War Savings in Great Britain 
 
 OR 
 
 THE GOSPEL OF GOODS AND SERVICES 
 
 Addresses delivered by Mr. Basil P. Blackett, C. B., 
 of the British Treasury 
 
CONTENTS 
 
 Address Delivered at 
 
 London, England — June 26th, 1916 page 1 
 
 Barnet, Middlesex, England — Nov. 27th, 1916. . . page 11 
 
 Atlantic City, N. J. — Sept. 25th, 1917 page 21 
 
 Philadelphia— Nov. 3rd, 1917 page 39 
 
 Baltimore— Nov. 12th, 1917 page 51 
 
 Syracuse, N. Y.— Nov. 27th, 1917 page 65 
 
 New York— Dec. 14th, 1917 page 79 
 
"GOODS AND SERVICES" 
 
 An Address Delivered by Mr. B. P. Blackett, C. B. 
 Under the Auspices of "United Workers" at the 
 National Economy Exhibition, Princes Skating Rink, 
 Knightsbridge, London, S.W., on Monday, June 26th, 
 1916, Mr. C. J. Stewart (the Public Trustee) in the 
 Chair. 
 
 Ladies and Gentlemen, — When the Chancellor of the 
 Exchequer introduced his Budget for the present year he 
 said that the expenditure of the country would be £1,825,000,- 
 000, that our revenue would be £500,000,000, and that that 
 left something over £1,300,000,000 which we are to find by 
 borrowing. Now, what on earth does that mean? Talking 
 in thousands of millions means practically nothing to any- 
 body. You get an example of that by the fact that not 
 many years ago the Chancellor of the Exchequer meant to 
 say £100,000,000 and he said £100 when introducing his 
 Budget. Imagination simply fails to rise to the idea of £1,- 
 800,000,000. What I want to do is to try to translate from 
 terms of money into terms of goods and services. What 
 happens if I spend 1/-? Supposing I spend it on bread. 
 It takes a good deal of time to try and say what really happens, 
 and I can only mention a few things. The first thing that 
 happens is, let us say, that the farmer ploughs and sows 
 the field and reaps it when ripe. I make a farmer plough 
 a field for me and reap the corn, and then I make him, or 
 somebody else, perhaps in Canada, cart the corn to the sta- 
 tion. I have already made someone build a railway several 
 thousand miles long, and somebody else build the wagons, 
 trucks and steel rails for the railway. Then I make some- 
 one else carry the corn from the railway wagon to the ship; 
 
2 
 
 someone meanwhile has been building a ship for me. Then 
 somebody brings the corn over to England for me and lands 
 and docks it, takes it on to the railway for me, and then to 
 the mill in order that the wheat may be turned into flour. 
 Then someone else carries it to the baker, and the baker 
 bakes bread, and probably someone finishes it up by delivering 
 the loaves at my door. That is what happens when I spend 
 1/-. It is quite true that most of those things have happened 
 before the shilling came into my hand. In order of time 
 my getting and spending the shilling is, perhaps, the last of 
 all. Chronologically, that is the order, but logically all those 
 things are done because I and other people spend our shillings 
 on buying bread. Spending means making other people 
 work for us, just as Mr. Withers was saying. You cannot 
 spend anything without making someone work for you. 
 
 Now, you will say — "It is all very well, but you must spend 
 money on bread." Certainly. If I am a father of a family, 
 for example, who, hitherto, has not had enough to buy suf- 
 ficient bread for the family, it is quite right if I have suddenly 
 become a little richer that the family should have a little 
 more bread to eat, and no one wants to suggest that anybody 
 should economize by not taking sufficient food. But, sup- 
 posing I have enough bread and food to eat, and enough clothes, 
 and the family generally has got a sufficient income to feed 
 and house itself properly and to enjoy sufficient relaxation for 
 health and efficiency, and there is still something over. I 
 make up my mind I want a gramophone, for example, or a 
 piano, or perhaps some bit of jewelry, and I save up for it. 
 What happens if I spend £5 or £10. Exactly what happened 
 before. I make other people work for me. Spending means 
 making other people work for me. "Well," you may say, 
 "you can afford it, why should you not? You want it, why 
 should you not buy it?" In time of peace it is very hard to 
 answer that particular question, but I think the war is teaching 
 us that something else besides our own immediate desires 
 has to be considered whenever we spend, and there is always 
 
3 
 
 a right way of spending as well as a wrong way. In any 
 case, in the present time of war, the object of one and all of 
 us, each individual, each family, and the nation as a whole 
 is to win the war. That cannot be done unless each one of 
 us does our bit. Mr. Withers explained that the reason why 
 we should save is that there are not enough labor and services 
 to go round. Everybody's labor and everybody's services 
 can be usefully employed, directly or indirectly, on winning 
 the war, and there are not enough labor and services in the 
 country unless civilians make up their minds to do without some 
 of the comforts and luxuries to which we were all accustomed 
 in our own sphere of life before the war. Of course, it is not 
 possible for everybody to reduce his or her expenditure just 
 down to the number of loaves absolutely necessary to feed 
 themselves with, and there are all sorts of difficult social 
 questions involved when you begin to ask the question of 
 how exactly can I economize? It is not quite possible for every- 
 body to reduce their expenditure down to the minimum re- 
 quired for sustenance, but I think what I mean can be said 
 somewhat in these words: that it is everybody's duty in this 
 time of war to reconsider carefully his or her standard of ex- 
 penditure and standard of comfort, and to cut it down ruth- 
 lessly to what is really essential to health and efficiency. Of 
 course, that must not be done wastefully. Past savings are 
 accumulated and they turn into what is called capital, and 
 capital goes very likely into building a big house, or putting 
 up plant and machinery. It is not true economy to let that 
 house go to rack and ruin. That is using up old savings 
 faster than you are making new savings, and that is waste. 
 Still, I doubt if there is anybody in the country who can 
 really say that he has reduced his standard of comfort or 
 cut down his methods of living to the absolute minimum. 
 We all know the old proverb: "Never buy to-day what 
 you don't want till to-morrow." But I would suggest to 
 the man who thinks he has really done everything, a York- 
 shire proverb: "Never buy a thing when you want it, but 
 
4 
 
 wait till you don't." There is a great deal to be said for 
 postponing the expenditure on things that we think we really 
 want until we are quite sure that we want them and then 
 we discover that we do not. 
 
 Now, supposing that man of whom I was speaking, who 
 wanted to buy a gramophone, decides that he will not buy 
 it, and instead of doing so lends the money to the Govern- 
 ment, and buys War Savings Certificates. Let us consider 
 just what happens. Each War Savings Certificate costs him 
 15/6. It means that he hands over to the. Government 
 not merely 15/6 in money, but he hands over to the Govern- 
 ment money which represents the command over goods 
 and services to the extent of 15/6. Instead of using those 
 goods and services himself, he temporarily, until the war is over, 
 lets the Government have the use of those goods and services. 
 But something more than that. He not merely hands over 
 to the Government 15/6 worth of goods and services, measured 
 in money, but the goods and services are set free for more 
 useful purposes. Take the gramophone for example. The 
 man, if he had bought the gramophone, would have employed 
 all sorts of people in making and delivering the gramophone 
 to him, leaving out of account the records. Instead of that, 
 space is set free on the ship which would have brought the 
 gramophone from America, where it would probably have 
 come from; labor set free at the docks in handling the gram- 
 ophone; room left on the railway wagon. All that helps the 
 Government. The men who would have carted it from the 
 store in town to his house, are set free for some other work. 
 Every shilling helps twice. First of all, when it is saved, 
 and then when it is lent to the nation. And, it is not only 
 by economizing our expenditure that we can help. We can 
 also help by avoiding waste. When you avoid waste you 
 set free goods and services for useful purposes. Supposing 
 everybody in the country made up their mind never to waste 
 bread, and no bread was ever wasted, what would be the 
 result? First of all, bread would be a good deal cheaper than 
 
5 
 
 it is. But, in addition, there would be more room on the 
 ships and so on for bringing the goods from abroad, and 
 at home we should be able to increase the amount of the goods 
 we make for export, we should reduce the amount we have 
 to spend abroad and increase the goods we have to export 
 to pay for the munitions wanted from America and else- 
 where. By personal economy and avoiding waste we in- 
 crease the goods and services that are available for the Govern- 
 ment to win the war. 
 
 Now, let me return to the figure of £1,300,000,000 which 
 the country has got to find by borrowing in order to pay for 
 the war. How do we pay for the war? "Out of taxation 
 and by borrowing" will be one answer. But that is not the 
 answer I want. Taxation is raised out of the new savings 
 of the country, and so is a good deal of the borrowing. You 
 can pay for the war in three ways — out of new savings, out 
 of old savings, or by mortgaging future savings. Savings, 
 when you think of savings of the nation as a whole, represent 
 the surplus of the goods we produce and the labor and services 
 over which we have command, owing to our past savings. 
 New savings are the surplus over what we consume in the 
 year. Old savings are stored up in the form of capital. They 
 may go into bricks and mortar in building houses, or into 
 machinery and plant, or stocks of goods in the warehouse, 
 or into securities which very often simply represent the stocks 
 of goods or houses or machinery. We have paid for a good 
 deal of this war by selling our old savings to America. When 
 we sell securities to America we are parting with our old 
 savings, and, of course, getting poorer in the process. Mort- 
 gaging future savings can be done in various ways. The 
 simplest example is the Anglo-French loan in America last 
 year. We borrowed £100,000,000 between us, France and 
 England, from America on the security of our future savings. 
 There are various other ways in which you can use old sav- 
 ings and mortgage future savings. You can create money 
 in the form of paper of some sort or other, which you put into 
 
6 
 
 circulation on the security of old savings or by mortgaging 
 future savings. These belong to what is called "High Finance," 
 and some of the methods, I am afraid, are a glorified version 
 of the action of a man who buys jewelry on the hire purchase 
 system and then pawns the jewelry for more than he has 
 paid on it. But it is only out of new savings that you can 
 really economically pay for the war. So long as we pay for 
 the war out of new savings the nation as a whole does not 
 become any poorer. The individuals in the nation lend their 
 money to the Government and they are richer by the amount 
 of the new savings they have lent to the Government. On 
 the other hand, the Government owes those individuals the 
 same amount. So if you take the nation and individual to- 
 gether, and regard them as a whole in material wealth we are 
 just as we were before. It is quite true that if we had not 
 spent the money on the war we might have spent it on what 
 the economists call reproductive purposes, and then we 
 should have been richer by our new savings. But, so long 
 as we are only spending new savings, we are not poorer than 
 we were before. When we are mortgaging future savings 
 or selling old, in both cases the nation is becoming poorer. 
 
 The object, then, we all have before us is somehow or other 
 to produce new savings in the course of the present year, which, 
 if valued in terms of money, will amount to something like — 
 over and above what we pay in taxation — £1,300,000,000. 
 That has all got to be done by producing goods or providing 
 services over and above the services that we use or goods we 
 consume. 
 
 When one is talking in these figures a million or a hundred 
 million or two difference is quite a bagatelle. Before the war 
 we saved something like £400,000,000 to £600,000,000 a year, 
 which we used to lend abroad or invest in a new way at home. 
 We have got to more than double the higher of those two 
 figures. It is quite obvious that cannot be done unless we all 
 refrain from unnecessary demands and do our best to increase 
 the output of the country and to reduce waste. 
 
7 
 
 As an aside, I should like to say something about the way 
 in which Germany is financing the war. She is financing it, 
 of course, partly in the same way as this country, but also in 
 some rather curious ways. Of course, there are new savings in 
 Germany, as here, and to some extent she has been able to sell 
 securities abroad using up old savings. Our blockade has 
 prevented Germany from getting a very great many of the 
 goods she wanted. One effect of that has been that willy nilly 
 the Germans have had to save to an enormous extent. That, of 
 course, in a way has helped them. It is to their good up to a 
 point. But that is not the only effect of the blockade. Another 
 effect has been that Germany has lived on her old savings in the 
 form of food, metals, commodities of all sorts, stored up in the 
 warehouses, until the stocks have been reduced to vanishing 
 point or beyond it. So long as they are not absolutely short of 
 those goods and services that is perhaps a reasonable way of 
 financing the war, but the blockade obviously has had a better 
 effect than that. It has meant that Germany has been forced 
 to save in a way that is thoroughly uneconomical. Her people 
 have been reduced to saving in food, and so on, in a way that 
 must terribly impair the efficiency of the nation. They have to 
 save far beyond health and efficiency because of our blockade. 
 Then, of course, using up all these stocks of goods has been 
 most uneconomical. It will be very difficult and dangerous 
 for Germany when peace comes to be absolutely without 
 stocks of goods if she wants to recover any trade at all. Not 
 only that, but a great many people have been thrown out of 
 employment by this excessive saving. And that is waste. 
 Future savings have been mortgaged by means of the German 
 War Loans to an extent which makes it very doubtful whether 
 the holders of the German War Loans — the holders of the 
 mortgages on future savings— will ever be able to enforce their 
 mortgages. Still, we do not want to dwell on Germany's 
 sufferings or use them as a reason why we should not do the 
 best we possibly can. I only mention that as an aside. 
 
 Each of us must do our best to pay for the war out of new 
 
8 
 
 savings. I should like to refer for a moment to what Mr. 
 Withers was saying about Government extravagance. It is 
 no excuse for any one of us for being extravagant to say that 
 somebody else is extravagant, much less is it an excuse for 
 individuals for being extravagant to point to Government 
 extravagance. After all, when the Government is extravagant 
 on the war, it is extravagant for the purpose of winning the war, 
 for a national purpose. If you or I are extravagant we are ex- 
 travagant for selfish reasons that directly prevent or hinder the 
 successful prosecution of the war. I was walking through Tra- 
 falgar Square this morning and I noticed in front of one of the 
 lions a big hoarding: "Lend your money to your country.' ' 
 You could see it for miles off almost. But when I got near it I 
 discovered that somebody had written on that poster — "I've 
 only got 2d." I say to him, "Lend that 2d." When you are ' 
 talking of £1,300,000,000, 2d. does not sound much, but I just 
 want to give you a few figures of what twopence has done. 
 I take the figures, so far as I can get them, of what the small 
 investor has contributed directly by lending money for the 
 war. It is not very easy to say exactly who the small investor 
 is, or what his contribution is, if you try to take what he has 
 contributed both directly and indirectly. If you could get at' 
 the indirect figures through co-operative societies and so on, 
 the figures would be very much bigger. But I take just the 
 direct contribution, the surplus of the deposits in Savings 
 Banks over withdrawals, the amount contributed directly 
 through the Post Office to the 43^% War Loan issue, to the 
 Post Office Exchequer Bonds and the War Savings Certificates. 
 In the first two months of the war — August and September, 
 1914 — the small investors' contributions were a minus quan- 
 tity, A}4 million pounds to the bad, because withdrawals from 
 Post Office and Trustee Savings Banks exceeded the deposits. 
 In the next quarter to December, 1914, the small investor 
 contributed three-quarters of a million; in the next quarter to 
 March, 1915, he contributed 5J/2 million. In the next, to June, 
 1915, he contributed six million. In the next quarter, to Sep- 
 
9 
 
 tember, 1915, he contributed 12 million, which was mainly the 
 result of the 4}^% War Loan. Of course, he contributed 
 forty million directly to the 4 3/2% War Loan, but as some of 
 the money came out of Savings Banks, in the quarter the net 
 contribution was 12 million. Then in the quarter, October to 
 December, 1915, he contributed six million. It was just about 
 that time that the War Savings Movement began, and the 
 figures become very interesting. In the first quarter of this 
 year, ending 31st March, 1916, the small investor contributed 
 16 y 2 million; in the quarter ending on 30th of this month — I 
 have had to guess one or two figures — it will be something like 
 Yi}/2 million. If you add the interest on the Post Office Savings 
 Bank Deposits which have not been withdrawn, amounting to 
 nine million for the two years, you get a total direct contribu- 
 tion from the small investor since the war began of 68 million 
 pounds — all by small savings. Lest we should be too proud, 
 I draw attention to some figures which appear on posters 
 in several parts of this room — "War Loans. A Comparison." 
 "The last British War Loan realized £600,000,000 and there 
 were 1,100,000 subscribers. The last German War Loan 
 realized £535,000,000 and there were 5,279,645 subscribers." 
 If you take the figures, so far as they can be trusted, of the 
 German small investors' contribution, it is something like three 
 times as large as that £68,000,000 of which we can boast. 
 Our duty then is to try and pay for the war out of savings, and 
 to go on and try and increase those figures of £17,000,000 in 
 the last quarter as against £6,000,000 in the corresponding 
 quarter of last year. We must increase it still faster, and the 
 best way to do that is that we should all unite together to do it, 
 that we should all become members of a War Savings Associa- 
 tion, regarding membership of the War Savings Association as 
 banding us all together in a national brotherhood for a national 
 ideal, by personal economy and avoiding waste ; united together 
 to win the war. 
 "United Workers," 
 175, Piccadilly, W. 
 
SPEECH MADE BY MR. B. P. BLACKETT, C.B. ON 
 NOVEMBER 27th, 1916, AT A DRAWING-ROOM 
 MEETING, AT GANWIC, BARNET, 
 MIDDLESEX, ENGLAND 
 
 Our hostess has told you how she came to take this matter 
 up, and I am very grateful to her for giving me this oppor- 
 tunity of speaking to so representative a gathering on the 
 subject of War Savings, not because I like making speeches, 
 especially of a preaching kind, but because I believe most 
 sincerely, first, that War Saving is of vital importance if 
 we are to win the war, second, that the importance of war 
 saving is little understood, and, third, that people every- 
 where are ready and anxious to understand it if only they 
 can get the opportunity. 
 
 Unfortunately the subject is not a very easy one to explain 
 clearly and the mere belief that it is a terribly difficult one 
 makes people inclined to leave it alone. I should like to say 
 at once that if after Miss Watson and I have spoken any of 
 you want to ask questions, I hope you will ask them without 
 hesitation. I am quite sure, so far as I am concerned, that 
 it will be my failure to make myself clear that will be responsible 
 for any failure on your part to understand me. 
 
 Now what seems to have impressed our hostess in the con- 
 versation which led to her arranging this meeting was my 
 statement that some people who really understand the problem 
 of War finance were beginning seriously to doubt whether 
 after all this country would outlast Germany financially. I 
 said that unless we could win the war by military efforts 
 next summer, or Germany found it more than she could 
 manage to get through to next harvest without starving 
 as the result of the blockade, there was serious room for 
 
12 
 
 doubt whether this country would be in any better position 
 for getting through the winter of 1917/1918 than Germany. 
 I added that if we wanted to make certain of winning the war, 
 and I laid stress on the "if" — it was absolutely vital that every- 
 one should begin to economize in a drastic way. Recent news 
 from Roumania adds point to this statement. This may 
 sound a serious and even an unpatriotic thing to say, and no 
 doubt some of you are. saying "If this is really true, why does 
 not the Government say so plainly? And then you probably 
 comfort yourselves by thinking "We are ever so much richer 
 than Germany and the idea that she could outlast us finan- 
 cially is moonshine." 
 
 Let me try to answer these two objections. The root of 
 the whole difficulty is that we are bound to rely on neutrals, 
 especially America, to lend us money temporarily during the 
 war with which to pay for what we are buying from abroad. 
 If we had only our own Army and Navy to consider the 
 position would be easy enough. Remember, however, that the 
 country has to find the means for paying neutrals not only 
 for what we buy for ourselves but also for practically all 
 that is bought abroad by Russia, and for a great deal that is 
 bought abroad by Italy, France and all the Allies. Mr. 
 McKenna has stated publicly that £2,000,000 a day has to be 
 found for payment to the U. S. A. Surely a striking enough 
 figure. Now remembering this and remembering also that 
 the willingness of America to sell us things and to lend us 
 money depends not on the question whether we can pay 
 eventually but on the question whether America thinks we 
 can — in other words that everything depends on the main- 
 tenance of our credit — and then put yourself in Mr. McKenna's 
 position and think what would be the effect in America if he 
 were to say publicly that our credit was doubtful. However 
 much therefore he would like to improve the real basis of our 
 credit by frightening the public at home into economy with 
 the whole truth, he dare not do so for fear of frightening 
 America and weakening the Americans' belief in our credit. 
 
