118.‘City Notes’, The Times, 28 June 1916.
119.‘The Cabinet Crisis and Perplexities of Faith’, 1 July 1916. Hirst kept this ‘letter bag’, which included messages from George Shaw-Lefevre, Thomas Ashton, Annie Besant, E. D. Morel, C. P. Scott, and Emily Hobhouse. From Italy, letters came from Edoardo Giretti and Luigi Einaudi, two liberal journalists and politicians, who contributed to the Economist; and from New York, Oswald Garrison Villard, Evening Post president, and publisher and editor of the Nation, and National City Bank executive George E. Roberts. Charles Burlingham wrote, ‘but the Economist has a great name and influence and the necessity of considering the prejudices of your City readers has only served to make you weigh your words and make them weightier.’ Burlingham to Hirst, 6 July 1916, Hirst Papers, BLOU, Box 42.
120.‘Your friends will have very much noticed the paragraph in City Notes of yesterday’s Times. But I suppose in these times one has only to expect prejudice and offensiveness.’ Keynes to Hirst, 29 June 1916, Hirst Papers, BLOU, Box 13.
121.‘Valedictory’, 8 July 1916. That June, Hirst published letters from Lord Brassey, Loreburn, Beauchamp and Farrer.
122.Hamilton joined Common Sense, describing its office as ‘a very odd assortment of persons – Lords Buckmaster and Beauchamp, Lady Barlow, Lady Askwith, Philip and Ethel Snowden, Ramsay MacDonald, Sidney Arnold, Richard Lambert, Robert Smillie … Arthur Ransome among others.’ Hamilton, Good Friends, pp. 85, 76–78. For Hirst’s rapprochement with Lansdowne, the marquess who had negotiated the Entente with France, but favoured an early end to the war by 1917, see Keith Robbins, The Abolition of War: The Peace Movement in Britain, 1914–1919, London 1976, pp. 151, 157. For Hirst’s retrospect on Common Sense and his time as secretary of the Lansdowne Committee, see ‘An Apology for Peace Makers’, 5 March 1919, Hirst Papers, BLOU, Box 13.
123.Elizabeth Bagehot to Hirst, July 1916, Hirst Papers, BLOU, Box 42.
124.Walter Layton, Dorothy, London 1961, pp. 57–58.
125.Hamilton, My Good Friends, p. 79.
126.This description is from a colleague, who reckoned that from 1904 onwards he, Withers and A. W. Kiddy ‘held a grip upon financial journalism as strong as that of the famous professional triumvirate over golf championships’. Despite being unknown to the public (such journalism was still largely anonymous), ‘any daily paper of standing in London which wanted a financial editor used to turn to one of us’. Frederick Harcourt Kitchin, The London ‘Times’ Under the Managership of Moberly Bell, London 1925, pp. 91–93.
127.‘City Notes’, The Times, June 28, 1916.
128.‘Withers, Hartley (1867–1950)’, Dilwyn Porter in ODNB, 2004.
129.‘It is unreasonable to expect the Boers to give full political powers to Englishmen’, handing ‘the country over to the Imperial Government or the Chartered Company.’ No taxation without representation, a slogan of the Outlander cause, was sound, but ‘not part of the scheme of the universe’. Boers ‘can point across their borders to Rhodesia, where British subjects live under an unqualified despotism’. Hartley Withers, The English and the Dutch in South Africa, London 1896, pp. 212–13.
130.Liberal fiscal policies were having an effect on investment abroad, but even a change of ministry would not do much on its own to alter that. ‘For as new countries grow in wealth and population’, investing in them ‘will naturally and rightly attain to a relatively greater value.’ Hartley Withers, Stocks and Shares, London 1910, pp. 294–302. See also, Hartley Withers, Money Changing, London 1913, pp. 47–69, 175–80.
131.Hartley Withers, Our Money and the State, London 1917, pp. 105–19.
132.See, alongside Hobson and Hobhouse, his ‘Commerce and Finance as International Forces’, in The Unity of Western Civilization, ed. F. S. Marvin, London 1915, pp. 198–221. In a collected volume endorsing the League of Nations, to which Sir Edward Grey lent his name, Withers argued that without such a body to keep the peace, each nation would strive for autarky, sapping trade, as fears of insecurity hobbled finance. Withers, ‘The League of Nations: Its Economic Aspect’, in The League of Nations, London 1919, pp. 87–100.
