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The European Crisis
05 August 1914
Volume 17

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My Lords, with your Lordships' permission, I do not propose to make any general statement on the subject of the grave situation of which your Lordships are all cognisant. There will be an opportunity to-morrow of making a more general statement on the circumstances which have brought us into war with Germany; but to-day, since no general statement of the kind has been made in another place, I propose merely to read two telegrams which have been received in the course of the morning. This morning a telegram was received from Sir Frederick Villiers at Brussels in the following terms—

"I have just received from Minister for Foreign Affairs—
that is the Belgian Minister for Foreign Affairs—
"a note of which the following is a literal translation:
"Belgian Government regret to have to inform His Majesty's Government that this morning armed forces of Germany penetrated into Belgian territory in violation of engagements assumed by treaty.
"'Belgian Government are firmly resolved to resist by all means in their power.
"'Belgium appeals to Great Britain and France, and Russia to co-operate, as guarantors, in defence of her territory.
"'There would be concerted and common action with the object of resisting the forcible measures employed by Germany against Belgium, and at the same time of guarding the maintenance for future of the independence and integrity of Belgium.
"'Belgium is happy to be able to declare that she will assume defence of her fortified places.'"
There was a further telegram which was communicated by the French Ambassador this morning, and which we have the permission of the French Ambassador to read in either House. He communicated to the Foreign Office here the following telegram received by the French Government from the French Minister at Brussels—
"The Chef du Cabinet of the Belgian Ministry of War has asked the French Military Attaché to prepare at once for the co-operation and contact of French troops with the Belgian Army, pending the results of the appeal to the guaranteeing Powers now being made. Orders have therefore been given to Belgian provincial governors not to regard movements of French troops as a violation of the frontier."
That is all, my Lords, that I have to say at this moment upon the general situation.

But on the particular points of the situation as it affects us here in our daily life and the financial situation in this country, I desire to say one or two words. During the last few days the Government have been conferring at great length with the most important representatives of finance and commerce in the country, including representatives of bankers, bill brokers, the Stock Exchange, discount houses, and also with an almost complete representation of all the great industries of the country—textile, iron, docks, and the rest; and I can say that we have found an absolutely universal desire among those representatives of great interests to combine so far as possible to meet the crisis which has arisen, in the interests of the country at large. We have had the advantage of not acting altogether alone. We have enjoyed the valuable co-operation of Mr. Austen Chamberlain, who, at the request of the Prime Minister and the Government, has freely given us his assistance and his advice. Our main object has been that the normal life of the country should be carried on with as little displacement as is possible in the unprecedented circumstances in which we are placed, more especially as they affect the wage-earning classes.

We found that both the financiers, speaking in the widest sense, and the captains of industry have been absolutely of one mind in determining that so far as possible things shall pursue their normal course, and that, so far as they are able to ensure it, money shall be forthcoming to meet the ordinary needs and concerns of life. We found that the great manufacturers are steady in determination to keep their works open so far as is possible for them, contemplating, no doubt, that in some cases they would be on short time, but with the resolve that so far as possible men or women should not be altogether thrown out of employment. They are prepared to do this even at the risk of accumulating stocks for which there may be no obvious market at the moment, and I am sure the House will agree that that is a most honourable and a most helpful determination on their part. In fact, altogether, my Lords, we have witnessed a very manly and vigorous spirit of co-operation between all the different classes whose resolves and hopes we have had an opportunity of hearing.

It needs, therefore, that to this spirit that has been shown there should be an equal response on the part of the public at large. First, the people must realise that, in spite of the immense difficulties that have arisen, difficulties affecting many individuals in an obvious manner in the course of their everyday existence—in spite of all this the credit of the nation remains absolutely unimpaired. We found, of course, that the necessary and unavoidable stoppage of remittances from abroad in all their forms—more often, of course, in some form of instrument than in bullion or in cash—causes to individuals and to companies a great temporary inconvenience. But the public have to realise that nothing has happened, or will happen, to produce any form of panic in this country, and they also have to realise that almost every individual can assist materially in causing the nation as a whole to keep its head and remain unaffected, so far as its daily conduct is concerned, by the astonishing events that we are witnessing. The public, in the first place, can help by not becoming nervous about their money affairs. There is no reason why any person, rich or poor, should lose his head over the momentary difficulty, if such should confront him, of obtaining sums, large or small, for the particular purpose of any given day. We are doing our best, as I shall explain in a moment, to meet these difficulties with the aid of the advice of which I have spoken.

