File 1262/1915 Pt 2 'Persia: Financial assistance: The Moratorium' [‎325v] (414/424)

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with a view to assisting those deliberations, my Lords have ventured to set
out in somewhat full detail the ideas which have occurred to them in regard
to the scheme which they have in mind, as they are anxious that, if it can
possibly be carried to fruition, the opportunity should not be allowed to slip
of inviting the people of India to extend to the financial sphere that ready
co-operation which their loyalty and patriotism have already prompted them to
offer with such brilliant results in the sphere of military operations.
I am to ask that Mr. Chamberlain will favour their Lordships with his
observations upon the subject at as early a date as possible.
The Under Secretary of State
for India.
I am, &c.,
John Bkadbury.
Annex :—Treasury to Colonial Office.
16,147. (Pressing and Confidential.) Treasury Chambers,
. Oth July 1015.
I am directed by the Lords Commissioners of His Majesty’s Treasuiy to
advert to the answer given in the House of Commons on the 30th ultimo by
the Chancellor of the Exchequer to a question by Sir Edwin Cornwall relative
subscriptions to the new War Loan from residents in the Dominions.
While my Lords are not aware whether ihe aggregate total amount of cash
that might be obtained from this source if special efforts were made to attract
subscriptions of the kind in question would be really considerable, they
desire me to say, for the information of Mr. Secretary Bonar Law, that the
numerous enquiries and suggestions made to them in this connection appear to
indicate the existence of some appreciable amounts of money, which, for
various reasons have not been and cannot be attracted by offers of loans local!}'
hy the Dominion or Provincial Governments, but would be readily subscribed
both on patriotic and financial grounds to a loan, carying with it the security
of the Imperial Government. Difficulties as regards the cost of remittance,
and still more, the fact that the British income tax has to be paid by residents
m the Dominions upon the interest received m respect of holdings in loans
issued in the United Kingdom, combined with the absence of special facilities
such as provision for the payment of interest locally, make it improbable that
the sources in question will contribute to any material extent to a loan so
issued.
< )n the other hand, if capital is in fact available in the Dominions for the
purpose of aiding the prosecution of the war, it would be of very great
<id\ ant age that it should be drawn upon at any rate to the extent necessarv to
finance the war expenditure of the Dominions themselves, and so to relieve
the. burden upon the resources of the United Kingdom created by His
Majesty s Government having to lend to the Dominions for this purpose.
In these circumstances My Lords would be glad if Mr. Bonar Law would
take into consideration, in consultation with the Dominion Governments if ho
thinks fit, the question of the issue of War Loans by the several Governments
locally, subject to trie guarantee by the Imperial Government of the principal
and interest of the loans so issued. It might be made a condition of each issue
that the proceeds shoukl be devoted solely to the war expenditure of the Empire,
and be applied in the first place to reducing, avoiding, or repaying borrowings
by the Dominion Governments from the Imperial Government for purposes of
their own war expenditure, and in the second place, if the amount is sufficient,
be lent to the Imperial Government, at the same rates of interest as these at
which the loans are issued, towards meeting the war expenditure of the
Imperial Government.
1 he latter contingency is perhaps an improbable one except in the case of
( anada, where a dollai loan at (sayj 4f per cent, free of British Income tax and
guaranteed by the British Government might be expected to attract investors
in the l nited States of America, thus adding very appreciably to the resources
o( the Empire for the purposes of the Avar, and by providing a much needed
ollsct to the war expenditure of the Empire and ks allies in the Dnited States