In 1912 Lloyd George approached the reform of the English land system by way of a land com mittee. He sketched the main lines of his policy in a series of speeches throughout 1912 and 1913. But just as he approached this venture his way was barred by two events—one personal and the other national. The first was known as the "Marconi Affair," which produced a grave crisis in Lloyd George's career. He had been persuaded by his friend Sir Rufus Isaacs (later Lord Read ing) to take LI,000 worth of shares in the American branch of the great Marconi company at a moment when the British Post Office was discussing the terms of a contract with the British company. The two companies were separate, and there could in fairness be no accusation of anything beyond carelessness. But Lloyd George—at that moment chancellor of the exchequer—was too formidable a political figure to be let off lightly. The proceed ings became the subject of an inquiry by a committee of the House of Commons, and he was gravely censured in the report of the chairman, Sir Albert Spicer, a prominent Liberal member of Parliament, although the majority of the committee acquitted him of serious blame. A majority of the House of Commons replied to the opposition attacks by a vote of confidence in Lloyd George. But for the moment his position was shaken.
Already overshadowed by these events, the land proposals were now effectively blocked by the far greater crisis of Irish civil war. Ulster, organized by Sir Edward Carson (later Lord Carson), threatened an armed defiance of the Govern ment. This defiance had now its first effect in the revolt of the officers at the Curragh against the orders issued for carrying out the prospective Home Rule policy. Faced with the possibility of a military revolt both at the Curragh and at Aldershot, Lloyd George took a very grave view of the situation and devoted all his energies to preserving civil peace. But at this moment, at the very heart of this Irish crisis, there came the vaster and more momentous challenge of the World War.
Lord Grey of Fallodon in his memoir, Twenty-Five Years, 1892-1916 (1925), gives a vivid account of the state of division that prevailed in the liberal cabinet in the fortnight before the outbreak of war. During that period the attitude of Lloyd George was deeply affected by his position as chancellor of the exchequer. On the Saturday before the declaration of war—Aug. r, 1914—the governor of the Bank of England headed a deputation to r 1, Downing Street, urging the policy of neutrality upon the Government. The same governor on Monday, Aug. 3, when the Germans invaded Bel gium, telephoned to Downing street withdrawing the opposition of the City, and declaring that they were now in favour of war. This change of opinion in the City was highly dramatic, but it reflected the attitude of the chancellor of the exchequer. Lloyd George at first was not in favour of Great Britain being drawn into a contest between the two great warring groups of Europe unless some British interest or some British obligation were clearly involved. Accordingly during the previous week he did not take up the decisive attitude against Germany which he adopted in 191f, when he held the view that the claim of Germany to go to war with France over Morocco clearly involved a British guarantee (under the Entente). Once Belgium was invaded, how
ever, and the neutrality treaty of 1839 defied, all hesitation left him; and never from that moment forward did he doubt that the military machine of the Central European Powers must be de stroyed. Thus it was that Lloyd George entered upon a new phase of his career—that of war statesman.
The first great civilian duty of the war fell on Lloyd George. As chancellor of the exchequer, he had to secure the finances of the country. While Lord Kitchener at the war office was organizing the armies, Lloyd George had to see that the credit of the country did not collapse. At the very opening of the war he called together the governors of the leading banks and arranged a mora torium which prevented a panic. All the gloomy forecasts of the breakdown of finance so freely indulged in by the opponents of the War were in a moment dissolved into thin air. During the first so months of the war he remained chancellor of the exchequer; and thus on him fell the main financial responsibility. By com mon agreement of all parties he placed British finance on an impregnable foundation.
The insufficient supply of shells and guns at the front was exposing British armies to an in tolerable inequality of loss. The crisis which followed on the general realisation of this fact in England broke up the liberal government, May 19, 1915, and substituted for it the first coali tion administration, of Asquith and Bonar Law. The government was entirely reconstituted. Perhaps the most important change was the creation of a ministry of munitions—offered to and accepted by Lloyd George. This ministry was boldly entrusted with the whole function of providing war armaments, hitherto part and parcel of the duties of the war office. It was natural that the war office should resent this subtraction from their powers. But it was now quite clear that, in so great a war, the supply of muni tions would be a function on a scale so large as to require a separate department. The new enterprise was rather a national movement than an ordinary office of state. The government work shops at Woolwich and elsewhere had been modelled to supply arms for a small peace army. Now that Kitchener was calling forth from the nation by his magnetic appeal an army of 2,000,000 there had to be a corresponding effort to supply them with weapons. In order to achieve this, Lloyd George put forth all his powers as a democratic orator and organizer. He first called on the private armament firms to make a new and gigantic combined effort; and they gave him splendid support. But this was not enough. He was compelled to create a vast network of new fac tories and workshops, and to rally to his effort a huge army of workers, both men and women. He set out to supply the army not only with sufficient shells, but also with the great guns and ex plosives rendered necessary by Germany's extensive preparations. Above all, he had to create the machine-guns, hand grenades, trench mortars, and other equipments which were now absolutely necessary for the efficient conduct of a war which was from day to day taking on new types and forms.