But before I proceed to explain in general terms what we are proposing to do, I should like to allude to another matter which is the foundation of a Question by my noble friend Lord St. Davids, which he has placed on the Paper, and with which, if I am allowed, I will deal now, because I shall be obliged before very long to leave the House. The noble Lord asks—
"whether the Government would consider the advisability of issuing a general statement at an early date as to the duties of the public at the present crisis, and the method by which they can best assist those in authority."
In the observations that I am making—and I have no doubt that some of my colleagues in another place either have made or will make observations of a similar nature—we are endeavouring to meet the point which my noble friend has raised. Because, my Lords, it is not only the question of the sort of nervousness which compels people who have a current account or a deposit at the bank to withdraw it and place it in a stocking or hoard it in some other manner which we desire to deprecate. There is also the possible form of nervousness which may affect some people in an attempt to lay in large stores of usable materials of all kinds, which they may desire to collect possibly from a vague fear that at some later period they may not be able to obtain them, or possibly from what I cannot help calling the less honourable fear that a rise in price may take place and that they may be able to anticipate in that way a rising market. A panic taking that form can do nothing but harm; and I hope that your Lordships, for instance, whose influence is widespread throughout the country, will do your best in all the circles in which you have influence to deprecate any unusual action of that kind, whether prompted, as I think it would be in ninety-nine cases out of a hundred, by mere nervousness, or possibly in the hundredth case by some less honourable feeling even than terror. There is no reason, so far as we are able to see, why the life of the nation should not pursue its normal daily course. Some people, no doubt, will undergo losses in varying degrees, and those losses as a nation and as individuals we must be prepared to face. But it is surely due to our conception of the British character, and to our belief that it is in times of struggle and stress that that character shows at its best, that we should be able to show the world that, monstrous and unprecedented as this convulsion is, we are not thereby deflected from our ordinary course, or driven to have recourse to proceedings of which we should never dream in calmer times.

I desire, before I sit down, to mention briefly and in quite general terms some of the results of the conversations which we have been having with bankers and others so far as matters have been arranged at present. In the first place, the suspension of the Bank Act has been decided upon, which, as the House is aware, will enable the Bank to issue a supply of notes sufficient for the currency requirements of the country in excess of the proportion which in ordinary times can only be issued as against its gold reserve. But it is important—it is quite unnecessary in this House, but it is important outside—to distinguish very carefully between an Act of this kind and the suspension of specie payments, which we do not contemplate and which we trust we may not have to contemplate. The issue of notes which will take place will still be good against gold so far as those who hold the notes desire to turn them into gold. It is proposed to issue £1 notes and 10s. notes, which will not be, as we are 110W issuing them, Bank of England notes but Treasury notes, but they will be convertible, if desired, into gold at the Bank of England. The printing of those notes is being proceeded with as fist as is possible, and a large supply will be available on Friday morning. The House will understand the urgency of the business and the importance of the date, because it is, as we all know, at the end of the week that wages have to be paid, and for the payment of wages these £1 and 10s. notes will be urgently required. Further supplies of these notes—I am not able to give the precise figures, but, of course, they run into millions—will go on being produced as fast as it is possible for the printers to produce them. It is possible that by the end of the week it may not be feasible to produce quite the sufficient number of notes which will be required for currency, and therefore postal orders, of which a considerable supply are in hand and to a large amount, will also be made legal tender, convertible into gold without change—treated, in fact, like small bank notes for the same purpose. Then, in view of the change in the position, I am able to state, and to state with great satisfaction because I know to the House the announcement will be an agreeable one, that the Bank rate will be reduced to 6 per cent.

The House will remember that we urgently passed a Moratorium Bill dealing with the one subject of bills of exchange. It was necessary to proceed in an almost frantic hurry with that particular branch of the subject, because acceptances were maturing daily and it was absolutely indispensable to save from ruin those who might have been called upon to meet them and would have been altogether, through no fault of their own, unable to do so. I think it is clear that some extension of the scope of the Moratorium by a further Proclamation—the House will remember that we took wide powers in the Bill—will be required. I am not able at this moment to indicate what that extension may be. We are engaged now in considering carefully what restrictions must necessarily be made from such a Moratorium to prevent its assuming a completely general character applicable to all liabilities of every kind. Consideration will show that it is almost indispensable that some such exceptions should be made, but I will not attempt at this moment, if I may be forgiven, to indicate their character. But so far as regards the provision of money, the banks have agreed that all bills, cheques, and drafts of different kinds which are presented through the clearing house—that is to say, cheques which are not open cheques—will be dealt with by them as usual, subject to the discretion which they may desire to exercise in exceptional cases. Therefore whenever possible crossed cheques ought to be used in the ordinary manner.