133.Here his answer to the ‘social question’ was at odds both with the Unionists – who favoured tariffs to protect home and imperial markets, and redirect capital to domestic investment – and most Liberals, who saw a role for government in taxing surplus income, and in welfare or social investment. ‘Let us leave the question of national extravagance to statesmen. Individual extravagance is a matter that each of us can deal with himself.’ Withers, Poverty and Waste, London 1914, p. 172. ‘It is appalling to think of a world in which war and armaments are left to the unchecked will of irresponsible rulers and experts’, replied the Economist. ‘Luxuries and Thrift’, 8 August 1914.
134.The contrast Withers formed with Angell, Hirst, Paish or Hobson is marked: if the latter now gave too much weight to finance as a force for peace, in the past they had exaggerated its role in war. ‘Why did we go to war in South Africa? Finance played its part behind the scenes, but it never could have brought the war about if most of us had not wanted to wipe out the memory of Majuba, or paint the map of South Africa red.’ Withers, Poverty and Waste, pp. 154–55.
135.‘Lombard Street is certainly entitled to congratulate itself.’ Withers, War and Lombard Street, London 1915, pp. 99, 123. For July–August 1914 as a successful episode of crisis-management, and parallels with 2008 as seen by then Bank of England governor Mervyn King, see Richard Roberts, Saving the City: The Great Financial Crisis of 1914, Oxford 2013.
136.More scandalous were loans to insolvent governments, such as were raised for Honduras, Paraguay, Costa Rica, or Santo Domingo in the 1860s and ‘70s: Hartley Withers, International Finance, New York 1916, pp. 94, 111.
137.Withers, International Finance, pp. 104, 167, 39, 41.
138.‘After Two Years’, 5 August 1916.
139.‘Financial Heroism’, 6 October 1917.
140.‘Peace Talk and War Measures’, 16 December 1916.
141.‘Meanwhile, the Allies will fight on with their confidence confirmed and gladdened by the proofs that Germany has given that she has shot her bolt.’ ‘The President and Peace’, 30 December 1916.
142.‘Enemy Aliens’, 4 November 1916.
143.As for war profiteering, it cited the case of investment trust companies, which had lost net revenue each year since the beginning of the war: £1,432,405 in 1913 had shrunk by 23 per cent to £1,104,631 in 1916. ‘At the Front and at Home’, 24 November 1917.
144.‘Peace Talk and War Measures’, 16 December 1916.
145.‘After Two Years’, 5 August 1916.
146.P. F. Clarke, Hope and Glory: Britain 1900–1990, London 1996, p. 96. Government spending peaked at 38.7 per cent of GDP in 1917; Broadberry and Howlett, ‘The United Kingdom during World War I’, pp. 210, 230.
147.Self-denial required borrowing at least as much as one expected to save for the year: ‘borrow from his bank to pay the instalments as they mature, and save as fast as he can to pay off his banker.’ ‘The War Loan’, 13 January 1917.
148.Ibid.
149.It criticized the ‘hesitant’ wartime record of the Asquith administrations, which had stoked currency inflation, let wartime profits accumulate untaxed, and failed to take full control of consumption and production. Yet it allowed that he and his ministers were ‘tired men’, who had put in ‘great work’ as ‘constitutional reformers’, and done their best in a pinch. Under Lloyd George, it expected ‘vigorous government’ – ‘higher taxation of excess profits, with a prohibition of any distribution of profits above the pre-war level, a higher income tax, special taxation of all who are exempt from military service, sterner restriction of unnecessary imports, higher postal charges, travelling charges, higher taxation of all luxuries – alcohol, tobacco, picture palaces’: ‘The Political Crisis’, 9 December 1917.
150.‘Achievement and Promise’, 23 November 1918; ‘Politics and Problems’, 7 December 1918; ‘Effort
or Imagination’, 18 January 1919. In contrast to Keynes’s proposal that all inter-Allied war debts be mutually forgiven, the Economist under Withers argued that Britain should first cancel debts owed to it by weaker allies, then ask the US to ‘fund our debt to them into a forty or fifty year loan’, explaining that ‘we still prefer this solution to Mr. Keynes’s, for we believe that we can afford it if we work hard and reduce extravagance, and it is in accordance with our proud financial traditions’: ‘Turn of the Year’ and ‘The Peace Treaty’, 27 December 1919.
