Lombard Street quotes

A notion prevails 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.

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.

A million in the hands of a single banker is a great power; he can at once lend it where he will, and borrowers can come to him, because they know or believe that he has it.

But the same sum scattered in tens and fifties through a whole nation is no power at all: no one knows where to find it or whom to ask for it.

Concentration of money in banks, though not the sole cause, is the principal cause which has made the Money Market of England so exceedingly rich, so much beyond that of other countries.

But the English money is 'borrowable' money. Our people are bolder in dealing with their money than any continental nation, and even if they were not bolder, the mere fact that their money is deposited in a bank makes it far more obtainable.

A million in the hands of a single banker is a great power; he can at once lend it where he will, and borrowers can come to him, because they know or believe that he has it.

But the same sum scattered in tens and fifties through a whole nation is no power at all: no one knows where to find it or whom to ask for it.

If any nation wants even to make a railway—especially at all a poor nation—it is sure to come to this country—to the country of banks—for the money. It is true that English bankers are not themselves very great lenders to foreign states.

But they are great lenders to those who lend.

They advance on foreign stocks, as the phrase is, with 'a margin;' that is, they find eighty per cent of the money, and the nominal lender finds the rest.

… that in poor states there is no spare money for new and great undertakings, and that in most rich states the money is too scattered, and clings too close to the hands of the owners, to be often obtainable in large quantities for new purposes.

A place like Lombard Street, where in all but the rarest times money can be always obtained upon good security or upon decent prospects of probable gain, is a luxury which no country has ever enjoyed with even comparable equality before.

But though these occasional loans to new enterprises and foreign States are the most conspicuous instances of the power of Lombard Street, they are not by any means the most remarkable or the most important use of that power.

But these defects and others in the democratic structure of commerce are compensated by one great excellence.

No country of great hereditary trade, no European country at least, was ever so little 'sleepy,' to use the only fit word, as England; no other was ever so prompt at once to seize new advantages.

A country dependent mainly on great 'merchant princes' will never be so prompt; their commerce perpetually slips more and more into a commerce of routine.

If things go on as they are I shall certainly keep it; but if they change I may not keep it.' Consequently he considers every change of circumstance a 'bore,' and thinks of such changes as little as he can.

But a new man, who has his way to make in the world, knows that such changes are his opportunities; he is always on the look-out for them, and always heeds them when he finds them.

The rough and vulgar structure of English commerce is the secret of its life; for it contains 'the propensity to variation,' which, in the social as in the animal kingdom, is the principle of progress.

But a new man, who has his way to make in the world, knows that such changes are his opportunities; he is always on the look-out for them, and always heeds them when he finds them.

The rough and vulgar structure of English commerce is the secret of its life; for it contains 'the propensity to variation,' which, in the social as in the animal kingdom, is the principle of progress.

In this constant and chronic borrowing, Lombard Street is the great go-between. It is a sort of standing broker between quiet saving districts of the country and the active employing districts. Why particular trades settled in particular places it is often difficult to say;

but one thing is certain, that when a trade has settled in any one spot, it is very difficult for another to oust it—impossible unless the second place possesses some very great intrinsic advantage.

Commerce is curiously conservative in its homes, unless it is imperiously obliged to migrate.

Partly from this cause, and partly from others, there are whole districts in England which cannot and do not employ their own money. No purely agricultural county does so.

On the other hand, if in consequence of a bad harvest the corn trade becomes on a sudden profitable, immediately 'corn bills' are created in great numbers, and if good are discounted in Lombard Street.

Thus English capital runs as surely and instantly where it is most wanted, and where there is most to be made of it, as water runs to find its level.

This efficient and instantly-ready organisation gives us an enormous advantage in competition with less advanced countries—less advanced, that is, in this particular respect of credit.

But in exact proportion to the power of this system is its delicacy I should hardly say too much if I said its danger.

Only our familiarity blinds us to the marvellous nature of the system.

There never was so much borrowed money collected in the world as is now collected in London. Of the many millions in Lombard street, infinitely the greater proportion is held by bankers or others on short notice or on demand;

that is to say, the owners could ask for it all any day they please: in a panic some of them do ask for some of it.

If any large fraction of that money really was demanded, our banking system and our industrial system too would be in great danger.

Some of those deposits too are of a peculiar and very distinct nature. Since the Franco-German war, we have become to a much larger extent than before the Bankers of Europe.

