Lastly, we have a somewhat new factor entering into the Money Market, but one which is increasing in importance, and that is the establishment in London of branches of many powerful and rich continental banks, who make use of the London Money Market for employing their surplus funds when they can do so to advantage. They lend money to the bill-brokers much as do ordinary London banks; and at times, when the conditions are favourable, they invest their funds in English bills, occasionally absorbing considerable amounts of Treasury and Exchequer bills. These purchases of English bills increase the money in the market for the time being, and the competition of these foreign bankers tends to depress the rate charged for discount. It must be remembered, however, that this course of business gives the banks in question power to draw gold from us heavily on the maturity of the bills, or at any time when they see fit, by selling their bills before maturity. From a consideration of these various factors, we see how largely they are interwoven together and dependent on each other. The banks gather in deposits from all quarters and lend to the bill-brokers, while leaving a large amount with the Bank of England; and the bill-brokers borrow from the banks and buy up bills from all quarters; but if the banks “call” their money from the bill-brokers the latter are driven into the arms of the Bank of England, to reborrow the money which the banks have called from them. This is also the case if the India Government call in their loans, and the money to repay the same cannot be borrowed from the banks. Similarly with the Stock Exchange, if much money is absorbed in this quarter, the banks will reduce their accommodation to the bill-brokers, who may by this action again have to rely on the Bank of England; and again, lastly, if the foreign banks commence to draw money from us, the strain comes as usual on the Bank of England. All these factors work round the Bank of England as a centre, and the need of strength on the part of that institution becomes at once apparent when it is seen what mighty interests are dependent on it, that the financial credit of the country rests ultimately upon its stability, and that its policy and actions involve consequences of weal or woe to the community at large. CHAPTER VII THE BANK RETURN