VALUE OF NOTES 
4C 
that it would be a fine thing to encourage people to 
take his notes by offering them at a small discount, 
but after breakfast he will remember that this would 
cause an enormous demand for his notes, but that 
they would all be immediately presented for redemp- 
tion so that more might be asked for and he would 
be ruined by the discount. There is, in fact, no 
possibility of the convertible note being below the 
value of the coin which it promises, and therefore it 
cannot drag the value of money—the unit of account 
of money—below the value of the bullion contents of 
the coin, when that coin itself is protected by free 
convertibility into bullion from being so dragged 
down. If the freedom of owners to do what they 
liked with sovereigns which prevailed in England 
before the War had been maintained, the introduction 
of an issue of convertible one-pound notes (formerly 
forbidden) with only an ordinary reserve against 
them, would doubtless have tended to drag down the 
value of English money, i.e. of £1 and all multiples 
and fractions of £1, and therefore to raise prices. 
But it would only have brought the value of the 
pound down along with gold throughout the world 
and only have raised English prices along with prices 
in the world at large. And a depression thus caused, 
though widespread, would be of trifling depth. 
An inconvertible issue has more power than a 
convertible of depressing the value of the unit of 
account and raising prices within the country where 
that unit is employed. 
Inconvertible notes may circulate at the full value 
of the bullion contents of the coin indicated on their 
face and even at the full value of the coin when it is 
restricted so as tc be worth more than its bullion 
contents. The lestimony «{ history is conclusive on 
this, and the {a.l is easily explained by the ordinary 
principle of demand conp'rd with adequate limitation