overcome. They would, in the first place, of course, be very leniently dealt with,-have ample time allowed for the substitution of State notes for their own circulation, and be constituted, probably, with ample remuneration, the distributors of the new currency. Many, I am persuaded, and, among them, the very best of the country banks, would not unwillingly give up the issue of notes, which must always, for obvious reasons, be the most anxious part of their business; their example would influence others, and with all, probably, the change would be regarded with the less disapprobation, when they felt that they were interfered with, only in prosecution of a great measure of state policy; and had to submit to no other restrictions than such as were imposed on the Bank of England. But, be the difficulties arising from their opposition more or less, they are all that it is worth while to consider; difficulties of detail in making the necessary arrangements there may be, but they are such as a very moderate share of ingenuity would suffice to remove.

That serious difficulties or dangers would attend the working of such a plan, when once carried into effect, I see no reason to apprehend. At least, if there be, they must be something very different from those stated by Mr. Tooke; for any thing more thoroughly gratuitous than the difficulties he has stated,--any stronger manifestation of a disposition to create the giants he afterwards means

to slay, I must be permitted to say I never witnessed. He assumes, commenting on a plan of Colonel Torrens, that, on the separation of the functions of issue and banking of the Bank of England, in a case where the issuing department should hold 9,000,000l. of specie against an issue of 18,000,000l. of notes, and the banking department have 9,000,000l. of deposits, with a reserve in notes of 3,000,000l., a drain of 3,000,000l. or a little more of specie, might cause the banking department to stop payment, while the issuing department had yet 6,000,000l. of specie, unless, -as he says, "Government should step in to prevent so ridiculous, however lamentable, a catastrophe." Ridiculous, indeed, but one,-the occurrence of which I cannot see the slightest reason for anticipating. Supposing the contemplated change to have taken place, the functions of the bank to have been separated, or a State Bank to have been established-the Bank, in its banking department, would be precisely in the same position as all other bankers, bound to take the same precautions and to make the same preparations for demands on the part of its depositors. In some respects it would be less exposed to such demands, inasmuch as being the Banker of the State, the Court of Chancery, and other great public establishments, and having in proportion to the extent of its business, fewer mercantile accounts, it would be less called on probably for notes for the purpose of being exchanged for

specie. I am aware of no reason why, in the case supposed, the demand for notes to be exchanged for gold, should not be equally divided among all the bankers of London and the great commercial towns; nor why then, any more than now, such a demand should drive any tolerably well-managed bank to stop payment.

That the fluctuations of the currency would be very much less than at present-that a much smaller efflux of the precious metals would be required to restore the equilibrium between our circulating medium and that of other countries than is now necessary, there is the very strongest grounds for supposing; but, whatever the amount of the drain, I cannot see why a State Bank should not have the same power to meet it, as the Bank of England now; the real powers of either depending on the specie in its possession.

Under the contemplated system, the extent of the drain would be the exact measure of the contraction of the currency:-under the present system, when, as Mr. Tooke says, "the amount of the circulating medium is the consequence of prices,"-the contraction of the currency, with falling prices and adverse exchanges, will necessarily be in proportion to its previous factitious expansion. Under which system does common sense tell us there will be the greater risk of "abrupt transitions in the state of interest and the state of credit?" Under both systems-when the state of commercial inter

change between this and other countries requires an export of the precious metals-there will be exhibited the same train of phenomena; the demands of depositors on the reserves of the banks; the caution thence arising in granting banking accommodation; the rise in the rate of interest; the fall in the prices of commodities; all proceeding until the tendency to efflux of the precious metals is arrested, and the tide begins again to turn in favour of this country. Under both systems these phenomena will be exhibited; but under the system of which I advocate the adoption, . it appears to me certain, that they will be less in degree; gentler in their transition; more gradual in their succession. The necessary contraction would be begun at the right time; it would never be delayed too long; it would be precisely to the extent required, because it would not have been preceded by a previous factitious expansion; and, above all, it would not be accompanied by any absurd measures to counteract its effect, as was the case under our present system by Mr. Tooke's own shewing in 1839, when, during a diminution of its treasure from 9,336,000l. to 5,119,000l., the Bank, while it extinguished notes by giving gold for them with one hand, created them afresh by discounting at the profitable rate of 5 and 6 per cent. with the other. If there be one single proposition in monetary science which

* And in 1836, he might have added,—and on not a few other occasions.

reason-authority-and experience alike concur in placing beyond the reach of doubt, it is this—that convenience and economy are the only legitimate objects to be sought for by the substitution of paper for metallic currency. England, with her unrivalled powers of production, will be absolutely certain at all times of commanding her full share of the money of the world-when shall we be convinced that we cannot for one hour with safety retain more? We have tried for some quarter of a century, with but indifferent success, in the regulation of the currency, the various processes of watching the exchanges, acting on the rate of interest, "pumping in and forcing out of specie," agreeably to the forms prescribed by the most eminent practitioners,-would it not be well to make at least the experiment,-whether, by leaving natural causes to their free operation, the currency may not regulate itself? Is it not time to place the guardianship of the currency in the hands of those who can have no interest in its abuses, and who will act by known and unvarying laws, relieving from the care of it those who have shewn that they have either no intelligible principles for their guidance, or are incapable of abiding by them, and of whom it would be difficult to say whether the rashness, or the fears, the groundless confidence, or the tardy wisdom, have most interfered with its safe administration.