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Online Library of Liberty: the Works and Life of Walter Bagehot, Vol The Online Library of Liberty A Project Of Liberty Fund, Inc. Walter Bagehot, The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) [1915] The Online Library Of Liberty This E-Book (PDF format) is published by Liberty Fund, Inc., a private, non-profit, educational foundation established in 1960 to encourage study of the ideal of a society of free and responsible individuals. 2010 was the 50th anniversary year of the founding of Liberty Fund. It is part of the Online Library of Liberty web site http://oll.libertyfund.org, which was established in 2004 in order to further the educational goals of Liberty Fund, Inc. To find out more about the author or title, to use the site's powerful search engine, to see other titles in other formats (HTML, facsimile PDF), or to make use of the hundreds of essays, educational aids, and study guides, please visit the OLL web site. This title is also part of the Portable Library of Liberty DVD which contains over 1,000 books and quotes about liberty and power, and is available free of charge upon request. The cuneiform inscription that appears in the logo and serves as a design element in all Liberty Fund books and web sites is the earliest-known written appearance of the word “freedom” (amagi), or “liberty.” It is taken from a clay document written about 2300 B.C. in the Sumerian city-state of Lagash, in present day Iraq. To find out more about Liberty Fund, Inc., or the Online Library of Liberty Project, please contact the Director at [email protected]. LIBERTY FUND, INC. 8335 Allison Pointe Trail, Suite 300 Indianapolis, Indiana 46250-1684 Online Library of Liberty: The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) Edition Used: The Works and Life of Walter Bagehot, ed. Mrs. Russell Barrington. The Works in Nine Volumes. The Life in One Volume. (London: Longmans, Green, and Co., 1915). Vol. 6. Author: Walter Bagehot Editor: Mrs. Russell Barrington About This Title: This volume contains Lombard Street, essays on Guizot & Cairnes, and The Depreciation of Silver. PLL v6.0 (generated September, 2011) 2 http://oll.libertyfund.org/title/2264 Online Library of Liberty: The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) About Liberty Fund: Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals. Copyright Information: The text is in the public domain. Fair Use Statement: This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit. PLL v6.0 (generated September, 2011) 3 http://oll.libertyfund.org/title/2264 Online Library of Liberty: The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) Table Of Contents The Works and Life of Walter Bagehot Volume Vi Lombard Street. Lombard Street In 1910. Prefatory Note to Twelfth Edition. Advertisement. Chapter I.: Introductory. Chapter II.: A General View of Lombard Street. Chapter III.: How Lombard Street Came to Exist, and Why It Assumed Its Present Form. Chapter IV.: The Position of the Chancellor of the Exchequer In the Money Market. Chapter V.: The Mode In Which the Value of Money Is Settled In Lombard Street. Chapter VI.: Why Lombard Street Is Often Very Dull, and Sometimes Extremely Excited. Chapter VII.: A More Exact Account of the Mode In Which the Bank of England Has Discharged Its Duty of Retaining a Good Bank Reserve, and of Administering It Effectually. Chapter VIII.: The Government of the Bank of England. Chapter IX.: The Joint Stock Banks. Chapter X.: The Private Banks. Chapter XI.: The Bill Brokers. Chapter XII.: The Principles Which Should Regulate the Amount of the Banking Reserve to Be Kept By the Bank of England. Chapter XIII.: Conclusion. Appendix. Note A.: Liabilities and Cash Reserve of the Chief Banking Systems. Note B.: Extract From Evidence Given By Mr. Alderman Salomons Before House of Commons Select Committee In 1858. Note D.: Meeting of the Proprietors of the Bank of England. 