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The Pamphlet Collection of Sir Robert Stout: Volume 82

Mr Gladstone

Mr Gladstone

said briefly but emphatically:—"The profits of issues (banking issues or notes) belongs to the State, and what is much more important than the profit, the responsibility of issues also belongs to the State." Mr R. H. Patterson, an eminent economist, in his valuable treatise on "The Science of Finance," admits the principle "that the State itself ought to be the fountain of paper currency—assuming the cost and responsibility of the issue of notes, and thereby entitling itself to the profit which may accrue from such issues," to be intelligible and quite justifiable. The clear-headed Henry George, in discussing the functions of Government in his "Social Problems," says:—"It is the business of Government to issue money. This is perceived as soon as the great labour-saving invention of money supplants barter. To leave it to every one who whose to do so to issue money would be to entail general inconvenience and loss; to offer many temptations to roguery, and to put the poorer classes of society at a great disadvantage. These obvious considerations have everywhere, as society became well-organised, led to the recognition of the coinage of money as an exclusive function of Government. When, in the progress of society, a further labour-saving improvement becomes possible by the substitution of paper for the precious metals for the material of money, the lessons why the issuance of such money should be made a Government function becomes still stronger." He adds—"The legitimate business of banking—the safe keeping and loaning of money, and the making and exchange of credits—is properly left to individuals and associations; but by leaving to them, even in part, and under restrictions and guarantees, the issuance of money, the people of the United States suffer an annual loss of millions of dollars, and sensibly increase the influences which exert a corrupting page 10 effect upon their Government." The late Mr Walter Bagehot, in his interesting volume, "Lombard Street," indicates an opinion that a Government should as a rule keep its own money, and that it should not give peculiar favour to any one bank, and by entrusting it with the Government account secure to it a mischievous supremacy above all other banks. An able writer on our monetary system, "The Author of the People's Blue Book;" in an excellent treatise on "The Bank of England and the Organisation of Credit in England" (2nd edition, 1866) states that it is "a gross error that issuing notes has some relation to banking, whereas there is none whatever; the issue of notes, representing the coined money of the realm, being a sovereign or State prerogative, to be exercised only for the benefit of the community." He characterises the notes of a private bank, not being a legal tender, as being "of the nature of a spurious coinage practically forced upon the ignorant and unwary." If the State, then, resumes its sovereign right over the issue of currency, it is doing no wrong to the banks, who have usurped a privilege to which they have no just claim, and the exercise of which is found to be prejudicial to the public, especially in the time of panics, when the ordinary and necessary internal circulation is hurtfully contracted and restricted by them, causing insolvency and loss even to men of wealth and substance. Besides, as has been already observed, and is also stated by Jevons, "It is no necessary function of a banker to issue promissory notes, and a great many banks exist in England without any power of issue." The London joint stock banks, doing a far larger business than any similar institutions in the world, issue no notes of their own. Every year, by the application of