Now the Bank of England, we have seen, holds the national reserve, as it were, and is, in consequence, the pillar upon which the money-market rests. Threadneedle Street (the Bank) is, therefore, the centre of the money-market (hence the description “central institution”) into which Lombard Street (the rest of the banks in the United Kingdom) pours its reserve and surplus cash. We might describe the Bank as the heart of the money-market, through which a stream of cash and credit-documents is continually flowing. The brokers (the outside market), who practically keep no reserves of cash, are largely financed by Lombard Street, which, however, calls in its advances to them during certain conditions of the market; and the bill-brokers are then compelled to fall back upon the Bank of England which holds the bankers’ reserves. In assisting the brokers the Bank is also supporting the credit of Lombard Street; so, clearly, the interests of each division are identical; and the closer and more friendly the relations between them the smoother will be the surface of the money-market. But we have to consider the Bank rate in relation to bankers’ charges; and here another factor must be introduced, to wit, the nature of the securities deposited by the customer. The business man’s favourite investments are English railways, Corporation Stocks, Industrial Companies, and so on, whilst occasionally, endowed with imagination, and recognizing how erratically the earth dispenses her favours, the blessed uncertainty of mines appeals to his gambling instinct. As a rule, a banker’s loans and advances are not covered by Consols, because it would pay the borrower better to sell out and place the sum they realized to his credit. Advances against Consols would be made principally to stockbrokers and to speculators who had bought them largely in the hope of a rise in price. Competition for an advance, which is covered by tangible securities, is keen both in London and the provinces, and competition, we must remember, tends to reduce the rate. Then, again, assuming that the Bank rate be 3 per cent., and that a banker suggests 4 per cent. on an advance covered by railway debentures, the customer may not see the force of maintaining a margin of 10 per cent. between the market-price of his stock for the protection of his banker, and paying him, say, ¾ per cent. more than his securities return on his purchase-money. As the customer’s loan or advance is well secured, and as the banker will only advance to the extent of 90 per cent. of the market-price on the condition aforesaid, he is only willing to pay Bank rate upon the sum he borrows.