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'I saw him, Colonel Hastings. It was in our old bungalow at Calcutta, about two years after I had gone back. Late in the evening I heard a step outside which strangely affected me. I was lying, half asleep, and starting up, in a drowsy state, I heard a voice at the verandah, and as I thought inquiring of my stupid old native whether I lived there. The steps then turned away. I darted to the casement, and although the figure was clad in the most extraordinary compound of European and Asiatic garments, I am sure it was Jerry. I darted downstairs and rushed out, but the man had disappeared. The servant said he was a bad fakir, and wished to get into the bungalow, but could or would tell me nothing of what he bad said. But I am quite sure it was Jerry. So I am certain he will come back-but you remember he never was punctual,' she added, with a faint smile.

I did not say to her, that if Jerry was alive she must have heard of him in some other way; but I took leave of her, and shortly afterwards returned to India.

In 1853, I was appointed to an embassy to Nepaul, a very striking country, governed by a powerful warlike race. The first minister or vizier of the country met us, as is the Nepaulese fashion, outside the capital, and we had a very courteous and gratifying reception. He was a tall, handsome man, with a flowing black beard, and conversed with me in Persian, which I spoke fluently. After our interview, one of the attendants informed me that the vizier wished to see me alone, and he accordingly conducted me to an inner apartment.

He ordered the attendants to withdraw, and then, in tones only too familiar, he exclaimed: Well Hastings, my boy, how go the Plungers?'

It was Jerry Donnelly, by all that was miraculous. I had observed him staring earnestly at me during the interview, and something in his gestures seemed not unfamiliar to me, but his flowing beard, solemn air, and Oriental dress so much disguised him, that even when I heard the well-remembered voice, I could scarcely realise his identity.

'But what on earth are you doing here, Jerry,' said I, and why don't you go home to your wife, like a Christian?'

'My wife! well that's the whole affair. You see, she's somebody else's wife, so I'm better out of the way; it would be a pity that poor Sophy should commit bigamy.

'I assure you, you are entirely mistaken; Mrs. Donnelly has not married again.'

'Hasn't she though?' said he. 'Don't I know better? Didn't I go to my own bungalow and find out she had married that starched fool Courtnay, when she knew I never could endure him? '

To his intense astonishment, I told him how the truth was, and in return, he related to me his own adventures. He had been carried into Tartary, and there detained for three years, when he was allowed to accompany a caravan or body of pilgrims to Nepaul. Being by that time a proficient in the language, he was taken notice of at court, but very strictly watched. effected his escape, however, disguised as a fakir, and made his way to Calcutta, but finding, as he thought, his wife married again to a man in his old regiment, he returned, was taken into favour, and had risen to his present distinction.

He

'Well, I always was a blundering fool, but I went home with a heart so soft to Sophy, and vowing that I never would vex her any more with my vagaries, that when I heard her called Mrs. Courtnay I was turned to stone, and did not care a rap

what came of me, not even to be made a vizier, which, I assure you, Charlie, is no joke in its way.' 'Well, at all events, you must come home now, and enjoy your good fortune.'

'I am not so sure about that,' said he. Recollect, she has grown accustomed to be mistress-I have grown accustomed to be vizier; she won't like to be contradicted, and it's a thing I never could bear, and what I never allow on any account. Now, if I went home, she would not be mistress, and, as sure as fate, she would contradict me. Maybe it's better as it is.'

Next morning, he sent for me again.

I have been thinking,' he said, 'of all that strange story you told me. I am all changed since we parted. I hardly know myself to be the same man I used to be, and

I am not sure if I should treat Sophy well. But ask her to come out here, and then she can try. If she likes me in this outlandish place, I will go home with her; if we quarrel here, no one will be a bit the wiser, and I can continue to be dead.'

'But,' said I, 'have you no encumbrances? Perhaps she might object to the details of your establishment.

'Not a bit,' said Jerry; 'I have none of your Eastern prejudices; let her come, and she will find nobody to disturb her.'

So she did come, and after living in Nepaul for two years, brought Jerry back in triumph to Branley Hall; and such is the true version of a tale which made some noise in the newspapers a few years ago.

