London, as you know, is the chief money market of the world, and the effect of wars and rumours of wars in any country on the globe is felt at once in the City of London. When it was evident that the four greatest continental nations were setting their armies in motion, stocks and shares fell to such a low price that dealing in them became impossible. Many of the stockbroking firms failed, and business was suspended, not only in London, but on almost every exchange throughout the world. It was thought that there would be a shortage of gold, and from noon onwards on the 31st of July the court-yard of the Bank of England was crowded with people eager to exchange notes for gold. Nevertheless "the Old Lady of Threadneedle Street," as the Bank of England is sometimes called, remained perfectly calm, and inside the building business went on as usual. On the 1st of August the bank rate[165] rose to 10 per cent., and the Stock Exchange was closed. [Illustration: Naval Reserves passing through Portsmouth to join their ships. _Photo, Sport and General._] On Sunday, 2nd August, the Naval Reserves[166] were called up, and the War Office became very active. A number of the London Territorial[167] regiments were on their way to camp for their annual training, but they were ordered to return and remain within reach of headquarters. It was very clear to everybody that the issue of war or peace was hanging in the balance. * * * * * On Sunday, 2nd August, the first important act of war was committed. Look at the map on page 38, and find the river Moselle. Not far from its left bank you will see the city of Luxemburg, which stands in the little independent duchy of the same name, at the south-east corner of Belgium. This state is about as large as the county of Essex, and its population is less than that of the city of Edinburgh. It is a country of low ridges and meadow land, and more than a quarter of its surface is covered with forests. There are good deposits of iron, and many of the people are engaged in mining and smelting the ore. From 1825 to 1867 the state belonged to Germany, and down to 1872 its fortress was in the hands of the Prussians. In that year the garrison was withdrawn, the fortress was dismantled, and the state was neutralized. The army of Luxemburg only consists of 150 soldiers and the same number of armed policemen. Its Grand Duchess is Marie Adelaide, who is now in her twenty-first year.