ROMANCE OF MONEY

Evening Star, Issue 19020, 15 August 1925, Page 18

ROMANCE OF MONEY

BANK WiTH A PERSONALITY OLD LADY OF THREADNEEDLE STREET [By A. S. Wauu, city editor of tho ‘Daily News’ and tho ‘Star.’] Probably the most exciting placo in tho world is the square mile round the Bank of England in London. The bank has a physique and a personality. The present outward covering of stone and mortar is not a subject for any lyrical praise; for it is flat and plain, and undistinguished by any beauty that the passer-by need stop to admire. This is to bo remedied by a now building to be begun shortly. But tho inner personality of tho bank is what concerns us hero, and that is something rather wonderful. All over the world tho bank is known by its nickname of The Okl Lady of Threadneedlo street. That is a good name for it. - If you can imagine an institution having a character as self-willed, irascible, domineering, as, shall we say, Queen Victoria, and yet characterised by all her shrowd common sense, you have some idea of tho personality of the bank. It is to all the other banking institutions—tho Big Five joint stock banks, tho private banks, tho discount houses, and money brokers —as tho scriptural hen, gathering her chickens under her wing whenever she scents their need of Tier protection or control.

I spoke of the city as an exciting placo, but to get tho thrill from it you must know what game to play and tho way to play it. People who come up on suburban railway lines—only caretakers live in the city after business hours—and immure themselves in offices all day, lose sight of the game, which consists in discovering what lies under the abstractions called tho Bank, Foreign Exchange, credit, foreign loans, colonial loans, overdraft, underwriting, and so forth. About a quarter of a million people como into the city buildings day by day to talk about and operate these mysteries, and they all flock homo at night to forgot them, mostly without a moment’s thought about their romance.

'As a journalist writing day by day of the city's doings, I am always coming across tho bit of romantic detail hidden like the violet in tho commonplace undergrowth. For instance, I know a city millionaire, who recently carried out an amalgamation of several millions of capital, who puts a lot of his spare time into solving newspaper puzzles, cross-words, and_ the like. Ho recently won a £lO prize in one. It took him about thirty hours to work the puzzle out, and I suppose that amount of time devoted to business would have brought him a few thousands. But the £lO gave him more pleasure than tho commonplace gains of business. Another millionaire one meets has written an opera, music and words, and a third keeps a private menagerie. These are the touches of romance which Show human nature under tho cold exterior of tho count-ing-house. But let us get to our game. What are these city mysteries? _ Imagine yourself trying, as a city editor docs daily, to watch an immense tangle of different threads, which seem to get twisted, knotted, and yet to straighten themselves out if your vigilance is keen enough and patient.

THREADS IN THE FINANCIAL TANGLE.

The -greatest thread comes from the Bank of England, because it is the very centre of the city; the others come from the big banks, the Stock Exchange, borrowers in distant lands, the bill brokers, and so forth. Dow does one manage to watch each one, and seo how they all ultimately mu together? Wo will look closely at each of our threads in the tangle, and see what simple names can bo given to them. We find at once two main varieties. There are Lending and Paying Back threads, and Buying and Selling threads. That is all. It seems too simple for words almost; but it is the actual truth that all that goes on in the Temple of Mammon with its extraordinary equipment of bankers, bill brokers, issuing houses, underwriters, stock jobbers, stockbrokers, insurance jobbers and brokers, exchange brokers, and its high priests—all that goes on is sale and purchase, loan and repayment, and a few necessary protective measures to fortify these simple things. Here we are, as we promised, playing our game of getting beneath the abstract names.

In the sale and purchase group wo have all sorts of operations. Buying and soiling of gold by the Bank of England; buying and selling; of stocks ancf shares on the Stock Exchange; buying and selling of other _ people’s written promises to pay debts in future in the market for bills of exchange and such documents; buying and selling of foreign currency on the foreign exchange market. In the loan and repayment group a similar wide series of operations can he traced—the threads again coming from all centres of the world. _ The hanks borrow and lend. The British Government borrows either by issues of stock on a promise to pay in the distant

future, or by issuing Treasury hills to bo repaid in three months. Nations abroad borrow by tho issue of loans. Colonies borrow by tho same process. Groat companies and small offer shares or stocks to the public—that is, they borrow tho public’s savings. Tho opposite process of repayment comes everv now and then, when bills mature, and when stocks come to tho end of the agreed term. In their main threads these are simple things, and easily understood. But they demand all sorts of intricate processes to bo done successfully. London’s regained supremacy over New York as tho world centre of finance—after a struggle which began before the war ended—is duo to the fact that London knows better how to handle these matters. London’s strength depends on two great fants—the llritish people arc cosmopolitan in their investments. mid our financial geniuses know all there is to know of foreign nations’ credit. That handy document, the bill of exchange, which comprises tho undertaking of one trader to pay another at a certain date—is the focus of some of tho greatest financing skill tho world knows. Hove everything depends upon the handling of tho debtor’s credit. Can you count on him paying up? London knows, oven if tho document comes from Arkansas, Tientsin, Berlin, Venice, Rio, or Mexico. You can market tho credit of citizens of every part of tho world in the City of Loudon. There are men thefyi with a sort of financial omniscience. New York will have to wait generations to develop that. i AFTER ALL, JUST LIKE BUYING A POUND OF TEA. I Similarly on the London Stock ExI change, you can buy or sell the debts I of the whole world.' Among tho manv I thousands of stocks and shares which | tho investor may soil and buy here are I 251 foreign Government, nr,/? municipal loans; 224 American railway stocks; 261 foreign railway stocks from other countries than the United States. Compare Now York’s Stock Exchange. There you have less than a quarter of our foreign market-—-118 foreign Government and municipal issues, thirty foreign railway securities, mostly in the Americas and Canada; twelve foreign investments of a general character. The reason for London’s preponderance is that before the war we watered the world with British capital, and learning tho great art of dealing securely in the credit of peoples abroad. London thus cun offer a market for anybody’s loans, so long as the borrower has trie assets and the honor to' meet the charges. So now we have got at the things underlying those formidable names used in finance. We see that everything comes down to the same sort of transaction as that involved in buying a pound of tea or a dress length in a shop. Tho abstract names and all the wonderful organisation of our financial centre hero are necessary, because what is dealt in cannot bo handled like the dress length, for example, but must be calculated by highly technical skill. And protections must be set round it. So wo have our underwriters who engage to carry risks for payments, and our great insurance offices who take every kind of risk, and even them out until they are not risks at all. • In order to do all its work, London’s financial headquarters must be housed; and I wish I could paint here the im‘menso building reconstruction going on in the city. Over £10,000,000 is now being spent on now buildings for banks, insurance offices, foreign finance houses, and so forth. Before long the City of London will be the most costly architectural quarter of the whole world There are sites which could not be bought with less than twice the number of gold sovereigns it would take to cover them What a city to sack! as somebody once said.