There was only one exception which we decided to recommend, and that was in the case of borrowings by small States. We decided that each of the great allied countries should contribute a portion of every loan made to the small States who were either in with us now or prepared to come in later on, that the responsibility should be divided between the three countries, and that at an opportune moment a joint loan should be floated to cover the advances either already made, or to be made, to these countries outside the three great allied countries. That was the only exception we made in respect of joint loans. Up to the present very considerable advances have been made by Russia, by France, and by ourselves to other countries. It is proposed that, if there is an opportune moment on the market, these should be consolidated at some time or other into one loan, that they should be placed upon the markets of Russia, France, and Great Britain, but that the liability shall be divided into three equal parts.
With regard to Russia, we have already advanced £32,000,000 for purchases here and elsewhere outside the Russian Empire. Russia has also shipped £8,000,000 of gold to this country, so that we have established credits in this country for Russia to the extent of £40,000,000 already. France has also made advances in respect of purchases in that country. Russia estimates that she will still require to establish considerable credits for purchases made outside her own country between now and the end of the year. I am not sure for the moment that it would be desirable for me to give the exact figure; I think it would be better not, because it would give an idea of the extent to which purchases are to be made outside by Russia. But for that purpose she must borrow. The amount of her borrowing depends upon what Russia can spare of her produce to sell in outside markets and also on the access to those markets.
If Russia is able within the course of the next few weeks or few months to export a considerable quantity of her grain, as I hope she will be, as in fact we have made arrangements that she should, [cheers,] then there will not be the same need to borrow for purchases either in this country or outside, because she can do her own financing to that extent.
The two Governments decided to raise the first £50,000,000 in equal sums on the French and British markets respectively. That will satisfy Russian requirements for a considerable time. As to further advances, the allied countries will consider when the time arrives how the money should be raised according to the position of the money markets at that time. I have said that we gave a guarantee to Russia that she need not hesitate a moment in giving her orders for any purchases which are necessary for the war on account of fear of experiencing any difficulty in the matter of raising money for payments. We confidently anticipate that by the time these first advances will have been exhausted the military position will have distinctly improved both in France and in Russia.
I may say that Treasury bills to the extent of £10,000,000 on the credit of Russia have been issued within the last few days. At 12 o'clock today the list closed, and the House will be very glad to hear that the amount was not merely subscribed but oversubscribed by the market, because this country is not quite as accustomed to Russian securities as France, and, therefore, it was an experiment. I think it is a very good omen for our relations, not merely during the war, but for our relations with Russia after the war, that the first great loan of that kind on Russian credit in the market has been such a complete success.
Now we have to consider the position of this country with regard to the possibility of our gold flitting in the event of very great credits being established in this country. The position of the three great allied countries as to gold is exceptionally strong. Russia and France have accumulated great reserves which have been barely touched so far during the war. I do not think the French reserve has been touched at all, or has been used in the slightest degree, and I think as far as the Russian reserve is concerned it has only been reduced by the transfer of £8,000,000 of gold from Russia to this country. Our accumulation of gold is larger than it has ever been in the history of this country. It has increased enormously since the commencement of the war. It is not nearly as large as that of Russia, France, or Germany, but it must be borne in mind that there is this distinction in our favor; up to the present we have had no considerable paper currency, and this is the great free market for the gold of the world. The quantity imported every year of, what shall I call it, raw gold, comes to something like £50,000,000, and here I am excluding what comes here by exchanges. The collapse of the rebellion in South Africa assures us of a large and steady supply from that country, and, therefore, there is no real need for any apprehension.
But still it would not have been prudent for us to have overlooked certain possibilities. I have already pointed out some of them—the diminution of exports, the increase of our imports, the absorption of our transports for war purposes, large credits established for our own and other countries, and a diminution in our savings for investments abroad. There is just a possibility that this might have the effect of inducing the export of gold to other countries. We therefore have to husband our gold and take care lest it should take wings and swarm to any other hive. We therefore made arrangements at this conference whereby, if our stock of gold were to diminish beyond a certain point—that is a fairly high point—the Banks of France and Russia should come to our assistance.
We have also made arrangements whereby France should have access to our markets for Treasury bills issued in francs. We have also initiated arrangements which we hope will help to restore the exchanges in respect of bills held in this country against Russian merchants, who, owing to the present difficulties of exchange, cannot discharge their liabilities in this country. They are quite ready and eager to pay, they have the money to pay, but, owing to difficulties of exchange, they cannot pay bills owing in this country. We therefore propose to accept Russian Treasury bills against these bills of exchange due from Russian merchants, Russia collecting the debts in rubles in her own country and giving us the Treasury bills in exchange. We hope that will assist very materially in the working of the exchanges. It will be very helpful to business between the two countries, and incidentally it will be very helpful to Russia herself in raising money in her own country for the purpose of financing the war.
We also received an undertaking from the Russian Government in return for the advances which we were prepared to make, that Russia would facilitate the export of Russian produce of every kind that may be required by the allied countries. This, I believe, will be one of the most fruitful parts of the arrangements entered into. An arrangement has also been made about the purchases by the allied countries in the neutral countries. There was a good deal of confusion. We were all buying in practically the same countries; we were buying against each other; we were putting up prices; it ended not merely in confusion, but I am afraid in a good deal of extravagance, because we were increasing prices against each other. It was very necessary that there should be some working arrangement that would eliminate this element of competition and enable us to co-ordinate, as it were, these orders. There will be less delay, there will be much more efficiency, and we shall avoid a good deal of the extravagance which was inevitable owing to the competition between the three countries.
I have done my best to summarize very briefly the arrangements which have been entered into, and I would only like to say this in conclusion. After six months of negotiation by the cable and three days of conferring face to face we realized that better results were achieved by means of a few hours of businesslike discussion by men anxious to come to a workable arrangement than by reams of correspondence. Misconceptions and misunderstandings were cleared away in a second which otherwise might take weeks to ferment into mischief, and it was our conclusion that these conferences might with profit to the cause of the Allies be extended to other spheres of co-operation. [Cheers.]