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for the public benefit that the use should be universal, it is desirable that the commodity should be sold at cost price. But this consideration does not apply to gas and tramways; and here the arguments put forward in Mr. Cannan's recent article 1 apply with full force. Why should the vigorous pedestrian or cyclist, or the pale-faced owner of a season ticket on an underground railway, suffer for the tramcar passenger ? A reasonable profit on undertakings of this character is a perfectly legitimate form of local taxation.

There remains one other form of monopoly which demands peculiar attention from the economist. It is an accepted principle that a Government ought not to confer a valuable franchise upon an individual, except for an adequate consideration. Patents and copyrights are the stimulus as well as the reward of invention. They confer a strictly limited monopoly. They are the exceptions which prove the principle. But what words can adequately describe the folly and enormity of the laws by which there are given annually throughout this kingdom, to individuals arbitrarily chosen, by authorities arbitrarily appointed, thousands of lucrative franchises to which the donees have no claim, and for which they make a nominal payment only? If a town council were to hand over the franchise of its streets for nothing to a tramway company, its action would be regarded as a qualification for the lunatic asylum ; and yet in every town and county franchises certainly far more valuable in the aggregate are presented every year to the retailers of alcoholic liquor. These licences are neither more nor less than monopolies; for if they were granted freely to all applicants their value would dwindle away. One single example will suffice. In a small northern town a new licence was granted in 1897 to a small house valued at £3,500. On receipt of the licence the owner promptly sold the house for £24,500. Thus the small northern town lost a sum of £21,000 by a single transaction. There are few people who realise that the patronage of the justices of the peace in this country is worth infinitely more than that of the Lord Chancellor and all the ministers of the Crown put together, and that if sale were substituted for patronage the rates in very many places would be entirely abolished and a large sum remain over for other municipal purposes.

No one supposes that the payment of an adequate price by

· ECONOMIC JOURNAL, March, 1899.

? See for this and many other typical instances, The Temperance Problem, Rowntree and Sherwell, pp. 337-346.

the licensee would conduce to the trade being carried on in a less moral and public-spirited way than the present. Nor does any part of the financial reform here indicated contain the prime demerit of novelty. The local character of licences is already recognised. In 1835, Lord John Russell proposed to transfer the patronage from the justices of the peace to town councils. In 1871, Mr. Bruce's Licensing Bill, brought forward on behalf of the Government of the day, and providing for a ten years' notice and no compensation to existing licensees, contained a clause (13) which ran as follows:

“Where a new publican's general certificate is to be granted for any licensing district, the same shall be granted to the person who offers by tender to pay for the same during the continuance of the certificate, the highest annual percentage on the annual value of his premises."

So that if the Bill of 1871 had passed, and the proceeds of the licences had been devoted to local purposes, it may confidently be asserted that at the present moment no complaint would be heard from one end of the kingdom to the other of the intolerable burden of rates.

And yet our so-called financiers shake their heads solemnly over the increase of local and imperial expenditure, and tell the people that the only possible means of providing more revenue is by resorting to octrois and a protective tariff.



OUR refined system of payment by cheque and by clearing is an incalculable benefit to our commerce, and the general soundness and prudence of the management of British banks cannot too strongly be maintained, but, is this great banking system based on ample cash reserves ? That is a banking, not a currency, question, a matter of proportion. Whatever the basis of currency, the question for oankers to consider would still be how muchwhat percentage? The total deposits of the banks of the United Kingdom at the end of 1898–excluding the Bank of England were given in the Economist of May 20 last at 770 or 780 millions, or, including the Bank of England, at 810 or 820 millions. These are the deposits of the internal banks, English, Irish, Scotch, or Manx. They have about 5,800 offices open, and hold “cash on hand, and money at call and short notice” estimated at £226,623,802. There is a vital distinction between cashon hand and money at call.

The figures are detailed, with other relevant information, in the following:

Table 1. Amount of deposits British banks.
Table 2. Leaves out the Irish, Scotch, and Manx banks, and

gives the figures for the English banks.
Table 3. Is the Statement of the Issue Department Bank of

England, May 17, 1899, with comments.
Table 4. Is part of the statement of Banking Department,

Bank of England, May 17, 1899, with comments. Tables Nos. 1 and 2 give us the nearest approximation to the deposit liabilities, and (without separation of the items) of the provision (including “money at call and short notice") which the banks make to meet their liabilities. These items are shown first for the banks of the United Kingdom, second for the English banks alone.

Tables Nos. 3 and 4 will enable us to make the division between

"cash on hand and at Bank of England, and the item money at call and short notice" in the balance-sheets of the English banks. We then want to eliminate, as far as possible, the items “money at call and short notice”-equal-market credits – that are duplicated in the balance-sheets of the English banks on the one hand, and of the Scotch, Irish, and Manx banks, and of the

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To the influences controlling the London Money Market must be added the financial houses not included in the lists of Bankers, e.g., the Rothschilds, the bill brokers, the merchant bankers, the private foreign banks, &c., &c., and the Stock Excbange.

i Notes in reserve.

? These items include cash at London bankers, in foreign countries, bullion in transit, and are quoted simply that the fact that the foreign and colonial joint stock banks have money-an unknown quantity-employed on the London market, may be kept in mind.

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TABLE 3.—ISSUE DEPARTMENT, BANK OF ENGLAND, MAY 17, 1899. Notes issued...............

........ 44,900,660 Against Government Securities ................. 11,015, 100

, other Securities ............................ 5,784,900 Total Securities

16,800,000 Against Gold....


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The above issue was distributed as follows, viz. :--
In the Banking Department, Bank of England (reserve of notes).. 17,218,830
In the hands of the public, including the Banks of England and
Wales ..... .....


es vs une public, including the Banks of England and

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MAY 17, 1899.
Public deposits including
Exchequer, Savings Bank, Commissioners of National Debt, ! £11,457,538

and Dividend Accounts.

Other Deposits including
(a) London Clearing Bankers' Balances.
(6) Bankers' Balances in the towns where the Bank of Eng.

land has branches, viz. :-Birmingham, Bristol, Hull, \ 37,461,629
Leeds, Liverpool, Manchester, Newcastle, Plymouth,

Portsmouth, and balances of Irish and Scotch Banks. (c) Balances of private firms and corporations.

Foreign banks, and of the Colonial banks having offices in London, on the other hand.

I ask, may we not assume as a rough working rule that “money at call and short notice" set out in the balance-sheets of the Scotch, Irish and Manx banks, and of the Foreign and Colonial banks having offices in London, will be part of the deposits of the English-and particularly the London-banks, and will swell the total of their liabilities, and for this reason the bulk “ of call and short money” is employed in London. On this basis we get rid of the duplication, and, with the help of Tables 2, 3, and 4, can arrive at the maximum amount of actual cash it is possible for the English banks to hold, and the difference will be “money at call and short notice"—or market creditsbelonging to the English, Scotch, Irish, and Manx banks, and to the Foreign and Colonial banks having offices in London.

I admit that the process might be carried further by an analysis of the balance-sheets of the London banks, but broad figures are safest for our purpose. There are many things which

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