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APPENDIX

reports, about 10 per cent of the above marketable securities(i.e. £18,000,000) was in fact liquidated in the first twomonths of the war.

Some offset must be allowed against the above for thesubsequent withdrawal by foreigners of assets held in GreatBritain at the beginning of the war. The existing exchangerestrictions are effective against British nationals, but by astrange oversight (unless it is a deliberate decision in theinterests of the City as an international banking centre afterthe war) are not effective against the withdrawal of assetsby foreigners. I do not make any important allowance forthis, partly because the level of the free exchange (overwhich such transactions are carried out) does not at presentindicate any serious pressure for such withdrawals, and partlybecause if such pressure were to develop we can scarcelysuppose that the post-war interests of the City will be pre-ferred to the immediate task of winning the war. It maybe that a large part of apparent foreign balances and otherassets, which were still held in London at the outbreak ofwar, were not free assets strictly speaking, but were neces-sary to meet various contingent liabilities in sterling or forthe purposes of current business.

Indeed so far from making an important allowance forwithdrawals, we can safely reckon, I think, when we areconsidering the British balance of payments, as distmct fromthat of the Empire or sterling area, on considerable annualaccretions of Empire and other over-seas balances left inLondon . In the last war, even during its darkest days, suchincreases played an important part and had reached a hugefigure by the end of it. I should guess the annual gain fromthis source at not less than £100,000,000 and it might wellbe more.

It would not be prudent to add up all the above figures,which are subject to considerable error, in order to reach afinal estimate of available foreign resources. Nevertheless,taking everything into account, I suggest that we can putthe total of our fairly liquid assets at a figure of the order of£1,000 million at least; and allowing also for the gradualincrease ha our liabilities to overseas creditors, we can financefor more than three years an adverse balance of paymentsof the order of £350 million annually.

Our total gold and dollar resources are appreciably greaterthan in 1914 (cf. table below) in spite of our dollar securities