almost every year since the "principle" was first enunciated.

On the ground of any peculiar skill or experience required for the due regulation of the currency, not the shadow of a case can be made out for intrusting its issue to banking associations, whether on the principle of monopoly or competition. The regulation of the currency, the "pumping in or forcing out of bullion"-as Mr Tooke calls it is difficult it-is and complex, precisely because it is intrusted to banks instead of the Government-intrusted, that is, to bodies who have the power of issuing it on any other occasion than in exchange for the precious metals.-Separate the two functions of banker and issuer of paper money-let notes be given only in exchange for gold-let the issue of them be merely in the nature of a mint operation-a mere substitute for the process of coining a given amount of bullion, and your paper currency will regulate itself. The whole skill and science of the thing will be at an end. The watching the exchanges, the taking note of prices, the shrewd appreciation of the signs of the times, are important only as affording the means of deciding whether the currency be in excess-a fact which, under a sound system, would be as apparent as any natural phenomenon, and, I may add, as little worth attending to with any view to its control. What would be thought of the wisdom, or sanity of the engineer-who, the object being to keep the water in

the London Docks on a level with the Thames, should construct an elaborate guage to ascertain the height of the tide, and engines to pump the water in and out, when opening the gates for its free ingress and egress would answer all the purpose? Such, and no greater, appears to me to be the wisdom of a people who, wishing to maintain the equality of value of a paper currency with the specie it professes to represent, permits its amount to be regulated by the operation of any other causes than the influx and reflux of the precious metals.

But if it be true that the issue of paper money

may be regulated by a process so simple as that to which we have referred, and can be safely regulated by no other; if it be also true, that the abuses to which a paper currency is liable are of most disastrous effect on the welfare of the community, then it is clear that the due regulation of the issue of paper money falls completely within the class of those functions which the state can efficiently discharge, and which it should entrust to no other hands. I am aware of no valid arguments which can be urged against this proposition. The talk about "free trade" in banking, meaning thereby a free trade in issuing notes, is not worthy of a moment's consideration. None of the arguments which prove the advantage of perfect freedom of individual agency, in the production and distribution of commodities, have the slightest applicability to the case of paper money. To issue notes

requires neither inventive genius, nor acquired skill, nor capital, nor labour; the creation of a paper currency demands none of those qualities which are to be found only in the earnest conflict of the energies of individuals, but its due regulation does require that preference of the welfare of the whole community over the interests of the immediate agent in its emission, which from no individual have you any right to expect. There is no argument for "free trade in issuing notes," which will not apply with equal or greater force to free trade in coining metallic money; and conversely, there are none of the reasons ordinarily held conclusive for reserving coinage to the State, which are not even more cogent in their application to a like reserve in the case of paper money. Insomuch as the circumstances which determine the value of a note, namely, in the first place, the sclvency of the issuer, -and in the second, whether the currency of which it forms a part has or has not been issued in excess, are less within the competence of individuals generally to ascertain, than the qualities of weight and fineness which determine the value of a sovereign, by so much more is it the duty of the State to protect the public against fraud and loss in the case of than metallic money. paper

With respect then to the limits within which a paper currency must be restrained, as well as to the means by which those limits are to be preserved, it would appear that there are grounds for coming to

conclusions on which we may with confidence rely. The issues of a paper currency must not exceed the total amount of the metallic money which would circulate, were coin the only circulating medium, to insure their not exceeding that amount, their fluctuations must be regulated solely by the influx and efflux of the precious metals, and in order that they may be so regulated, the power of issue must be in the hands of authorities appointed by the State, and in theirs alone.

With regard to the second point to which I have referred as important to the stability of a paper currency, viz. the degree in which it should be substituted for metallic money; in other words, what should be the lowest denomination of bank note, I am not aware that any data exist from which absolute rules for our guidance can be drawn. The following considerations, however, may suffice to direct us to a conclusion on which we might not insecurely act. On the one hand we must bear in mind that, by limiting the notes to be issued to very high denominations, we lose sight, in a great degree, of the objects of economy and convenience for which recourse is had to paper money. If, on the other hand, we permit the circulation of very low denominations, we, in the first place, narrow inconveniently, as already stated, the metallic base of our circulation. In the second, we place a paper circulation in the hands of the very humblest and least informed classes, thus greatly increasing the chances

of panic,, and adding to the temptations to forgery. The opportunities for passing forged 51. notes must be rare,for passing forged 17. notes of daily occurrence; and whilst the least instructed person can detect a counterfeit sovereign, a forged note, if tolerably executed, will, in nine cases out of ten, escape discovery. Among several sums that might be named as the minimum amount of a bank note, it is true, perhaps, that no very satisfactory a priori reason could be given for preferring any one to the others; but among them the sum of 51. would certainly be included, and there is this very sufficient reason for selecting it as the minimum denomination, that, as regards England, it is so already. This sum certainly satisfies as well as any other, and perhaps better-the conditions that have been stated, on the one hand, a currency with that minimum is available to a very considerable extent as a substitute for coin. Taking the 51. note circulation of England, Scotland, and Ireland, at 30,000,000l. and assuming the gold circulation, with the additions that would be necessary to replace the small notes of the two latter countries, to be 20,000,0007. it appears that with a minimum of 51. we can dispense with 3-5ths of the coin we should otherwise require. On the other hand, we retain in the country an amount of metallic money which, added to the reserve held against the note circulation, there is, from experience, no reason to believe insufficient, and which would be yet more securely adequate to