Stuk 8 - Copy of a letter from Edwin Montagu to H. H. Asquith

(Place of writing not indicated.)—States his views on the general situation, which he has arrived at independently, having had no opportunity for discussing them with colleagues.—It would appears to ‘the ill-informed and inexpert eye’ that all schemes for driving the Germans out of France which have hitherto been tried or suggested must be abandoned. The Anglo-French offensive, about which Joffre and French were optimistic, has failed. More troops would be required for the success of such a frontal attack, and they cannot surprise the enemy without lateral communications which enable troops to be quickly concentrated at a given point on an extended front, while the lavish use of high explosives was also found to be ineffective.—The kind of misjudged optimism associated with this campaign is dangerous to morale. It occurred to him that the Germans might be drawn up to Paris again by a calculated retreat, thus lengthening their line, and then attacked with hidden forces from the south, but the tactical difficulties involved and the current state of French feeling make this impossible.—Although high explosives do not lead to decisive victory, offensives unaccompanied by heavy artillery and plentiful ammunition only result in numerous casualties. Heavy guns, however, are scarce everywhere. The future of the war will largely depend on mechanical invention, but the success of any scientific surprise depends on it not being used until it is available in sufficient numbers to make its employment decisive, and it is unlikely that any such machines will be available for many months. Moreover, it is a waste of human material that attacks are unrelated in the different theatres of war. In view of these considerations, and since the Russians are, as he understands, incapacitated till next March, it is essential that they use the intervening time to prepare for an overwhelming action throughout Europe.—Since the war is likely to last a long time, finance will become increasingly important, but if they go on as they are they will not be able to endure long enough to ensure an undoubted victory.—The first problem is that the Government has been trying to prevent the people from feeling the effects of the war. It has been suggested that consumption might be curbed by heavy taxation or forced loans, but this would merely lead to demands for increased wages. Rather, an appeal should be made to the people to consume less, the import of unnecessary articles should be prohibited, and supplies should, if necessary, be limited. Before the war Germany had a commercial advantage in the lower standard of living of its people, represented by lower wages, and during the war this has lowered even further by the assent of the people to Government action tending to reduce consumption—a lesson of self-discipline which will be useful to the Germans at the end of the war, whatever happens. In Britain, conversely, the working classes are in more constant employment and their wages and standard of living are higher than ever before. ‘They must be made to feel the pinch of war.’ Unnecessary imports should be prohibited, and bread, meat, and perhaps other items should only be sold by card or ticket [i.e. rationed]. The reduction of consumption is specially important for Britain because it imports so much of what it consumes.—This policy must be accompanied by rigid economy in Government. He has urged the Chancellor of the Exchequer to undertake an inquiry with a view to reducing waste in public departments, something which Montagu cannot do by himself, but which can only be done by the Chancellor with the support of Cabinet Ministers, setting their loyalty to their own departments aside. The War Office and the Admiralty must be included in the inquiry. He is glad that public opinion is turning against systematic waste in camps and hospitals. In his view the housekeeping and cooking of ordinary regimental camps (at home, at least) should be done by capable women, not amateurs, and places like the Carlton and the Ritz, where people eat and drink luxuriously, should be closed.—Demands for extravagant pay must also be resisted. Many army officers are paid very highly, and the separation allowance paid to married men in the army is much greater than that paid by the Germans. The War Office’s tendency to pay a man at a rate as high as it has been at any time of his life, whatever his occupation, must be checked. The Royal Commission, chaired by [Henry] Duke, set up to issue compensation for damage sustained by the operation of the Defence of the Realm Act, should not be stopped, but the evidence heard by it should be ruthlessly published to pillory the unpatriotic. For instance, while the Commission rightly refused to compensate a man for damage to his sporting rights, they made an award of £10 to Lord Aberconway.—The time has also come to tackle the selfseeking and unpatriotic conduct of the joint-stock banks, who have constantly sought (though unsuccessfully) to obtain money from the Government or the Bank of England at a lower rate than they would lend it to the public, in order to increase their profits, and have not really been helping the War Loan. If they do not mend their ways, the Government should announce a rise in the interest on the loan to 5%, keep the subscription list open, and, when the banks’ business became impossible, intervene to guarantee their depositors, leaving their shareholders to suffer. Even now, it appears to be their intention to keep their dividends as usual, notwithstanding the serious depreciation in capital values.