quantity of English gold coins always circulating out of the country to feel that a larger number may exist than it may be possible to estimate by any enumeration, however careful. The report of the Master of the Mint and Colonel Smith, which will be found in the Appendix to this paper, refers, as a circumstance which would increase the charge of the maintenance of the gold currency, to "the number of sovereigns, estimated at about 30 millions, which circulate in foreign countries.' This report is dated in the year 1869, and, whatever the amount may be, it is not likely to be smaller at the present time than it was then. Again, the sovereign coins may prove to form a somewhat larger proportion of the total circulation than has been estimated, and the half-sovereign coins a somewhat smaller proportion. The accepted estimate of the British gold coinage now in existence is £100,000,000, but it might very likely happen that £5,000,000 more gold circulation, that is to say, £105,000,000, might have to be operated on, divided somewhat thus:£87,500,000 in sovereigns.

17,500,000 in half-sovereigns.

£105,000,000

instead of there being £80,000,000 in sovereigns and £20,000,000 in half-sovereigns as previously estimated. A variation like this would entirely upset all the calculations based on the expectation of profit. Again, the wear and tear of the gold circulation may prove to be more evenly or less evenly distributed over the whole coinage than has been expected. Should a large proportion of coins turn out to be just over the minimum legal tender limit to be allowed, this would be to the disadvantage of the Government both ways, as they would have to accept a larger quantity of very light coin, and yet have a larger deficiency in weight to make up.

It would be best to represent to Mr. Childers, that in the event of his seriously proposing to proceed with the plan contained in the Coinage Bill, the most prudent course would be to deal with the coinage in sovereigns first. This would show two things clearly :First, the actual cost of bringing the sovereigns to standard value; second, the probable circulation in half-sovereigns. A more certain basis for calculation would thus be secured than can be obtained now. I have not in the estimate given above made any addition in the form of profit for the prospective growth of the half-sovereign circulation expected by Mr. Childers, for the reason that I greatly doubt whether any such increase would be found to take place. There are many sound reasons against placing too much confidence on expectations in prospective finance, and though there has been a considerable increase in the employment of half-sovereigns of late years, it is quite possible that such an increase may not continue, and more than likely that, even if it did, the Exchequer would not reap that benefit from it which is looked for.

7.-Metallic Circulation and Token Money.

To examine into this part of the question requires us to consider the amount of the token coinage, that is, of the silver coinage, now in use. We have to take the point up from the date of Mr. Jevons's estimate, given in his paper read to the Statistical Society in 1868. Mr. Jevons thought £14,000,000 a probable amount at that date. Since then, about £10,275,000 in nominal value of silver coin has been minted, and about £3,700,000 withdrawn, leaving an addition of about £6,500,000. An allowance must be made for loss, destruction, and exportation of the silver coin, which during sixteen years must have amounted to a considerable sum. It may be supposed that something like £18,000,000 or £18,500,000 is now in circulation in silver coin. The bronze coinage in use is probably between £1,200,000 and £1,500,000. The existing token coinage is therefore probably rather below £20,000,000.

To this amount it was intended, by the Chancellor of the Exchequer's proposal, to add £20,000,000 more, in the form of ten-shilling pieces. The whole metallic circulation on the basis of £80,000,000 in sovereigns and £20,000,000 in ten-shilling pieces would have worked out thus :

ESTIMATE OF METALLIC CIRCULATION ON BASIS OF TEN-SHILLING PIECES BEING TOKEN MONEY.

One-third of the metallic circulation would thus have been token money. Now, the fluctuations in the circulation of the token money at present in use are considerable. Bankers find themselves sometimes overstocked with silver money, which they experience a difficulty in disposing of; and, as the ten-shilling pieces would have doubled the token money in circulation, and would have been the part of the circulation most liable to fluctuation, it was necessary to provide some means of disposing of them when redundant, had the Coinage Bill come into operation.

8.-Method proposed for regulating the Circulation of the Gold Token Money.

As the Bank of England could not take the token coins into the Issue Department, the necessity arose for an arrangement with the Government for receiving them back when not required in circulation. The result of enquiries made of the Treasury, as to what their course of action with respect to them would be, is best given in the following extract from a circular issued to the members of the

Country Bankers' Association, by the Secretaries, Messrs. Waterhouse, Winterbotham, and Harrison :

"Fears having been expressed in some quarters that the Regulations which, under the 5th clause of the Bill, the Treasury will be entitled to make with regard to the exchange of the new coins for gold at the Mint, and by the Bank of England, might prevent country bankers from getting rid of any surplus stock of these coins which may accumulate in their hands, we wrote to the Treasury on the subject, and have received a reply from the Chancellor of the Exchequer stating that, although for administrative purposes it is necessary to provide that arrangements are to be made by the Treasury, it is the intention of the Chancellor of the Exchequer that those arrangements shall not interfere with the ready exchange at full nominal value of ten-shilling pieces at the Bank of England on behalf of the Mint.'"

