that the banks do not vary the amount of their gold and silver with every variation of the circulation. The proportion of silver to gold kept by all the banks, has varied from 20 to 33 per cent., but the proportion varies very much with different banks. The amount of gold necessary to be kept against any given amount of notes in circulation is purely a question of management, and depends upon a variety of circumstances. The degree of public confidence the bank may have acquired, the excitable character of the population, the state of commercial cre lit, the facility of obtaining supplies, and the rapidity of communication with its branches, are all to be taken into calculation by a prudent banker. Gold can now be so readily obtained from England by means of steamboats, and distributed throughout Ireland by means of railways, that so large an amount may not be so necessary as formerly. The railways and the electric telegraph are useful to bankers, and present a striking instance of the utility of scientific discoveries to men of business. Abolition of Small Notes.-The following is the report of the Select Committee of the House of Commons, made in 1826, respecting the abolition in Ireland of notes under 51. : "With respect to the circulation of Ireland, the inquiries of your Committee have been less extensive than those which they have instituted with respect to Scotland. "The first law in Ireland which restrained the negotiation of promissory notes, was an Act passed in the Irish Parliament in the year 1799. "The preamble recites that various notes, bills of exchange, and drafts for money, have been for some time past circulated in lieu of cash, to the great prejudice of trade and public credit; and that many of such notes are made payable under certain terms, with which the poorer classes of manufacturers and others cannot comply, unless by submitting to great extortion and abuse. It adds, that the issue of such notes has very much tended to increase the pernicious crime of forgery; and the Act proceeds to apply to notes between the value of 57. and 20s. similar restrictions to those which had been applied to such notes issued in England by the Act which passed in the year 1777. It permits, however, during the suspension of cash payments by the Bank of Ireland, the issue of bankpost bills, bills of exchange, and drafts under certain regulations, for any sums not less than three guineas. This Act did not extend to the Bank of Ireland. "In 1805, this and some other Acts which had passed in the interim relating to the issue of small notes, were repealed; and notes under 20s., which had been previously admitted under certain regulations by the Act of 1799, were declared void. "There is at present no law in force imposing any limitation to the period for which notes for a sum not less than 20s. may be issued in Ireland. "A tolerably correct estimate of the amount of promissory notes, above and below 51., circulating in Ireland, may be formed from the subjoined returns made by the Bank of Ireland, and by other banks at present established in that country. "Bank of Ireland notes.-An account of the average amount of the Bank of Ireland notes of 57. and upwards (including bank-post bills) for the years 1820, 1821, 1822, 1823, 1824, and 1825: Irish currency. "Notes and post bills of 51. and upwards ...... £ An account of the average amount of the Bank of Ireland notes under the value of 57. (including bank-post bills) for the years 1820, 1821, 1822, 1823, 1824, and 1825: ... Irish currency. 8. d. "Notes and post bills under the value of 51. 1,643,828 0 5 "It appears from the evidence that a practice prevails in Ireland of issuing notes for the payment of sums between one and two pounds, for three guineas, and other fractional sums.* "Your Committee see no public advantage arising out of this practice, and they are of opinion that it ought to be discontinued, as it tends to dispense with the silver coin, and practically to exclude it from circulation. "Your Committee hesitate, in the present imperfect state of their information, to pronounce a decisive opinion upon the general measures which it may be fitting to adopt with respect to the paper currency of Ireland. "Although they are inclined to think that it would not be advisable to take any immediate step for the purpose of preventing the issue of small notes in Ireland, their impression undoubtedly is, that a metallic currency ought ultimately to be the basis of the circulation in that country. "It will probably be deemed advisable to fix a definite, though not an early period, at which the circulation in Ireland of all notes below 51. shall cease; and it is deserving of consideration, whether measures might not be adopted in the interim for the purpose of insuring such a final result by gradual, though cautious, advances towards it." The following is a summary of the evidence given before the Committees of the two Houses of Parliament, as to the effect of abolishing the small note circulation in Ireland : 1. Small currency is necessary to carry on the commercial transactions of the country. * The Act 8 & 9 Vict. c. 37 (1845) prohibits the issue of notes for fractional parts of a pound, consequently the practice referred to has since been discontinued.-EDITOR. JOHN ACHESON SMYTH, Esq., Agent for the Belfast Bank at Londonderry, "In Lancashire, I believe all the raw materials are bought in large parcels, and by bills. In Ireland, the raw material is all bought in small parcels, and all in small notes. In Lancashire, there is only cash wanted to pay the workmen, but we want it both to pay the workmen and to buy the raw material. The provision and grain that we send to England are also bought in small notes, and we are reimbursed by drawing bills for our shipments." PIERCE MAHONY, Esq., Solicitor to the Provincial Bank of Ireland. "If the banks were prevented issuing notes under the amount of 51., would any inconveniences arise in conducting the trade of the South of Ireland? The trade of Ireland generally, and especially in the South of Ireland, would be greatly inconvenienced, and the growth of manufactures would be decidedly checked, if not destroyed, by such a measure. From the great subdivision of land in Ireland, and particularly in the South and West (where the population is almost exclusively agricultural), the produce is disposed of in small portions, scarcely ever representing 57., and almost universally under that amount. I am of opinion that the withdrawal of all notes under that amount would have the effect of curtailing the accommodation the banks now afford to the public to a ruinous extent, and that the trade of the country under such circumstances would not afford profitable employment for banking capital to any extent; and, therefore, I should anticipate the withdrawal of such estab lishments, except, perhaps, at Cork and Belfast. In the south and west of Ireland, from the nature of the provision and corn trade, the chief demand for notes or for gold commences in October, and continues until March, when that trade is nearly over for the season. From March until October the butter trade is almost the only one in the South and West of Ireland; and as that trade would not employ all the capital that is required in the winter season, the effect would be, if sovereigns were substituted for small notes, that the extra supply required for the corn, beef, and pork trade, must remain idle in the banker's chest, or be remitted at great risk and expense for employment elsewhere during the summer and autumn. "Do you think, if a metallic circulation were adopted, that there would be a difficulty in maintaining that metallic circulation?