—The next problem is the American Exchange position. The British can only prolong the war by flooding America with gold, but this can only be done if the Russians and French agree to contribute a proportion relative to their own gold reserves as compared with those of the British. If the Allies’ gold cannot be mobilised, they must resort to inconvertible paper. They can, of course, sell securities in America, but they do not want to flood America with her own securities or permanently diminish Britain’s wealth by parting with all its American investments. However, means of controlling the volume of sales by altering the minimum price in England are being investigated. Suggests issuing a War Loan free of income tax in Ottawa, in the hope that America would also subscribe to it.—Efforts to restrict the resources of the Germans must continue. Much trade with Germany still goes through London, including remittances for transactions from Germany to neutral countries, but it is difficult to detect because most of those involved do not know that they are trading with the enemy but simply take no trouble to ensure they are not. It can only be stopped by one or two successful prosecutions and by blacklisting certain Continental and American firms.—Despite all temptation, nothing must be done to make funds available for the Germans in America. It is true that the British need ships, but to purchase or allow the sale of interned German ships would be as useful to the Germans as exporting to Germany or America an equivalent amount of gold for their use. The Germans could use the money to buy American goods which could not be imported into Germany, then mortgage those goods and use the money to buy more goods. Attempts to starve Germany should not be abandoned, since, apart from the confession of weakness that would involve, a bad harvest in Germany means that they are nearer success than ever before. Repeats his recommendation that a new War Trade Department should be formed, the Board of Trade, in its anxiety to maintain trade, having been too easy with the Germans.—His most important point is that the Government’s continued recruitment of men of all ages and occupations is unsustainable. The necessary increase in export trade can only be achieved by employing more men, not only in munitions but in their normal jobs, and there is no point in increasing the size of the army even further when it cannot be equipped as it is. If they had begun the war with a smaller army and refused to enlarge it beyond a certain point, it would be smaller but better equipped, and they should have been able to make munitions for the Russians and be more use to the Allies. Refers to Asquith’s journey to France next week, and warns that he will eventually have to take over the whole finance of that country, since France was heavily in debt when the war began, but no-one has had the courage to raise a loan or increase taxation. ‘The English cannot be compelled to do anything but part with their money: the French can be compelled to do anything but will not part with a centime.’ Suggests that, if the French will agree to suspend attacks against the Germans for the winter (though continuing to try and kill them), the British should put a specified number of men under their command and finance them if necessary (though the British can only provide such finance if they can make money by selling abroad, as they alone of all the Allies can do owing to their command of the seas). This mutual arrangement would avoid friction between the French and English. It would not be in the interest of the French to let the Germans break through the English line any more than through the French line. Emphasises again that they cannot in-crease the army and do all the other work needed if the war is to be prolonged. He would not object to compulsory military service for young men, but older men required for other work should no longer be recruited. It is a mistake to think that the output of munitions can be increased by increasingthe number of orders, since all orders are competing for the same raw material, machinery, and tools. What is required is more men. The manufacture of unnecessary articles for home consumption should be stopped and profitable export encouraged, but either the Government should either take over the export firms and thus obtain the whole profit or there must be so heavy a tax on war profits as to prevent justifiable jealousy between one part of the public and another. The army is presently too large. It might be worth considering dividing profit from trade during the war between the Allies, but many soldiers already enlisted should be taken away from training. The size of the army should be governed by the number of men that can be spared from other occupations, and the number of men they can equip to ensure they are not helplessly slaughtered. Since there is no current prospect of adequately equipping more than 1,250,000 men, the number of men training and drilling should not exceed 2 million. The rest should be sent back to work, and future recruitment should be made from the young, from unnecessary trades, and from considered localities, as he urged when he was a member of the Cabinet. Really recruitment should be under the charge of Lloyd George, owing to its close connection with the production of munitions.—Apologises for the length of the letter, which was written hastily. If any of the suggestions are valuable he would like the opportunity of revising them. The crux of the matter is that, in order to finance the war, finance must be freed of certain obligations and a new war rigour must be imparted into national life. They will have to pay to nurse the French through the winter, because French finance has practically collapsed. But this cannot be done at the present rates of national and personal expenditure and production.

