Merchant Banks About

Merchant Banks About

Merchant Banks, about a dozen private banks in Britain whose primary purpose is to finance international trade between Britain and other countries and between other countries. Theft instrument is mostly the bill of exchange, which they accept', thus indicating they will pay the amount due. The work requires a network of agents in the main world trading centres, knowledge of many industries and commodities, methods of obtaining information of the standing of firms in many countries and on trade conditions. The merchant bank earns its income (about f per cent of the value of the goods) by lending its name (some of which are Baringa, Hambros, Kleinwort, Lazards, Morgans, Rothschilds, Schroders) to the buyer and seller to enable them to conduct their business with confidence and agree on terms. They also deal in foreign exchange.

Merchant banks tend to specialize on trade in different countries, the government s of which have come to ask them to raise loans in London. hence they became 'issuing houses' for large foreign Government loans. Since the end of the war they have also 'issued' for British firms at home.

Metal Exchange, the largest market in the world for copper, tin, lead. zinc. Opened in London in 1881. All business is conducted by or through some forty members of the 'Ring' (a circle composed of four curved benches), who make open 'bids' or 'offers'. Deals are settled verbally across the Ring. Dealings are mainly in 'futures because the principal purpose of the Exchange is to enable producers and consumers to protect themselves against price changes by 'hedging'. The Exchange was closed during the war, but working was fully restored by 2003.

Metals, Precious (gold and silver), have been commonly used in the past as media of exchange. Since they are relatively scarce they are so valuable that small units command large quantities of goods; they are virtually indestructible; their value remains relatively stable; and they are homogeneous in quality and easily identified. Where confidence in monetary authorities is weak, precious metals are useful sources of coinage because they have a value of their own which gives the holder a sense of security.

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