But it is not easy to rouse men of business to the task.

They let the tide of business float before them; they make money or strive to do so while it passes, and they are unwilling to think where it is going.

Even the great collapse of Overends, though it caused a panic, is beginning to be forgotten. Most men of business think—'Anyhow this system will probably last my time. It has gone on a long time, and is likely to go on still.'

but if we wish so to work it, we must study it. We must not think we have an easy task when we have a difficult task, or that we are living in a natural state when we are really living in an artificial one.

Money will not manage itself, and Lombard street has a great deal of money to manage.

A General View of Lombard Street.

The main point on which one system of credit differs from another is 'soundness.' Credit means that a certain confidence is given, and a certain trust reposed. Is that trust justified? and is that confidence wise? These are the cardinal questions.

To put it more simply—credit is a set of promises to pay; will those promises be kept?

Especially in banking, where the 'liabilities,' or promises to pay, are so large, and the time at which to pay them, if exacted, is so short, an instant capacity to meet engagements is the cardinal excellence.

The main point on which one system of credit differs from another is 'soundness.'

Credit means that a certain confidence is given, and a certain trust reposed.

Is that trust justified? and is that confidence wise? These are the cardinal questions. To put it more simply—credit is a set of promises to pay; will those promises be kept?

The bill brokers lend most of their money, and deposit the remnant either with the Bank of England or some London banker. That London banker lends what he chooses of it, the rest he leaves at the Bank of England.

You always come back to the Bank of England at last.

But those who keep immense sums with a banker gain a convenience at the expense of a danger. They are liable to lose them if the bank fail.

The note of the Bank of France has not indeed been depreciated enough to disorder ordinary transactions. But any depreciation, however small—even the liability to depreciation without its reality—is enough to disorder exchange transactions.

They are calculated to such an extremity of fineness that the change of a decimal may be fatal, and may turn a profit into a loss.

Accordingly London has become the sole great settling-house of exchange transactions in Europe, instead of being formerly one of two. And this pre-eminence London will probably maintain, for it is a natural pre-eminence.

The English world at least believes that it will not, almost that it cannot, fail. Three times since 1844 the Banking Department has received assistance, and would have failed without it. In 1825, the entire concern almost suspended payment; in 1797, it actually did so.

But still there is a faith in the Bank, contrary to experience, and despising evidence.

No doubt in every one of these years the condition of the Bank, divided or undivided, was in a certain sense most sound; it could ultimately have paid all its creditors all it owed, and returned to its shareholders all their own capital.

No doubt in every one of these years the condition of the Bank, divided or undivided, was in a certain sense most sound; it could ultimately have paid all its creditors all it owed, and returned to its shareholders all their own capital.

But ultimate payment is not what the creditors of a bank want; they want present, not postponed, payment; they want to be repaid according to agreement; the contract was that they should be paid on demand, and if they are not paid on demand they may be ruined.

And that instant payment, in the years I speak of, the Bank of England certainly could not have made. But no one in London ever dreams of questioning the credit of the Bank, and the Bank never dreams that its own credit is in danger.

To fully explain the matter I must go deep into the theory of the exchanges, but the general notion is plain enough.

Loanable capital, like every other commodity, comes where there is most to be made of it.

Continental bankers and others instantly send great sums here, as soon as the rate of interest shows that it can be done profitably.

This discredit means, 'an opinion that you have not got any money,' and to dissipate that opinion, you must, if possible, show that you have money: you must employ it for the public benefit in order that the public may know that you have it.

The time for economy and for accumulation is before.

A good banker will have accumulated in ordinary times the reserve he is to make use of in extraordinary times.

And then the plain problem before the great dealers comes to be 'How shall we best protect ourselves? No doubt the immediate advance to these second-class dealers is annoying, but may not the refusal of it even be dangerous?

A panic grows by what it feeds on; if it devours these second-class men, shall we, the first class, be safe?

'

No doubt the immediate advance to these second-class dealers is annoying, but may not the refusal of it even be dangerous? A panic grows by what it feeds on; if it devours these second-class men, shall we, the first class, be safe?'

A panic, in a word, is a species of neuralgia, and according to the rules of science you must not starve it.

The holders of the cash reserve must be ready not only to keep it for their own liabilities, but to advance it most freely for the liabilities of others.

They must lend to merchants, to minor bankers, to 'this man and that man,' whenever the security is good.

