Lombard Street: A Description of the Money Market/Index

by Walter Bagehot

 

INDEX

 

• Act, Peel's, of 1844, 2, 3, 23, 29, 35, 41, 45, in, 154, 193, 194, 240, 333
• Althorp, Lord, committee for publication of Bank account, 303
• America, 23; Civil War, 46; banking methods, 313
• Amsterdam, Bank of, 79, 80
• Appendix I. (Walter Bagehot)

  Note A. Liabilities and cash reserve of the chief banking systems, 317-319

  Note B. Extract of evidence given by Alderman Salomons before House of Commons Select Committee, 1858, 319-329

  Note C. Statement of circulation and deposits of the Bank

of Dundee at intervals of ten years between 1764 and 1864, 319–329

• Note D. Meeting of the Proprietors of the Bank of England,

September 13, 1866 (from Economist, September 22, 1866), 330-338

• Appendix II. (E. Johnstone)

  Note I. Deposits in London, New York, and German banks, 339, 340

  Note II. Deposits of five metropolitan banks, 340, 341

 

• Bank, Acts, 1844, 2, 3, 23, 29, 35, 41, 45, 111, 154, 193, 194, 240, 333; 1742, 95

  deposits, 4, 11, 27 seq.; of savings banks, 301; growth of, 239-341

  distinctive function of a, 1; earliest type of, 77; remittance

of money, 81; supply of paper circulation, 82, 85

• Bank note issues, 85, 87, 88

  reserves, 26-34; minimum, 305–309; importance of, 152, 196, 197, 317. See Bank of England Austro-Hungarian, 33

  of Dundee, 82; Statement, Note C, Appendix, 330

  of England, 17, 19; effect of Act of 1844, 23; issue department, 24, 155; panic no effect on, 187; banking department, 25–32, 40, 62, 154, 175, 176, 185, 186, 189, 284; reserves on deposit, 28–34; liability for international payment, 33, 34;

responsibility of directors, 36, 37, 43; their singular position, 38-44; small value of stock, 39, 40; demands upon reserve, 44, 45; elevation of rate, 46; foreign drain, 47; domestic drain, 48-57; advances in time of panic, 61, 63, 64, 179, 182, 298, 305, 312; State account, 62, 286–289; anomalous system of one reserve, 65; three remedies, 65, 70, 72; Origin, incorporation, privileges, 90–97; period of restriction, 107, 113; settlement of value of money, 109–117. Chapter VII., Administration of Bank Reserve, 153–197; unrecognised responsibility, 153; Governor's speech on panic of 1866, 157, 167; Appendix, 330–338; Mr. Hankey's observations, 161; criticism of, 163; strength and weakness of directors, 166, 167; their mistakes, 170, 171; improvement since 1857, 171; rate raised by steps of 1 per cent., 173; chronic faults of policy, 176; one-third reserve not adequate, 178; Clearing House system, 183, 184; attitude in time of panic, 179–186; rules for advances, 187; policy of inconsistency, 189; successful action in large and small advances, 192; "Banking security," 195; Discount Office, 195; importance of amount of advance, 196. Chapter VIII., Government of the Bank of England, 198–229; election of directors, 198; young men chosen, 199; elder members on committee of Treasury, 201, 228; no banker a director, 202; character of directors, 204; no fixed executive, 205; duties of Governor and Deputy-Governor, 206; constitution of, 207, 229; question of permanent Governor, 210-218; of Deputy-Governor, 219-224; suggested reforms, 225-229; Sir George Lewis and directors of, 240; rivalry of bill brokers, 280; rule of 1858, 281. Chapter XII., Principles to Regulate the Amount of Reserve, 284–309; nature of liabilities and deposits, 285; Government account, 286; Budget account, 287; public deposits, 287; analysis of return, 289; bankers' deposits, 289; utmost caution required, 290; transactions of the German Government, 291–295; withdrawal of foreign deposits, 295–297; opinions as to lending bankers' balances, 297; changes involving change of rules, 300; object of publishing account, 302; "apprehension minimum," 303; time required for operation, 306; estimates for minimum reserve, 307-309; faulty system, 310; proposals to amend single-reserve system, 310–315; cash reserves (Appendix I.), 317; meeting of proprietors, 1866 (Economist), 330

