57. Again, it is asked, how will the Scotch and Irish banks continue their accommodation to their customers? I answer, they will be put exactly on the same footing as all other banks, and if so, they can have no just cause of complaint.

Others object that if paper is inconvertible, it will be no better than a French assignat during the French revolution. I answer-very true, they would be so if they were forced out in same way, in payment of government expenses, without any provision for their being withdrawn from circulation, every fresh sum issued being thus a permanent addition to the amount already in circulation; but the case in the present instance bears no analogy to this whatever; no one can procure the inconvertible paper without giving a bill which is considered good and considered to represent a valuable portion of goods which has been sold for it, and the owner must pay for the discount of this bill, and the said bill provides that at a certain day the full amount of it shall be paid into bank and taken out of circulation, in case this has not been previously done in the discharge of other engagements, so that the inconvertible currency can only be obtained by the very same process, and at the very same expense, as a purely metallic currency, or the convertible notes of the present day, and people will be equally careful of parting with what it is equally difficult to get, and equally necessary to have, as being the only legal tender; there is, therefore, no permanent addition made to the circulation.

58. But it is again objected, that if money can be raised by merely giving bills, there will be plenty of accommodation bills manufactured, and through their agency the quantity

of inconvertible paper brought into circulation will be such that it must sink in value from its superabundance.

To which I reply:-Those who make this objection forget that the commissioners are restricted merely to the discount of paper presented to them by the commercial banks; therefore, if any deception is practised in this way, it must be in the first instance practised on these banks, and if they cannot protect themselves sufficiently from any injurious extent of accommodation paper, the objection would apply to all banking under the present system, for there is no reason why it should be more successfully practised under the inconvertible paper currency than it is now; but the fact is, such practices would be rendered much more difficult by the proposed plan, for in order to have accommodation paper discounted to any extent it is necessary to have dealings with two bankers, who are of course ignorant that they are each discounting what may be called counterparts of the same fictitious paper; but when these houses come both to send in these bills for re-discount, these counterparts are immediately compared, and the practice is put a stop to; and in the case of a simple renewal of a bill, which may occasionally be a convenience to men in trade, this, it is to be observed, makes no addition to the existing circulation; the renewal being discounted to provide payment for that which is falling due, and the amount merely crosses and recrosses the counter-it is a prolongation of the time of payment but no addition to the issue; neither of these practices can ever be carried to an extent of any importance in a national point of view. Bankers likewise will now be even more cautious as not having the inducement of circulating their own notes; the fact is, however, that no extra issue arising from these causes could ever

amount to the same sum as the payment of the dividends, and yet these are not found to produce any serious bad consequences.

59. But it may still be urged, that in times of speculation the same goods may be sold over and over again, and bills passed upon each transfer, and there is no saying whether it is the first bill or the last bill which is the true representation of the goods.

The answer is plain :-They are all equally the representatives, and each in their turn are given upon the transfer of a valuable consideration, which bears evidence that the person who transfers the property considers the parties to the bill trustworthy, and therefore that the bill is good for the real value of that property. This is all that the transfer of goods can prove in any case, be that transfer made only once or a hundred times; so far therefore as the goodness of the security, the bills may be all equally good for the money. The next point to be considered is, will the circulation be increased by those bills being discounted? Now, when B buys from A, he gives him his bill, and when he, B, resells to C, he gets C's bill, but it does not follow that B runs forthwith to his banker and pays the discount to get cash for this bill, for it is the natural provision for his own bill to A, and if he does not apply it to that use, he must apply some other bill, which is just the same thing as regards the circulation.

The assumption upon which the objection is made is this: that all those persons through whose hands the speculative article has passed will all be so needy that they will forthwith no sooner get a bill than they will turn it into money, which is evidently not true. Every man in

trade must always keep past him available means of raising money when demands arise, and, as I have already stated, the more natural appropriation is to apply it to the payment of the bill he had himself given for the article. But to show that this objection is of no weight, I beg to observe, that speculation is much more encouraged now by the issues of private banks who have an object in getting out their notes, and of course speculation is going on from time to time to as great or greater extent than it would be under an inconvertible currency, and it is no more therefore an objection to the system proposed than it is to that now in existence. The legislature cannot attempt to legislate for the particular dealings of individuals, or say to this person or that person, "You may consider it very beneficial to speculate in such or such articles, but we know what is good for you better than you do yourselves, and we shall therefore take good care to prevent you." Every one must see the absurdity of any such interference; such an activity of commerce as the supposed speculation points out must be left to those interested in it exactly as it is now; the issue will then take place, as it does now, according to the extent of commercial transactions; and as the speculation subsides, the payment of the bills discounted withdraws the notes issued, or an equal amount, and never can create any enlargement in the circulating medium of importance in a national point of view. It is a thing quite beyond the province of Parliament, which might as well interfere (and with exactly the same prospect of success) to regulate the quantity every man should eat and drink, as how or in what he should speculate. I admit, the objection wears a plausible appearance before it comes to be examined, but on proper consideration there is

nothing in it, and it must not be lost sight of that all this supposed system of renewals, accommodation bills, and speculation bills are all going on at the time when the commissioners are feeling their way to that extent of term and rate of discount which, under all these practices, will bring the exchanges to par, and therefore the entire effect produced by these causes will be taken into the calculation to be made from the experience of a state of things in which all those elements are in actual operation.

60. It may still be asserted that although liability to be called on for specie cannot be considered an effectual preventative against over-issue, yet the apprehension of it has nevertheless a strong tendency to prevent it, and if this feeling was entirely removed, it might, at least, occur much oftener; and, therefore, that in this respect a serious objection must arise to any inconvertible currency.

In answer to this I have stated (Nos. 52 and 53) that the over-issue of paper during the Bank Restriction Act was occasioned, 1st, by the issue being entrusted to persons who had a direct interest in over-issuing, namely, the Bank of England and Ireland Directors and all the other bankers who issued paper money. 2d. By the extended term of discount introduced. 3d. By loans to Government and dealings in the funds, all which facilities for over-issue are corrected in the plan here proposed, which with the addition of making all either directly or indirectly concerned in evading or acting contrary to the rules laid down to be guilty of a felony, would appear (with the entire publicity given to all transactions by the proposed form of bulletin) to give satisfactory assurance that any apprehension upon the subject of over-issue was not worthy of attention; but, to fully meet the sensitiveness of the public on this point,