13 
 
 Of course, we can ultimately repay everything that we borrow 
 but we cannot do so during the war. And America cannot 
 be expected to conduct a War Savings campaign merely for 
 the sake of lending us money. She is not at war and is 
 naturally spending the profits she is making from us without 
 considering whether we want to borrow them or not. 
 
 I come now to the second objection that we are much richer 
 than Germany. This is perfectly true and this war has 
 been remarkable among other things for the revelation of how 
 enormous, how astounding, are the financial resources of 
 this country — greater than was ever believed before the war. 
 But the question is not whether we or Germany started 
 the richer but what use we are making of our resources. And 
 here unfortunately there is no question that Germany is using 
 up her resources more slowly than we are using up ours. She 
 is forced by our blockade to economize — to an extent that 
 is certainly more drastic than any voluntary economy which 
 any sensible person would advocate here. But — except 
 for a few of the privileged cast — everyone in Germany is 
 cut off from all superfluities and every kind of self-indulgence. 
 The consequence is that it is much easier than here to devote 
 all energies to the prosecution of the war. Here we are wasting 
 our great resources because private expenditure on unneces- 
 saries and private self-indulgence is not only scarcely checked 
 but in many cases among those in all walks of life who are 
 making money out of the war, is going on to a far greater 
 extent than in peace time. 
 
 This brings me to the question which you have come here to 
 have answered. How does individual economy help to win the 
 war? The answer is shortly this. All available goods and 
 services are urgently wanted to provide what our soldiers and 
 sailors need in order to carry out the actual fighting to the best 
 advantage. Every time any one indulges in unnecessary 
 expenditure, he or she is using up goods and services which 
 might otherwise have been available for winning the war. This 
 statement needs expanding. The vital point to realize is that 
 
14 
 
 it is not a question merely of money, it is not even mainly a 
 question of money. It is a question of the things money will 
 buy. The possession of money after all is merely the posses- 
 sion of a power to command goods and services from others. 
 When it is said that the country is spending over £5,000,000 a 
 day, most people simply fail to grasp in imagination what is 
 meant. £5,000,000 of money is too big an idea to grasp. I 
 suppose most people if they allow themselves to think what is 
 meant would try and imagine a great vault full of golden sov- 
 ereigns. But to show that this is not the way to think of it, 
 let me give my own experience. I was one of the witnesses 
 last year to the contract between the British and French and a 
 syndicate of American financiers for the lending of 500 million 
 dollars, i. e., £100,000,000 to those Governments. I was 
 actually responsible afterwards for the taking in and paying out 
 of many millions of dollars from the proceeds of the loan but I 
 never saw or handled a dollar of the money either in the form 
 of a coin or in the form of a note. Evidently £5,000,000 of 
 money doesn't mean 5,000,000 of sovereigns or even 5 millions 
 of £1 notes. What then does it mean when we are told that the 
 Government is spending £5,000,000 a day? It means that 
 goods and services to that amount are used up by the Govern- 
 ment every day, or in other words the Government gets people 
 all over the world to work for it every day to an extent which 
 measured in money cost is represented by £5,000,000. For the 
 simple truth is that whenever I spend money I make some one 
 work for me. Suppose for example I — or I had better say one 
 of you — buy a set of sable furs, at a price of shall I say 300 
 guineas. What is it that really happens? First you make 
 someone set out and hunt the animal, and you make other 
 people provide him with the food and the equipment required 
 by him during the time he is hunting and obtaining the skin 
 and curing it. Then you make someone else transport the skin 
 to this country, incidentally getting people to build ships and 
 railways for you for the purpose, and so on till the sable is 
 delivered and unpacked in your own home. You are using your 
 
15 
 
 power to spend 300 guineas to induce people to work for you. 
 You may say, of course, that you only decided at the last 
 minute to buy the sable set having been doubtful up till then 
 whether to buy sable furs or a new grand piano or to invest 
 money in Exchequer Bonds. But logically it is the fact that 
 you and other people spend money in that way that uses up all 
 those other people's labor, and if you had really put the money 
 in Exchequer Bonds instead you would have had a double ef- 
 fect on the goods and services available for helping Sir Douglas 
 Haig and Sir John Jellicoe to win the war. In the first place 
 you yourself would not have used up for your own gratification 
 goods and services which they need, and in the second place 
 you would have transferred to the nation the power to com- 
 mand that amount of goods and services. Lending to the na- 
 tion means that you temporarily part with your right to use 
 goods and services to the amount measured in money of your 
 loan and allow the nation to exercise a similar right, and in ex- 
 change you are promised a restoration of the right at a later 
 date with some extra goods and services thrown in as compen- 
 sation for postponing your power to exercise the right now. 
 
 Do not think that is mere juggling with words. It is the 
 exact downright truth. Read Mr. Runciman's speech in the 
 House of Commons a short time ago about the appointment of 
 a Food Controller. What was the burden of that speech? We 
 are short of labor at the docks, on the railways, everywhere — 
 not only for the army and for making munitions. We can't 
 build as many new ships or as many railway wagons as we 
 should wish for want of labor. We can't be sure of getting 
 all the food we want from abroad in time to avoid a temporary 
 shortage because labor and ships and railway dock space are 
 short. And what is the remedy? As far as food is concerned, 
 the Government is going compulsorily to prevent waste and 
 over-consumption so far as it can. If people would only have 
 done this voluntarily and to the extent that they do it volun- 
 tarily, it would be done without using up labor in organizing 
 compulsion and in a way much more likely to be equitable all 
 
16 
 
 round. But the point which Mr. Runciman made abundantly 
 clear was that there is a serious shortage of goods and services 
 to meet the absolutely essential needs of the army and navy and 
 civil population in the matter of food. Read any of the recent 
 numbers of that rather dreary production 'The Board of Trade 
 Journal." You will find that the cry is the same everywhere. 
 Cotton machinery is rendered idle for want of labor. Blast 
 furnaces are being blown out for want of labor. And it is 
 only natural when you think of the vast army in the field with- 
 drawn from labor, and of the vast demand for munitions. 
 But what is the remedy? Are the army and navy to go short 
 of necessities? Are less men to be used to fight our battles? 
 Are less munitions to be made? You have already really 
 answered — No. But that answer means that we at home, 
 you and all of us who are not privileged to be fighting, must 
 deny ourselves firmly and go without everything that is not 
 essential to our health and efficiency. It is our comfort or 
 other people's lives between which the choice lies. Are we 
 content to let others fight for us simply that we may enjoy 
 comforts and luxuries? Are we willing to have this said of us? 
 If it were not that what is done is done in thoughtlessness and 
 ignorance I should agree with a remark made to me by a friend 
 the other day that to buy a natural skunk coat now is the act 
 of an unnatural skunk. 
 
 Let me return once more to that £2,000,000 a day which has 
 to be paid to America and other neutral- countries to pay for 
 what we import from abroad. You will remember that I said 
 that the need of keeping up our credit in America added to the 
 difficulty. Now what is it that we import from abroad and 
 how do we pay for it? As we all know, we import from abroad 
 a great many things that are absolutely essential and but for 
 our gallant navy's brilliant achievement in keeping the seas 
 open for our ships, we could not have gone on fighting for more 
 than about a month. But besides the food and raw materials 
 and munitions which are vital to us and our Allies, we import a 
 large amount of luxuries. Gramophones and Ford Motors 
 
17 
 
 bought by newly-rich munition workers are the favorite exam- 
 ple, but there are thousands of other imports which are not 
 essential but merely serve as comforts and luxuries to rich 
 and poor. If we ceased all of us to buy these, the problem 
 would be greatly eased. Why not then prohibit all imports 
 and then let us spend as much as we like at home? A good deal 
 has been done in the direction of prohibiting luxury imports 
 and though there are considerable difficulties in the way more 
 may be done. You must remember that it is not only luxury 
 imports from America and other neutral countries but also 
 imports of such things as champagne and Paris luxuries from 
 France that are concerned, as France needing money to spend 
 in America just as we do will probably transfer to America the 
 right to receive payment from us for what we owe to France so 
 that we have to pay in America just the same. But the great 
 difficulty of prohibiting these unnecessary imports is that most 
 of them are raw materials or half-finished products part of 
 which is really essential, only the superfluous excess over neces- 
 saries being devoted to providing comforts and luxuries. Un- 
 less therefore some rationing system could be devised — covering 
 not only food but everything on which we spend money — it is 
 voluntary economy to which we must look for help. Moreover, 
 a rationing system would use up a great deal of labor that can 
 ill be spared. 
 
 Let me deal at this point with a completely fallacious argu- 
 ment that is often put forward by ignorant people who think 
 they know but they don't. The National War Savings Com- 
 mittee has been attacked f r saying that it is almost if not 
 quite as important to ecoi.cn "ze in home-produced things as on 
 imported articles, and it is said that provided money is spent on 
 home products only, the more money is so spent the more it 
 circulates and the better for the country. This is entirely 
 untrue. Just see what it means. Labor is urgently needed 
 for war purposes and yet we are urged to make people at home 
 work for us to produce homemade goods. We want as large a 
 surplus of home products as possible in order that we may ex- 
 
18 
 
 port them to help to pay for necessary imports from abroad, 
 yet we are told to buy for ourselves as many home products as 
 possible. Take for example, a home produced gramophone and 
 ah imported one. If the home-produced one is bought the 
 labor required for making it is diverted from war needs, or else 
 the gramophone is no longer available to be exported. If the 
 foreign gramophone is bought, someone has to set to work to 
 make some article or other to export to pay for that imported — 
 which shows it is better not to buy gramophones at all. 
 
 Or again suppose that all this were not true, and I were to 
 pride myself on buying the home product instead of the im- 
 ported one. How do I know that the person from whom I 
 bought the article will not at once use the money toward buy- 
 ing a set of furs from America? If I had used the money to 
 lend to the Government this could not have happened. 
 
 People who talk like this are doing real harm to their country 
 and helping the enemy. 
 
 Before I sit down you will expect me perhaps to say a little 
 about practical ways of saving and about the facilities offered 
 through War Savings Associations for the accumulation of 
 small savings. Now in speaking to an audience like this, the 
 first thing obviously is, lend all you can to the country. One 
 may as well confess at once that the cumulative results of 
 individual savings among the comparatively small class of people 
 who are what we may call well-to-do, though they can ma- 
 terially help the finance of the war, cannot do anything like 
 enough to solve the problem of the shortage of goods and ser- 
 vices. But what the well-to-do can do is by the force of their 
 personal example acting upon and influencing public opinion 
 to show the way to the workers, who perhaps for the first time 
 in their lives have something to spare after buying absolute 
 necessities. It is amazing what a difference personal example 
 among the well-to-do, and particularly in the case of women, 
 makes on the effectiveness of the War Savings campaign among 
 the workers. First of all, therefore, I would urge all of you to 
 use your influence among women of your own class by setting 
 
19 
 
 an example and urging them to set an example. It is a hard 
 thing to ask, but if any of you would go in for some blatant and 
 ostentatious economy and saving you would supply a long felt 
 want. The trouble is that the real economy which is being 
 exercised by a large proportion of the well-to-do is lost sight of. 
 It is not mentioned in the newspapers, whereas the extravagance 
 of individual sinners is mentioned and the working class read 
 about it and judge all the well-to-do by what they read — just 
 as many of the well-to-do are apt to condemn all workers be- 
 cause they hear of individual cases of extravagance among 
 munition workers. Let me give a concrete case. I am told — 
 the facts are not yet verified — that at the forthcoming Austra- 
 lian bazaar at the Savoy all the lady helpers are being made to 
 buy special new frocks and new hats at a minimum cost of £12 
 each. If that is true it is absolutely shameful. Instead of 
 doing so they should wear simple overalls and advertise the 
 fact that this is being done on patriotic grounds and immense 
 good would be done instead of immense harm through first the 
 waste and secondly the bad example. 
 
 I have not much time for other concrete suggestions, but 
 here are some: — Give War Savings Cards as Christmas 
 presents. Do with fewer fires — closing some of the rooms 
 in your house — do with less servants and what is more im- 
 portant, less service. If you are so lucky as to have old 
 and valued servants, there is no need to dismiss them. Lend 
 their services for voluntary war work for the duration of war. 
 Economy in dress and in the household I have already men- 
 tioned. Then another practical way is to go to your Local 
 War Savings Committee and offer to help them in their work. 
 Interest yourselves in the formation of War Savings Asso- 
 ciations — join them yourselves and get your servants to join 
 them and help them to make a good start. Get your local 
 clergy to form War Savings Associations for their various 
 clubs and in the schools. If none of these are conveniently 
 available for your servants to join, band together and form 
 a joint Association for the servants of several households. 
 
20 
 
 I believe the Secretary of the Barnet War Savings Committee 
 is here and he will be delighted to provide information and 
 there is a good deal of literature here. 
 
 Personal economy is essential if we are to make sure of 
 winning the war. It is essential if we are to go into the council 
 of Peace and be in a strong position to obtain satisfactory 
 terms — terms which will ensure permanent peace. For if 
 we are known to be financially unable to go on with the fight 
 how can we take a strong line in discussing terms of peace? 
 Finally, personal economy is all important during the re- 
 construction period for making England and the world a 
 happier place. We shall need capital to spend on recon- 
 struction, and to avoid a long period of weary misery while 
 the world slowly recovers from threatened bankruptcy. 
 And is it so much to ask? Were we not all tired of the osten- 
 tatious extravagance of the pre-war period? Has not the 
 war taught us that our sense of values had gone wrong? 
 Is not simplicity of life a higher ideal than luxurious self- 
 indulgence and even if it is a sacrifice what a puny thing to 
 set against the sacrifice of those in the trenches. Let me 
 repeat it — our self-indulgence is directly adding to the risks 
 of those at the front and lengthening the war and the list 
 of casualties. If all of us — and women especially — could 
 once realize that they are purchasing goods at the price of 
 human life they would not endure for a moment to spend 
 a penny needlessly. 
 
WAR SAVINGS IN GREAT BRITAIN 
 
 An Address by Basil P. Blackett, C.B., of the British 
 Treasury, Before the Savings Bank Section, Ameri- 
 can Bankers Association, at Atlantic City, N. J., 
 Sept. 25, 1917. 
 
 I greatly appreciate the honor which has been done me by 
 the Savings Bank Section of the American Bankers Asso- 
 ciation in asking me to address them on the experience of 
 Great Britain in regard to War Savings, and I am particu- 
 larly glad to have this opportunity of addressing influential 
 bankers on the subject. 
 
 I have had the privilege of being closely associated with 
 the War Savings movement in Great Britain since its incep- 
 tion. The subject is very near my heart, and I believe it 
 to be of exceptional importance not only for the winning of 
 the war but also for the welfare of the world after the war, 
 when it is the comfort and hope of mankind that a new and 
 better world can be built up, hallowed by the sacrifice of life 
 and well-being which the war has brought upon us. Such 
 a reconstruction will involve a plentiful supply of capital, 
 and there is no way in which capital can be made available 
 except through saving. 
 
 I propose to divide my address into two main portions. 
 In the first I shall try to show the importance of saving. 
 In the second, I hope to tell you something of the methods 
 and results of the War Savings movement in Great Britain. 
 
 I 
 
 How is the war paid for? A full answer would involve 
 a treatise rather than a short address. I ask your indulgence 
 
22 
 
 if what I say strikes any of you as unduly dogmatic, as may 
 well result from my attempt at brevity. 
 
 How is the war paid for? It is not enough to say that it 
 is paid for either out of taxation or out of the proceeds of 
 government loan issues. For the question arises immediately : 
 How does the nation at war manage to provide the sums 
 required from it by the government in the form of taxes or 
 loans? The banker will perhaps answer that the govern- 
 ment's own expenditures provide the funds, owing to the 
 large sums of money which it expends on war requirements 
 of all sorts, such as pay for the sailors and soldiers, separation 
 allowances for their dependents, wages for the countless 
 numbers of men and women engaged in producing food and 
 munitions, profits for the manufacturers engaged on govern- 
 ment work, and so forth. The government, it is said, begins 
 by borrowing money temporarily in some form or other, 
 then uses the funds obtained to meet its expenditures, and 
 the money flowing back into the deposits of the banks and 
 the pockets of the people becomes available there to pay 
 taxes or to be used as subscriptions to war loans. Now 
 it is perfectly true that the continuous circulation of money 
 is an essential part of the machinery for the financing of 
 the war, but if we are to deal satisfactorily with our question, 
 we must get away from our habit of thinking in terms of 
 money. Money is, after all, only a token generally recognized 
 by civilized people as representing in the hands of its owner 
 the power to command goods and services from others — power 
 to make other people work for him. If I am hungry and 
 happen to possess an orchard with ripe apples in it, I can go 
 into the orchard and pick some apples and eat them. If 
 I don't possess the orchard but have a dollar in my pocket, 
 I can go into a store and buy some apples. Chronologically, 
 in point of time, other people have planted the apple tree, 
 tended it, picked the apples, shipped them, and put them 
 on sale in the store before I spent my dollar, but, logically, 
 by spending my dollar I make other people do for me all the 
 
23 
 
 work needed to produce apples and put them on sale at a store 
 within easy reach of me. Spending money, in fact, means 
 making other people work for me. 
 
 The British Government is spending something over $30,- 
 000,000 a day on the war at the present time. (I take for 
 purposes of illustration the expenditure of the United Kingdom 
 on the war, as I am more familiar with the figures, but what 
 I say is equally applicable to the expenditure of the United 
 States.) In other words, the British Government is making 
 people work for it to an extent which, measured in money, 
 is equivalent to an expenditure of $30,000,000 a day. The British 
 Government is getting the labor and services and materials, 
 or, in the short phrase which has become a familiar one in 
 England, is getting * 'goods and services" valued at the figure 
 of $30,000,000 a day. Incidentally, one result of the war 
 has been that the amount of goods and services obtainable 
 for an expenditure of $30,000,000 a day is considerably less 
 than the amount which such an expenditure would have 
 secured before August, 1914, but this is another matter, and 
 is not directly in point now, though it would be in point if 
 the question we were asking were: What is the ultimate cost 
 of the War? 
 
 The important thing is not the number of dollars or pounds 
 sterling or francs which the belligerent governments are 
 spending, but the goods and services which they command. 
 It is the securing of the goods and service which is the real 
 problem. If the goods and services are secured, the war is 
 being paid for. If the government cannot undertake a par- 
 ticular military enterprise or cannot obtain particular muni- 
 tions which it requires, it is often said that this or that is 
 not done because the government cannot pay for it, or cannot 
 afford it. What is really meant is that the goods and services 
 required cannot be secured. If the war is to be fought and 
 won, the essential thing is that the necessary goods and ser- 
 vices should be secured, and it is to the securing of these 
 goods and services that the government devotes the proceeds 
 
24 
 
 of taxes or loans for war purposes. Where does the British 
 Government get these goods and services? The British 
 ^Government has obtained the greater part of the goods and 
 services needed from the people of the United Kingdom, but 
 it has also obtained some of them from people in other parts 
 of the world. If goods and services are to be available for 
 the government for war needs, it is necessary that the goods 
 and services which the people in the kingdom can command 
 for their private use should show a surplus over those which 
 they are using up in satisfying their own private needs. Tax- 
 ation has the effect of practically compelling people to see that 
 there is such a surplus. Inviting the people to subscribe 
 to war loans tends to encourage them to provide a further 
 surplus. 
 
