"3. That while either an absolute figure for the maximum fiduciary issue, or a maximum determined on a proportionate basis, should be prescribed by law, provision should be made for increases beyond this maximum on condition of a tax being paid by the bank to the Government."
These suggestions the Committee proceeded to discuss, dismissing the proposal for the amalgamation of the two departments of the Bank of England on rather curious grounds. It argued that the effect of the amalgamation of the two departments would be to place deposits with the Bank of England in the same position as regards convertibility into gold as is now held by the note. Presumably there must be something in this argument, or the assembly of very learned and practical gentlemen who signed the Report would not have put it forward; but to the ordinary mind it seems to have very little validity. At present any depositor in the Bank of England can go and draw out his balance in cash, if he desires to do so. In normal times the bank will presumably give him notes or gold to suit his convenience. If the bank exercised its right of paying him in its banking department in its own notes, all that he would have to do would be to go to the issue department and turn the notes into gold.
