"ON THE BRINK OF THE PRECIPICE"

Ambassador Walter H. Page to President Wilson.

HERE is first a telegram, dated, London, June 28, 1917, from Ambassador Page to President Wilson, followed by a letter written the next day, disclosing the precarious financial condition of Great Britain and the Allies at that time. Arthur J. Balfour, to whom particular reference is made, had succeeded Sir Edward Grey as British Secretary of State for Foreign Affairs, and Bonar Law was Chancellor of the Exchequer. Page relays a call for financial help from Britain to the United States, the Allies being "on the brink of the precipice."

It is well to remember that, since the war began, Great Britain had advanced to her Allies 193,849,000 (approximately $1,000,000,000), while the United States, at that time, had advanced to Great Britain $686,000,000 and to the other Allies $427,000,000.

This correspondence is taken from the "Life and Letters of Walter H. Page," by permission of Doubleday, Page & Co.

MR. BALFOUR asked me to a conference at seven o'clock with him, the Chancellor of the Exchequer, and their financial advisers. It was disclosed that financial disaster to all the European Allies is imminent unless the United States Government advances to the British enough money to pay for British purchases in the United States as they fall due.

Bonar Law reports that only half enough has been advanced for June and that the British agents in the United States now have enough money to keep the exchange up for only one day more. If exchange with England fall, exchange with all European allies also will immediately fall, and there will be a general collapse.

Balfour understood that in addition to our other loans and our loans to France and Italy, we would advance to England enough to pay for all purchases by the British Government made in the United States. He authorizes me to say that they are now on the brink of a precipice, and unless immediate help be given financial collapse will follow. He is sending an explanatory telegram to Spring Rice.

I am now convinced that these men are not overstating their case. Unless we come to their rescue we are all in danger of disaster. Great Britain will have to abandon the gold standard.

THE financial panic (it's hardly less) that more than threatens this Government raises the question, Why on earth do the British drift along till they reach a precipice? That's hard to answer. It's their way. They are too proud to acknowledge their predicament even to themselves until events force them to do so. Mr. Balfour informs me that the agreement that he reached in general terms with Mr. McAdoo was this that our Government would thenceforth lend (1) to France and Italy (and Russia?) the sums they would otherwise have to borrow from England (as they have all the while been borrowing) and (2) in addition lend to England whatever sums should be required to pay for British Government purchases in the United States. So much for that. I have no information whether that is Mr. McAdoo's understanding.

Now, Bonar Law assured me at the fearful financial conference to which they invited me that the Treasury Department had given Lever (the English financial agent) only half enough in June to meet the British Government's bills in the United States. Since they had reckoned on meeting all such bills from advances made by us, they find themselves unable to go further without our help. They have used all the gold they have in Canada.

This, then, is the edge of the precipice. It came out that, a few weeks ago, the French came over here and persuaded the British that in addition to the French loan from the United States they were obliged to have the British loans to them continued for how long, I do not know. Bonar Law said, "We simply had to do it."

The British, therefore, in spite of our help to France, still have France on their back and continue to give her money. I know that for a long time the British have felt that the French were not making a sufficient financial effort for themselves. "A Frenchman will lightly give his life for any cause that touches his imagination, but he will die rather than give a franc for any cause." There is a recurring fear here lest France in a moment of war-weariness may make a separate peace.

As things stand today, there is a danger of the fall of exchange and (perhaps) the abandonment of specie payments. These British run right into such a crisis before they are willing to confess their plight even to themselves.

They are not trying to lie down on us : they are too proud for that. Why they got into this predicament I do not fully know. I know nothing of what arrangements were made with them except what Mr. Balfour tells me. It seems to me that some definite understanding ought to have been reduced to writing. But here they are in this predicament, which I duly reported by telegram.

It is unlucky that "crises" come in groups two or three at once. But the submarine situation is as serious as the financial. I have a better knowledge of that than I have of the financial situation. But in one respect they are alike the British drive ahead, concealing their losses, their misfortunes and their mistakes, till they are on the very brink of disaster: that is their temperament. Into this submarine peril (the Germans are fast winning in this crucial activity there's no doubt about that) I have gone pretty thoroughly with their naval men and their shipping authorities. Admiral Sims has reached the same conclusions that I have reached independently, from his point of view. The immediate grave danger for the present lies here. If the present rate of destruction of shipping goes on, the war will end before a victory is won. And time is of the essence of the problem ; and the place where it will be won is in the waters of the approach to this Kingdom not anywhere else. The full available destroyer power that can by any method be made available must be concentrated in this area within weeks (not months). There are not in the two navies half destroyers enough : improvised destroyers must be got. There must be enough to provide convoys for every ship that is worth saving. Merely arming them affords the minimum of protection. Armed merchantmen are destroyed every day. Convoyed ships escape almost all. That is the convincing actual experience.

If we had not come into the war when we did, and if we had not begun action and given help with almost miraculous speed, I do not say that the British would have been actually beaten (Tho' this may have followed), but I do say that they would have quickly been on a paper money basis, thereby bringing down the financial situation of all the European Allies; and the submarine success of the Germans would or might have caused a premature peace. They were in worse straits than they ever confessed to themselves. And now we are all in bad straits because of this submarine destruction of shipping. One sea-going tug now may be worth more than a dozen ships next year.