Page:The Economic Journal Volume 1.djvu/221

 Rh lower rates than the Bank of England cared to charge. The principle is believed to have been carried still further, and the use of the funds of other bodies to have been obtained by the Bank of England, always on condition that the rate of interest should he allowed. The experiment, or change of policy, has had the good effect, that, without impairing the annual profits of the Bank, it has given the institution a healthy and firm control of the market from time to time, especially in times when such control was most needed. But Mr. Lidderdale has not relied wholly upon his power to borrow sums of money in this way. He has initiated the practice of discounting short bills by the Bank—bills with a few days or a few weeks to ran before maturity. Whenever the Bank succeeds in raising the market rates of discount to within a little of its own charge, it also succeeds in attracting much business in the shape of discount on short bills. The effect is salutary, because, supposing the Bank to have raised its rate to five per cent. on suspicion that a crisis may break out, it has nothing to do but to allow its short bills to run off in order to bring the market sharply up to any advanced standard of interest which it may think desirable to impose. The rise may be to six per cent. or seven per cent., or still more; but if the market depends upon the Bank for supplies of money against short bills, it will continue to be dependent, and will have to raise the rate of interest all round. It is always the last half million or so which determines the value of money throughout the market. Supposing twenty millions to be lent in London every day, but that on one day there is a demand for twenty sud a half millions, then the surplus demand raises the rate of the whole twenty millions lent. Accordingly, the London market of discount and interest becomes more attractive, and draws more money from abroad, and draws it more quickly than would be the case if the Bank of England were not powerful. Under Mr. Lidderdale there have been fewer complaints than had been heard of for many years past, as to the banking system of the country being out of joint. His new policy marks a radical change, which bas been put to the test and has come out well.

report on Profit-Sharing lately presented to both Houses of Parliament appeared at a somewhat opportune time, just, in fact, as Parliament is about to institute special inquiries on several branches of the labour question, which is now more than over the subject of the hour. To those who require more than this, to those who expected it to be a full and complete statement of all that has been done or attempted in this branch of industrial experiment, the report is a little disappointing. To earnest co-operators, above all, who have studied and know the question and its difficulties, this report cannot fail to be unsatisfactory, because it leaves almost untouched and with hardly a passing reference, many of the applications of the principle which have had birth within the cooperative movement itself.