Lombard Street

Money gathered in London banks gives traders and governments borrowing power that scattered private savings cannot provide. Walter Bagehot begins with this practical distinction in Lombard Street, his account of England's money market. He uses comparisons of bank deposits and examples of merchants financing their businesses to explain how credit changes the scale of trade. His stated aim is to make banking intelligible through concrete cases, rather than let arguments over the Act of 1844 dominate the discussion.

The analysis also follows the risks created by this concentration of money. Bagehot examines the Bank of England's reserves, the pressure of demands for gold and the consequences of governors delaying changes in interest rates. He questions whether the Bank's policies and leadership can respond quickly enough to changing conditions. Readers interested in economic history will find an argument about the responsibilities of a major banking institution, built around the workings of nineteenth-century London finance.