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immense capital recently invested which the banks -lend. Money on in joint-stock companies has been loan, we think, would have become drawn from little hoards, which cheap of late years but for the previously lay dormant. But the great growth of joint-stock compeculiar feature of the new posi- panies. If the great and ever-intion is this—that instead of keeping creasing profits of our people had their reserve funds in bank, men been deposited, as before, with now invest them in joint-stock en- the banks, these establishments terprises, for the sake of obtaining would have had so much money to a higher rate of profits. Banks lend compared with the amount of give a comparatively low rate of securities upon which they make interest, for they have to pay them- their advances, that the rate of selves for taking charge of deposits, interest would have fallen. But and for finding appropriate employ. the new coinpanies have immensely ment for their customers' money. increased the amount of securities But by becoming a shareholder in upon which banks are in the habit a joint-stock enterprise, a man em- of lending; they have made almost ploys and invests his money with every man a trader, and supplied out the help of intermediate parties. him with a form of property which and hence is entitled to and obtains banks will lend upon; and in conthe profits of trade subject to no sequence of this, inter alia, the rate abatement. It might be supposed of money has not only maintained thatowing to this change, the itself, but has greatly advanced. amount of deposits in the banks In fact, men nowadays keep their would be diminished-and to some reserve sunds, not in the banks in extent this will be the case (making the form of money, but in the form allowance for the increasing wealth of bonds, shares, and coupons of the community); but it must be negotiable when necessary, and remembered that the money thus bcaring a higher interest than the abstracted from the banks is in great banks could give. To keep money part returned to them from another in bank (save what is absolutely quarter. The decrease in the de- necessary for one's ordinary expenposits of individuals is compensated diture) is now an exploded custom. by the deposits of the new compa- All that we think of commanding, nies. Each company opens an ac- or keeping in reserve, now is, not count with a bank, and deposits cash, but the paper representative with it its spare funds; so that of property, and the interest which what the banks lose in one form comes to us as the holders of these they gain in another. This change, symbols or title-deeds of wealth. however, is important in one aspect. Strange to say, in this city of Banks do not speculate. They lend Gold, gold cannot be seen. We their money only on the best and know, from official returns, that so most negotiable securities, and ab- many millions of gold lie in the stain from employing it in industrial vaults of the Bank, and we inenterprise. · Hence, although they fer that some thousands of soveare of inestimable value in sustain- reigns are kept in each of the other ing commerce, they never take direct banks, as small change for their part in the establishment of new customers' wants. But the prebranches of industry, or the devel- cious metal makes no appearance opment of new national resources. in the business transactions of this The joint-stock companies, however, City of Money. Bits of paper, with do this as their general feature. some writing on them, are the po. They make railways, they open tent agents of the scene. Paper, mines, they manufacture gas, and paper everywhere ; but no goldengage in all manner of reproduc- not even bank-notes. Let a man tive enterprise. In fact, the distinc- go to buy some shares. He sees the tion may be stated thus : -- The rate they are quoted at, and, going companies make the securities upon into the dingy, office of his broker,

commissions him to buy. The bro- porter finds it difficult to carry ker runs out into the busy crowded £500 in gold even for an hour or room of the Stock Exchange, finds two. What a sight, then, it would or calls out for some one who has be if the busy hive had to trot shares of the kind to sell, makes about thus burdened ! Ants in a bargain at the current rate, and their hive, carrying about their brings back either a cheque or a eggs as big as themselves, would be stamped agreement to purchase, a joke to it. And consider, too, which he hands to his client. what insecurity there would be Coupons or certificates are given on what occasions for loss of the preone side, and a cheque on the other. cious coins - what temptations to But no gold--not even notes! The theft or robbery-if the transactions same takes place in the Royal Ex- in this busy place were so conducted. change and Mincing Lane - only It would be quite impossible to carry bills and produce are there dealt in, about such a mass of gold as is need instead of stocks. If you pay a man, ed to liquidate the engagements you give him a cheque. If you dis- which daily take place. Still more, count a bill, you get the produce in a even if it were possible to carry cheque. If you obtain a loan from about these loads of gold, the gold your banker on stock, the amount itself could not be got. To suffice is placed to your credit, and you tell for the operations at the banks and your creditor to draw on you, or on 'Change, fifty 'millions of gold give him a bill. It is really a strange would not be enough. Yet such an thing to contemplate - so much amount of the yellow metal could wealth changing hands : money not be procured. Happily the gold ceaselessly in transitu - yet not a is not wanted. Cheques, bills of sovereign to be seen. It is but the exchange, and bank-notes are found ghost of money that occupies the to be equally valuable and negoticity; or rather, it is money in its able-they represent property quite most civilised form convenient as reliably as gold, besides being and inexpensive. It is the cheque- infinitely more portable, safe, and system – the credit-system; and, convenient. And hence they — or after all, money itself is nothing rather, bills and cheques - constielse than a form of credit – a thing tute to all intents and purposes (whatever its substance) which men the only currency on 'Change and by common consent have agreed throughout the monetary city. By to recognise as a definite symbol means of them, transactions to the of wealth - a representative of pro- extent of tens of millions take place perty.

daily, without a single sovereign The truth is, the whole operations or even bank-note being visible. of this monetary metropolis would We have styled the narrow but come to a standstill if the payments all-iniportant precinct of which we and exchanges of property had to write the City of Gold.

