Produced by Edited by Charles Aldarondo (aldarondo@yahoo.com)
A Description of the Money Market.
By WALTER BAGEHOT
Introductory.
I venture to call this Essay 'Lombard Street,' and not the 'MoneyMarket,' or any such phrase, because I wish to deal, and to showthat I mean to deal, with concrete realities. A notion prevails thatthe Money Market is something so impalpable that it can only bespoken of in very abstract words, and that therefore books on itmust always be exceedingly difficult. But I maintain that the MoneyMarket is as concrete and real as anything else; that it can bedescribed in as plain words; that it is the writer's fault if whathe says is not clear. In one respect, however, I admit that I amabout to take perhaps an unfair advantage. Half, and more than half,of the supposed 'difficulty' of the Money Market has arisen out ofthe controversies as to 'Peel's Act,' and the abstract discussionson 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 theAct of 1844; and when I do speak of it, I shall deal nearlyexclusively with its experienced effects, and scarcely at all, if atall, with its refined basis.
For this I have several reasons,—one, that if you say anything aboutthe Act of 1844, it is little matter what else you say, for few willattend 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 ofParliament—and there is still so much animosity—that a single sentencerespecting it is far more interesting to very many than a whole bookon any other part of the subject. Two hosts of eager disputants onthis subject ask of every new writer the one question—Are you with usor against us? and they care for little else. Of course if the Actof 1844 really were, as is commonly thought, the primum mobile ofthe English Money Market, the source of all good according to some,and the source of all harm according to others, the extremeirritation excited by an opinion on it would be no reason for notgiving a free opinion. A writer on any subject must not neglect itscardinal fact, for fear that others may abuse him. But, in myjudgment, the Act of 1844 is only a subordinate matter in the MoneyMarket; what has to be said on it has been said at disproportionatelength; the phenomena connected with it have been magnified intogreater relative importance than they at all deserve. We must neverforget that a quarter of a century has passed since 1844, a periodsingularly remarkable for its material progress, and almostmarvellous in its banking development. Even, therefore, if the factsso much referred to in 1844 had the importance then ascribed tothem, and I believe that in some respects they were even thenoverstated, there would be nothing surprising in finding that in anew world new phenomena had arisen which now are larger andstronger. In my opinion this is the truth: since 1844, LombardStreet is so changed that we cannot judge of it without describingand discussing a most vigorous adult world which then was small andweak. On this account I wish to say as little as is fairly possibleof the Act of 1844, and, as far as I can, to isolate and dwellexclusively on the 'Post-Peel' agencies, so that those who have hadenough of that well-worn theme (and they are very many) may not bewearied, and that the new and neglected parts of the subject may beseen as they really are.
The briefest and truest way of describing Lombard Street is to saythat it is by f