Summary.

The situation may be summarised as follows:—Our currency is formed of a maximum of credit based upon a minimum of legal tender metallic money. The expansion of commerce which follows increase of population is mainly supported by an extension of this credit, manipulated through an ingenious and highly developed system of banking. (See "Lombard-street," by W. Bagehot.) New credits are formed of people's savings, representing the unconsumed portion of the profits of industry, which is periodically added to the public wealth as new capital; and so long as exchanges are effected at level prices and obligations are met with fair regularity, commerce is sound and healthy. Yet a nation's trade is apt to be thrown into disorder at any moment for want of a monetary system which can be successfully used to support credit when something happens to disturb the even course of commercial exchanged and legal tender money is called for. At such times financiers and bankers, who art the first to perceive signs of approaching danger, look to the Bank of England d affording great possibilities, for a comparatively small issue of notes in excess of the legal quantity would save many serious situations if done promptly before creditors had time to become alarmed, But this is never done, and many millions' worth of the people's savings are lost, and incradicable despair seizes hold of many thousands of human hearts before the Government decides to take the only course which can put an end to a financial panic, and sanction the further issue of as many notes as will effect the purpose. Instead of making this action exceptional and dilatory, and under the taint of failure, surely frequent and bitted experiences must have amply proved that it would be much wiser to make this power leading feature of the bank's constitution, to be exercised at the discretion of the directors, not tardily and spasmodically, but continuously and judiciously, as occasion might demand. There would be no danger then to public credit from allowing any business concern to go into prompt liquidation, however large the amount involved, if proved to be hopelessly insolvent, because it would be well understood that all sound businesses would receive ample support, and rotten branches could be cut off without creation serious public alarm.

It therefore seems an absolute necessity that the creation of a Federal Bank of Issue, on the lines wisely laid down by the Sydney Conference of Bankers, with some such modifications as are herein suggested, should, next to the settlement of the till be amongst the very first measures to engage the attention of the Federal Parliament; and that each State should take steps to establish a State Bank in touch with the Federal Bank of Issue, in order to enable it economically to carry out its land purchase and land settlement operations; to aid municipalities, county councils and Credit Foncier societies for the better housing suburban and rural populations. The rapid and solid progress of the nation and the expansion and permanent safety of our commerce depend upon the elastic and stable currency which such institutions would provide.