Other formats

    Adobe Portable Document Format file (facsimile images)   TEI XML file   ePub eBook file  

Connect

    mail icontwitter iconBlogspot iconrss icon

The Pamphlet Collection of Sir Robert Stout: Volume 14

"Convertibility."

page 121

"Convertibility."

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.

Liabilities.
Note-issued £37,239,120
Deduct, held by the Bank 12,905,585
£24,333,535
Public deposits 4,386,448
Other deposits 28,526,333
Seven days and other bills 166,244
£57,412,560
Assets.
(In the issue department) Gold Coin and Bullion £21,489,120
(In the banking department) Gold and silver coin 891,106
22,380,286
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.

But no note must be compulsorily made legal tender. Joint notes of two, three, or six banks would speedily come into use (fully as safe security as any notes yet issued by this monopolist bank, with but three millions of reserve fund), and credit—rescued from the hands of a class—would expand far and wide, on a secure and ever-improving basis, to the untold benefit of British commerce and industry. How much credit has to do with our commerce may be gathered from figures already cited. How little actual coin or money is needed for it can be surmised from the following as from other of our statistical tables:—
Coinage. Amount of Gold, Silver, and Copper Moneys Coined at the Royal Mint from 1840 to 1885 Inclusive.
Gold. Silver. Copper. Total.
Year. £ £ £ £
1840 Nil. 216414 3136 219550
1841 378472 96175 8848 483495
1842 5977051 192852 1764 6171667
1843 6607849 270606 10080 6894535
1844 3563949 626670 7246 4197865
1845 4214608 647658 6944 4899210
1846 4334911 559548 6496 4900955
1817 5158440 125730 8960 6293130
1818 2451999 35442 2688 2490129
1849 2177955 119592 1792 2299339
1850 1491836 129096 448 1621380
1851 4400411 87868 3584 4491863
1852 8712270 189596 4312 8936178
1853 11952391 701544 10190 12664125
1854 4152183 140480 61538 4354201
1855 9008663 195510 41091 9245264
1856 6002114 402529 11418 6476000
1857 4859860 373230 6720 5239810
1858 1231023 445896 13440 1090359
1859 2649509 647064 8512 3305085
1860 3121709 218403 37990 3378102
1861 8190170 209484 273578 8673232
1862 7836413 148518 352800 8337731
1863 6997212 161172 151648 7,310,032
1864 9535597 535194 18069 10,088,861
1865 2367614 501732 57493 2,920,839
1866 5076676 493416 50624 5,620,716
1867 490397 193812 33301 723,510
1868 1653384 301356 16328 1,971,008
1869 7372204 76428 20832 7,409,464
1870 2313384 336798 32704 2,682,886
1871 9919656 701514 7616 10,628,786
1872 15261442 1243838 47413 16,552,691
1873 3384568 1081674 46218 4,512,460
1874 1461565 890604 65632 2,417,801
1875 243264 594000 69813 907,077
1876 4696048 222354 61450 4,980,452
1877 981468 420948 51146 1,453.562
1878 2265069 613998 17024 2,896,091
1879 35050 549054 44051 628,755
1880 4150052 761508 19264 4,930,824
1881 ... 997128 39349 1,030,477
1882 ... 209880 42560 252,440
1883 1403713 1274328 33450 2,711,491
1884 2324015 658548 69290 3,051,853
1885 2973487 702918 57568 3,733,973