The Pamphlet Collection of Sir Robert Stout: Volume 14
The following table shows how far the Bank of England can contribute support to the fiction of a metallic currency when her last sovereign and her last shilling have been exhausted. The figures may be filled in from the official Bank Return of any date latest to hand. As an instance we give that issued for the week ending 23 Sept., 1885.
|Deduct, held by the Bank||12,905,585|
|Seven days and other bills||166,244|
|(In the issue department) Gold Coin and Bullion||£21,489,120|
|(In the banking department) Gold and silver coin||891,106|
|Balance which the Bank could not pay that day, either in gold or silver||£35,032,274|
Now, no monopoly, excepting, perhaps, the Post Office, ever yet operated beneficially to the public, and this monopoly of the Bank of England, which is the foundation of a gigantic Trades Union of Money Lenders, is the most trade-destructive combination in existence. There will be no "fixity of tenure" in business until such an abomination is made an end of, and how to do this with safety to the public credit has been often suggested by sound economists.
Under the 1838 Banking Law of New York every bank was allowed to issue as many notes as it pleased on first depositing (with the Comptroller of the State) Stocks of the American Government, or of the State of New York, at not exceeding par value. Receipts for such deposits were stamped on the face of each note before it went into circulation, the breach of this proviso incurring heavy penalties. The notes were payable in hard money under all circumstances, and in case of any being dishonoured the public officer was required to sell Deposited Stocks to the full amount, and make good the payment.
For the United Kingdom we recommend a modification of this law, viz., perfect freedom of issues by anyone who first deposits (at the Mint) Bullion or Consols for the full amount, the Government receipt for the same being stamped upon the face of the note previous to issue, under heavy penalties. In case of failure to pay any note according to its tenor, the Master of the Mint to be required to sell securities by auction and pay the note within three days. On the other hand the securities and the interest thereon remain the property of the depositors, and may be reclaimed at any time on returning an equivalent number of notes.
One disadvantage incidental to the present restricted system has been that under its operation there is but one Gold Reserve, that one becoming unduly sensitive upon slight pressure. Under such a freed and improved system as is here advocated, many banks would be compelled to keep reserves, and the security for safe currency, no less than for extended facilities in trade, would be proportionately increased.