New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-10-10
NEW PUBLICATIONS.
MONEY AND PANICs.

conducted on the system Of credit In this respect,
Wall Street and Lombard Street are the counter
parts of each other. Tho subject could scarcely be
exhibited in clearer more forcible light than has
been done by Mr. Bagehst i'll the present seasOuable
Volume. The author possesses rare qualities for the
accomplishment OF the work. Holding eminent
place among the practical inanciers and economists
of England, he brings the fruits of wide expert
ence to the eucidation Of principles He is not only
man Of shrewd observation but of profound refec-
ton. The lucidty of ms statements is equal to his
keenness Of insight His style Of writing is marked
by the same traits that constitute the character Of
the efficient man Of business ceaness of perception,
promptness Of decision, thoroughness of detail and
vigor OF accomplishment, without waste of words.
The drift Of Mr.. Bagehots Teasonings IN this
volume is to show that occasional pancs in the
money market are the necessary consequence of the
prevailing financial methods. His illustrations are
drawn mainly from the usages Of tho Bank of En-
gland Of other jont-stock banks in that country, OF
private bankers and of illbrokers
lie opens the subject with the description Of LON
bard Street as the greatest combination of economl-
cal power and economical dolicacy that the world
has ever seen. Every one is aware that England Is
the greatest moneyed country in the world. Every
one admits that il has ready cash nc command
than any other country. But few persons are aware
how much greater the balance OF disposable tunds'
which can be lent at any time a1d for any purpose
i3 in ENGLAND than anywhere else in the world AT
a recent date the bank deposits in London amounted
TO Gl2O,OO0,OJ0, while those in Ncw-fOrk were
c4OOOOOOO in Paris Gl3,000,0O0, and in the German
Empire G8000000, Concentration Oh money ID OahAS
ia the principal cause which has made the money
market of England so exceptionally rich' as com
pared with that Of other countries. The effect is
seen constantly Vast loans arc made in Lombard
Street which IL would be impossible TO obtain else
whore There are few civilized governments that
could not borrow considerable SUMS OF England II
any nation especially poor nation, wants 70 Duiu
railroad, it is sure to offer its bonds in the Engish
market Immense works are thus achieved win
the aid of English capital which but for that AID
would never have been planned.
The facility Of obtaining large amounts OF money
on loan is a peculiar feature of modern society. 1t
never occurs to an Englishman that any enterprise
which bids fair to pay can fail for want Of money
Yet no idea was more familiar century or two ago.
or is more common now in most countries A citizen
Of London in Queen Elizabeths time could not
imagine the present state of things. 4 place Ike
Lombard Street where money can always be OBJ
tanned on good security Is a luxury which no nation
ever enjoyed before.
But there are still more remarkable instances OF
the power Of Lombard Street than these occasional
loans 10 new eu teTpriscs and foreign States English
trade is carried on 70 an immense extent with bor-
rovaG capital IN every district small traders have
sprung mp, who, with the money obtained by dis
coutia their notes, almost crowd tho old capitalist
ont OF his shoes. There steady bounty on trading
with borrowed capital Lombard Street is the
great qobetweon in this system of chronic borrow
ing. It is the standing broker between the saving
districts of the country and the employing districts
There are many distrcts in England which cannot
employ their own money No purely agricultural
county does so. The savings Of county with
good land but no manufactures aud no trade much
exceed what can be safely lent in the county.
These savings are first lodged in the local banks,
and are by them sent to London and are deposited
with London bankers. The money thus sent up
from the accommodating districts is employed in dis
counting the notes of the industrial districts. De
posts are made with the bankers III Lombard Street
by the bankers of Somerset5hre and Hampshire,
and those bankers employ them in the discount Of
notes from Yorkshire and Lancashire. English cap
ia thus runs as surely where it is most wanted as
water runs to find its level
1t is only by this refinement of the banking sys-
tenn that. English trade, which is trade on Dor
rowed capital has been able to effect such wonder
full achievements. But in exact proportion to the
power of this system is its delcacy and its dsnger
Only familiarity with this system keeps out OF sight
its marvellous nature. There never was 80 much
borrowed money collected in the world as is now
collected in London. OF its many millions, by far
the largest part is held by bankers on demand on
short notice That is to say. the owners could ask
for the whole of it any day they please. In panic
some of them do ask for some of it, II any large
fraction of that money really was demanded, the
banking system Of England and also the industrial
system. would be in imminent peril. A large sum
of money is also held on foreign account, which
might be asked for in time Of panic. In the crash
Of 1866, although there was a much smaller sum Of
foreign money on deposit. the amount was demanded
and had to be paid at great cost and suffering. 1t
would be far worse if the larger sums now held
were suddenly called for, without better resources
than were had at that time.
II NAV be alleged, says Mr. Bagehot, that though
the instant liabilities of London bankers are large
their present means are large in proportion. On the
contrary he remarks, there is country at present
and never has been one in which the ratio of the
cash reserve to the bank deposits small as 1t
now is ia England. The amount of that cash is so
exceedingly small that bystander almost trcmbles
when he compares its minuteness with the immen-
sity of the credit which rests upon It, Nor it be
said that the system is managed with SO much skill
and discretion that there Is no uangcr III ts opera
ton Il lis not always managed with discretion.
There is the astounding instance to the contrary,
ailirms the author, Of Oyerend Quincy, s. Co. Ten
years ago that house stood next to the Bank of En-
gland. 1t was better known abroad than any purely
English firm The partners had great estates mostly
made in the business. They still had immense
income from it, Yet in six years they lost all their
own wealth, sold the business to the company, and
then lost large part of the companys capital.
These losses, moreover, were made in manner so
reckless and so foolish that would think child
who had lent money in the City of London would
have lent it better After such an example, there