STATEMENT BY MR. BONAR LAW. (Hansard, 26 February 1917)

§ Mr. BONAR LAW

I have now received the essential figures which relate to the new money in connection with the Loan, and I am, therefore, in a position to give the result. The House will remember that I made a preliminary statement a week ago. I then said that a large number—200,000 or 300,000—of applications had not been examined. I have since found, as it was not known how large the number was, that estimate was much below the mark. The number has been much greater. In forming an estimate as to the value of subscriptions which had 1696 not been examined, that estimate must depend upon the average amount in each application. It was impossible to make even a guess at that, and I am glad to tell the House that the total result reaches a figure which even a week ago I should have considered it altogether impossible to have reached. In that statement I included as new money Treasury bills. I propose to do the same now; and I think perhaps it would be right to explain to the House why I regard them as new money. Treasury bills are for a comparatively short date; the longest is for a year, and the shortest for three months. At the time the Loan was issued the average was about four months. These bills, therefore, represent obligations which will have to be met by the State in a short time, and I think I am right in considering them, to whatever extent they were converted, as in effect equivalent to new money advanced. I shall now give the figures to the House. The applications through the Bank of England amount to £819,586,000. The amount of Treasury bills converted was £130,711,950, and applications through the Post Office amounted to £30,715,000. The amount received during the currency of the applications for the Loan through War Savings' certificates was £19,300,000. This makes a total of £1,000,312,950. Of the amount applied for I may say that only about £22.000,000 was put as tax free Loan, and the rest was in the five per cent. Loan in the ordinary way. In estimating and trying to realise the meaning of such a figure, it is right not only to make comparison with our previous Loans and those of our enemies, but also to consider what the financial position was when the Loan was issued. Through the necessity of keeping up our exchanges, the value of all money on the London market has long been much higher than it would have been. The result of that was that up to the very eve of the issue of the Loan, Exchequer bonds bearing six per cent, were issued and Treasury bills bearing five and a half per cent. In consequence of this high level of money, it was urged upon me by many of those most competent to judge that the rate of the Loan ought to be six per cent., and I was warned, I may say, that it would be a failure if a lower rate was offered. I decided, as I am sure any Chancellor of the Exchequer would have decided in my place, that it would be a less evil to risk comparative failure than to stereotype 1697 British credit at such a figure as six per cent. I may say I did not anticipate even a comparative failure.

Now we must make a comparison with previous Loans. The amount of the new money subscribed to this Loan exceeds the amount of the two previous Loans taken together. The Loan of 1915 I thought at the time was a great success, and I think so still. The amount of money obtained was £616,000,000; but it is an open secret, now known to everyone, that of that amount £200,000,000 was subscribed directly by the banks. I am sure—and no one will feel this more strongly than my right hon. Friend who preceded me, that if it is not necessary, it is undesirable to have these large contributions from the banks, so that the business of the country may be succesfully carried on in other directions. I am quite sure, in the circumstances of 1915, it was right that the banks should make such a contribution. Their deposits had largely increased, and I may say, if the necessity had arisen, that I intended myself to make a similar appeal to the Banks, and the Committee of the Banks had indeed in advance promised me that they would give that support if it were required. I should like to take this opportunity of saying how completely in my belief the Banks, with their agencies all over the country, have done their best to stimulate their customers to subscribe to the Loan even at the expense, of course, of diminishing their own deposits. In addition to the amounts that I have named, we have received gifts from 444 individuals amounting to £60,000, and from eighty-seven other individuals we received loans free of interest amounting to £196,000. These amounts do not go directly into the Loan, but, of course, they are an addition to it, and they amount to a quarter of a million. Besides that, we have received promises to return interest from twenty-five individuals, amounting to £13,000 a year during the War.

I should like to compare the figures of this Loan with the German Loan. The amount of money raised by the last German Loan was £532,000,000, but their biggest loan, the third, was £608,000,000, which is surpassed, as the House will have noticed, by this Loan to the extent of nearly £400,000,000. It is interesting and instructive to note that the German Loans have successively become smaller, while ours have increased to the extent that the House has already seen.

1698 I should like to give the number of applicants to the Loan, because, in my opinion, that is almost as important as the total of the amount subscribed as an indication of the spirit of the peoples where the loans are raised. In 1915 the number of subscribers was 1,100,000, divided almost equally between the Post Office and the Bank of England. The number of applicants to this Loan through the Bank was 1,089,000, but that does not in reality represent all the individuals, because many of these loans were made by firms on behalf of employés, the names of which were not given. Therefore, the total number would in reality be much greater, but, as I have no means of estimating the number, I give the exact applications made to the Bank of England. The number of applicants through the Post Office was 1,000,000. As regards War Savings Certificates, it is not possible to give more than an estimate, for this reason: It is possible that some individuals bought more than one War Savings Certificate. There were, however, 400,000 who took sums of £12 and upwards, and these may be regarded as individual subscribers. The number of 15s. 6d. War Savings Certificates sold was 5,600,000. I think it is a safe assumption, from the point of view I am putting to the House, that this represents an average of two to each individual, which means an additional number of subscribers of 2,800,000, making the total number of subscribers to the Loan 5,289,000. Compare this with the German figures. The subscribers to the fifth German Loan numbered 3,810,000; the fourth 5,280,000, again showing a falling off in the latest loan as compared with the previous loan. But in the German Loan every subscriber of a shilling and upwards was included. In our War Savings Certificates arrangements are made to receive week by week small subscriptions until they reach the amount of 15s. 6d. I am informed that if every applicant of that kind were taken into account the total number of applicants to this Loan would not be less than 8,000,000 people, as against the last German Loan of 3,810,000, while the population of Germany is nearly 50 per cent, greater.

