when the type from which these lines are printed comes to be broken up. When we see the accuracy with which hand and eye can be trained to many a delicate mechanical operation, we need not attach much importance to this objection.

The question of how to preserve our gold coinage for its legitimate use as a circulating medium is one that is by no means so easily answered. The result might be arrived at by the imposition of a seignorage, which can be charged either by a direct charge or a depreciation of the coinage. At present the Mint must return 1,000 sovereigns to anyone tendering their exact weight of bullion, 916.66 fine, the only loss being that of interest in the meanwhile. A seignorage could be imposed by returning, say, 990 sovereigns of their present standard weight and fineness, or 1,000 sovereigns each containing 1 per cent. less of pure gold. To take a grain of pure gold away from every sovereign, and so to make 122 gr. do the duty of 123 gr., would affect all existing contracts, and though it would probably be but little felt in the transactions of every-day life, it would at once upset all international dealings. The course has found favour with a Chancellor of the Exchequer more ingenious than successful, and has the advantage that it would more nearly equalise the value of the sovereign and a 25 franc piece; it has even been supported by the ingenious suggestion that as the average sovereign is a grain light no real harm would be done. The question is one that is not as simple on the merits as it appears; but I cannot think that it would be politic to adopt any measure that might affect the credit enjoyed by an English sovereign in every corner of the globe, even at the advantage of making it identical in value with the coinage of other nations. Any debasement of the coinage of any country must naturally make itself felt in the foreign exchanges; but if to avoid this disturbance a seignorage were imposed by way of a direct charge, or in other words, by the retention of so many grains of pure gold out of every parcel of gold sent in for coinage, the charge in the case of gold sent in for recoinage by the Bank of England would naturally be credited per contra to the Mint, and would therefore fall on the nation. The demand, however, for heavy coins, both for export and for the purposes of art, would cause a perpetual drain and disappearance of gold coin for which it is difficult to provide a theoretical remedy. It does not appear, however, in practice that foreign nations when establishing a gold coinage have suffered any inconvenience from the scarcity of coin which might be imagined to arise from this cause.

But whatever measures of reform we may apply to our gold coinage, as long as gold is used it will suffer loss by wear and tear, and the precious metal thus lost is gone for ever. It remains to be considered whether any economy in the use of coin could be effected by substituting for it another form of circulating medium,

in other words, by an increase in the use of bank notes. The question of the one-pound note is one that would furnish materials for a separate paper, and I venture to think that this Society would listen with pleasure to an essay on the subject, which would come most fitly from some-one conversant with the working of the note circulation of one of our English, Scotch, or Irish banks of issue. It is one that was touched on in one of our most recent discussions, and the arguments pro and con may be found scattered in many works on banking matters, and collected in the evidence given before the Committee on banks of issue in 1875. Owing to the many anomalies that exist in the present bank note system in the United Kingdom, the subject is complicated by the necessity for considering at the same time in whom the right of issue shall bo vested, and the advantage to the public has to be taken into account as well as the advantage to the banker. On the one hand free-trade is claimed in the matter of note issue as in other matters, and it is held that bankers should in this respect have full discretion to avail themselves of their credit, subject to such restraint only as their own prudence may suggest. But in many things individual freedom of contract is restricted by law in the public interestin education, in the matter of the employment of women and children, in the sale of intoxicating liquors, unlimited individual freedom is found incompatible with the public good, and experience of free note issue in the past warrants us in placing our note issue in the category of things that require regulation. It is objected to the issue of £1 notes by the Bank of England that it is a bad thing on principle to have a paper issue of identical denomination with the unit of currency; that it would tend to drive gold out of the country, and consequently in a time of pressure intensify a panic; and if a £1 note issue were to be secured on an actual bullion reserve, it becomes a question whether, in view of the great additional expense of manufacture and issue, as well as of registration on withdrawal, the operation would be a profitable one to the Bank. Any less complete system of registration would be very unsatisfactory to the public, would make the tracing of notes much more uncertain, and would to a certain extent encourage fraud. Considerable stress has been laid on the fact that the average life of a bank note varies inversely with its face value, and that as the £1 note would circulate longer and among a lower class than does the £5 note, forgeries would be more frequent, less often detected, and would remain longer in circulation. In the last years of the £1 note, especially in 1815 to 1820, forgeries of £1 notes increased in a very marked degree, and even down to the present time more forgeries of £1 notes are presented at the Bank than of any other denomination. On the other hand it may be claimed that there are no returns of the losses to the public by base coin, which would tend to diminish under a paper circulation, and that if forgery of notes

became really serious, they would fall into discredit and cease to be in demand, and it would rest with the public itself to use the medium that it found most convenient. In the meantime the government has made the public the judge of its own interests in this respect by issuing a fractional paper currency in the shape of the now familiar postal orders, which take their chance of forgery, and rest on no special security whatever.