• Bank of France, 33, 68, 69, 83, 86, 170, 175, 217, 299, 318

  of Genoa, 79

  of Germany, Imperial, 84, 318, 339

  of Hamburg, 79

  London and Westminster, 39, 40, 58, 97, 101, 154, 226, 278

  of Russia, 33

  Savings, 288, 311

  of Scotland, 82

  Swiss, 86

• Banks, joint stock, 19, 66, 205. Chapter IX., 230–251; capital as guarantee, 230; profits and dividends, 232, 233; facts and fears, 237; success contrary to expectation, 238; government, 241; responsibility of managers, 246; errors of, 247; working committee of directors, 247; importance of clearly known government, 250; balances of German Government with, 292–295

  private, 21. Chapter X., 252–264; character of, 252, 253; continuance doubtful, 254; reasons, 254; competition against, 255; privileged opportunities, 256, 257; case of Overend, Gurney & Co., 258–260; new business, 261; organisation, 263

  of United States, 318

• Baring Brothers, 18
• Bill brokers, 12, 21,29, 32, 59, 60,61, 148; Messrs. Rothschild, 203; reserves of joint stock banks 240. Chapter XI., 265–283; as intermediaries, 265; mercantile tradition of the "standing of parties," 267; bills of exchange, 268; Mr. Richardson's evidence in 1810, 268; existence of old practice, 271; modern bill broking, 272; interest and its consequences, 274; in time of panic, 275, 276; effect of one-reserve system, 277, 278; rivalry with Bank of England, 280; action of "Overends," 282; anomalies of position, 282, 283; German Government and, 291
• Botly, Mr., 335, 336
• Bullion, 45–47; committee, 268

 

• Caisse d'Escompte, 89
• Canal, Suez, 13
• Capital, English: runs where wanted, 12, 13; sudden demands for, 13; organisation of, 14; loanable, 46; credit or capital, 124, 125; surplus of loanable, 142, 143; rise of prices, 146

  German, 340

• Cayley, Mr., 322, 325
• Chancery funds, 288
• Charles II., 91
• Chevalier, M., 125
• Clearing-house system, 183, 184, 185, 289
• Commerce, English: democratic nature of, 9; prompt to seize new advantages, 10; propensity to variation, 10; foreign competition, 15; trade on borrowed capital, 16, 180; placing savings at interest, 129; beginning of companies, 129; the investing mania, 150; adventure, the life of, 220
• Commons, House of, 1 68
• Companies, growth of trading, 129–131, 150
• Consols, 60, 61, 64, 195, 312
• Credit, organisation of, 21; soundness of, 22; best credit, 49; auxiliary dealers in, 50, 51; "instinctive confidence," 68; varying nature of, 124; causes, 125; rise of prices and rise of credit, 132, 133; checks to credit, 149; sustained by large reserve, 152; an opinion generated by circumstances, 304
• Currency (legal tender), 22, 23; limit of issue, 23–25; "cash" and "bullion," 45–47; supply of paper, 82, 83; automatic since Act of 1844, 154; reserve, 171; Bank of England notes and, 186

 

• Deposits, known, 4; "borrowable money," 5; county savings, 11; bills in profitable trades, 12; peculiar and distinct, 16; dangers attending, 17, 20; nature of foreign, 35; and banking, 75–86; savings bank, 301; growth of, 339
• Discount, Office, 195; result of raising rate of, 306
• Downing Street, 288
• Dundee, Bank of, 82, 330

 

• East India Company, 13, 128, 288
• Economist, the, 134, 155, 161, 162, 163, 330
• England, Bank of. See Bank
• Exchange, uncertain foreign, 78, 79, 80; bills of, 268
• Exchequer, Chancellor of the, position in the Money Market. Chapter IV., 98–108; Government and banking, 99–101; deficiency bills, 102, 103; Treasury bills, 102, 103; evils of position, 105, 106; Pitt's policy, 106; authority from the, 158; Sir George Lewis as, 240; Exchequer bills, 52, 191, 192

 

• France, Bank of, see Bank; banking in, 75, 76, 83, 84; war indemnity to Germany, 294
• Frankfurter Zeitung, 340

 

• "Gazette," the, 275
• Genoa, 9; bank of St. George, 77, 79
• German banks, 340; Government and English banks, 291-299
• Gerstenberg, Mr., 335
• Gladstone, Mr., 159
• Goschen, Mr. (afterwards Lord), 172
• Government and the Money Market, 98–101; and Bank of England, see Bank; of Charles II., 91; of William III., 92; of France and paper money, 89 Governors of the Bank of England, 177; election, 198; age, 199; Committee of Treasury, 201; change of office, 205, 206; a permanent Governor, 210, 212; Deputy-Governor, 219; greatest reform possible, 225; inclusion of bankers, 225; alteration of constitution, 229, 313
• Greenbacks, 23
• "Grundziige der National-Oekonomie" (Wirth), 87

 

• Hamberg, Bank of, 78, 79
• Hankey, Mr., 37, 161–165, 177, 178, 196, 325, 327
• Harman, Mr., 52, 168
• Holland, Launcelot, 330
• Hudson's Bay Company, 210
• Huskisson, Mr., 190
• Hyam, Mr., 332

 

• India, 13, 174; securities, 195; Secretary of State as lender, 287
• Interest, not a universal idea, 126; difficulty of investing at, 128; the stockjobber, 129; low rate followed by rapid rise, 147; investing mania, 150; London and Paris rates, 172
• Italy, earliest banks of, 77

 

• James II., 92
• Jevons, Professor, 134
• Joint stock banks. See Banks
• Jones, Mr., 333

 

