London Stock Exchange closes
- Category:
- Society
- Date:
- 31 July 1914
- Author:
- Łukasz Skowroń
On Friday 31 July 1914, less than an hour before trading was due to begin, the London Stock Exchange closed its doors. It was the first such closure since the exchange was founded in 1801. London, then the financial centre of the world, stopped trading in securities before Great Britain had even entered the war.
The cause was the panic that had been gripping the financial markets for several days. With each new ultimatum and mobilisation, investors across Europe were selling shares and bonds en masse, trying to convert them into cash and gold. One continental stock exchange after another suspended business, and foreign clients began dumping their securities on the London market. The City of London faced a wave of bankruptcies among brokers and banks whose continental debtors could not or would not settle their obligations. London was the last of the great European markets to close.
The same day the Bank of England raised its interest rate from 4 to 8 per cent, and the next day to 10 per cent, to stem the outflow of gold. Also on 31 July the New York Stock Exchange closed; it did not resume even limited trading until 12 December 1914. At the beginning of August the British government extended the bank holiday and introduced a moratorium on the repayment of certain obligations to calm the situation.
The London Stock Exchange did not reopen until 4 January 1915, and then under strict restrictions, including a requirement that transactions be settled in cash only. The closure of 31 July showed that the coming war would strike not only armies and states but also the world economy, which before 1914 had been more closely interconnected than ever before.
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Meanwhile
(04)Elsewhere in the same days.
- 1 August 1914 · Eastern FrontGermany mobilises and declares war on RussiaOn 1 August 1914 Germany ordered general mobilisation and in the evening declared war on Russia. The war ceased to be a Balkan conflict.
- 1 August 1914 · Eastern FrontFirst fighting on the border of the Kingdom of PolandOn 1 August 1914 the German-Russian border, running through Polish lands, became a front line. In the following days the Germans took Kalisz and Częstochowa.
- 29 July 1914 · Balkan FrontAustro-Hungarian artillery shells BelgradeOn the night of 28–29 July 1914 Austro-Hungarian monitors and artillery shelled Belgrade. These were the first shots of the First World War.
- 2 August 1914 · Western FrontGermany delivers an ultimatum to BelgiumOn the evening of 2 August 1914 Germany demanded that Belgium allow its troops to pass through, giving it 12 hours to reply.
Related events
(04)The same battle, people or subject.
- 4 January 1915 · SocietyLondon Stock Exchange reopensOn 4 January 1915, after a break of more than five months, the London Stock Exchange reopened. Trading was for cash only and not below minimum prices.
- 2 August 1914 · SocietyBritain declares a moratoriumOn 2 August 1914 Britain declared a moratorium on the payment of bills of exchange to save the City of London from a wave of bankruptcies.
- 4 August 1914 · SocietyBritain publishes a list of contraband of warOn 4 August 1914 a British proclamation defined the goods to be treated as contraband of war. It was the first step towards the blockade of Germany.
- 20 August 1914 · SocietyBritain modifies the Declaration of LondonOn 20 August 1914 Britain announced it would apply the Declaration of London on naval warfare, but with changes that tightened control of trade.