The Extent of the London Discount Market in the Middle of the Nineteenth Century

Abstract

THE London Money Market has long been a favourite topic with writers on monetary economics; but surprisingly few attempts have been made to estimate the extent of its resources at different periods of the nineteenth century. Because of the paucity of evidence available, much has been made by certain writers, notably by Palgrave,l of a statement in I848 by James Morris,2 then Governor of the Bank of England, who declared that he believed the Bank's discounts to be equal to those of private discounters in London. This statement has been utilised to show, what has come to be widely accepted, that until I 848, at least, the Bank was quantitatively supreme in the London Discount Market. In fact, it is possible to prove that Morris's statement failed to do justice to the discount business of either the private discount houses or the London banks; and that, even in the middle 'forties, the business of these discounters completely dwarfed the Bank's London business at its maximum. By far the largest discount house, both in the 'forties and 'fifties, was Overend, Gurney & Co. The only other substantial bill-dealing houses-i.e. firms which ran a book, and borrowed funds to finance bills carried on their own account-were Alexander & Co. (now Alexander's Discount Co. Ltd.), Bruce, Buxton & Co., and Sanderson & Co. None of these houses published accounts, but information given to the various Parliamentary inquiries in the 'forties and 'fifties is sufficient to provide a basis for a reasonably accurate estimate of the scale of their operations, both separately and collectively. To utilise this material for an estimate for the middle 'forties