MISSING MILLIONS

Evening Post, Volume CXIX, Issue 73, 27 March 1935, Page 9

MISSING MILLIONS

CURRENCY PROBLEM

Where is the money?

In an address on currency and monetary problems Vto members of ttie '95 Club at' the' Reform Club, Manchester, (states the "Guardian"), Mr. Barnard Ellinger said that he did not know that there were any currency problems. In practice England'had been content to use banknotes instead of gold for currency for the last twenty years because they were legal tender and there was • confidence that the righrt. of issue would not be abused. In the 1928 Act provision was made to enable the Bank of England, with the' consent of the Treasury, to' increase the fiduciary issue when necessary owing to 'the growth of industry and commerce and -for other reasons and not merely; in time of crisis.. . ■ ,■■'■•.' . '

The only problem that he knew connected with currency which' he did not know the answer was, "Where is it all?" The total note.issue tyas about £470,000,000, of which about £70,000,000 was in the Bank of England, and about £100,000,000 in the clearing banks. That left £300,000,000, and it was estimated' that' the coin in circulation was about £70,000,000, so that the total currency was £370,000,000, or more than oneytenth of the total national income. ahd; seven times the estimated weekly sum paid out in wages and salaries. It was-an interesting line of speculation to ask where the money was, and he was endeavouring to obtain an answer.

Of course, that was by no means all the money which was Used in the conduct of the business of the country. The average weekly circulation of cheques was four or five times as great as the total amount of currency circulation, but all that was credit. As a rule, no currency changed hands. '■*■ ' ' ■ ■ ' ' ",