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He looks in vain for the haggard look and care-worn features which he has learnt (very incorrectly) to associate with City men, and especially with the dealers in money. Overburdened, no doubt, some of these men are occasionally-and in what trade or profession is it other wise?-but, on the whole, they wear a more lively and cheerful look than any other set of businessmen we have seen. They are intent on their work; they have no time to stand and parley with you; but they go about their business with liveliness and zest. You never hear the slow monotones of depression; their voices are quick and lively, and a laugh and a bit of badinage are seldom quite absent as they fly about in search of information or in execution of commissions. They dress well, in the substantial style-and a gold chain across the waistcoat, or a flower in the button-hole, are their favourite and not very conspicuous modes of personal decoration. Sometimes, indeed, you will see the gay-coloured neck-scarf, buttoned surtout, white waistcoat, and light gloves, familiar to you in Pall-Mall and Piccadilly; for even the West-End swell nowadays ventures into the vortex of financial speculation; but he looks a butterfly among the busy throng, and his air (as doubtless he wishes it to be) is quite different from that of the habitués of the precinct. Nothing more conduces to preserve youthfulness than a considerable amount of mental activity. The alertness and vivacity of the mind transfer themselves to the personal appearance. And, despite all the worry and anxieties which these money-dealers and speculators are supposed to, and sometimes do, undergo, they wear better, and keep their youth longer, than the farmers and provincial classes generally. There is no sauntering here; and men of threescore and upwards step out as lightly as men of half their age in provincial places. In truth, it is the elderly gentlemen who show to most advantage in this monetary metropolis; and ever and
anon you meet with the fresh clear complexion, pure white whiskers, and brisk look and movement, which characterise the best specimens of our elderly English gentlemen. It seems a healthy as well as exciting pursuit which men ply in this precinct of Mammon. Even the speculators par excellence-men who are rich to-day and poor tomorrow as a class, live for the bright side of the picture, and look as if they did so.
It is curious to note how the tide of business and population ebbs and flows in this peculiar precinct. The busiest and most crowded place in the world for half-a-dozen hours of the day, it thereafter becomes almost a solitude. Except in Cornhill, where shops have not yet been wholly supplanted by offices, the precinct after sunset relapses into darkness. About ten in the morning, the omnibuses deposit load after load of passengers at the corner of Cheapside, opposite the Mansion House; while Hansom cabs and private broughams convey to business the grandees of the place. And during the next six or seven hours vehicles of all descriptions ply to and fro the precinct. But between five and six o'clock the daily exodus begins. Bankers, brokers, speculators, clerks, and directors alike, all rush off homeward, out of town it may be, or to distant suburbs; and the Golden City becomes wholly silent, dark, and solitary. In the moonlight, this solitude of palatial edifices looks even more grand and imposing than by day; but the currents of busy life no longer flow between the towering piles, and the streets seem like riverbeds which have suddenly been left dry. On Sundays, the solitude and apparent desolation are still more conspicuous. Hardly any one lives in the precinct save the porters left in charge of the offices. The churches, accordingly, are almost empty. It is only when some highly-gifted preacher is appointed to the locality that the pews become filled-a rare occurrence-by persons drawn from other parts of
London. Some of us can recollect the time when Dr Croly, in his heyday, drew crowds to the fine Church of St Stephen's, Walbrook, at the back of the Mansion House, and when his noble oratory and high intellect converted the solitude of empty pews into a crowded and attentive audience. There, for years, he lifted up his voice like one preaching in a wilderness. The emptiness of the churches in the precinct, however, is simply the result of there being no parishioners of the class who ordinarily attend churches.
Banks form the most conspicuous architectural feature of the precinct. And naturally so, for without them trade and financial operations could not acquire the remarkable development which is here to be witnessed. They are the reservoirs of the place, into which flows the spare money of the nation, and out of which flow the monetary streams which set agoing all the other operations of the place. Besides the Bank, which in external appearance, as well as in real power, throws into the shade all its compeers, we see conspicuous among the others the large building of the London and Westminster Bank, facing on the other side of Lothbury its old opponent the Bank of England, the huge but unattractive fabrics of the Union and London Joint-Stock Banks in Princes Street,—the London and County Bank in Lombard Street, and the handsome pile of the Oriental Bank. Next in importance, as architectural features of the place, are the Insurance Offices, and chief among these, the Sun, the Imperial, and North British, all in good sites in Threadneedle Street. In the third rank-and soon likely to take a higher place are the offices of the Discount-houses and new Credit companies: the massive and costly edifice of the National Discount Company in Cornhill, occupying the first place in point of architecture; while in Lombard Street, the great discount-house of Overend, Gurney, & Co. (familiarly called "the
house at the corner") and Hanbury's bank, face each other at the foot of Finch Lane; and in Lothbury are the offices of the two young giant credit-companies, the "General" and the "International." Every year some of the old establishments, banks or others, are building for themselves finer edifices. They feel a necessity not only to be prosperous, but to advertise their prosperity by architectural display. There is a rage for Portland stone and polished granite pillars; and the movement in favour of external display is proceeding to an extent which has excited considerable criticism and distrust among the older and more cautious grandees of the locality. Perhaps the "old fogies" are right, if we judge from a London point of view,-for London architecture (we except the fine old churches) is a very poor affair compared with the wealth of the place.
