But there is a very solid and serious distinction between a private issuer of notes and a Government. The property given to a solvent banker for his notes is not lost to the nation; the banker lends it, if he is a good banker, to persons who do not waste or destroy it, but employ it as capital. The public pays exactly the same for the tool of exchange, whether it procures it from a miner or from a bank. But when the wealth is given to a miner, he consumes it; the nation retains, no doubt, an equal value of gold, but it is lost as capital beyond the work of exchanging in buying and paying. Its services as a tool are all that the nation gets from it. The same services are procured from the bank-note, only it costs but sixpence to the banker and to the nation. Compared with a 5 note, wealth to the extent of 4, 19s 6d, which must have been sent away to a foreign miner, now remains in England, and if the banker does not mismanage his business, is set to work as a part of the wealth-producing capital of the nation. But Government issues are directly united with consumption; the Government spends and consumes what it procures with its notes; it is not employed as capital. No Government which acquired the whole paper circulation of a country could be trusted for not consuming what it procured with it, whereas in England every pound of the Bank of England issues, except what the law commands to be kept in gold as reserve, is capital at work in the creation of wealth. This capital is given to the Bank by the holders of its bank-notes, and the Bank places it in the hands of men who employ it and reproduce it in goods made.

To stand on a level with coin as a tool of exchange or currency, the debt expressed by the banker must be as valuable as the coin. With metallic money the public possesses certain knowledge - it holds the precious metal in its hands. How is it to feel equally assured as to paper money? How is it to acquire a well-warranted confidence that the debt remains good, that the issuing banker can always pay for it, because he is as perfectly solvent? By convertibility, that is, not only by the right to demand coin for the note at any moment, but also by the fact itself that the coin demanded is actually given. How, then, is convertibility to be secured? This leads to the farther question, who ought to be the issuers of the paper circulation of a country - the Government or a bank or banks?

With regard to the respective fitnesses of each of these two issuers for the function, very diverse opinions are maintained. On the side of the bankers, it is urged that the bank-note - as its name indicates - is historically the offspring of banks. In substance it is the same as the cheque, an order on or an undertaking by a bank to pay a sum of money. Further, it is an ordinary commercial transaction and has existed as such in many countries, and the State is not warranted in invading the domain of private life. The note circulation of Scotland is appealed to as a proof of the excellence which private issues may attain to, bank-notes being actually preferred to sovereigns by the Scotch- and where is a more acute and intelligent population to be found than the Scotch?

The advocates of the issue by Government take their stand on prerogative. The function, they urge, is essentially a public act - it covers the whole nation. The profit derived from so national an operation ought fitly to be reaped by the public. Omitting existing issuers, no injury is done to a particular individual by appropriating the issues to the State. The Parliament of England, they point out, acted on this principle in 1844; it laid the foundation of the ultimate extinction of private issues, and erected a Government office as the sold distributor of bank-notes in the future.

It seems to me that if the issuing of notes were com-menced for the first time it would be difficult to resist the argument that the profits of a function which embraces the whole people naturally belongs to the people itself. Bank issues are local. A currency comprehending the whole community is of a higher order, so that even if the agency of banks were called for, some portion of the profits might justly be reserved for the State. The bank's right to have its cheques undisturbed is indisputable - they are personal relations of individuals to it. The solution of the question, however, will in almost all cases be determined by the circumstances of the day and place; local arguments may at any time turn the scale in favour of either party. In England private banks had proved themselves to be bad and unsafe issuers of public currency. The Act of 1844 wisely and justly substituted for them issues controlled by the State. In Scotland the private issues have displayed on trial unchallengeable quality; few persons, not doctrinaires, would dream of suppressing them in favour of Government notes, except under some call of necessity. In America there is entire liberty of action. Government and banks issue together. Hence when a final arrangement is made for rendering all the notes convertible, some principle must be found and carried out. It is a matter of great gravity.

Direct issue by a Government appears to me to be an objectionable machinery for the management of a paper currency. It fails on the capital point of providing thoroughly trustworthy security for convertibility. A Government cannot be declared legally insolvent. A President of the United States or a Prime Minister of England cannot be locked up in prison if multitudes of their fellow-countrymen are reduced to ruin by the bankruptcy of the State. "No more gold in the till," would be an answer to the presenter of a note which would place the Bank of England in the Insolvency Court; what harm would it do to a single Government official employed in managing the paper currency? Hence responsibility for maintaining convertibility cannot be fastened on political rulers as it can on a private company. They are not liable in person or in purse. They can always plead for refusing to pay gold, "The State acknowledges the debt, and you will be paid at last, but you must wait a while now." But what does this mean? That the national currency is instantly corrupted, that all kinds of value will soon be put upon the bank-notes, that the essential function of currency to furnish a guarantee to the man who receives it - that he will be able to buy as valuable goods with it as those he sold - will be lost, that every one will be in perplexity as to the worth of the paper money which he puts down in his account-book when he sells on credit, and then the whole trade of the country becomes poisoned with uncertainty and disorder. Politicians, and indeed tax-payers also, are not to be trusted for being proof against the temptation of being indifferent about a deterioration of the currency, if only it helps them in an hour of difficulty. A purely metallic currency would furnish them with no resource; but to get property with paper is easy and pleasant for a Government, and they can always plead necessity at pleasure. The conclusion is that a Government is a bad direct issuer of paper currency, and every nation would do well not to fall into such a snare.