The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1873-10-01

KIT
From the Philadelphia Ledgerl
Mr.. Walter Bagehot, an Englishr1an OF
considerable literary reputation, has lately
written Il book called " Lombard Street -
the London equivalent for Wall street or
Third >treet-in which he gives full, clear,
and popular account of that mysterious
thing the money market. We are given to
magnifying the Importance Of that which
we do not clearly understand, and even
bankers are prone to lend their help to the
vague uncertainty in which the secrets OF
the money market are shrouded from the
vulgar gaze. Mr.. Bagehot has taste for I'M
rayclling mysteries and for showing
that there is always plain truth
behind, (which he delights in telling
in very plain terms. He wrote an eX-
cellent book on the English Government, in
which he uncovered many things that had
for years passed as profound secrets of state,
and now he has done the same thing for the
money market, where Governments are often
nowadays made and lost. His account Of
the Bank Of England, with its conservative
system, shows that it serves an excellent
purpose in Keeping steady balance be-
tween all the lenders and all the borrowers
who come to London-the one class to get
money, the other to get the best price they
can for it. He shows, too, that the money
market, under whose potential Influence we
all live, is, after all, OF comparative recent
creation-born as late as 1919, and not with
the canny scot William Patterson, who
really founded the Bank OF England in 1904.
The early history Of the bank is curious and
interesting. In the library which Mr..
Stephen Colwell formed, and his family gave
-. flara n nNl n
six hundred separate pamphlets about the
Rank of England, but most of them relate
to its earlier history, and that has little or
nothing - do with the part it now plays in
the nl6SE ns66aE Of the world, since it has
become die regulator of Lombard street,
and Lombard street Of the world, in all its
real financial operations.
The history Of banking goes back to the
early days of Geneva and Venice, AmSter-
dam and Hamburg, but those have either
disappeared entirely or they are OF small i'm
portance now in the actual control Of capt.
tai. 1t has gradually centred in London,
brought there partly by the enormous accu-
mutation of wealth and the control of it in
English hands, and finally by the destruc-
ton OF French credit, or, rather, credit In
the safety of the Bank OF France by the re-
cent Communist troubles in Paris. The
Bank of England has to make no small sacri-
flee to hold its place as the great governing
BODY of Lombard street, for while younger
banks, such as the London and Westminster
Joint stock banks, pay 20 per cent. dividends
and increase their capital by dividing their
earnings. the Bank of England sticks to the
good old legal rate of six per cent; but then
it is obliged, not by law or even by its own
regulations, but simply by custom and to
preserve intact its power, to hold reserve
of forty to fifty per cent, While the
Joint stock banks trade on ten 70 fifteen per
cent, and look to the Bank Of England both
for caution when there is danger ahead and
for help when the danger actually comes.
The wonderful conservative power OF prl-
yate institution thus to resist The temptation
TO great profits for the sake of great stability
is eminenty English but then it is also due
to the fact that even its large capital of-nearly,
a hundred million dollars is owned by men
whose wealth is so largely invested in other
enterprises that they are willing to take
small interest from tue bank so as to make
large profit on their other and more specula.
tive properties. The fact that the Bank OF
England is a private corporation is often
lost sight of; but MIR. Bagehot shows clearly
how entirely distinct its banking business IS
kept from the agency entrusted to it by the
Government. We have somewhat similar
instance in the case of the Farmers and Me-
chanics Bank as the financial agent of the
State and of the city, and that in no way
makes the bank State or city institution.
The enormous operations of the London
money market of Lombard street are
largely due to the sense Of perfect conf
dence inspired through the whole financial
world by the course of the Bank Of Eng
land for more than half century. We can
not expect to see that confidence transfer
red to, New York while Wall street is SO
largely subject to the operations of "rlngs"
and "pools y; and yet the growth and de.
velopment Of wealth In this country are so
rapid that sanguine people think they see
signs Of future and not very distant day
when New York shall control the money of
the world, as London does to-day. This
control, however, does not come merely
from the superior wealth OF London itself,
for, great as, it is, it is not q 1.-THE OF the
money dealt IN every day in Lombard street.
1T rests upon the fact that people OF all coun.
tries trust implicitly their surplus money to
the keeping of London banks and bankers,
and ID turn 90 70 them Just AZ implicitly for
luoley when they want 1t, knowing that; no