also, likely to be reduced by the introduction of £1 notes. They could be transmitted far more easily than gold from the country to London; and banks in the country would be able to work with a much leaner till. If they wanted to replenish their till they could do so by means of the penny post, whereas now the expense and the labour of moving gold render a banker careful not to allow his till money to run too low. Any drain throughout the country would, therefore, concentrate itself upon the central reserve to a greater extent than it does now, because of the smaller amount of cash in the tills with which to meet it.

Mr. Goschen's proposal for the withdrawal of the light coins-which he said is suspended because he thought it might be tacked on to larger measures now in progress-is also calculated to reduce the amounts held by the banks in their tills. It sometimes suits a banker to retain light gold in his till on the chance of putting it again into circulation at an early date rather than submit to the loss on realisation at the Mint. When the coinage is rehabilitated-which it is understood it will be at the expense of the State-it will very often suit a banker to send a surplus to the Mint, which he would not do now that he has

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to bear the loss of the light weight. This, of course, is no reason why banks should not be relieved from the unfair loss they incur as last holders of the gold which has circulated; but it is necessary to bear in mind that the change will create an inducement to work with a smaller amount of till money, and consequently be the means of adding to the concentration upon the reserve at the centre.

The establishment of a second reserve, the introduction of £1 notes, and the rehabilitation of the gold coinage, are all calculated to increase the concentration upon the centre. Is it prudent of the Government to place the whole responsibility upon the discretion of the directors of the Bank of England? It does not seem to be a policy which would have commended itself to Sir Robert Peel. After the first breakdown of the Bank Charter Act in 1847 he said (on the 3rd Dec.):"I will now discuss the question whether there should be any modification of the Act of 1844. I think you ought to continue the restrictions of private and joint-stock banks. I think you ought to require of these banks to bear some share of the expense of keeping in reserve a stock of gold. I think, also, that if you do not impose the identi

cal restrictions now imposed on the Bank of England, some restriction you must impose, for after the experience of 1826, 1836, and 1839, I, for one, am not content to leave the regulation of the monetary concerns of this country to the uncontrolled discretion of the Bank, In 1844 the general conviction was that it should not be so left; and I, for one, know no better mode of imposing restriction than that which was devised by the Act of 1844." Of course, Sir Robert Peel was discussing the question of again leaving the regulation of the issue of bank notes to the uncontrolled discretion of the Bank; but having regard to the language he employed in expressing his opinion on that subject, it does not seem likely that he would be willing to create a second reserve of gold, and give the Bank an uncontrolled discretion to issue notes upon it. Since then there have been the catastrophes of 1857 and 1866; and the Bank of England has lost the control over the market which it formerly exercised. Would Sir Robert Peel, with the further experience of 1857 and 1866, place the second reserve in the uncontrolled discretion of the directors of one Institution-an Institution whose power in the market has diminished, is diminishing, and will diminish?

Moreover, there is no connection between the amount to be realised by means of an issue of

£1 notes, and the total amount of the banks' deposits on account of which it is to form a second reserve. The amount so realised may remain stationary for years to come, whilst the amount of the banks' deposits may largely increase. There is no possibility of a sliding-scale between the two. A more natural proposal would be to create a second reserve by requiring all the banks to contribute towards it a certain proportion of their deposits; and this seems to be the meaning of the suggestion Sir Robert Peel made in the above quotation "I think you ought to require of these banks (the private and joint-stock banks) to bear some share of the expense of keeping in reserve a stock of gold."

A reserve created by requiring all the banks to contribute towards it a certain proportion of their deposits, would avoid the sacrifice Mr. Goschen said the State would incur in carrying out his proposals. He said: "I have now indicated a method by which I think it (the amount of bullion) might be increased, and might be increased without imposing any tax on any portion of the community, but it would be secured by the State

foregoing a portion of the profit which it would make upon the fiduciary issue. A certain amount of gold would be lying idle, and men would say

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Why should that gold remain idle?' 'What a sacrifice! Why is it so?' Well, it would be the State which would have foregone a portion of the profit which it made on the fiduciary issue, and it could say, 'It is of such enormous importance there should be a larger reserve of bullion in the country that we have foregone this profit which we may have made upon our paper issues because we believe it to be better to secure a reserve to which in times of crisis you may apply.' The alternative proposal of a second reserve created by requiring all the banks to contribute towards it a certain proportion of their deposits would avoid this sacrifice, and would place the burden upon the proper shoulders to bear it, viz., the proprietors of the banks."