13th September, 1866. The Metaphysical Basis of Toleration. (1874.) Monsieur Guizot (1874.) Professor Cairnes. (1875.) The Public Worship Regulation Bill. 1 (1874.) The Depreciation of Silver. Preface. I.: The Low Value of Silver, and Its Effect On India. II.: The Remedies For the Fall In Silver. III.: Further Suggestions On the Fall In Silver. IV.: The Effects of the Resumption of Specie Payments In France On the Price of Silver. V.: The Effect of a Depreciation of Silver On Our Foreign, and Especially On Our Eastern Trade. PLL v6.0 (generated September, 2011) 4 http://oll.libertyfund.org/title/2264 Online Library of Liberty: The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) VI.: The Extreme Fall In Silver, and the Hasty Remedies Proposed. VII.: The Report of the Committee On the Depreciation of Silver. VIII.: The Proposal of the Bengal Chamber of Commerce to Suspend the Coinage of Silver In India. IX.: The Debate On the Indian Budget. X.: The Different Effect On Trade of a Cheapening of the Precious Metals, and of a Depreciation of Inconvertible Paper. XI.: The American Commission On the Currency. XII.: The Permanent Effect of an Increase of “council Bills” On the Flow of Silver to India and Upon the Indian Exchanges. XIII.: The Effect of the “council Bills” On the Indian Exchanges. XIV.: The Minute of the Indian Government On the Depreciation of Silver. XV.: A Proposed Remedy For the Depreciation of the Silver Coinage of India. XVI.: The Transition State of the Silver Market. XVII.: Bi-metallism. Appendix. Evidence Before the Select Committee On Depreciation of Silver. Monday, 8th May, 1876. PLL v6.0 (generated September, 2011) 5 http://oll.libertyfund.org/title/2264 Online Library of Liberty: The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) [Back to Table of Contents] The Works And Life Of Walter Bagehot Volume VI LOMBARD STREET. LOMBARD STREET IN 1910. Bagehot’s “Lombard Street” was begun, as he tells us in his “Advertisement,” in the autumn of 1870. It is a wonderful achievement, that a book dealing with the shifting quicksands of the Money Market should still, after forty years, be a classic of which no one who wishes to understand the subject can afford to be ignorant. Since it is so, it is evidently desirable to give, for those of its readers who are not acquainted with the Money Market of to-day, a brief account of the chief movements and tendencies which have altered the conditions since Bagehot wrote. This task is all the easier, since the most notable results of these movements and tendencies have amply confirmed what he said. Lombard Street has accepted the bill that Bagehot drew on it. There are two chief outstanding facts of modern monetary development. One is the reliance of the London Money Market and the Money Markets of the world on the Bank of England as the custodian of the central gold reserve. This is the principal theme of Bagehot’s argument, to which all its digressions and excursions ultimately return. The other is the development of joint stock banking in England by the gradual diminution of the old private banking firms and the coincident expansion of the banking companies by growth and amalgamation. All this Bagehot foresaw and predicted. The Cheque Currency Of To-day. This development has modified the problem of the Money Market in several important respects. Since the ordinary joint stock banks with offices in London were forbidden, by the Bank of England’s charter, to exercise the right of note issue, it has been their special function to spread the use of cheques in England and to make them the predominant form of paper currency, reducing the bank-note to a secondary place as currency, and at the same time raising it to a more important one as part of the basis of credit. Since the joint stock banks have covered England with branch offices, ready and eager to give banking facilities to customers of quite moderate means, the cheque has become the chief circulating medium in commercial payments, and the bank-note has almost ceased to circulate. The outstanding note issues of all the English banks, other than the Bank of England, have now sunk below £250,000, and it is significant to observe that they are habitually below the amount authorised by the Act of 1844, so that their diminution has been due, not so much to the reduction of the number of banks with the right of issue, as to a change in the habits of the people, which does not now want even as many bank-notes as it might have, since it has been accustomed to the greater convenience and safety of the cheque. PLL v6.0 (generated September, 2011) 6 http://oll.libertyfund.org/title/2264 Online Library of Liberty: The Works and Life of Walter Bagehot, vol. 6 (Lombard Street, Essays on Guizot & Cairnes, The Depreciation of Silver) At the same time what is usually described as the circulation of the Bank of England note has increased, but its actual circulation as currency in the hands of the people is probably less than when Bagehot wrote.
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