The next subject to which I would direct the attention of the House is conversions. The Bank of England is unable to give me any figures as to the conversion of the 4½ per cent. Loan, which I am sure will not be a surprise to the House, and indeed I should like to take this opportunity of con- 1699 gratulating the Governor and the Bank of England on the great success with which they have carried through the largest financial operation that was ever undertaken in the world. The question of the conversion of the 4½ per cent. Loan is of no interest to me or to the House. If anyone does not choose to convert, it means that; the State will pay a smaller rate of interest on the money than if it had been converted. The only way in which anyone could gain if he did not convert it would be if, at some subsequent stage in the continuance of the War a higher rate of interest were payable on some subsequent loan. That is obviously so against the interest of those who subscribed to the 4½ per cent. Loan that I think we may assume that the great bulk will have been converted. Exchequer Bonds are almost in the same position. I made no appeal to have them converted. There were some at 6 per cent, and some at 5 per cent. If I could have appealed for the 6 per cent. only I should have liked to have done so, but I could not without getting the 5 per cent, converted. The shortest period of any of them is two years eight months, and that applies only to £30,000,000, whereas the great bulk of the Exchequer Bonds are for three years and a longer period. I have, however, received provisional figures of the conversion of Exchequer Bonds. They show that £233,000,000, approximately, had been converted. That enables me to give the House the position of what is called "the floating debt" at the time the Loan was issued. At that time the outstanding Treasury Bills amounted to £1,053,000,000. Some have been paid off; some have been converted; and the amount now is £718,000,000; so that, including the Exchequer Bonds, which are not strictly floating debt, the floating debt at the time the Loan was issued was £1,562,000,000, and is now £994,000,000. It may interest the House to know that during this campaign special care was taken not to encourage withdrawals from the Savings Bank, with the result that the withdrawals, in spite of the immense sum raised by this Loan, were £6,000,000 less than in 1915. Another point which generally interests the House is the cost of raising the Loan. I am glad to say, as indeed is obvious, that the cost does not at all rise in proportion to the amount which is raised. I have had an estimate made, and I find that the cost of the 1915 1700 Loan was approximately £60,000 and the cost of this Loan, including the advertising and all the expenses of the War Savings Associations, was £75,000.

It is impossible that I should attempt to ask the House to recognise the services of all those who had helped in connection with the Loan. To do so would be to recognise the services of nearly the whole country. But I may say that special thanks are due to the local authorities and the heads of them all over the country. This Loan has been run from local centres, which is in itself a proof of the advantage of that method of dealing with subjects of this kind. It is right also to make a special acknowledgment of the services of the Chairmen and others directing the War Savings Committees and Associations. They have done splendid work, and during the period the Loan was before the public more, than six thousand new associations were formed. As I pointed out in answer to a question to-day, the value of the work done by these associations is not merely in raising money; it is in encouraging the people of this country to save and take a direct interest in the State. I am sure I am only expressing the feeling of the whole House when I say we are indebted to the ladies and gentlemen who have run these associations for what they have done, and we hope the stimulus given during the time the Loan was opened will be continued now that the Loan has come to a close. Of course, obligation is also due to volunteer workers all over the country, both men and women. It is due also to the Press, who have served the State splendidly in this matter. I should like also to say that I am indebted to a small committee representing some of the most important advertising firms, who gave their services gratuitously and placed the advertisements with the various newspapers of the country. I think it right also to make one special acknowledgment. After the Loan had been open for some time I sent to my hon Friend the Member for Hornsey (Mr. Kennedy Jones) and asked him to help us. He undertook to do so, and I am only expressing the opinion of everybody who had anything to do with the Loan in saying that in the organisation and direction of the campaign he has rendered invaluable service.

The success of the Loan was in reality due to one cause only—the patriotism of 1701 the people of this country. In addition to the gifts to which I have already referred, I received quite a number, mostly from ladies, of gifts of jewellery. As Chancellor of the Exchequer I did not quite know how to deal with them. I supposed I was not entitled to refuse anything that was given to me, but I thought, on the whole, that we were not entitled to take such sacrifices as that at such a time. I sent them back. But two of them came anonymously, and these I have not been able to send back. It may perhaps interest the House if I read the letter accompanying one of these anonymous gifts: It is heartbreaking to read every day a request for money for the War Loan when one has not any to give. As I have no money, I am hoping yon can turn this bracelet into a bullet. That is the spirit which accounts for the success of the Loan. The enthusiasm and the widespread nature of the application are an expression of the will of the people of this country to win the War, and the result of the Loan is evidence of the financial ability of this country to see it to a successful issue.