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over 20 years, an average annual expenditure of 42,000,000; the Crimean War cost 675,000,000 in three financial years, or an average annual expenditure of 225,000,000; while the S. African War of 1899-1902 cost 211,000,000 spread over four years. In the face of the expenditure during the World War of 1914-9, these figures are insignificant. The money spent by the Government of Great Britain during the five financial years cannot be placed at less than from 8,000,000,000 to 9,000,- 000,000. At one period the average daily expenditure rose to the enormous figure of nearly 7,000,000 sterling.

It was not, however, till the year 1915 was well advanced that the full meaning of the cost of the World War in terms of goods and services began to be appreciated, even by those in high places. During the first few months of the war the inevitable dislocation of industry caused by the calling-up of men of military age and the interference with tlje normal markets led to a considerable amount of unemployment, and steps were taken by the Government and by the public for the relief of distress. This period of unemployment lasted but a short time and far less distress was caused than had been anticipated. The increased demand for men for the fighting forces and the rapid organization of special war work in many directions quickly absorbed the unemployed. Women were drafted into industry in ever-increasing numbers. In the meantime, the normal production of goods was reduced and stocks diminished. Prices rose rapidly owing to the excess of demand over supply and wages were raised sympathetically. Gradually alarge amount of overtime became general, and, in many instances, owing to several members of the same family being in receipt of good wages and on account of overtime, the incomes of working-class families reached very substantial figures. By the summer of 1915 the purchasing power of the people of the country had been very considerably increased.

With the increased demand for goods which followed this rise of the purchasing power of the masses, prices mounted still higher; and with the growth of credit, which was required to cover the increased payments of wages, a dangerous situation was created. By the middle of 1915 it was obvious that it was of paramount importance that the personal expenditure of the people of the country should be checked, and that, in fact, the stopping of individual expenditure was quite as important as the raising of money for the war. It was seen that while from the financial point of view it was desirable that the expenditure on the war should be covered as far as possible by monies raised by taxation, and next by loans from money saved by the people of the country, it was equally important that the mass of the people should reduce their personal expenditure in order to release the resources of the country in capital and labour for the production of the essentials of war. The military advisers of the nation were calling for still larger numbers of men for the fight- ing forces. Recruiting became more and more urgent. The war factories were crying out for tens of thousands of hands for the production of the vast stores needed on all the fighting fronts. At the same time, the demand of the people through their daily expenditure, stimulated by high wages and big incomes, was automatically retaining labour in the production of things which were not only not necessary for their subsistence, but were often mere luxuries. Again, the expenditure of individuals tended to increase the purchase of imported goods, necessitating either increased exports demanding labour for their production, or adversely affecting the Exchanges and necessitating the export of gold or the sale of foreign securities. The real difficulty of the situation was seen to be the scarcity of human labour to produce the necessaries of war rather than the finding of money to pay for them. Thus the exigencies of the recruiting agencies and national factories led directly to the " goods and services " point of view and to an imperative demand for personal saving.

The dangers of the situation were emphasized by Mr. Lloyd George in May 1915, and it soon became evident that drastic steps would have to be taken to enforce economy throughout all ranks of the community and particularly among the wage- earners, whose aggregate purchasing power had reached dimen-

sions which made their personal expenditure the largest factor in the situation.

Early Efforts for Saving. During the autumn of 1915, a vigorous mission was undertaken by a voluntary body known as the United Workers, who by the holding of lectures and meetings throughout the country did much to explain the facts to the people and prepared the ground for more concentrated effort later. About the same date a Parliamentary War Savings Committee was established, and through its efforts local war thrift committees were set up in a number of the larger towns of the country. All these efforts were, however, to a large extent ineffective, owing to the absence of any form of investment security specially adapted for persons of small means. The machinery of the Post Office Savings Bank and the Trustee Savings Banks, allowing for deposits at low interest, was inade- quate to cope with the situation.

The history of the Post Office Savings Bank during the first year of the war fairly accurately indicates the trend of events. The outbreak of the war saw a sharp run on the Post Office Savings Bank deposits, a run accentuated by the actual shortage of coinage which persisted even up to the end of August. The net withdrawals from the Post Office Savings Bank Department from the declaration of war to the end of Aug. were 2,500,000 in excess of deposits. After Aug. 1914 confidence was quickly restored and deposits began to come in freely. Before the end of Sept. they had exceeded the withdrawals, and so completely did the tide turn that the deposits for the three months ended April 30 1915 exceeded the withdrawals by 4,400,000, or were 3,000,000 in excess of deposits in the corresponding quarter of 1914. For the five months from Jan. i 1915 to May 31 1915, the balance due to depositors increased by over 6,500,000 as compared with an increase of 1,700,000 during the correspond' ing period of 1914.

Good as these results were in themselves, it became, however, increasingly clear that the Post Office Savings Bank alone, with the rate of interest on deposits at 2^%, was not sufficient to stimulate saving in the country to the extent that was necessary. Several times pressure was brought to bear on the Government with a view to getting the interest on the savings bank deposits increased, but this pressure was resisted. Other small attempts were made to attract saving. During the issue of the 4^ % War Loan in June 1915, scrip vouchers of 53. and IDS. and scrip cer- tificates of i and 5 were issued by the Post Office. The scrip vouchers, when they amounted to 5 or a multiple of 5, and the scrip certificates could be exchanged at any money order post- office during the first fortnight of Dec. 1915, the owner being duly registered as a holder of a corresponding amount of War Loan and being given a stock certificate. Interest was allowed on the scrip vouchers according to the month of purchase and provision was made for repurchase by the Post Office at face value of any vouchers in excess of the 5 multiple. The aggregate result was that, between Nov. 1915 and Dec. 1920, scrip certificates amounting to 3,967,965 and scrip vouchers amounting to 1,049,838 were exchanged for 4^% or 5% War Loan or Exchequer bonds. The 5 scrip certificates were only exchangeable for 45 % War Loan, but the scrip vouchers could be held for subsequent loans. These were the chief official steps taken to facilitate saving by the people up to the end of 1915. In Nov. of that year the Government was pressed to increase the maximum sum which depositors might pay into the Post Office Savings Bank in any one year, but it was pointed out that this would require fresh legislation, the existing limits having been fixed by the Savings Bank Acts of 1891 and 1893.

Expression had been given to the need for action in a letter to The Times in the summer of 1915 from "A Banker." 1 The force of his contentions was widely recognized, and this letter may be regarded as the germ from which the War Savings movement was started. This was followed by an important manifesto signed by some of the foremost men in the world of business published in The Times in November. It was a straight-

1 The author was Mr. R. H. Brand, a partner in the London firm of Lazards, and a well-known writer on finance. (H. CH.)