The currency question : considered in relation to the Act of the 7th & 8th Victoria, chap. 32, commonly called the Bank Restriction Act / by George Combe.

George Combe

Date:: 1856

Credit: The currency question : considered in relation to the Act of the 7th & 8th Victoria, chap. 32, commonly called the Bank Restriction Act / by George Combe. Source: Wellcome Collection.

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$sited when the notes were issued, that they may pay their own debts to foreigners with it—after all this, the Chamber desire that the Bank should not give back the gold represented by their notes, hut that they should issue more notes, to he entangled in a com- merce already so restricted in real transactions, as to be incapable of maintaining in circulation the notes previously issued! In England, bank notes never are returned extensively, accompanied with demands for gold, until a contraction has taken place in trade, which has rendered it incapable of maintaining them in circulation. The return of the notes to the Bank is merely a symptom of an already existing commercial collapse, and is not the cause of it. In such circumstances, to issue more notes, not payable in specie, or in anything else, would be a purely noxious absurdity. In our next remarks we shall advert to the case of the Provincial Banks. [From the Scotsman of December 12, 1855.] In our last article on the Currencv, we stated that when the Bank of England buys gold, it pays for it in its own notes. We now add, that the English provincial banks also, so long as they keep within the limits of their authorised issues, buy gold and pay for it in their own notes, although not so directly as the Bank of England does. With their own notes they discount bills payable in London; send these to their London agents, who receive payment of them in Bank of England notes, with which they procure gold from the Bank, and send it to their constituents. In their case, also, the gold is held in deposit till the holders of their notes request them to pay it over to them; and they lose nothing except the cost of the paper and printing of the notes, and the fraction of the stamp duty corresponding to the time during which the notes are in cir- culation : the double return, on capital and unsecured note circula- tion, enables them to bear this trifling expense. It is only when they issue beyond the amount of their authorised averages, that they must use gold or Bank of England notes, which they procure out of their capital; but this excess of issue is purely voluntary on their part, and if not profitable need not be made. The Scotch Banks are included in the Act of 1844, and most of these observations apply to them. There are some peculiarities, however, in their circumstances, which require to be mentioned. The foreign trade of Scotland is adjusted chiefly through bills pay- able in London, and gold is scarcely ever demanded on a large scale from the Scotch Banks. Their notes are used as currency in settling domestic transactions, and, on certain days, are exchanged—that is to say, the notes issued by each bank are brought back to it by all the other banks into which they have been paid; balances are struck, and every debtor bank pays the balance which it owes to the creditor banks in Exchequer Bills, or in bills payable in London. Practically, this is equal to paying the balances in gold ; for Exche-$