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not possibly have anticipated the magnitude of its operations 'which should enable it to cope with , and even to embarrass , the Bank of England in the important work of the regulation of the currency . Originally a mere agent to bring together the capitalist and the borrower , remunerated by a commission ' in the same manner as a stockbroker , acting indeed like him except thai the investments were made in bills of exchange instead of in stock , he ultimately became a principal , discarding the name and office of a broker , and calling himself a money dealer and a banker . His business is to borrow money of any one who will lend it to him , paying
interest somewhat under the Bank of England rate , and undertaking to repay the amount whenever demanded or at furthest upon a very few days ' notice . What he borrows with one hand he lends with the other , on the security of bills of exchange generally speaking , though not unfrequently upon the deposit of various kinds of produce , in which case his operations are similar to those of a pawnbroker . His object is of course to keep all the money employed , since whatever lies idle is a dead loss , as he is paying interest for it . Tet he lias undertaken the responsibility of being ready at all times to repay the sums he has borrowed—and he relies on the chance of the daily transactions
balancing each other , so as at once to enable him to answer all calls , and , at the same time , not to leave any sum unemployed . If the demands for repayment exceed the sum coming in , he endeavours to adjust the matter by raising the rate of interest to those who will leave their money with him , raising the rate also upon the borrower . Should this fail , and the withdrawals still exceed the new deposits , he relies confidently—should the worst come to the worst—upon the help of the Bank of England ; or , rather , he would compel the Bank to discount for him ' under ' any circumstances whatever '—he would compel the Bank to give ready money in exchange for merchants' promises to pay at some
future date ; in fact , Mr . Chapman , late head of the firnv-of the great house of Overend , Gufney , and Co ., affirms that a bill of exchange of undoubted character ought at all times to be as readily exchangeable against money as a bank-note . It is no doubt extremely convenient for any one who has a few hundreds to spare for a short time to be able to get interest for it , ana yet to have the money as available as if it were lying unproductive in his own cask-box . Abstractly , he knows such a thing to be impossible—he knows perfectly well that money cannot be employed productively and at the same time be in hand—yet many men are willing to run
the risk of the crash not coming in their own time ; and so enormous amounts are abstracted from circulation , and find their way into the hands of the billbrokers , who are necessarily always on the alert to employ these large sums at as good an interest as possible . The provincial joint-stock banks send fuenty of paper to market—paper inherently worthess in many cases , but quite good enough for the billbroker , who does not care whether the acceptor pays the bill or not—he relies upon the endorsement of the joint-stock bank , which simple symbol represents to his mind the entire fortune of every individual shareholder who has rashly confided his
all to the mercy of half a dozen directors of whom he may know nothing . Under the present system , therefore , the floating capital of the country flows into a few hands , who employ it at" * as high an interest as they can procure . There are not sufficient first-class bills in existence representing real transactions to absorb the millions that centre ia the deposit houses . A demand has therefore sprung up for securities , which has been met in a twofold way—first , by accommodation bills whicli arc discounted on the faith of the endorsement of a joint-stock bank ; and , next , on the deposit of goods which arc thus held speoulativelv , in many cases by men of very
little capital of their own , and of course having little to lose if the markets go wrong . It is not necessary to point out the inierenco that the cfl ' eot of all this is to raise the price of the necessaries of life-upon-tho-workiuff-olu 8 SC 3 < -aud-upQii ., cQnaumci ; 3 in general ; the wholesale speculators being enabled by means of money borrowed from the discount houses , who in then * turn have borrowed it from the public , to maintain am unnaturally high price , far beyond wlmt would provail if it wore allowed to regulate itself in the usual way by the laws of demand and supply . This derangement of the ordinary course of things often operates very prejudioiolly towards the well-established trader conducting his business in a prudent manner with his own capital , who is quite unable to cope with a
