Excerpt from The English Capital Market

T the risk of being charged with an attempt to rob criticism of its rightful bread, I feel bound to meet in advance an objection which may be made to the general character of this book: the objection, namely, that the convulsive changes of the last six years have so greatly affected the work of the Money Market that they have fundamentally altered the nature of the services it contributes in the economic organization of this country.

Yet, when an engine is out of order, the skilled mechanics who are called in to examine and repair it bring with them no new ad hoc set of mechanical principles and the fair-minded patient, though his state of mind argues a world in revolution, recognizes that the principles of physiology have not ceased to operate. The tale runs that an eminent divine, after a decisive defeat of his party in the House of Commons, returned home and planted mustard and cress in his garden. Not long after he was able to assure his friends that, crushing as had been their political defeat, the herbs had nevertheless come up in much the usual way. It may be that they would grow now in the garden of the Bank of England, or even in a land reshaped to the lives of heroes.

It is true that the war has loosened ideas, has released influences hitherto held in check by a sense of the inherent unalterableness of things, and by so doing has modified our general conceptions of the true relations among members of a modern society: in particular the relations between rich and poor, and between master and man. But the economic centre of the social organization has surely not greatly changed. Much the same impulses and much the same needs govern the adjustment of economic resources to economic ends; the long chains of processes through which materials pass on their way from the soil to the consumer are much the same as they were, though their operation is disturbed by an additional set of difficulties introduced by the war.

This seems to be especially true in those inner and strictly business processes with which the Money Market is concerned. The banks still supply the means of effecting payments in the form of a cheque currency of unrivalled efficiency; they and the Issue Houses still collect capital from points of plenty and carry it to points of scarcity the company promoter, in the old extravagant way, still supplies business ability with the resources required to give it scope severe alternations of economic activity and stagna tion still arise from infectious changes of confidence on the part of the business men to whom society still entrusts the administration of its resources. Broadly speaking, the same principles of action lead to the same social economies and the same social wastes, though they work themselves out with less sureness and precision in face of the greater uncertainty which in present conditions affects all business adjustments.

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