"Of course no nation could permanently tolerate such unfavorable trade balances as those from which the Allies in Europe are now suffering. They can only do so now and keep their exchanges with the United States steady by borrowing immense sums here. But the war itself is not permanent, and the question is merely whether the present state of affairs can be continued long enough to enable all the enemies of the Central Powers to exert their full strength and win a final victory.

"You will no doubt all have noticed that the credits granted Great Britain have been greater than those granted to any other Ally. The reasons are simple, though they are not, I think, generally understood. We have, in the first place, the largest war and munition program of any Ally; in the second place, as I have shown above, we are, with the exception of the United States, the greatest industrial arsenal among the Allies; that necessarily involves large imports. We send a great deal of steel from England to our Allies; we have to replace it by steel from here. We make rifles for Russia; we have to import the steel to make them. We send boots to Russia; we have to import the leather needed. These examples might be multiplied many times. Thirdly, we extend large credits in England to our Allies, some part of which they may use anywhere in the world, and this part may ultimately come back on the sterling exchange in New York. Lastly, it is well known that neutrals who are owed money by England unfortunately find it convenient to utilize the sterling exchange in New York in order to recoup themselves in dollars. But so also do neutrals who are owed money by the other Allies. So long as we maintain the sterling exchange this appears to be inevitable, and the burden of financing both our own and our Allies' trade tends to fall on that exchange. It is by our maintenance of this sterling exchange that the continuance of our Allies' trade is rendered possible. The maintenance of the sterling exchange means the maintenance of the allied exchanges. All these factors together exert an immense influence. If England had had only herself to finance since the beginning of the war, and indeed even if she had only herself to finance now, it is quite possible she would not have needed to borrow at all abroad."

LOSS IN PRODUCTIVE POWER

The extent of the withdrawal of productive power can only be judged by figures. Of the 7,500,000 men serving in the British Army, 4,530,000 were contributed by Great Britain, 900,000 by the British dominions and colonies; and the remaining 1,000,000 by India and the various British African dependencies. Production went on to a remarkable degree, but this production was largely for war purposes. It was secured by recruiting female labor to an unheard of extent in the munition factories. According to the London Economist, the financial side of the British administration was anything but satisfactory. It speaks of waste and faulty methods:

"On the financial side our record is by no means so satisfactory. We have, it is true, poured out money like water, but much of it has been raised by faulty methods, and the amount of it that has been wasted is appalling to consider. In the matter of borrowing, our methods have lately been greatly improved; and the recommendation of the Committee on National Expenditure, that the system of raising money by bank credits should be checked as far as possible, is being brought within the bounds of practical politics by the great success of the War Savings Committee's energetic and ingenious campaign for prompting the sale of National War Bonds. Perhaps also we may claim some small share in that success through the adoption of the principle so long advocated in these columns of a lower rate for money at home combined with special terms for money left here by foreigners. But successful borrowing, direct from the investor, instead of in the shape of money manufactured by banks, is a welcome, but not sufficient, improvement. We have to raise much more money by taxation. We have also to do much more than has yet been done to reduce the wicked waste of public money and support the efforts of the Committee on National Expenditure to husband the resources of the nation. A correspondent in a provincial town in which a Tank has lately been busy asks: 'Is it not pathetic to see widows and children scraping together their shillings and pennies to help the Government, while we have tens of thousands of pounds being squandered by a profligate Ministry of Munitions!'"

Copyright Underwood & Underwood

A Woman Doing Road Construction Work

Of the 7,500,000 men serving in the British Army, 4,530,000 were contributed by Great Britain. Yet production was speeded up by recruiting and training the labor of women.

[Click for a larger image.]