PREFACE

Responsibility for the appearance of this book--but not for its
contents--lies with the Council for the Study of International
Relations, which asked me to write one "explaining what the City really
does, why it is the centre of the world's Money Market," etc. In trying
to do so, I had to go over a good deal of ground that I had covered in
earlier efforts to throw light on the machinery of money and the Stock
Exchange; and the task was done amid many distractions, for which
readers must make as kindly allowance as they can.

HARTLEY WITHERS.

6, LINDEN GARDENS, W.
_March_, 1916.




CONTENTS


CHAPTER I

CAPITAL AND ITS REWARD

Finance the machinery of money-dealing--Lenders and borrowers--Capital
and its claim to reward--Stored-up work--Inherited wealth--The reward of
services--Questionable services--Charles the Second's dukedoms--Modern
equivalents--Workers and Savers


CHAPTER II

BANKING MACHINERY

Money at a bank--Bills of exchange--Finance and industry--Supremacy of
bill on London--London's freedom--The Bank of England--The great joint
stock banks--The discount market--Bills and trade


CHAPTER III

INVESTMENTS AND SECURITIES

Stock Exchange securities--Government and municipal loans--Machinery of
loan issue--Underwriting--The Prospectus--Sinking fund--Bonds and
coupons--Registered stocks--Companies' securities--Stock Exchange
dealings


CHAPTER IV

FINANCE AND TRADE

Why money goes abroad--Trade before finance--Prejudice in favour of home
investments--Prejudice against them--The reaction--Mexico and
Brazil--Neutral moneylenders and the war--Goods and services lent and
borrowed--The trade balance


CHAPTER V

THE BENEFITS OF INTERNATIONAL FINANCE

International finance and trade--Opening up the world--Exchange of
products--Finance as peacemaker--Popular delusions concerning
financiers--Financiers and the present war--The cases of Egypt and the
Transvaal--Diplomacy and finance


CHAPTER VI

THE EVILS OF INTERNATIONAL FINANCE

Anti-Semitic prejudice--The story of the Honduras loans--The problem to
be faced by issuing houses--Their moral obligations, responsibilities,
and difficulties--Bad finance and big profits--The public's
responsibility


CHAPTER VII

NATIONALISM AND FINANCE

Dangers of over-specialization--Analogy between State and
individual--Versatility of the savage--Specialization and
peace--Specialization and war--Should the export of capital be
regulated?


CHAPTER VIII

REMEDIES AND REGULATIONS

Regulation of issues by Stock Exchange Committee--Danger arising
therefrom--Difficulty of controlling capital--Best remedy is keener
appreciation by issuing houses, borrowers, and investors of evils of bad
finance--Candour in prospectuses--War as financial schoolmaster--War as
destroyer of capital--War as stimulator of productive activity.