and dead Act of Parliament. It avails not to say,-as does our Professor vehemently and frequently, that if the bank had issued notes, the public would not have retained them. How does he know that? How can he possibly prove it? What would have been,' we do not undertake to prove; though, when people hoard notes, they may retain them far longer than could have been conjectured. The additional 800,000l. of 1857 were retained; and five millions in 1825. Moreover, such argument evades to notice, what is the attested fact, and what might a priori be expected, that dread of the operation of the law causes hoarding, causes the desire of more notes. Again, suppose for a moment that the ruin would have been just the same, even without the law; then one evil of the law is, that the imprudent can screen their imprudence by laying the blame on the law.-Bankers and merchants see, as well as feel, that the law, so far as it does anything, does precisely the opposite of what common sense requires. Every fact on record goes to prove that they are right; and they do not deserve to be put down as ignoramuses, even if many City men talk nonsense about the export of gold.

To sum up against Lord Overstone's sliding scale. To have too much note currency is well provided against while notes are convertible; to have too little, in a trading community, under our credit system, where rich men are great creditors and great debtors, means, in a crisis, undeserved ruin to thousands. How much is ENOUGH, no one can say abstractedly. In a country of chronic distrust, as Turkey or recent Spain, even coin is buried, and nothing is enough. In a spasm of distrust, a far larger currency than ordinary is needful. The law cannot possibly know how much is enough; for what is plentiful to-day, may be too little in half a year. The Act

of 1844 has presumed that the fifteen millions which the Government happens to owe to the Bank, will be always enough note-currency for England. To call this presumption' ignorant' would be feeble language. 'Fatuous' is rather the word; for there is no imaginable connection between the accidental debt of the Government and the need of an industrious people for currency. The legislator fancies that he knows how much is enough; perhaps he does know the average. But to fix the supply immovably, is to provide that in a time of DISTRUST ruin shall be double or tenfold.

Has then the Act of 1844 no positive merit with Prof. Price? It has. He tells us both what it has not done, and what it has done. He requests us to note the former well; therefore we extract his words, pp. 135-137:

I believe that not a single person ever suffered loss in Scotland from the nonpayment of bank-notes; and we know this to be true of the Bank of England at all times when its notes were convertible, and not forbidden to be paid in gold. There never has existed any practical motive, much less any practical necessity, which called for a change in the systems of Scotland and of the Bank of England. The Bank of England note, since the Bank Restriction Act was repealed, and payment on demand enforced by law, has enjoyed the most untainted reputation for solvency and credit. The Act of 1844 has not rendered the Bank of England note ONE WHIT better or sounder or more deserving of circulation, than it was before that period. It is very desirable to note the fact well. . . . . The Act was

designed as a remedy against drains [of gold]; an absurd and impracticable scheme. [But] public opinion recognised that the paper-money issued by these [the country] banks did not fulfil the indispen

sable condition of solvency. . . . Bankers who conducted their business ill were manifestly unfit persons to be entrusted with the function of supplying public money. . . The remedy came in 1844; and whatever else may be said of the Act then passed, it is certain that so long as it remains in

force, the special disasters of 1825 can never

recur.

The Act of 1844 has two different

parts, either of which may be destroyed, and the other left. The former operates solely on the Bank of England, and not on the country banks. The latter operates solely on the country banks and not on the Bank of England. The former alone has been generally censured in London. It destroys the con*rol of the Bank of England in every langerous crisis over the issues for which it is responsible, enacts a sliding scale, and decrees the absolute supremacy of gold. Professor Price declares that nothing of this was wanted. Nevertheless he defends this first part of the Act by the second part, which has no logical connection with it whatever. The second part forbad new banks of issue, and limited the issues of those existing to the average of their recent circulation. This is surely a very lame defence of the first part of the Act. But neither have we any conviction that the Act deserves credit on the second head; and the topic is not immate. rial.

