THE WORLD'S BANKER.

Hawera & Normanby Star, Volume LIII, Issue 9295, 18 February 1907, Page 6

THE WORLD'S BANKER.

In an article concerning the bank rate which appears in the Combill Magazine, it is stated that one reason why a demand for gold elsewhere is likely to fall on London lies in the fact- that of the great financial centres London is the only one in which the obligation to pay gold, immediaitely and on demand, is recognised as an essential part of the banking system. Anyone who receives a cheque in England can get gold for it or Bonk of England notes," and he can then take the Bank of England notes to the bank and change them, there and then, into sovereigns. No other centre gives this facility. If it does not suit the Bank of Firance to pairt with gold, a holder of its notes is liable to be paid in silver five-franc pieces, mere tokens, intrinsically worth about half their face value. In Germany the obligation to pay gold exists 1 in theory, but in practice the Rechebank makes matters so unpleasant to those who ask it foT gold when it docs not want to part with it that even "Captain Yon Koepenick" would hesitate about raiding its store.

In New York it is .generally easy to obtain gold. A holder of a draft, on a New York bank asks to have it paid in gold certificates, one. of the many forms of American paper currency, and ■exchanges the certificates into gold at the Treasury. But the possession of a credit in New York does not give an absolute rigtit to a gold certificate, and it is quite conceivable that the supply of them might be made difficult. It follows, f-rotn this great advantage possessed by London as a monetaTy centre, that London is the world's banker, and the commercial transactions all over the world are settled by a draft on London, the only place whorethe possession of a draft gives the immediate and unquestioned' right to its equivalent in gold.

Sere is a reason why active fcrade elsewhere is likely to affect, sooner o»r later, the Bank of England's store M gold.

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