TRANSACTIONS OF SECTION F. 699 



Currency Note Issue. 



Statement of August 26, 1915. £ 



Scottish and Irish Banks of Issue — 



Other Bankers 1,204,000 



Trustee Savings Banks 469,000 



Currency Note Redemption Account : 



Gokl Coin and Bullion 28,500,000 



Government Securities 9,586,000 



Balance at the Bank of England .... 14,750,000 



£54,509,000 



Proportion of gold to notes outstanding, 52'6 per cent. 



This statement shows that at the end of August 1915 about 54,500,000?. of 

 Currency Notes were in circulation, that there was held against them 

 28,500,000Z. in gold with about 9,600,000?. Government securities, and that there- 

 was further a balance of 14,750,000?. at the Bank of England. 



The Currency Note issue is thus amply secured, but can any profit arise to^ 

 the Treasury from the issue? We must first estimate the expenses. The best 

 basis that we can find for estimating the cost at which the Treasury Note issue 

 is being worked is found in the Report of the Postmaster-General. In his; 

 Report for 1903 the net expenditure of the Post Office Savings Bank Depart- 

 ment is stated as ' representing an average cost per transaction of 5.93rf.'' 

 Professor Dicksee maintains that there is nothing in common between trans- 

 actions of this description and transactions in the Savings Bank Department.. 

 ' If there were,' he adds, ' it would be a simple matter for any competent 

 person with up-to-date ideas to reduce the costs of t'he Post Office Savings Bank 

 to a maximum of 2f?. per transaction.' At present there are no statistics avail- 

 able to show whether the cost of Treasury Notes equals or approaches the cost 

 of transactions in the Post Office Savings Bank. But there is a statement 

 in the evidence taken before the Select Committee of the House of Commons 

 on Banks of Issue in 1875 which shows that the cost of a one-pound! 

 note circulation, kept in a reasonable condition, could not be much less than 

 l^c?. per annum for every note issued. This would be a much smaller' 

 expense than that shown in the estimate based on the expenditure at the Post 

 Office, but, as more than 93,000,000?. of Currency Notes had been cancelled up to ' 

 August 1915, the expense of working the issue must be very large, and a profit 

 can hardly be looked for. Nor is the amount of gold acquired for the Bank of 

 England by the Currency Note issue really important considering the large 

 reserves which must always be held against it. 



On the other hand the experience of the Scottish and Irish banks of issue 

 shows that an issue of one-pound notes can be maintained at comparatively 

 small cost, and that in these countries notes of one pound circulate with great 

 freedom, even in some cases being preferred to gold. In foreign countries, too. 

 Governments have thought it worth while to issue notes of far lower value than 

 ten shillings. For years Italy is.«iued notes of one lira (9J^.), and France is 

 now issuing one-franc notes, and even 50-centime notes are not unknow.i. 

 Further, an allowance must be made for the fact that gold coin withdrawn from 

 active circulation is, for the time being, protected from wear. Hitherto the 

 Government has accepted responsibility for the loss in weight of gold coinage, 

 and the stoppage of this loss, should far outbalance the cost of printing notes. 



(iv) The Extent to which these Measures were Effective, Necessary, or Desirable. 



Our fourth question clearly invites a difference of opinion. We have already 

 explained the various Emergency Measures, and in the process we have criticised 

 them -where criticism seemed to be required. Consequently we say nothing 

 further about them here, but in order to place on record the objections which 

 may possibly be urged against them we print here Mr. A. H. Gibson's summary. 



The measures enumerated above restored confidence among the banks, who 

 had standing over them the possibility of a general run from their depositors 

 at a time when they were unable to convert any large part of their resources 