In 1823 the infamous Congress of Verona sent the French armies to destroy the constitution of Spain, which had been framed by the nation with English sympathy and recognition, when by our aid liberated from Napoleon I. Mr. Canning, then Foreign Secretary, was indignant in the extreme, but England alone could not act against Russia, Austria, Prussia and France. The Duke of Wellington was sent to Verona to protest: and, protest being vain, Canning called a New World into existence' (according to his celebrated boast) to redress the balance of the Old.' In short, he recognised the independence of the Spanish colonies, after stirring up President Monroe to pronounce the celebrated declaration, that if the European monarchies endeavoured to reconquer them, it would not be

matter of unconcern to the American Republic. In consequence English merchants rushed headlong into the new markets of Mexico and other new States, formerly colonies of Spain, still half-formed, ill-governed, ill-organised. out rightly knowing their wants, their roads, their means, or time to investigate their trustworthiness, shiploads of merchandise were poured in. The wonderful activity of trade in 1824-5 so delighted Mr. Robinson,' then Chancellor of the Exchequer, that his speeches earned for him the name, Prosperity Robinson. But as 1825 wore on, it became notorious that our goods had been flung away by millions. First merchants, then country banks, then London banks suffered ruin and panics. But the cause of the ruin was not that the country bankers had issued too many notes, but that merchants had ignorantly and fatuously sent out too many goods. Now Professor Price accepts with praise an Act which forbad in future any NEW English banks from issuing notes at all, and left the OLD banks which alone ostensibly could be blamed, to continue their issue! This also was nineteen years later, and after it had become lawful to have more than six partners. We can see no logical relations here at all.

Moreover, as far as we can understand, the unfrequency of panic to the distress of issuing banks has depended on quite a different cause, viz. the suppression of one-pound notes. A chief reason for suppressing them was, the facility which they gave to passing forged paper. But besides, poor and ignorant noteholders are most liable to panic, so that a bank issuing small notes is peculiarly exposed to a sudden run. Are we wrong in believing that this cause played a large part in the disasters of 1825, the bankers

having been previously brought low by the reckless trading of the merchants? On the whole, it does not appear to us that Professor Price makes out a case for either part of the Act of 1844.

We think we need not apologise for dwelling so long on this Act. It is practically the main topic of these lectures: practically also the great subject for Parliament. The sliding scale sleeps for ten years at a time; but no one can say when a new crisis will happen, which it may kindle to an explosion. We have, at length, a Prime Minister whose reputation in finance makes a reform of this Act morally possible. Neither Russell, nor Aberdeen, nor Derby, nor Palmerston would have had courage to overthrow Sir Robert Peel's financial work. Mr. Disraeli, indeed, has all the courage needful. We speak with respect for the point of view from which we think Sir Robert viewed the Act. His paramount object seems to us to have been, gradually to extinguish all private issues of notes; strip the Bank itself of their control; finally absorb bank-notes into strictly Royal notes, and make the Royal currency twofold-notes and coin. He could not do this at once; but he thought his successors would complete it. In the sliding scale, which is the peculiarly baneful part of the Act, he probably trusted to Lord Overstone's practical judgment.

If ever Mr. Gladstone take up this question, he will insist upon dealing with it by clear scientific principles, without which it is impossible for Parliament to reason about it, or know what is being done. Nothing forces the State to become our letter-carrier, nor to make our notes, nor, we may add, to make our coin. Merchants in Turkey sit loose to Turkish money, and make contracts in that of Spain or Austria, or in ducats of Venice, Holland, Russia. In old

Rome individuals coined copper, and large payments of the State itself went on by Greek coin. Indeed those of us who are elderly can remember when copper coined by private firms circulated pretty freely in the market with the copper of George III. and George II. It is for the State to choose whether it will coin money or not, whether it will carry letters or not; but if it forbid individuals to do these things, then it is bound to execute the task well and thoroughly itself. So, it is not bound to furnish bank notes; but if it forbid private persons from this function, then it binds itself to do the work effectually, and make no arbitrary exceptions. There is here an obvious possible compromise. The Government might issue gold notes itself, and make them legal tender, leaving it open to others to issue notes based upon any or every form of property. Acceptance of the latter class of notes would of course be optional. A minimum might be imposed on them, as said above, to avoid forgeries and public distress. By gold notes we understand transferable notes, which attest that the holder is entitled to a certain sum of gold coin actually in store. The inscription on them might run thus: The bearer shall receive on demand [one hundred] gold sovereigns reserved for his use in the Royal Mint.' The advantages of paper money are twofold. The former is of very small comparative importance, viz., the saving of interest on the worth of the metal, when we employ paper to do the work of gold. Secondly, what is of more value, besides saving of wear to the gold, the paper is lighter, easier to carry or transmit, easier to conceal, easier also to trace if stolen. The second class of advantages are retained by gold notes, the former only is sacrificed. If a million's worth of such notes were current, it would be instructive in every

