large borrower, or seller, in the market. The extent of its operations in this direction is chiefly regulated by the amount of the "bankers' balances," and the longer it takes to effect its object the more acute and sensitive does the market become. A healthy public A healthy public opinion that the Bank's reserve ought, as a rule, to grow with the amount of the "banker's balances," instead of as now being only brought to bear on the proportion of reserve to total liabilities, would do much to steady the market, and to remedy what the Governor of the Bank has described as the failure of the existing system of finance in the past, viz., the much larger effect upon the value of money resulting from any "pull" upon the reserve, by with-drawals for foreign countries where reserves are small.

The weekly publication of the amount of the "bankers' balances," and the other alterations which have been suggested with a view to the improvement of the barometers afforded by the accounts of the Bank of England and the other banks, would be of immense advantage to the mercantile community. But it is altogether a mistake to suppose that the more frequent publication of accounts, which do not even distinguish

the deposits payable on demand from those payable after notice, can possibly contribute to the formation of a useful public opinion as to the amount of money which should be kept unemployed by the respective banks. And, moreover, there is the fundamental difficulty as to what is "overtrading," or "trading up to the hilt." It will generally be defined as an undue locking-up of resources: the employment in banking advances of an excessive amount of a bank's deposits. The investment of a bank's surplus over and above the amount employed in its business in first-class securities would not be regarded in the City as "overtrading." Money so invested is considered quite as available as money deposited with the Bank of England or some other bank. It would be considered a misnomer to call the investment of a surplus a "trading up to the hilt." And no bank that invested a large portion of its surplus in this way would suffer in comparison with a bank which allowed its surplus to remain idle. Depositers are quite as satisfied with the safety of their money in a bank which has its surplus largely invested in first-class securities, as in a bank which keeps a greater proportion of its surplus with another bank.

To trust, therefore, to the more frequent publication of accounts which do not supply the necessary data upon which it is possible to estimate what would be a proper amount of cash reserve to deposits; to the effect of a public opinion which does not regard it as any detriment to a bank to have a small cash reserve provided it has a large amount of investment in first-class securities; to bring to bear an influence upon those banks whose cash reserves are behind the line, is fatuous.

CHAPTER VI.

ONE POUND NOTES.

THE other proposal which is likely to assume a practical form relates to the issue of £1 notes. Mr. Goschen did not propound his plan with much clearness, and in concluding his speech he said :"I feel, and I painfully feel, and I ask your indulgence, and the indulgence of the public, and

of my critics in this respect, that it is impossible within the limits, even the extreme limits, which your patience has allowed me to occupy to-night, to do justice to the large currency plan, or even to such modified suggestions as I have made. They cannot be understood simply from the utterances to which I have given expression tonight." After this warning one feels some hesitation in criticising what appears to be the scheme which Mr. Goschen's speech foreshadows. The speech, however, is public property, and was, no doubt, made with the object of promoting a discussion upon the topics introduced into it. If we mistake its meaning, in some respects, it will

not be from any want of endeavour to grasp

it.

The object, and the object alone, for which Mr. Goschen is prepared to embark in any scheme such as the £1 note, is to increase the stock of gold at the centre in order to be stronger both for banking and for national purposes. He did not elaborate his plan to effect this object, but he declares that for the administration of this new currency the machinery established by the Bank Charter Act would be useless, because he is "totally opposed to any measure which would simply end in the exportation of gold from the circulation of this country." This is a very extraordinary reason to give for not issuing the £1 notes under the Bank Charter Act, because by its provisions, for every £1 note that is issued, a corresponding amount of bullion must be deposited. There is nothing to prevent the Issue Department of the Bank of England now issuing £1 notes (for the Act says nothing at all as to the denomination of the notes to be issued), and retaining every sovereign which the notes replaced in its possession. But Mr. Goschen said:"Now, there is a favourite measure in the air, which is the increase of the fiduciary issue; and

I