The Newberry herald. [volume] (Newberry, S.C.) 1865-1884, 1873-10-22
Miscellastepms.
I'd
LONDON WALL STREET.
THE BANK OF ENGLAND AND THE
VI MYSTERIES OF TIE ENGLISH MON
EY MARKET.

: II T, Damn Vt cNhhaNO AMI IL
! MYSTERIES OF TIE ENGLISH MON.
! EY MARKET.
Mr.. Walter Bagehot, an English
man Of considerable literary repu-
,ation, has lately written q book
ca II cd 'Lombard street" the
London equivalent for Wall street
in which he gives a full, clear,
and popular account Of that mys-
tcrious thing the money market.
We are given to magnlfying the
Importance Of that which we do
not clearly understand, and even
bankers arc prone to lend their
help TO the vague uncertainty in
which the secrets Of the money
market arc shrouded from the
vulgar gaze. Mr.. Bagehot has q
taslo for unraveIing mysteries
and for showing that there is al
ways plain truth behind, which
he delights in telling in very
plain terms. He wrote an excel
lent book on tho Government, in
which he uncovered many things
that had for years passed as pro-
found secrets of.he state and now
he hrs. done the same thing for
THO, mouey market, where govern
mehts. are often now q days made
and lost. His accounts Of the
Bank "f England, with its conser-
vative system, shows that it
serves au excellent purpose in
keeping a steady balance between
all the lenders and all the bor-
rowcrs who como to London-the
one class 10 get money, the other
to get the best price for it. He,
shows, too, that the money mar
kct, under whose potential in
tiucnce we all live, is, after all, Of
comparative recent crcation-born
as late as 1919, and not with: the
canny. Scot William Patterson,
who really founded the Bank Of
England in 1894. In the library,
which Mr.. Stephen Colwell form
ed, and his family gave to the uni
versity, there is a collection Of
over six hundred separate pamph-
lets about the Bank of England,
but most of them relate to it's
earlier history, and that has little
or nothing to do with the rart~it
now plays in the money market
Of the world, since it has become
the regulator of Lomb bard street
and Lombard street Of the world,
in all its real financial operations.
The history Of banking goes
back to the carly days of Geneva
and Venice, Amsterdam and Ham
burg, but those have either disap-
peared entirely or they are of
small Importance now in the ac-
tual control in London, brought
there partly by the enormous ac-
cumulation Of wealth and the con-
troll of it in English bonds, and,
finally by the destruction of
French credit, or rather, credit in
the safety Of the Bank of France
by the recent Communist troubles
in Paris. The Bank of England
has to make no small sacrifice to
hold its place as the great govern
ing body Of Lombard street, for
while younger banks, such as the
London and Westminster joint
stock banks, pay twenty per cent.
dividends and increase their capi-
tai by dividing their earnings,
the Bank of England sticks to the
good old legal rate of six per cent;
but then is obliged, not by law or
even by its own regulations, but
simply by custom and to preserve
intact it's power, to hold a reserve
Of forty or: fifty per cent, while
tho Joint stock banks trade on
ten or fifteen per cent, and look
to the Bank of England both for
caution when there is danger
ahead and for help when the dan
ger actually comes. The wonder
full conservative power OF a prl-
vate institution thus to resist
temptation to great profits for the
sake of great stability is eminent
" English; but then it is also due
10 the fact that even its large capi-
tai of nearly a hundred million dol
lars is sowned by.mcn whose wealth
is so lsrgely invested in other en-
tcrpriscs that they are willing to
take small interest from the
bank so as to make q large profit
on their other and more specula-
tive properties. The fact that the
Bank of England is u private cor
poratiou is often lost sight Of; but
Mr.. Bagehotshows clearly how en-
tirely distinct it's banking business
is kept from the agency entrusted
to it by the government. The
enormous operations of tho Lon
don money market Of Lombard
street are largely due to the sense
of perfect. confidence inspired
through the whole 6nancla! world
by tho course Of the Bank ofEng-
land for more than half a century.
We cannot expect TO see that
confidence transferred to New
York while Wall street is 50 large
ly subject to the operations OF
"rings" and ''pools;" and yet the
! orowt h and 6avelOOment of Wcalth b