A Popular History of The Great War/Volume 1/Page 60

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But by the middle of the last week of July excitement began to give place to anxiety. It became clear that even if Great Britain were not actually drawn into the fighting, war on the continent would have serious repercussions in this country. The first signs of the gravity of the situation were seen in the money markets. The stock exchanges of Europe began to face ruin. Everyone wanted to sell, none to buy. Prices fell to what a week before would have seemed impossible figures. On Wednesday, July 29, on the London Stock Exchange, seven firms, unable to meet their obligations, were hammered. Foreign houses, particularly German and Austrian, were pouring securities on London, and selling them for whatever they would fetch. On Friday, July 31, public confidence received a two-fold shock. The bank rate was raised from 4 per cent to 8 per cent, the highest figure recorded since 1873. The second shock concerned the stock exchange. At ten o'clock in the morning a notice was posted on the door of the house to the effect that the committee, acting upon representations from leading members, had decided upon closing until further notice. There followed within a few hours a conference of the leading bankers with the government, the result of which was officially intimated as follows:

Interviews have taken place to-day between the prime minister, the chancellor of the exchequer, and representatives of the Bank of England and the leading joint-stock banks in regard to the financial situation. It is understood to have been decided that the situation is not at present such as to justify any emergency action in regard to the supply of legal tender currency, but in the event of further developments taking place necessitating government action, the treasury will be prepared to take such action immediately.

On Saturday, August 1, the bank rate was raised to 10 per cent. At the same time the banks began to guard their gold. The Bank of England took steps to protect itself, and banks generally met demands on them with bank notes in place of sterling. These notes were exchangeable into gold at the Bank of England on demand, and on Friday and Saturday that week London witnessed the extraordinary spectacle of people waiting outside the Bank of England to obtain gold for paper. The nation was face to face with the possibility of the entire overthrow of its credit system and of a general run upon its banks. Panic is not a fair word to describe the effect of these events on the vast numbers who understood little of their technical

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