 When people lend money to the government, they pro- 
 vide the money needed to pay for their subscription in various 
 ways. The best way is that they should deny themselves com- 
 forts and luxuries and instead of using their money to command 
 goods and services for themselves they should go out of the 
 market for them and not compete, but hand over the power to 
 command these goods and services to the government, which 
 uses them for war needs. A second way of providing money 
 for subscriptions to war loans is to sell securities. What is the 
 effect of such sales? Here we must distinguish between the 
 sale of securities to purchasers at home, that is, in the case of 
 Great Britain, the sale of securities by one citizen of Great 
 Britain to another, and the sale of securities by a citizen of 
 Great Britain to a citizen of another country. If I sell securi- 
 ties in order to invest in war loan, and the purchaser is a fellow 
 citizen of my own in Great Britain, all that happens is that 
 my fellow countryman transfers to me his command over cer- 
 tain goods and services, and I, in turn, hand my power to com- 
 mand these goods and services over to the government in ex- 
 change for a government I. 0. U. The amount of goods and 
 services available in Great Britain for the use of the govern- 
 ment in fighting the war is not increased, but the man who has 
 
25 
 
 bought the securities from me has given up the potential com- 
 mand over goods and services available in the country, and I 
 have made sure that the government has obtained command 
 over them. A further result is that the buyer of the securities 
 cannot subscribe for shares in a new company that is intending, 
 shall we say, to build a cinematograph theatre, and the pro- 
 moters of the company find it so difficult to obtain command of 
 goods and services that perhaps they drop the proposition. 
 Selling securities for the purpose of subscription to a loan has 
 its uses, therefore, but if the buyer is a fellow countryman the 
 quantity of goods and services available for the war is not in- 
 creased. 
 
 Now let us suppose that the buyer of the securities lives out- 
 side the United Kingdom— shall we say in the United States. 
 This process has been very evident during the war. What 
 happens? Clearly, the first thing that happens is that the buyer 
 of the securities has transferred a command over goods and 
 services in America to the seller, and the seller by using the 
 money to subscribe to a British War Loan passes on that com- 
 mand over goods and services in America to the British Govern- 
 ment. So long as the United States was neutral, this meant a 
 definite increase for the Allies of their command over goods and 
 services for the purposes of the war. The British Government 
 was not compelled to use its power in the United States because 
 through the medium of the exchanges machinery was available 
 by which it could get that power exchanged into a power to 
 command goods and services in any part of the world. In 
 practice, however, the expenditure of the Allies in the United 
 States has been so large that this operation of selling securities 
 to citizens of the United States has been an essential feature of 
 the process by which the Allies have obtained supplies in Amer- 
 ica. A similar command over goods and services in places 
 outside the United Kingdom results from any surplus that may 
 exist over the export from Great Britain of goods or services 
 (the simplest illustration of an export of services is obtainable 
 from the activities of the British mercantile marine) over the 
 
26 
 
 import into Great Britain of goods or services for the private 
 gratification of the population. Unless the private exports 
 exceed the private imports, there is no increase in the goods and 
 services available for the goverment. There may be a useful 
 exchange enabling the British Government to use goods and 
 services in England, but there is no actual increase in the ag- 
 gregate amount of goods and services available. 
 
 Strictly speaking, therefore, there have been only two sources 
 from which the British Government has been able to secure the 
 goods and services it has needed for the war. These two sources 
 are the surplus of production at home over private consumption 
 at home of goods and services in the widest sense, and the sale 
 abroad of assets which have represented the fixed capital re- 
 sulting from previous similar surpluses built up in the years 
 before the war. In other words, the British Government has 
 had to pay for the war either out of new savings effected by its 
 nationals or out of the proceeds of the transfer of past savings 
 to the inhabitants of other countries. 
 
 It may be argued that there is a third source from which 
 the war can be paid for. namely, the anticipation of future 
 savings. It is quite true that part of the cost of the war can 
 and must ultimately be met out of future savings, but the goods 
 and services which are going to be provided at some future date 
 are of no use on the battlefields of France or Belgium. When 
 the British Government issues a war loan at home, or borrows 
 money in the United States, it obtains goods and services now 
 on the credit of the expected capacity of its nationals to produce 
 future savings. When, as in the case of the Anglo-French loan, 
 belligerent governments obtained money in the United States 
 on the strength of their promise to pay, without collateral, the 
 borrowing governments were exchanging the future savings 
 of their nationals for the present savings of the people of the 
 United States. When, however, the British Government bor- 
 rows on a loan secured by collateral it would be at least as true 
 to say that what it is exchanging for the new savings of the 
 people of the United States is not the future savings of the 
 
27 
 
 people of Great Britain but their past savings represented by 
 the collateral. Again, there are various banking devices for 
 creating credit which have somewhat similar results, that is, 
 they serve to secure the use of present savings on the credit of 
 future savings. Ultimately, the borrowing governments will 
 have to take from their nationals by taxation a part of their 
 future surplus of goods and services produced over goods and 
 services consumed, and hand these over to the lenders, whether 
 they be their own nationals or whether they live outside the 
 boundaries of the borrowing governments. This is a matter 
 of domestic arrangement between the governments and their 
 nationals. The lenders now, whether at home or abroad, will 
 of course be better off than those who have spent their money 
 instead of lending it. But in providing for the needs of Britain 
 during the war the only things which count are the present 
 savings of Britain and such past savings as can be exchanged 
 for the present savings of others outside Britain. 
 
 The gospel of goods and services is the gospel which, in season 
 and out of season, the National War Savings Committee has 
 been preaching throughout Great Britain for the last eighteen 
 months. The war can be paid for only out of savings. 
 
 So long as the United States was not a belligerent, the goods 
 and services at the disposal of the belligerent governments were 
 definitely increased by the sales of securities to America, or by 
 loans in America. It is still possible for the United Kingdom 
 to sell and for the United States to buy securities previously 
 held in the United Kingdom, and the Government of the United 
 States is, of course, making large and liberal loans to Great 
 Britain and others of the Allies. But now that the United 
 States is a belligerent, this process has become a mere transfer 
 of the command over goods and services from one belligerent 
 to another. It does not in itself increase the goods and services 
 available for the Allies, including the United States, in fighting 
 the war. In other words, now that there are scarcely any neu- 
 trals left, the time has come when the war must be paid for out 
 of new savings, and new savings alone. The citizens of the 
 
28 
 
 United States of America can sell securities to each other., and 
 they can buy securities from Great Britain and France, but in 
 doing so, while they may be assisting greatly in making the ma- 
 chinery of finance do its work, they are not providing new goods 
 and services for the war. The problem for those who are fight- 
 ing the battle for freedom and self-government and the uphold- 
 ing of public right in the world is to bring to bear all their re- 
 sources that can possibly be set free and use them to win the 
 war. These resources cannot be increased by any juggling with 
 finance. It does not matter to the gunner whether the shell 
 which he is firing cost half as much or twice as much as it would 
 have cost in 1913. What matters is that he should have the 
 shell. If the number of shells available is increased, he is better 
 able to do his part, and the lives of the infantry in the trenches 
 will be saved. The only way to increase the number of men 
 and guns and shells and supplies available at the front to win 
 the war is to reduce the competition of private individuals for 
 the goods and services which the belligerent governments re- 
 quire for war needs. This can only be done by increasing pro- 
 duction of the things which are necessary, and reducing the 
 consumption of everything else. 
 
 II 
 
 It was not until January, 1916.. that the British nation 
 really tackled the war savings problem. It is most refreshing 
 to see that in eighteen weeks of war the United States has in this 
 matter already advanced to the point that the British nation 
 had reached after eighteen months. The entry of the United 
 States into the war has practically eliminated such value as 
 past savings possessed for providing goods and services for the 
 war. Everything now depends on new savings, and the United 
 States, I am sure, is not going to be behind hand in producing 
 new savings. 
 
 The story of the work of the National War Savings Com- 
 mittee in England and Wales is one of which we are rather 
 proud, subject always to our confession that we were very 
 
29 
 
 slow in starting on this necessary work. In one sense, the 
 whole campaign of the National War Savings Committee 
 can be summed up in the statement that it has preached 
 by all means in its power the gospel of goods and services. 
 It has adopted all sorts of expedients to bring home to the 
 people the economic arguments outlined above to show that 
 the war must be paid for out of new savings; that every 
 cent of private expenditure which is not really necessary for 
 health and efficiency involves a diminution of the goods 
 and services available for winning the war. Extravagance 
 and waste are treason in war time. In the words of Mr. Lloyd 
 George: "Extravagance costs blood — the blood of heroes." 
 It may sound an astonishing claim, but I do seriously contend 
 that the National War Savings Committee has actually 
 succeeded in bringing the doctrine home to the bulk of the 
 people. I do not say that there is not still much wicked waste, 
 but the vast majority of English men and women are now 
 organized on a war basis — are devoting all their energies to 
 that little bit of the war machine in which they can be useful, 
 and are avoiding waste and self-indulgence for the sake of 
 the sailor on the sea and the Tommy in the trenches. 
 
 The facts had become so obvious by the time the National 
 War Savings Committee started, that, looking back, one 
 can see that success was inevitable, if only the necessary 
 work was done in explaining the facts everywhere. On the 
 one hand, the workers of the country had never been so well 
 off. Wages had increased generally, and for the time being, 
 at least, they had increased faster than prices. Many more 
 members of the family than in peace time were earning money, 
 so that the family as a unit was much better off. Some of 
 the extra earnings were being wisely invested in better food 
 and better clothes for the children, but there was unfortu- 
 nately a terrible amount of useless and wasteful extravagance. 
 The cheap jewelry trade was booming, and it was obvious 
 that but few of the workers were using the chance of their 
 lives to secure permanent improvement of conditions by putting 
 
30 
 
 by some of their extra wealth against a rainy day. The state 
 was thus being called upon at one and the same time to provide 
 goods and services for the war and to provide extra food and 
 luxuries for masses of the people over and above what they 
 had demanded in peace time. 
 
 There was an obvious shortage of labor and materials — 
 a shortage of ships and men to build ships — a shortage of 
 equipment at the docks and of labor at the docks — a shortage 
 of railway wagons and of the men to drive the engines — a 
 shortage of farm labor and coal and miners — a shortage of 
 many materials required from abroad. The workers of the 
 National War Savings Committee have gone up and down 
 the country pointing to this shortage and explaining its 
 causes. They have enforced the lesson of patriotic abstention 
 from self-indulgence which employs labor and material when 
 labor and material are short for war needs. They have af- 
 forded facilities for co-operative saving and organized local 
 effort so that every man, woman, and child, whether his or 
 her income were small or large, could by increased production 
 and reduced consumption help the national cause. 
 
 It was uphill work at first. England has always regarded 
 saving as a mean sort of habit, proper only to Scotland. 
 Perhaps I may venture to illustrate this by one of the countless 
 stories bearing upon this Scottish virtue. A Scot who was 
 visiting London was taken by his friend to an Episcopal 
 Church. They arrived early, and the Scot spent the time 
 examining the Prayer Book. Suddenly he nudged his friend 
 excitedly. "Come awa', mon," he said, "come awa'. It's 
 awfu'. Look at this book — see what it says — on one page 
 after anither, 'Collect/ 'Collect,' 'Collect.' " The war has, 
 I hope, altered the English sense of values in this respect! 
 
 The cry of "Business as Usual" had taken a firm hold, and 
 on all sides one heard the argument that the one thing to 
 do was to keep money in circulation, and so do good to trade. 
 Moreover, the National War Savings Committee adopted 
 methods which were not altogether liked. Our first section 
 
31 
 
 was to try in some striking way to bring pressure to bear on 
 the well-to-do, so that they might understand the need for 
 saving, and set a good example to their fellows. There was 
 an unfortunate idea that our campaign was directed entirely 
 against the poor, and the poor resented it. Our experience 
 has been that where the well-to-do have set the right example, 
 the results have been amazing. 
 
 We hit on the plan, drawing a lesson from the recruiting 
 campaign, of placarding London with posters, which, in the 
 words of our first annual report, * 'provoked and stimulated 
 discussion of the economic problems of the war." This is 
 a mild way of putting what really happened. We had at 
 our disposal an immense amount of poster space given free 
 by the government departments and by patriotic citizens, 
 and we covered them with such posters as the following: 
 ''Bad Form in Dress 
 To Dress extravagantly in wartime is 
 not only unpatriotic — it is 
 bad form." 
 
 or, again, 
 
 "Don't ride a motor-car for pleasure." 
 the result of which was to make the timid motorist fear attacks 
 on the high-road from the indignant and patriotic proletariat. 
 
 Naturally, the opposition of tradesmen throughout the 
 country was aroused, but, what was worse, many of our 
 serious-minded friends thought themselves compelled by their 
 consciences to give us the cold shoulder. They sympathized 
 keenly, they said, with the necessity for encouraging savings, 
 but they could not have any connection with an organization 
 which adopted such undignified methods. But the gospel 
 prevailed, thanks to three things in the main: the real patriotism 
 of the country, the devotion of a host of voluntary workers, 
 and the war savings certificate. 
 
 I will deal with the war savings certificate first. You prob- 
 ably all know what it is, but you will perhaps excuse my 
 dilating on its merits. The war savings certificate is sold 
 
32 
 
 for fifteen shillings and six pence, say $3.87^.' It can be 
 obtained at any post-office and at a great many other places. 
 The holder can get cash for it at a few days' notice whenever 
 he likes. If he cashes it within a year of the date on which 
 he bought it, he gets his money back and nothing more. If 
 he cashes it immediately after the anniversary of the date 
 on which he bought it, he gets fifteen shillings and nine pence 
 for it, that is, with an addition of six cents to the purchase 
 price. If he cashes it thirteen months after it was issued, 
 he gets fifteen shillings and ten pence, that is, with two cents 
 more for the extra month, and so on for each extra month 
 of its currency he gets an extra penny, or two cents. After 
 it has been out for two years, it is worth sixteen shillings and 
 nine pence, say $4.18, and after it has been out for five years 
 he gets a pound, or say five dollars, for it. The rate of interest, 
 if the certificate runs for the full five years, is about 534 
 per cent, compound. There is no liability for income tax or 
 super tax, an attraction which was very important for people 
 who are paying five shillings in the pound, that is 25 per cent, 
 for income tax, and a further 10 to 15 per cent, for super tax. 
 So great was this attraction that it became necessary to fix 
 a limit of 500 to the number of certificates which might be 
 held by any one individual. We were kind, however, to 
 the wives and children of millionaires in that we allowed each 
 member of a family, irrespective of his or her income, to 
 hold up to 500 certificates. 
 
 The certificates can only be held by individuals. Corpora- 
 tions or firms as such cannot invest. They are not nego- 
 tiable, so that if a man wants the money he must cash the 
 certificate. This form of government security has proved 
 immensely attractive to the small investor (whom I purposely 
 leave undefined). It offers him absolute security for his 
 capital without market fluctuations. He is not bothered 
 (and the government is not bothered) with the issue of half- 
 yearly interest warrants or the preparation of half-yearly 
 coupons for infinitesimal amounts, which cost the government 
 
33 
 
 a great deal to issue and are of no use to the man whose sole 
 capital consists of a few war savings certificates. The holder 
 feels that his money is growing and accumulating for his 
 benefit when he wants it, and that he will get his capital 
 back after the war or when a rainy day comes, with a sub- 
 stantial addition for interest. The working man in England 
 dislikes a bearer bond because he does not know where to 
 keep it, and has no safe in which to deposit it. His war 
 savings certificate, while it represents to him his capital, cannot 
 be stolen from him by a friend or burglar or wife. The attrac- 
 tions of the war savings certificates have been widely brought 
 to the notice of the public by various means. In addition 
 to the "crime" posters which I have already mentioned, we 
 covered London and some of the provincial cities with posters 
 explaining what war savings certificates were, and how they 
 could be got. We had one poster, which you copied in 
 America, which was very effective: 
 
 "124 Cartridges for 15/6 
 and your money back with compound interest." 
 This brought home to the girl in the munition factory how she 
 could help her boy at the front. By buying a war savings 
 certificate she could at one and the same time provide her boy 
 with cartridges, provide the government with money with 
 which to pay her for making cartridges, and put by a nest 
 egg for herself against the day when he and she settled down 
 as bride and bridegroom. This was a clear demonstration 
 of the gospel of goods and services. 
 
 But we did not rely solely on the war savings certificate 
 and its merits/ We set to work to organize the country, 
 and have established local war savings committees covering 
 the whole area of Great Britain. There is a separate organiza- 
 tion in Scotland which started later in the day, but has fol- 
 lowed the English methods with great success. At the present 
 time there are about 1,500 local War Savings Committees 
 in England and Wales, that is, one committee for every 
 24,000 of the population. I do not know the exact number 
 
34 
 
 of committees in Scotland, but there, too, the whole area is 
 covered. 
 
 These committees are autonomous bodies, paying their own 
 expenses, in direct correspondence with the National Committee 
 at headquarters and relying on its advice, but not subservient 
 to it. The members of the local committees are representative 
 of all phases of the local life. The unpaid local magistrates 
 and officials who are such a feature of English life have played a 
 great part. The committees are usually under the chairman- 
 ship of the mayor or the chairman of the county council or of 
 the urban district council, as the case may be. The borough 
 treasurer is frequently the treasurer of the committee. The 
 secretary is a volunteer chosen from among the active local 
 workers of the area covered by the committee. The member- 
 ship includes representatives of the trade unions, friendly 
 societies, political clubs, womens' organizations, churches, 
 schools, local residents, etc. 
 
 The functions of the committees are two-fold. Their first 
 duty is by propaganda of all sorts, public meetings, meetings 
 held in works in the employer's own time, drawing-room meet- 
 ings, meetings in schools, churches, etc., by the distribution of 
 literature obtained usually from headquarters, and by personal 
 effort on the part of volunteer helpers, to bring home the gospel 
 of goods and services, and establish a strong local public opinion 
 in favor of economy. But we have not allowed the committees 
 to be mere talking institutions, or debating societies. They 
 have more to do than mere preaching. They have definite 
 functions, namely, to set up war savings associations and to 
 supervise them when they are set up, seeing that their accounts 
 are audited, and that they keep alive. 
 
 The war savings association is the final end of the chain which 
 reaches from the government through the National War Sav- 
 ings Committee to the investing public. These are voluntary 
 associations of people who club together to invest war savings 
 certificates. If thirty-one people get together and contribute 
 six pence a week, that means that the treasurer has in hand each 
 
35 
 
 week the sum of fifteen shillings and six pence which he can im- 
 mediately take to the postoffice and invest in a war savings 
 certificate. The treasurer of a war savings association has the 
 privilege, denied to any one else, of holding war savings certif- 
 icates in blank for subsequent transfer to the name of an in- 
 dividual. As each member of an association increases his total 
 individual subscription to fifteen shillings and six pence, one of 
 the certificates in the hands of the treasurer is allotted to the 
 individual member. There is a certain amount of advantage 
 to him in that he gets the certificate possibly thirty-one weeks 
 older than it would have been had he set aside six pence a week, 
 and taken the fifteen shillings and six pence, when finally ac- 
 cumulated, to the Postoffice. The government, of course, has 
 the advantage of having the use of each of the separate sixpences 
 from the moment when they are contributed. But the great 
 advantage of the war savings associations is that people in co- 
 operating and competing react favorably on each others' saving 
 propensities. A good many associations adopt a system of 
 weekly or monthly drawings among those members who have 
 completed a 15/6 contribution as to which shall get the earliest 
 dated certificate. This introduces a little excitement, and the 
 pleasant sensation of a little flutter. 
 
