One point more remains to be noticed. Of what denomination ought notes to be? Much opposition is directed in England against small notes, but it has its roots in prejudice and not in science. The size of notes is a question of convenience, coupled with the importance of guarding against forgery. One-pound notes are eminently prosperous in Scotland; they are even preferred to sovereigns. In Austria, Italy, and America, notes much smaller than those of one pound circulate freely and successfully. No objection is heard against them, except when very small; they are then apt to become dirty, defaced, and capable of being easily forged. The denomination of notes is analogous to that of cheques. Very small cheques cause bankers much trouble and clerical work; they are consequently disliked. One-pound notes were suppressed in England by an act of panic and ignorance. In 1825 many issuing banks became insolvent, and their one-pound notes, which were widely spread in retail business, brought grievous loss to many poor persons. The denomination of bank-notes was consequently limited to five-pounds. It was not perceived that the loss arose, not from the size of the note, but the badness of the issuer, and that the objection lay against any notes, of whatever kind being issued by such untrustworthy agency.
We must not bid farewell to the Bank Charter Act of 1844 without mentioning a wonderful doctrine propounded in connection with it by persons who claim to possess the highest authority on currency. The greatest stress is laid upon this doctrine as expressing the fundamental principle which ought to govern all currencies which are composed of coin and convertible bank-notes mixed together. It is believed that this doctrine was reckoned by those who were supposed to be the advisers of Sir Robert Peel to be the brilliant discovery of the grand secret which gives soundness to a mixed circulation; but this cannot be affirmed with certainty. But however that may be, this principle is fondly held, and strenuously proclaimed, by great personages, by Chancellors of the Exchequer in and out of Parliament, by Secretaries of State laying down rules for the currencies of important colonies and dependencies, and by countless writers who speak authoritatively on currency. This doctrine affirms that a mixed currency of coin and paper should be made to circulate in the same quantity as if it had been purely metallic. Had the assertion been that the mixed currency should be made throughout of the same quality as the purely metallic, it would have been perfectly intelligible, and of unquestionable excellence. The framers of the Bank Act might have fairly boasted that they had carried it out into execution - that the currency of England contained bank notes which were as good, as trustworthy, as sound guarantees of value as the sovereigns which circulated by their side. But to make the numbers of a mixed currency the same as if the currency had been all of sovereigns - that indeed, the ex-Lord Mayor might have said, passes the human understanding.
We need not dwell on the questions - first, How in the world any one is to find out whether the bank notes of a mixed currency are more or fewer than the sovereigns which would have been used, had there been no bank-notes? and, secondly, Having found this out, by what process he is to force the public to take more notes to fill up the deficiency, or to surrender the excess which it has contrived to get into its hands? Nor need we challenge the inventors of this doctrine to explain their conception of the nature of currency, or the possibility of making any one, except the public itself, the determiner of how many sovereigns and bank-notes it will buy and use; it is enough to ask them whether they imagine it to be possible to violate the law of gravity in coins and notes one particle more than in any other substance? Coins are heavy, bank-notes are light. Supposing these tools to be equally efficient, equally trusted, can it be conceived that the public would employ as many of the heavy as of the light ones? Can any one believe that if the twenty millions and more of Bank of England notes were suppressed altogether, as many sovereigns would be asked for to supply their places? Every day men carry about their persons bank-notes worth thousands, even hundreds of thousands, of pounds; would they ever be willing to carry as many sovereigns? What an opportunity for thieves - the visible and tempting bags, instead of the invisible bank-notes. Is it not obvious that the extinction of the Bank of England notes would be followed by a huge increase of cheques? Poor currency! hard indeed is its fate. The professors of its science teach palpable absurdity; the public is bewildered, and fails to understand; the oracles insist with gravity that they possess a science which is a mystery for the many; and the world pronounces currency to lie beyond the human understanding.