Page images
[ocr errors]

easily made. Keats is not one of those poets, the events of whose lives can challenge interest with their works. No one was ever more wholly a poet; the best record of his life and character is to be found in his poetry. Not that there is anything to conceal-quite the reverse. In fact, the more that is known about him, the more does it become clear that the man was of a stronger, manlier, more active and generous nature than a first reading of his poems might lead one to suppose. Sir Sidney Colvin makes one more effort to slay the long-lived legend, born of Byron and Shelley, that Keats was a timid, effeminate creature, all genius perhaps, but no courage or strength, who lived in a coterie of mutually admiring cockneys, and died in terror of the Quarterly Review.' Nothing could be further from the truth, as every one knows who has ever looked at the poet's delightful letters, which show a man as full of courage, generosity, kindliness, and the sense of duty as of the love of poetry and the modest consciousness of genius. Their interest lies in that revelation of his mind and character much more than in anything which they record of what he privately did or suffered, until one comes to the misery of his passion and the tragedy of his illness and death. After all, his one great achievement was the writing of his poems; and the best offering we can make to his memory is to read them and read them again and again. He is, of all our English poets, the one who most unfailingly, most invariably, converts everything he touches into poetry; not always into good poetry, but never into anything else. Almost all our other poets might conceivably have been men of some other profession. No one can fancy Keats anything but a poet, a poet by birth and nature, by choice, by training, and finally by consummate achievement.



A SHORT time ago the writer was present when an English statesman of many years' experience asked a Russian, who had spent his life in Government finance, -'What is your opinion of the success of German plans for the economic exploitation of Russia?' The answer came very quickly and briefly: 'That depends wholly on whether or no Great Britain decides to finance Germany in accomplishing her objectives in Russia.' It is proposed in this paper to examine the grounds on which this answer is based, to show that it is strictly accurate, and to enquire into what should be the action of Great Britain upon this vital subject.

The crux of the whole matter lies in the banking customs which obtain in England. Prior to the War, London was the money centre of the world. She was the one great reservoir of accumulated capital upon which all nations might draw upon certain conditions concerned only with security and return. Thus it has been that English banking has been primarily international banking, and secondarily, by a long distance, industrial and commercial. Gradually, the local banks, with their study of local needs, have become absorbed in the London Joint Stock Banks with their innumerable branches. These large consolidations have drained the provinces of money, and have thereupon become the primary factors in carrying on the international banking of the world. If Germany purchased wheat in Australia, or cotton in America, or jute in India, or any nation purchased anything anywhere in the world, the commercial transaction was, almost without exception, financed by bills on London. London became the clearing-house of the world.

These vast financial transactions have been secured on bills accepted by approved banking institutions. The one relevant question is as to the liability of the acceptor and the rate of interest to be paid. No question as to the origin of the bill or the nature of the merchandise covered is the subject of enquiry. The bills then pass from bank to bank as freely as Government currency or Government securities. Prior to the War,

therefore, it was only necessary to possess such bills in order to secure any sum required. If money was tight, the rate of interest rose and thereby attracted to London the additional credits. Beneath the surface, London was always in possession of a great credit, able, by raising the rate, to call in her large outstanding balance.

Under such a system of international banking, any nation could, by a system of banking acceptance of drafts, negotiate in London bills to a colossal amount, always provided the total volume was within the apparent credit resources of the accepting banks and the commercial activities of the nation concerned. Large sums were loaned to America from time to time, through the medium of such finance bills, to move cotton and for other purposes; but the greatest use of this international reservoir of banking credit was made by Germany through her great banks, such as the Deutsche Bank and the Dresdner Bank.

