Lombard Street | Page 4

that the Money
Market is something so impalpable that it can only be spoken of in very
abstract words, and that therefore books on it must always be
exceedingly difficult. But I maintain that the Money Market is as

concrete and real as anything else; that it can be described in as plain
words; that it is the writer's fault if what he says is not clear. In one
respect, however, I admit that I am about to take perhaps an unfair
advantage. Half, and more than half, of the supposed 'difficulty' of the
Money Market has arisen out of the controversies as to 'Peel's Act,' and
the abstract discussions on the theory on which that act is based, or
supposed to be based. But in the ensuing pages I mean to speak as little
as I can of the Act of 1844; and when I do speak of it, I shall deal
nearly exclusively with its experienced effects, and scarcely at all, if at
all, with its refined basis.
For this I have several reasons,--one, that if you say anything about the
Act of 1844, it is little matter what else you say, for few will attend to it.
Most critics will seize on the passage as to the Act, either to attack it or
defend it, as if it were the main point. There has been so much fierce
controversy as to this Act of Parliament--and there is still so much
animosity--that a single sentence respecting it is far more interesting to
very many than a whole book on any other part of the subject. Two
hosts of eager disputants on this subject ask of every new writer the one
question--Are you with us or against us? and they care for little else. Of
course if the Act of 1844 really were, as is commonly thought, the
primum mobile of the English Money Market, the source of all good
according to some, and the source of all harm according to others, the
extreme irritation excited by an opinion on it would be no reason for
not giving a free opinion. A writer on any subject must not neglect its
cardinal fact, for fear that others may abuse him. But, in my judgment,
the Act of 1844 is only a subordinate matter in the Money Market;
what has to be said on it has been said at disproportionate length; the
phenomena connected with it have been magnified into greater relative
importance than they at all deserve. We must never forget that a quarter
of a century has passed since 1844, a period singularly remarkable for
its material progress, and almost marvellous in its banking development.
Even, therefore, if the facts so much referred to in 1844 had the
importance then ascribed to them, and I believe that in some respects
they were even then overstated, there would be nothing surprising in
finding that in a new world new phenomena had arisen which now are
larger and stronger. In my opinion this is the truth: since 1844,
Lombard Street is so changed that we cannot judge of it without

describing and discussing a most vigorous adult world which then was
small and weak. On this account I wish to say as little as is fairly
possible of the Act of 1844, and, as far as I can, to isolate and dwell
exclusively on the 'Post-Peel' agencies, so that those who have had
enough of that well-worn theme (and they are very many) may not be
wearied, and that the new and neglected parts of the subject may be
seen as they really are.
The briefest and truest way of describing Lombard Street is to say that
it is by far the greatest combination of economical power and
economical delicacy that the world has even seen. Of the greatness of
the power there will be no doubt. Money is economical power.
Everyone is aware that England is the greatest moneyed country in the
world; everyone admits that it has much more immediately disposable
and ready cash than any other country. But very few persons are aware
how much greater the ready balance--the floating loan-fund which can
be lent to anyone or for any purposeis in England than it is anywhere
else in the world. A very few figures will show how large the London
loan-fund is, and how much greater it is than any other. The known
deposits--the deposits of banks which publish their accounts--are, in
London (31st December, 1872) 120,000,000 L Paris (27th February,
1873) 13,000,000 L New York (February, 1873) 40,000,000 L German
Empire (31st January, 1873) 8,000,000 L
And the unknown deposits--the deposits in banks which do not publish
their accounts--are in London much greater than those many other of
these cities. The bankers' deposits of London are many times