d for the employment of their capital. It has come about
during the past few years that so far as the operation of loaning money
is concerned, the whole financial world is one great market, New York
bankers nowadays loaning out their money in London with the same
facility with which they used to loan it out in Boston or Philadelphia.
So close have become the financial relationships between leading
banking houses in New York and London that the slightest opportunity
for profitable loaning operations is immediately availed of.

Money rates in the New York market are not often less attractive than
those in London, so that American floating capital is not generally
employed in the English market, but it does occasionally come about
that rates become abnormally low here and that bankers send away their
balances to be loaned out at other points. During long periods of low
money, indeed, it often happens that large lending institutions here
send away a considerable part of their deposits, to be steadily
employed for loaning out and discounting bills in some foreign market.
Such a time was the long period of stagnant money conditions following
the 1907 panic. Trust companies and banks who were paying interest on
large deposits at that time sent very large amounts of money to the
other side and kept big balances running with their correspondents at
such points as Amsterdam, Copenhagen, St. Petersburg, etc.,--anywhere,
in fact, where some little demand for money actually existed. Demand
for exchange with which to send this money abroad was a big factor in
keeping exchange rates at their high level during all that long period.

5. High money rates at some given foreign point as a factor in
elevating exchange rates on that point might almost be considered as a
corollary of low money here, but special considerations often govern
such a condition and make it worth while to note its effect. Suppose,
for instance, that at a time when money market conditions all over the
world are about normal, rates, for any given reason, begin to rise at
some point, say London. Instantly a flow of capital begins in that
direction. In New York, Paris, Berlin and other centers it is realized
that London is bidding better rates for money than are obtainable
locally, and bankers forthwith make preparations to increase the
sterling balances they are employing in London. Exchange on that
particular point being in such demand, rates begin to rise, and
conti