the value of these changes as the Government chooses to enlarge or contract the issue.[1] But a practical New York banker has no need to think of the goodness or badness of this system at all; he need only keep enough "greenbacks" to pay all probable demands, and then he is fairly safe from the risk of failure.
By the law of England the legal tenders are gold and silver coin (the last for small amounts only), and Bank of England notes. But the number of our attainable bank notes is not, like American "greenbacks," dependent on the will of the State; it is limited by the provisions of the Act of 1844. That Act separates the Bank of England into two halves. The Issue Department only issues notes, and can only issue £15,000,000 on Government securities;[2] for all the rest it must have bullion deposited. Take, for example, an account, which may be considered an average
- ↑ Note to 12th edition. Mr. Bagehot was dealing with the period prior to the resumption of specie payments by the United States in 1879. Since then there has been no fluctuation in the value of the "greenback."
- ↑ This was the limit of issue against Government securities at the time of writing. By the Bank Act of 1844 the Bank was authorised to issue £14,000,000 against securities, and it was further provided that if any other English note-issuing Banks allowed their powers of issue to lapse, the Bank might be authorised to increase its issue against securities to the amount of two-thirds of the lapsed issues. Since 1844 the Bank has been empowered by successive Orders in Council to increase its issue against securities to the extent of £4,450,000 as follows:—
