that would prove a very serious thing. There will be upwards of ten millions sterling required in one day. You will remember that in three months in the early part of last year the banks deposited about three and a half millions to retire their circulation. This was because it was proposed by the Government to reduce the interest on the bonds to 3 per cent. They immediately deposited money to retire their circulation and this brought about a great deal of stringency in the market. How it would be if they had to deposit ten millions in one day, or anything like that amount, especially as legal tenders are very scarce, I do not know. There are already, as I have said, some bills brought in and quite recently a new bill has been brought forward to issue two hundred millions of dollars of notes bearing 2 per cent. interest to be taken up and held by these banks as part of their reserves. Whether that or

The

any of the other bills will pass is of course very doubtful; and it is also very doubtful, whatever course is taken, if anything can be done in time to save many of the banks from re-organising.* Mr. Martin has also referred to the abolition of the small notes. small notes are abolished only in regard to the national bank circulation. The small legal-tender notes continue to be issued, and in fact they have been increased since 1879 by £1,580,700, and there is no suggestion as to abolishing these at present. Mr. Tritton pointed out, as a consequence of this system of banks having no branches, that there would be an absence of the aggregation of deposits as in our large banks. That is so, and, I think that even in New York there are only two or three banks whose deposits exceed three millions sterling.

By the most recent advices from America it appears that, notwithstanding very strong opposition, the bill for the extension of the National Bank Charters has been passed by the House of Representatives, and is now before the Senate. It is also reported on the best authority that Congress will not adjourn until the measure has been passed in one shape or another.

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:

QUESTION I.-What is the proper course for a banker to tako when a bill is presented to him for payment drawn payable to the order of A B, but accepted by the drawee thus:

"Accepted payable at Y L & Co. to A B." Does the restrictive acceptance affect the instrument and justify the banker in requiring to be satisfied that the proceeds of the bill shall reach A B?

ANSWER. The proper course for the banker would be to pay A B and A B only, and the bank is justified in requiring to be satisfied that the proceeds of the bill shall reach A B.

QUESTION II.-Is a banker justified in refusing to pay an acceptance of his customer made payable to the order of the drawers, B & Co., when the signature of B & Co. on the bill as first endorsers differs entirely from the signature of B & Co. as drawers?

ANSWER.-As in most firms more than one partner signs the signature of the firm, it occasionally happens that bills are drawn in the name of the firm by one partner and endorsed by another. A banker would not in such case refuse payment of a bill on account of the difference in the signatures of the firm as drawers and as endorsers, unless he had reason to suspect the genuineness of either.

QUESTION III.-Would A's guarantee or agreement to secure B's overdrawn account, supposing it is drawn upon a 6d. agreement stamp, rank as a preference security in the event of A's bankruptcy?

ANSWER. Certainly not, because it is but a promise to pay, and gives the holder no rights beyond those of ordinary creditors on A's estate,

QUESTION IV.-Upon the discharge of a guarantee, is the banker bound to give up the instrument?

ANSWER. It is usual to surrender guarantees when the purposes for which they are given are completed.

THE ANNUAL REPORT OF THE DEPUTY MASTER OF THE MINT FOR THE YEAR 1881.

THIS report has just been issued, and although there has been but little mintage work to record, there is a good deal of interesting matter in it. Much is said in regard to the inquiry with a view to the new building, and to the proposition to place it on the Thames Embankment. Whether for good or for evil, however, it has been decided to retain the Mint in its old position on Tower Hill, and to make such alterations in the old building and in the machinery as shall fit it for any work that it may have to perform. This retention of the old building was indeed rendered possible by the unusually large stock of gold coin held by the Bank,-Mr. Grenfell, the Governor, having stated, in his evidence before the Committee of Enquiry, that no inconvenience would arise "if the Mint were to cease coining sovereigns and half-sovereigns for a period of six months, or a year, or even more." Of course, if a continued coinage of gold had been required, it would have been difficult, if not impossible, to carry out the extensive building alterations which appear to be desirable. As a result, therefore, no gold has been coined during the year 1881, the strength of the mint having been devoted to the coinage of silver, of which coins have been made to the value of £3,306,000.

With regard to the silver coinage it is stated :—

The total amount of threepences issued was £23,625, and showed a slight increase on the issues of 1880, although during two-thirds of the year applicants for small sums, instead of being supplied by the Mint, were, as in former years, referred to London banks which held a surplus stock. The demand for threepences, therefore, is still large.

The number of fourpences in circulation has again been reduced by the withdrawal of pieces of the nominal value of £4,000. It may be assumed, therefore, as mentioned in my last Report, that these coins, none of which have been issued since 1856, will soon practically disappear from circulation.

Half-crowns of the nominal value of £229,420 have been issued during the year, and the total amount of these coins placed in circulation since 1874, when their coinage was resumed, has been thus raised to £1,221,490.

