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Financing War
by Ken Wright
Early in 1915, the British Government began to feel the financial pressure of
the war and indicated to the Australian Government that it would be better if
Australia could finance her own share of the war effort. After deducting the
war loans already received or promised by Britain, the Australian Government
concluded the war was going to be more of a financial burden to the country
than first realised in 1914.
The Government decided to raise loans from the public and the Commonwealth Bank
of Australia was entrusted with the job of managing the operation on behalf of
the Commonwealth Government. On the 1st July 1915, the first of seven war loans
was launched with the Government hoping to raise 5 million pounds. Public
enthusiasm for the war effort was so great; that the sum received at the close
of the first loan was 13,389,440 pounds.
The excellent result of the first loan was achieved by a general newspaper
appeal but with the second loan launched on December 1st that same year, the
Treasurer decided, in addition to newspaper appeals, a circular letter would be
posted to every resident in Australia who had an income of 300 pounds or more a
year urging their support. The public response was excellent for the second
time. So much so that the financial newspapers in London said, ‘ It was a great
financial achievement to float two loans in such a short space of time and it
was evidence of Australia’s undiminished determination to remain in the war and
also demonstrated Australia possessed very real resources of her own’.
The third loan began on June 1st 1916, with the usual newspaper appeals but the
Government decided a more vigorous appeal was needed to encourage small
investors. A plan was formulated for employees to make applications through
their employers to purchase war loans on instalment payments over a 10-month
period. The idea was successful and almost four times the number of people
subscribed to the third loan than they had for the second loan.
By now, the Treasurer began to wonder how long Australia could keep up her war
loan contributions but the war need money so loan number four was opened on
December 23rd only six months after the third loan appeal. This caused problems
for people who still had not paid off their previous instalments on loan number
three. The Government wisely left it up to the individual subscriber to pay by
10 monthly instalments. The Australian public surprised the doubters by over
subscribing the loan by three and a half million pounds. The generosity and
patriotism for the war loans had been overwhelming considering Australia’s
small population, but how long could it last?
War loan number five started on September 6th, 1917 and number six on February
17th, 1918. The Government, in both cases still got more than they required but
not by much. War had galvanised into activity the vast latent resources and
financial potential of the Australian people and so far, the public had given
more than generously for war purposes. However, the closeness of what monies
were required for the fifth and sixth war loans and the amount given by the
public caused consternation in Government circles. If the war was going to
continue into the foreseeable future, the Government was worried that should
they attempt another loan, the citizens might not be as generous as they had
been in the past. Unfortunately the war was soaking up money like a sponge
therefore the Government had no choice but to launch war loan number seven with
the hope of raising 40,000,000 pounds.
Number seven-war loan was opened on August 1st 1918 and also would be the last
as the war ended in November. To ensure this loan reached the required amount,
the Treasurer announced on the 25th September that it was the Governments
intention to place before Parliament, legislation called ‘The War Loan
Subscription Bill ’compelling everyone to contribute to war loans in proportion
to their means. He felt the patriotic spirit of people to give voluntarily,
had, in the past, been most generous, but could not be relied upon in the
future. Australians did not need to be forced to support their fighting forces.
Mrs Bruce was just one of many who supported the cause. Her son, Robert Bruce
was an Ambulance driver who was wounded in action near Pozieres in August 1916
and was sent home for discharge in July 1917. Although her son was safely home
she still wanted to do her part to help win the war. On the 24th October, Mrs
Bruce purchased a war loan from the local State Savings Bank branch in Moonee
Ponds, Melbourne, and along with thousands of like minded citizens, helped to
give the Government war chest more than 4 million pounds over the amount
required.
The Governor of the Commonwealth Bank of Australia [1912-1923] Sir Denison
Miller summed up Australia’s efforts in connection with the various war loans
during the Great War as a stupendous achievement but apart from national
generosity, other factors helped to make the loans a success. Throughout the
country, newspapers daily urged people to purchase loans. The British War
Office had used a new war machine called a ‘tank’ to help promote their war
loans and sent one to help in Australia’s promotional efforts. The arrival of
the tank in July 1918 caused tremendous interest. So much so that three
replicas were built to go on public relations tours raising money for the war
loan. A mock up of a destroyer was erected in Moore Street [now Martin Place]
in Sydney, manned and guarded by sailors while VIP’s made stirring speeches
about the virtues of the seventh war loan from the deck. Aeroplanes flew over
the city dropping leaflets commending the same loan. Anywhere large crowds
gathered, midday addresses appealed to the patriotism and purse of the crowd.
The launching of the loans throughout the towns and cities of Australia was
carried out with almost as much effort as that which was used to attract
recruits into military service.
The Commonwealth Bank carried out its allocated task with dedication and with
remarkable organizational ability with the full cooperation of the great
trading banks, government savings banks, friendly societies, insurance
companies and the stock exchanges. The War Loan Subscription Bill was quietly
scrapped, as it did not apply to peacetime although it’s possible that many
investors were influenced by the threat of compulsory war loan subscription.
This might explain the extra money in comparison with the previous two loans.
In the final analyses, it was the openhearted generosity and the staunch belief
in the cause that Mr, Miss and Mrs Australia had made the seven war loans so
successful.
[The author is indebted to the Commonwealth Bank of Australia for permission to
use material from their archives.]
References
The Official History of Australia During the War of 1914-1918 vol XI.
The Commonwealth Bank of Australia by CC Faulkner 1923.
The Australian War Memorial Archives.
The Commonwealth Bank Archives Sydney.
Personal Papers in Authors collection.
Copyright © 2006 Ken Wright.
Written by Ken Wright. If you have questions or comments on this
article, please contact Ken Wright at:
wright9w@optusnet.com.au.
About the author:
Ken Wright lives in Melbourne Australia and served 5 years in the Australian army in an Armoured Recon Unit.
He has worked as a book sales rep and correctional officer.
He is married with two children, three dogs, and two cats.
He retired early and began writing 4 years ago and has written numerous published articles published for
military magazines in Australia, the UK and the US.
Published online: 07/11/2006.
* Views expressed by contributors are their own and do not necessarily represent
those of MHO. |
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