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