These monetary transactions were very essential in the financial growth of London, and were a large factor in our capital becoming the centre of finance. Owing to the vast extent of our trade, both as to its amount and diffusion, we were in a position to conduct financial transactions the world over. From this it followed that when commerce began to expand and grow among continental nations, it was found that the easiest way of settling the financial business arising therefrom was through the intermediary of London. England bought from and sold to all nations, but in the first half of the nineteenth century _reciprocal_ transactions between foreign centres of trade were few and far between. For instance, suppose a New York merchant shipped produce to Hamburg, he would draw on some appointed London house for payment; the merchant in Hamburg who had bought the goods would then have to find the means of providing this London house with the necessary funds to meet the draft from New York. This he would do by buying a draft in Hamburg from some merchant there who had shipped goods to London and was wanting payment. This draft he would remit to the London house on which the American exporter had drawn, and the London house would collect the money represented by the Hamburg draft, thus settling both transactions. This is only a rough example, but it is typical of what came to be a regular custom. Various countries may trade together, but unless they have direct mutual financial transactions, they cannot settle their indebtedness without remitting precious metal of one kind or another, or employing the agency of another country which has direct financial dealings with both. In the time of which we are speaking London was the only centre which was in a position to carry out such transactions. In the latter half of the past century, and especially towards the close of the century, our position suffered through direct financial operations between various countries becoming established, thus eliminating the need of a middleman; but it may still be said of London that it has direct financial and trading connection with _every country of the world_, which at present cannot be said of either Paris, Berlin, or New York. The very fact of the establishment in London of branches of the leading banks and finance houses of France, Germany, and the United States, emphasises the position which London has attained and still holds in the financial world. CHAPTER VI FACTORS OF THE MONEY MARKET Having now surveyed the history and development of our financial system up to a point when “system” can really be said to have started, and also having glanced at the causes which have placed London in the forefront of all financial centres, we will consider the formation, as a whole, of what is called the “Money Market”; and then more carefully examine certain of the more important factors which help to form that market.