 Associations are formed in any group of people. The num- 
 ber of members may be as few as fifteen to twenty, or even less, 
 or may be as large as 10,000. They have been formed in 
 schools, churches, clubs, munition factories, factories of all 
 sorts, business offices, trade unions, friendly societies, etc.. etc. 
 In one case of which I am thinking, a group of domestic servants 
 formed the Blank Street War Savings Association. 
 
 Associations have to be affiliated to the National War Sav- 
 ings Committee in order to obtain the privilege of having a free 
 supply of account books, members' cards, etc., and the privilege 
 of holding certificates in blank. This affiliation is done through 
 the local committees, which undertakes a general responsibility 
 for the suitability of the officers of the association. The gov- 
 ernment is in no way responsible for the cash collected by an 
 
36 
 
 association until it has been invested in war savings certificates, 
 but the decentralization of the work, and the provision for 
 monthly returns and audit through the local committee, and the 
 interest which one member takes in another member's doings in 
 a small community, have been sufficient to prevent any trouble 
 with defaulting secretaries or treasurers. 
 
 A great many of the associations are inside works and firms' 
 offices, where the pay clerk does most of the active work of col- 
 lecting the subscription, and the employer frequently encour- 
 ages the efforts of his employees by promising them the first 
 sixpence or the first shilling, or the last sixpence or the last shill- 
 ing towards a war saving certificate. We have been careful, 
 however, throughout, to secure that the war savings association 
 shall be run by the employees or the workmen themselves, and 
 not by the employer, as we have found that too much interest 
 by the employer tends to make the workman suspicious. He 
 sometimes thinks that if he is known to have saved a good deal 
 the employer will think that he is overpaid. The safeguard 
 against this suspicion is the fact that once the war savings 
 certificate is in the name of the workman no one knows whether 
 he has cashed it or not. As a matter of fact, the total number of 
 war savings certificates issued during the sixteen months from 
 the date they started to the end of June, 1917, was over 
 110,000,000, and of these only 1,500,000 have been cashed, and 
 more than 500,000 of those which were cashed were cashed by 
 people during January and February, 1917, for the purpose of 
 taking up the 5 per cent, war loan. As may be imagined, the 
 War Savings Organization throughout the country did invalu- 
 able work in the War Loan Campaign, but I have no time to-day 
 to speak of that. 
 
 The number of war savings associations in existence at the 
 end of June, 1917, in England and Wales, was 35,000, that is, 
 one for every 1,000 of the population; and there are 5,000 or 
 6,000 more in Scotland. I do not know the exact membership 
 total, but it certainly exceeds 5,000,000. 
 
 In addition to providing war savings certificates for those 
 
37 
 
 who subscribe by instalments, many of the war savings associa- 
 tions and nearly all of the local war savings committees act as 
 postmasters for the purpose of selling whole certificates. Ex- 
 perience has taught us that there cannot be too many places at 
 which certificates are sold. People will take a certificate if it is 
 offered them on the spot, but 15/6 is apt to dwindle away if it 
 accompanies a man for a walk of even a quarter of a mile to a 
 postoffice. 
 
 From the elaborate machinery which I have described, it 
 might be inferred that the greater part of the subscriptions for 
 war savings certificates come from the associations. As a mat- 
 ter of fact, at the present time, a large proportion of the certif- 
 icates bought is bought through an association, but there are 
 still a great many people who are shy of co-operating in so mean 
 a vice as saving, and prefer to do it without the knowledge of 
 their fellows by going to the postoffice or other agent for the 
 sale of the certificate direct. The value of the work done by 
 the war savings committees and associations is therefore even 
 more important in regard to the encouragement of the general 
 habit of saving and lending money to the government than it is 
 in regard to the provision of facilities of investment by instal- 
 ment. 
 
 I should like also to emphasize a further point. The National 
 War Savings Committee in their organization have refused to 
 regard themselves as being wholly, or even mainly, a bond- 
 selling institution. They have regarded as their first function 
 the task of encouraging saving. They have, of course, en- 
 couraged people to lend their savings to the nation, but pro- 
 vided the savings are effected they do not much care how the 
 savings are kept safe, provided that they are not simply 
 hoarded. It is a remarkable fact that in spite of the special 
 attractions of the war savings certificate, and of the large sums 
 — nearly $500,000,000 — invested in them, the savings campaign 
 has given an impetus to every one of the older institutions for 
 encouraging savings. The Post Office Savings Bank, the other 
 savings banks, the building societies and other co-operative 
 
38 
 
 societies, all show record increases in their deposits, and those 
 responsible for them have, in consequence, nearly all, been 
 hearty and valuable workers for the war savings movement 
 though at first their fear of competition threatened to cause 
 much difficulty. 
 
 This last point is one which should appeal specially to an 
 audience of bankers. The war savings movement has in the 
 first place increased savings banks deposits during the war. 
 Still more important, it is educating a vast new army of future 
 clients for savings institutions after the war. Finally, it can- 
 not fail to be of enormous significance in the future state of 
 England that one in every four of the population, at the very 
 least, is a direct holder of government securities. 
 
♦ 
 
 THINKING IN TERMS OF MONEY THE CAUSE OF 
 MANY FINANCIAL FALLACIES 
 
 An Address Delivered Before the American Academy of 
 Political and Social Science, at Philadelphia on 
 Saturday, Nov. 3rd, 1917, by Mr. Basil P. Blackett, 
 C. B., of the British Treasury. 
 
 I took a solitary walk last Sunday in Rock Creek Park, and 
 as I walked I began to ponder on what I had to say at this 
 Conference. The sun was warm, and after a while I sat down 
 by the bubbling stream on a rustic bench, when suddenly I 
 saw approaching me one of the famous bankers who have taken 
 service at the Treasury during the war. The fact that he was 
 on foot has made me wonder since whether it was a dream. 
 Fortunately I refrained from hailing him, for just then there 
 appeared from the opposite direction a figure which I knew 
 somehow to be King Solomon. He was not gorgeously arrayed, 
 and was evidently war-saving, but there was no mistaking the 
 regal presence and the intellectual brow. My friend the banker 
 — for some queer reason my memory fails now to identify him 
 with any particular one of the several eminent bankers at the 
 Treasury, so that in a way he seems to be an embodiment of 
 them all — the banker recognized King Solomon at once, and 
 called joyfully to him: 
 
 "My dear King: This is indeed a pleasure— you're just the 
 man I wanted to see. The perplexities of War Finance and the 
 problems which confront the U. S. Treasury are gigantic. 
 We're asked to find $20,000,000,000 or more in a year, and we 
 must borrow some $12,000,000,000 to $15,000,000,000 in the 
 next eight or nine months. I simply don't know how the money 
 
40 
 
 is to be raised. You were dead right, King, when you said that 
 money is the root of all evil." 
 
 "Good friend," replied King Solomon, "you know more of 
 banking than of Scripture, or you would know I never said that. 
 I may indeed have said that Matrimony is the root of all evil. 
 It was in my own case, and I fancy that my mother's first 
 husband, the Hittite, must have felt the same. But let me 
 suggest to you a new version of the proverb you misquote. It 
 is this : 'Thinking in terms of money is the root of most of your 
 evils.' I think you agree." 
 
 "Solomon is always right," replied the banker with a bow. 
 "Undoubtedly our problem is not merely, or even mainly to 
 raise the money. What we want for carrying on our part in 
 this great war for democracy against Tyranny " 
 
 "Pray do not consider my feelings," Solomon interrupted, 
 "I'm a strong supporter of democratic principles now. They 
 might not have worked in Jerusalem when I was there, but one 
 of my reasons for meeting you to-day was that I hope that this 
 war may be the means of bringing the blessings of liberty and 
 justice to my poor old Jerusalem." 
 
 "No offense meant," said the banker. "What I was saying 
 was that when we say we are asked to spend $20,000,000,000 in 
 the first year of the war, we really mean that we have to secure 
 for the use of the U. S. Government for war purposes labor and 
 materials and food and commodities and services such as those 
 rendered by soldiers and sailors and by noncombatants too, in 
 all sorts of ways — we have to secure goods and services (to use a 
 convenient short phrase) which, valued in terms of dollars, 
 represent $20,000,000,000. The real problem is not so much to 
 find the money as to find a surplus of goods and services to that 
 amount available for the purposes of the Government, over and 
 above the goods and services which the 100,000,000 people of 
 the U. S. A. are employing for their own private purposes. 
 That's what you mean by your phrase about thinking in terms 
 of money, isn't it?" 
 
 "You take my meaning exactly. And what I suggest to you 
 
41 
 
 i 
 
 as the only possible solution of your financial problems is that 
 you should make the people of the country understand the state 
 of the case. None of them understand what twenty billions 
 of dollars means. You yourself probably don't go much be- 
 yond visualizing it as the figure twenty, with the dollar sign 
 before and followed by a comma and nine ciphers neatly divided 
 by commas into sets of three. Meanwhile there's one of your 
 friends in Wall Street who owns common stock in half a dozen 
 sound American concerns, valued six months ago at market 
 prices at say $1,000,000, and now valued at $700,000, who 
 thinks he is ruined, and says the Government has ruined him, 
 and never stops to reflect that the stock in question represents a 
 share in certain real things such as buildings, machinery, raw 
 materials, which are - probably not less valuable, and possibly 
 more valuable (in terms of money at any rate) than they were 
 six months ago. And what's worse, some of your banker friends 
 who ought to know better seem to think in the same slipshod 
 way. Others cry that the great thing to do is to keep money 
 circulating because it is good for trade. "Business as Usual." 
 Other people cry out for conscription of wealth as a solution of 
 all troubles, as if a house in Fifth Avenue or a bank in Chicago 
 could be put on wheels and sent to France for use as a Tank; 
 or the Pennsylvania Railway Company's tracks could be torn 
 up bodily and transported to Russia without any one but the 
 supposed millionaries who own them being any the worse." 
 
 "If you believe in Democracy you are at any rate not a 
 Socialist, I am glad to see," said the Banker. 
 
 "Don't you be too sure, my friend," rejoined the King. "It 
 depends on definition. But to continue. The thing to do is to 
 get the people of this country to understand that money is 
 merely a symbol, recognized by civilized people for their own 
 convenience, as giving the owner of it for the time being a call 
 on other people, the power of getting other people to work for 
 him, the power to command goods and services which other 
 people are able and willing to supply in order that by receiving 
 a reward in money they may themselves have command of 
 
42 
 
 what they need for their daily sustenance, and to keep a roof 
 over their heads; or over what they desire to obtain for the sake 
 of comfort and luxury. It is quite easy — as some of your 
 friends the Socialists will gladly explain — to construct a theo- 
 retical state of society in which money would be abolished." 
 
 "No doubt it is", broke in the banker, "but would it work?" 
 
 "I did not express any opinion," was the reply. "But 
 does not the fact that it is theoretically possible to dispense 
 with money prove that money is merely a mechanical device 
 and nothing more, a device to keep a machine of a particular 
 construction in easy working order?" 
 
 At this point King Solomon took a watch from his pocket, 
 and remarked that he could still spare a little time longer 
 before starting off to advise the King of the Arabians on 
 military matters. He suggested that they could continue 
 their talk more comfortably seated, and I was a little alarmed 
 when they made for my bench, which was not meant for more 
 than two. Needlessly, as it proved; for in spite of King 
 Solomon's ample proportions the small seat accommodated 
 them both without my being so much as observed. 
 
 "King," resumed the banker, "that's a fine watch of yours, 
 but I notice you wear only a common cord as a chain." 
 
 "The watch is an heirloom," Solomon answered. "It 
 belonged to the Queen of Sheba's grandfather, and I could not 
 get a tithe of its value if I sold it. But my heavy gold chain 
 went more than a year ago to swell the gold at the Bank of 
 France, and I gave the proceeds to relieve the Armenian 
 sufferers." 
 
 The banker looked as if he would like to pay a tribute to 
 this generosity, but stopped short; no doubt from a sense 
 of reverence. Instead, he resumed the discussion with the 
 words; "You do not, of course, suggest that we could or should 
 supersede money in arranging the finance of the war?" 
 
 "Certainly not," was the reply. "But keep money and 
 finance in their proper place, as useful bits of machinery, 
 and meanwhile go out to the people and explain the facts." 
 
43 
 
 "That is a big undertaking," said Mr. Banker. "Do you 
 think it is really worth while?' ' 
 
 "Surely, surely," said Solomon. "If you want to accom- 
 plish what you have set out to do, that is the only possible 
 method in this country. In Germany there has been no 
 need to explain. The people have been dragooned into sav- 
 ing, if only by the British blockade which has forced the 
 whole population to organize itself on a war basis. There, 
 every one has to serve in such a way as the Junkers think 
 most likely to help them in conducting the war, producing all 
 he or she can, and consuming only what is absolutely essential 
 to keep body and soul together, and sometimes less. In 
 France and Italy, and to some extent in Great Britain, similar 
 necessity has been at work, and this has been reinforced on 
 one side by continual lessons and appeals for patriotic self- 
 denial, and on the other by drastic legislation prohibiting the 
 import and manufacture of anything that could be done 
 without. Nearly everyone in these countries has realized 
 this truth. Do you not remember the Song of the Pennies, 
 which the children sing in England? — 
 
 With five pounds the cost of a rifle 
 Why, what can a poor penny do? 
 
 And then the chorus, in which Sergeant Shilling joins: — 
 
 We are each small enough, it is true; 
 There's little a penny can do; 
 But a cartridge to fire from a rifle 
 Is just what a penny can do! 
 
 All over the world the children learn this truth at once. Last 
 Christmas Mr. Lloyd George received a letter from Arizona 
 which said: "Please sir, Peggy is eight and Baby is five, 
 and I am ten, and we should like these five dollars to be used 
 to give some of the poor suffering people in England a happy 
 Christmas." There was a further note from their mother: 
 "This is entirely their own idea. Their Uncle gave them a 
 dollar each to buy themselves Christmas presents, and they 
 have saved the other two." And next to the Children the 
 
44 
 
 working girls have been the quickest to learn. The mill worker 
 of Milan., the midinette of Paris, the munition worker in 
 London have been among the first to see how they can help. 
 Each of them has worked harder and earned money, not to 
 spend on herself, but to lend to her country, so that the 
 Government may have the wherewithal to buy cartridges and 
 hand-grenades to protect the lives of their boys at the Front. 
 Many of them have understood well enough that the money 
 they lent to the nation came back to them as wages to pay 
 for the cartridges they were making, and that by not spending 
 it on themselves they were setting labor and materials free to 
 be used to help on the war. Do you remember the poster 
 advertising the British War Savings Certificates? ''124 
 cartridges for 15s.6d, and your money back with compound 
 interest?" 
 
 "Yes", said the banker: "I've seen specimens of that poster, 
 and it certainly concentrates the appeal for savings into a 
 very compact and alluring sentence. We're thinking of issu- 
 ing something on the lines of those British War Savings 
 Certificates here." 
 
 "An admirable plan" was Solomon's comment. "I con- 
 gratulate you. These hectic Liberty Loan campaigns, whirl- 
 wind weeks during which every art is employed to make every- 
 one eat and drink and work and play and dream to the tune 
 of 'Buy a Bond' are wonderful events, and by the way I 
 must congratulate the treasury through you on its remarkable 
 achievements this last month. But these campaigns have 
 their disadvantages." 
 
 "That's so", said my friend the banker, with conviction. 
 "They use one up terribly, and they upset the market a 
 good deal." 
 
 "I was not thinking so much of that", answered King 
 Solomon. "You mention some of the objections, but the main 
 disadvantages, to my mind, are that they encourage people 
 to think in terms of money, and as soon as the campaign is 
 over people settle down to their old habits of extravagance. 
 
45 
 
 What I like about the War Savings Certificate is that the cam- 
 paign goes on continuously, and involves something deeper 
 than a passing emotion. People get the habit of daily saving 
 and the incentive to go on saving, because there is always a 
 form of War Loan which they can buy, and there is no temp- 
 tation to borrow money to subscribe, and then forgetfulness 
 to save to pay off what was borrowed. But my t time is 
 nearly up. Let me tell you a story before I go. You remember 
 the Victory Loan campaign in Great Britain last January and 
 February, when $5,000,000,000 of new money was raised 
 (after 2Y-- years of war) quite apart from the fact that some 
 $1,500,000,000 to $2,000,000,000 of three to five-year Bonds 
 were converted into long-term loans. (I must begin by apolo- 
 gizing for the misuse of language in this story. It arises 
 from a habit I have of accurately reproducing conversations. I 
 One evening Robinson, a War Loan worker, was sitting in 
 his Club after a hard day's work, when an acquaintance of 
 his, Smith, came up and introduced a third man. Jones. 
 Robinson knew Smith to be on the Stock Exchange, and 
 gathered that Jones was also a member. He knew nothing 
 of their monetary position. The talk soon turned to the 
 War Loan, and Smith remarked that he had not made up 
 his mind yet what he would do. He had, he said, taken 
 £10,000 of the ±y 2 % War Loan in July 1915, and been badly 
 stung, — a slang term which implies that his investment had 
 not been wholly satisfactory. So I judge from Robinson's 
 rejoinder, that a man who had invested in that loan had 
 no need to complain, as he could now convert it into the new 
 loan on very satisfactory terms. 'Yes, I know', said Smith, 
 'but I got so sick with the way the bally thing fell, and the 
 idiotic Government did nothing to help, that I sold it and 
 bought some American rails, and now the robbers are com- 
 mandeering these; and I've two sons at the front too. There's 
 no gratitude in these confounded politicians.' By this time 
 Robinson was fairly roused, and he proceeded in half an 
 hour's patient exposition and exhortation to give a masterly 
 
46 
 
 display in securing a difficult subscriber. In the end Smith 
 seemed deeply impressed. "I never saw it in that light", 
 he concluded, "and I'm hanged if I won't take £50,000. I'll 
 have to borrow the lot at my bankers', and I've an overdraft 
 already, but from what you say I think I can square them." 
 
 "All this time Jones had said little, though he had seemed 
 to be listening attentively. Flushed with his success with 
 Smith, Robinson now turned to Jones. But he could get 
 nothing more out of him than that he had considered all the 
 means available to him. and had reluctantly decided that 
 he could not subscribe. 
 
