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    300 THE lEAPEB, [No. 418, March 27, 1858...

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    The Bank And The Bill-Brok.Ek,S. The Two...

    not possibly have anticipated the magnitude of its operations which should enable it to cope with , and « ven to embarrassi 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 that 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 . Yet he has 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 c . 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 firm of the great house of Overend , Gurney , 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 bUlbrokers , 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 {? lenty of paper to market—paper inherently wortliesa in many cases , but quite good enough for the billbroker , who does not care whether the acoeptor 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 lias rashly confided his all to the mercy of half a dozen directors of whom

    lie 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 pro cure . There are not sufficient first-class bills in existence representing real transactions to absorb the millions that centre in the deposit houses . A demand has therefore sprung up for securities , which has been met in a twofold way—first , by accommodation bills which arc discounted on the faith of the endorsement of a joint-stock bank ; and , next , on the deposit of goods which are thus held speculatively , 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 inference that the effect of all this is to raise the price of the necessaries of jife upon the working classes and upon consumers inl ^ nSTlKb ^ h ^ esalc ^^ by means of money borrowed from the discount houses , who in their turn have borrowed it from the public , to maintain an unnaturally high price , far beyond what would prevail if it were allowed to regulate itself in the usual way by the laws of demand and eupply . This derangement of the ordinary course of things often operates very piejudicially towards the well-established trader conduoting his business in a prudent manner with his own capital , who is quite unable to oope with a

    less scrupulous , house of small means of its own , but backed by money borrowed from the public bymeans of the deposit houses . How injuriously au this acts upon our commercial morality , and how it lowers the tone of our men of business , it is be * yond 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

    competitors with the Bank for discount business . But , in troublous times , when tbe 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 Hie 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 of 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 -wiJl 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 Bank of England to rediscount the bills which they have themselves discounted below the rate of interest

    charged by the Bank . They cannot , thereioro , possibly suffer present inconvenience from the new rule which the Bank have made for their , guidance . Henceforth they must rely on their own resources , and take the consequences if they imprudently make contracts which 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 receive it buck again without a lengthened notice . Their money has becu invested in ships , metals , wages , colonial produce , andirrhundrod 1 "bther"ways *; -it'has-puroha 8 ed ~ 8 ome valuable article or other , which must bo sold again before the borrower can rcplacv the money advanced to him .

    'The child's the father of the man . ' Tlic child soon learns that ho cannot oat his cake and have it too . The mnn has not yet learned the same lesson , or lie would not expect to retain the control of his money , and at the sumo timo enjoy that interest which can arise only from its being exchanged for some purchasable commodity .

    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 , hovr ^ ever , are in the majority , and it is UOf

    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 Buy of Biscay ran against it on a foggy night ; but no \ v 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 Fontainebieau 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 conf . iin the sweetest seclusions , the brightest waters , the most vernal slopes , and enticing woodlands in Europe . ' Do' 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 nuld 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 lias ever seen Windermerc , yew-shadowed Grasmcrc , or Derwentwatcr , the Scottish or the Irish lakes , is to be 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 ? Far from it . He knows lit tic of his own country as yet . Has ho seen all the beauty that lies between the Sol way Pritli and the English Channel ? has he drank at the fountains of the Ribble and the Aire , or walked up the shaded paths of Geltsdalc to Cross Fejl ? If he lias , let him pass next summer in journeying across the Yorkshire moors , along the Pennine chain , und in the valleys of the Eden and Lune . There lie will find sublimity , and , if he likes it , solitude ; and bearing lie will

    round the coasts of the United Kingdom , probably find as much magnificence ns he can appreciate . We have no Alps , it is true , no Rhine , no Baden-Baden , no Boulevards ; but we have exquisite scenery , watering-places which arc paradises , tlie 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 sec quite as much at home as ordinary imaginations sec abroad . We may discover , if so minded , some little Italy of sott brilliance in Devonshire , and quite enough ol Siberia in Cornwall . The hop-grounds of Kent , after all , are more picturesque than the vineyards of Southern Franco , and there is no sp idcr-waistcu official in buckram to demand passports and

    overhaul portmanteaus . If London would go down and sco the country , the country might oomo up and sco London , a »« millions of money would so flow as to keep up a healthy circulation instcud of being bled m Fronoh hotels and German gambling-ho uses . And this would not bo the only result . The Continent cannot afford to lose the summer and winter nntrnnnm . nf 1 ? , iur ] iinf 1 PlltrOliaGTO ia tllO riglH

    word ,- ^< MmwolutUo ^ iaos . ^» dJ ^^ Europe . Wo render Paris opulent . " Wo keep Florence alive . Boulogne would bo a wlutowaalioa Palmyra without us . Without us grass won a grow in tho streets of ltome , and the Popo wouw be compollcd to rotranoh his cxponsoa . 7 " 1011 : us tho Gorman spas would stwgimto , und Jttoni Blanc would stand alone in its glory . Wo Imvo n right , thon , to bo petulant , for the new piwanoit regulations amount to a positivo inlruigo « "O « n w tho timo-hououred privile / roa of Clous ilomaniix m

    300 The Leapeb, [No. 418, March 27, 1858...

    300 THE lEAPEB , [ No . 418 , March 27 , 1858 .

• Citation
  • Leader (1850-1860), March 27, 1858, page 12, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/cld_27031858/page/12/