£1 BANK NOTES.

On the 28th ultimo, Mr. Wm. Fowler, the Member for Cambridge, brought forward in the House of Commons a Resolution in regard to £1 notes, and it may be convenient to place on record a summary of the arguments which were used on the occasion.

The resolution was in the following terms:

"That in the opinion of this House the prohibition of the issue of Bank notes of £1 in England and Wales is unreasonable and ought to be removed, and that all needful steps should be forthwith taken to authorise the issue of such notes."

Mr. FOWLER, in moving this resolution, remarked that the currency had remained unaltered for many years, and that business was conducted not by Bank notes, but by credit. £1 notes had long been in circulation in Scotland and Ireland, where feeling was strong in their favour. The reason of their abolition in England was the panic of 1825, which they were said to have caused, though this was against the opinion of Lord Liverpool. The main cause of the panic was speculation, and several panics had occurred since the abolition of £1 notes, which were therefore abolished under an erroneous impression. Small notes he had seen to be a great convenience in America, as they were found to be in Scotland and Ireland to the poorer classes, who, unlike the richer classes, having balances at their bankers, were unable to draw cheques. They were also very convenient for paying wages. The whole issue should not be on credit, but a certain amount on security, and a certain amount on bullion, as proposed by Sir R. Peel in 1844. The circulation of bullion was now probably about 100,000,000, of which every other coin was light, but the issue of small notes would prevent the necessity for recoining the whole of the sovereigns and half-sovereigns. The forgery question was raised as an objection to this proposal, but superior engraving now prevented forgeries. No forgery of importance of notes of any Scotch or Irish Bank had occurred for 20 or 30 years, and a similar state of things prevailed in America, but offences of uttering false coin were very prevalent. Another objection to the proposal was that the holders of £1 notes were more liable to panics than holders of notes of larger amount. This, however, was not borne out by the opinion of Mr. Tooke, nor the experience of the City of Glasgow Bank failure. Then it was said that we should lose bullion by the issue of small notes, but gold would be much safer as a security against notes than by being scattered over the country, nor did the circulation of notes show that there was no gold in the country, as might be seen in the case of the United States. Nor would the issue of £1 notes be costly, if we could save the interest on a large amount of bullion, and the wear and tear of our sovereigns. Moreover, Scotch and Irish Bankers did not find them inconvenient, and in Scotland and Ireland their circulation had increased, though the reverse was the case in some continental countries. The danger of gold being attacked in case of disaster if it were in one place, was a very improbable contingency.

£1 Bank Notes.

Mr. EWART, in seconding the motion, said that England ought to have the same advantages as Ireland.

Sir JOHN LUBBOCK said that £1 notes had after a long trial been abandoned. The three main arguments against them were: 1st, the desirability of keeping a large stock of gold in the country: 2nd, the greater liability of £1 notes to be suddenly presented during panics than notes of higher denomination : 3rd, liability to forgery. Very many eminent authorities, including Sir R. Peel, Lord Överstone, and John Stuart Mill, and more recently the present Governor of the Bank of England and others, were adverse to the issue of notes for smaller sums than £5. The general opinion of the City was against the issue of £1 notes, and he believed of the country bankers also. The holding in this country of international stocks had probably lessened the importance of a gold circulation as a reserve against adverse exchanges, but a gold circulation would be a source of strength in a great war, as the French found in the Franco-German war. By issuing small notes to replace the metallic circulation, they were able, with only a slight disturbance of values, and at a very moderate cost, to obtain immense funds. Again, the Government only held £500,000 reserve, against the immense liability of £80,000,000 deposits in the Savings Banks, but this was rendered tolerable, owing, in a measure, to the latent reserve existing in our gold circulation. Nor was there any reason for stopping at £1 notes; notes of 10s. or 1s. might, for similar reasons, be issued. The danger arising from the liability of £1 notes to be presented during panic still existed, though probably in a diminished form through the diffusion of education. The profit from the issue of £1 notes had been overrated; as assuming, as the late Governor of the Bank had done, that £21,000,000 of notes would be issued, the profit after deducting all expenses for security, manufacture, cost of prosecutions and the like, would not be more than £100,000; much, of course, As regards forgeries there would depend on the conditions of issue. were in 1820 over 400 prosecutions, at a cost of £53,000; and of 181,000 forged notes presented during the last five years of the issue of £1 notes, 127,000 were of that denomination, and only 400 above £5, and it was singular that now, 50 years after the abolition of £1 notes, the majority of forged notes brought into the Bank of England were £1 notes. Superior engraving had no doubt done something to diminish the risk of forgery. The popularity of the £1 note in Scotland and Ireland was no reason for its adoption here, as the banking and economical conditions of those countries were very different to England. The hon. member (Mr. Fowler) might have made out a case for committee, but to call upon the House to authorise the issue of £1 notes at once was unreasonable.