crisis to observe whether they ever fetched a premium over those of the Bank. The experience of this cen tury seems to assure us that they would not. If to have one million, or even twenty millions of gold sovereigns in store conduces to safety and dignity, we see no cause to moan, like a usurer, over the loss of the interest of the gold,-perhaps 6d. a head per annum on our whole population. What is wealth for, if not to maintain safety and dignity? Sir Robert Peel moved in this direction in his celebrated Act. So far, we do not venture to disapprove; but if the State restrict its own notes to a gold basis, it must not forbid others from issuing notes (say of ten pounds or twenty pounds and upwards) upon the basis of all tangible property. Then distressed traders, who had property not instantly marketable, would get 'accommodation.' But at present we do not know what the State consciously undertakes. By forbidding new banking houses, however strong, to issue notes, it seems to take that function entirely for its own; yet it fulfils one side of it only, by limiting itself to gold. Again: it makes the Bank of England note ordinarily legal tender, as though it were State money; yet it is not State money, for the State does not guarantee it, and the Bank is at last bound to cash it. Bullion must be kept for all issues above 14 or 15 millions. Why this limit? It is meant to be scientific, but it has no tendency to secure payment on demand. The sum in question is said to be the Government debt to the Bank; but if there were to be a universal run on the Bank for gold, those who needed the gold would insist on having it instantly. The ultimate responsibility of the Government would not save the Bank from bankruptcy. The whole is a chaos. It is not scientific, nor yet is it practical. It neither attempts

to estimate, as bank directors do, what reserve of gold suffices (which must vary from time to time); nor yet does it, like gold notes, honestly keep in store the representative of every note issued. How can a Parliament reason and compare opinions when there is no basis proposed to reason upon? An Act without a basis is a mere EDICT from a powerful minister, carried by the force of his character and of his majority.

In Hungary, where many who are rich in land are deficient in marketable capital, it was attested by Kossuth that a land-bank was found very useful. If the English law did not interfere, who shall say that a great bank might not arise, supplementary to what we must call the Government Bank, and advance a new paper currency to those who could give security in any sort of property? If this paper were payable in cash and Bank of England notes, not on demand, but at seven days' sight, and the larger sums (say, five hundred pounds and upwards) at a month's sight; such currency would, if perfectly honest, satisfy those depositors in common banks, who in a crisis withdraw their funds through terror: thus the present bank-notes (payable on demand, and legal tender), would be economised. That the law should a priori forbid such possible developments, appears to be infatuation. Certainly its prohibitions impose on it grave duties, which it now neglects. But to find any principle in the present mixing up of the Government with a private banking establishment, is impossible.

Professor Price remarks on an error of generalising into which even Mr. J. Stuart Mill has fallen, in saying that the 'Money' in the market is equivalent to the goods. in the market. The proposition is evidently indefensible, even if money include cheques and bills. Professor Price gives useful prominence to

the strangely neglected fact, that coin and bank-notes are by far the least used of all the media of exchange. To the market of the world they are what cash in the pocket is to one's quarterly income: hence Professor Price calls them the 'small change' of the market. The vast mass of payments is made by cheques for the home trade, bills for the foreign trade. The London Clearing House alone, week by week, cancels cheques amounting to several millions sterling. As a telling fact, Sir John Lubbock's analysis of nineteen million sterling, paid into his bank, is adduced. It consists of 18,395,000l. in bills and cheques, 487,000l. in bank-notes, only 118,000l. in coin: that is, about 2l. 118. 3d. per cent. in banknotes, and 128. 5d. per cent. in coin. Justly may this be called the small change. But although this is the normal state, in which coin pays an ultimate balance only, yet in panic the cheques and bills have no sure basis; and no argument can be drawn from this interesting fact in disparagement of the necessity of such a note currency as can expand, if requisite, and forestall or instantly allay needless panic.

We do not wholly go along with Professor Price as to inconvertible notes. Perhaps from haste and inadvertence, he omits to notice (at least we cannot find any notice) that their inability to pay foreign debts is an essential cause of depreciation to them, whether they are few or many: hence no proof of their being 'in excess can be founded on the fact of depreciation. We have very much to say here, but our limits forbid. The terrible mischief is the extreme difficulty of going back to specie payment, when the issue has been large. Whether notice be given or not given, the evils are great. If the depreciation is considerable, it is impossible to hinder speculation and hoardings, unless the return to specie payment be very sudden; which implies a large mass of gold already in hand. Our transatlantic brethren have yet to show us another great example of skill and energy; and we trust, under their new and vigorous President, Southern peace will be at last established, Southern industry revive, and large armies become needless after which they will not long. leave their currency in disorder.

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