586 TRANSACTIONS OF SECTION P. 



I. Summary of the m.ore important Emergency Measures during the 



year 1914." 



Events have moved so rapidly within the last twelve months that even com- 

 paratively recent occurrences seem to have become remote. The rush and pres- 

 sure of the times have been such that one is liable to forget matters which 

 happened only a few months ago and would in other circumstances have been 

 regarded ae of the highest importance. Accordingly, for the sake of what 

 follows, the following brief record of dates and facts may be pardoned in order 

 to prevent digression in the later parts of the Report. 



In the early summer of 1914 credit in Great Britain and on the Continent 

 was normal, with perhaps a tendency towards uneasiness. There is an almost 

 inevitable disposition for people to claim wisdom and foresight after the event, 

 but, judging from the quotation of Consols, there was small anxiety. The 

 fluctuations in 1913 had been 75f-71 and the closing price on June 25, 1914, was 

 74J-75, a price well over the average of the previous year. Early in July there 

 were signs of caution in the chief Money Markets, following the assassination of 

 the Archduke Francis Ferdinand at Sarajevo on June 28. The progress of 

 negotiations between Austria and Serbia seems to have produced little effect, and 

 even the presentation of Austria's ultimatum to Serbia on July 24 did not 

 cause any marked uneasiness in London, as it was the general impression that 

 the War would be localised. On the 25th there was a panic on the Vienna 

 Bourse, while in London Consols fell to 72^. Between that day and the follow- 

 ing Tuesday (28th), when Austria declared war against Serbia, was a time of 

 growing anxiety. In the week ending on Wednesday, 29th, Consols had fallen 

 4^, Belgian 3 per Cents 4|, French 3 per Cents 6, Russian 3^ per cent. Bonds 5, 

 Russian 5 per Cents (1908) 8^, Austrian 4 per Cents 8. By this time all the 

 Stock Exchanges had closed except London and the provincial Exchanges, New 

 York and the official (parquet) Paris Exchange. The Bank Rate was raised 

 from 3 per cent, to 4 per cent, on Thursday the 30th. Remittances, both in 

 payment of Stock Exchange accounts due by foreigners as well ae the calling 

 in of credits due from abroad, ceased except from America, while the closing 

 of all the Continental Stock Exchanges except the official Paris market caused 

 large quantities of International stocks to be offered for sale in London. It so 

 happened that this period of extreme tension coincided with the date fixed for 

 the settlement, which had been arranged for July 27-July 29. The failure of 

 foreign clients of brokers to remit the sums due in London for the settlement 

 made the po.'^ition of these brokers precarious, and one important firm with 

 foreign connections failed, while it was currently reported that many firms were 

 prepared to hammer themselves. The failure of foreign remittances to the 

 Stock Exchange affected transactions made before the crisis ; but, after the out- 

 break of hostilities with Serbia, there was a steady pressure of sales from the 

 Continent. The effect of these was a reduction in the price of securities, and 

 this at once re-acted on those stocks held on margin. Loans on St-ock Exchange 

 securities at this period amounted to about 80,000,000?., of which 60,000,000?. 

 was lent by the Joint Stock Banks and the remainder by other bodies. A con- 

 tinued fall in quotations would cause the margin to disappear, and therefore 

 the lenders would call for additional security or they might call for repayment 

 of the loan when due through anticipation of having to meet pressing demands 

 themselves. The latter course v,-as adopted by some, which threatened a further 

 fall in the prices of stocks, and this again, if allowed to continue, would have 

 depreciated the stocks held by banks, which would again have been serious if 

 necessity aroee for the liquidation of a part of these holdings. If demoralisation 

 in the Stock Exchange was to be avoided, some act:on had to be taken upon 

 Thursday, the 30th, and it was decided to close the Exchange. 



The closing of the London Stock Exchange was the first of the series of 

 Emergency Measures; and, to some extent, it influenced those that followed. 



" The inclusion of this Summary involves a change in the numbering of the 

 succeeding sections. 



