Page:The Bank of England and the State, 1905.djvu/48

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Foreign Trade and the Money Market.

London, the Financial Centre of the World.

As I have already said, the fact of our being the recognised financial centre is beyond doubt. That this is so is a matter of the very greatest moment, for it will be admitted that the prosperity of the whole of the United Kingdom must, in a great measure, depend on our being able to maintain that position. A bill of exchange on London is the recognised medium of settling international transactions, which is made use of in all parts of the world. I really think you must have lived, or at least travelled, in foreign countries, to realise to what extent this bill on London enters into daily commercial life in all foreign countries. Not only in the banks abroad but in the offices of most leading merchants, the dealing in such bills is of constant occurrence; and the names of London bankers and merchants are as well known in the important commercial towns all over the world as amongst ourselves. It is quite true that a certain number of bills are drawn on Germany, or France, or Belgium for goods shipped there from transatlantic countries, but the number of such bills is comparatively small, and they are only used in connection with trade between those respective countries, and not as international mediums of exchange. As regards shipments of goods to the United Kingdom, the shipper almost invariably obtains payment for those goods by selling his bill on London to the local bank; but not only that, in most cases he would prefer, when he sends goods to any part of the Continent of Europe, or to the United States, to draw a bill on London against them, leaving the purchaser to settle with the London banker. In using the term banker, I include, of course, the large number of so-called merchant bankers who make a speciality of this kind of business. Thus the China merchant who sells tea to Russia or Germany, or silks to the United States, will probably obtain payment through the medium of the London Money Market, and equally the German merchant who sends his goods out to China. It is needless to multiply instances; they may be found amongst almost every article of trade; the coffee that is shipped from Brazil into France or Italy, the cotton from New Orleans to Poland, sulphur