Yet we be carried on in gold. A single have had to say that no gold is dealer sometimes lends, or pays, or visible there. If gold be regarded receives a million sterling or more as an equivalent expression for in a single day; and dealings to the wealth and property, our title is extent of several hundred thousand correct, for the whole place abounds pounds are by no means exceptional in wealth, and deals in it, Neveroccurrences on the part of single theless it is the City of Gold even in individuals. Probably not less the literal sense of the term, for its than fifty millions of property are whole existence, all its operations, changing hands, in loan or purchase depend upon the presence of gold — in banks, discount-houses, on in one part of the locality-in the 'Change, or in Capel Court - every Bank of England. The gold, it is day. Fancy what it would be if true, is invisible. The thousands men bad to carry about with them who operate there never see it. It such a mass of gold. A stout lies hid in the strongest chambers

of the Bank, and no one sees it or and commercial classes, but, on the counts it but the party who makes other hand, it is very profitable to out the official return. But, 'visi- the banks and money-dealers. An ble or invisible, its presence and increase in the rate is virtually a amount regulates the operations transfer of a portion of the profits of the Bank, and those operations of the former into the pockets of the regulate and affect all the other latter. Bankers like a high rate of operations of the precinct. The discount, the trading classes do not. value of stocks and shares rises or But both of them are alike interfalls, panic or prosperity occur, ac- ested in watching the movements of cording as much or little of the yel- gold, as productive of the changes low dross is reported to be in the in the rate of discount - or, in other occult chambers of Threadneedle words, in the value of money on Street.

loan. Hence it is that the påragraph in But why, it may be asked, should the City Article which is most closely a little more or less gold in the studied is that which relates to the Bank of England produce such imsupply of gold. The two brief lines mense effects upon the trade and which tell how much gold was taken prosperity of the country? All to the Bank or withdrawn from it, the engagements which are conare in reality the vital point of each tracted in this monetary metropolis, day's monetary •news. If gold is as well as throughout the country, being deposited largely in the Bank, although carried on solely by means the dealers are all elate, and busi- of cheques and bills, are bound to be ness and enterprise go ahead; if met, if required, by payment in the much gold is being withdrawn from legal money of the country. This the Bank, every one becomes un- legal mouey is gold and Bank of easy; enterprise stands still. How England notes. Gold, in excepis this momentous effect produced ? tional times, may not be easily proThe practical answer is, that the curable; but the other element of movements of the pacious metal the legalised currency – namely, regulate the Bank's rate of discount, bank-notes - may be manufactured and the rate of discount affects the in any quantity. It may be asked, whole industry of the country. If then — by the uninitiated reader, traders can borrow, or get their we mean ---When gold, at these rare customary advances, on easy terms, times, becomes scarce, cannot its say at 4 per cent, they have every temporary deficiency be compeninducement to extend their busi- sated by an increase in the issue ness and employ as many men as of notes - which in the eye of the possible; but if they have to pay 8 law, as well as in the estimation of or 10 per cent, their margin of profit the public, are as valid a tender as is seriously diminished, if not alto- gold? It must be remembered, gether swept away. Hence every however, that these notes are a fluctuation in the Bank rate is legal tender only so long as the watched with intense interest Bank is ready to give gold for them throughout the whole country, and on demand. The first duty of the most of all in this monetary metro. Bank is to take care that it is at all polis. But in this precinct, as else- times in a position to do this. It where, the community is divided must insure the convertibility of into two classes which are very dif- the note. It must always be ready ferently affected by the changes in to give gold for its notes whenever the Bank rate. Trade and money, such payment of gold is demanded. we have said, are the great powers It is necessary, then, to observe to which together set agoing the whole what extent such a demand for business of the precinct; traders gold payment is likely to arise, and money-dealers constitute its before we can decide as to the propopulation. A high rate of discount priety of the measures which the is disadvantageous for the trading Bank takes to meet such a contin