In wild periods of alarm, one failure makes many, and the best way to prevent the derivative failures is to arrest the primary failure which causes them.

The way in which the panic of 1825 was stopped by advancing money has been described in so broad and graphic a way that the passage has become classical. 'We lent it,' said Mr.

The ultimate banking reserve of a country (by whomsoever kept) is not kept out of show, but for certain essential purposes, and one of those purposes is the meeting a demand for cash caused by an alarm within the country.

It is not unreasonable that our ultimate treasure in particular cases should be lent; on the contrary, we keep that treasure for the very reason that in particular cases it should be lent.

When reduced to abstract principle, the subject comes to this. An 'alarm' is an opinion that the money of certain persons will not pay their creditors when those creditors want to be paid.

If all those creditors demand all that money at once, they cannot have it, for that which their debtors have used, is for the time employed, and not to be obtained.

With the advantages of credit we must take the disadvantages too; but to lessen them as much as we can, we must keep a great store of ready money always available, and advance out of it very freely in periods of panic, and in times of incipient alarm.

The Bank will get poorer and poorer, and its poverty will protract or renew the apprehension. And at the rate of interest so raised, the holders—one or more-of the final Bank reserve must lend freely.

Very large loans at very high rates are the best remedy for the worst malady of the money market when a foreign drain is added to a domestic drain.

Any notion that money is not to be had, or that it may not be had at any price, only raises alarm to panic and enhances panic to madness.

Very large loans at very high rates are the best remedy for the worst malady of the money market when a foreign drain is added to a domestic drain.

Any notion that money is not to be had, or that it may not be had at any price, only raises alarm to panic and enhances panic to madness.

But though the rule is clear, the greatest delicacy, the finest and best skilled judgment, are needed to deal at once with such great and contrary evils.

The moment this was reported in the City and telegraphed to the country, it made the panic indefinitely worse. In fact, to make large advances in this faltering way is to incur the evil of making them without obtaining the advantage.

What is wanted and what is necessary to stop a panic is to diffuse the impression, that though money may be dear, still money is to be had.

If people could be really convinced that they could have money if they wait a day or two, and that utter ruin is not coming, most likely they would cease to run in such a mad way for money.

Effectual arguments to convince the people who need convincing are wanting. Just so, an immense system of credit, founded on the Bank of England as its pivot and its basis, now exists. The English people, and foreigners too, trust it implicitly.

Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone: but what we have requires no proof.

The whole rests on an instinctive confidence generated by use and years. Nothing would persuade the English people to abolish the Bank of England;

A many-reserve system, if some miracle should put it down in Lombard Street, would seem monstrous there. Nobody would understand it, or confide in it.

Credit is a power which may grow, but cannot be constructed.

Those who live under a great and firm system of credit must consider that if they break up that one they will never see another, for it will take years upon years to make a successor to it.

I shall be at once asked—Do you propose a revolution? Do you propose to abandon the one-reserve system, and create anew a many-reserve system? My plain answer is that I do not propose it. I know it would be childish.

Credit in business is like loyalty in Government.

You must take what you can find of it, and work with it if possible. A theorist may easily map out a scheme of Government in which Queen Victoria could be dispensed with.

… people do not like to let their money out of their sight, especially do not like to let it out of sight without security—still more, cannot all at once agree on any single person to whom they are content to trust it unseen and unsecured.

Hypothetical history, which explains the past by what is simplest and commonest in the present, is in banking, as in most things, quite untrue.

The real history is very different. New wants are mostly supplied by adaptation, not by creation or foundation. Something having been created to satisfy an extreme want, it is used to satisfy less pressing wants, or to supply additional conveniences.

The real history is very different.

New wants are mostly supplied by adaptation, not by creation or foundation.

Something having been created to satisfy an extreme want, it is used to satisfy less pressing wants, or to supply additional conveniences. On this account, political Government—the oldest institution in the world—has been the hardest worked.

A banker who lives in the district, who has always lived there, whose whole mind is a history of the district and its changes, is easily able to lend money safely there. But a manager deputed by a single central establishment does so with difficulty.

The worst people will come to him and ask for loans.

His ignorance is a mark for all the shrewd and crafty people thereabouts. He will have endless difficulties in establishing the circulation of the distant bank, because he has not the local knowledge which alone can teach him how to issue that circulation with safety.

But a manager deputed by a single central establishment does so with difficulty. The worst people will come to him and ask for loans.

His ignorance is a mark for all the shrewd and crafty people thereabouts.