 "Six months later in the same club Smith and Robinson 
 met again. 'You made a fine fool of me that night', said 
 Smith. 'Just let me tell you what a mess you got me into. 
 I've had the mos*t ghastly day of my life to-day. I was offered 
 a half share in a partnership to develop a new ruby mine 
 •'somewhere in Asia." It's the chance of a lifetime. Only 
 £100,000 wanted. We can't float a company till after the 
 war, because this sickening Government won't let anyone 
 issue new capital unless it chooses in its wisdom to say the 
 issue will help to win the war. Well, I said I was on, and 
 I went over to my bankers to arrange things, when the manager 
 said he was sorry but he couldn't increase my overdraft, 
 and had the cheek to suggest that I ought by now to have 
 paid off some of what they lent me to take up your blessed 
 loan. He wouldn't lend me money on any of my other 
 securities without being told what I wanted it for, and when 
 I told him he said that the bank could not advance money 
 which was to go abroad, or for a purpose which was so obviously 
 not necessary for winning the war. And then, not content 
 with these insults, he proceeded to suggest that people with 
 much smaller means than mine had succeeded in paying off 
 very big sums borrowed for subscribing to the Loan, and would 
 I please consider the matter seriously. I was so angry that 
 I told him to sell the bally War Loan for what it would fetch, 
 and be done with it. He didn't like it, he said, but if I was 
 
47 
 
 really determined to forget that we were at war it was probably 
 the best thing I could do. By this time I was so infuriated 
 that I said I would close my account, and find a bank where 
 the managers were gentlemen, or at least taught to behave 
 like gentlemen. I went straight across to my friend Brown, — 
 you know the bank. Well, I'm hanged if Brown didn't tell 
 me that he thought my bank had been remarkably patient — 
 that in any case he could not help me, as the London banks 
 had agreed not to take customers from one another if the 
 reason for the change of bankers was that a customer had 
 failed to get accommodation for a purpose which was ob- 
 viously not useful to the war. So here I am absolutely dished. 
 I've had to say I can't go half shares in this show, with the 
 result that the whole thing's off. I've quarrelled badly with 
 my bankers; altogether I'm in a fix. Coal's a staggering 
 price, and I've just added two new palm houses to the glass 
 I have to keep going. I've two sons in the Army, and I 
 might at least claim that amount of luxury. Incidentally 
 I've only managed to .keep my head gardener, who thinks he 
 ought to enlist, by threatening to turn his wife out of his 
 cottage if he does. He's 45 and has two sons at the front 
 and ought to be ashamed of himself; and with the wages 
 I'm paying him he's a regular millionare. Why, he told me 
 he'd got over 60 War Savings Certificates now. Well! you 
 deserved this tirade, you know, as you're the scoundrel at 
 the bottom of it all. I must be off now, as my son's coming 
 up from Aldershot, and we're going to paint the town red to 
 drown our troubles, So long.' 
 
 ' 'Scarcely had Smith gone, when Robinson saw Jones ap- 
 proaching. He tried not to be seen, as he thought that he 
 couldn't bear to talk with another of his failures that day. But 
 Jones made his way quickly to him. 'Hullo, Robinson,' he 
 began. 'I suppose you're not particularly anxious to renew my 
 acquaintance after the way I met your War Loan appeal. The 
 fact is you made me feel thoroughly mean that night, but I 
 couldn't help myself. I've something better to tell you to-day, 
 
48 
 
 and that's why I've ventured to speak to you. I'd have liked 
 to do it before, but I didn't have the courage. The fact is I 
 used to have a pretty good business in the American Depart- 
 ment of the Stock Exchange, but that's gone altogether, be- 
 cause of what the Government — quite rightly, of course — had 
 to do about American securities. Then just when I was hoping 
 to get our house let so that we could move into a cheaper one, 
 our two boys got killed on July 1st, 1916, the first day of the 
 Battle of the Somme. The shock was too much for Mrs. 
 Jones, and she had a complete nervous breakdown, and we had 
 to have two nurses in the house and no end of expense for 
 special treatment and specialists — though I must say my doctor 
 has been a brick about his own account. The result was that 
 last February I had got rid of practically all my capital except 
 the A\% War Loan I'd bought, and I had an overdraft of nearly 
 £600 at the bank. I was earning something at the Ministry 
 of Munitions where I had got a really useful job. But I had 
 refused to take anything much by way of salary when I had 
 enough without, and I didn't think it fair to make the country 
 pay because of my new troubles. Thank goodness things are 
 quite easy now. My wife's recovered. We've shut up all 
 but two rooms in our house, and my wife's as happy as can be in 
 saving for the sake of the other mothers' sons. She's a great 
 woman, though I say it that shouldn't. And you've no idea 
 how jolly it is. The wife got places for two of the maids at the 
 munitions factory near us, and sometimes they drop in to tea 
 with us on Saturdays, and tell us about their work and talk of 
 what they'll do when the war's over. Did I tell you that the 
 wife's promised to have them back? And the kitchen maid's 
 working as conductor with the omnibus company, and she and I 
 have a chat sometimes when I happen to come down to work on 
 her 'bus. Well, the result of it all is that I've paid off the bank 
 overdraft and they've lent me enough to buy £500 of your War 
 Loan in the market, and that's partly paid off, and all of us, 
 Mrs. Jones and our old servants and I, are members of a War 
 Savings Association in our neighborhood and we're piling up 
 
49 
 
 War Savings Certificates. So I feel that I can look you in the 
 face again. . . . Eh, well, so long! It's good of you to 
 say such nice things of our small efforts, but we're really trying 
 to help, you know.' 
 
 "Robinson's effort to restrain Jones from flying from his 
 praises proving vain, he sat for awhile and pondered on the two 
 cases. 
 
 "But I need not tell you his conclusions.* I'm afraid my 
 story's rather long already," said Solomon. "And now I fear 
 I must hurry off, or I shall be late in Arabia. The connections 
 are not good, I find, in these days though I'm glad to say that 
 Beersheba Junction is open again. Good-bye, my friend." 
 
 And with that he vanished, and the banker somehow dis- 
 appeared too. But I noticed that a fly-leaf had dropped from 
 King Solomon's pocketbook, and when I picked it up I found it 
 covered with all sorts of odd sentences in a minute handwriting, 
 of which I quote a few: 
 
 "He that gathereth not scattereth abroad." 
 
 "Every dollar saved helps twice, first when it is saved 
 and again when it is lent to the nation." 
 
 "Millions in the belligerent lands have for the first time 
 an opportunity of laying by a little capital. It is the 
 chance of generations. Will they not take it? They help 
 their country and themselves by saving." 
 
 "If man would but learn the duty of right spending, he 
 would learn the greatest pleasure in the world." 
 
 There were other sentences also which I did not decipher. 
 
 But I particularly noticed t^at on each side of the fly-leaf there 
 
 was printed in red letters a c ? itence which evidently appeared 
 
 in a similar place on each lc f of the notebook from which it 
 
 came, and the sentence was this: 
 
 "Where there is no Vision the People perisheth." 
 
 *Note: As neither King Solomon nor the banker explained the con- 
 clusions to be drawn from the two cases, I do so, though with diffidence. I 
 suppose they would be something like the following: Smith had at best 
 merely put his own and his bankers' credit at the disposal of the Govern- 
 ment on false pretenses for a few months during winch someone else (such 
 as Jones) had been able to build up new savings with which to replace the 
 
50 
 
 gap left when Smith sold his Loan. More probably he had compelled the 
 Government to find £50,000 in June to wipe out (by means of the special 
 War Loan Depreciation Fund) the fictitious credit based as it proved on no 
 real goods and services, which Smith had allowed the Government to build 
 upon in a moment of shallow emotion. 
 
 On the other hand, Jones in six months had 
 
 (1) saved £600 to repay his bank, thereby 
 
 (2) setting goods and services to that amount free for the Government 
 
 (3) undertaken to save a further £500 and already saved part of it 
 
 (4) lent the £500 to the Government for war purposes on the security of 
 his intention to save, backed by the bank's credit, thereby 
 
 (5) giving the Government command over goods and services to the full 
 extent to which the self-denial of the Jones faring was setting goods 
 and services free, and 
 
 (6) had evidently been exercising an untold influence for good in aiding 
 others to find fit places in a nation organized for War. 
 
ADDRESS DELIVERED BY Mr. B. P. BLACKETT C. B. 
 BEFORE THE CONVENTION OF INVESTMENT 
 BANKERS OF AMERICA AT BALTIMORE 
 ON MONDAY NOVEMBER 12th. 1917. 
 
 Mr. Basil P. Blackett: Mr. President and gentlemen: 
 I thank you all very much for the very cordial reception which 
 you have just given to me, and through me to the War Sav- 
 ings Committee of Great Britain. I feel it a great honor to 
 be invited before an audience of this kind to explain something 
 of the way in which Great Britain has faced its financial prob- 
 lems and in particular the problem of what has come to be 
 known as war savings. 
 
 It has been very interesting to me to be in this country as 
 I have been now for over four months, and to watch the gradual 
 opening and settling of very many of the questions which 
 had previously faced Great Britain in this war. In a great 
 many things it has been possible for America to learn by Great 
 Britain's mistakes, and our experience has throughout been 
 at your sendee. When one looks at the way things have 
 moved in this country one is struck sometimes by the extra- 
 ordinary resemblances. I feel this particularly when I find 
 myself called to the Treasury Department in Washington and 
 consulted on small problems of detail that have arisen with 
 regard to the form of the War Savings Certificate, the question 
 of how to deal with the post offices in the matter, and such ques- 
 tions. It is extraordinary how history repeats itself. The same 
 difficulties arise and the same possible solutions are considered 
 and rejected until finally some solution is reached. And yet, 
 in very many ways, the differences have struck me even more 
 forcibly than the resemblances. It was in February 1916, 
 
52 
 
 that the National War Savings Committee first came into 
 being in Great Britain, and things were very different in 
 February, 1916, from what they are in November, 1917. 
 Even at that time it was commonplace to hear people talk 
 about a war of endurance and a nation at war or even a nation 
 organized for war, but very few people if any had more than a 
 very groping notion of what organizing a nation for war 
 meant. We were all groping after some sort of a solution, but 
 the period between February, 1916, and now has been one 
 during which the answer to the question, What does or- 
 ganizing a nation for war involve? has become very much 
 clearer and very much easier. In February, 1916, there were 
 many people who said that for England the war had not 
 begun, and there was a good deal of truth in the statement. 
 We did not know we were at war really, I think, until the battle 
 of the Somme in July, 1916. But we had been through a 
 good deal before that. 
 
 Our first problems were the same as they have been here 
 and elsewhere, to find the men and to find the money. We 
 set about a vigorous recruiting campaign. America, when 
 she came to deal with her problem of finding the men, found 
 a much better way. Then there was the question of finding 
 the money. We had our first war loan in November, 1914, 
 but that was a comparatively small affair, only $1,750,000,000. 
 At that time the Stock Exchange was not open, and the whole 
 machinery of finance, in London and in most parts of the 
 world, was practically at a standstill. The great cry in which 
 Britain thought she had found salvation was * 'Business as 
 Usual", and "Business as Usual" was the cry which held the 
 field for some little time. As a matter of fact, though they 
 did not know it, the advocates of "Business as Usual" were 
 put completely out of business at the moment when the 
 London Stock Exchange was reopened in January 1915, 
 after ^being closed for five months, under somewhat dras- 
 tic restrictions. One of them was that no security that 
 had not been physically in possession in the United 
 
53 
 
 Kingdom since the war began could be sold on the Lon- 
 don Stock Exchange, or on any stock exchange in the 
 Kingdom. Everybody thought that was a splendid way of 
 preventing German-owned securities from being sold. Another 
 restriction was that no one was to be allowed to make any 
 new issue of capital without the leave of the Treasury. Some 
 business men looked rather askance at this regulation, but 
 they left the matter with some confidence to the committee 
 which was formed to deal with capital issues, because they saw 
 it contained the Governor of the Bank of England and two 
 or three eminent representatives of the City of London. Then 
 suddenly it dawned on them as time went on that these re- 
 strictions w r ere having a very different effect; not only could 
 the London Stock Exchange not buy securities from the 
 Germans, but it could not pick up' securities cheap in any of 
 the neutral or foreign markets, and there were murmurings 
 against the Treasury. There was still more murmuring as 
 fine schemes for new capital issues of all sorts and kinds 
 ranging from the very ambitious munitions plant to the 
 cinematograph theater in the munitions area were one and 
 all turned down by the Treasury, unless they could be proved 
 to be essential for the purposes of the war. Then we moved 
 on from that, and w T e had the big war lean campaign in July. 
 1915, when three billion dollars was raised. 
 
 Meanwhile another problem had arisen. The question of 
 munitions production presented itself. Steps had to be taken 
 to organize the production of munitions in Great Britain on a 
 very big scale. We were working still on what I may call the 
 volunteer recruiting basis, and the difficulties that were met 
 with were manifold. We found one munitions plant that 
 had just been started going ahead successfully but one 
 which had been started a few w T eeks before in this neighbor- 
 hood suddenly closed down because the new plant had taken 
 away all its men at higher w r ages. Wages all over the country 
 were going up faster than the cost of living, and none of these 
 wages seemed to be coming back to the Government in the 
 
54 
 
 form of war loans. The working man was persuaded to some 
 extent to invest in four and a half per cent war loan in July, 
 1915, paying by installments, but by the time his last install- 
 ment was due he found that it would probably be a better thing 
 not to pay up his installment but to buy the war loan in the 
 market, because it had gone down. Naturally he was not 
 satisfied, and altogether we did not seem to have solved the 
 question of getting the working men to invest in war loans. 
 Then a committee was appointed under the chairmanship of 
 Mr. Edwin Montagu, now Secretary of State for India, and that 
 committee produced a most statesmanlike report. It was 
 quite a remarkable report when one remembers that most of 
 its members were still groping, in the dark, for a solution. The 
 gist of that report was that it was of urgent importance to 
 secure savings by the small investor, that the small investor, 
 the man who ought to be the small investor, was engaged in the 
 spending of his, or in many cases her, money on useless articles 
 of luxury, and that the nation could not afford to be conduct- 
 ing a great big war and at the same time to be importing and 
 producing unnecessary articles of luxury with which to gratify 
 the natural instincts of the small investor, who, for the first 
 time, had money to spend, or, if he preferred it, to invest. The 
 Montagu Committee reported that, incidentally, it would be 
 useful if some of the savings were lent to the Government, but 
 the important thing was that the money should be saved in 
 order — and I am now going a little forward in my story — in 
 order that what are now termed "Goods and services" might 
 not be used up for the private self-indulgence of the individual, 
 but might be set free for the use of the nation for war purposes. 
 And then the National War Savings Committee was formed, 
 and it spent two or three months in a good deal of uncertainty 
 as to what its duties were. It started out with the determina- 
 tion that it would try to mould public opinion, to create public 
 opinion in favor of saving and against unnecessary expenditure. 
 We placarded London, especially the East End, with great 
 posters, "Do not ride a motor car for pleasure." The east- 
 
55 
 
 ender saw it and at first resented it and then saw there was an 
 opportunity, and went into the west-end and hooted the man 
 who did ride a motor car for pleasure and quite a useful public 
 opinion began to be created. (Laughter.) I heard of one lady 
 who said that she could not do without her daily motor ride 
 but she was so ashamed to take it in view of public sentiment 
 that she always took a wounded soldier with her. (Laughter.) 
 
 We tried to persuade the ladies that it was unpatriotic to 
 dress too well in war times, and, of course, we were advertising 
 all the time the war savings certificate of which I hope to tell 
 you something shortly. But, from the first, the National War 
 Savings Committee had a vision of the future. It refused to 
 regard itself as a mere bond-selling institution; whose whole 
 duty was to go out and by force or fraud or peaceful persuasion 
 of some sort or other to make people subscribe for war savings 
 certificates. It had been carefully arranged that the War 
 Savings Certificates should not be transferable, and that 
 naturally meant that no bank would lend money to an in- 
 dividual on the security of War Savings Certificates. But, 
 some of our workers who were keen on selling these certificates 
 thought this was in the way, and they wanted us to do away 
 with the restriction so that the banker could lend money on 
 the War Savings Certificate and large sums could be invested 
 in it in that way. But, we refused to regard the lending of the 
 money to the Government as the important thing. The im- 
 portant thing was, as we said at first, that there should be 
 saving. And then we began to think what saving meant. If 
 I had to mention any one individual who helped most in guiding 
 thought into the right channels I should mention some one who, 
 I expect, is pretty well-known to a good many of you, — Mr. 
 Hartley Withers, who is well known in England as a writer on 
 economic subjects and is now the editor of the London Economist. 
 
 And we came to the conclusion that by savings, we meant 
 something more than merely small economies. Increased 
 production, we saw, meant increased savings provided that 
 private consumption was not increased. Avoidance of waste 
 
56 
 
 meant increased savings. Then we began to try and think 
 out the problem in terms other than terms of money. In 
 arguing with bankers and others we began to see that a good 
 many fallacies were due to the habit of thinking in terms of 
 money. People who cried out "Business as Usual," said that 
 the one thing to do was to make money circulate because 
 it was good for trade. This argument had to be met, and the 
 only way to meet it was to show that money was nothing 
 other than a symbol. We explained that spending money 
 means making other people work for you. It means using 
 up goods and services, and if those are being used up by the 
 individual for purposes that are not essential to health and 
 efficiency, as our phrase went, they are being used up to the 
 disadvantage of the nation instead of being saved for the 
 purposes of the war. With labor short and material short 
 and tonnage short it was quite obvious that the nation was 
 suffering if the individual citizen was allowed to go on spending 
 on non-essentials, or even producing non-essentials, and grad- 
 ually we got a vision that what was needed was a nation or- 
 ganized for war. Without claiming anything very startling 
 I think I could claim that most of the measures that have been 
 passed in Great Britain from the winter of 1916 onwards in 
 the direction of organizing the nation for war were advocated 
 first of all by the workers of the National War Savings Com- 
 mittee and that the opinion created by the workers of the 
 National War Savings Committee was largely responsible 
 for bringing it home to the Government that these measures 
 were necessary. Take food saving, for example. In this 
 country food saving started first owing to the needs of the 
 Allies; but in England it was not really until the autumn or 
 winter of last year that it occurred to us that food saving 
 on the ground of shortage of food was going to be necessary. 
 But the War Savings Committee had been advocating food 
 saving as a means of saving tonnage, as a means of saving dock 
 space, and we had been advocating on the other side increased 
 production of food. Then, again, we had been advocating a 
 
57 
 
 decrease in the consumption of any luxuries, whether imported 
 or home made. About the beginning of this year the Govern- 
 ment put a very strict embargo on all imported luxuries, 
 practically prohibiting the importation of all luxuries, and to 
 a large extent, they prohibited also the manufacture of un- 
 necessary things in England, because even if the actual manu- 
 facturer is not prohibited all sorts of difficulties are placed in 
 the way of his obtaining labor and materials for making things 
 that are not necessary. Men can't get steel because the pri- 
 ority arrangements see to it that all the steel goes to the essen- 
 tial war industries. Then, of course, we advocated such 
 movements as those in favor of increased production of food, — 
 allotments, growing of potatoes, increased acreage for wheat 
 and all those things that are so familiar in this country. As 
 I was saying just now, in many ways the differences strike me 
 more than the resemblances, because all these things grew in 
 Great Britain out of the War Savings movement, whereas in 
 this country they have preceded it, but they are all part of 
 one great big whole, the question of organizing the nation 
 for war. Germany, of course, showed the way. She had to, 
 partly because of the British blockade, and also because she 
 was able to dragoon her people so that each one takes the 
 place that he or she is most fitted for in serving the war. 
 
 What I want to emphasize all through is that the War Sav- 
 ings Committee set out, not with the object so much of raising 
 one hundred or two hundred or three hundred million dollars 
 or pounds for the Government, as to persuade people not to use 
 goods and services that were wanted for the war and to increase 
 the goods and services that were available for the war by 
 working harder and not wasting. When you begin to think of it 
 from that point of view the amount of increased production 
 and increased services that the war has brought forth in all the 
 belligerent countries is quite remarkable. I wonder what the 
 money value of all the knitting that has been done since the 
 war began would be (laughter). That is time given up volun- 
 tarily out of working hours in producing something. We have 
 
58 
 
 never thought of it in terms of money, fortunately, but. if you 
 are beginning to size up the differences between the nation's 
 income and the nation's expenditure on other purposes than the 
 war, you must count all that in the scale. All the Red Cross 
 work, all the hundreds and thousands of ways in which women 
 have taken up unpaid work — and men, too — all that increases 
 the amount of services available for the Government; all that is 
 true war saving. I always like, when I am speaking of the 
 doings of the National War Savings Committee in England, to 
 emphasize this point — that we do not regard ourselves as a 
 bond-selling institution, but that we regard ourselves as an 
 organization for securing goods and services for the Govern- 
 ment. 
 
