‘Money Means Not Money’

‘Money Means Not Money’ - Reflections on ‘The Meaning of Money’ 1909-2009
Forthcoming in Economic Affairs, June 2009- IEA
Author: Arthur Edwards

The Meaning of Money sets out to make the City pages comprehensible to the casual readers that Withers imagines struggling to get to grips with their sense. It does this 






















































by elucidating, in clear language, to what each of the terms refers and gradually building up a complete picture of the interaction of the disparate parts of the whole ‘machinery’ of the City. In Withers’s words, ‘the object of this volume is to explain a matter of plain, positive, practical fact, which is very important, very dull and very little understood.’ Without further ado he embarks upon a journey which takes the reader from the idea of ‘the price of money’, to an explanation of the Bank of England’s balance sheet, to musings on London’s role as a ‘monetary physician who cannot afford, under any circumstances, to be sick.’
Withers takes the trouble to give careful common-sense explanations of the development of the various commercial practices that have resulted in the City’s core institutions. Thus Bills of Exchange, Cheque Paying Banks, Bill Brokers and Discount Houses, Accepting Houses and Foreign Banks are all treated consequentially with their own chapters. This process culminates in a description of the role of The Bank of England at the centre of the financial process. Though the subject appears unpromising, and Withers modestly downplays its entertainment value, the narrative, interspersed throughout with humour and practical illustration, is anything but dry. A personality such as Withers could not be content to contain himself with mere technical elaboration of known facts; he must speculate as to future developments, muse upon the recent past and ponder the principle of comparative advantage that makes Italy a producer of cultural goods or England disadvantaged in manufacture.

Today’s
Perspective



There is still much to be gleaned for today from Withers’s book, both in the general terms of banking practice and specifically with regard to the deft handling of the American 1907 financial crisis, which was effectively managed so that it did not become a global crisis; there existed a community of men who supervised and felt responsible for the workings of the system, and these were not regulators but bankers themselves. In Withers’s telling words:
‘...good banking is produced, not by good laws, but by good bankers. Just as the most carefully planned constitution will inevitably break down if the men at the helm of government are incompetent or dishonest, so no skilfully devised banking system will make banking good, unless the banking is conducted by straight and able managers, or defend banking from suspicion by its customers, if other wheels in the financial machine have been proved to be unsound.’
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