He will have endless difficulties in establishing the circulation of the distant bank, because he has not the local knowledge which alone can teach him how to issue that circulation with safety.

The regent in Law's time had given a monopoly of note issue to a bad bank, and had paid off the debts of the nation in worthless paper.

The Government had created a machinery of ruin, and had thriven on it.

Among so apprehensive a race as the French the result was fatal. For many years no attempt at note issue or deposit banking was possible in France.

If the banks are bad, they will certainly continue bad and will probably become worse if the Government sustains and encourages them.

The cardinal maxim is, that any aid to a present bad Bank is the surest mode of preventing the establishment of a future good Bank.

When the trade of Banking began to be better understood, when the Banking system was thoroughly secure, the Government might begin to lend gradually;

There would be a penalty for their misconduct. New and better banks, who might take warning from that misconduct, would arise.

As in all natural trades, what is old and, rotten would perish, what is new and good would replace it.

And till the new banks had proved, by good conduct, their fitness for State confidence, the State need not give it. The Government could use its favour as a bounty on prudence, and the withdrawal of that favour as a punishment for culpable folly.

As the Bank during that period did not perform, and was not compelled by law to perform, its contract of paying its notes in cash, it might apparently have been well called the period of Bank license.

But the word 'restriction' was quite right, and was the only proper word as a description of, the policy of 1797.

Mr. Pitt did not say that the Bank of England need not pay its notes in specie; he 'restricted' them from doing so; he said that they must not.

I cannot fully discuss the suspensions of the Act of 1844 in 1847, 1857, and 1866; but indisputably one of their effects is to make people think that Government will always help the Bank if the Bank is in extremity.

And this is the sort of anticipation which tends to justify itself, and to cause what it expects.

On the whole, therefore, the position of the Chancellor of the Exchequer in our Money Market is that of one who deposits largely in it, who created it, and who demoralised it. He cannot, therefore, banish it from his thoughts, or decline responsibility for it.

It is a commodity subject to great fluctuations of value, and those fluctuations are easily produced by a slight excess or a slight deficiency of quantity. Up to a certain point money is a necessity.

If a merchant has acceptances to meet to-morrow, money he must and will find to-day at some price or other.

And it is this urgent need of the whole body of merchants which runs up the value of money so wildly and to such a height in a great panic.

Nor is this the only changeable element in modern industrial societies. Credit—the disposition of one man to trust another—is singularly varying.

In England, after a great calamity, everybody is suspicious of everybody; as soon as that calamity is forgotten, everybody again confides in everybody.

On the Continent there has been a stiff controversy as to whether credit should or should not be called capital:'

Nor is this the only changeable element in modern industrial societies.

Credit—the disposition of one man to trust another—is singularly varying.

In England, after a great calamity, everybody is suspicious of everybody; as soon as that calamity is forgotten, everybody again confides in everybody. On the Continent there has been a stiff controversy as to whether credit should or should not be called capital:'

The first taste is for high interest, but that taste soon becomes secondary.

There is a second appetite for large gains to be made by selling the principal which is to yield the interest.

So long as such sales can be effected the mania continues; when it ceases to be possible to effect them, ruin begins.

The first taste is for high interest, but that taste soon becomes secondary. There is a second appetite for large gains to be made by selling the principal which is to yield the interest.

So long as such sales can be effected the mania continues; when it ceases to be possible to effect them, ruin begins.

So long as the savings remain in possession of their owners, these hazardous gamblings in speculative undertakings are almost the whole effect of an excess of accumulation over tested investment. Little effect is produced on the general trade of the country.

Provisions get back to their usual price, or some great industry makes, from some temporary cause, a quick step forward. At these moments, therefore, the three agencies which, as has been explained, greatly develope trade, combine to develope it simultaneously.

The certain result is a bound of national prosperity; the country leaps forward as if by magic.

But only part of that prosperity has a solid reason.

But to the country as a whole, the general rise of prices is no benefit at all; it is simply a change of nomenclature for an identical relative value in the same commodities.

Nevertheless, most people are happier for it; they think they are getting richer, though they are not.

And as the rise does not happen on all articles at the same moment, but is propagated gradually through society, those to whom it first comes gain really;

Human industry is more efficient, and therefore there is more to be divided among mankind. But in so far as that prosperity is based on a general rise of prices, it is only imaginary.

