anks and the discount houses," he describes
briefly and clearly the respective functions of these different bodies in
the organism of the city, according to his own close observation as a
banker himself, knowing the ways and thoughts of the men he describes, and
as a man of business likewise in other ways, knowing at first hand the
relation of banking to the trade and commerce of the country. _Lombard
Street_ is perhaps a riper work than _The English Constitution_, as its
foundation was really laid in 1858 in a series of articles which Bagehot
then wrote in the _Economist_, though it was not published till the early
'seventies, after it had been twice rewritten and revised with infinite
labour and care. _Lombard Street_, like _The English Constitution_ in
political studies, is thus a new departure in economic and financial
studies, applying the same sort of keen observation which Adam Smith used
in the analysis of business generally to the special business of banking
and finance in the complex modern world. It is, perhaps, not going too far
to say that the whole theory of a one-reserve system of banking and how to
work it, and of the practical means of fixing an "apprehension minimum"
below which the reserve should not fall, originated in _Lombard Street_ and
the articles which were the foundation of it; and the subsequent conduct of
banking in England and throughout the world has been infinitely better and
safer in consequence. A like note is also struck in _Physics and Politics_
(1869), which is a description of the evolution of communities of men. The
materials here are derived mainly from books, the surface to be observed
being so extensive, but the attitude is precisely the same, that of a
scientific observer. To a certain extent the _Physics and Politics_ had
even a more remarkable influence on opinion, at least on foreign opinion,
than _The English Constitution_ or _Lombard Street_. It "caught on" as a
development of the theory of evolution in a new direction, and Darwin
himself was greatly interested, while one of the pleasures of Bagehot's
later years was to receive a translation of the book into the Russian
language. In _Literary Studies_ (1879) and _Economic Studies_ (1880),
published after his death, there is more scope than in the books already
mentioned for other characteristics besides those of the scientific
observer, but observation always comes to the front, as in the account of
Ricardo, whom Bagehot desc