(Carbon copy, with handwritten alterations.)

TRANSCRIPT:

3rd July, 1915.

My dear Prime Minister,

I want to ask you to read—this is the first spare moment I have had for some time—my views on the general situation. It may well be that you will find they coincide with other views which have already been expressed to you, but I have had no opportunity of discussing this matter with any of your colleagues; my conclusions have been arrived at independently and I feel it my duty to lay them before you.

First, as regards the military situation. The ill-informed and inexpert eye would gather the impression that all hope of driving the Germans out of France by any method which has at present been tried or been suggested must be abandoned. The great Anglo-French offensive of 1915, which was anticipated so optimistically by both Joffre and French, has failed. So far as I can gather, the French delivered their attack against Germans of practically equivalent force, although the drill-book would inform the student of elementary military maxims that for a frontal attack the minimum force is three to one. Further than this, it would appear to have been demonstrated that unless lateral communications are available which will enable lightning concentrations of troops at a given point on an extended front, no hope of taking the Germans by surprise can be entertained. And thirdly, those who base their hopes upon a time when the British Army is bounteously equipped with high explosives are not profiting by the lesson to be learnt from the fact that the French have such an equipment, have expended it lavishly and have found it useless.

Optimism which takes account of the factors in your favour and against you, weighs them up judiciously and comes to the conclusion that the balance is on the right side, is a great confidence-producing quality. Optimism which springs from an enthusiastic appreciation of the factors on your side and ignores the factors against you is bound to produce disappointment, deterioration of moral, and distrust of judgment. I cannot help thinking that this latter sort of optimism is much more the quality that we have seen in France than the former. It has occurred to me that the best way of moving the Germans would be to adopt the heroic course of secretly devising a great retreat, heralded possibly by fictitious stories of disaster and defeat, of lack of ammunition and even fraudulent casualties; to draw the Germans once again up to Paris, to lengthen their line and to spring upon them hidden forces concentrated, say, in Marseilles, from the South. This would perhaps require a Napoleon to carry out and even if plausible it would seem to be, in the present condition of French feeling and the hopes which have been constantly nurtured among them, impossible.

Now, although high explosives do not seem to be the wherewithal to win decisive victory, it is quite obvious that without heavy artillery supplied with plentiful ammunition, an offensive merely means the butchery of brave men. More and more as the war goes on both the French and the English are becoming convinced that you cannot do without a very large supply of very heavy guns. We have been concentrating our attention on 18-pounders and it would seem that this fact had only recently been realised. If you scour {1} the civilised world you cannot get enough heavy guns for our purpose, even, I believe, for next summer’s campaign. More than this, I am perfectly certain that the future of this war depends largely on mechanical invention and I rejoice to hear rumours of the organisation of inventive capacity, but any scientific surprise that we may have for the Germans depends for its success upon its not being used until it is available in sufficient numbers to make its employment decisive and if we begin now to devise new machinery it is not likely that for many months to come such machines will be available in proper numbers. Again it does seem to me to be a waste of precious human material that attacks should be unrelated in the different theatres of war. The Russians are now incapacitated until, I believe, next March. Surely from all these considerations it is essential that we should set down quietly and prepare by every means in our power for a concentrated and overwhelming action throughout Europe when we are ready, but not before.

If this is so, if it be understood, recognised calmly and coolly that this war must last long, that any peace which would not be equivalent to a defeat cannot be achieved in the near future, then the war becomes more than ever a war of endurance. Finance plays a larger and larger part in it, and I say with all the emphasis in my power that if we go on as we are doing now, despite our greater financial resources, we shall not be able to endure with sufficient ease long enough to ensure an undoubted victory.