—I do; because the trade in the south and west of Ireland is periodical; the remittances from those districts of Ireland would force the gold away at certain periods, and it must be returned at others, with considerable expense, to meet the trade of the country."t 2. A gold currency would be more inconvenient than notes, and would not be so well liked by the people. * Commons' Report, p. 77. † Ibid. pp. 250, 251. LEONARD DOBBIN, Esq.,* Agent for the Northern Banking Company of "Do the people of the north of Ireland manifest any wish for gold in preference to notes, or for notes in preference to gold?—They decidedly prefer notes, and the weavers have refused to carry gold out of the market lately. Can you assign any reason for this preference?-There are many reasons that I could assign. The bank notes are now the established currency; the people are perfectly acquainted with them. If a man should lose notes, or a house be robbed, or if there is a forgery, it would be much better for them to trace notes than it would gold. I have often assisted poor people in tracing notes that were robbed, and forged notes, whereas the gold could not be traced so readily. Another reason I would give is this, guineas became light, and were troublesome to the people. When standing beam there was 1s. charged, and when lighter than standing beam 2s. 6d. ; and when gold was scarce, and bank notes not a legal tender, the land agents refusing to take anything but gold, the tenants were obliged to pay from 1s. to 4s. on a guinea, discount. Some agents would only take gold."+ J. A. SMYTH, Esq., Linen Merchant, and Agent for the Belfast Bank at Londonderry. "I am in the habit of employing my linen buyers to go to the country markets, and I must supply them with the week's money before they start, perhaps five hundred or a thousand pounds. They have to go through the interior of the country, and do not return for a week. They make their purchases all in small quantities, and it is more convenient for them to carry notes than gold."+ ARTHUR GUINNESS, Esq., Director of the Bank of Ireland. "I conceive, that with the persons who handle the circulation of the country, there is a decided preference in favour of small notes over cash in every respect. I speak from mine own experience; for I remember perfectly well, before the restrictions upon cash payments, when gold was a great inconvenience in trade. I speak of those who handle the currency of the country, among whom I think the preference is in favour of the small notes, as more convenient, more portable, and less liable to counterfeit. I conceive these to form the general ground of preference."§ 3. The profits of the banking establishments would be so much diminished, that they could not extend the same accommodation to the agricultural and commercial classes. *This gentleman was afterwards agent for the Bank of Ireland at Armagh, and M.P. for that place. † Commons' Report, p. 243. § Commons' Report, p. 237. Lords' Report, p. 7. W. P. LUNNEL, Esq., Director of the Bank of Ireland. "If the notes under 57. were prohibited, would the profits of the Bank of Ireland be materially affected by such prohibition?—I should expect that they would suffer: they must sacrifice a certain profit. "Have you considered to what extent the profits of other bankers would be affected?-I should expect that the principal circulation of the country bankers is in small notes, and therefore in that proportion they would suffer." JOHN HOLMES HOUSTON, Esq., Banker at Belfast. "If all the notes under 51. were prohibited to be issued, would it be worth while, in your opinion, to keep the establishment of a bank at Belfast ?--I do not think it would, except by carrying it on in the same manner as it formerly was-to keep a discount office, charging a commission on discounting bills, because 57. notes would not circulate. Then our circulation would be so trifling it would not answer."t H. A. DOUGLAS, Esq., Director of the Provincial Bank of Ireland. "I consider the cash account system and the one-pound circulation so connected, that if the notes are withdrawn, it is understood that our establishment will not grant any further cash-credits. The business which we carry on, even if we charged a higher rate of interest, or a commission, would not be of sufficient magnitude to repay us for the expense of our establishment, independent of our notes. If the issue of small notes be withdrawn, then we cannot afford to allow interest on deposits." 4. The abolition of small notes would prevent the investment of British capital in the present banking establishments. T. S. RICE, Esq., M.P. (LORD MONTEAGLE), Director of the Provincial Bank of Ireland. "Is it your opinion, that if all notes under 57. were abolished, a considerable inconvenience would arise in the ordinary traffic in Ireland?— I conceive that it would. I conceive that the first effect of the extinetion of all notes below 51. would be a much more considerable diminution of the general mass of the circulating medium in Ireland than in England. "I fear extremely that if anything were to occur which materially diminished the profits of our establishment, it would have the effect of depriving us of one of the chief benefits of the establishment, namely, the support and control of British capitalists, and conducting the bank by British merchants, and upon British commercial principles. I conceive a rate of profit, rather higher than the average rate of profits, is essential to induce persons so circumstanced to engage in such a business, more particularly when it is considered that there is no limitation of responsibility by the grant of charters."§ *Lords' Report, p. 108. Ibid. pp. 24, 26, 27. ↑ Ibid. p. 35. |