has learned the way to the highest freedom in both trade and
finance.

Therefore, before this most Audacious War was set afoot England had a
very small stock of coin gold but a very large stock of gold
credit-bills.

For years England has held in her cash box from $1,800,000,000 to
$2,500,000,000 of the commercial credits of the world. With goods and
trade-honor behind these promises to pay gold, she had no need of the
metal but only of command of the seas, that her gold might come in when
needed. When the war broke out, $600,000,000 of these gold promises to
pay were of German and Austrian origin. The big London bankers who had
their names on the back of such acceptances could not in honor
underwrite any more commercial bills. They knew their capital was
involved in collection of those already out.

But Britain said the commerce of England must go on as well as the war.
The people who held these acceptances were promptly invited to turn
them into the Bank of England, which held the guaranty of Great Britain
behind it, and receive the money therefor; the discount rate after
maturity to have 2 per cent added thereto, 1 per cent to go to the Bank
for expenses and 1 per cent to the government for reserve fund to cover
any losses. Of such bills $600,000,000 were promptly discounted.

I hear that two banks, the London City & Midland with its $525,000,000
of deposits, and Lloyds' Bank, both refused to rediscount. They
believed the investments in commercial paper they had made were
perfectly good, and that they were as well able as the Bank to wait for
payment until one year after the war if necessary.

But to date more than half of these rediscounted bills have been paid.

It may be of financial interest to narrate how payments could be
accomplished when by the King's orders there could not be any "dealings
with the enemy" and payment to either side was forbidden by both. Yet
the Dresdner Bank and other big German and Austrian banks have to date
met fully one half their London obligations.

They were enabled to do this because their London branches were
independent institutions whose independence was recognized by the
British government. The London branches were thus liquidated,
collecting in and meeting their obligations at maturity, so far as
possible.

Liquidation in acceptances is one of the keys to the success of the
English loan. While England had the ability before the war to discount
$2,500,000,000