Volume 2 - ElectricCanadian.com

THE BANK DURING THE WAR 315was impressed on the branch managers that, since payment ingold or Dominion notes was no longer obligatory, goldpayments should be avoided and Dominion notes paid outonly in small amounts for change-making purposes.Instructions were also given that transactions in sterlingand foreign exchange were to be avoided, except the paymentof small sums for ordinary travelling or living expenses toholders of travellers' letters of credit issued by direct correspondentsof the bank in Great Britain and the United States.No payments were to be made on letters of credit issued bybanks on the continent of Europe, or by British and Americanbanks which were not correspondents. An embargo wasalso placed upon cable payments for the good and sufficientreason that the cable companies had been prohibited from takingmessages in code payments under commercial lettersof credit, and the issuance of letters of credit, travellers'cheques, or drafts and money orders payable abroad. Themanagers were instructed to decline everything in the natureof new business or the enlargement of existing credits, and towarn borrowers operating under authorized credits to usethem as sparingly as possible. These drastic restrictions onordinary banking operations show what a revolution had beeneffected within twenty-four hours by the outbreak of war.On August 6, it was deemed necessary to give furtherexplicit instructions as to foreign business, in these terms:"All drafts drawn by foreign correspondents (except those inthe United States) on the branches of this bank should bereferred to the branch at which the account is kept, forinstructions. If the draft is drawn by any institution whichhas no account, but is advised as being in order by the London,England, branch or the New York Agency, it may be paid.Drafts of any other nature whatsoever should not be paidwithout reference to this department; in fact absolutely noforeign transactions must be undertaken without referenceto us, except in cases where the funds are already in hand ordefinite instructions regarding their treatment have been