London discount market

This work is the most important contribution in recent years to a subject on which lerle has been witten. It is an admirably clear study of the workings of the London discount market nd in relation to the British banking system, with which it is very closely liked.

The market itself is dominated by twelve discount houses which deal in short-term assets of varying liquidity. By acquiring bille of different kinds at an early stage in their term and reselling them towards maturity, the houses fulfil two important functions they create a market and establish prices for bills, and they hold these assets during the period of their existence when they are least attractive to the banks and other financial institutions. Although the individual transactions do not yield great profits to the discount houses, the turnover is enormous on average Lasom. a day and this makes the system economically viable.

The book consists of three sections, the first of which is an introduction. The second deals with the theory of centralised banking, an understanding of which is essential to grasp the significance of the market's rôle; and with the day-to-day routine of the discount houses nd the way in which they are organised.

Pacy is a summary of the history of the market from its beginnings in the early nineteenth century to the present day. Every aspect of it is taken into account and each of the influencing factors is briefly discussed. The Bank of England plays a very large part in the history of the market-indeed, it is by the Bank's grace that the discount houses are able to continue business-and the pattern of this role is clearly outlined in this section of the book. Professor Scammell finishes by indicating the future trend of the discount houses: the range of activity will probably grow faster than in the last few years. This is because the market's business has undergone a subtle but important change since its inception a point which emerges clearly in the concluding chapter and it has now become, largely through the Bank of England, a medium through which public finance is administered, whereas formerly it was a private market dealing mainly in commercial bills and bonds.