“It would be strange if we did not know what a bank note was, would it not, father, when you have been spreading them before our eyes continually for this twelvemonth? First comes ‘I promise to pay——’”
“Never mind the words. The words in which the promise is made are not essential.”[essential.”]
“A bank note is a promissory note for a definite sum; and it must be stamped.”
“And payable on demand. Do not forget that, pray. It is this which makes it differ from all other promissory notes.—Well, now: what is the intrinsic value of a bank note? Its cost of production is so small as to be scarcely calculable.”
“It is, in fact, circulating credit,” observed Melea; “which is certainly not among the things which can be destroyed by fire.”
“It is only the representative of value which goes off in smoke,” observed Horace. “The value remains.”
“Where? In what form?”
“That depends upon the nature of the paper currency. Before bank notes assumed their present form,—when they were merely promissory notes, which it occurred to bankers to discount as they would any other kind of bills, the property of the issuers was answerable for them, like the goods of any merchant who pays in bills; and the extent of the issue was determined by the banker’s credit. Then came the time when all bank notes were convertible into coin, at the pleasure of the holder; and then the value, of which the notes were the representatives, lay in the banker’s coffers, in the form of gold and silver money. As for the actual value of the Bank of England notes issued since the Restriction Act passed, you had better ask somebody else where it is deposited, and in what form, for I cannot pretend to tell you. I only know that the sole security the public has for ever recovering it lies in the honour of the managers of the Bank of England.”
“What is that Restriction Act?” asked Melea. “I have heard of it till I am weary of the very name; and I have no clear notion about it, except that it passed in 1797.”
“Before this time,” replied her brother, “by this 9th of May, 1814, every banker’s daughter in England ought to be familiar with the currency romance of 1797.”