The financial writer would probably be discharged who wrote in his money article: “Confidence in Lombard Street yesterday was in superabundant supply, and sellers could find no borrowers of it even on nominal terms. In fact, before the close of business balances of confidence were unplaceable. Overnight confidence fetched no more than 1 per cent. and weekly confidences 1½ per cent. In consequence, therefore, of this great mass and weight of confidence the discount market was very weak and rates fell further. It is thought probable that the Bank of England may have to make confidence scarcer and dearer by taking it off the market, that is to say, by borrowing confidence.” Is, therefore, that superstructure of “credit” that superstructure of confidence beneath which the country economically prospers? Is there not often in Lombard Street an abundance of “credit” coincident with a scarcity of confidence? And is not all this “credit” impotent without confidence? Is prostrate confidence to obtain its re-creative power only from mountainous gold reserves? Or will it be regenerated by a new faith in the essential greatness and wealth of the country? I have great hopes of the future. I give abundant reasons for this faith within me. Experience has taught me the incalculable harm pessimism does. Pessimism is like an infectious disease. It spreads quickly. It is difficult to fight against it. There are numerous sad-visaged prophets amongst us to-day--men without hope, men without a smile. They cannot cheer us. They see coming, with the inevitability and irresistibility of doom, the day of sorrow, the day when we shall reap the abundant aftermath of woe. But dark as the night may be, I see a new day of joy dawning, a day when the sowers will go forth with renewed hope and energy, with the confidence that they will gather in at the due season a harvest more abundant than they have reaped before. Let us not wring our hands and moan in dark corners. Let us look forward with brave hearts and strong minds to the day of victory and peace. That day will bring us a new faith, a new confidence, perhaps a new happiness in which we shall forget the old griefs and despairs. W. W. W. CATFORD, S.E. _February, 1915._ CONTENTS CHAP. PAGE I. INTRODUCTORY 1 II. WHAT IS MARKET MONEY? 13 III. THE CURRENCY OF CUSTOM 23 IV. CREDIT AND CONFIDENCE 32 V. SOUND BANKING 43 VI. THE SUPERSTRUCTURE OF WEALTH 51 VII. WHAT IS THE LOANABLE FUND? 61 VIII. THE METAMORPHOSIS OF THE FUND 70 IX. THE CENTRAL FUND 80 X. THE CENTRAL RESERVE 88 XI. THE FIDUCIARY CURRENCY 97 XII. BANKING WEALTH 107