Volume 2 - ElectricCanadian.com

THE BANK DURING THE WAR 309by the London Stock Exchange. A rapid drop in the prices ofthose securities in which Canadian investors were especiallyinterested gave abundant cause for alarm on this side of theAtlantic. It seemed to be the view that the danger pointwas St. Petersburg, as Petrograd was then known. Thus onWednesday, July 29, the London branch cabled to the headoffice, "Consider that feeling is steadily improving, but alldepends on action of Russia." Later in the same day cameoptimistic tidings. The closing of the markets had beenmarked by an upward tendency, but heavy withdrawals ofgold from the Bank of England for export to the Continentled to the expectation of an immediate advance in the bankrate. "We are still hopeful," ran the message, "that Europeanwar will be avoided. The Prime Minister stated in theHouse of Commons this afternoon that situation at themoment is one of extreme gravity, but that it is hoped thearea of possible conflict would be circumscribed."This hope began to be dispelled the next day (July 30)when the London bank rate was increased to four per cent.,and the discount rate to five per cent., while consols fell to69J^. It was reported that, although the Ulster question wassupposed to have been settled, the Continental situationwas as black as it could well be, and the message added:"There is an emergency meeting of the Stock Exchangetomorrow morning at ten to decide whether they will closeor not."On July 31, the Friday before Britain's entry into thewar, the London Stock Exchange closed until further notice,a step which within the next few days was followed by everystock exchange in the United States and Canada. On that daythe bank rate was increased to eight per cent, (a jump of100 per cent, in twenty-four hours) and the general marketrate for loans to ten per cent. The Bank of England wasfacing exceedingly heavy demands for gold and advances,and the Government had given it authority to issue fiduciarynotes at its discretion. On August 1 Germany declared war