THE EFFECT OF “COVER” 87 
against all notes issued, all the profit of issue is taken 
away : and where 100 per cent. must be kept against 
all notes issued above a certain amount (as for instance 
under the Bank Charter Act, 1844, in England) all 
profit in issuing more than that amount is taken 
away. In such cases, if notes, or at any rate more 
notes, are to be issued, some other inducement has 
to be offered. 
When an issue is inconvertible into free bullion 
and has in consequence of over-issue sunk below the 
bullion value it should represent, the inexpert are 
apt to imagine that the proportion of cover held 
against it does or should determine its value. A 
Canadian Minister of State actually complained at 
a time when the Canadian paper was inconvertible 
because the dollar was worth less than the American 
dollar although, as he said, the cover held against the 
inconvertible paper Canadian dollar was a larger pro- 
portion of the issue than the cover held against the 
American convertible paper dollar. If the whole of 
the paper currency were about to be exchanged for 
the whole of the cover, there would be reason in this 
belief. If, for example, in July, 1923, the 25,000 
milliards of German currency had been exchangeable 
with the 650 million gold marks held against them, 
the value of a paper mark might have been taken 
to be one forty-thousandth of a grld mark, and if 
the three hundred millions of British Currency Notes 
had been exchangeable with the fifty millions of 
cover, the £1 Currency Note might reasonably have 
been taken to be worth one-sixth of a gold pound, 
though the £5 Bank of England note on the same 
principle would have been worth about six-sevenths 
of five gold pounds. But nothing of the kind was 
expected, and when the cover is not going to be 
paid out how can it affect the value of the thing 
said to be covered =~ Buried in cellars, it might as