The notes were based on what we call the credit, or wealth, of the country. The public placed their confidence in them because they felt they were placing confidence in the wealth and power of the country, in themselves as a nation. They could have no sounder basis. The nation was indifferent to the convertibility or inconvertibility of the notes. All the country was conscious of was that the notes were legal tender and as good as gold. Theorists attach too much importance to the effect upon the public mind of an issue of inconvertible notes. The great mass of people does not understand convertibility or inconvertibility, certainly not in the deep sense critics imagine it does. It understands, however, confidence in the Government, and this confidence is of greater worth than are vague ideas of convertibility. The mass of the public is ignorant of monetary and currency problems, but it is not ignorant of the power of the Government and the power of the law. When the mass of the public had these notes--and even postal orders as legal tender--in its possession, it knew it had purchasing power equal to the denomination of the notes, and that was all-sufficient. This explains the public’s satisfaction and calmness. Moreover, it is a phenomenon of deep psychological importance. There were sections of the public--merchants, financiers, bankers, academicians, theorists, and pressmen--who knew that the notes, though issued as convertible, had behind them no gold backing. But even many of these were not erudite students of currency. Nevertheless, they could not help feeling and acknowledging that the right and wise thing had been done. And as for merchants, bill-brokers, bankers, and other people who wanted legal tender currency, they cared not so long as they could get it. This was their chief concern. It was a matter of indifference to them whether the notes were convertible or inconvertible. Perhaps the most fruitful point for controversy at this juncture, now that we have experienced the benefits of the policy, is whether it would have been better to have suspended the Bank Act and have issued Bank of England notes, or to have done what actually was done. Much can be urged in support of each policy. Bank of England notes would have obviated any confusion arising from two distinct species of fiduciary paper currency. The great virtue and convenience of the new notes was their low denomination. It would have created needless difficulties, perhaps, to have given power to the Bank of England to issue such notes. Confusion, therefore, was greatly lessened by making the Treasury notes of low denomination and by keeping the Bank of England notes at a high denomination. As a fiduciary note, currency should be as simple as possible and not complicated, the distinction between the denominations should conform to the idea of simplicity.