A general rise of prices is a rise only in name; whatever anyone gains on the article which he has to sell he loses on the articles which he has to buy, and so he is just where he was.

The only real effects of a general rise of prices are these: first, it straitens people of fixed incomes, who suffer as purchasers, but who have no gain to correspond; and secondly, it gives an extra profit to fixed capital created before the rise happened.

and as at first every one believes that he will gain when his own article is rising, a buoyant cheerfulness overflows the mercantile world.

This prosperity is precarious as far as it is real, and transitory in so far as it is fictitious.

The augmented production, which is the reason of the real prosperity, depends on the full working of the whole industrial organisation—of all capitalists and labourers; that prosperity was caused by that full working, and will cease with it.

The change is generally quicker because some check to credit happens at an early stage of it. The mercantile community will have been unusually fortunate if during the period of rising prices it has not made great mistakes.

Such a period naturally excites the sanguine and the ardent; they fancy that the prosperity they see will last always, that it is only the beginning of a greater prosperity.

They altogether over-estimate the demand for the article they deal in, or the work they do. They all in their degree—and the ablest and the cleverest the most—work much more than they should, and trade far above their means.

The good times too of high price almost always engender much fraud.

All people are most credulous when they are most happy; and when much money has just been made, when some people are really making it, when most people think they are making it, there is a happy opportunity for ingenious mendacity.

Almost everything will be believed for a little while, and long before discovery the worst and most adroit deceivers are geographically or legally beyond the reach of punishment. But the harm they have done diffuses harm, for it weakens credit still farther.

We should cease too to be surprised at the sudden panics. During the period of reaction and adversity, just even at the last instant of prosperity, the whole structure is delicate.

The peculiar essence of our banking system is an unprecedented trust between man and man: and when that trust is much weakened by hidden causes, a small accident may greatly hurt it, and a great accident for a moment may almost destroy it.

Now too that we comprehend the inevitable vicissitudes of Lombard Street, we can also thoroughly comprehend the cardinal importance of always retaining a great banking reserve.

There can be no effectual inquiry now into the history of the late crisis. A Parliamentary committee next year would, unless something strange occur in the interval, be a great waste of time.

Men of business have keen sensations but short memories, and they will care no more next February for the events of last May than they now care for the events of October 1864.

A pro forma inquiry, on which no real mind is spent, and which everyone knows will lead to nothing, is far worse than no inquiry at all.

And Mr. Harman, another Bank director, expressed his opinion in these terms: 'I must very materially alter my opinions before I can suppose that the exchanges will be influenced by any modifications of our paper currency.'

Very few persons perhaps could have managed to commit so many blunders in so few words.

But it is no disgrace at all to the Bank directors of that day to have committed these blunders. They spoke according to the best mercantile opinion of England. The City of London and the House of Commons both approved of what they said;

Unluckily, in the management of the matter before us—the management of the Bank reserve—the directors of the Bank of England were neither acquainted with right principles, nor were they protected by a judicious routine. They could not be expected themselves to discover such principles.

The abstract thinking of the world is never to be expected from persons in high places; the administration of first-rate current transactions is a most engrossing business, and those charged with them are usually but little inclined to think on points of theory, even when such thinking most nearly concerns those transactions.

No doubt when men's own fortunes are at stake, the instinct of the trader does somehow anticipate the conclusions of the closet.

No doubt when men's own fortunes are at stake, the instinct of the trader does somehow anticipate the conclusions of the closet.

But a board has no instincts when it is not getting an income for its members, and when it is only discharging a duty of office.

During the suspension of cash payments—a suspension which lasted twenty-two years—all traditions as to a cash reserve had died away.

The usual defect then is, that the Bank of England does not raise the rate of interest sufficiently quickly. It does raise it; in the end it takes the alarm, but it does not take the alarm sufficiently soon.

A cautious man, in a new office, does not like strong measures.

Bank Governors are generally cautious men; they are taken from a most cautious class; in consequence they are very apt to temporise and delay. But almost always the delay in creating a stringency only makes a greater stringency inevitable.

As has been shown, trade in England is largely carried on with borrowed money. If you propose greatly to reduce that amount, you will cause many failures unless you can pour in from elsewhere some equivalent amount of new money.

But in a panic there is no new money to be had; everybody who has it clings to it, and will not part with it.

Especially what has been advanced to merchants cannot easily be recovered; they are under immense liabilities, and they will not give back a penny which they imagine that even possibly they may need to discharge those liabilities. And bankers are in even greater terror.

