to the large bill bankers or “accepting houses” in London to allow of the due payment of the enormous number of bills falling due in the three months succeeding the outbreak of war.  The audacity of the step will be understood when it is realised that probably something like L300,000,000 of bills fall due over a period of three months.[1] The necessary money was lent without security, the Government promising not to demand repayment until twelve months after the end of the war.  A proportion of this advance will be in the nature of a loss, though how much it is quite impossible to say.  By this measure, in the event of the bills not being met by those who have promised to pay them—­the acceptors—­the liability which would ordinarily have fallen upon the drawers and endorsers through whose hands the bills had passed has been removed.  The State has advanced to the commercial community a huge sum of money, risking the total loss of some part of it, in order to set in motion the machinery of international exchange.  Further steps, however, were taken.  The general moratorium expired on November 4.  Useful as it had been, it still left many traders in financial difficulties because of the impossibility of collecting debts owing to them in enemy and other countries.  The Government, therefore, appointed a committee representing the Treasury, the Bank of England, the Joint Stock Banks, and the Association of Chambers of Commerce of the United Kingdom to authorise advances in approved cases to British traders carrying on an export business in respect of debts outstanding in foreign countries and colonies, including unpaid foreign and colonial accepted bills which cannot be collected for the time being.  It is safe to say that no Government ever took such gigantic measures to meet a great crisis.[2] The Prime Minister, speaking at the Guildhall on November 9, 1914, summarised as follows the effects of the steps taken:  “The foreign exchanges are working in the case of most countries quite satisfactorily, and the gold reserves at the Bank of England, which were 40 millions on July 22, and which had fallen on August 7 to 27 millions, now stand at the unprecedented figure of 69-1/2 millions.  The central gold reserve of the country after three months of the war amounts to L80,000,000, almost exactly twice the amount at which it stood at the beginning of the crisis.  The bank rate, which rose, as you know, to 10 per cent, has now come down to 5, a figure, I think, not in excess of that at which it stood this time last year.  Food prices have been kept at a fairly normal level, and though trade has been curtailed in some directions, unemployment has been rather below than above the average.”

[Footnote 1:  Mr. J.M.  Keynes (Economic Journal, Sept. 1914) estimates the aggregate value of outstanding bills in London at L350,000,000.]

[Footnote 2:  In addition to these various financial measures, the State has lent Belgium L10,000,000 and the Union of South Africa L7,000,000, whilst it has also guaranteed L5,000,000 of the new Egyptian cotton loan.]