“the gold ran out”: A young man’s letter at the outbreak of the First World War

Cecil Grundy

Cecil Grundy

Cecil Grundy was working for Burberry at the outbreak of the First World War. Having left England two years previously he was working in their Argentinian branch. On Tuesday 4 August 1914, the day war broke out between England and Germany, Cecil wrote home to his family living near Wandsworth Common. Cecil returned to England a few months later. Cecil was twenty years old standing at 5ft 11” tall with a 35” chest. He spent four months with the Honourable Artillery Company before entering Sandhurst and being appointed to a commission in the Duke of Cambridge’s Own, The Middlesex Regiment commencing on 14 July 1915. In October 1915 he was wounded after inspecting the wire above his trench. A few weeks later he died from gangrene. Cecil’s younger brother was Ronald Grundy who you can read about in an earlier post.

Letter 4 August 1914:

Dear father, mother and boys,

Although we are so very securely away from the war it has already caused several startling and unlooked for changes in our Republic.

As was to be expected there was a big run on all the banks the first day that things began to look at all serious, and in reply the government at once ordered them to remain closed for the following week.

At the Government Exchange where they are guaranteed to give gold in exchange for one paper currency whenever it is asked for, the gold ran out the first day and they were forced to shut up shop at once. This is exactly what I expected would happen whenever a serious monetary pause arose, for I am convinced that the nation has issued millions more bills than ever it could realise if called upon to pay up.

It has already recognised that when the banks again open on Monday there is likely to be another big rush, and the government calmly proposes to meet this by issuing a further 200 million dollars in paper. This to me seems the height of folly, for though the issue will be guaranteed by the nation, everyone knows its got precious little to back up its guarantee with – always borrowing right and left and if it ever takes place it will be bound to seriously injure the credit of the nation and probably reduce the purchasing value of our banking accounts by 5 or 10%. Gold being essential to all those called to Europe in aid of their respective countries, the demand has been tremendous and the supply being meagre in the extreme its value has shot up with a bound and an English sovereign now values at $16 – it [sic] usual price being $11.45 – and by tomorrow it will doubtless be up to $20.

The first page of Cecil’s letter

Scan 77


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