And if No. 2 has No. 3 to pay, as is very likely, he may be ruined because of No. 1's default, and No. 4 only on account of No. 3's default; and so on without end.

On settling day, without the Clearing-house, there would be a mass of failures, and a bundle of securities.

The effect of these failures would be a general run on all bankers, and on the Bank of England particularly.

And with the Bank of England, as with other Banks in the same case, these advances, if they are to be made at all, should be made so as if possible to obtain the object for which they are made.

The end is to stay the panic; and the advances should, if possible, stay the panic.

And for this purpose there are two rules: First. That these loans should only be made at a very high rate of interest.

Making no loans as we have seen will ruin it; making large loans and stopping, as we have also seen, will ruin it.

The only safe plan for the Bank is the brave plan, to lend in a panic on every kind of current security, or every sort on which money is ordinarily and usually lent.

This policy may not save the Bank; but if it do not, nothing will save it.

The only safe plan for the Bank is the brave plan, to lend in a panic on every kind of current security, or every sort on which money is ordinarily and usually lent.

This policy may not save the Bank; but if it do not, nothing will save it.

If we examine the manner in which the Bank of England has fulfilled these duties, we shall find, as we found before, that the true principle has never been grasped; that the policy has been inconsistent;

They are sometimes said to exercise a particular control over the relations and negotiations between the Bank and the Government. But I confess that I believe that this varies very much with the character of the Governor for the time being.

A strong Governor does much mainly upon his own responsibility, and a weak Governor does little.

Still the influence of the Committee of Treasury is always considerable, though not always the same. They form a a cabinet of mature, declining, and old men, just close to the executive; and for good or evil such a cabinet must have much power.

There is in all ordinary joint stock companies a fixed executive specially skilled, and a somewhat varying council not specially skilled.

The fixed manager ensures continuity and experience in the management, and a good board of directors ensures general wisdom.

But in the Bank of England there is no fixed executive. The Governor and Deputy-Governor, who form that executive, change every two years. I believe, indeed, that such was not the original intention of the founders.

There must be a great want of system and a great deficiency in skilled assistance if extreme labour is thrown upon the chief. But in importance, the functions of the head of the Bank rank as high as those of any department.

The cash reserve of the country is as precious a deposit as any set of men can have the care of.

And the difficulty of dealing with a panic (as the administration of the Bank is forced to deal with it) is perhaps a more formidable instant difficulty than presses upon any single minister.

Everybody in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked.

A day might come when his favour might mean prosperity, and his distrust might mean ruin.

A position with so much real power and so much apparent dignity would be intensely coveted.

The permanent Deputy-Governor must be a director and a man of fair position. He must not have to say 'Sir' to the Governor.

There is no fair argument between an inferior who has to exhibit respect and a superior who has to receive respect.

The superior can always, and does mostly, refute the bad arguments of his inferior; but the inferior rarely ventures to try to refute the bad arguments of his superior. And he still more rarely states his case effectually;

And he still more rarely states his case effectually; he pauses, hesitates, does not use the best word or the most apt illustration, perhaps he uses a faulty illustration or a wrong word, and so fails because the superior immediately exposes him.

Important business can only be sufficiently discussed by persons who can say very much what they like very much as they like to one another.

The thought of the speaker should come out as it was in his mind, and not be hidden in respectful expressions or enfeebled by affected doubt.

Indeed, all the favouring conditions just mentioned concur in many banks. An old-established bank has a "prestige," which amounts to a "privileged opportunity"; though no exclusive right is given to it by law, a peculiar power is given to it by opinion.

The business of banking ought to be simple; if it is hard it is wrong.

The only securities which a banker, using money that he may be asked at short notice to repay, ought to touch, are those which are easily saleable and easily intelligible. If there is a difficulty or a doubt, the security should be declined.

Actual crime will always be rare; but, as an uninspected manager of a great bank has the control of untold millions, sometimes we must expect to see it: the magnitude of the temptation will occasionally prevail over the feebleness of human nature.

But error is far more formidable than fraud: the mistakes of a sanguine manager are, far more to be dreaded than the theft of a dishonest manager.

Easy misconception is far more common than long-sighted deceit.

the magnitude of the temptation will occasionally prevail over the feebleness of human nature. But error is far more formidable than fraud: the mistakes of a sanguine manager are, far more to be dreaded than the theft of a dishonest manager.

