of keeping up a large stock of
gold in the coffers of the bank. Hear Mr Thomson again upon this
subject:--

"It would occasion greater loss than the mere profit on the small
notes, inasmuch as at present we have to keep on hand a large
stock of small notes, to fill up in the circle those that are
taken from it by tear and wear, and to meet occasional demands.
The present mode of keeping up this stock, which consists of our
own notes, is done at no expense; if we had to keep a
corresponding stock of gold to keep up the circle in the same
proportion, we would, perhaps, if there is L1000 dispersed in
small notes, require to keep up a protecting fund of L500 to meet
that, or something in that proportion. So that, upon the whole,
if there was L1,800,000, which was the sum assumed of notes in
circulation, withdrawn, we would require to fill up the place,
L1,800,000, in gold, and in order to fill our coffers with a
protecting stock, perhaps from _seven to nine hundred thousand_,
to keep up the stock; and, in addition to that, there is the
expense of transmission from one part of the country to another,
and the bringing it from London."

The small note circulation is here estimated at L1,800,000 but there
is no doubt that it is now considerably larger. Taking it, however, at
Mr Thomson's calculation, what a fearful amount of unoccupied and
inoperative capital is here! This, be it observed also, is only the
first reserve, which at present is represented by the small notes of
the bank. According to the later evidence of Mr Blair, the Scottish
banks are in the habit of holding, _besides this_, a further reserve
of gold and Bank of England notes, equal to _a fourth of their
circulation_, without taking into account exchequer bills, or other
convertible securities which bear interest.

Thus it follows, as a matter of course, that if the small notes were
abolished, and a gold currency established, there would not be room in
the country for one-fourth of the present number of banks. If the
banks are removed, and more especially the branches, which must
inevitably fall, we should like to know from any theoretical
economist, even from Sir Robert Peel, how the country is to be
supplied with money?

So much for the effect which the introduction of a metallic currency
would have upon the banking establishments. Let us now see what would
be the cons