The large discount-houses and brokers possess considerable capital, though it would look extremely small when contrasted with the short-loan fund, and they deposit certain approved securities with the banks against the money at call advanced to them; but the small bill-brokers are little better than runners for the banks with whom they re-discount their bills almost as soon as they are in their cases, and their capital would consist principally of a silk-hat and a bill-case. Certain brokers on the Stock Exchange, it may be added, stand in much the same relation to Lombard Street. Besides borrowing from the banks the bill-brokers also accept deposits from the public, basing their rate upon the Bank rate, and allowing a slightly higher rate than the London bankers. The market for bills is a special market, into which the banks pour their surplus funds, so customers will be careful not to confuse the price of a bill with the price of a loan, though, of course, there is a close connexion between the two; for when loanable capital is dear discount rates too are high, and when the former is cheap the latter are low. The London customer, who discounts fine bills with his banker, will naturally take care that he does not pay a higher rate than the bill-brokers would charge him, and when he discounts second-rate trade-bills he will remember that competition is very keen, and that if his credit be good he can generally induce the manager to quote a fine rate. Coming to provincial banking, we have seen that the large merchants and manufacturers remit some of their best trade-bills to London; but in the great cities, where the banks are numerous, the competition for good paper is considerable; and as the customer usually keeps his current account at the bank with which he discounts his bills, he can generally, if his account be worth retaining and his credit good, get his paper discounted at Bank rate, or even slightly under when the market rate is below it. In the small country towns, however, the banks’ rates are higher, but then, of course, the paper they discount there is not of the same class; and a capitalist, be he a money-lender or a banker, raises his rate in proportion to the risk he runs, the one thinking a bill so doubtful that 100 per cent. will just tempt him to risk his principal, and the other drawing the line at about 7 per cent. A, for instance, has an acceptance of C’s for £100, dated the 1st January and drawn for one month, so the bill, allowing the usual three days’ grace, will be due upon the 4th February. A takes this bill on the 5th January, to his banker, by whom it is discounted. From the 5th January exclusive, to the 4th February, inclusive, there are thirty days; and assuming that the discount rate be 5 per cent. per annum, and the rate of commission upon the amount of the bill ⅛ per cent., we get the following:-- 100 × 5 × 30 ------------ = 8s. 2d. 100 × 365