So far as regards what is even more interesting to some, the provision of actual cash over the counter, the bankers are making arrangements whereby cash and various instruments of legal tender will be available for wages, salaries, and the normal cash requirements of daily life. I think the House will agree that the bankers are doing their best to carry out the object which, as I intimated earlier, we all have at heart—namely, that there should be as little disturbance as possible of the ordinary habits of the people and the daily life of the country. I ought, perhaps, to mention, on the point of the free use of cheques through the clearing house, that when the bankers ask to have a discretion in dealing with drafts on them of that kind it is in order that the free use of the clearing house may not be used to defeat the object of the Moratorium, on which, of course, they themselves rely to prevent undue pressure being put upon them during the period of its duration. I think those are all the points that I have to mention. As I said at the beginning of my remarks, so far as the general situation in Europe is concerned and the circumstances which have brought us into war, upon which I have no doubt the House would desire to have further information, some Papers will almost immediately be presented, and it is, I think, desirable to defer until we have those Papers any kind of general discussion on the subject.

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There will be a Vote of Credit?

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The noble Earl may take it from me that a Vote of Credit will be asked for. As to the particular day on which that will be done, perhaps he will forgive me if I do not reply. But as the noble Earl has put the question, I may say that it will probably be on the day on which that is done, whether it is to-morrow or later, that the general statement may be made in this House.

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MY Lords, I think it would appear ungracious on our part if we were to allow the important statement to which we have just listened to pass by without at any rate one or two words of comment from this side of the House. The statement of the noble Marquess was certainly one which, upon the whole, seemed to be well calculated to reassure the public mind at the present critical moment. The noble Marquess told us that the series of steps which he and his colleagues propose to take have been the result of a careful consultation with the representatives of the financial, commercial, and industrial interests of this country. There can be no doubt that the noble Marquess and the Government to which he belongs did well, before moving in this matter, to satisfy themselves that they were in possession of the best advice which they could procure from the highest authorities in this country, and that they could count upon the support of those authorities. The noble Marquess, I understood, assured us that the steps which His Majesty's Government have in contemplation had found favour with those whom he consulted, and I have no doubt that the House will be content to accept that assurance on his part.

May I say, in passing, that we are grateful for the reference which he made to our colleague, Mr. Austen Chamberlain, whom His Majesty's Government thought well to call into their councils. The fact that he should have taken not only a part, but a conspicuous part, in these matters is, if I may be allowed to say so, a good illustration of the manner in which at this moment we are all of us, without distinction of Party, endeavouring to do what we can to meet the emergencies to do what we can to meet the emergencies which the country has to face.

The general policy which appears to have actuated His Majesty's seems to me to be an eminently sound one. Their object, as the noble Marquess told us, was that there should be a minimum of disturbance in the business affairs of the nation, and particularly in so far as the interests of the wage-earning classes are concerned; and no doubt anything that His Majesty's Government are able to achieve, or that private effort is able to achieve, in the way of preventing a sudden interruption of the employment of the labouring classes is the greatest service which they can render to the nation at this moment. We heard with pleasure the noble Marquess's statement that in all these matters he and his colleagues had met with what he called the manly cooperation of all concerned, and we certainly shall not differ from him when he dwells upon the importance of efforts on the part of the public to second the Government in what they have attempted to do. No shall we differ from him when he suggests to us that it is the duty of every one of us, not only every member of this House but every one who has an opportunity of making his influence felt, to avoid any action which could have the effect of aggravating in any way the general alarm and uneasiness which must inevitably prevail at such a moment as this.

As to the steps which Ministers propose to take, I cannot speak with any pretence to authority in regard to them. But they seem to me, taken as a whole, to be steps which cannot fail to have a steadying effect upon public opinion and to be likely to give considerable relief to the public mind. The steps which the noble Marquess enumerated were, I think, the following. The suspension of the Bank Act and the issue of small notes for £ and 10s.; the arrangement by which postal orders can be used as legal tender; the diminution of the Bank rate to 6 per cent.—an extraordinarily valuable contribution to the solution of our present difficulties—and the extention of the Moratorium, which I know from conversations with many of my friends was deemed in its original shape to be not adequate to the requirements of the case. If I may be permitted to say so, I think His Majesty's Government in dealing with these difficult problems have shown considerable presence of mind, and I am glad to think that they are being well supported in the country. Upon the support of this House I need not say they may count.