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TH

CURRENCY.1

HE subject of Currency has long been the scandal of Political Economy. It is not intrinsically more difficult than the other parts of the science: nay, it is in itself far less obscure than the incidence of Taxation, or the determination of Price. But it has been made obscure by vicious legislation. We may seem to speak dogmatically; but to mince words here would be a sham humility. No one defends English legislation on the subject of banking and notes up to the close of our French wars; no one can plausibly defend the last great measure of 1844, especially side by side with Scotch law and Scotch experience. If Scotch law be right, English law is extremely wrong; and conversely. Whoever wishes to understand Currency, will do well to begin by supposing England and Ireland nonexistent, and confine his attention to Scotland. After this, knowing what is the relation of cause and effect, he will be at no loss to understand English complications, and judge correctly of our legislative wisdom.

Concerning metallic money there is only one thing obscure to the least instructed, viz. how it gets into circulation. Primarily, when it is coined by a government, it is circulated by government expenditure. The State gathers and stamps the gold, then uses the coin to pay for what it wants. But such expenditure falls far short of the needs of currency for an industrious people. In some countries foreign coin circulates; in a rude state individuals coin, and in regard to cheap metal this does well enough; but to attest the purity of gold and silver a government assay is found essential. With us the State coins

at its own expense, and gives the coin in exchange, with necessary alloy and work gratis, to any one who will bring to the Mint the same weight of pure gold, not less than a thousand sovereigns. Thus moneydealers supply themselves and the public with a sufficiency of gold coinage, and we are no longer dependent on the expenditure of Government for the supply. Currency becomes a science only when we pass from metallic to representative

money.

Professor Bonamy Price, in expounding this science, often frets us by his use of words, and surprises by the eyes which he casts upon matter of fact: but he is lucid and searching in his exposition of principles. We shall rapidly apply them first to Scotch law and practice. In Scotland the State never spent much gold coin. The bankers, instead of teasing the Crown for more, took into their own hands the remedy, and issued simply their own notes, payable on demand. As the people were satisfied with this so was the State. Down to recent times sovereigns were scarce in proportion to notes. There, as here, use is made of bills and cheques, as well as of notes payable on demand, which are, as Prof. Price acutely remarks, nothing but cheques drawn by a man on himself.

If a state undertakes the duty of coining metal, forbids individuals to coin it, and then does not supply enough; if in consequence a base paper currency get abroad, which is accepted under hard pressure, and great calamities arise by bankruptcy, then the State is blamable. The proper cure is not to forbid private issue of paper (unless indeed the State will take that function also wholly on itself,

'Principles of Currency, by Bonamy Price, Professor of Political Economy in the University of Oxford. James Parker and Co. 1869.

and do it effectively), but to increase its metallic issues for small traffic. But in Scotland, though there has been an insufficiency of metallic money, and the people consequently are used to ragged notes, which (as we think) would be well displaced by more gold sovereigns, yet no public calamities have been sustained. One great bank failure startled the country, in the Western Bank of Scotland; but Professor Price informs us (p. 128), that the creditors of all Scotch banks have been paid in full. He justly remarks hereon, that the Scotch have been good bankers. They have had the advantage of being let alone.

The doctrine of laisser faire, which is so pernicious if allowed to dominate in politics, is the heart and soul of thriving trade. A trade which must be put under severe restraints, as the sale of intense poisons, cannot be a very gainful one. The great energy of modern trade is in proportion to its freedom. Many trades ought to be subjected to some superintendence: Professor Price illustrates this from emigrant ships. We heartily assent. But if a trade ought to exist, it ought not to be needlessly interfered with, nor beyond the mark of necessity. There is a clear reason for enacting a minimum for bank-notes payable on demand: 1. Because of the increased danger of forgery involved by small notes. 2. Because the poor and ignorant need to be shielded from the miseries which bankrupt notes inflict on them. We thoroughly approve of the extermination of the English old one-pound notes, and can see no advantage in those of Scotland. Five sovereigns are a very trifling weight to carry; no inconvenience can be suffered on this head. The advantage of the metal is well bought by its price. But it is obvious that these reasons for prohibiting small notes are inapplicable against larger notes. Fivepound notes do not pass,

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reigns, very often, very quickly, in a very hurried way, very unobserved. If they are not legal tender, they hardly inflict on a seller more compulsion to take them, than do cheques of five pounds; or if this be not quite true of five-pound notes, yet it is certainly true of twentypound notes. Totally to forbid private persons to issue notes, while they are free to draw bills and cheques, or to profess the trade of banker, on whom cheques are drawn, is wholly arbitrary, unintelligible, indefensible. It is an interference with trade immensely beyond what the defence of the poorer and ignorant classes requires. In Scotland there is no such interference. The banker, at his pleasure, issues notes, as he accepts bills, and has cheques drawn on him.

