IMAGINATION IN MONEY MATTERS.
NOTHING would seem so little liable to the influence of imagi- nation as the condition of the Money Market, and nothing iareally much more subject to it. Just at this moment, as every- body knows, the City is in an anxious and perturbed state, and with considerable reason. The Bank, having only seven millions in its "Banking Reserve," has put out its storm-drum, raising its rate of discount to 7 per cent., and we may be in a few days in the midst of a money crisis. If America makes " heavy drafts," say of £250,000 by each mail,—that is, a million a week— or Germany suddenly asks for a big sum, in anticipation of the election of the Comte de Chambord ; or if the country banks draw heavily, either to guard themselves or to aid customers, who in parts of England have no crop to speak of ; or if, which is really likely, Mark Lane must for once pay in advance for " hurrying forward" the wheat from Illinois and the West, then the storm-drum must go to the mast-head, the imagination of men will wake, and the Bank Charter Act will in a couple of days or so be once more suspended. Those things may happen, though we are by no means confident they will happen ; but whether they happen or no will be due in a very large degree to the imaginativeness of people about their money, the sort of unreasoning fear which any danger to that seems to inspire. A good deal of this imaginativeness is, of course, founded on sound calculation, but then a very great deal is not. Business men of course want discounts, and when the rate rises think it may rise higher, and rush for their accommodation, lest when the pinch comes they should get none at all. But even they almost always imagine that the pinch will be sharper than it will be, and pay away heaps of money for the privilege of feeling safe when, if they would but wait a few days, they would be just as safe without such heavy losses. In this ease, for instance, Mr. Lowe is not Chancellor of the Exchequer, or Heaven knows what might happen, and Mr. Gladstone is, and the whole City knows that he would act sensibly, and suspend the Act in decent time, —that is, would declare, what everybody knows and nobody ever says, that before serious harm could happen to the Bank the State would be at its back. We are not 'discussing the merit of that astounding system which leaves English credit, on which the world of com- merce rests, at the mercy of an American demand for twopence-
halfpenny—fancy London really caring whether New York wants a million or not—but it exists, and its working is such as to tempt every man with large weekly wages to pay, or large bills to discount, or large sums of specie to obtain for any reason, to over-protect himself, lest the storm should last longer than he expected. It seldom does, and never would, if Parliament would either knock down the absurd distinction between the banking reserve and the real reserve, or would fix a figure at which the Charter Act relaxed of itself ; but men under present circumstances are timid about their money, and instead of calculating, act as if convinced that the very worst was perfectly certain to happen. Private depositors are the worst of all. They may know per- fectly well that their bank is impregnable—for example, any depositor who reads the proprietary list of the London and West- minster must know, as absolutely as he can know anything, that nothing short of the conquest of Great Britain ought to make him afraid—yet they will all the same rush for money they do not want, and do not know what to do with. They are afraid of some ghost or other in their own minds, perhaps of that day always coming, but never yet come, when they shall be paying their cabmen with bits of silver spoons. They can wait very well, as banks, brokers, and large wagepayers cannot ; but they won't wait, and the crisis, which but for their folly would get itself over very well, becomes a national calamity. It is when the private depositor begins to move that Bank Directors get frightened, and in the majority of cases their movement is the result of mere fear. If they would only sit still, and wait like human beings of average common-sense, the explosion would peas over their heads, as everything else passes, and they would not be hurt. England is not going to fail, and it is England which is practically answerable for the reserves sound bankers always keep in the Bank of England.
There is something very odd, almost inexplicable, about the way in which English imagination works in relation to the Money Market. As a rule, our countrymen are not timid about their money, are almost reckless in leaving property unguarded, and do not know how to hoard ; but they are at heart won- derfully distrustful of the City, or it may be merely ignorant. The moment anything goes wrong there, they are ready to carry sacks of coin on their shoulders right through Thieves' Yard, so that they may but get out of establishments they have trusted all their lives, and trusted justifiably. They would be patient probably in any other case, but the thought of losing money by a bank seems to be too much for them, and they skulk just as they do before a tooth-drawer. It may be that a little vanity enters into the fear they feel, a dislike of seeming to be less far-sighted than their neighbours, less prudent and well managing ; but the main element in monetary panic, as far as it affects private persons, is fear, often the stronger the more unreasonable it is. They cannot get rid of it, trust the most exaggerated statements, and as every banker has seen, apply the big words of the City Editors,—words perfectly justified where they are intended to apply—to affairs with which they have really not the smallest connection. Argument is perfectly useless in such cases, just as it is when a theatre is on fire. The dread spreads like a panic among a mob, as if the mere number of the people endangered increased the individual's fear of his own danger, and finally there is a stampede, with no result except an enormous number of unnecessary victims. Even their faith in the customary seems to fail. They know perfectly well that no Government has ever dared to let things go too far, they know that Mr. Gladstone never himself makes financial blunders, „and they know that an English panic of that kind—for the fall of a house like Overend Gurneys was quite a different matter—will last, .if it comes at all, bat a day or two, and still they are as frightened as if they were bill discounters. All reasonableness seems to desert them, and men who will stand a far heavier attack in the way of ordinary loss behave like a Southern people with the cholera among them. They all fancy they have got it, or will get it, whereas it keeps its averages as regularly as any other disease, and does not kill half as many people as malaria will. Sit still, is the best order for quiet folk in a time of City crisis, but it is given with no more effect than the same order in a fire. Everybody is blinded by that curious intellectual selfishness which Is not of the heart, but of the brain, till he thinks himself the very object of the fire, and jumps out of the window, with the most total forgetfulness that his staircase is of stone.
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