Volume 2 - ElectricCanadian.com

THE BANK DURING THE WAR 319of a cheque drawn on it by the bank's agents in Hamburg;and the sudden severance of relations with Germany andAustria, with which Canadian importers and shippers did aconsiderable business, of course worked both ways. Anothermatter which involved serious legal and technical difficultieswas the noting and protesting of bills which had been extendedfor a calendar month under the moratorium proclamationof August 2. Notaries found it physically impossible to notethe bills, and refused to protest them on the ground that theymight incur a penalty for damaging the credit of a firm whichhad taken advantage of the Royal Proclamation. In the endthe bank managed to protect itself and its customers bysending a formal notice to the obligants on such bills,although at first the solicitors of the New York Agencyinsisted on the protest of the bills forwarded by that officeof the bank. Perhaps in this case necessity knew no law.Within a fortnight after Great Britain's declaration ofwar, the Chancellor of the Exchequer, the Right Hon. DavidLloyd George, took the bold step of authorizing the Bank ofEngland to discount at bank rate, without recourse to theholder, approved bills of exchange accepted prior to theproclamation of the moratorium on August 4. This remarkableand far-seeing action was interpreted by the Bank ofEngland in the most liberal way, and enabled the "frozen"resources of the banks and the London bill-discounting housesto be turned into cash without further liability on the part ofthe holder. Not only were bills on London accepting houses"approved" by the Bank of England, but they discounted inthis way the obligations of the London offices of foreign banks,even of those of enemy nationality. It would be impossibleto estimate the relief which this step gave to the moneymarket in London. The result was immediately felt in theresumption of discount business on a small scale, and therelaxation of a stringency which threatened to paralyseBritish trade.On August 21 the Chancellor of the Exchequer asked for