The Money Market is not a market for the sale and purchase of spare money, but for its hire. Difference between hiring and borrowing. Payment for the hire of spare money is called in business interest, and in old-fashioned economic treatises “the reward of abstinence”. In the case of spare cash in the money market the obligation of the owner to the hirer is as great as that of the hirer to the owner, since capital not hired perishes by natural decay. Negative interest. The real business of the money market is to sell incomes for lump sums of spare ready money. Enormous rates of interest paid by the poor. The Bank Rate. Lending to companies. Limited liability. Varieties of shares and debentures. Jobbers and brokers. The connection of Stock Exchange transactions with industry is mostly only nominal. Warnings. Bogus companies. Genuine companies which are smoked out. “Coming in on the third reconstruction.” Perils of enterprise, of public spirit, of conscience, and of imaginative foresight. 231 53 SPECULATION Risk of becoming a gambler’s wife. Selling and buying imaginary shares for phantom prices. How this is possible. Settling day on the Stock Exchange. Fluctuations. Bulls, bears, and stags. Contango and Backwardation. Cornering the bears. The losses risked are only net, not gross. Cover. Bucket shops. Unreality of the transactions. An extraordinary daily waste of human energy, audacity, and cunning. 239 54 BANKING Spare money for business purposes is mostly hired from bankers. Overdrafts. Discounted bills of exchange. The Bank Rate. How the bankers get the spare money they deal in. Customers must not draw their balances simultaneously. The word credit. Credit is not capital: it is a purely abstract opinion formed by a bank manager as to the ability of a customer to repay an advance of goods. Credit, like invested capital, is a phantom category. Its confusion with real capital is a dangerous delusion of the practical business man. “Bubbles” founded on this delusion. The Bank Rate depends on the supply and demand of spare subsistence available. Effective demand. Proposals to tax invested capital and credit. A hypothetical example. 243 55 MONEY Money as a tool for buying and selling. As a measure of value. As material available for other purposes and therefore valuable apart from its use as money. The latter a guarantee against the dishonesty of governments. Debasing the currency. Paper money. Inflation. Post-war examples. Deflation. Stability the main desideratum. How to maintain this. Fluctuations in the value of money indicated by a general rise or fall of prices. Cheques and clearing houses as economisers of currency. Communism dispenses with pocket money. The Bank of England as the bankers’ bank. An intrinsically valuable coinage the safest and most stable. 251 56 NATIONALIZATION OF BANKING