Thus we see that the Government was practically liable to have the redundant ten-shilling pieces returned to them at any moment. The Government, in fact, was in the following dilemma. If it was not willing to receive the redundant ten-shilling coins when required, these could hardly be successfully placed into circulation. But if it did receive them, the doing so must at all events diminish the expected profit, even if it did not involve them in a loss. It has been shown above that, on the basis of Mr. Childers' estimate, the profit of the operation, allowing for the wear and tear up to date, could not have exceeded £970,000, and that a considerably smaller result was probable. Taking the highest estimate, however, it barely would have produced a fund sufficiently large to provide for keeping the sovereign coinage up to standard value. If on an average no more than £350,000 to £400,000 of the ten-shilling pieces were paid in, the cost of holding which would have fallen on this fund, this alone would have reduced it to an amount far too small to meet the annual charge. It should further be observed that the larger the amount of token coin in circulation the larger the fluctuations in it were likely to be. Hence it appears doubtful whether a larger circulation would be attended by a larger profit. I have made enquiries from London Banks-whose courteous assistance I desire thus to acknowledge and I find that, as it is, notwithstanding the great deficiency of weight in the bulk of the circulation, a large amount both of sovereigns and of half-sovereigns are at the present time paid into the Bank by bankers in London. It appears that there may be rather more than £45,000 a day in sovereigns, and £5,000 in half-sovereigns, paid in thus, taking one day with another. This would give about £13,500,000 or £14,000,000 in sovereigns and £1,500,000 or £1,600,000 in half-sovereigns paid in thus in the course of the year, the difference in the proportion between the two descriptions of coins being explained by the deficiency of weight in the half-sovereigns being so much greater than in the sovereigns. If we assume the money to remain with the Bank for about ten days or a fortnight before it was used, the Bank would have £70,000 to £80,000 of gold coin-half-sovereigns-always on hand, received in this

manner, at the present time, it would not be a large estimate. With the token coinage this amount would be largely increased, and might be expected to take a nearer proportion to the amount now paid to the Bank in sovereigns. Should the limits of the natural requirements of the country become exceeded, the redundant circulation would hence be followed by a great loss. The matter would work out thus :-A ten per cent. profit was expected, but if more than ten per cent. of the additional circulation were redundant this would be held at a loss.

In making these remarks on Mr. Childers' proposal, I trust that the due limits of financial criticism have not been overpast. It is true that it does not immediately concern bankers whether the Government proposal proves a financial success or a financial failure. But we must remember that bankers have brought forcibly before the Government the question of the condition of the gold coinage, and have pointed out not only that this was deteriorating, but that great inconvenience to the public arose therefrom, and it may fairly be said that bankers would be failing in their duty if, having a business knowledge of the condition of the coinage, and of the great fluctuations in the use of the coins by the public, they did not point out what would be the result, as a matter of business, of the plan proposed. I must, however, deprecate in the strongest terms the idea that it is more the duty of bankers, as a class, than of any other class in the community, to bear the charge of the maintenance of the gold coinage in its integrity. It is said sometimes, that as "dealers in money" they ought to bear a larger part of the charge of the maintenance of the coinage than other classes. This arises from a misconception of what the real business of banking is. Bankers really deal, not in "money as "coin," but in "money" as "book transfers of capital," and to place an additional tax on them for this purpose would be opposed to the first principle on which taxation should be founded-the equality of charge.

9. Further considerations on the proposed token ten-shilling piece. It should be remembered in dealing with this subject that the interests of the Australian colonies must be carefully considered in dealing with the question, in consequence of the large amounts of gold coin minted at Sydney and Melbourne. The value of the gold coin issued at these Mints is as follows:

Total of gold coin minted in Australia to December, 1883 £72,752,100

We must assume for this purpose that their interests have been considered, and that no difficulties will arise on this account.

No objection could be raised to the proposed token coin on the ground that there would be any difference in purchasing power between it and the full-weight half-sovereign. Unless a token circulation, whether formed of metal or of paper, becomes redundant, the purchasing power it possesses within the country where it is legal tender is equivalent to the coin of standard value which it displaces. Arrangements had been made to prevent the token coin from becoming redundant as mentioned above. Hence, no danger on this score was to be apprehended, so long as these arrangements were maintained. But the 10 per cent. difference in the value of the tokens might encourage the coinage of gold ten-shilling pieces by private persons outside the Mint. Such tokens, coined of standard gold, might be difficult to be distinguished from the real coins. Whether there was much risk of a surreptitious coinage of this class or not, some inconvenience would have arisen, and the risk of counterfeit coins being successfully passed would have been increased by the fact that the sovereigns and the ten-shilling pieces could not be weighed collectively, as sovereigns and half-sovereigns are weighed now. Besides these practical considerations there were others of at least equal importance. Very strong reasons may be brought forward against introducing a token coin made of the metal from which the standard of value of the country is formed. Such a coin would familiarize the people with the idea that there was no necessity for the gold coin to be of standard value, and, though we need have no apprehension, fortunately, that this step would be followed by the debasing of the sovereign itself, yet it cannot be said that the idea is a desirable one to encourage. When an idea of this class is once introduced there is always danger that, in time, it may be pressed home to its utmost limit, and prudence bids us refrain. The correct principle is that all coins formed of the metal from which the standard of value is made should be of full value. The gold coinage in sovereigns would, it is true, remain available to meet any foreign demand, or any demand for legal tender in coin at home. It is, however, quite possible that it might prove difficult to explain to foreigners what the exact effect of the alteration was. Those who have practical knowledge of exchange operations will most keenly appreciate the risk of any measure which might affect those operations in an adverse sense. Further, in times of pressure, whether from foreign or from domestic requirements, inconvenience might certainly arise from the legal tender coin being in sovereigns alone. One-fifth of the gold circulation of the country would no longer be available to meet such demands; and, though I trust the banking institutions of the country may never again be subject to such pressure as occurred in 1866, yet we should be very wrong to close our eyes against the possibility that such a pressure might recur, or to relax any precautions which might mitigate its force. I feel in this matter that the date 1866 is so long past that many of my