Macaulay on Depreciated Currency—­Its Evils To-day—­The Plight of the Rentier—­Mr Goodenough’s Suggestion—­Sir Edward Holden’s Criticisms of the Currency Committee—­His Scheme of Reform—­Two Departments or One in the Bank of England?—­Not a Vital Question—­The Ratio of Notes to Gold—­Objections to a Hard-and-fast Ratio—­The Limit on Note Issues—­The Federal Reserve Act and American Optimism—­Currency and Commercial Paper—­A Central Gold Reserve with Central Control.

Everyone has read, and most of us have forgotten, the great passage in Macaulay’s history which describes the evils of a disordered currency.  “It may well be doubted,” he says, “whether all the misery which had been inflicted on the English nation in a quarter of a century by bad Kings, bad Ministers, bad Parliaments and bad judges was equal to the misery caused in a single year by bad crowns and bad shillings....  While the honour and independence of the State were sold to a foreign Power, while chartered rights were invaded, while fundamental laws were violated, hundreds of thousands of quiet, honest and industrious families laboured and traded, ate their meals and lay down to rest in comfort and security.  Whether Whigs or Tories, Protestants or Jesuits were uppermost, the grazier drove his beasts to market, the grocer weighed out his currants, the draper measured out his broadcloth, the hum of buyers and sellers was as loud as ever in the towns, the harvest-time was celebrated as joyously as ever in the hamlets, the cream overflowed the pails of Cheshire, the apple juice foamed in the presses of Herefordshire, the piles of crockery glowed in the furnaces of the Trent, and the barrows of coal rolled fast along the timber railways of the Tyne.  But when the great instrument of exchange became thoroughly deranged, all trade, all industry, were smitten as with a palsy....  Nothing could be purchased without a dispute.  Over every counter there was wrangling from morning to night.  The workman and his employer had a quarrel as regularly as the Saturday came round.  On a fair-day or a market-day the clamours, the reproaches, the taunts, the curses, were incessant; and it was well if no booth was overturned, and no head broken....  The price of the necessaries of life, of shoes, of ale, of oatmeal, rose fast.  The labourer found that the bit of metal which, when he received it was called a shilling, would hardly, when he wanted to purchase a pot of beer or a loaf of rye bread, go as far as sixpence.”

From some of the evils thus dazzlingly described we are happily free in these times.  We are not cursed with a currency composed of coins which are good, bad and indifferent, with the result that the public gets the bad and indifferent while the nimble bullion dealers absorb and export the good.  There is nothing to choose between one piece of paper and another, and all that is wrong with them is that there are too many of them.  But the general result as it affects the labourer who wants to purchase a pot of