5484 



MONEY BILL 



precious metals have caused great 

 variations in the general level of 

 prices, with far-reaching economic 

 effects. If the supply of money 

 cannot be increased as fast as the 

 production of other goods, the buy- 

 ing power of money rises and the 

 prices of other goods fall, and this 

 fall in prices has a depressing effect 

 upon industry. Some historians, 

 indeed, have attributed the de- 

 crepitude which overtook the 

 Roman Empire to scarcity of the 

 precious metals. On the other 

 hand, great additions to the supply 

 of metals, though the consequent 

 rise in prices has a stimulating effect 

 on production, have led to inflation 

 and economic disturbance. 



Coined money, however, has long 

 ceased to be the sole commodity 

 used for the purpose of exchange, 

 having been superseded, except for 

 small retail transactions, by notes 

 issued by banks or Governments, 

 and in countries at a high state of 

 economic civilization by cheques 

 drawn on banks. But these credit 

 instruments, as they are called, 

 only won the essential quality of 

 acceptability by being at all times 

 and without question convertible 

 on demand into gold, which had in 

 the meantime gained undisputed 

 supremacy over silver as the metal 

 of universal acceptability. Bank- 

 notes are believed to have origin- 

 ated from the custom that grew up 

 by which people deposited their 

 stores of money and other valu- 

 ables in the hands of the gold- 

 smiths, who were the medieval 

 forerunners of the bankers. The 

 receipts given by the goldsmiths 

 against deposits of money began 

 to be used for making payments by 

 their holders, who were thus saved 

 the trouble of going and taking 

 money from goldsmiths ; this pro- 

 cess involved no economy of metal, 

 since the receipt represented so 

 much metal deposited. 



The first real step to the develop- 

 ment of a credit system was taken 

 when the goldsmiths gave to bor- 

 rowers, not a bagful of coins, but a 

 paper promise to pay a certain 

 sum. The goldsmiths were en- 

 couraged to do this by the experi- 

 ence which had taught them that 

 their promises to pay would pass 

 current as money and would not, 

 for some time, come back to them 

 for payment ; they could thus keep 

 a considerable amount of paper 

 outstanding against a much smaller 

 reserve of metal. This system, 

 evolved by bankers, laid the founda- 

 tion of banking by note issue, which 

 provided the community with a 

 form of money which could be ex- 

 panded to a very considerable ex- 

 tent beyond the limits of the 

 metallic reserve on which it was 



based. In so far as banknotes were 

 accepted in exchange for goods and 

 services in the country in which 

 they were current, they thus per- 

 formed exactly the same service, and 

 had the same effect upon prices, 

 as metallic money, and should 

 therefore, from the practical point 

 of view, be included within any 

 definition of money that is 

 adopted. 



Some economists, however, have 

 maintained that the title money 

 should be applied only to coin ; 

 others, again, have thought that it 

 should be restricted to coin and 

 such credit instruments as are legal 

 tender, and so have to be accepted 

 by creditors and sellers in payment 

 of debts or for goods sold. 



Note Issue in England 

 In England legal tender money 

 consists of gold and Bank of Eng- 

 land notes, and the Treasury notes 

 (which have been issued since the 

 Great War) up to any amount ; of 

 silver up to 40s. ; and of bronze up 

 to Is. The note issue of the Bank 

 of England has been very strictly 

 limited under the Bank Act of 

 1844, by the provisions of which 

 every note above a certain specified 

 amount has to be represented by 

 its exact equivalent in metal. 

 The Bank Act allows a portion of 

 this metal to be in silver, but the 

 whole of it is in fact always held 

 in gold. The limit of the note issue, 

 which might be backed not by 

 metal but by securities, had been 

 raised before the Great War to 

 18,450,000. The Bank Act was 

 superseded when the Great War 

 came by the Currency and Notes 

 Act of 1914, under which the legal 

 limit on the Bank's note issue was 

 withdrawn, and Treasury notes 

 were created. But it has been re- 

 commended by a committee ap- 

 pointed to inquire into the matter 

 that steps should be taken as soon 

 as possible to re-establish the 

 British banking system more or 

 less on the old basis. 



Under that system British 

 money consisted of gold and silver 

 coins, Bank of England notes 

 (which were rarely used in exchange 

 for goods and services, but chiefly 

 as -reserves hi the hands of the 

 banks against demands made upon 

 them by their customers for 

 money), and cheques drawn on the 

 banks by their customers. By these 

 cheques by far the greater number 

 of commercial transactions were 

 settled, and the cheque thus seems 

 to establish its claim to be con- 

 sidered as money, which we can 

 define as any article or token, 

 whether of metal, paper, or any 

 other substance, which is commonly 

 taken in payment for goods and 

 services. For international pur- 



poses gold seems likely to be the 

 only commodity that will possess 

 the essential quality of universal 

 acceptability. 



Bibliography. Treatise on the 

 Coins of the Realm, Lord Liverpool, 

 new ed. 1880 ; Money and the 

 Mechanism of Exchange, W. S. 

 Jevons, 8th ed. 1887 ; History of 

 Currency, 1252-1894, W. A. Shaw, 

 1895 ; The Evolution of Modern 

 Money, W. W. Carlile, 1901; A 

 Short History of Coins and Cur- 

 rency, Lord Avebury, 1902 ; Money 

 and Monetary Problems, J. S. 

 Nicholson, 6th ed., 1902 ; History 

 of Money in the British Isles and 

 the United States, A. F. Dodd,1911 ; 

 Money, E. Caiman, 3rd. ed., 1921. 



Money, SIR LEO GEORGE 

 CHIOZZA (b. 1870). British politi- 

 cian and economist. Born at 

 Genoa, June 13, 1870, of mixed 

 Italian and English parentage, he 

 settled in England, and in 1903 as- 

 sumed the additional name of 

 Money. In 1906 he entered Parlia- 

 ment as Liberal M.P. for N. Pad- 

 dington, and represented E. 

 Northamptonshire, 1910-18. On 

 the outbreak of the Great War he 

 joined the R.N.V.R., and after- 

 wards served on various govern- 

 ment committees. In 1915 he 

 became parliamentary private sec- 

 retary to Lloyd George, and was 

 knighted, and from 1916-18 was 

 parliamentary secretary to the 

 ministry of shipping. His books 

 imiiude Riches and Poverty, 1905, 

 insurance versus Poverty, 1912 ; 

 The Nation's Wealth, 1914; The 

 Triumph of Nationalization, 1920. 



Money Bill. Any proposal put 

 before parliament which involves 

 the expenditure of public money. 

 The rules and procedure for the 

 passage of such measures into law 

 differ from those of ordinary bills 

 thus : (1 ) They must be introduced 

 by a minister of the crown ; no 

 private member can introduce one. 

 The reason for this is that ministers 

 are responsible for finding the 

 necessary money, and their arrange- 

 ments would be upset if they had 

 to find sums which were no part of 

 their plans. (2) They can only 

 originate in the House of Commons. 

 By resolutions of 1678 and 1860 

 the Commons established the sole 

 right of introducing and altering 

 money bills, and this was strength- 

 ened by the Parliament Act of 

 1911. (3) By the Parliament Act 

 the House of Lords was deprived 

 of the right of rejecting money 

 bills, its only remaining power over 

 them. Disputes as to whether a 

 certain measure is or is not a money 

 bill are now avoided by a defining 

 clause in the Parliament Act which 

 further leaves the decision in the 

 hands of the Speaker. See Parlia- 

 ment Act. 