 Of course, there "was a bond-selling side to our work, 
 and I think it will interest you if I now turn to tell you some- 
 thing of our war savings Certificates. I have said this thing 
 so often that I am almost sure people are tired of hearing it. 
 I will tell you something also of the organization of the War 
 Savings Committee. The War Savings Certificate is issued for 
 15 shillings and sixpence, roughly $3.87 J/9, which can be bought 
 at any post office, at any bank, and a good many other places. 
 It can be cashed by the holder of it at any time on a few days' 
 notice. He goes to the post office and obtains a form which 
 he sends to the Postmaster-General — we are a small country 
 geographically, and we can centralize things — asking for his 
 certificate to be cashed for him at such and such a post office, 
 and after a few days he gets cash for it. If he cashes it at any 
 time during the first year he only gets fifteen shillings and six- 
 pence; if he cashes it after 12 months but before 13 months 
 have expired he gets fifteen and ninepence; after another month, 
 fifteen and tenpence, and so on, increasing by a penny a month. 
 After four years and eleven months he can get nineteen and 
 ninepence for it ; if he hangs on another month he gets an extra 
 threepence,, so that he gets a pound for it at the end of five 
 years. It is earning interest for him all the time at a pro- 
 gressively increasing rate so that by the end of the five years it 
 has been earning 5*4 P er cent, compound interest, whereas it 
 
59 
 
 is earning no interest at all in the first year, and less than two 
 per cent, if he cashes it in the first 18 months. This certificate 
 is a registered document that belongs to the individual in 
 whose name it is registered, and if he loses it he can get another 
 with little difficulty, and the man who picks it up can not make 
 anything out of it. That is important for the British working 
 man, who dislikes having a bond of any kind because he has 
 no safe in his house; he does not know when a burglar may 
 come along, or his friend may be short of cash, and sometimes 
 he may be glad his wife can not get away with it. (Laughter.) 
 
 We put a limit of five hundred on the total any one can have, 
 because this security was issued at a 534 per cent, rate of in- 
 terest for five years, which was a higher rate at the time than 
 any British Government security was being issued, and in- 
 cidentally it was also entirely free from taxation so that, as 
 compared with a 5 per cent, bond which, allowing only for in- 
 come tax and not for super tax, yields only 3% per cent., it 
 was a very attractive investment for the rich man. We put 
 on this limit to secure the super tax. A war Savings Certif- 
 icate is not transferable, but the Postmaster-General is al- 
 lowed, if he thinks fit, to permit a transfer in a special case. 
 Of course if a man could go and cash it there is no particular 
 loss to him in not being allowed to transfer it. We objected 
 to its being transferred because that made it very useful for 
 paying for drink at the public house, and things of that sort, 
 and we did not want it passed as currency. 
 
 Let me give an instance. The Postmaster-General received 
 a letter from a young woman asking that her certificate might 
 be transferred into the name of another young woman. He 
 wrote back and said the certificate was not transferable without 
 special reason, and he was afraid he could not do it. Nothing 
 happened for a week or two, and then a letter arrived from a 
 soldier stating that the young lady who asked for the transfer 
 was no longer engaged to him but that the other young lady 
 was, and could they transfer it for him? (Laughter.) The 
 Postmaster- General, of course, said Yes, at once. 
 
60 
 
 Originally we only issued War Savings Certificates in one 
 denomination, which was called a pound and sold for fifteen 
 and six, but we found that people came in and wanted five or 
 ten or fifteen at a time, quite poor people, too, and eventually 
 we issued a single document representing twelve certificates, 
 and another single document representing twenty five certif- 
 icates and if necessary, if a man writes to the Post Office, he 
 can get, instead of 30 or 40 or 50 certificates, a single document 
 representing whatever number he wants up to 500. That was 
 chiefly for the sake of saving labor. The instances of people 
 wanting quite large sums are often striking. They do not come 
 only from the rich people who want to avoid the super tax. 
 I remember one case of a small farmer. I don't think he had 
 more than four or five acres up in the lake district in Westmore- 
 land. He attended a war savings meeting, and was so much 
 struck with the accounts of the investment and the patriotic 
 appeal that he determined to invest. He was starting out from 
 home next morning and his wife asked him where he was going. 
 He said, "I am going to the bank to draw out two hundred 
 pounds to put into War Savings Certificates/' His wife said, 
 "Don't do that." She went over to the mattress and produced 
 two hundred pounds in sovereigns. There were hundreds of 
 instances of that sort— people you would never suspect of taking 
 up large amounts. 
 
 The total number of War Savings Certificates sold since the 
 issue began at the end of February, 1916, is something like one 
 hundred and forty million, that is to say, the cash value at 
 fifteen and six each is between a hundred and a hundred and 
 ten million pounds, roughly, five hundred million dollars or a 
 little more. That sounds very small as* I understand your War 
 Savings Certificates are hoped to produce as much as two billion 
 dollars, but we are very well satisfied with the amount. Week 
 by week the sale goes on and they bring in something like four to 
 five million dollars a week to the Treasury, and they represent 
 real money saved. None of it is banker's money created for the 
 purpose. None of it is borrowed, and most of it would be spent 
 
61 
 
 on goods and services which the Government want but could 
 not have obtained if it had not been for the War Savings 
 Certificate. 
 
 Now, for the organization of the War Savings Committee. 
 The organization as it exists at the present time, consists of 
 the National War Savings Committee at headquarters in 
 London and about fifteen hundred local war savings committees, 
 that is, a local committee for every city with 20,000 inhabitants 
 or more; a local committee for all the other areas in the country 
 divided up as convenience dictates, and a county committee 
 for each of the counties in England and Wales. These local 
 committees are entirely autonomous bodies; they find the 
 money for their own expenditure. They elect themselves. 
 They have power to add to their numbers. They are in con- 
 stant communication with headquarters but they are given 
 quite a free hand if they want it, and the result is that they 
 are generally very ready to take advice. In addition to these 
 local War Savings Committees there are something over 40,000 
 war savings associations. These war savings associations are 
 bodies or clubs which get together for the sake of co-operative 
 saving. The ordinary illustration which appears in the hand- 
 book which the National War Savings Committee issued is a 
 group of 31 people who decide they would like to save for the 
 sake of the country and invest their money in War Savings 
 Certificates. If each saves sixpence a week and puts it by in a 
 stocking it will take thirty-one weeks to buy one certificate. 
 But each week the club treasurer has fifteen and six in hand and 
 he can go to the post office and buy a war savings certificate 
 which he gets in the name of the society with the special privi- 
 lege of being able to transfer it without the postmaster's special 
 leave. Then as each individual in the club contributes enough 
 to have fifteen and sixpence to his individual credit he gets one 
 of the certificates that belongs to the society. If he is the first 
 to save fifteen and six in a group of thirty one he gets a certif- 
 icate that is 31 weeks older than he would have if he bought it 
 by himself. This has an immense attraction to him if you talk 
 
62 
 
 about it, though it merely means that he gets, I think, about 
 five and three-eighths per cent instead of five and a quarter 
 after five years; but he is usually pleased with the idea. An 
 additional attraction which has become a great favorite even 
 in church circles, is that when three or four or a dozen members 
 or more each reach fifteen and six on the same day their names 
 are put into a hat and they have the excitement of drawing as 
 to which shall get the best certificate. There need not be 31 
 people; there may be any number. Twelve or fifteen is prob- 
 ably the minimum. I know of one particular society formed 
 by some domestic servants. They started with eight members, 
 but they quickly rose to over thirty. Some associations have 
 over 10,000 members. I don't know what the total member- 
 ship is, we have been growing so fast. It is something like five 
 million. The local committee's function is to look after 
 the propaganda work, to form War Savings Associations, to 
 supervise their accounts, to see that they are properly audited, 
 and generally to act as a medium of communication between 
 the individual association and the National War Savings 
 Committee at headquarters. The Government takes no 
 responsibility for the solvency of an association. If you get 
 thirty domestic servants in the same street engaged in co- 
 operative saving they are not going to let any one of their 
 number go away with the cash. We have had no trouble 
 at all with defaulting officials. 
 
 Among the most successful of these Associations are those 
 formed in big munition works or factories or big offices of any 
 kind. There the employer very often encourages the associa- 
 tion. He very often offers the last sixpence for the War Savings 
 Certificate of his employes, and he generally puts some one in 
 his accounting department at the disposal of the committee of 
 the association for keeping the accounts and helping them 
 along. The pay clerk very often collects the cash at the time 
 of payment of wages. Most of these associations take on the 
 duty of acting as sellers of whole certificates without regard to 
 the instalment plan, so wherever you have an association you 
 
63 
 
 have an agent for the selling of certificates other than the nor- 
 mal agents such as the Post Office and the banks. The value of 
 these associations has been enormous. One does not know 
 whether it is in the village or in the small town or in the large 
 town or wherever it is that its use has been the greatest. We 
 have got most of the schools actively engaged in war savings. 
 In many cases nine out of ten of the children are members of 
 the war savings associations belonging to the school, and they 
 produce enormous sums because their parents through them 
 invest their savings in war certificates on their own account. 
 The children take home pamphlets to their parents and get the 
 thing discussed, and act as agents in a way most remarkable. 
 The association clustered around the school becomes a new 
 center of interest in the village. They have enormous possi- 
 bilities as a new force in English village life. Already some of 
 them have taken up the problem of co-operative agricultural 
 and horticultural association, and they may develop into 
 credit banks or anything. There is really a possibility in front 
 of them which is enormous, and wherever they are these 
 associations have a very stimulating effect. If two or three 
 people or a dozen people have combined to save they react on 
 each other and stimulate their saving propensities, a very im- 
 portant thing in England, where the idea of anybody saving 
 was abhorrent to his neighbors who thought he was mean. 
 
 The number of certificates sold through the associations 
 is only a portion of the total of something over a million a 
 week that are being sold. In spite of the network of associa- 
 tions and committees covering the whole kingdom, there are 
 still a great many people who prefer to do their savings for 
 themselves without others knowing what is happening. The 
 value of the committees and associations is out of all propor- 
 tion to the number of certificates that are being saved through 
 their agency because not only do they stimulate others to 
 go direct to the post office and buy certificates, but the or- 
 ganization of the National War Savings Committee was 
 responsible, far more responsible than anything else, for the 
 
64 
 
 thousand million sterling war loan of January and February 
 of 1917. The organization was placed at the disposal of the 
 Chancellor of the Exchequer and practically every one in 
 England, Scotland and Wales was reached through this 
 organization. The results astonished the financiers alto- 
 gether. The sort of total the Government had in mind was 
 at the outside three billion dollars, and no one was more 
 flabbergasted than the people at the center when they dis- 
 covered it was over five billion. That was almost entirely 
 due to the organization of the War Savings Committee acting 
 together with the stimulus from the immer.se press campaign 
 and the other means of popularizing the war loan. 
 
 After the war loan campaign, for three months the War 
 Savings Committee placed themselves at the disposal of the 
 Minister of Food for the purpose of conducting a food cam- 
 paign. We were asked to place ourselves at the disposal of 
 the Board of Agriculture for an increased agricultural produce 
 campaign, and the National Service Department wanted us. 
 Eventually we had to say that these children of ours had better 
 have their own organizations. In the last few months a new 
 savings campaign nas been started, and it is a quite remarkable 
 thing, I think, that at the present moment, when prices in 
 England have certainly gone far ahead of the increase in 
 wages— it was not so a year ago — when prices have gone far 
 ahead of the increase in wages, and despite the increased 
 number of members of the family now in employment, families 
 who a year ago were fabulously well off, are beginning to 
 find that with the prices as they are at present the amount 
 left over for investment is not large; and yet in spite of that the 
 amount that is being saved weekly in war savings certificates 
 is as much as it was a year ago. That, I think, is another 
 achievement that can be put down entirely to the existence 
 of the war savings organization, and the habit of saving 
 which has spread through Great Britain. (Great applause.) 
 
ADDRESS GIVEN BEFORE THE CONVENTION OF 
 THE ASSOCIATION OF TEACHERS OF THE 
 STATE OF NEW YORK, AT SYRACUSE, N. Y. 
 ON TUESDAY, NOVEMBER 27th, 1917 BY 
 MR. BASIL P. BLACKETT, C.B. OF 
 THE BRITISH TREASURY. 
 
 The opportunity of meeting and addressing a representative 
 gathering of school-teachers of the State of New York on the 
 subject of War Savings in Great Britain is one of which I 
 feel very proud, and I am most grateful to your President, 
 Dr. Weet, for extending the invitation to me. 
 
 The War Savings campaign in Great Britain has been a 
 conspicuous success, and if any of those who have been much 
 concerned in the conduct of the campaign were to be asked to 
 apportion the credit for this success, they would, without 
 hesitation, one and all agree in giving the first place to the work 
 done by the school-teachers and the school-children of Great 
 Britain. Let me quote, in support of this statement, an article 
 from the monthly journal published by the National War 
 Savings Committee. This quotation comes from the issue 
 of November 1916: — "No tribute to those who have helped 
 the War Savings movement would be complete unless the 
 children received their share. No one ever doubted that boys 
 and girls are amongst the most ardently patriotic inhabitants 
 of the land, but one might perhaps have doubted whether 
 this particular way of demonstrating their patriotism would 
 have appealed to them very strongly. Most of us have to 
 live fairly long before we properly appreciate the value of 
 little efforts towards a great cause, and to save pennies and 
 to do without sweets or treats seems such a tiny contribution 
 
66 
 
 to the winning of the war. But the children have realized 
 its use. Much of the credit for this is due to the teachers. 
 To their many other labors, teachers all over the country 
 have added the task of teaching thrift and showing how every 
 penny handed over to Britain hastens victory.' 1 
 
 Here is another quotation, this time from the number for 
 December 1916. This is a report from the County of War- 
 wickshire: — "There are few schools now without a War 
 Savings Association, and the certificates bought amount in 
 the aggregate to a very considerable number. May a grate- 
 ful nation some day, and not too late, recognize and recom- 
 pense the silent and splendid patriotic self-sacrifice of the 
 elementary school-teachers." 
 
 In telling the story of the War Savings campaign in Great 
 Britain the two most important features which have to be 
 explained are first of all the War Savings Certificate, and then 
 the organization of the country into local War Savings Com- 
 mittees and War Savings Associations. I do not propose 
 to-day to say much about the British War Savings Certificate. 
 The United States Government has now announced the terms 
 of the American War Savings Certificate, which follows in 
 many respects the British model and in some respects un- 
 doubtedly improves upon it. All that I need say about the 
 British War Savings Certificate is that it costs 15/6d, that is, 
 approximately $3.8734, that it can be cashed at any time either 
 for 15/6d or, after the first year, 15s/9d plus Id. (that is 2c) for 
 each additional month until at the end of 5 years it is worth £1 
 (say, $5). No one can hold more than 500 certificates, but within 
 this maximum there is no restriction on the amount that 
 can be bought at any time. The certificates are on sale, 
 and have been on sale now for a year and three quarters, 
 at every Post Office, every bank, and a great many other 
 places, and can be bought at any time during business hours 
 on any day. 
 
 The War Savings organization is designed to carry out two 
 main purposes, first, to explain to everyone the urgent reasons 
 
67 
 
 why saving is so important, and, second, to provide facilities 
 for co-operative saving and investment in War Savings certifi- 
 cates. Of these two purposes, it is the first and not the 
 second which the National War Savings Committee has re- 
 garded as the most important. Our object was to make 
 people save, and we refused to be judged solely by the number 
 of certificates sold, though this has been very satisfactory. 
 The way the country was organized was as follows. At the 
 centre was the National War Savings Committee appointed 
 by the British Treasury. In every city where the population 
 was 20,000 or more a local War Savings Committee was es- 
 tablished, and similar local War Savings Committees under 
 the general superintendence of a County Committee in each 
 county were set up in areas where the population was less 
 than 20,000. The whole of England and Wales has been 
 gradually mapped out and divided up into local committees 
 in this way, so that at the present moment there are something 
 over 1500 local War Savings Committees, and there is no 
 one in England and Wales who does not live within easy reach 
 of one or other of these committees. Scotland has been or- 
 ganized in a similar way. The local committees are usually 
 presided over by the Mayor or the City Treasurer, or, in 
 the case of a county, by the Chairman of the County Council, 
 and it has been the aim of the National War Savings Com- 
 mittee to make each of those local committees fully representa- 
 tive of the area within its control. In addition to representa- 
 tives of the Municipal authority, nearly all the committees 
 contain representatives chosen from among the bankers, 
 manufacturers, local residents, women's organizations, labor 
 organizations, school-teachers, munition works, friendly so- 
 cieties, etc, etc. The usual procedure was to hold a public 
 meeting and persuade a certain number of those present to 
 form themselves into a local War Savings Committee with 
 power to add to their number, so that the size and influence 
 of each committee could, if necessary, be gradually extended 
 as time went on. The expenses of the local committees are 
 
68 
 
 found almost entirely without the help of the Government, 
 and this gives them a great deal of liberty and autonomy 
 which has been of extreme value. They pay the piper and 
 they feel they can call the tune. They are in constant touch 
 with the National Committee, either through its traveling 
 representatives, of whom about 30 are appointed, or by cor- 
 respondence, which, with the growth of the movement, has 
 become very voluminous. The functions of the local com- 
 mittees are two-fold. First, propaganda to explain the reasons 
 why saving is important, to create a strong local opinion 
 in favor of economy; and, second, to establish War Savings 
 Associations, to keep them alive after establishment, to 
 supervise their working, and to act as the channel of communi- 
 cation between the central committee and the Associations 
 for such purposes as the distribution of leaflets, account books, 
 etc. which are provided free by the National Committee for 
 Associations affiliated to it. The local committees do not 
 themselves collect subscriptions, though they do, most of 
 them, sell whole certificates. The function of the War Sav- 
 ings Associations is to provide facilities for co-operative saving 
 of small sums from a penny upwards. These sums, as col- 
 lected from the individual member of an Association, are 
 pooled, and every 15/6d that is obtained is at once used for 
 the purchase of a War Savings certificate. The certificates 
 so purchased are held in the first place in the name of the 
 Association, but are subsequently transferred to the members 
 as their individual subscriptions mount up to 15/6d. There 
 are at present about 40,000 War Savings Associations in 
 Great Britain, that is, one for even' thousand of the popula- 
 tion. The number of members varies from as little as 15 
 to as many as 10,000 or even more. They are formed in all 
 sorts of social groups in connection with churches, factories, 
 munition works, stores, business offices, friendly societies 
 or to cover certain geographical areas, such as a village or 
 a particular street in a town, and finally, but by no means 
 least important, in connection with schools. I have not 
 
69 
 
 got any very recent statistics as regards the number of Asso- 
 ciations in schools, but in the middle of May 1917, there were 
 over 11,000 school Associations in Great Britain. The value 
 of association for the purpose of saving is enormous, especially 
 in a country such as England where there was a tendency 
 before the war at any rate to confuse the virtue of thrift with 
 the vice of meanness. When a few people get together to 
 save in common for the sake of helping their country, they 
 stimulate each other's efforts by co-operation. Indeed, the 
 War Savings Associations have had an immense influence 
 not merely upon their own members, which must amount 
 now to over five millions, but even more upon those others 
 who still prefer to do their saving independently by going 
 direct to the Post Office to buy War Savings Certificates. 
 Moreover, the influence of the War Savings organization is 
 not confined to the small investor or to investment in War 
 Savings certificates only. In England, ever since the end 
 of 1915, various kinds of Government securities have been 
 obtainable, over the counter as it were, from day to day, 
 and not merely at stated times when a big war loan was being 
 issued; and the War Savings organization has had immense 
 value in stimulating the purchase of these larger Government 
 bonds as well as in persuading people to buy War Savings 
 Certificates. We appealed to all classes and made it clear 
 from the first that we were not confining our appeal to the 
 wage-earners. 
 
