In trying to picture what would happen in the London Stock market should such a war as that which Englishmen are always discussing really occur, we must take into account not only the mass of securities that would be directly affected, but also the great burden borne by London banks and bankers in security issues all over the world. On another page we have seen that London’s capital expenditures on new issues in various quarters of the globe in a single year exceeded £267,000,000; in the quarter just closed (September, 1912), these disbursements ran £25,000,000 above the previous year.
That they will continue so to increase is open to no doubt as long as England’s abstention from war is assured; but if there should arise even the possibility of war, it would result in an embarrassment of credit with terribly serious results, such as have never been dreamed of in the world’s history. The many years of peace between the great powers, the many new countries that have been opened to commercial development, and the countless new fields of industrial endeavor that have come into being while this peace has lasted, have served to create a British credit situation huge and complicated beyond all precedent. Any serious interruption or derangement of so vast a system would find a very different situation from that which existed on the Continent in 1870. It would be appalling.
And yet, ere we go too far afield in search of the shivers, the observer must bear in mind that this great credit system of which London is the banker and clearing house, in reality knits together in its international web all the great powers, and binds them so closely together as to guarantee, in some measure, the preservation of peace. That peace hath her victories, and that the creation of wealth through industrial pursuits may serve in this way to prevent armed strife--these are, after all, encouraging indications quite as strong as treaties. To-day the bankers of London and Paris are the war lords of creation. Both these centres loan money, on early maturing bills, to all the world. Stop London’s discounts through an outbreak of war, and gold would pour into that centre at the rate of $200,000,000 a month. “It might be possible to starve her population,” says a recent writer, “but no combination of the Powers could bankrupt London. In the event of war Paris could bankrupt Germany in a week. No war could disturb the credit of the Bank of France; but the German Reichsbank would inevitably go down in the smash. All Germany’s capital is in her own shop. She is doing a great business, and, quite properly, a great part of it on borrowed money. But if her loans were called, she must put up the shutters.”[113]