390 THE ECONOMIC JOURNAL stances which have been the indirect means of preventing the banks and great financial houses from getting themselves into difficulties. Someone has exclaimed, 'Why did not my partners prevent me from entering into such excessive commitments ?' Had those partners been members of a board, each independent in a pecuniary sense of the other, and each responsible to the shareholders for allowing ntismanage- ment to continue unchecked, what we now deplore might never, and need never, have happened. A great joint-stock bank is compelled to keep a close daily watch upon the proportion of cash held to the liabilities, and the manager be he ever so strong-headed and venture- some is not allowed to reduce the total below a fixed proportionate limit. Someone has exclaimed,' !I never conceived it possible I could be short of cash!' The conception would have been easy enough, had not the wrong principle of uncontrolled one-man power been allowed to govern the conduct of the business until all became such confusion that it was thought that even full speed a-head could not bring the ship to grief in the densest fog. In the case of the banks in London which are not joint-stock banks, there is probably not one where the engagements entered into depend upon the unaided judgment of one individual. The nature of the business is in these times too complicated for any one man to continue for any length of time to conduct it successfully. The great banks and the financial houses as a body have shown themselves to be sound through this crisis owing to the facilities they have enjoyed which were not at their disposal in the years prior to the Overend and Gurney crisis. The managers of these institutions can now better inform themselves as to the character, standing, and, what is of great importance, the latest engagements of those who propose business to the?n, than they could twenty y. ears ago. Such is the rapidity with which rumour flies about ?n these times, that the weakness of a firm hardly makes itself felt in South America or even in remote Eastern cities, but the news flashes from one European centre to another, and the commercial paper bearing the name or names whispered about passes from one bank or discount house to another without finding any one willing to take it. There is, besides, not only a sort of free- masonry between dealers in money, who live more or less upon each other, but an itching to communicate bad news, which ensures the spread of the evil tidings with the utmost rapidity. What is the result ? The detection of any financial weakness, which may be mani- fested in a variety of ways, so instantaneously reacts upon the bank or financial house that has entered into rash commit?nents, that engage- ments are undertaken with a degree of caution and care in our day which was quite unknown before electricity could ring bells and tell tales thousands of miles away. In our day every leading man of business sits opposite a set of buttons which communicates with his clerks. He has a telephone in a cupboard hard by; a boy or boys read)' to run for his life with telegrams; and a machine too near to be pleasant which tells him on a strip of paper what horse has won the Derby aln?ost as soon as he has passed the winning-post; what the Prime Minister has just said about the Russian intrigues in Bulgaria; how much lower the Bank reserve is, and what is the state of the stock markets two minutes ago. He has no sooner taken in these various small items than another bell rings, and his wife, who is in a shop in Bond Street, asks for another fifty-pound note as she has run short of cash.
