Chapter 22 Bankrupt Britain chooses war

〖The First World War highlighted the decisive influence of oil on the outcome of the war.Just as the European countries were fighting fiercely and stalemate, the British quietly threw their troops into the oil-rich Arab region...〗 During World War I from 1914 to 1918, it was a well-kept secret that, on the eve of Britain's declaration of war on the German Empire in August 1914, the British Treasury and the British Empire were practically bankrupt.Examination of the actual financial relations of the major warring states reveals an extraordinary context for secret loans, often linked to detailed plans for the redistribution of raw materials and material wealth around the world after the war, especially with the Ottoman Empire believed to have vast reserves of oil The redistribution of regions is inextricably linked.

On June 28, 1914, in Sarajevo, the capital of Bosnia, a Serbian assassin assassinated the Archduke Ferdinand of the Austro-Hungarian Empire, which was the most direct factor that triggered the First World War.After a month of uncompromising bargaining, Austria believed that Serbia was responsible for the murder of the Grand Duke and declared war on Serbia publicly on July 28. On July 29, the day after Austria declared war, Russia ordered a nationwide military mobilization in preparation for war. On the same day, the German emperor sent a telegram to Tsar Nicholas, asking the Tsar not to use force. This telegram really made the Tsar temporarily cancel the order of national defense mobilization. On July 30, the Russian high command persuaded the hesitant tsar to mobilize the army again. On July 31, the German ambassador to St. Petersburg handed over the letter of war to the tsar to declare war on Russia. It is said that the ambassador burst into tears when he ran out of the room after handing over the letter of war.

The German General Staff, which had been preparing for operations on the east and west fronts, officially implemented the Schlieffen Plan.Because of the defense commitment between France and Russia, Germany decided that France had to be defeated quickly, leaving Russia too late to mobilize. On August 3, 1914, Germany declared war on France. At the same time, the German army attacked France through Belgium. On 4 August, just eight days after Austria declared war on Serbia, Britain declared war on Germany.Nominally, Britain had promised in advance to protect Belgian neutrality.And the real reason is by no means based on the principle of cold lips and teeth.

Britain's decision to declare war on Germany in August 1914 was quite literally extraordinary because of the fact that the British Treasury and the pound shilling system (the dominant monetary system in international trade and finance at the time) were bankrupt.A recently declassified internal Treasury memo has raised further questions.The internal memo was written by Treasury staff to Lloyd George, then Chancellor of the Exchequer. In January 1914, six months before the events in Sarajevo, Sir George Pesh, a senior official in the British Treasury, undertook an in-depth study of the state of all important British gold reserves at the request of the Chancellor of the Exchequer.

In 1914, the sterling gold standard was the cornerstone of the world's financial system.In fact, the pound has been so widely accepted in international business and finance that for 75 years the pound itself has been considered "as good as gold".In 1914, the pound was comparable to the dollar before August 15, 1971. Sir George's confidential memorandum reveals the thinking of the top leaders of the City of London at the time: there is another influencing factor in the financial world that encourages banking reform, and this is the growing commercial and financial power of Germany.And there was growing unease that Germany would loot London's gold reserves before or at the outset of a major conflict between the two countries.

The secret memo was written more than six months before the Austrian crown prince was assassinated in Sarajevo. Pesh took note of his concerns. After the Balkan crisis of 1911-12, some of the large German trade banks became more and more sophisticated, and they kept increasing their gold reserves.Sir Pesh warned the chancellor that in the current circumstances any further run on London banks "would seriously hamper the country's ability to raise funds to fight a major war". On May 22, 1914, Basil Blankett, a senior official of the British Treasury, drew up another memorandum for Lloyd George.

The memorandum dealt with the "Effect of War on Gold Reserves," Blankett wrote: "It is of course impossible to predict with any degree of accuracy the consequences of a major European war, in which most of the Continental countries, as well as Great Britain, would be involved, and could be seen anywhere in the world." Of the capital markets utilized, only New York (assuming the United States remained neutral) was able to attract the gold needed for the war. Equally astounding, a letter dated 2:00 am on Saturday 1 August 1914 from Sir George Pesh to Lawrence was just a few days before the crucial date for Britain's decision to enter the war, 4 August. Ed George's letter played an important role.

Dear Mr. Minister: The national business must be based on the credit system, but our credit system is broken, and the top priority is to take action as soon as possible without hesitation to repair the damaged credit system; at this critical juncture, if our largest few With all the banks failing, we couldn't raise the money we needed for the war. The Bank of England immediately suspended hard currency payments (in bullion and silver bullion) and the Banking Act of 1844.This decision greatly increased the gold reserves in the hands of the Bank of England, allowing the British government to pay for the just-declared war against Germany.Because war requires a lot of money to pay for food and military supplies.In addition to gold, the Bank of England issues banknotes to British nationals, which serve as legal tender in a state of emergency.As of August 4th, Britain's financial institutions were all ready for war.

But, as we shall soon see, came the secret weapon of later: the special relationship between the HM Treasury and the Morgan Bank consortium in New York.