stopped forthwith, and that if it were necessary to provide more currency it would be better for the banks to be allowed to issue notes themselves.  This suggestion involves, of course, a complete reversal of the principles on which our monetary system has grown up, since it has long been based on a note-issuing monopoly in the hands of the Bank of England.  But these are topsy-turvy days, in which greyheaded precedent is very justly at a heavy discount; and Mr Goodenough’s suggestion very practically gets over a big difficulty that stands in the way of stopping the stream of Bradburys.  This difficulty lies in the fact that if the banks were pulled at by their customers for currency and could not supply them with Bradbury notes, they would be forced to take notes from the Bank of England, with a bad effect on the appearance of its reserve.  If the business of issuing notes were put into the hands of the clearing banks, their power to do so would be limited by the extent of their assets, or of such of their assets as were thought fit to rank as backing for their notes.  In other words, the note-issuing business would once more have to be regulated on banking principles and controlled by the price asked, for advances, instead of expressing the helplessness and improvidence of an impecunious and invertebrate Government.  In this manner the new departure might be a convenient halfway-house on the way from chaos back to sanity.  But probably it is too revolutionary and goes too straight in the teeth of the Bank of England’s privilege to receive much practical consideration; and there is the question whether the public would take the new paper readily and whether it could be made legal tender.

Sir Edward Holden, in one of those masterly surveys of world finance with which he now instructs the shareholders of the London Joint City and Midland Bank, assembled at their annual meeting, gave much of his attention to an attack on the report of Lord Cunliffe’s Committee on Currency.  This was only to be expected, since the Committee had made recommendations on lines which were largely conservative and did not embody any of the reforms or changes which had been previously advocated by Sir Edward.  Being on this occasion chiefly critical, he did not make very clear in his latest speech the precise proposals that he favours.  For them we have to go back to his speech of a year ago, as reported in the Economist of February 2, 1918, p. 171, where he stated that “if the Bank (of England) had been working on the same principles as other national banks of issue, there would have been little ground for anxiety,” and that these principles are:—­

1.  One bank of issue and not divided into departments.

2.  Notes are created and issued on the security of bills of exchange and on the cash balance, so that a relation is established between the notes issued and the discounts.

3.  The notes issued are controlled by a fixed ratio of gold to notes or of the cash balance to notes.