The average price at which silver was purchased during the year was 5113d. per ounce, as against 521d. in 1880, and 524d. in 1879. The following is the average price of standard silver in the London market for each month in 1881 :

Annual Report of the Deputy Master of the Mint for 1881. 421

This gives an average price for the year of 51d. per ounce, as against 524d. in 1880, and 513d. in 1879, and shows that the Mint was able to purchase its requirements at only above the average price of the year.

Referring to India, it appears that the silver coinage there has been far less than last year, having been only £4,250,000, as against £10,250,000 in the preceding year. The following table shows the "imports" and "coinage" during the last seven

It is said that the quantity of country silver in the shape of ornaments, &c., received at the Bombay Mint in 1880-81 was considerably less than in the previous years, having only amounted to £350,000, as against £1,370,000 in 1879-80.

The portion of the report, however, which will have the chief interest for the readers of this Journal consists of the DeputyMaster's remarks on the condition of the gold coinage. Mr. Fremantle says

There is a subject of much importance to which it is my duty, before concluding this Report, to call their Lordships' attention.

It has for many years been evident that the condition of the gold coinage has been growing more and more unsatisfactory, and nothing but the inability of the Mint to undertake the work of an extensive re-coinage has prevented my bringing the subject before their Lordships at an earlier period. The facts of the case have been known to successive Chancellors of the Exchequer, but so long as the capacity of the Mint remained inadequate, and the state of its machinery was such as to make it difficult to meet even the ordinary requirements of the coinage, it was impossible to deal successfully with so large an increase of work as a re-coinage of gold would entail, and public attention has not therefore of late years been officially directed to the matter.

The position of the public and the Government in regard to the question may be briefly stated. Receivers of light gold coins, i.e., coins below the "least current weight" prescribed by the Coinage Act, are, by the 7th section of the Act, obliged to cut or deface them, but the law on this point is systematically disregarded by bankers, by most of the public departments, and by the public generally. It is observed, however, by the Bank of England, by whom bankers sending in light gold are called upon to pay the difference between its nominal and metallic value, with the

natural result that the larger part of the light coin which the latter receive is purposely replaced in circulation, while a small proportion only is allowed to find its way to the Bank of England or its branches, and thence to the Mint for re-coinage. The state of the gold currency has been the subject of careful inquiry at different times at the Mint and Bank of England by Mr. Stanley Jevons and other persons interested in the question, and more recently by Mr. John B. Martin, whose able paper, read before the Institute of Bankers on the 19th of April, 1882, contains the latest information on the subject. Experiments made by Mr. Jevons in 1868.† and confirmed by Mr. Martin, prove that a sovereign becomes light at the expiration of eighteen years from its date of issue, but no serious attempt has been made to withdraw light gold coins from circulation since 1844, or thirty-eight years ago.

On the 8th of June, 1842, the Treasury entered into an arrangement with the Bank of England that light gold should be received by the latter on behalf of the Government, and paid for by weight at 31. 178. 101d. per ounce, the rate at which gold coin is issued from the Mint. A Royal Proclamation was at the same time issued calling attention to the laws and regulations as to light gold coin, and directing Revenue officers and others to conform to them. Under this arrangement 11,137,000l. of light coin was received at the Mint and re-coined during the eighteen months from July, 1842, to February, 1844; and so great was the stimulus which appears to have been given to withdrawal that, during the subsequent fourteen months to the 31st of March, 1845, a further sum of 3,000,0007. in light gold was withdrawn from circulation, although the arrangement with the Government had come to an end, and the Bank of England appears so early as in January, 1843, to have reverted to its normal practice of paying for light coin at the rate of 31. 17s. 6d. only per ounce. The cost of the whole operation to the State, including the actual expense of re-coinage, was 67,8167. The 14,000,000l. thus withdrawn was estimated by the Bank of England at the time to represent the whole of the light gold then in circulation except about 5 per cent. The plan adopted in 1842-44, therefore, although it gave rise to much complaint on the part of the public, appears to have been in a great measure successful, but the question has in 1882 assumed a very different aspect. In 1842 the oldest sovereigns and half-sovereigns had only been about twenty-five years in circulation, the first issue having taken place in 1817, whereas in 1882 it is necessary to reckon with a coinage which was begun sixty-five years ago and which has been permitted during the last thirty-eight years to become lighter and lighter each year. The coins to be withdrawn, therefore, are obviously much lighter, and the loss on their withdrawal would consequently be greater than in 1842. Experiments made at the Mint in November, 1879, on a considerable parcel of light gold show that the average loss of weight in worn sovereigns and half-sovereigns may be taken to be 3d. per £. Taking the gold circulation at 100,000,000, of which about 50 per cent. is light, the amount to be re-coined cannot be estimated at less than 50,000,000l., and it is also to be noted that the fineness of a large proportion of the coins now in course of withdrawal is deficient, as explained in former Reports, to the extent of about 400l. per million. It follows that the

* "Our Gold Coinage: an Inquiry into its present defective condition, with a view to its Reform." Journal of the Institute of Bankers, Vol. III., Part 6. (1882).

Journel of the Statistical Society, Vol. XXXI., Page 426. (1868). "Money." By Professor Stanley Jevons, F.R.S., Page 156 (1875).