The first difficulty is with the people. We have, I think been too long running the war on the principle that nobody ought to feel it if we can avoid it. This is going to be disastrous. People talk of curbing consumption by heavy taxation or forced loans from the people. I do not see how you would get any further by any resort to such an expedient. All the way through we have found that if the privations of war begin to be felt by the working man he is in a position to blackmail the Government and to demand an increase of wages. (I am told that the arbitrator in the Post Office case is going to award in favour of the Post Office employees.) If you taxed or deprived him of any proportion of his wages we should have all round the demand, both from Government contractors, private people and employees of the state, {2} that owing to the heavy taxation it was essential that their wages should be increased and consumption would be as great as ever. It can only be cured by a successful appeal to the people not to consume so much, by an actual prohibition of import of things we can do without and, if necessary, by a limitation of supplies. Before the war began the Germans had an advantage over us in the commerce of the world, despite greater prices for raw materials, by a lower standard of life amongst the inhabitants of Germany represented by lower wages. During the war this standard of life has been lowered still more by the Germans cheerfully assenting to Government action which tended to reduce consumption and at the end of the war, whatever happens, this lesson {3} of self-discipline will be most useful to the German. In our country precisely the opposite has happened. The working classes are in more constant employment and earning higher remuneration than ever before and their standard of living has increased. They must be made to feel the pinch of war. I would urge that our imports should be examined from beginning to end and that things we can do without should be prohibited and I believe further that the time has now come when bread, meat and perhaps other things should only be sold by card or ticket, for the same reason as the Germans have done it, to restrict consumption. It is far more important for us than for them because we import so much of what we consume.

But this must be accompanied by rigid economy in the Government departments and no consideration of the convenience of the public should stand in the way of a curtailment of every unnecessary service, {4} even in those offices around which sentiment clings, such as the Local Government Board and the Education Office. I have urged upon the Chancellor of the Exchequer that the Treasury should undertake an enquiry with a view to trying to reduced expenditure and stopping the waste which has been going on in all public departments. It cannot be undertaken by me; it must be undertaken by the Chancellor himself with the full authority of the Cabinet and the cooperation of all Cabinet Ministers, however much they may love their own departments. The War Office and the Admiralty must be included in this enquiry. I am rejoiced to find that public opinion is being aroused on waste in camps and hospitals and it is the system and not the men who work it that is at fault and should be altered. I believe that an ordinary regimental camp would get on far better, at home certainly, if their housekeeping and their cooking was done, not by amateurs but by capable women; {5} and I believe too that places like the Carlton, the Ritz and other places where people eat and drink luxuriously, ought to be closed.

Then too we must resist demands for extravagant pay. I wonder how many thousand British officers are in receipt of emoluments far in excess of the miserable £800 a year which is all that Joffre himself gets. As we recruit, the proportion of married men in our Army increases. Our separation allowance of 12/6 a week compares most unfavourably from this point of view with the German separation allowance of 6/– a month. The War Office always believe that whatever a man’s employment his emoluments should be as great as they have been at any time of his life. This tendency must be checked. We have set up a Royal Commission with Duke as Chairman, the object of which is to compensate people for damage sustained by the operation of the Defence of the Realm Acts. I do not believe that this Commission should now be stopped, but I would ruthlessly publish the evidence heard before it in order to pillory the unpatriotic. The Commission very rightly refused to compensate a man for damage to his sporting rights. On the other hand they awarded Lord Aberconway £10 for certain damage sustained. I do not blame Duke, but I would like to direct public attention to Lord Aberconway. These are only two examples.

