TRANSACTIONS OF SECTION P. 643 



!oiut as at pi'03eut (3(^. for 20/.) and proceed by steps of quo penny's difierenco to 

 s., aud by a greater leap to Is. 6d., for the most valuable dwellings, the residential 

 shops, &c., being treated iu a similar manner, but (as now) with more indulgence. 

 A rough calculation shows that the same amount as at present could thus bo 

 secured by the Chancellor of the Exchequer on a better graduated scale than the 

 existing one, and therefore at the cost of less suftering to the community at large. 



FRIDAY, AUGUST Z. 



The following Papers were read:— 



1. The Influence of the Hate of Interest on Prices. 

 By Professor Wicksell, Ph.D. 



1. The rate of interest influences prices not by its absolute, but by its 

 relative, height, in proportion to the existing rate of profit on capital, prices being 

 forced up lohen the rate of interest on money is low in proportion to average 

 profit, and pressed down in the opposite case. 



2. A difference between the two rates (of interest and of profit) generally 

 occurs, not by the rate of profit remaining constant and the interest on money 

 spontaneously rising or sinking, but, on the contrary, by the inevitable alterations 

 in the rate of profit itself, which are followed, but not very rapidly, by similar 

 changes in the rate of interest, so as to give the impression that the rise or fall 

 of prices is due to a similar movement in the rate of interest, whereas in reality 

 it is caused by the interest of money not rising or falling fast enough in com- 

 parison with the existing rate of profit. 



3. Yet under present circumstances, so long as metallic money remains 

 the standard of value and free coinage of gold is allowed, the regulationof prices 

 by the rate of interest has a very limited range, the banks being forced by the 

 reduction or the increase of their reserves to heighten or lower their discount, as 

 the case may be, so that the production of gold always takes the lead in the long 

 run in determining the average level of prices. 



4. If this obstacle be removed, however, by the free coinage of gold being 

 stopped, as that of silver has been stopped, an appropriate manipulation of the rate 

 of interest by common action of the leading banks of the world would be the 

 means of keeping the general level of prices, and consequently ' the value of 

 money,' practically constant. 



2. The Sjiecie Reserve of the United Kingdom. 

 By E.. H. Inglis Palgrave, F.B.S. 



The question as to the amount of the specie reserves which the banks of the 

 United Kingdom should maintain is one which comes forward for consideration 

 continually. In a recent address Mr. Alfred Clayton Cole, one of the best-known 

 directors of the Bank of England, has again called attention to the subject. In 

 this public utterance Mr. Cole declared that, in respect to the reserve, it was no 

 business of the Bank of England during any time of crisis to take care of the other 

 banks of the country. All the Bank of England was called on to do was to take 

 care of itself. The subject has since been discussed on several occasions by leading 

 London Bankers, the Governor of the Bank, the Chancellor of the Exchequer, 

 Lord Goschen, and others. A general opinion has been expressed that the Specie 

 lieserves require to be strengthened. 



If this opinion expressed by Mr. Cole is to be the guiding maxim of the Bank 

 of England in future, it behoves the other banks to take some steps towards 

 ensuring their own safety. In doing this there are three main courses which 

 might be followed ; — 



1. For the banks to increase their balances at the Bank of England. 



2. To establish a separate reserve of their own which might be kept at the 



T T 2 



