at the beginning again, and gradually build up our position, they advised that nothing could be raised in the form of a straight loan in January, or until the effect of the Federal Reserve Board's announcement had worn off. We were, therefore, left at the moment with a prospective weekly expenditure of somewhere near 50 million dollars, in addition to the Exchange. The amount required, however, to maintain the Exchange, instead of remaining at 12 millions, as estimated last September, had been gradually rising, and last week had reached 64 million dollars. For this week the total had reached 76 million dollars. Sir Robert Chalmers, however, was able to congratulate the War Cabinet on the fact that the amount required daily had dropped in the last two days from 17 million dollars - first to 8 million and then 4 million dollars. However the amount required for the maintenance of the Exchange was still very far in excess of the 12 million dollars estimated by the Treasury Committee. In the absence of loans the only way to balance the Exchange was either to take less in goods, or give more, that is to say, in gold or in American securities.
Mr. Bonar Law explained that the question on which he wished to have the decision of the War Cabinet was whether we were to send a telegram to the Allies asking them to restrict purchases in the United States of America, as had been contemplated by the Governor of the Bank of England.
The Governor of the Bank of England said that the proposed telegram, the despatch of which had been advised by the Exchange Committee, was now rather out of date. He had consulted the Exchange Committee that morning, and their view had modified a little in accordance with the improved Exchange situation.
After hearing the gist of the telegram which it had been proposed to send, the War Cabinet decided that, in view of the improved Exchange situation, to send the telegram would alarm the Allies unnecessarily.
They further decided that, at the earliest possible date, a conference should be arranged with the representatives of Russia, France, and Italy. This conference should include, not only the Chancellor of the Exchequer and corresponding Ministers of the Allies, but also the heads of the Governments, and should be held in Paris. The initiative for arranging the conference should rest with the Chancellor of the Exchequer as soon as he considers it convenient.
6. The War Cabinet decided that the policy of curtailing orders in the United States of America, which has been pursued during the last few days, should be continued without making any announcement.
Attended for this Question:
Vice-Admiral Sir H. F. Oliver, K.C.B., M.V.O., Chief of the War Staff, Admiralty.
7. The Chief of the Imperial General drew attention to the proposal of the French Government that two additional divisions should be sent to Salonica by France and England respectively. According to the latest decision, he said, the Allied forces based on Salonica were to be raised to a total of twenty-one and a half divisions exclusive of the one and a half divisions which Italy had been asked to send, and the additional British division involved in the increase had already arrived. Both the British and French forces at Salonica, however, still required many drafts, which had been delayed owing to transport considerations.
The new proposal, he said, had two objects:-
(i.) To meet the Greek menace.
(ii.) To meet a probable big attack by the Germans.