Inter-Allied financial conference in London

The British chronology of the war records that on 14 and 15 July 1916 an inter-Allied conference on financial matters sat in London. The sources give few details of its proceedings. Documents preserved in France show that on 13–15 July representatives of Britain, France, Russia and Italy met in London to discuss armaments and army supplies, and that on 14 July separate meetings were held as part of it at the British Treasury and the Ministry of Munitions. These files survive in the papers of Paul Mantoux, the interpreter who accompanied the French Under-Secretary of State for Armaments, Albert Thomas, at inter-Allied conferences. The British Ministry of Munitions had for a few days been headed by Edwin Samuel Montagu, the successor of David Lloyd George.

The coalition’s banker

Since the first Allied financial conference in Paris in February 1915, Britain had increasingly become the banker of the whole Entente. With its money Russia, Italy and the smaller allies bought arms, ammunition, machinery and raw materials, largely in the United States. According to Russian scholars, under an agreement of the autumn of 1915 London granted Russia credits of up to £25 million a month, and in return Russia sent gold to England, with which the British could pay for orders in America. Needs, however, grew faster than means. The British Treasury under the Chancellor, Reginald McKenna, watched with alarm the dwindling reserves of gold and dollars needed for purchases in neutral America. Financial matters were also to have been discussed in Petrograd by Lord Kitchener, who was killed in June on his way to Russia.

Bark’s negotiations

The talks with Russia caused the most difficulty. The Russian Finance Minister, Pyotr Bark, travelled to London and Paris in the summer of 1916, and the available sources do not allow us to establish exactly to what extent his negotiations coincided with the meetings of 14 and 15 July. The Russian historian L. A. Muravyova calls his summer negotiations in London the hardest of all those he conducted during the war. Russia asked for new credits, although it was accused of not having fully used those it had already received. Bark defended Russian interests firmly and, according to this author, drove a wedge between the allies by revealing that Russia had signed an agreement on purchases in America. The dispute with the Chancellor of the Exchequer ended with Russia being granted a smaller loan than it wanted, secured on Russian gold. The French took the opportunity to raise the question of settling accounts between the allies after the war.

The talks took place at a time when the Entente, in line with the plans agreed at Chantilly in the winter, was attacking simultaneously on several fronts. On the Somme a great Anglo-French offensive was under way, and in the east the Brusilov offensive was consuming enormous quantities of ammunition. A month earlier the allies had concluded at the Paris conference an agreement on joint economic warfare against the Central Powers. The London talks did not settle the question of Entente finances. On 24 August the British and French met on the matter at Calais, and in the autumn Britain concluded a new financial agreement with Russia, which limited the share of British credits that the Russians could spend in the United States.