Romanian loan in London

A British chronology of the war records under 11 January 1915 that the government of Romania had negotiated a loan of 5 million pounds sterling in Britain. According to Romanian economic historians, the loan, bearing interest at 5 per cent a year, was granted in January 1915 by the Bank of England. The credit was secret, and Bucharest was to use it to pay for weapons and war materials ordered in Britain, France and Italy.

The loan took the form of Romanian Treasury bills, which were taken up by the Bank of England. The Bank’s internal history of the war years lists in 1915, among the foreign Treasury bills in its portfolio, exactly £5 million in “Roumanian bills”, alongside much larger Russian and Italian sums. In the summer of 1915 this debt, like part of the Russian obligations, was taken over from the Bank by the British Treasury.

For Romania the money was of the first importance. The country remained neutral, but the prime minister Ion I. C. Brătianu was preparing for a war that was to give him Transylvania. In the autumn of 1914 he had already concluded a secret agreement with Russia. The Romanian army, however, was poorly equipped, lacking above all artillery and ammunition. Before the war Romania had bought much of its armament in Germany, and now it had to look for suppliers elsewhere. As early as December 1914 it had taken out a secret loan in Italy, of about 10 million lire at 6.5 per cent, to buy weapons and ammunition from Italian works.

For the British the loan was meant to help draw Romania over to the side of the Entente. The country, with its large army and long border with Austria-Hungary, could play an important role in the east. London also sought its help for Serbia, so far without success, because Brătianu did not want to bind himself with obligations towards his neighbours.

It did not end with one loan. In October 1915 the Bank of England opened a further credit for Romania, of £7 million and on the same terms. Bucharest also raised money at home. At the beginning of May 1915 a public subscription to a domestic loan brought in more than 400 million lei within a few days, more than had been expected. Despite these efforts, the Romanian army entered the war in August 1916 still worse armed than its opponents.