Loading ...Every note presented at the Bank of England for payment must be immediately paid in gold coin ; but as it was known that the wants of the community in this country were such as to require, for the ordinary trade, from 17 to 20 million pounds of Bank of England Notes to be always in circulation, the Bank was permitted to make use, at first of 14, and afterwards of 15, million pounds of its own notes by investing them in securities, so as to make interest, which interest the Bank was to retain for its own use ; and this enabled it to pay, and the nation had a claim to exact a payment, for such a privilege — this payment now amounting to nearly £200,000 a year — the profit which the nation derives from the issue of Bank of England Notes. Beyond this sum of 15 million pounds, the Bank is prohibited from issuing a single Bank Note without having an equivalent sum in gold in its vaults, and it is compelled to publish weekly an account of all the gold so held.
” How absurd,” writes the Daily News, ” to expect that the same amount of circulating medium can discharge the required duties when the exports and imports of the country amount to £200,000,000 as when they only amounted to £50,000,000 ! ” No one is prepared to deny that large daily transactions in commerce are calculated in all probability to require a larger amount of money in circulation than smaller transactions. I say, in all probability, — for it is not necessarily true. Banking expedients in all civilised countries, and especially in our own, have increased so enormously during the last 20 or 30 years that it is difficult to say how much, they may not supply the place of actual cash or Bank Notes. But, admitting that more ready money was required in 1865 than in 1845, the supply of currency in this country — i. e. gold and Bank Notes, forming together the only legal tender — is only limited by the amount of gold to be found in the whole world, for we can always obtain what gold we may require by simply giving our commodities in exchange. It is merely a question of time. But what has the Government or the Bank of England to do with the supply of ready money ? Ready money has never, as far as I am aware, in any country in the world, been supplied by the Government ; it has always been provided by the individuals who wanted it. All that our Government has ever undertaken to do is to stamp any quantity of gold brought to the Mint into gold coin, thus indicating its weight and purity. There is no limit to the quantity of gold which may be coined, beyond the limit of the power of individuals to obtain it; and, in like manner, there is no limit to the quantity of Bank Notes which can be obtained at the Bank of England, although the Directors are bound to retain all the gold brought in beyond the stipulated £15,000,000; so that it is an absolute fact that there is no limit placed by law in this country on the amount of gold and Bank of England Notes which may be used in circulation, excepting that all the notes beyond 15,000,000 must be represented by an equal amount of gold.
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