As regards the note issue of English banks, it is one of the anomalies of our system that a banker in or near London may not issue notes at all; if outside the magic circle some only may issue notes, but not of less than £5; it is reserved to our friends across the Tweed and in Ireland to issue £1 notes. But the conditions under which a £1 note would be current in England is held to be not quite identical with those which obtain over the border. There the interchangeability of notes, and the small number of banks of issue having numberless branches, cause any particular note to pass much more frequently over a bank counter, and forgery is more readily, effectually, and speedily discovered. In England the notes have a more local circulation but a longer life, and passing unfortunately through the hands of a less well-educated people afford more opportunities for the undetected perpetration of fraud. On what conditions, necessary for the protection of the public, English country bankers would be content to issue £1 notes it is hardly competent to a London banker to express an opinion; in the hands of men familiar not only with the theory of our provincial circulation, but also with its practice, such men, if I may cite them by name, as Mr. Palgrave or Mr. Dun, the subject would receive adequate treatment, and this Institute might thus be put in possession of evidence on which to base a sound judgment. But the question of the reform of our gold coinage will not be settled by any paper read or discussion held in this place, and I venture to think that the necessity for a recoinage, admitted by the Royal Committee of 1868, will entail the appointment of yet another committee for the direct investigation of this very serious question. The object of this paper has been to elicit from the Institute of Bankers, as representing the class most interested in the subject, an expression of opinion that this inquiry and this reform should no longer be delayed, and if successful in this, I shall deem the labour expended on its composition very far from being thrown away.

Memorandum of the principal Acts and official documents bearing on the gold coinage referred to in this paper.

Lord Liverpool: On the Coin of the Realm. A letter to the King, 1805.

(Effingham Wilson, 1880.)

Mint Indenture, 6 Feb., 1817.

Coinage Act, 1817. 56 Geo. III. c. 68.

The Bank Act (England), 1844. 7 and 8 Vict. c. 32.

(Ireland), 1845. 8 and 9 Vict. c. 37.

(Scotland), 1845. 8 and 9 Vict. c. 33.

Report relating to the Coinage, 28 May, 1866.

Report of Royal Commissioners on International Coinage, 1868.
Coinage Act, 1870. 32 and 33 Vict. c. 10.

Letter from the Treasury to Bank of England, 21 June, 1870.

Report of Select Committee on Banks of Issue, 1875.

Report of Select Committee on City Lands (Thames Embankment) Bill, 1881. Victorian Year Book, 1881.

Annual Reports of the Deputy-Master of the Mint, 1870-1880.

NOTF A.-THE GOLD CURRENCY IN FRANCE.

The issue weight of the Napoleon is 6:451 grammes, and it circulates as legal tender until it reaches the minimum legal tender weight of 6.430 grammes. It is illegal under a penalty to pass a coin of any less weight, but as a matter of fact the Act is a dead letter. The Bank of France does not re-issue light coins, and the State bears the loss, which is naturally less than in England in proportion to the more modern creation of the gold coinage in France. If we compare the French with the English gold coin, and assume the coinage of a 25 franc piece, we find the following result :—

whence it appears that the allowance for wear and tear in France is not much more than half of what is permitted under the English Coinage Act.

NOTE B.-THE GOLD CURRENCY IN GERMANY.

Under the Act of 9th July, 1873, the "Zoll "-pound (= kilo. or 500 grammes, oz. 16.07535 or grs. 7716-1680) is coined into 62.775 20-mark pieces of 900 millesimal fineness. They are issued as follows, viz. :—

Gold coins of the realm not more than G 005 below the current weight aз provided by the above Act, and which are neither broken, nor cut, nor defaced, are legal tender. All coins found in the Treasury below this weight are not reissued to the public.

NOTE C.-THE GOLD CURRENCY IN THE UNITED STATES.

Standard Weight, Legal Limit OF ABRASION, And Least Current Weight of UNITED STATES GOLD COIN.

1873. Department No. 46,

Mint Bureau No. 1, Coinage Act of 1873.

Treasury Department,

Office of the Director of the Mint,
Washington, D.C., April 1st, 1873.

Section 14 of the Coinage Act of 1873 provides that gold coins which have been reduced in weight by natural abrasion not more than one-half of one per centum below the standard weight, after a period of circulation of 20 years, and a proportionate rate for a less period, shall be received at their nominal value at the United States Treasury and its offices.

The following tables exhibit the standard weight, legal limit of abrasion, and least current weight of single pieces, and sums of $100, $500, $1,000, and $5,000 United States gold coin (excluding the dollar) under the Act referred to, statements exhibiting the standard weight, legal limit of abrasion, and least current weight of United States gold coin after a circulation 20 years under the provisions of the Coinage Act of 1873.