“And are so many wanted?”
“We shall soon see,” muttered Mr. Berkeley. “I much doubt whether there will be two-thirds the number by this day twelvemonth.—Aye, you may well look frightened, girls. Confidence is shaken already, I can tell you; and even you can see what is likely to follow when banking credit is impaired.”
“If these terrible consequences happen, father, will you attribute them to the Bank of England being excused from paying cash?”
“That first destroyed the balance of the currency, which will have much to do to right itself again. Formerly, the Bank and its customers were a check upon each other, as are paper and gold, when the one is convertible into the other. As the profits of the Bank depend on the amount of its issues, the public is always sure of having money enough, while affairs take their natural course.—On the other hand, the public was as sure to make the Bank lose by an over-issue; since an over-issue raises the price of gold, which makes people eager to have gold for their notes, which again, of course, obliges the Bank to buy gold at a loss to coin money to pay for their own over-issues. Now, by this penalty being taken from over their heads, the balance of checks is destroyed. The people are more sure than ever of having money enough; but there is no security whatever against their having too much. Witness the state of our currency at this hour.”
“If we could but contrive any security against over-issue,” observed Melea, “we might do without coin (or at least gold coin) entirely: but, as there does not appear to be any such, I suppose we must go on with a mixed currency. What a pity such an expense cannot be saved!”
“And it is the more vexatious when one thinks of the loss by hoarding,” observed Fanny. “No one would think of hoarding paper.”
“Certainly; if it was the only sort of money.”
“Well; many do hoard gold,—besides Mrs. Parndon. How many years will her guineas have been lying by when she dies!—(and I do not believe she will part with them but in death.) They might have doubled themselves by this time, perhaps, if they had been put to use instead of being buried in her garden, or under the floor, or among the feathers in her feather-bed, or wherever else they may be.”
“I was going to ask,” said Horace, “how she comes to make public such an act as hoarding: but you seem not to know the place of deposit.”
Fanny explained that not even Hester knew more than that her mother had a stock of hoarded guineas; and she had mentioned it only to such particular friends as the Berkeleys.