XVIII

THE REGULATION OF THE CURRENCY

February, 1919

Macaulay on Depreciated Currency—Its Evils To-day—The
Plight of the Rentier—Mr Goodenough's Suggestion—Sir
Edward Holden's Criticisms of the Currency Committee—
His Scheme of Reform—Two Departments or One in the
Bank of England ?—Not a Vital Question—The Ratio of
Notes to Gold—Objections to a Hard-and-fast Ratio—The
Limit on Note Issues—The Federal Reserve Act and
American Optimism—Currency and Commercial Paper—A
Central Gold Reserve with Central Control.

EVERYONE has read, and most of us have forgotten,
the great passage in Macaulay's history which
describes the evils of a disordered currency. " It
may well be doubted/' he says, "whether all the
misery which had been inflicted on the English
nation in a quarter of a century by bad Kings, bad
Ministers, bad Parliaments and bad judges was equal
to the misery caused in a single year by bad crowns
and bad shillings. . . . While the honour and inde-
pendence of the State were sold to a foreign Power,
while chartered rights were invaded, while funda-
mental laws were violated, hundreds of thousands
of quiet, honest and industrious families laboured
and traded, ate their meals and lay down to rest
in comfort and security. Whether Whigs or Tories,
Protestants or Jesuits were uppermost, the grazier
drove his beasts to market, the grocer weighed out

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