Banking authorities are almost unanimous in asserting that with a paper currency payable in gold on demand it cannot be forced into circulation beyond the requirements of trade, as it will either be exchanged for gold for exportation, or deposited with some banker, but certainly in some way or other returned to the issuer.

At the time of the passing of the Act of 1844 there were in England and Wales issuing notes:*

* 'Bankers' Magazine,' December, 1876.

Of these the following have from various causes discontinued their issues :

Leaving the fixed issues of the country banks at the present time (January, 1877) as follows :

The apparent discrepancy in the numbers of the private banks is accounted for by the fact of twelve amalgamations having taken place under clause 7, thus reducing the issuing banks by six, but causing no diminution in amount.

In practice no bank can keep up to its authorized fixed issue, whatever may be the local demand for its notes, on account of the risk of being over the amount on the average of four weeks, for which they would be liable to be fined in accordance with the provision mentioned in clause 8.

The following tables, principally taken from the Report of the Bank of Issue Committee in 1875> giving the average circulation since 1844, show the effect of the restriction, although allowance must also be made for decreased circulation caused by the more general custom of keeping accounts with bankers.

It will be observed that the percentage of actual, compared with authorized issues is much larger in the case of the joint-stock than the private banks*

Table I. - Annual averages of authorized and actual issues of Private Banks in England and Wales during the years 1844-76.

Table II. - Annual averages of authorized and actual issues of Joint-stock Banks in England and Wales during the years 1844-76.

Table III. - Annual averages of the authorized and actual issues of both Private and Joint-stock Banks in England and Wales during the years 1844-76.

The Acts for the regulation of the issue of Irish and Scotch bank notes were not passed until 1845, and although somewhat similar to the English Act in their provisions, differ in one or two material respects. As in England the Irish and Scotch banks have authorized issues allotted to them, but they are allowed to exceed the limits if they hold gold and silver to an amount equal to the excess, the silver not to be in a greater proportion than one fourth of the gold. Notes may be issued for any sum of not less than 20s.

The weekly returns must state separately the amount of notes in the hands of the public under £5, as also the total sum of gold and silver held in the till.

Irish banks can, if they please, transfer their issues to the Bank of Ireland, but cannot again resume the privilege. No such provision appears in the Scotch Act.

In both Acts Bank of England notes are expressly stated not to be legal tender, so that a creditor can demand payment in gold in Ireland and Scotland.

In Ireland there were at the passing of the Act of 1845 six banks of issue having an authorized circulation of £6,354,494; and there has been no alteration since that time.

In Scotland there were in the year 1845 nineteen banks of issue, having an authorized circulation of £3,087,209. Of these two banks with issues to the amount of £337,938 have ceased to exist, the number has been further reduced by six by amalgamations, but the sum total is not thereby affected. There are at present (December, 1876) eleven banks with a fixed issue of £2,749,271.

The following tables will show the average note circulation of the Irish and Scotch banks, the excess over the authorized issue being the amount issued against gold.

Table IV. - Annual average circulation of the Irish Banks for the years 1844-76, showing the proportion in each year to 1844, also the amount above or below the authorized issue, i.e. the issue against gold when above the limit.

Table V. - Annual average circulation of the Scotch Banks for the years 1844-76, showing the proportion in each year to 1844, also the amount above the authorized issue, i.e. the issue against gold.

To complete the view of the circulation two tables are given below showing the issues of the Bank of England, and those for the whole of the United Kingdom. It is only right to mention that all these figures are taken from a most valuable series of statistics compiled by Mr. Pal-grave, and published in the Bankers' Almanac.

The first point that strikes one on a perusal of these figures is the very slight increase in the paper currency since the passing of the Act, when the enormous development of trade during the intervening period is taken into consideration. It is quite clear that but for the economy effected by the extension of banking among the public, and the establishment of the Clearing system amongst bankers, the present amount of notes issued would be totally inadequate to the requirements of the day. A century ago it was believed that without the privilege of issuing notes, the business of a banker could not be successfully conducted; now we see some of the greatest banks in every sense of the word who have never issued notes, and of those who did so many have voluntarily relinquished the advantage, such as it is.

Doubtless the diminution of the country circulation is due in great part to the restrictions imposed by the Act of 1844, but it is by no means entirely so, as we find that a large proportion of banks of issue are invariably from 25 to 50 per cent. under their authorized limit, some even more.