Nelson's history of the war. Vol. XI., The struggle for the Dvina, and the great invasion of Serbia

THE POLITICAL SITUATION. 73

the sailors on her fleets, and her own producers for that part of the war material which was manufactured at home. But she had to do more. She, like France, was still an open country, with commercial relations throughout the entire globe. She had to import for herself and her Allies large quantities of war stores, and she had also to import great amounts of raw material and food to keep her civilian life going. But for these imports she must make payments which the foreign exporters would accept. She could pay her own subjects with her War Loan stock, but that was our kind of money, not the kind that was current in foreign countries. The British financial problem was therefore twofold—to raise funds internally for domestic payments, and to provide some means of meeting our liability to foreign exporters.

The first problem was the simpler. In the last resort an indefinite amount could be raised, even if we were compelled to inflate our currency or resort to forced loans. No belligerent Government which retains the confidence of the nation need ever be stopped short by any domestic payments. The aim of Britain was so to manipulate her levies as to produce the minimum of economic dislocation. The cost of the war had steadily risen. In June it was estimated at £2,660,000 a day; in September it was £3,500,000 ; in November it was [4,000,000 ; and for the year 1916-17 it was calculated at £5,000,000. For the year 1915-16 the Chancellor of the Exchequer put the total British expenditure at close on £1,600,000,000, of which £190,000,000 was allocated to the Navy, [715,000,000 to the Army, and [423,000,000 as loans to our Allies and Colonies.