gency. As gold becomes scarce, with gold from the stock kept on does the public lose faith in the hand by the Bank of England. Or notes, and rush to the Bank to have it may be our own Government, them converted into gold ? By no which, by making loans to a formeans. Experience enables us to eign State, necessitates a correspeak with perfect confidence upon sponding export of the precious this point. It is not a question metals-or which, in times of war, of opinion, but a simple matter of has to export specie to provide fact. No such loss of confidence supplies for its army abroad. Or in the notes of the Bank has ever finally, and as is most frequently occurred, either in our own time, the case, it is great capitalists, great or in that of our fathers and grand money-dealers, who convert their fathers. The Bank of England note money into gold or silver as best is a tender which no one ever mis- suits their purpose for the time, trusts. People take the notes as and who transfer it from one readily when there is not a spare country to another, wherever they sovereign in the Bank, as when its can make the largest profits upon coffers are overflowing with the it. It is these agencies, and not precious metal. Even in times of any mistrust of the notes, which the direst commercial crisis, of the produce the occasional heavy Forst monetary panic, the public demands for gold upon the Bank ask only for notes. The notes serve of England. It is extremely rare their purpose as money quite as that such drains ever become so well as gold does, and they greatly great as to be a real and unavoidprefer them. The convertibility of able embarrassment for the Bank. the notes is never endangered, In times of war, indeed - as, for and people would much rather example, during the long and gihave the notes than an equivalent gantic contest with France under sum in gold. This is a fact beyond the First Napoleon - the Governdispute. As a medium of internal ment may have to send its last circulation-as a means of settling sovereign abroad in order to sustain accounts among ourselves - Bank the military operations of itself and of England notes accepted its allies. But, save in such exeverywhere and at all times as tremely exceptional circumstances, preferable to specie. Indeed, we which have occurred only once in may go further than this, and say our history, the drain of gold for that a cheque upon a good bank is export never assumes a magnitude preferable to either, although it is such as really (that is to say, apart not a legal tender at all. Gold is from the artificial restrictions of quite unneeded by us in our mone- the present Bank Act) to imperil tary transactions with one another. the position of the Bank. The And even if it were announced that export of three or four million the Bank could not give us gold for sterling of specie usually proits notes for a twelvemonth to come, duces such an effect upon the rate not one man in a hundred thousand of exchange, as of itself to render would care. The public at large any further exports of the kind unneither require the gold nor de profitable ; hence the drain ceases. sire it.

And moreover, as experience amply Who, then, are the parties whose shows, in two or three months all action at times produces a drain of the gold thus exported returns to gold from the Bank? They may us. These, then, are the causes be classed under three heads. It which produce the occasional may be the Bank of France, or any drains of gold from the Bank, and other great foreign bank, which such are the limits by which these buys up bills of exchange upon drains are circumscribed. But London, and sends them here to never — not in a single instancebe cashed, in order to supply itself is gold demanded from the Bank

VOL. XCVL-NO. DLXXXVII.

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from any loss of faith in its notes. Ought the presence or absence of a No one doubts the value of the few millions of gold to make the Bank of England's notes, and the vast difference between national power of converting them into gold prosperity on the one hand, and is never desired save as a means of national disaster and widespread procuring gold for export, by the suffering on the other? How will parties and for the purposes which posterity speak of us when it sees we have specified.

that we made the huge fabric of This City of Gold is based upon our national industry stand like an gold, -and the foundation is found inverted pyramid, resting on a narto be pre-eminently unstable and row apex formed of a chamberful of perilous. The golden base perpetu- yellow dross? Will they not laugh ally oscillates to and fro, and each at our folly, our barbarism? When of its greater oscillations is felt like the usual supply of gold is temthe shock of an earthquake. It rises porarily diminished, why should and falls, expands and contracts, our usual credit-system be restricted and sometimes seems to slip away in proportion, or totally suspendfrom beneath the City altogether. ed? Of what use is Credit but to Then goodly houses go down by the take the place of payments in coin ? dozen — not because they are ill- Was it not for this purpose, and for built - not from any fault of the this alone, that credit and paperarchitect or occupants, but simplý money were adopted? Why, then, because the foundation upon which not make use of our credit-system as they all stand has given way. Of a means of compensating the temlate years these oscillations have be- porary absence of gold? Why not come more frequent and more seri- tide over the difficulty instead of ous; and every ten years or so, a con- aggravating it ? and so avoid the vulsion takes place—not of nature, tremendous sufferings which are but by Act of Parliament -- which ever-recurrent under our present spreads terror and disaster through system of monetary legislation. the Golden City, and paralyses the Suffering thousands and starving whole country as effectually as myriads signalise each great moneif an earthquake had strewed with tary crisis. Even during the last ruins the great seats of our national year, though the crisis of evil has industry. The merchant and the been escaped, the usurious Bank manufacturer, the shopkeeper and rate of 9 or 10 per cent has swept the day-labourer, alike find their away the profits of trade into the trade stopped, and their gains swept pockets of bankers and capitalists. away.. Suffering and want spread Parliament inflicts misery upon the over the land, as if there were a country out of an antiquated degreat famine. There is a paralysis ference to some bits of yellow dross. of trade, a dearth of employment; Is this wisdom, is it humanity, is and the hard times are felt by the it civilisation ? It is barbarism mill-worker and the bricklayer, not and folly, preached up by the less than by the magnates of the moneyed interest, the high priests trading and commercial world. Is of Mammon, at the expense of the there not something wrong here? community.

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