• Laurie, P. N., 338
• Law's failure in France, 89
• Legal tender, 22, 23. See Currency
• Lewis, Sir George, 240
• Liabilities and cash reserve of chief banking systems, Appendix I., 317–319
• Lombard Street, 1, 3; combination of power and delicacy, 3, 16; loans to foreign countries, 6, 7; to British traders, 8, 9; the great go-between, 11, 12; system, 16, 19; danger, 8, 30; reserves, 31; single and many reserve systems, 68-73. Chapter III., How Lombard Street came to exist and why it assumed its present form, 74–97; growth and early history of banking, 74–78; remittances of money, 81; paper circulation of, 82–90; monarchical form of, 90; origin and history of the Bank of England, 90–97. Chapter V., The mode in which the value of money is settled in Lombard Street, 109–117; the higgling of the market, 110; power of the Bank of England, 111–114; fluctuations of value, 114–116. Chapter VI., Why Lombard Street is often very dull and sometimes extremely excited, 118–152; time and element in trade operations, 120; partnership in industries, 121; general effect of depression, 122; case of agriculture, 123; causes of varying credit, 125; difficulty of investing at interest, 128; growth of companies, 129; "The Great Rise in the Price of Commodities" (Bagehot Economist, 1871), 134–142; expansion of industry, 143; prosperity, true and apparent, 144–148; high prices and fraud, 151; importance of banking reserve, 152; confidence in Lombard Street, 302; relative position of, Appendix II., 339
• London, 7, 13, 27, 28, 29, 30, 32, 33, 34, 90. 92, 94. 96, 97, 101, 102, 186, 240, 242, 243, 258,

292; County Council, 101; loan fund, 4, 14; London as clearing house to foreign countries, 34; "London Banker," 253; London and Westminster Bank, see Bank; London Joint Stock Bank, 291, 292

• Lowe, Mr., weekly Government account with the Bank of England, 288

 

• Macaulay, Lord, 90, 92, 127, 130
• Macculloch, Mr., 14
• Merchant princes, 9, 10
• Metropolitan Board of Works, 101
• Money Market, the, concrete and real, 1; Money Market money, 5; of England, 5; liabilities and means, 17; beginning of modern, 47; two maladies of, 48, 89; panics, 49–52; why England is a great, 90. Chapter IV., The Position of the Chancellor of the Exchequer in the Money Market, 98–108; Government and its money, 98; and banks, 99–100; action in case of collapse, 103; evils of system, 105, 106; charmed life of Bank of England, 107; aid of State, 108; settlement of the value of money, 109–117; fluctuation of prices, 134–142; bill brokers and, 274, 281; publication of Bank account gives stability to, 302; sensitive state not necessarily insecure, 315; relative position of London, Appendix II., 339. See also Bank of England, Lombard Street
• Moxon, Mr., 333, 337
• Murrieta & Co., Messrs., 18

 

• National Debt, 92
• New York, 32

 

• Overend, Gurney & Co., 17, 18, 157 159, 175 182, 208, 251, 258, 259, 268, 273, 282, 331, 336
• Overstone, Lord, 237, 238

 

• Panic, incipient, 49; species of neuralgia, 51; of 1825, 52, 190; problem of managing, 52; strain on reserve of Bank of England, 57–66; classification of, 118; preparation for, 119; of 1866, 155, 159, 193; of 1857, 58, 160, 193; Bank of England and, 179, 181, 182, 221, 298, 312; Clearing-house during, 184; in 1844, 193; joint stock banks and, 251; brokers in time of, 275; recipe for, 302, 303, 314
• Paris, 33, 34
• Pearse, Mr., 167
• Peel, Sir Robert, 43, 190, 238; Act of 1844, see Act
• Pitt, William, 106, 191

 

• Queen Elizabeth, 7
• Queen Victoria, 67

 

• Ricardo, 14, 21, 55
• Richardson, Mr., 268–270, 271, 272, 273, 274
• Rothschild, Messrs., 202, 226

 

• St. Petersburg, 190
• Salomons, Alderman, 160, 277; evidence before Select Committee, 1858, Appendix I., Note B, 319, 335, 337, 338
• Savings, speculative investment of, 126–131; through bankers, 132; excess deposited in banks, 137; savings banks, 288, 301
• Scotland, Royal Bank of, 82
• Smith, Adam, 77, 80, 110, 230, 231
• Somerset House, 62
• South Sea Bubble, 130, 150, 210
• Spooner, Mr., 326
• Stock Exchange settlements, 184
• Suez Canal, 13

 

• "Times," the, 176
• Tocqueville, M. de, 13
• Turgot, 89
   
• United States, 23; Bank of, 208

 

• Venice, 9; Bank of, 79

 

• Watkins, Mr., 333
• "Wealth of Nations" (Smith), 80
• Weguelin, Mr., 178, 240, 320, 321, 322, 324
• Wellington, Duke of, 190
• Whitmore, Mr., 168
• William III., 92, 128

 

THE END

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