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of panic,, and adding to the temptations to forgery. The opportunities for passing forged 51. notes must be rare,- for passing forged 11. 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 5l. would cer. tainly 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 30,000,0001. and assuming the gold circulation, with the additions that would be necessary to replace the small notes of the two latter countries, to be 20,000,0001. 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

its object when relieved (as, under the system contemplated, it would be) from internal drain. With that minimum, moreover, the paper circulation would scarcely be at all used by the humbler classes.

The practical application of the foregoing observations, and of those in the preceding chapter on the same subject, is, of course, to Scotland and Irelandthe suppression of all notes under 51. having been already accomplished in England—and whatever may be the decision of the Legislature, as to the parties to whom the issue of notes shall be confided, it is most earnestly to be desired that the law in Scotland and Ireland, with respect to small notes, should be assimilated to the law in England. I am aware of no one valid reason for exempting those portions of the empire from the operation of that law; whilst in addition to the general reasons, there are especial and very strong grounds for subjecting them to it. The persons by whom small notes are principally used—belonging mostly to the humbler classes, are precisely, as I have said, the parties the most likely to be affected by panic, or by the other conceivable motives which create a disposition to demand payment for the notes they hold. There are at present no means of effecting that payment but in gold; we may rest assured that the gold necessary for that purpose will not be held by the bankers of either Scotland or Ireland; they will prefer holding securities paying them intérest; their recourse in times of pressure will be on the




specie in the Bank of England, and by permitting the continuance of the small note circulation of Scotland and Ireland, we incur the risk at all times, and the certain recurrence, at some periods, of an internal drain on our stock of specie in addition to the legitimate drain on that stock for the purpose of exportation.

There is another advantage which would flow from the adoption of such a system for the administration of the currency, as I have ventured to recommend; and to which, although but of minor importance, it may be well to refer for a moment, -I mean the profit to be derived by the State from reserving to itself the exclusive issue of notes. I know not any more legitimate source of revenue, nor any quarter to which the people have a better claim to look for relief from taxation. The profit arising from the substitution of paper for metallic money, is emphatically a profit to which the whole community, and not any individual members of the community, are entitled, inasmuch as it arises from the qualities and circumstances incident to a people, not in their individual, but in their collective capacity. The profit on an issue of notes does not depend, as I have already had occasion to observe, on the genius, skill, or energy of the issuer; it depends on peculiar circumstances and conditions of the state of society. Integrity and good faith so widely spread as to induce a mutual confidence as widely extended; a spirit of obedience to the laws, which gives a feeling of security of property; a sense of national strength, which leads a people to consider successful aggression from without as impossible ,-these are the qualities and circumstances which can alone permit the universal use of any forms of credit in lieu of the precious metals, and as to the common stock of those qualities, and to the creation of those circumstances, every member of the community contributes his share, so is every member of the community, even the humblest, justly entitled to a share in the advantages flowing from their operation and influence.





Mr. Tooke anticipates exceeding difficulty in carrying out any plan for separating the functions of the Bank of England, or establishing a State Bank of issue; and if a plan for such separation of the business of issue from that of banking could be devised, asserts that it “is calculated to produce greater and more abrupt transitions in the rate of interest and in the state of credit, than the present system of union of the departments.” Mr. Norman and Mr. Loyd have very wisely, he says, refrained from committing themselves to any specific plan ; and adds that, with respect to any schemes for this purpose, hazarded by less cautious writers, he has seen none which are not crude and undigested, and involving greater inconveniences than the system they wish to displace. I am, for my own part, fully satisfied, that there exist no difficulties of really serious amount in the way of the suggested reform of our monetary system-none that would not va

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