| Great Britain | $3,745,000,000 |
| France | 2,445,000,000 |
| Italy | 1,160,000,000 |
| Russia | 325,000,000 |
| Belgium | 183,520,000 |
| Greece | 15,790,000 |
| Cuba | 15,000,000 |
| Serbia | 12,000,000 |
| Rumania | 6,666,666 |
| Liberia | 5,000,000 |
| Czechoslovak Republic | 7,000,000 |
| ——————— | |
| [5]$7,919,976,666 |
[5]Increased to $9,646,419,494 by October, 1919.
"Here, then, are figures totaling nearly half of our war debts that are not only self-supporting but also a double-edged weapon in the international market. In the first place, they represent money spent at home on American goods, from which the American manufacturer has taken his toll of profit; and in the second place, they have put the world in our debt to an extent that will be difficult to pay in the exchange of goods.
"Imports of foreign commodities or even gold will take a decade to halve the debt, for the gold can not be spared, nor do we wish it, and our creditors will find it difficult to increase their exports to a point capable of bringing about a balance in their favor. The imports from Europe are bound to be offset by our own exports, some able economists predicting a balance of a billion dollars in our favor for the next five years. Regardless of the demands to be made upon us from this source, it is probable that the peak-load of expenditure has been reached and the period of readjustment and redemption set in.
"Charging off, then, our loans to the Allies as an asset, let us then consider how we may best meet the bill due the American people. Vague discussions of the creation of a huge sinking fund have been heard, although for some reason or other, in history these operations have not been entirely successful. Fortunately the bulk of our debt has an early callable date, and the Treasury has recently come in for much applause by advocating no more loans unless they be in the nature of a one-to five-year currency. Experience teaches that the full benefit and effect of war taxes are rarely felt until after the war. England, after the Napoleonic wars, came back with a rapidity that astonished the Exchequer itself. Taxes rolled up in such a volume and expenses dropped with demobilization to such an extent that the Government found itself anticipating the callable date in national debts by market purchases, and even then it was found convenient gradually to reduce the scale of taxation.
"Our experience after the Civil War was very similar to England's, and the Treasury's surplus annually accumulated to a point that forced the Government to buy back at high premiums the bonds it was not privileged to call. This was true, though to a lesser degree, with the Spanish war loan.
"It seems as though the two operations of liquidating our own debts and the debt of Europe to the United States dovetailed perfectly into one gradual and stupendous task. While Europe is paying her indebtedness to us without interfering with the development of international trade by the sale of foreign securities in our home market our buyers here must receive the tools to operate with through the redemption and repurchase of their Liberty Bonds. In this half of the deal safety, as usual, lies in the middle course. It is hoped that taxes will be maintained at a level that will infallibly provide funds for fixed redemptions with a sufficient surplus to get a flying start by purchase around the present low levels."
FINANCIAL STATUS OF ENGLAND IN 1914
One year before the war England's position in regard to the balance of trade was most favorable. Her imports were valued at $3,210,000,000 and her exports at $2,560,000,000. But it was usually estimated that foreign countries owed England about $1,610,000,000 annually for interest on capital lent for shipping freights and for banking insurance and other commissions. The total amount owed her, therefore was $4,170,000,000 as against $3,210,000,000 which she owed for her imports. She had therefore a favorable balance of about $960,000,000 which was lent abroad. The war brought an enormous decrease in tonnage, and the excess of imports over exports attained the figure of $1,950,000,000 a year.
Exceptional measures had to be taken to maintain the exchange rates with the United States from whom the chief purchases were made. Large amounts of gold were exported, but by June, 1915, there was a collapse in American exchange. Drastic measures were used to induce the holders of American securities in England to sell or lend those securities to the Government. In this way exchange was kept up practically to the gold point. This question of exchange and the position of England as the director of the financial campaign of the Allies is illustrated from an address given by Mr. R. H. Brand to the American Bankers Association, in September, 1917: