240 THE CURRENCY REPORT

should be maintained, but that in future if an
emergency arose requiring an increase in the amount
of fiduciary currency, this should not involve a
breach of the law, but should be made legal (as it is
now under the Currency and Bank Notes Act of
1914), subject to the consent of the Treasury.

It is not proposed at present to secure the circula-
tion of paper instead of gold by legislation. The
Committee considers that " informal action on the
part of the banks may be expected to accomplish all
that is required." If necessary, however, it points
out that the circulation of gold could be prevented by
making the notes convertible, at the discretion of the
Bank of England, into coin or bar gold. The
amount which, in the opinion of the Committee,
should be aimed at for the central gold reserve is
£150 millions (a sum which is already almost in sight:
on its figures quoted above) ; and " until this amount
has been reached and maintained concurrently with
a satisfactory foreign exchange position for a period
of at least a year/' it thinks that the policy of re-
ducing the uncovered note issue " as and when
opportunity offers " should be consistently followed.
How this opportunity is going to "offer" is not
made clear; but presumably a rcflow of notes from
circulation can only happen through a fall in prices
or a reduction in bank deposits by the liquidation of
advances made to the Government, directly or
indirectly, by the banks.

Concerning the difficult problem of replacing the
Bradbury notes by Bank of England notes of
£i and ios., an ingenious suggestion is made by the