The classification which we have made of the edifices of this monetary metropolis is likewise applicable to the population-to the busy crowds whom we see rushing to and fro-and to the pursuits which they follow. Let us see what is the style of business which each of these classes carries on. We shall find that they are all closely connected
integral parts of one great system of monetary trade, and that the line of demarcation between some of them is not drawn with sufficient sharpness to be readily perceptible to the uninitiated.
Let us describe first, generically, the leading operations of the Banks. The fundamental part of their business is to receive deposits of money. They take money into safe keeping, and they manage it in such a way as to meet the requirements of the depositors. They give the depositors cheque-books, blank forms of drafts upon the bank; and whenever one of these cheques is presented, either by the depositor or by any one to whom he has made it payable, the bank hands the money across the counter, in notes or in gold as may be demanded. In some
cases the banks give interest on the sums deposited, in others they do not and the Bank of England does not pay interest in any case. The next part of the business of banks is to recompense themselves for this management of their customers' money, by employing at usury the balance of the deposits which is not likely to be called for by the depositors. This balance amounts in ordinary circumstances to about four-fifths of the whole money deposited with the bank. When trade is stagnant, this balance is at its highest amount; when trade is brisk, or when credit is shaken, it is at its lowest. A bank, in short, must mark well the signs of the times in order to know the exact amount of the deposits which may be safely lent out. If too much be lent out, the bank is embarrassed in meeting the demands of the depositors; if too little be lent out, the bank loses its profit on the sum thus needlessly kept on hand. Having determined what portion of the deposits is not likely to be called for, the bank invests or lends out at interest this sum in various ways. First of all, it invests a portion in the purchase of Consols a species of security which is of all others the most steady in value, and the most readily negotiable; in other words, which can be most readily sold and reconverted into money. Next, the bank makes advances to its customers. Any one who has an account with a bank may, in ordinary times, by tendering Government or other good stock, obtain a temporary loan on that security to the amount of three-fourths of its current value. But the most extensive kind of advances made by the banks is in the discount of commercial bills. A customer of the bank has a bill, or bills, falling due say three months hence; but by taking them to the bank he deals with, he can get cash for the full amount of these bills at once, minus three months' inter
est on that amount. In extraordinary cases, the banks-and especially the Bank of England, the great fountainhead of credit-will make advances to some large firm or company whose position is solvent, but which is in temporary embarrassment. In this case, an agent of the bank examines the books of the firm, sees what are its assets, and decides what amount may safely be lent to it: but the bank does not accept these assets as securities for the loan-it makes the loan to the firm itself, holding the firm responsible—and its object in ascertaining the amount of the assets is simply to see that the circumstances of the firm are such as to warrant the loan being made to it. The advances made on these various forms of security-viz., stocks, commercial bills, or in aid of wealthy but temporarily embarrassed firms-are for considerable periods; say, on the average, three months. But there is a portion of the banks' deposits which it would not be prudent to lend for such periods, yet which may be safely lent for a week or a day. The great point in banking is to see that every pound which is not needed by the depositors is profitably employed. Each day there is a surplus available for short investments. What is done with it?
It is handed over to the bankbrokers, who may be called moneybrokers pure and simple. This is another class of business. These men are the intermediaries between the banks and the various other institutions, companies, or individuals who flourish in this monetary precinct. It is the duty of these bank-brokers-whose position is most onerous, and who are few in number-to employ the sums at their disposal in loans at call, or for a week, or a single day. Their vigilance must be unceasing. · They have to keep their eye on the expiry of each of those brief loans, and find a new investment for it;
*For further details connected with banking, see the article on The Economy of Capital' in the Magazine for March 1864.
and when a change in the rate of discount takes place, they are on the trot the whole day, altering their terms and making new bargains on the footing of the change. To lend money for a single day, when the rate of interest is at (say) four per cent per annum, may seem to an outsider a very infinitesimal operation-one which would not repay the cost and trouble connected with
it. But sometimes these bankbrokers have three or four millions sterling to dispose of: and the interest on that sum for a single day amounts to £330 or £400. By neglecting these daily loans-by letting the amount which can be safely employed in this manner (the surplus on the day's proceedings) lie inactive in their coffers, the London banks would lose £100,000 or £150,000 a-year! The bank brokers of course get a commission on their work- -a small percentage; and as one of these brokers has been known to have had £2,000,000 pass through his hands in a single day, their business is as lucrative as it is onerous. But to whom, to what parties, are these very short loans made? Who is it that is ready to take money on loan for a single day?