By economy in the public departments, by urging economy amongst the people, by limiting consumption, by decreasing imports, we shall put ourselves in a position to prolong the war, but much more is necessary. All the way through the War we have been hampered by the selfseeking and unpatriotic conduct of the Joint Stock Banks. The time has, I think, now come to take them by the throat and not to parley with them any longer. They are constantly seeking to obtain money from the Government or from the Bank of England at a lower rate than they would then lend it to the public at, {6} purely to increase their own profits. They tried this again and again from the last Chancellor of the Exchequer without success and I trust that they will be no more successful now, but I believe there is every evidence that they are not really helping in the War Loan and if they do not mend their ways I would tell them that we will raise the interest on the Loan to 5%, keep the subscription list open and when their business became impossible come in and guarantee their depositors, while leaving their shareholders to suffer. Their selfishness is beyond belief and even now, whilst they are asking concessions from the Chancellor of the Exchequer as a price of cooperation in the Loan, I hear that it is their intention—one bank has already carried it out—to keep their dividends as usual notwithstanding the serious depreciation in capital values.

Next the American Exchange position gives rise to the most serious anxiety and if we are to prolong the war it can only be successfully met by flooding America with gold—gold which she will not want to receive; and this can only be done if the Russians and the French will agree to give up hoarding their gold and simply for the purpose of American Exchange agree to pay us out of every £10,000,000 of gold we send to America a proportion prop[o]rtionate to their gold reserves as compared with ours. If we withstand the bankers’ demands and mobolise† the gold of the Allies, we shall be alright. If we cannot, I see visions in the near future of inconvertible paper. We can of course sell securities in America and considerable sales are now going on but we do not want to flood America with her own securities or permanently diminish our wealth by parting with all our American investments. But the stream of sale can always be modified by alterations of the minimum price here in England, & we are now considering some form of organisation. {7} We ought also I think to issue in Ottawa, ostensibly for the Canadians, a War Loan free of Income Tax to which it is hoped that America would subscribe.

At the same time we ought to relax no effort to restrict the resources of the Germans. I am still of opinion that trading with the enemy goes on on a very large scale in London, that it is almost impossible to detect because it is done not so much by men who know that they are trading with the enemy but by men who take no trouble to make sure that they are not. It must be through London, and through London alone, that remittances for transactions are made from Germany to most neutral countries. The goods and trade bills may not come to London at all, but the finance bills certainly do and this can only be stopped by one or two successful prosecutions if evidence can be obtained and by blacklisting certain firms on the Continent and in America with whom it ought to be privately agreed in England that no business should be done during the war.

Next I do hope that despite all temptation nothing will be done to make funds available for the Germans in America. It is quite true that we want ships, but to purchase or to allow the sale of interned German ships would be as useful to the Germans as the export of an equivalent amount of gold guaranteed from capture to Germany or America on behalf of the Germans. Once they have got the money they could buy in America goods which they could not import into Germany (in order to restrict our market), {8} mortgage those goods and use the money to buy more goods so t† that the money would be many times more useful to them than its actual value. Next, though we have failed to starve Germany, yet apart from the confession of weakness which an abandonment of our attempt would involve, now that she is threatened with a bad harvest we are nearer success than we have ever been before. If you would accept my suggestion of a new War Trade Department, I am quite certain that we should have more success than we have had hitherto because I fear there is evidence that the Board of Trade, in its anxiety to maintain as much trade as possible, [h]as been too easy with the Germans.

