Volume 2 - ElectricCanadian.com

328 HISTORY OF THE BANKIt is of course a matter of history that the Germansquadron responsible for these measures changed its course andsailed down the coast to South American waters, encounteringthe British squadron under Rear-Admiral Sir ChristopherCradock at Coronel, off Santiago, Chile. Sir Christopher,who had done so much to free the Atlantic of the Germanmenace, went down before superior gun-power, but was avengedby Vice-Admiral Sir Frederick Doveton Sturdee at the Battleof the Falkland Islands a few weeks later. The latter victorypractically freed the Pacific Ocean of the enemy for theremainder of the war, and not again were Canadian bankerscalled upon to take steps to protect their reserves from theperils of war.At the outset of the war, as was naturally to be expected,Great Britain took steps to withdraw balances from foreignbanks and to obtain payment of such debts due to her fromabroad as could be collected. Even before the actual outbreakof hostilities a steady stream of gold was flowing from NewYork to Great Britain, but this ceased as soon as the seasbecame unsafe. The demand for remittances to Great Britainled to a rapid rise in the value of the pound sterling abroad.Early in the first week after war broke out some small transactionsin cable transfers were reported in New York at thehigh figure of $7 per pound sterling, and a few days later noquotations were to be had trading in exchange had ceased.The demand had not been filled, however, and about themiddle of August it was announced that the Bank of Englandhad named the Department of Finance in Ottawa as a depositoryto which gold might be remitted for its account. Thefact that the City of New York had over $80,000,000 in shortterm notes maturing in London and Paris during the balanceof the year 1914 hung like a heavy cloud over the situation,but this immense sum did not represent half the amount ofindebtedness which it is estimated that Americans werecalled upon to pay. Accordingly, very large sums of gold