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My Lords, may I make one correction of an omission from my remarks? When I was speaking of the general co-operation and assistance which we have received I think I did not specially mention the governor and the directors of the Rank of England. Certainly that was all omission which I ought not to have made, because we have received not merely the most valuable advice but the most cordial assistance from them through all our negotiations and discussions.

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My Lords, may I interpose for a single moment as one who represents those who are not directly concerned with what in the limited sense of the term are political affairs, and as one who is necessarily, front the position that I hold, in touch with the various classes of our population in a way somewhat different from politicians. What I desire to do, if I may, is to endorse from that standpoint the appeal which has been made in the lucid, weighty, and reassuring speech of the noble Marquess, an appeal to the public at large to co-operate in this particular matter. There are some of us who feel that, owing to circumstances or responsibilities, we are to a certain extent cut off for the moment front any obviously clear way of giving active co-operation for the national benefit in what is at this moment occurring. It seems to me that any one who feels that can at least charge himself with this responsibility, that no action of his, directly or indirectly, or of those whom he can influence, shall tend to accentuate and to increase such anxiety as necessarily prevails at the present moment. Every one should bear in mind the thought that there is a cowardly selfishness possible at such an hour which may not merely at the moment discredit the man who does it but may complicate the issues themselves by making it, in small or large matters, difficult for those who have administrative responsibility in commercial or industrial or small shopkeeping interests to steer the course they would desire to steer. I speak not without knowledge and not without having seen some of it myself in the last two days, and I believe that the public at large are rightly to be reminded of the responsibility which rests upon all classes of the population in this matter. I believe that the appeal made by the noble Marquess, endorsed in all parts of the House, will be responded to, and that his speech may help to reassure those outside as to the hopes we entertain that all parts of the population are going to rise to au opportunity like this and bear their part in carrying the common burden by abstaining from any act of individual selfishness or individual gain which might tend to make it harder for others to meet the difficulties which we should all try to face as well as may be, standing shoulder to shoulder.

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My Lords, the noble Marquess the Leader of the House has answered in advance the Question standing in my name on the Paper. But there is one suggestion I would venture to make. He has put the case quite clearly as to the disadvantage of the public being guilty of the very foolish act of hoarding food, which we know is quite unnecessary and extremely unwise, but which is at the present moment putting up the price of provisions. The noble Marquess has set out the case against that with admirable clearness. But there are thousands of people in the country who do not read the debates in either House of Parliament. What I would like to ask the noble Marquess is this—whether the Government would consider the advisability of publishing a little leaflet setting out, in very short sentences, what I would call "The duty of a citizen" in the matter. I mean such sentences as not to hoard food, not to crowd the main thoroughfares, not to hoard gold. If those things were set out simply and perfectly clearly in a little leaflet, and if that leaflet were shown at post offices and police stations as the official request and advice of the Government, I believe it would do incalculable good.

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I will bring my noble friend's suggestion, which, speaking on the spur of the moment, seems to me to be a sound one, to the notice of my colleague the Home Secretary, who is specially concerned, and also to the notice of my other colleagues in whose Departments such action, if it were decided to take it, would fall.

ALIENS RESTRICTION BILL. (No. 216.)

PRIZE COURTS (PROCEDURE) BILL. (No. 217.)

Moved, "That Standing Order No. LTV 'That no Motion for making or dispensing with a Standing Order be made without notice' be now read."—( The Marquess of Crewe.)

On Question, Motion agreed to, and the Standing Order read accordingly.

Moved, "That Standing Order No. XXXIX 'That no two stages of a Bill be taken on one day' be now read."—( The Marquess of Crewe.)

On Question, Motion agreed to, and the Standing Order read accordingly.

Moved, to resolve, "That it is the opinion of this House that it is essentially necessary in the public interest that the Bill this day brought from the House of Commons intituled 'An Act to enable His Majesty in time of War or imminent national danger or great emergency by Order in Council, to impose restrictions on Aliens and make such provisions as appear necessary or expedient for carrying such restrictions into effect,' and also the Bill this day brought from the House of Commons intituled 'An Act to amend the law relating to Procedure in Prize Courts' should forthwith be proceeded in with all possible despatch, and that notwithstanding Standing Orders Nos. LTV and XXXIX, the Lord Chancellor ought forthwith to put the question upon every stage of the said Bills in which this House shall think it necessary in the public interest to proceed therein."—( The Marquess of Crewe.)

On Question, Motion agreed to, and resolved accordingly.