The War and Our Financial Fabric

What is the money that is bought and sold in the money market? Who are the merchants there? Who are the middlemen? Who are the sellers and buyers? What sort of a place is this money market? We can visualize a cattle market, where farmers bring their cattle to sell, and we can visualize Covent Garden, where fruit, vegetables, and flowers are sold: but can we visualize a money market? Is it in some vast building in the City? Is Lombard Street a mighty emporium where many merchants congregate at their stalls and offer, in the same fashion as vendors of apples and sweets do, pounds, shillings, and pence for sale?

It is not located in any spacious building, like the London Stock Exchange. Buyers do not go there and offer golden sovereigns for golden sovereigns and silver shillings for silver shillings. To the ordinary man, who is perplexed by the mysteries of the money market, it sounds strange, indeed, that money can be bought with money. This is because he associates money with pounds, shillings, and pence, and cannot understand a sovereign being bought with a sovereign. Yet he understands the business of a money-lender and he understands borrowing. He knows that when he borrows from a money-lender he borrows money and pays something for the loan, something that he calls interest. Well, the vendors of money in Lombard Street are purely and simply money-lenders on a great scale.