Page:The Bank of England and the State, 1905.djvu/22

 "I will," he says, not weary the House with a discussion as to the precise nature of deposits, and whether they constitute a part of the currency of the country. There is a material distinction, in my opinion, between the character of a promissory note payable to bearer on demand and other forms of paper credit, and between the effects which they respectively produce upon the prices of commodities and upon the exchanges. The one answers all the purposes of money, passes from hand to hand without endorsement, without examination, if there be no suspicion of forgery: and it is, in fact, what its designations imply it to be, currency or circulating medium. I do not deny that other forms of paper credit have some effects in common with bank notes, that they all have a tendency to economise the use of metallic money, and have a common influence on the value of gold to the extent to which they dispense with the use of it, and thus leave a larger quantity available for the general purposes of the world than there would otherwise be. But I think experience shows that the paper currency, that is the promissory notes payable to bearer on demand, stands in a certain relation to the gold coin and the foreign exchange in which other forms of paper credit do not stand."

It cannot, however, I think, be denied that subsequent experience shows that the other forms of paper credit alluded to do stand in relation to the gold coin and foreign exchange almost in a more. direct degree than the bank note at the present time. But that the business of banking generally affects the currency, and did so in 1844, is already admitted by Sir Robert Peel. Certain restrictions were introduced which were to be applied to all existing banks; and it was thought desirable to make compulsory the periodical publication of the names of all partners and directors, and of such matters as the transfer of shares, as well as the amount of the issue of notes, and to decide how long the responsibility for the possession of shares would attach to a party. "The privilege of issue," he says, "is one which may be fairly and justly controlled by the State, but the banking business as distinguished from issue, is a matter to Which there cannot be too unlimited