War and Lombard Street (Paperback)

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1915. Excerpt: ... CHAPTER IV FINANCE BILLS AND TRADE If a bank wants to ruin all its customers and therefore, incidentally and consequently, itself, the easiest way for it to do so is to ask them all to pay, forthwith, what they owe it. If there is some other bank from which they can borrow the wherewithal to pay, then bank number one may get its money back and lose its business. If not, bank and customers are in a hole together and remain there until the bank thinks better of the demand that it is making. This was in effect what London was doing to the rest of the world at the beginning of the war. London was the world's banker, as it has so often boasted, and it said to the world, Pay up. There was no other banker to which the world could apply, no other centre in which there is an accumulation of capital and a machinery of credit capable of financing the world's commercial requirements. Paris might 75 at a different season have provided some of the credits that London was wanting to turn into cash, but Paris had its own preoccupations and was not asking for new acceptance business at the beginning of August, 1914. Berlin used to accept a fair number of bills, and she also would have been ready enough to fill the gap that London made, if Germany had not been at war, and if London would have lent the money to Berlin to finance other countries with. But in the circumstances then ruling, Berlin was as helpless as Paris, in fact much more so, since it may be doubted whether even in normal times Germany has any surplus capital to spare. The fact that it does finance other countries is no proof, since we know that it also finances itself in London and Paris. New York had a great opportunity for taking London's business away from it and establishing itself as the world's financ...