Of course we cannot extend such a credit unless we go to war with Germany.  But is there no way in which our Government might immediately and indirectly help the establishment in the United States of a large Franco-British credit without violating armed neutrality?  I do not know enough about our own reserve bank law to form an opinion.  But these banks would avert such a danger if they were able to establish such a credit.  Danger for us is more real and imminent, I think, than the public on either side the Atlantic understands.  If it be not averted before its manifestations become apparent, it will then be too late to save the day.

The pressure of this approaching crisis, I am certain, has gone beyond the ability of the Morgan financial agency for the British and French governments.  The financial necessities of the Allies are too great and urgent for any private agency to handle, for every such agency has to encounter business rivalries and sectional antagonisms.

It is not improbable that the only way of maintaining our present preeminent trade position and averting a panic is by declaring war on Germany.  The submarine has added the last item to the danger of a financial world crash.  There is now an uncertainty about our being drawn into the war; no more considerable credits can be privately placed in the United States.  In the meantime a collapse may come.

     PAGE.

Urgent as this message was, it really understated the desperate condition of British and Allied finances.  That the warring powers were extremely pressed for money has long been known; but Page’s papers reveal for the first time the fact that they were facing the prospect of bankruptcy itself.  “The whole Allied combination on this side the ocean are very much nearer the end of their financial resources,” he wrote in July, “than anybody has guessed or imagined.  We only can save them....  The submarines are steadily winning the war.  Pershing and his army have bucked up the French for the moment.  But for his coming there was more or less danger of a revolution in Paris and of serious defection in the army.  Everybody here fears that the French will fail before another winter of the trenches.  Yet—­the Germans must be still worse off.”

The matter that was chiefly pressing at the time of the Balfour visit was the fact that the British balances in the New York banks were in a serious condition.  It should always be remembered, however, that Great Britain was financing not only herself, but her Allies, and that the difficult condition in which she now found herself was caused by the not too considerate demands of the nations with which she was allied in the war.  Thus by April 6, 1917, Great Britain had overdrawn her account with J.P.  Morgan to the extent of $400,000,000 and had no cash available with which to meet this overdraft.  This obligation had been incurred in the purchase of supplies, both