less scrupulous ^ house small means own , but backed by money borrowed from the public by means of the deposit houses . How injuriously all this acts upon our commercial morality , and how it lowers the tone , of our men of business , it is beyond our present object to discuss . It is necessary to enter into these details in order that the full bearings of the Bank measure may be understood . As long as things go smoothly , the discount houses carry on their operations with the money of the public , usually charging for good bills a somewhat smaller interest than the Bank of England rate—in fact , being rivals and compe-But
titors with the Bank for discount business . , in troublous times , when the system is bearing its natural fruit of disaster , and the public are beginning to lose confidence , and to withdraw their deposits , the billbroker has considered himself entitled to go to the Bank of England and demand , as a matter of right , money in exchange for the promises to pay which he has purchased in excess . The billbroker has borrowed money of the public promising to repay it on demand , with interest accruing day by day , he has invested that money in bills of exchange falling due at a distant date , hoping not to be called upon to repay the sums due
by him to the public ; but , when he is so called upon , he looks to the Bank of England to find him , at a moment ' s notice , half a million or a million of money , even in the worst times , when pressed by demands of a strictly legitimate character . He undertakes the impossible task of giving a large interest for money , and yet repaying it on demand , without being able , in the very nature of things , to keep any reserve to meet calls ; and when these calls are made , he boldly claims a right to draw on the reserve kept by the Bank of England as a matter of precaution for their own safety , and for the accommodation of their own clients . Yet this reserve
of the Bank of England is limited by the same laws as the reserve of Messrs . Jones , Loyd , and Co ., or any other private banker . The Bank cannot manufacture notes at discretion ; the amount they have unemployed is regulated precisely in the same manner as in the case of any other bank . Formerly there was no limit but the discretion of the directors of the Bank issues ; but the Act of 1844 sternly prohibits the creation of even a single five-pound note in excess of the statutory limit . It is too much to expect that an Act of Parliament should be violated to favour those houses who have undertaken to perform what is really
impossiblewho receive millions of money at interest with an undertaking to repay them precisely as if the whole amount were lying unemployed in the till . There is no more reason that the Bank should cripple itself to help these improvident traders in bills pf exchange , than that it should take upon itself the burden of the engagements of other commercial houses , whose speculations in tea , silk , sugar , or any other article of produce , had proved unsuccessful . The billbrokers have , indeed , as we have shown , fostered such speculations by their imprudent advances , and have virtually become partners in the profit or loss accruing from such
engagements ; henceforward they will understand that it is not the province of the Bank of England to relieve them from the embarrassments which must follow , sooner or later , upon merely speculative engagements . In the present state of things , when millions of money are lying unemployed in the City , the billbrokers would never dream of going to the JJank of England to rediscount the bills which they have themselves discounted below the rate of interest charged by the Bank . They cannot , therefore , possibly suffer present inconvenience from the now rule whioh the Bank have made for their guidance .
Henceforth they must rely on their own resources , and take the consequences if they imprudently make contracts whioh they cannot fulfil . Henceforth the public must understand that , if they lend money and receive interest for the use of it , they cannot expect to rccoivo it buck again without a lengthened notice . Their money has beon invested _ in-shipSj-mctal 3 , _\ v . uge 3 , ^ QoloiUttL . pxo . d . M , CQ » and a hundred other ways ; it has purchased some valuable article or other , which must bo sold again before the borrower can replace the money advanced to him .
• The child's the father of the man . ' The child soon learns that lie cannot cut his oako and liavo it too . The man has not yet learned the sumo lesson , or ho would not , expect to retain the oontrol of his money , and at the same time enjoy that iutorost wiiioh oan arise only from its being exchanged for some purchasable commodity .