The outline of the banker's trade is this. A merchant who has goods about to be sold, wants 'money' in the interval which must ensue before their price is received. The goods may have been sent abroad, duly insured, or they may be in warehouse at home. On the strength of them he asks of a banker the loan of 1,000l. The banker begins his business on the support of his private funds; but counts upon getting 'customers,' who employ him to collect their dues, and leave the proceeds for awhile in his hands. Armed by such deposits,' he is able to listen graciously to the merchant's request. He does not pay 1,000l. to him in coin. Deducting say 25l. or 351. for discount,' he

advances' to him 9751. or 9651. in one of two ways: either by giving this amount in the banker's own notes, if he issue notes; or else, by permitting him to draw cheques upon him to the amount agreed, just as if he had deposits in the bank, although he has none. The banker's procedure is called accommodation.' It is legitimate, if the merchant's goods are safely above the

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sum lent, and if the banker's funds are adequate to bear the strain. Another merchant has sold goods abroad, and is paid by a bill drawn by a foreign house on some other house he brings it (perhaps) to the banker for sale. If the banker accept it the merchant can get money upon it. This may involve large risk to the banker. Special tradesmen also, called bill-brokers, facilitate such transactions, and in London are said to take the chief risk. But in the simpler and earlier development the banker is himself the bill-broker.

A banker's great temptation is to overtrade by bills and cheques (which is called, we believe, overbanking), not to over-issue. For if he err in the former way, though punishment overtakes him possibly in six months, yet he has time, he has warning, he may devise escape, he sometimes outrides the storm, and it blows over; but if he issue too many notes, he smarts for it in one week, sometimes in a single day. The public determines how many notes it wants. No one in our country retains in his pocketbook or desk very long much more either of notes or of coin than he thinks he is likely to use; and the bankers are keenly aware of this. Justly does Prof. Price wonder at the ignorance and perversity, which talks about the inflation of the currency' to be feared where private persons issue notes freely. In a compact, moderate-sized country like ours, with a strong executive, firm courts, and rapid travelling, notes not wanted are infallibly returned on the banker very speedily. Only in a vast, wild country, as the back States of America, such a thing as inflation may temporarily happen; but the people themselves, who were sufferers some twenty and more years ago, ere long brought a sharp remedy, enacting that the noteholders should be paid before the depositors and other cre

:

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ditors of the bank. (Whether this is an expedient principle is among questions open for legislation of course depositors must have fair warning that they will have to encounter this risk.) Now, inasmuch as the natural penalty on banker who makes an imprudent issue of notes is quicker and surer, such imprudence is less to be feared. He who is prudent as to bills and cheques is not likely to be imprudent in his issues. Hence (it has been argued), a law which forbids a banker to employ his capital on the less dangerous side-issue of notes-drives him into greater activity in forms of business which are more liable to abuse; and whatever else they do, do not aid to sustain his solvency, but rather add to its risks. It would be interesting to know what ratio exists with the great Scotch banks of issue, between their issue of notes on the one side, and their dealings by cheques and bills on the other.

Prof. Price carefully analyses the banker's operations and concludes that he is at bottom nothing but a broker for the transfer of debts. He needs capital to start with: so does a grocer. He needs gold, silver, and notes to pay balances with: so does a grocer. But he no more deals in 'capital' than does a grocer. No one can create capital. That which the banker accepts and transfers is not capital, but the title to capital. Neither cheques nor bills nor credit are capital. Credit is permission to use the capital of another; but if one uses it, the other does not. The banker receives in deposit, or collects for his customers, sometimes solid money, but far oftener paper, which is a memorandum of indebtedness, and carries with it a right to money, either instantly or at a short interval of time. He either pays no interest to his customers,-who are then satisfied with his services as agent, collector, and guardian of

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