 Perhaps one of the most remarkable features about the 
 War Savings organizations as a whole is the fact that though 
 it was started and organized under Government auspices 
 from a central headquarters in London, the life of the movement 
 at the present time comes from the individual members of 
 the Associations and from the Associations and local Commit- 
 tees re-acting upon and stimulating headquarters. It is a 
 thoroughly democratic organization and not a State imposed 
 system. 
 
 Now, after explaining the details of the War Savings organi- 
 
70 
 
 zation, I want to turn to the methods of persuading people in 
 England of the importance of saving. We were greatly helped 
 by the Press in stimulating public opinion on the subject of 
 saving. The Press has its own methods of doing this sort of 
 work. Let me show how the well-known London comic paper 
 Punch helped. Here are two poems from one of its November, 
 1916 numbers: 
 
 "A pious old man of Dundee 
 Used to put seven lumps in his tea 
 
 But his new zeal for thrift 
 
 Joined in moral uplift 
 Has reduced his allowance to three." 
 
 "A wealthy financier named Jonah 
 Made a fortune in far Arizona 
 
 But so strongly he feels 
 
 About thrift after meals 
 That he's knocked off his second Corona." 
 
 The appeal has not been an appeal merely to sentiment or 
 merely to the pocket, and it has not been an appeal merely to 
 lend money to the country. What we have tried to do and in a 
 large measure have succeeded in doing is to explain the funda- 
 mental economic reasons why saving is specially important in 
 war time. We have tried to teach people not to think in terms 
 of money. Very few of us — indeed perhaps none of us — can 
 form any sort of mental picture of what 20 billion dollars means. 
 So if you tell people that it is urgently important that they 
 should save money because the Government has to spend 20 
 billion dollars on the war in the first year, you will probably 
 not get very far. Moreover, if you tell a man who has never in 
 his life had more than shall we say 10 dollars or 20 dollars in 
 his pocket at any one time, that the Government wants 20 
 billion dollars in a year he will very likely say to you that a 
 dime or a quarter or even 5 dollars from his pocket would be 
 perfectly useless. What we have tried to do is to get away 
 from figures and explain that when we say that the Government 
 
71 
 
 wants to spend 20 billion dollars on the war, what we really 
 mean is that the Government has to obtain materials, labor, 
 and services of all kinds from the people of the country during 
 the war, which, valued in terms of money, amount to that fig- 
 ure. Finding 20 billion dollars does not mean accumulating 
 coin or notes to that amount in a chest or in the U. S. Treasury 
 Department. Nothing of the sort. It means in the short 
 phrase which we have become accustomed to use in England 
 that goods and services must be placed at the disposal of the 
 Government in a volume never contemplated before — that the 
 Government must be in a position to obtain those goods and 
 services from the people. Money is, after all, only a symbol 
 recognized in the present state of civilization as a convenient 
 means for obtaining command over goods and services. If I 
 have a dollar in my pocket I can make anybody I like, almost, 
 work for me. I can make the candy shop produce and put on 
 sale candy to the value of a dollar. I can make a taxicab in 
 New York carry me — for a very short distance. I can make a 
 railway company convey me for something like 40 miles. I can, 
 also, if I like, lend the dollar to the Government, in which case I 
 transfer to the Government my command over goods and ser- 
 vices to the extent of a dollar's worth measured in money. 
 Now just think what this means. It means n ot merely that the 
 Government has money with which to obtain a dollar's worth of 
 goods and services, but it means also that there is an extra 
 dollar's worth of goods and services available in the country 
 for the use of the Government, because I have chosen not to 
 use them up for my own private purposes. The problem before 
 the Government is to find goods and services for the war in 
 unprecedented volume, and it can only do so if the citizens of 
 the country refrain from competing with the Government for 
 the available goods and services. The late Lord Kitchener put 
 the matter very clearly in a speech which he made in London on 
 the 1st March, 1916, his last public speech. What he said was: 
 "There are not goods and services enough to go round. Either 
 ciivlians must forego some of their ordinary comforts, or the 
 
72 
 
 Navy and Army must go short of their necessities, and that 
 means a larger loss of life." 
 
 Now, it may have sounded a Utopian thing to do, but what 
 the National War Savings Committee set out to do, and what 
 all its local committees have been doing, has been to try and 
 explain this gospel of goods and sendees, as I am tempted to call 
 it, in popular language to every one who will hear it. We had 
 a poster, that was also issued in the form of a pamphlet, en- 
 titled "Six Reasons Why You Should Save," and the reasons 
 were those: 
 
 1. Because when you save, you help the Country to help 
 you to win the war. 
 
 2. Because when you spend on things you do not need you 
 help the Germans. 
 
 3. Because when you spend, you make other people work for 
 you, and the work of every one is wanted now to help our fight- 
 ing men, or to produce necessaries, or to make goods for export. 
 
 4. Because by going without things and confining your 
 sp endings to necessaries you relieve the strain on our ships and 
 docks and railways and make transport cheaper and quicker. 
 
 5. Because when you spend you make things dearer for 
 everyone, especially for those who are poorer than you. 
 
 6. Because every shilling saved helps twice, first when you 
 don't spend it and again when you lend it to the Nation. 
 
 Well, perhaps you will be thinking that the idea of ever 
 persuading people to save and lend money to their country by 
 giving them lectures on political economy is bound to be a 
 failure. The reverse is the case. It is quite true that it proved 
 very difficult to persuade bankers and business men not to 
 think in terms of money. They were apt to say "Business as 
 usual is my motto. Let money circulate; it is good for trade." 
 "Quite so" was our reply. "Let money circulate, but in the 
 right channels." All our expenditure and all our labor must go 
 upon supplying the requirements of war and the essential needs 
 of our people. They must not be squandered upon unnecessary 
 goods. Public opinion must declare itself definitely against 
 personal indulgence. 
 
• 73 
 
 The National War Savings Committee had a gradually 
 broadening vision of what its functions were. It knew from 
 the first that its functions were not merely to sell War Savings 
 certificates but also to persuade people to save. Then it saw 
 that increased production and avoidance of waste were equally 
 important. The country wanted goods and services. There 
 were plenty of people who had it in their power to increase the 
 amount of services available, by taking up work that would 
 help the country, whether paid or not, or by transferring their 
 activities from producing non-essentials to producing essentials. 
 So the vision which the War Savings Committee saw and pro- 
 claimed was that in a nation organized for war every man and 
 every woman and every child had their part, both in a positive 
 way by producing more of the things that were essential, by 
 avoiding waste, and also by the less attractive method of avoid- 
 ing all expenditure which was not essential for health and effi- 
 ciency. As I say, the bankers and the business men found 
 this doctrine hard, but the girl in the munition factory was 
 quick to see it. We had a poster which was very popular — 
 ' '124 cartridges for 15/6d and your money back with compound 
 interest." The munition girl was not slow in seeing that if she 
 saved 15/6d and lent it to the Government, the Government 
 would have 15/6d with which to buy cartridges, the Govern- 
 ment would have 15/6d with which to employ herself and others 
 on making cartridges, and that the labor of herself and others 
 would be set free for making those cartridges instead of being 
 used up in making or selling, shall we say, cheap jewelry, and 
 that finally after the war when her boy came back from the 
 front she would have not merely 15/6d, but also the accumu- 
 lated interest toward furnishing a home for the two of 
 them. But the children were even quicker in understand- 
 ing the gospel of goods and services than the girl in the 
 munition factory. Everywhere the children understood. 
 Here was something positive they could do. They could take 
 their part in the financial offensive. By not buying candy, or 
 by not going to the movies, they could help to increase the 
 
74 • 
 
 amount standing to their credit in the school War Savings As- 
 sociation and they could be taking their part in helping to win 
 the war. They could not all, they knew, be like Jack Cornwell 
 the hero of the Battle of Jutland. They could not all die for 
 their country like Edith Cavell, but they could help positively 
 by saving their pennies and by earning more pennies by doing 
 useful things out of school hours. They could take their part 
 in making history instead of only reading about the heroes of 
 history. They were wonderful missionaries for the War Sav- 
 ings campaign. They went home and told their parents about 
 the War Savings Certificates and about the gospel of goods and 
 services. Let me quote again from the War Savings Journal: 
 'The schools are splendid almost everywhere. Nine Associa- 
 tions in Hove in six weeks subscribed £480" or again, 'The 
 children themselves have often been our best missionaries and 
 advertising agents. They have written convincing letters to 
 parents and neighbors and helped at War Savings meetings," 
 or again "From Merthyr Tydvil comes a story which proves 
 how eager the children are. Between a Monday and a Thurs- 
 day the scholars of one school paid in £6 (30 dollars), and they 
 never expected to see it any more. They fancied that the cash 
 was sent straight to the Army and Navy and was gone for good. 
 They were all poor children, yet they were prepared not to lend 
 but to give. Truly, the very small investor is doing very well." 
 Now I want to tell you something about what happened in a 
 county of Wales called Cardiganshire. It has a population of 
 just 60,000, but in the first quarter of 1917 the number of War 
 Savings certificates bought through the War Savings organiza- 
 tion in Cardiganshire was seven fold greater per head than the 
 next highest county in England and Wales. Of course, there 
 must have been many "nest-eggs" brought out to make this 
 total, but the reports by the Hon. Secretaries for the county 
 show that it was the schools that secured this wonderful result: 
 "When the campaign was started we decided to work through 
 the schools not only to form Associations but to reach the parents 
 as well as the children and to appeal to all classes and practically 
 
75 
 
 every existing institution. The results were amazing and 
 electrifying. The earnestness and enthusiasm passed all 
 bounds. Meetings were crowded at whatever hour they were 
 held — from 10 A. M. to 10 P. M. Practically everywhere 
 speakers found large and influential gatherings of teachers, 
 farmers, and others awaiting their arrival. The children con- 
 ducted a house-to-house canvass/' In fact, there was an im- 
 mense revivalist movement, as I may call it, about the country. 
 This shows what the sincere efforts of a few active and patriotic 
 organizers working on a patriotic population through the school 
 teachers and the school children can perform. 
 
 One very successful method of encouraging war savings 
 has been the performance of little plays, especially in the 
 villages, by the school-children. One playlet I remember was 
 called "Patriotic Pence." In the first of the two scenes, Mrs 
 Smith, with her children clamoring for pennies to buy this, 
 that, and the other, wonders where all the pennies go. She 
 sings the question, and the children join in the chorus "Oh, 
 dear, what can the matter be? Everything's wrong in our 
 home." And then a figure appears who turns out to be a 
 fairy, and she introduces 12 small brown figures which are 
 the spent pennies, and they explain, in a song, the useless 
 things they have been buying. The tune is "The Campbells 
 are coming". The song begins, I remember, 
 
 "The pennies are going to-day, to-day, 
 The money is flowing away, away, 
 The money is flowing and nobody knowing, 
 
 And nobody having a say, a say. 
 From somebody's pocket I fell, I fell, 
 And that was just as well, as well, 
 For there rolled down the street two sixpences neat 
 
 And a stream of pennies as well, as well." 
 
 Thereupon Sergeant Shilling sends the pennies off to buy milk 
 instead of beer, candles instead of candies, and so on, and 
 they return bringing also the cartridges that save the soldiers' 
 lives. They sing another song which is also set to one of 
 
76 
 
 the English patriotic airs. I only remember a part of it — 
 the chorus: — 
 
 "We are each small enough, it is true. 
 There's little a penny can do. 
 But a cartridge to fire from a rifle 
 Is just what a penny can do." 
 
 The second scene some weeks later is also in Mrs. Smith's 
 room, which is now much better kept. The fairy comes 
 again and calls in the patriotic pence, and they tell in other 
 songs, still to well-known English airs, what they have lately 
 been doing. Mrs. Smith explains to a visitor that it only 
 means that "the kids and I are trying to do our bit at home 
 as Dad is doing his bit in the Navy." 
 
 It is sometimes objected — I remember in one particular case 
 a meeting of London teachers where it was objected — that 
 the work of managing a school Association was likely to be 
 too much for the over-worked teacher. The complaint was 
 answered on the spot by a lady teacher, who said that she 
 had been running an Association for six months and though 
 at first it took her a little longer she now found that with 
 more than 100 members the account keeping did not involve 
 ten minutes work a week. All through Great Britain the 
 teachers have made immense sacrifices of their time, not 
 merely running School Associations among the children, but 
 acting as regular workers for the local War Savings Com- 
 mittee and stimulating others to form War Savings Associa- 
 tions. 
 
 Some of the teachers with whom we first discussed the 
 question of encouraging War Savings in the schools were 
 afraid that it would be dangerous to teach the children to 
 save lest they should become mean, but the appeal we made 
 was not to the pockets of the children or their parents so 
 much as to their patriotism; and if there is any danger of 
 the kind feared it could surely be got over by insisting on 
 the duty and pleasure of right spending. Just try for a 
 
77 
 
 moment to form a vision of a nation of right spenders, where 
 everyone in his or her spending would think not merely of 
 himself or herself and the pleasure to be obtained, would not 
 insist too strongly on the fact that the money was his or her 
 own to spend as he or she liked, but would think of others 
 and remember that, though money is our own to spend, it 
 is our own to spend rightly with due regard to others. In 
 war time it is easy to see what our duty to others is. Our 
 duty is to help to win the war, and this we can do by refraining 
 from all unnecessary spending. But in peace time, too, 
 we can think of others. If the duty of right spending were 
 once properly learnt, he who had learnt it would be the hap- 
 piest man in the world. This war is bringing, in all the 
 belligerent countries, large sums into the pockets of the wage 
 earners. No one grudges them their earnings, but it is for 
 many of them the opportunity of a lifetime; indeed, it is 
 the opportunity of generations. For once there is some sur- 
 plus over bare necessities which can be saved and set aside 
 against a rainy day or as the nucleus of a capital fund. Many 
 are learning it and are seeing that they can help themselves 
 and their country by saving. 
 
 Let me end with one more quotation from "Punch". 
 
 "Lend all and gladly. If this bitter strife 
 May so by one short hour be sooner stayed, 
 
 Then is your offering, spent to ransom life, 
 A thousand fold repaid." 
 
ENGLAND'S EFFORT TO PAY FOR THE WAR OUT 
 
 OF SAVINGS 
 
 Address Delivered Before the Academy of Political 
 Science, at the Carnegie Hall, New York, on Friday, 
 December 14th, by Mr. Basil P. Blackett, C. B. 
 of the British Treasury. 
 
 I must begin by apologizing for the word "England" in 
 the title. The title should be "The effort of the United 
 Kingdom of Great Britain & Ireland to pay for the war out 
 of savings"; but on grounds of euphony or economy the 
 authorities have insisted on a shorter title. I hope, therefore, 
 that any Scotchman or Irishman in the audience will not 
 impute the title to me for wickedness. After all, it would 
 have been a mistake, I think, to have used a title which sug- 
 gested in any way that a Scotchman had to make an effort 
 to save! 
 
 The story of the British effort to pay for the war out of 
 savings is one of a gradually widening vision of what was 
 involved. When the war began, thinking by Departments 
 was the order of the day. It was customary to speak of 
 "The Navy's task" and "The Army's task" and "The Trea- 
 sury's task," and while it was of course realized that they all 
 contributed towards the achievement of one purpose, it was 
 as much as each Department could do, when the war first 
 broke out, to concentrate on its own particular activity. 
 
 The first big task with which Great Britain was con- 
 fronted was the need for an army of millions instead 
 of an army of thousands. A recruiting campaign was 
 set in motion, and for a time everything was subordinated 
 to the obtaining of recruits for the army. In spite of the 
 
80 
 
 interference with normal business which inevitably resulted, 
 we were sufficiently blind to what was really happening to 
 accept the cry of "Business as Usual"' as our first catchword. 
 That phrase had its proper significance when it was invented, 
 but it attained a much wider meaning than was intended by 
 its author. Its proper limited meaning was that in spite 
 of the shock to credit and to the mechanism of finance, it was 
 the duty of those who could not fight to attend to the every 
 day details of their own business and keep the machinery 
 of business and finance running as smoothly as might be. 
 It meant that there was work for everyone to do and that 
 harm, and not good, would result if people wasted their time 
 and energy by neglecting their ordinary occupations as if 
 they were the excited spectators of a drama and as if watching 
 the unfolding of the drama was all they had to do. 
 
 After the recruiting campaign came the shortage of muni- 
 tions. The two subjects of recruiting and of the production 
 of munitions were closely connected. It became evident that 
 the scale on which we were producing munitions of war had 
 to be increased in even larger proportion than we had increased, 
 or were trying to increase, the numbers of our army. The 
 Munitions Department was accordingly created and set to 
 work on its task of organizing industry and labor for the 
 production of engines of war on a colossal scale. Yet it was 
 some time before the questions of recruiting and of the pro- 
 duction of munitions were fully co-ordinated, and it was only 
 after immense efforts that the need for recruits and the need 
 for munitions were visualized and regulated as two aspects 
 of the same problem. 
 
 Meanwhile finance was following its own course. During 
 the first five month.- of the war those who were responsible for 
 finance were mainly taken up with heroic and on the whole 
 successful rr.easu.res to prevent the collapse of the delicate 
 machinery of modern finance based on credit and credit 
 instrument.-. Owing to Great Britain's position as the centre 
 of International finance, this problem involved not merely 
 
81 
 
 Great Britain but the world as a whole. During the same 
 period some provisional steps were taken to increase taxation, 
 and a war loan of $1,750,000,000 was issued. This was no 
 mean feat at a time when all the Stock Exchanges of the 
 world were closed and when but three months had elapsed 
 since the fateful days at the end of July 1914, when Inter- 
 national finance seemed to be on the verge of complete paraly- 
 sis. 
 
 It was in January 1915, when the London Stock Exchange 
 was reopened, that the first official steps were taken towards 
 conserving the capital of the country for the financing of the 
 war. The Stock Exchanges of Great Britain were re-opened 
 under new conditions. They were bound, as they are bound 
 to-day, by what are still known as the Temporary Regula- 
 tions for the Re-opening of the Stock Exchange, which imposed 
 very strict limitations on all dealings in capital. Among the 
 questions which were uppermost in the minds of the bankers 
 and brokers during the discussion with the Treasury as to 
 these regulations was the protection of the London money 
 market against enemy dealings in securities: but there were 
 two of the regulations unobtrusively introduced which involved 
 quite other considerations. These were the regulations which 
 aimed at preventing any new issue of capital during the war 
 without Treasury approval, and prohibited the sale in the 
 United Kingdom of any securities which had not been con- 
 tinuously in physical possession in the United Kingdom since 
 the beginning of the war. Both these regulations were aimed 
 in part at the prevention of enemy dealings, but they were 
 really a first step towards the use of financial weapons to 
 discourage business that was not essential for the prosecution 
 of the war. It was only gradually that people began to under- 
 stand that by preventing the purchase in Great Britain of 
 securities imported into Great Britain since the war began 
 the Treasury was aiming at preserving for investment in war 
 loans any new capital seeking investment. The restrictions 
 on new issues of capital were naturally followed by restrictions 
 
82 
 
 on capital expenditure by Municipal and public bodies. At 
 first the Municipal authorities were not inclined to accept 
 any restrictions. The favorite argument which they used 
 was that investors in securities of the kind which they issued 
 would not in any case invest money in Government securities 
 and that therefore they were not competing with the Govern- 
 ment. But they gradually came to understand that whether 
 or not the money which they refrained from using for capital 
 expenditure was lent to the Government, they would, by 
 refraining from spending it, be leaving a free field to the 
 Government for the labor and materials which the Govern- 
 ment desired for the war. The question of conserving the 
 capital of the country for the war began to be envisaged as 
 merely one aspect of the question of releasing men for the 
 Colors and setting free labor for munition works, and a 
 big step forward was taken when the local authorities generally, 
 convinced by these arguments, co-operated loyally with the 
 Government in discouraging all forms of Municipal expendi- 
 ture which could not be defended as being necessary for the 
 achievement of victory. 
 