151.The February Revolution looked to it like good news at first, both for the war effort and raising revenue. ‘The Russian Revolution and War Finance’, 17 March 1917; ‘The Russian Kaleidoscope’ 22 December 1917; ‘Russia’s Economic Position’, 5 January 1918. ‘These debts will undoubtedly be recognized’, wrote its Wall Street correspondent, in the aftermath of October, ‘as soon as the All-Russian Government formally takes its place among the Powers’ –i.e. the Whites, backed by French, British, American and seven other expeditionary forces, won the Civil War. ‘Russian Default’, 19 July 1919; ‘Soviet Russia’, 13 December 1919. The paper soon abandoned this hope. ‘The Results of Bolshevism’, 28 May 1921. See also Keith Neilson, Strategy and Supply: The Anglo-Russian Alliance, 1914–1917, London 1984, p. 316; Hew Strachan, Financing the First World War, Oxford 2004, pp. 179–81.
152.‘Back to Sanity’, 2 November 1918. For Withers’s criticisms of wartime finance, and confidence the Bank Governor’s plan would see off rivals to the City, see his Wartime Financial Problems, London 1919.
153.The only headline articles on the war in Ireland appeared after Withers had left, as a peace agreement was being negotiated – a policy shift the paper now supported. ‘Policy and Principle’, 5 November 1921.
154.The classic account is George Dangerfield, The Strange Death of Liberal England, London 1935.
155.‘Answers to the perennial question about the causes of collapse of the Liberal party cannot relate to the quality of the ideology available to it’. For it was ‘better equipped than any other ideological force to handle the pressing social problems that had at last secured the political limelight’: Freeden, New Liberalism, pp. 21–22, 225.
156.Packer emphasizes the admirable adaptability of liberalism to twentieth-century responsibilities, in this case ‘fighting a modern, total war’. Even the abrogation of free trade, or conscription, failed to split the party. It had no ‘deep-seated issues’ and ‘the government did not dissolve because it was tortured by Liberal principles, but because of an unforeseen political crisis’. Packer, Liberal Government and Politics, pp. 177–80. See also, Cameron Hazlehurst, Politicians at War, July 1914 to May 1915, New York 1971, p. 264. Soutou provides a powerful antidote to such benign explanations, arguing that the division of the Cabinet between those who feared dependence on the US and favoured a negotiated peace to avoid this, and those ready to fight on regardless, pitted finance against industry, in a battle which the former lost. Georges-Henri Soutou, L’or et le sang: le but de guerre économique de la Premiére Guerre mondiale, Paris 1989, pp. 364–72. On this, caution is required. As Hirst’s ouster at almost the same time as Asquith indicates, it is debatable if the City opposed the end of ‘business as usual’ by 1916.
157.Lord Rosebery, who impressed the importance of continuity on his followers, was outdone by Grey, a still more ardent imperialist – embarrassing even the former with his calls for seizing the entire Nile valley and Uganda in 1894. Grey arrived at the Foreign Office with an idée fixe that Germany was Britain’s ‘worst enemy and greatest danger’. Grey to Henry Newbolt in January 1903, in Keith Robbins, Sir Edward Grey, London 1971, p. 131. For the evolution away from Salisbury’s ‘splendid isolation’ by the turn of the century, see George W Monger, The End of Isolation, British Foreign Policy, 1900–1907, London 1963, pp. 1–20; Keith Wilson, The Policy of the Entente: Essays on the Determinants of British Foreign Policy 1904–1914, Cambridge 1985, pp. 5–6 and passim.
158.For the shortcomings of the Radicals, and the degree to which Grey was insulated from them – at a Foreign Office distinguished for its ‘social exclusiveness’, which viewed ‘arbitrationists’ and ‘reductionists’ as ‘meddlesome busybodies’ and ‘amateur diplomatists’, see Zara Steiner and Keith Neilson, Britain and the Origins of the First World War, London 1988, pp. 136–81, 184.
159.L. T. Hobhouse to E. Hobhouse, 24 December 1914, in Clarke, Liberals and Social Democrats, p.168.
160.Newton, Darkest Days, pp. 267–68; Asquith to Stanley, 4 August 1914, in Asquith, Letters to Venetia Stanley, Oxford 1982, p.150; Frances Stevenson, The Years That Are Past, London 1967, pp. 73–74.
161.Grey also played on the idea of an inexpensive naval war. ‘For us, with a powerful fleet, which we believe able to protect our commerce, to protect our shores, and to protect our interests, if we are engaged in war, we shall suffer but little more than we shall suffer even if we stand aside.’ HC Deb 3 August 1914, Vol. 65, col. 1823.