Mr. GLADSTONE said he objected to the House being called upon "forthwith" to adopt the resolution. With reference to the Act of 1844, he had no doubt Sir R. Peel regarded it as a final measure-a measure that laid firm foundations never to be departed from, but upon which unquestionably a superstructure was to be raised. No great change should be introduced into our (currency) system without previous parliamentary enquiry. The administration of the Bank of England had solved the practical question connected with the disturbances of 1847, 1857, and 1866, and a firm administration would, he hoped, prevent their return. The conditions of a good currency were safety, convenience, cheapness, and that it should be As regards safety, a currency in small notes profitable to the nation. might be more liable to fraud than the existing currency. This question demanded careful enquiry. How to deal with light gold was also a difficult

question. He was not sure whether the Government ought to make a charge in the nature of a sovereignty for the labour of manufacture. The proposal, with regard to small notes, need not be objected to because very few people were interested in it. Among arguments for a metallic currency, one less sound than the rest was that whatever monetary crises might occur, the possession of a metallic currency constitute an element of security. Putting aside the case of a great war, the belief that we were better able to encounter monetary crisis, such as arose from bad harvests, was an entire fallacy. With respect to the motion, he would remark that we had already, to a certain extent, applied in the case of notes of over £1 the principle that it was wise, to a certain extent, to economise the monetary circulation by the issue of bank notes. Although in some quarters something heretical was supposed to lurk in £1 notes, he did not know why that principle should not apply to £1 notes which applied to notes of a higher denomination, supposing it was found that some sensible economy was thereby attained. He hoped the discussion would do good, and would hereafter make it the happy duty of those who had brought forward the question to develop and apply the principles of the Act of 1844 to still further efficiency and benefit to the nation.

Mr. GOSCHEN said it was fortunate that the Bank Act had been allowed to remain without change. He thought he could discern through his right hon. friend's speech that there were certain points in the Act which he would like to have changed. But relaxations had often been desired which had been proved to be unnecessary. That it had been a success, was a great proof of the wisdom of Sir R. Peel. These were dangerous proposals introduced by an hon. member calling himself a bullionist, but these proposals would diminish the amount of gold in the country, and nothing would induce him to lessen the extent to which our currency rested on gold. In spite of the tremendous amount of transactions carried on by banks without any reserve of gold, the whole of the vast transactions of this country ultimately rested on gold. The strain upon gold was greater now than it was before Germany had adopted a gold coinage. He thought the fear of forgery had been successfully met, nor did he object on the ground of expense, but upon principles affecting the currency of the country. The proposals would not be of any advantage to the richer classes, but might be to the poorer classes, a point that had not been sufficiently elaborated. The circumstances of America were so abnormal that no argument could be founded on the experience of that country, and it was the resumption of specie payments that obliged America to collect so large an amount of gold, the permanent effect of which had yet to be seen. £1 notes might be convenient for transmission by post, though not for odd sums, and they were more liable to be lost than gold. There were strong arguments against any measure which would diminish the aggregate amount of bullion in the country, and even the coin in the pockets of the people was an ultimate reserve which it was most important to maintain.

