APPENDIX II 
11Q 
the public being able to replace their stock of Currency 
notes by sovereigns and half-sovereigns. But there was 
no reason to believe that the public had any desire to 
do this. The experience of all civilized communities 
has gone to show that notes are preferred to gold coin 
even when issued in somewhat lower denominations 
than for ten shillings at present prices. It should be 
noted that as the sovereign and half-sovereign remain 
legal tender, there is nothing to prevent individuals and 
banks from importing those which are minted in South 
Africa and Australia and putting them into circulation 
if they see any advantage in doing so. 
The Gold Standard Act, 1925, while putting on the 
Bank of England the obligation of giving gold bars in 
exchange for Currency Notes, did not take away from 
the Treasury, alias the Government of the day, the 
power of withdrawing the Minute which established 
the Cunliffe limit, and thus recovering its freedom to 
issue an unlimited amount of notes. This weak point 
was removed by what was called the ‘‘ amalgamation 
of the note-issues ’’ effected under the Currency and Bank 
Notes Act of 1928, which came into operation on Novem- 
ber 22 of that year. 
That Act repealed the provisions of the Currency and 
Bank Notes Act, 1914, which gave the Treasury the 
power to create the Currency Notes, and it provided that 
the Bank of England should redeem the existing out- 
standing issue by itself issuing £1 and 10s Bank Notes 
in exchange. To balance the liability thus taken over 
by the Bank, it prescribed that the Bank should receive 
the whole of the Bank Notes (£56,250,000) and silver 
coin (£5,250,000) held in the Currency Note Account, 
together with a portion of the government Securities 
held in the Account, sufficient (with the Bank Notes and 
silver coin) to make up a total equal to the amount of 
Currency Notes outstanding (£286,750,000). The Bank 
Notes transferred, which had been purely unnecessary 
and meaningless intermediaries between Currency Notes 
and the £56,250,000 of gold bullion held against them, 
were immediately cancelled, and this eliminated a double 
reckoning in the total of paper currency which had