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, _ ,...,,. .. rr . - .,. „ . . . . . . . . . .. . .. , . . .... . ... .. . ... . . . . . .. ¦ . ^ . . ¦ . . . " - <^ 3 gH gOO T H 3 S E E APE R . [ No . 418 > March 27 , 1858 . 1
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THE PASSPORT AGGRESSION . There are three classes of British subjects abroad —pleasure-seekers ( including invalids ) , men of business , and those whose insolvency and not their will consents . To the last section belongs a supplementary species , answering to the description of Colonel Waugh . The pleasure-seekers , however , are in the majority , and it is not improbable that , for these ladies and gentlemen the locking-up of the Continent may result in the discovery of Great Britain , Ireland , and all the islets that adjacent lie . Horace Walpole complained that the grand tour threatened to depopulate the kingdom , which when deserted would not
be found again until some Columbus from the Bav of Biscay ran agaiust it on a foggy night ; but now that the English—who have been accustomed to spend four millions sterling a year in Paris— -are beginning to search for pleasant promenades , the wanderers of Fontainebleau for leafy alleys , the bathers of Boulogne for rippling bays , the pilgrims of Cannes for villa-crowned hills , it may occur to fashionable memory that our own islands contain the sweetest seclusions , the brightest waters , the most vernal slopes , and enticing woodlands in
Europe . ' Dp' Switzerland again and again , and is there nothing left for admiration among the Scottish mountains ? Weary of Burgundy , seek for refreshment to the eye and mind in Wicklow and Kerry . If Biarritz be inaccessible we have the mild whisperings , the verdure , the beauty of Torbay . London and Brighton , of course , are but opposite ends of one great town , and the little watering-places on the Kentish coast are unmentionable to the loiterers among the purple fountains of Bordeaux and the silver rills of Chablis . But who that has ever seen
Windermere , yew-shadowed Grasmere , or Dcrwentwatcr , the Scottish or the Irish lakes , is to he pitied if compelled to revisit their lovely glimpses by the passport persecutions of a journey to Auxerre or Dauphiny ? When the tourist can make affidavit , and say that he has exhausted the Grampian , the Cheviot , and the Wicklow hills , explored the Great Glen of Scotland , summered himself in all the milky pastures of Devon , looked from Snowdon over Wales , and followed the winding Wye , may we pity him because he cannot freely disembark at Boulogne ? Ear from it . He knows little of his own country as yet . Has he seen all the
beau-ty that lies between the Solway Frith and the English Channel ? has he drank at the fountains of the'Ribblc and the Aire , or walked up the shaded paths of Geltsdale to Cross Fell ? If he has , let him pass next summer in journeying across the Yorkshire moors , along the Pennine chain , and in the valleys of the Eclcu and Lunc . There he will find sublimity , and , if he likes it , solitude ; and hearing round the coasts of the United Kingdom , he will probably find as much magnificence as he can appreciate . We have no Alps , it is true , no Rhine , no Baden-Baden , no Boulevards ; but wo have
exquisite scenery , watering-places which arc paradises , the purest air , no passports , and , if but the hotels would co-operate , every possible pleasure and facility in travelling from one point of our own country to another . And the imagination may see quite as much at home as ordinary imaginations seo abroad , We may discover , if so minded , some little Italy of sott brilliance in Devonshire , and quite enough oi Siberia in Cornwall . The hop-grounds of Kent , after all , are more picturesque than the vineyards of Southern France , and there is no sp idcr-waistea official in buckram to demand passports and
overhaul portmanteaus . If London would go clown and seo the country , the country might como up and sec London , ana millions of money would so ( low as to keep up a healthy circulation instead of being bled "j French hotels and German gambling-houses . A »<* this would not bo the only result . The Continent cannot aftbrd to lose the summer and wmicr PftkPnogo of England . Patronage is tho ng »
Europe . We render Paris opulent . We koon Florence alive . Boulogne would bo a wlntc \ rasi )« J Palmyra without us . Without us grass vrou a glow in tho streets of Romp , and tho Popo wouio bo compelled to retrench his expenses . Y 1 ^ ' 011 , us tho Gorman spas would stagnate , and JMom Blanc would stand alone in its glory . Wo linvo a right , then , to bo petulant , for tho now piwaiwii regulations amount to a positive infringement w the timo-honourcd privileges of Oious homaium ai
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Citation
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Leader (1850-1860), March 27, 1858, page 300, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/vm2-ncseproduct2236/page/12/
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