Mr. LAING said that the whole question was an academical one, and hoped the House would not be led away by the charm of bi-metallism, or attempt to interfere with the present system.

Mr. ANDERSON agreed that a paper currency was in no sense a reserve that in case of need could be drawn from the pockets of the people. A forced paper currency was the only way to utilize the coins now in daily use. He did not, however, wish to force a paper currency upon the country,

though it was the scientific currency which won its way to favour wherever it was tried.

Mr. MAGNIAC hoped that the House would not attempt to manufacture money in any way. The Banks Act of 1844 had come triumphantly out of every examination. The use of £1 notes in Ireland or Scotland was no argument for their adoption in this country. There ought to be no alteration in our system without investigation, and nothing should be done to shake confidence in English £5 notes.

Mr. BUXTON thought that the issue of £1 notes would be a convenience to the people of England. In Ireland and Scotland they were preferred to gold. They would be useful for the transmission of money as the demand for postal orders showed. Another advantage would be a reduction in the loss now incurred by bankers through light gold, and he also believed great profit would result to the country by the issue of these notes. The drawbacks to the proposal were the risks of forgery and the diminution of the bullion.

Mr. WARTON said that the speech of the right hon. member for Ripon, (Mr. Goschen) showed that the English mind was not yet willing to yield to fallacies.

Mr. WILLIAMSON thought it would be of advantage to the country if £1 notes were issued by the Bank of England, guaranteed by a deposit of gold bullion for each note issued.

The motion, which probably was only intended to elicit a discussion on the general question, was ultimately negatived.

QUESTIONS ON POINTS OF PRACTICAL INTEREST,

THE Council desire to express their readiness to receive at all times questions which are of general interest, and in regard to which it would appear desirable to assimilate the practice of bankers.

The following questions have been received, and answers are appended, which, after careful deliberation, the Council have approved :

Cheque-Bill attached.

QUESTION I.-A banker presents a bill or draft to a private firm for payment.

The drawers do not pay cash or accept the draft payable at their bankers, but give a cheque on their bankers payable to the holder of the bill, or bearer; no mention being made of the draft on the cheque. This cheque, however, is attached to the draft and sent through the clearing-house.

When the cheque with draft attached reaches the banker on whom it is drawn, it is found that the draft is not properly stamped and the cheque with draft attached is returned, the answer written on the cheque being, "Bill attached requires a stamp."

Is the banker right in refusing to pay the cheque under the circumstances, seeing that it is drawn payable to bearer, without any restriction as to the "Bill attached ?"

ANSWER: The cheque as drawn being complete in itself, the banker is not called upon to examine any document the drawer may choose to attach thereto with the view of deciding whether such document is in order.

Stolen Cheque-Liability of Banker.

QUESTION II.-A cheque drawn payable to the order of A is transferred by A by special indorsement to B. B in his turn specially indorses it to C, who takes it in satisfaction of a debt due to him by B. The cheque (which has not been crossed) is stolen from C before he has endorsed it, and upon its being presented by the thief, the banker upon whom it is drawn cashes it, without observing that the indorsements are made continuous, and that the cheque does not purport to have been indorsed by C. The thief escapes; C discovers that the cheque has been paid as described. Can an action for the recovery of the amount of the cheque be maintained by C against the banker, either in C's own name or in his own name joined with that of the drawer of the cheque? If not, what remedy has C? To whom is the banker liable?

ANSWER: C's remedy in the case stated would be against the drawer who, in his turn, would have a claim on the banker for paying his cheque not duly discharged by the indorsee.

Signed Cheque-Death of Partner.

QUESTION III.-A cheque is signed by a partner in a firm thus, "Jones, Robinson & Co." The partner signing dies before presentation for payment, and the bankers have notice of his death. Can the bankers pay, or does the death of the partner act as a revocation of the power of the bank to pay upon the cheque, as in the case of an individual drawer?

ANSWER: The death of a partner does not invalidate the firm's signature as signed by him previous to his decease.