the Public Debt, and this permission still continues.

If this permission had been carried out to its legitimate conclusion, the National Debt and the capital of the Bank of England would have been one and the same thing, and the paper notes of the Bank would have been nearly £800,000,000.

As Mr. Macleod observes; this fundamental principle of the Bank of England was as erroneous as the Mississippi scheme, and if this principle had been carried out much further, it must have ended in universal ruin; but that, in all these cases, such as the Mississippi scheme, the Ayr Bank, the French Assignats, or American banking, the mischief is not developed until the issues exceed a certain limit. In the case of the Bank of England, the mischief has been prevented from producing its inevitable consequences by rigidly restraining it within that limit. The depreciation of the issues is the evidence that the certain limit has been exceeded. That the Bank of England Note has not been depreciated, is evidence that the principle has not been carried far enough to develop the mischief.

The idea, therefore, of basing a paper-currency upon property, or commodities, or upon public stock, is essentially erroneous, and if carried out to its legitimate consequences, must terminate,

as it did in France, in 1796, and in America, in 1837-9.

But the Bank of England being based, from its commencement to the present time, on this vicious principle, the first step to the re-constitution of the Bank of England on a sound principle must be to restore the borrowed capital of the Bank.

This must be the foundation of the Bank of England, otherwise it is a Bank without capital, and must be unequal to its purpose and object.

The next important step must be to enlarge the credit capital of the Bank of England, by extending the power of the Bank over the issue of notes on Government securities.

That the safe limit has not been exceeded by the issue of £14,000,000 of Credit Notes is manifest from the fact that these notes have never depreciated. The issue might be extended to £40,000,000 or £50,000,000 on the same security with equal safety, the security depending on the solvency of the British Nation.

The fallacious theories which have so long bewildered the banking and commercial mind. with regard to over-issues and over-trading will be passed over lightly here, the object being to expose the fundamental fallacies of the Bank Charter Act.

No practical purpose is now to be served by further discussion of the wearisome questions. about Metallic Currency, and Paper-Currency, and how these are affected by Foreign Exchanges.

We never have had, and never can have, a wholly metallic currency. We have had a wholly and inconvertible paper-currency, and that, whilst it lasted, was an injustice and a disgrace to the nation. But we have paid for that vicious system, and got out of it, and are not likely to go back to it, whilst common sense, not to say common honesty, prevails in this country.

We have now a mixed metallic and paper-currency, based on bullion, as the acknowledged measure of value, and the only true basis of the representative value.

The convertibility of the bank-note into gold coin of the realm, on demand, is the foundation of the commercial honour and prosperity of this country, and must be preserved at whatever

cost.

To show that the convertibility of the banknote can be preserved at a much less cost than under the existing system, and with equal safety, is the present object.

CHAPTER IV.

MONEY, CURRENCY, AND CAPITAL.

MONEY is currency of intrinsic value.

The metallic currency is called Money, and the Paper-currency of all sorts is termed, Security for Money. These securities for money, or the paper-currency, are divided into two general divisions, firstly, promises to pay money, called Promissory Notes; and secondly, orders to pay money, called Bills of Exchange. Each of these general divisions, again, is divided into several varieties.

The Sovereign, or Pound, is 123 274 grains of standard gold, 22 carats fine, and 2 carats alloy. The sovereign was a new gold coin, made current by proclamation, of the value of 20s., on the 1st July, 1817.

Currency is that which passes current from hand to hand, for the transfer of Debt. It is evidence of a debt due to the possessor of it, proving that he has rendered services for which he has received no equivalent, but which he can

demand at any time. It may, therefore, be laid down as a fundamental conception, that Currency and Transferable Debt are convertible terms; that whatever represents transferable debt of any description is Currency; and that, whatever material the currency consists of, it represents Transferable Debt, and nothing else. Therefore, where there is no debt, there can be no Currency. Where the exchanges are equal, there is no debt, and there can be no currency. The Debt represents the precise inequality of the exchange, and where there is no exchange, the debt must equal in value the service rendered. Hence it is clear that the use of currency is to supply the defect of the exchange, or, rather, in most cases, to do away with the necessity of an exchange. Its real use is manifestly to enable commodities to circulate, or move from the possession of one person to another, or to enable one person to render another services without the necessity of an exchange. Hence,The use of a Currency is not to facilitate exchanges, but to abolish exchanges.

Circulation is the amount of the sum total of all the transferences of the currency. It is generally used as synonymous with money and bank notes, and more particularly the latter. Thus, the number of notes issued by the Bank of England, or any other Bank, is called its circulation. But this is an objectionable term.