PAPER CURRENCY 185

their subscribed capital, besides paying up any amount
remaining unpaid on that capital. A further provision is
that a fund is constituted, in the custody of the Canadian
Government, by the deposit of an amount equal to § per
cent. of its average issues by each bank. The whole of this
fund is available for the redemption of the notes of any
failed bank, and the notes are further able to earn 5 per
cent. interest for their holders, from the date of failure to the
date when the liquidator of the insolvent bank announces his
readiness to pay them. Thus even temporary depreciation
of notes, whose issuer becomes insolvent, is guarded against.
The Scotch and Irish Banks, since 1845, have been
restricted in their issues in a curious fashion. For issues not
exceeding a fixed limit for each bank, the position is that
of the English country banks, but for issues beyond these
limits, gold must be held at the head office of the issuing
bank. The Bank of England is limited similarly by the
Act of 1844, which entirely separated the note-issuing
functions of the Bank from its other functions, so that the
[ssue Department is, practically, operated by the Bank but
not under its control. For it, as for the Scotch banks, a
limit is set to the amount of notes which may be issued
without an equal holding of gold by the Bank. The Bank
is permitted to hold silver, as metallic reserve against notes,
to the extent of one-fifth the total of metal held, but has
ceased to do so since 1853. The security for the “fiduciary
issue,” as the notes not covered by gold are called, is not
left to the discretion of the management, but is required to
take the form of public securities, definitely assigned for
this purpose, and the chief item in these is an old debt,
arising out of loans by the Bank to the Government, of
which £11,015,100 remains unpaid. The issues secured by
bonds in this fashion were limited to a total of £14,000,000
in 1844, but, as country bank issues have decreased, this
item of the issues by the Bank of England increases, and in
August 1902 reached £18,175,0001 The increases permitted
are designed to replace the disappearing issues of the

! Raised to 418,450,000 in August 1903, while the above was passing through
he press,