The War and Our Financial Fabric

Confidence, I have said, is, in the production of economic wealth, the vitalizing element. In economics it plays the part that faith plays in religion. Confidence and credit have like derivations, like connotations. Confidence is a confiding in, credit a believing in. But, we must ask, a confiding or believing in what? Confidence, the spirit of economic prosperity, is distinct from what is called Lombard Street credit. Confidence is vastly more potent than Lombard Street credit. If confidence be dead Lombard Street credit cannot of itself revive it. But confidence can revive Lombard Street credit. When the nation is prostrate and languid confidence alone can revivify it. It is the economic tonic.

In the money article it would excite derision if we wrote: "In Lombard Street to-day confidence was again in superabundant supply, and lenders were offering it on nominal terms. Confidence over the night could be obtained in liberal quantity from 1 1/2 per cent. downwards, and for a week at no more than 1 3/4 per cent. In fact, balances of confidence were unlendable. Owing to the cheapness of confidence the discount market was again exceedingly weak, and rates continued to fall."