Germany has, indeed, made a close technical study of the possible functions which a bank could perform in the aid of manufacture and commerce. Her banks were equipped not only with machinery for international banking, but with the most carefully organised departments for dealing with various branches of trade. They went further even than the study of these great industrial problems with a view to financing their needs; they took a direct and in some cases controlling interest by purchase and ownership of shares. For example, in the chemical trade a German bank owned a large portion, if not a majority, of the shares in one of the greatest of the dye-stuff companies, that at Elberfeld, known as the 'Farbenfabriken vormals Friedrich Beyer & Co.' A corps of experts trained from the business point of view, whose duty it was to study each industry and collect all the possible data thereon, was established in these banks. Therefore, if a manufacturer came, let us say, to the Deutsche Bank, and presented his plans for an industrial undertaking, he was at once put into communication with experts in his own line of business; and all the resources of knowledge and experience, including the reports of the Germans in British Consular pay, were placed at his disposal. If the bank, knowing the entire subject, decided to support him, it might first invest in

his corporation; in any event, it would give him a large line of credit. Indeed, it has been calculated that 90 per cent. of German industry before the War was done on credit and on a basis of only 10 per cent. capital. Far the greater part of the money came directly from London, and quite a fair portion from Paris. Credit was given the manufacturer by authorising those who sold to him to draw bills against his purchases in foreign countries or otherwise; and these bills, accepted by the Deutsche Bank, or other finance bills created in their stead, were then available for discount in London under the system above explained.

In order to elucidate fully the working of this plan, it is necessary to describe the methods adopted in Russia by the German commercial men, assisted by their banks. Russian credits are very long; the shortest period during which it is reasonably possible to secure an agreement to pay is one of nine months. At the end of that time, an extension of credit is probably necessary for an additional period of from three to nine months. It is obvious that the English merchant cannot give such long credits out of his own capital; and it is equally clear to any one who knows English banking methods that aid from English banks in giving such credit is quite out of the question. Consequently, the German merchant got the business. He arranged with the Russian bankers to guarantee the ultimate credit, and, being thus armed with the necessary credentials, was able to obtain a discount from his German bank as against his sales. Then the German bank through the medium of accepted bills, promptly obtained the necessary money in London, renewing so long as was necessary. Thus indirectly the English bank loaned to Germany the money to enable the German trader to destroy the business of the English, whom it refused to finance in like manner. The handling of credits in South America was similar; and in China, the German merchants, assisted by their banks, were rapidly overhauling the older established English houses when the War came on.

We have no intention of implying that the German banking system is in itself perfect or superior to the English. It is more than questionable whether a banking

concern should both finance a business and become a stockholder in it. The point to seize, however, is that this system, which has been built up with great care, is organised so that it can secure British banking credit on cheap terms, and then with its aid can advance the industrial and commercial interests of Germany. It is admirably adapted to achieve this end; and, so long as British banking credits are open to these uses, the German banking system will operate to build up successful competition with English trade. It is, of course, quite another question what would happen in these great German banks, with their immense investments in industrial enterprise, if the reservoir of banking credit in London and in Paris were closed to them.

The system of banking in the United States, now unified and expanded by the new Federal Act which took effect at about the beginning of the War, is for the most part a system of industrial and commercial banking very similar to the German, but without the feature of investment by the banks in industry. It is usually arranged that the borrowers should at least once a year clear up their banking loans. In the opinion of the American banker, it is not the function of the bank to supply fixed capital; but he is always prepared to finance against quick assets which constantly liquidate themselves. To use an instructive illustration-when the Southern cotton mills were formed, it was customary to subscribe the capital to be put into the plant and buildings, while the money ordinarily known as 'working capital,' invested in raw cotton, materials, etc., was financed by banking loans. Such loans were made on unsecured overdrafts. Thus a concern with a capital of, say, a million dollars invested in plant and machinery could borrow whatever amount was needed for raw materials, operation, etc. These Southern cotton-mills have been almost universally successful, and have transformed the Southern towns in which they are situated. In many cases they have now accumulated immense capital and have expanded far beyond their modest beginnings.

Some of the large banks in the United States, like the First National of Chicago, make, as do the German banks,

« PreviousContinue »