thus allowing the country banks a total profit of £1,760,000, or nearly two millions out of the privilege of issue before their entire surrender of it. And this appears to us as liberal an arrangement as they could have any reason to expect. We are now almost in a position to determine on what system the Bank of England should be expected to render an equivalent for the exclusive issue of paper money in England and Wales. Prior, however, to entering upon this consideration, it will be necessary to refer to another principle, which the present system infringes no less remarkably than those already instanced. With the exception of a very limited section of currency theorists, it is now universally admitted that a paper currency ought to be so regulated as to contract and expand in conformity with the requirements of commerce; that is to say, to contract whenever trade is stationary and the supply of commodities in the market small, and to expand whenever trade becomes active and the supply of marketable commodities undergoes an increase. By the currency theorists it is still maintained that a paper currency ought to contract and expand exactly as a currency purely metallic would do in the like circumstances. But this is palpably equivalent to asserting, that whatever evils are inseparable from a metallic currency ought to be, not avoided, but perpetuated in a mixed currency. One of the chief defects of a purely metallic currency consists in the very circumstance that it does not contract and expand with the decrease and increase of marketable commodities requiring to be exchanged for each other, but that, on the contrary, through the operation of an influx or efflux of gold, it not unfrequently contracts or expands in a far greater proportion than the state of the markets would justify, thereby producing an excessive depreciation or appreciation in general prices; while sometimes it even expands when the state of the markets would require a contraction, and vice versa. And accordingly, this is the evil against which common sense would desire to contrive peculiar safeguards in a mixed currency. The present system however has most carefully perpetuated the evil. For in the case of every considerable efflux of gold, the circulation--that is the amount of circulating medium, paper and metallic, in the hands of the public--must contract not merely in the proportion required for correcting the unfavourable exchange, but in a much higher proportion; and in every case in which such a drain commences at a period when the Bank’s reserve of unemployed notes is at or near the minimum, the circulating medium must actually contract to an extent precisely equal to the amount of coin exported. Thus supposing the drain to commence when the reserve of notes is at the average of about £6,000,000, an exportation of £10,000,000 of gold would not only reduce this reserve to its lowest prudent minimum of about £3,000,000 but would also contract the amount