The War and Our Financial Fabric

In writing this work I need hardly say -- for it will be apparent to all who have laboured through it -- that I have had two main purposes in view. I have written it as a guide to the student of the money market, and I have written it with the object of learning some lessons which, I think, are to be learnt from the unique experiences of the financial world since the outbreak of the war. There is much contentious matter within its pages, but this is inevitable in dealing with a subject so profound and intricate, so profound, indeed, as well nigh to baffle human vision to see clearly, steadily, and wholly its vast complexities. The financial fabric is something that has grown up in our midst as a mysterious thing. It has arisen not only out of our needs, but out of our national character. It is no invention that has suddenly revolutionized fashion in banking. It has been an economic evolution, a product of environment, and who will say that its evolution has reached its final stage? The environment has been gradually, inevitably, imperceptibly created and modified by national character, that is to say, by national psychology. This explains its distinction from other systems. Other systems in the world are likewise products of national character, products of circumscribed environment. This is why they differ, and why there is no scientific precision. There may come a time when the world will have an international banking system, but that day is far distant. Meanwhile systems must remain national.

It is important, therefore, for the student to understand that it is a psychological product, a something that has grown up out of the soul of the nation. It is difficult to be clearly conscious of this, to regard it as a something not purely scientific, something not independent of human nature as are mathematics. Banking is a part of our economic system. Political economy has been called a dismal science. This is a delusion. It is neither a science, nor is it dismal. Students of political economy have made it look dismal because they have regarded it as a science, in the making of whose laws and in the shaping of which human nature and constantly changing character have no part. Political economy is a branch of psychology. The subject is human nature, in the same way as ethics or religion is human nature. It deals with temperament and the soul, and the temperament and the soul are not strictly scientific subjects, like geology and astronomy. We might just as reasonably describe religion as the science of theological economy, and ethics as the science of moral economy, as describe social intercourse as political economy. If political economy means the law of the State, then laws are made by the citizens of a nation and are being constantly modified. They are not laws beyond the control of man.