The policy pursued during 1912 of holding large cash balances in london and of lending them

The returns of the Board of Trade prove this in the most striking manner, and we give below a table of some of the important articles. A thorough man of business, employing a fair capital in a trade, which he thoroughly comprehends, not only earns a profit on that capital, but really makes of his professional skill a large income. Now too that we comprehend the inevitable vicissitudes of Lombard Street, we can also thoroughly comprehend the cardinal importance of always retaining a great banking reserve. If Council Bills are at a higher rate than 1s. The effect of this cheapness is great in every department of industry. The first banks were not founded for our system of deposit banking, or for anything like it.

There is no tendency to a monarchy in the cotton world; nor, where banking has been left free, is there any tendency to a monarchy in banking either. CHAPTER XIII. Adie. ‘ The evil is, that owing to terror, what is commonly good security has ceased to be so; and the true policy is so to use the Banking reserve, that if possible the temporary evil may be stayed, and the common course of business be restored. 4d. The mercantile community will have been unusually fortunate if during the period of rising prices it has not made great mistakes. Adam Smith describes it so admirably that it would be stupid not to quote his words:–‘The currency of a great state, such as France or England, generally consists almost entirely of its own coin.

Bagehot raised in England, many years ago, to an impregnable position in the unwritten constitution of this country—the doctrine, namely, that in a time of panic the reserves of the Bank of England must, at a suitably high rate, be placed at the disposal of the public without stint and without delay. The basis of it is false.

Such a drain arises from a disturbance of credit within the country, and the difficulty of dealing with it is the greater, because it is often caused, or at least often enhanced, by a foreign drain. and 3,000,000 L. The bill brokers lend most of their money, and deposit the remnant either with the Bank of England or some London banker.

They stand for the first time at a figure which is large in relation to the total trade of the country and to the resources of the Government.

And so it is in all countries not of British descent, though in various degrees.

Germany, accordingly, when she instituted her gold standard, prohibited the issue of notes of a less denomination than 100 marks, in order that gold might actually circulate from hand to hand to a maximum possible amount. ) The absence of the advice and experience, which the officers of a State Bank would possess, is a source of weakness to Government itself. , and borrows 40,000 L. (a) An abnormal year. In fact, in Lombard Street, the principal depositors of the bill-brokers are the bankers, whether of London, or of provincial England, or of Scotland, or Ireland. The lender thinks, too, that the bill-broker being daily conversant with bills and bills only, knows probably all about bills: he lends partly in reliance on the wealth of the broker and partly in reliance on his skill.

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