To some extent these loans are made to all the other sections of the community in this monetary precinct. It is only to its own customers that a bank discounts bills, or makes advances on stock, &c.; but the daily surplus which is distributed by the bank-brokers is lent to any suitable parties, without distinction, who may desire to have some of it. Nearly all of it, how ever, is taken up by the Stock Exchange and the Discount-housesthe latter of which establishments rank next in importance to the banks in this city of money-dealers. The discount-houses do not receive money in deposit as the banks do: they do not issue cheques, or undertake the management of money for customers. They receive money, not in deposit, but on loan. They take short loans, for a week, or a fortnight, or "at call," paying interest, of course, on
all sums thus received. In this way the Discount - house offers a good means of investment for sums which could not otherwise be employed to equal advantagenamely, for sums which the owner has on hand merely for a few days. For example, a man who has money invested in some particular kind of stock or shares, and who thinks it advisable to sell out at once, with the view of re-investing his money in some other form, may have that money on hand for a week or two, waiting for a favourable opportunity of re-investing it. Instead of keeping it on hand, he lends it to a discount-house, and receives a high rate of interest on it, till he is ready to use it again. The daily surplus of the banks, as we have said, is also employed to a great extent in this way. The money thus obtained on loan, as well as the private capital of the discount-houses, is employed by these firms in discounting commercial bills. And as they do not require to keep money on hand, like the banks, to meet the wants of depositors-as all their money, in short, is fully employed at interestthe discount-houses can afford to discount bills at a rate slightly lower than that of the Bank. The cashing of bills is their special and only business, and they get a very large share of it. The main principle which they have to observe is this: They know the amount of their private capital, and the amount of money which they may reckon upon receiving on loan from the public, on the one hand, and, on the other, they know the average term of the bills which they discount (say two months or three months); they then discount to the full amount of their resources,-taking care, thereafter, that the amount of bills which they discount shall be balanced by an equal amount of bills " running off," i. e., falling due. If the state of the money market renders it advisable for them to increase their reserves, they have only to lessen the amount of the bills which they discount, and in a single week their cash on hand
is increased, in consequence of the bills falling due to them being in excess of the amount which they are discounting. To discount a bill is to purchase a debt falling due at a specified time. Ordinary commercial bills are as good as money; and the larger portion of what figures in the returns of the joint-stock banks as "deposits" is held by these banks in the form of commercial bills which they have discounted. The money deposited with a bank is employed in the purchase of these bills, and the rate of discount charged upon them is a chief source of bankers' profits. If a firm which has purchased a bill (by discounting it) is in need of ready cash, money can be obtained by re-discounting the bill-i. e., selling it to a bank or other party which deals in that kind of business. And every time a bill is thus paid away, the more solid does its value become; because every party through whose hands it passes endorses it, and becomes security for its ultimate payment. In this way, bills to some extent become part of the currency, circulating from hand to hand in payments which would otherwise have to be made in cheques, notes, or gold. As every discount-house keeps an account at a bank, it can (if in temporary need of money) take some of the bills which it has discounted, and get them re-discounted at the bank with which it deals. Some years ago, however, the Bank of England refused to treat the discount-houses on the same terms in this respect as its ordinary customers. They are rivals of the Bank in the discounting line, and manage to get the lion's share of the business; and the Bank, with considerable justice, said :— "We have to keep on hand reserves to meet all demands that can be made upon us, whereas you trade to the full extent of your resources: in this way you make larger profits in ordinary times than we can do; and it is rather too much, when you become embarrassed by so trading, to come upon us to help you.' The discount-houses are the great
rivals of the Bank; and whenever a monetary crisis takes place, a great deal of bitter feeling arises between them; and the Bank is seldom loth to see one of these rival establishments brought to the ground.
Let us now come to another important branch of business carried on in this precinct. Let us enter the Royal Exchange. For the greater part of every day a stranger will be at a loss to discover for what purpose so fine an edifice was erected. As he enters the central court, the place looks deserted-only a few loungers, looking neither very business-like nor respectable, sauntering or sitting beneath the verandah. One may guess that some of those people have met here by appointment, as a convenient rendezvous; and what the others are waiting for, it is not easy to see. On the afternoon of Tuesday and Friday, however, the scene is very different. All idlers are then excluded, but any one may enter who has business to transact. The Royal Exchange belongs to the Gresham Committee, but the public has full right of entry on the simple condition that they come there on business and not as idlers. The business consists in the buying and selling of "bills of exchange," i. e., orders for money payable in foreign_countries,—bills on China, India, Egypt, Paris, Hamburg, New York-on all the chief seats of commerce. A merchant who has to pay a sum of £10,000 in Calcutta, instead of sending specie, goes on 'Change and buys bills to that amount, which he transmits at the mere expense of postage. The price of these bills is regulated by two considerations. First, there is the length of time which a bill has to run. If it is payable four months after date, it is of course less valuable than one at three months-the discount, or rate of interest, having in each case to be deducted. But the value of these bills is also affected, like everything else, by the amount of supply and demand. If the amount of bills upon Calcutta happens to be greater than