they entered the prohibited zone. Mr. Balfour and his associates were working also on this problem in Washington; and, at the same time, Page and Admiral Sims and the British Admiralty were bending all their energies in London to obtain immediate coöperation.

A remark which Mr. Balfour afterward made to Admiral Sims shows the frightful nature of the problem which was confronting Great Britain at that time.

"That was a terrible week we spent at sea in that voyage to the United States," Mr. Balfour said. "We knew that the German submarine campaign was succeeding. Their submarines were destroying our shipping and we had no means of preventing it. I could not help thinking that we were facing the defeat of Great Britain."

Page's papers show that as early as February 25th he understood in a general way the disheartening proportions of the German success. "It is a momentous crisis," he wrote at that time. "The submarines are destroying shipping at an appalling rate." Yet it was not until Admiral Sims arrived in London, on April 9th, that the Ambassador learned all the details. In sending the Admiral to England the Navy Department had acted on an earnest recommendation from Page. The fact that the American Navy was inadequately represented in the British capital had long been a matter of embarrassment to him. The ability and personal qualifications of our attachés had been unquestioned; but none of them during the war had been men of high rank, and this in itself proved to be a constant impediment to their success. While America was represented by Commanders, Japan, Italy, and France had all sent Admirals to London. Page's repeated requests for an American Admiral had so far met with no response, but the probability that this country would become involved in the war now gave new point to his representations. In the latter part of March, Page renewed his request in still more urgent form, and this time the President and the Navy Department responded favourably. The result was that, on April 9th, three days after the American declaration of war, Admiral Sims and his flag-lieutenant, Commander Babcock, presented themselves at the American Embassy. There was little in the appearance of these men to suggest a violent naval demonstration against Germany. Both wore civilian dress, their instructions having commanded them not to bring uniforms; both were travelling under assumed names, and both had no more definite orders than to investigate the naval situation and cable the results to Washington. In spite of these attempts at secrecy, the British had learned that Admiral Sims was on the way; they rejoiced not only in this fact, but in the fact that Sims had been chosen, for there was no American naval officer whose professional reputation stood so high in the British Navy or who was so personally acceptable to British officialdom and the British public. The Admiralty therefore met Admiral Sims at Liverpool, brought him to London in a special train, and, a few hours after his arrival, gave him the innermost secrets on the submarine situation—secrets which were so dangerous that not all the members of the British Cabinet had been let into them.