162.Hirst was no less enthusiastic than his predecessor about Japan, though under him the paper did caution that ‘so startling a growth’ in its foreign debt – ‘£115,000,000 as compared to something like £7,000,000 previous to the war’ with Russia – ‘even though occasioned by happenings which have raised the borrower into the foremost rank of nations, cannot be lightly regarded’. There was, nevertheless, ‘everything to inspire confidence’ – maritime pluck, a sinking fund, cash balances held abroad. It saw great promise in railway securities designed to open up Manchuria, Korea, Taiwan. ‘Japan as a Borrower’, 20 July 1907. For Masuda Takashi, then in London as head of the mercantile branch of Mitsui, ‘the Rothschilds of Japan’, see 9 November 1907; 5 January 1908.
163.Japan used an 1895 war indemnity from Peking (230 million silver taels deposited at the Bank of England) to move to a gold standard in 1897, the precondition for its borrowing binge. The £82 million China borrowed over the same period – to pay ‘for its own subjugation’ to Europeans and Japanese – must also be included in the City’s total. Mark Metzler, Lever of Empire: The International Gold Standard and the Crisis of Liberalism in Prewar Japan, Berkeley 2011, pp. 3, 258. The City, in this way, profited from both ends of the imperial redivision in Asia.
164.‘It has not been sufficiently appreciated how much the chancellor’s domestic policy relied on sustaining the flow of capital export.’ Offer, Empire and Social Reform, p. 128. Lloyd George’s ties to the City extended to his insider dealings in Marconi shares in 1912, and to his bailout of the financial sector in July–August 1914 (see below).
165.In an introduction to Morley’s letter of resignation in 1914, published a decade after the armistice, Hirst noted that Morley had criticized the Crewe Memorandum in 1907 – a secret Foreign Office report arguing that the rise of Germany posed a mortal threat to preservation of the British Empire, that would have to be met with all necessary measures. Morley saw it as too hostile to Berlin, and too focused on ‘balance of power’, but agreed on two points. Hirst approved of both as basic tenets of his own liberalism. First, ‘that England was the natural enemy of any country threatening the independence of others and the natural protector of the weaker communities’. Second, that ‘nations have always cherished the right of free intercourse and trade in the world’s markets, and in proportion as England champions the principle of the largest measure of general freedom of commerce she undoubtedly strengthens her hold on the interested friendship of other nations, at least to the extent of making them feel less apprehensive of naval supremacy in the hands of a Free Trade England than they would in the face of a predominant protectionist Power. This is an aspect of the Free Trade question that is apt to be overlooked.’ John Morley, Memorandum on Resignation, August 1914, New York 1928, pp. xxvii–xviii.
166.For Liberalism’s ‘democratic promise’ to reign in ‘cosmopolitan finance’, see Howe, British Government and the City, pp. 136–38, 140; ‘Policy did not reflect the dominance of one particula
r interest group, for that would threaten the assumption that the state was disinterested. Fairness was more than a rhetorical device; it had to be seen to be done’: Martin Daunton, Trusting Leviathan: The Politics of Taxation in Britain, 1799–1914, Cambridge 2007, p. 388.
167.‘The strength of New Liberalism lay not in its transcendence of Cobdenism’, but in ‘its ability to dissociate free trade from laissez-faire’: Howe, Free Trade, pp. 192–93; 268–72. The City’s hostile reaction to New Liberal budgets, which Howe details, must qualify this conclusion somewhat: in effect, it chose between what must have been seen as two different types of interference with free trade – opting against direct taxation, and for protection.
168.Lloyd George put the eventual cost of the government ‘cold storage’ scheme, which guaranteed the purchase of unmarketable bills by the Bank, at £50 million: Roberts, Saving the City, pp. 5, 158, 237. Hirst put it at £200 million in case of a long war: ‘The War, Trade and Finance’, 22 August 1914. His Economist had the consistency to oppose, or lament, moves like the stock exchange closure, remarking in a review of Withers’s book, ‘It is difficult to understand why a Government so versed in secret diplomacy had made no secret financial preparations for the great war to which its military and naval conversations are now known to have pointed.’ 6 February 1915.
169.Bruce K. Murray relies in part on figures Herbert Samuel compiled and presented to the Royal Statistical Society in 1919, ‘The Taxation of the Various Classes of the People’. Murray, People’s Budget, pp. 290–96; 310–11.
170.Or about $44 billion in 1913 prices. Stephen Broadberry and Mark Harrison, ‘Introduction’, in The Economics of World War I, eds. Stephen Broadberry and Mark Harrison, Cambridge 2006, p. 23.
171.A. J. P. Taylor, Essays in English History, London 1976, p. 233. For a contrasting view of how much Britain truly left behind ‘the benefits of a liberal market economy’ in wartime, see Stephen Broadberry and Peter Howlett, ‘The United Kingdom during World War I: Business as Usual?’, in The Economics of World War I, pp. 206–34.
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