But now I come to what is really the burden of my prayer. I cannot understand how the Government is content to go on recruiting and recruiting men of all ages and employments. We must increase our export trade and we can only increase our export trade by the employment of many more men than at present, not only on munitions but on their normal avocations. What is the use of collecting a larger army than we have got at present when it is known that you cannot equip the men you have got and that you have no sort of date in view when you can equip the men you are getting. I am perfectly certain that if we had been content with a small Army at the start of the War and refused to enlarge it beyond a certain definite figure, we should have now an Army smaller but better equipped; we should have been able to make munitions for the Russians, which would pay us better, and we should have been more use to the Allies. Let us for Heaven’s sake stop now. You are going to France next week. I am quite sure that sooner or later you will have to take over, if you want the French to go on at all, the whole finance of France. She has a Government which started the War heavily in debt on peace expenditure. Nobody has had the courage yet to raise a loan: nobody has had the courage to put on a penny of taxation. The English cannot be compelled to do anything but part with their money: the French can be compelled to do anything but will not part with a centime. And I think the right plan would be to say, if the French will go on through the winter putting forward every effort to kill Germans, but not to attack, we will place at their command and at their disposal a maximum army of x men and not one man more, but we will finance them if it becomes necessary. We can only finance them, we can only make munitions, we can only find the money, if we can make money: and we can only make money by selling abroad as we alone of all the Allies are able to do because we have command of the seas. I believe that the friction between the Franch and the English would be avoided if the English were under the command of the French and they would be safeguarded by an assurance that the French would not attack. It would not be in the interest of the French to let the Germans break through the English line any more than through the French line. But as I have said, we cannot afford to go on increasing our Army and do the other work that we are compelled to undertake, if the War is to be prolonged. I would not really mind compulsory military service for every young man that reaches the age of eighteen, but I would no longer recruit older men who are essential in other work. It has often been said that the best way to increase the output of munitions is to increase the number of orders. This is a great mistake. When one order to one firm is not punctually executed, you do not cure the mischief by giving an order to another firm. All orders compete for the same raw material and for the same machinery and tools, and the secret of munitions is simply men, men, men. J[u]st exactly in the sam[e] {9} way I would stop as far as possible the manufacture of unnecessary articles for home {10} consumption and do everything to facilitate profitable export, but I would observe that either the export firms must be taken over by the Government who would obtain the whole profit or there must be so heavy a tax on war profits as to prevent justifiable jealousy and envy between one part of the public and another. The question then remains, how large an Army can we support in the field? It is no use blinking at the facts. There are the facts staring us in the face: and I maintain most emphatically that our Army is already too large. We want the men already enlisted for employment. It might well be that it would be worth while considering any profit made out of trade during the war being divided between the Allies, but we ought to take away from training many soldiers that we have already enlisted. The size of our Army should be governed by two considerations: the number of men that we can spare from other avocations, and the number of men we can equip to ensure that they are not helplessly slaughtered. I do not believe that there is any prospect at present of equipping an Army of more than 1,250,000 men in any satisfactory way and therefore our total number of men training and drilling should not exceed 2,000,000. All the rest should be sent back to work and such recruiting as is necessary to keep the Army up to that size and to repair losses, which ought not to be nearly as heavy as in the past period, ought to be undertaken by recruiting from the young, from unnecessary trades, and from considered localities, in the way that I urged when I was a member of your Cabinet. (Really recruitm[en]t should be under L. G’s charge as it is so intimately connected with munition output) {11}

I must apologise for the length of this letter. It has been written very hastily and if any of its suggestions are of value I should like an opportunity of revising them, but the real crux of the matter is that in order to finance this war, which we alone can do, we must be relieved from obligations which hamper us in this finance and we must set ourselves to impart a new war rigour into our national life. If we are to nurse the French, disappointed of their dearest hopes, through the next winter, we shall have to open our purse-strings still wider because French finance has practically collapsed. We cannot do this at the present rate of national and personal expenditure: we cannot [do] this at the present rate of national and personal production. Let us stop this recruiting of men that we cannot arm and turn our attention to the far more valuable duties that I have described.

I am,
Yours sincerely,

—————

Carbon-copy embossed at the head with the royal arms, with handwritten alterations (see below), some of which are evidently corrections of errors made in taking down the letter from dictation. The alterations were presumably also made to the original typed document.

{1} ‘scour’ substituted by hand for ‘starve’.

{2} ‘the state’ substituted by hand for ‘estates’.

{3} ‘lesson’ substituted by hand for ‘reason’.

{4} ‘service’ substituted by hand for ‘servant’.

{5} ‘capable women’ substituted by hand for ‘good cooks’.

{6} ‘at’ inserted by hand.

{7} ‘& we are … organisation’ inserted by hand.

{8} ‘(in order … market)’ inserted by hand.

{9} Mistyped ‘samw’.

{10} ‘home’ substituted by hand for ‘American’.

{11} ‘(Really … output)’ inserted by hand.