subject to twelve months' notice, which could be given after August, 1855, and conditional on the repayment of the loan of $311,015,100 to the Bank; and thus the absence of any specified term has prevented the automatic periodical revision of the Act itself; though, of course, the terms of the management of the National Debt, the rate of interest of the various advances to the Government, and the conditions of carrying on the banking accounts of the Government, have been revised from time to time, as a matter of private arrangement between the Treasury and the Bank.
The end Sir Robert Peel had in view was, as I have mentioned before, to establish the currency safely and absolutely on a gold basis. The fiduciary issue, that is the only part of the note issue not covered by bullion, was fixed at an amount which was, from experience, considered to be the possible minimum circulation: everything above this amount was to be, and must be, covered by gold. "According to the ancient monetary policy of this country," he says, "that which is implied by the word 'pound' is a certain definite quantity of gold, with a mark upon it to determine its weight and fineness, and that the engagement to pay a pound means nothing, and can mean nothing else, than the promise to pay the holder, when he demands it, that definite quantity of gold. There is no doubt some expense in the maintenance of a metallic circulation, but none, in my opinion, sufficient to countervail the advantage of having gold coin generally distributed throughout the country, accessible to all, and the foundation of paper credit and currency."
The result of his policy, he anticipated, would be that, as commerce increased, the circulation of bank notes would also increase. Only one speaker during the debates considered that the restrictions on the issue of notes were too stringent, and foreshadowed the possibility that some other form of paper credit would be substituted for the notes, but what form was not indicated, and no one could have anticipated the extent to which joint stock banks were to grow, and how deposit banking was to take the place of bank note circulation.
Sir Robert Peel does indeed mention the word "deposits."