Page:The Bank of England and the State, 1905.djvu/50

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8
Foreign Trade and the Money Market.

of that position would mean it is almost impossible to conceive; but in bringing this point to your notice, and asserting for it a paramount claim in the consideration of the fiscal question, I am confident you will agree that I am not pleading in the interests of a special class, for I feel sure that all of us bankers would put the great interests of the country before our own; and as our prosperity is dependent on that of the nation, so again every one of our industries, and our whole trade, and the employment of our working population is, in the United Kingdom more than any other country, dependent on the unimpaired maintenance of our banking system, and that again is largely dependent on our position as the bankers of the world.

It is indeed a great responsibility we carry on our shoulders; it is not beyond the mark to say that on the greatness of our banking resources, the greatness and development of our industries must depend. That the present system of unrestricted trade must increase these resources, as it must also increase the national income through our shipping trade is, to my mind, beyond question. The part played by this bill on London in maintaining stability in our money market, the part it has played, and is still playing, in settling the vast expenditure of the war, is known to you all, but I doubt if it is at all realised throughout the country. London banker hardly ever invest in bills on foreign centres; the rate of discount may be 3 per cent. here, and 4 per cent. in Berlin, yet it does not occur to us to invest our money in bills on Berlin; but take the opposite case; you have money here at 4 per cent. and 3 per cent. in Berlin or Paris, you at once have a flow of investment into those bills, it is the Berlin banker who discounts, as it were, instead of the London banker, and hence the demand on our market is lessened. It is only when our rate recedes again below that of the market where the bill is held that it will come over here for discount. Thus this bill on London, this bill, the origin of which is based in most cases on purely commercial transactions, performs a most important function in equalising the value of money prevailing in the various centres, and preventing