securities, and £18,288,640 represented by bullion. The Bank of England has no power by law to increase the currency in any other manner.[1] It holds the stipulated amount of securities, and for all the rest it must have bullion. This is the "cast-iron" system—the "hard and fast" line which the opponents of the Act say ruins us, and which the partisans of the Act say saves us. But I have nothing to do with its expediency here. All which is to my purpose is that our paper "legal tender," our bank notes, can only be obtained in this manner. If, therefore, an English banker retains a sum of Bank of England notes or coin in due proportion to his liabilities, he has a sufficient amount of the legal tender of this country, and he need not think of anything more.
But here a distinction must be made. It is to be observed that properly speaking we should not include in the "reserve" of a bank "legal tenders," or cash, which the bank keeps to transact its daily business. That is as much a part of its daily stock-in-trade as its desks or offices; or at any rate, whatever words we may choose to use, we must carefully distinguish between this cash in the till which is wanted every day, and the safety-fund, as we may call it, the special reserve held by the bank to meet extraordinary and unfrequent demands.
- ↑ See note on page 23.