 Meanwhile the problem of paying for the war out of savings 
 was being approached from another point of view. In accord- 
 ance with her old traditions, Great Britain proceeded to in- 
 crease taxation as fast as seemed possible without causing 
 overwhelming disturbance of monetary conditions. The 
 initial increases in taxation were small in comparison with 
 what has since been achieved, but it may be convenient at 
 this point to anticipate the story a little and to give the figures 
 of British annual revenue for the whole period of the war. 
 
 In the financial year 1913-14, the last complete year before 
 the war, Great Britain's Revenue and Expenditure amounted 
 to just under £200,000,000, or $1,000,000,000, her expenditure 
 including, however, a sum of about £10,000,000, or $50,000,000 
 for reduction of debt. 
 
 In the year 1914-15 the total revenue was £270,338,000, say 
 $1,350,000,000. 
 
 In 1915-16 the revenue was £336,766,824, say $1,680,000,000. 
 
83 
 
 In 1916-17 the revenue was £573,427,582, say $2,870,000,000 
 and for 1917-18 it is estimated that the revenue will amount 
 to between £650,000,000 and £700,000,000, that is to say, to 
 something between $3,250,000,000 and $3,500,000,000. 
 
 As compared with the pre-war figures this means that an 
 additional $2,250,000,000 to $2,500,000,000 is being taken 
 out of the pockets of the people each year. This is a very 
 considerable first charge on the annual savings of the country. 
 Indeed it is not far short of the highest estimate of the total 
 annual savings of Great Britain prior to the war. Of course, 
 with the rise in prices and the immense increase in productive 
 activity, directed to war purposes, with the decrease in unes- 
 sential expenditure, the annual savings of the country (leaving 
 out of account the Government's expenditure on the war) 
 have increased enormously. 
 
 But it was not possible to impose the extra taxation all at 
 once. The Treasury realized from the first that extra taxation 
 and subscriptions for war loans must come out of the same 
 source, namely, the surplus of the income of the country over 
 the amount spent by private individuals on their own require- 
 ments; or, in other words, out of the surplus of the goods and 
 services produced over those privately consumed. The posi- 
 tion was, of course, very considerably obscured by the fact that 
 people in England were able, if they wished, to contribute both 
 to taxation and to war loans out of the proceeds of the sale of 
 securities, and it was not easy to make people in general 
 recognize the essential difference between the sale of securities 
 by John Smith of London to John Jones of London and the sale 
 of securities by John Bull to Uncle Sam. The power to obtain 
 cash, or, in other words, the power to obtain immediate com- 
 mand of the goods and services in course of production in the 
 world by selling securities to neutrals was one which has been 
 of enormous importance to Great Britain in financing the war. 
 It is still of some importance, but with the gradual disappear- 
 ance of neutrals the world over and in particular when the 
 United States joined the Allies, the sale of securities in Great 
 
84 
 
 Britain to purchasers beyond the seas has lost a large part of its 
 former value as a means of financing the war. Now that the 
 whole of the resources of the United States are thrown upon 
 the side of the Allies, the sale of American Railroad stock in 
 London by London to New York no longer adds to the re- 
 sources available for war against- Germany. All it does is to 
 transfer from America to Great Britain the power to command 
 goods and services which are in any case already potentially 
 available for war requirements. In other words, the war must 
 now be paid for entirely out of the annual savings of the nations 
 at war. At the time I am speaking of, in 1915, such sales of 
 securities to the United States meant that Americans accepted 
 the past savings of Great Britain in exchange for goods and 
 services actually being produced in America. 
 
 From the point of view of the country as a whole, the sale of 
 securities abroad and borrowing of money abroad means that 
 past savings are being dissipated. It is therefore of enormous 
 importance that new savings should be effected. In the case of 
 Great Britain however it has to be remembered that new 
 capital has been invested and still is being invested abroad in 
 larger volume than before the war in the form of British loans to 
 Britain's Allies. Even since the United States of America en- 
 tered the war, Great Britain has lent $1,450,000,000 to her 
 Allies in the six months ending September 30th, 1917. So 
 that to a very large extent Great Britain has during the war 
 not so much realized her previous investments abroad as she 
 has re-invested her savings in new directions. 
 
 It would obviously have been undesirable in 1915 to raise 
 taxation to a point at which the taxpayer would have been 
 inclined or compelled to pay his taxes by the sale of securities 
 to neutrals. Taxation as a method of raising money for a war 
 has the advantage that it provides a strong inducement to the 
 taxpayer to economize. If it is increased beyond the point at 
 which for the time being economy is likely to result, heavy 
 taxation would do more harm than good. The balance of the 
 expenditure on the war that could not be raised by taxation 
 
85 
 
 had of course, to be raised by borrowings. The issue of a war 
 loan was accordingly decided upon in June 1915, and over 
 £600,000,000 ($3,000,000,000) was secured. It was during the 
 war loan campaign of 1915 that the phrase "War Savings" 
 first became popular in Great Britain. An effort was made to 
 issue that war loan in a form which would make it attractive to 
 the small investor. It has never been possible to identify the 
 contribution of the small investor to the various loans issued in 
 Great Britain owing to the fact that on the one hand big con- 
 tributions from Building Societies, Co-operative Societies, 
 Savings Banks, etc., which are really in fact contributions from 
 the small investor are hidden away among the large subscrip- 
 tions, while on the other hand, for one reason or another, some 
 of the small bonds issued through the Post Office have been 
 bought by others besides the small investor. Financially, the 
 response from the small investor to the invitation for sub- 
 scriptions through the Post Office in the war loan of July 1915 
 was not unsatisfactory, but in the course of the next 6 months 
 experience proved that the problem of securing contributions 
 to the war loans from the wage earner was still altogether un- 
 solved. So little was the true state of affairs realized that quite 
 patriotic people thought they were really helping when they 
 were enticed into buying such things as motor cars by adver- 
 tisements offering to take payment in whole or in part in War 
 Loan Bonds, — as if it were not obvious that the last thing a 
 patriot should do is to sell or part with his War Loan holdings 
 for the sake of obtaining cash to spend on luxuries. A campaign 
 for war savings was started immediately after the war loan of 
 July 1915, but its results were not very satisfactory. It was 
 almost entirely a bond selling campaign and there was little 
 attempt to explain the fundamental reasons why saving was 
 important. Local war savings committees were established 
 in various cities, but as they had nothing suitable in the way of 
 a bond to sell to the small investor and as they had no definite 
 functions other than those of preaching, they soon either died 
 a natural death or if they remained nominally alive were quite 
 
86 
 
 inactive. When a new war savings campaign was opened on 
 new lines in 1916 one of its first problems was to overcome the 
 resulting unpopularity of the war savings movement and to 
 obtain the substitution of active and vigorous local war savings 
 committees in places where one of the old committees was still 
 officially in existence. 
 
 The 1915 war savings campaign failed and the cause of its 
 failure was that those who were conducting it were still thinking 
 in terms of money. The British experience was that the 
 essential pre-requisite to a successful war savings campaign is 
 to translate terms of money into terms of the things which 
 money commands or into terms of "goods and services." 
 
 Although it had obviously become antedeluvian, the cry of 
 "Business as Usual" had still strong hold throughout the 
 country. It was incompatible with the setting free of labor 
 from non-essentials to essentials such as the production of 
 munitions, but "Business as Usual" appeals strongly to natural 
 human selfishness and was in many cases, I fear, a cloak for 
 the cry of "Pleasure as Usual." I do not mean to say that those 
 who were using the cry of "Business as Usual" were consciously 
 unpatriotic; the difficulty was to make them see the fallacy of 
 their position. The arguments which they produced were 
 plausible — "How can we pay taxes if our business is taken 
 away from us?" was perhaps their favorite argument. When 
 in the beginning of 1916 the National War Savings Committee 
 was appointed, it set to work to combat this argument. Its 
 answer was this: If I spend £100 on buying things and so 
 enable the seller to pay £10 extra in taxes, surely it would be 
 much better if instead of spending the £100 I lent the whole of 
 it to the Government? And then we went on to explain that 
 there was an absolute shortage of goods and services available 
 for the war, that energy must be transferred from the produc- 
 tion of non-essentials to the production of essentials, that the 
 consumption of non-essentials must cease in order that their 
 production might cease. Moreover, the opportunity for a 
 transfer of energy from non-essential to essential businesses was 
 
87 
 
 unique. There was an unlimited demand by the Government 
 for the labor and the skill of all who had labor and skill to 
 offer, and if non-essential businesses were closed down there 
 would be no difficulty whatever in finding employment for 
 those who had previously been engaged in them, whether as 
 employers or employees. In many cases the transfer was 
 extraordinarily simple. Jewelers and watchmakers can turn 
 almost immediately to the manufacture of fuses. I know a 
 builder in London who was able to turn his workshops almost 
 without any changes into the making of shells. 
 
 At the end of 1915 a Committee under the Chairmanship of 
 Mr. Edwin Montagu, now Secretary of State for India, who 
 was at that time Financial Secretary to the Treasury, discussed 
 the question of "War Loans for the Small Investor." In its 
 Report this Committee wisely went one better than its title: 
 it declared that the problem was to secure savings by rich and 
 poor alike, that saving was the essential thing, and that if the 
 savings effected could be secured as subscriptions to Govern- 
 ment war issues, incidental advantages would result, but that 
 the first and most important thing was to make people save. 
 It was on the recommendations of this Committee that the 
 National War Savings Committee was appointed. I have already 
 described before many audiences in this country the progress 
 of the War Savings campaign which was initiated by the Na- 
 tional War Savings Committee, and I do not propose to repeat 
 to-day at any length what I have had to say on that subject. 
 The success of the War Savings campaign — it has been an un- 
 doubted success — was due to a large extent to the invention of 
 the War Savings Certificate which has now the proud privilege 
 of being the model for the American War Savings Certificate. 
 In addition, small Exchequer bonds in denominations of £5 
 ($25) and upwards were placed on continuous sale over the 
 counter at the Post Offices. In a large measure also success has 
 been due to the organization of local War Savings Committees 
 and War Savings Associations throughout the country. It was 
 a new idea in England to go out to the public and take bonds 
 
88 
 
 to them and persuade them to buy them. Prior to the war the 
 financial houses in Great Britain which had bonds to sell ex- 
 pected the investor to come to them and buy the bonds and 
 did nothing more in the way of touting for custom than the 
 despatch of circulars to selected addressees. The National War 
 Savings Committee gradually built up an orgaization which 
 urged people to save and buy Government securities and offered 
 easy facilities for obtaining them. 
 
 But at bottom the success of the War Savings campaign has 
 been due not to the excellence of the securities which it had to 
 sell, not to its organization, not to its bond-selling efforts, but to 
 the atmosphere which it has created. It is hard to describe 
 what I mean by the phrase "War Savings atmosphere." Those 
 who have taken part in the War Savings movement in Britain 
 understand what it means. I have said that the terms of refer- 
 ence on which the National War Savings Committee was ap- 
 pointed emphasized the importance of saving, and left the 
 question of investment in Government securities in the second 
 place. Starting out from this basis, the Committee gradually 
 extended its conception of what its duties were. It had been 
 appointed at a time when thinking in Departments was still 
 prevalent, but when the country as a whole was beginning to 
 be conscious that behind the diversity of Departmental duties 
 there was unity to be aimed at, all directed towards the same 
 object — victory, the victory of democracy over tyranny, and 
 that there must be some single idea and ideal in which the 
 diversity of departmental duties could be gathered together in 
 a higher unity. The members of the National War Savings 
 Committee began by urging the importance of savings. And in 
 explaining savings to themselves and to others, they began to 
 see that the word meant the placing of goods and services at the 
 disposal of the Government in increasing volume, that it meant 
 increased production, avoidance of waste, as well as refraining 
 from unnecessary expenditure. Service for the country, 
 whether paid or unpaid, increases the goods and services avail- 
 able for the war. Bandages and Red Cross articles produced 
 
89 
 
 by voluntary labor increase the goods available for the war. 
 It does not matter whether they are paid for or not paid for. 
 Thus the National War Savings Committee and those whom it 
 reached throughout the country began to see that all the 
 problems of the war could be summed up in one idea — that 
 the release of men for the Colors, the production of more 
 munitions, increased agricultural production, the problem of 
 organizing labor for war, the tonnage problem, the problem of 
 shortage of means of transportation, were some aspects of 
 this idea; the effort to save money by avoiding expenditure was 
 another aspect of it. And it could all be summed up in the 
 ideal of a nation organized for war, but organized by its own 
 voluntary effort in a democratic way and not by force imposed 
 from above. It was this ideal that the National War Savings 
 Committee began to see as its vision widened. Its workers 
 went about the country showing people that what was neces- 
 sary was to increase the goods and services available for the war 
 and that this must be done by increased production on the one 
 hand and on the other hand by stern economy in the avoidance 
 of all expenditure which would put the individual in competi- 
 tion with the Government for the goods and services which the 
 nation needed. 
 
 An organization has been built up covering the whole country. 
 There is a local War Savings Committee, over 1500 of them in 
 all, within easy reach of every inhabitant of Great Britain, 
 whose function is to explain the need for War Savings and to 
 establish and supervise War Savings Associations. These 
 latter are clubs for co-operative saving by instalments, provid- 
 ing the readiest of facilities for the saving of small sums. Over 
 40,000 such Associations are now at work. 
 
 The War Savings movement was like a snowball. Each new 
 local committee added new workers; each new association led 
 to the establishment of other associations; each new member of 
 a war savings association brought in other members. The 
 enthusiasm engendered was extraordinary. It was the unselfish 
 ideal behind the movement which was the key to this enthu- 
 siasm. The only phrases that I can use that seem at all to do 
 
90 
 
 justice to our experience are religious phrases. We went about 
 proclaiming the gospel of right spending. A revivalist move- 
 ment is the best parallel for the growth of the war savings 
 movement. Our workers were missionaries. We owe much to 
 the democratic nature of our organization. The Briton re- 
 fused to be organized from above for war, but he quickly under- 
 stood what was meant by the organizing for war of the people, 
 by the people, for the people. What happened in the movement 
 for increase of munitions production might be cited as a parallel ; 
 it was to a great extent labor itself which organized labor for 
 the production of munitions through the action of its own 
 Unions. 
 
 It is obvious that statistics are a very poor index by which to 
 measure the result of the War Savings movement in Great 
 Britain. The figures of the Victory loan in January and 
 February 1917, however, show something of the value of the 
 organization created. The financiers hoped for a total of 
 £500,000,000, or £600,000,000— $2,500,000,000 to $3,000,000,- 
 000. The War Savings organization placed itself at the dis- 
 posal of the Chancellor of the Exchequer, and the total of the 
 loan was over £1,000,000,000— over $5,000,000,000. The 
 following statistics may serve as illustrations of what the small 
 investor has done. They must be taken with reserve in so far 
 as the small investor was and is an undefined entity, and 
 allowance must be made for the fact that there are absolutely 
 no statistics whatever available in which the subscribers to war 
 loans issued 'through the Bank of England are classified accord- 
 ing to the amount of their subscriptions. The total amount 
 subscribed to British Government war loans issued through 
 the Post Office, that is, in denominations from 15/6d upwards, 
 up to 30th September 1917, is £206,000,000, or just over 
 $1,000,000,000. Of this amount War Savings certificates 
 accounted for just under £100,000,000 ($500,000,000) net cash. 
 All but about £35,000,000 ($175,000,000) of this total of 
 $1,000,000,000 has been subscribed since January 1916. 
 
 The number of holders of war savings certificates is not 
 exactly ascertainable, but it is estimated at not less than 
 
91 
 
 12,000,000 persons and may be as large as 15,000,000. The 
 total population of the British Isles is about 45,000,000, so that 
 more than one quarter of the population or possibly as much 
 as one third of the population has a direct interest in Govern- 
 ment securities; and remember that there has been no effort 
 to urge the well-to-do to buy War Savings Certificates. They 
 have been urged to buy War Loan or Exchequer Bonds issued 
 through the Bank of England. The War Savings Certificate 
 is specially meant for those for whom the ordinary Govern- 
 ment Bond is not a suitable investment. 
 
 One further bit of information has just reached me. Prices 
 have now risen to a level which is quite out of proportion to 
 recent increases in wages in Great Britain. A year ago the 
 rise in prices was still far behind the relative increase in wages, 
 especially if the family is taken as a unit. For the increased 
 number of its members in paid employment has meant for 
 many a family an aggregate income of a size never dreamed of 
 before the war. Yet in spite of all adverse factors the number 
 of war saving certificates sold weekly is equal to what it was a 
 year ago. But whereas a year ago the sales were effected 
 chiefly through the Post Offices and Banks, at the present time 
 the War Savings Associations are the largest factor in the 
 weekly totals. 
 
 When we look back to the days before July 1914 and think 
 of the changes which the war has brought about, one of the 
 most remarkable in my opinion has been the immense widening 
 of our outlook and the broadening of our vision. We have 
 been lifted out of our own narrow and self-regarding interests. 
 The world has been made one in suffering. Everywhere when 
 men and women talk of the period after the war thoughts 
 are expressed and projects are formulated which, if they have 
 any real meaning at all, imply that never again will the con- 
 science of humanity permit individuals or classes or even 
 individual nations or groups of nations to claim in the exercise 
 of their own individual rights or ' 'sovereign' ' powers that they 
 are justified in riding rough-shod over the rights and interests 
 
92 
 
 of humanity as a whole. This widening of outlook and of 
 vision has been very marked in the story of Britain's effort 
 to pay for the war out of savings. It is the story of the 
 gradual growth of a wider vision in the region of war finance 
 till the vision transcended that region and proclaimed that 
 the problem of financing the war was neither more nor less 
 than the problem of organizing ourselves for victory so that 
 all the resources of the British- nation, spiritual, moral and 
 material, might be brought to bear on the achievement of a 
 single purpose. Thinking in terms of money became im- 
 possible. Money terms had to be translated into terms of 
 human activities. The message of the war savings movement 
 became "Produce more, consume less, waste nothing. The 
 Government wants all the goods and services the country 
 can provide. If you have services to offer, offer them abund- 
 antly. It does not matter whether or what you are paid for 
 your services: spend your money and yourself in the service 
 of your country. In war time your money is your own to 
 spend, only if you spend it in .a way that will help to win the 
 war. If you waste it, or if you spend it on luxuries, even on 
 comforts, or on anything not essential to health and efficiency, 
 you are trenching on the surplus of goods and services that 
 ought to be made available for the purpose of the war and you 
 are increasing the toll which death takes from those who are 
 risking their all for you." It has been impossible to stop at 
 this point. "Spend your money and yourselves in the service 
 of others". If this message is true in war time it must be true 
 in peace time. Democracy must learn to organize itself for 
 the good of the world. I am vividly conscious of the fact that 
 the old problem of reconciling individual freedom with the 
 greatest good of the greatest number is still unsolved. But 
 after all is the message anything new? Is it not the old message 
 of Christianity — that happiness lies in forgetfulness of self, 
 and has not the war taught us all once again how much happier 
 simplicity of life and service for others makes us than the vanity 
 of extravagance for extravagance sake? And so, in the dim 
 
93 
 
 distance, discerned as yet by faith and not by reasoning, the 
 student of economics sees a vision of a new economic philos- 
 ophy after the war, perhaps even of a new organization of 
 society where both in individual and in national expenditure 
 the duty and the pleasure of right spending will be known 
 and enjoyed.