272 THE REGULATION OF THE CURRENCY

gold when they know that they can get currency
or get gold when required. . . . America no longer
believes a financial panic possible, and therefore the
business men, being perfectly assured as to the
stability of credits, do ,not hesitate to enter manu-
facturing and commercial enterprises from which
they would be deterred under old conditions of
unstable credit/7 Well, let us hope the Senator is
right and that America is right in believing that a
financial panic is no longer possible there. But
one cannot help feeling that such a belief may be
rather dangerous in the minds of people so ready
to take rose-coloured views as our American cousins.
The Federal Reserve system has worked beautifully
in a period in which American finance has had nothing
to do but rake in the enormous profits of American
production at tha expense of warring Europe and
lend part of them, to be spent in America, to the
Allied belligerents. It may work equally well if
and when the problem to be faced is different,
but it will be interesting to see—for those of us who
live to see—what sort of a tax will be needed to
c< require " America, in one of its holiday moods, to
return currency that it thinks it needs and the
Federal Reserve Board regards as redundant. "

Another point on which Sir Edward lays great
stress, in his attack on the Bank Act of 1844 and
the Committee which supports its main principles,
is the beauty of the bill of exchange as backing for
a note issue, as opposed to Government securities.
" There is," he says, t( no automatic system for the
redemption of currency notes as would be the case