Easy misconception is far more common than long-sighted deceit.

And the losses to which an adventurous and plausible manager, in complete good faith, would readily commit a bank, are beyond comparison greater than any which a fraudulent manager would be able to conceal, even with the utmost ingenuity.

A certain number of directors attending daily by rotation is, it should be said, no substitute for a permanent committee. It has no sufficient responsibility.

A changing body cannot have any responsibility.

The transactions which were agreed to by one set of directors present on the Monday might be exactly those which would be much disapproved by directors present on the Wednesday.

It is essential to the decisions of most business, and not least of the banking business, that they should be made constantly by the same persons; the chain of transactions must pass through the same minds.

A large business may be managed tolerably by a quiet group of second-rate men if those men be always the same; but it cannot be managed at all by a fluctuating body, even of the very cleverest men.

You might as well attempt to guide the affairs of the nation by means of a cabinet similarly changing.

The truth is that the circumstances which originally favoured the establishment of private banks have now almost passed away.

The world has become so large and complicated that it is not easy to ascertain who is rich and who is poor.

No doubt there are some enormously wealthy men in England whose means everybody has heard of, and has no doubt of. But these are not the men to incur the vast liabilities of private banking.

but they would never begin it for themselves. And if they did, I expect people would begin to doubt even of their wealth. It would be said, 'What does A B go into banking for? he cannot be as rich as we thought.'

A millionaire commonly shrinks from liability, and the essence of great banking is great liability.

No doubt there are many 'second-rate' rich men, as we now count riches, who would be quite ready to add to their income the profit of a private bank if only they could manage it. But unluckily they cannot manage it.

The infusion of new partners requires from the old partners a considerable sacrifice of income; the old must give up that which the new receive, and the old will not like this.

The effectual remedy is so painful that I fear it often may be postponed too long.

I cannot, therefore, expect with certainty the continuance of our system of private banking. I am sure that the days of small banks will before many years come to an end, and that the difficulties of large private banks are very important.

But by far the greatest of these intermediate dealers are the bill-brokers. Mercantile bills are an exceedingly difficult kind of security to understand.

The relative credit of different merchants is a great 'tradition'; it is a large mass of most valuable knowledge which has never been described in books and is probably incapable of being so described.

The subject matter of it, too, is shifting and changing daily; an accurate representation of the trustworthiness of houses at the beginning of a year might easily be a most fatal representation at the end of it. In all years there are great changes;

If the panic destroyed those dealers it would grow by what it fed upon (as is its nature), and might probably destroy also the bankers, the holders of the reserve.

The public terror at such times is indiscriminate.

When one house of good credit has perished, other houses of equal credit though of different nature are in danger of perishing.

A definite proportion of the liabilities might often be too small for the reserve, and sometimes too great.

The forces of the enemy being variable, those of the defence cannot always be the same.

I admit that this conclusion is very inconvenient. In past times it has been a great aid to the Bank and to the public to be able to decide on the proper policy of the Bank from a mere inspection of its account.

The practical difficulties of life often cannot be met by very simple rules; those dangers being complex and many, the rules for encountering them cannot well be single or simple.

A uniform remedy for many diseases often ends by killing the patient.

Another simple rule often laid down for the management of the Bank of England must now be abandoned also. It has been said that the Bank of England should look to the market rate, and make its own rate conform to that.

and by this I do not mean absolute panic, but only a vague fright and timorousness which spreads itself instantly, and as if by magic, over the public mind.

Such seasons of incipient alarm are exceedingly dangerous, because they beget the calamities they dread.

What is most feared at such moments of susceptibility is the destruction of credit; and if any grave failure or bad event happens at such moments, the public fancy seizes on it, there is a general run, and credit is suspended.

There is no 'royal road' to the amount of the 'apprehension minimum': no abstract argument, and no mathematical computation will teach it to us. And we cannot expect that they should.

Credit is an opinion generated by circumstances and varying with those circumstances.

The state of credit at any particular time is a matter of fact only to be ascertained like other matters of fact; it can only be known by trial and inquiry.

Of course in such a matter the cardinal rule to be observed is, that errors of excess are innocuous but errors of defect are destructive.

Too much reserve only means a small loss of profit, but too small a reserve may mean 'ruin.'

Credit may be at once shaken, and if some terrifying accident happen to supervene, there may be a run on the Banking department that may be too much for it, as in 1857 and 1866, and may make it unable to pay its way without …