52 
MONEY 
spendable money far enough to raise the price of 
fine gold from the par price of £425 to £575, because 
long before that happened, every one who had notes 
would be running to the issuers to get sovereigns 
with them: the sovereigns thus obtained could be 
turned into bullion, and so give the holder a larger 
amount to spend than if he spent his note. Incon- 
vertible notes, not being subject to this ‘“ automatic 
check,” may be issued in greater and ever greater 
quantities, so that they can cause a gap to appear 
between their value and that of the bullion to which, 
through the coin, they are nominally equal. 
At first sight it is probable that most of us would 
expect the gap to appear in the form of a note passing 
for less than its nominal value, say a pound-note 
passing for £0'8 or 16s. and a dollar-note for $o-8o. 
This does not happen, and nothing really suggests 
that it should happen. The pound-note was, and 
continues to ordinary apprehension to remain, “a 
pound ”’ : it will buy a thing priced in a shop-window 
at “ £1,” and it will pay a debt of £1. Failing the 
note going to a discount, we should perhaps expect 
the sovereign to ‘“ go to a premium,” and begin to 
circulate at some value exceeding £I, say £125 or 
£1 5s. This might happen if people really preferred 
sovereigns to notes, and if they could shift the 
premium as fast as changes in the price of bullion 
took place, but in fact that could not be done: the 
currency value lags behind the bullion value, and 
consequently the coins are not kept in circulation 
at higher prices, but are ‘ driven out,’ as it is usually 
said, by the notes. It is not really a case of their 
being driven out, but of their being attracted out 
into the bullion or export market by the premium 
obtainable there and not obtainable so long as they 
are used as currency. Jewellers and bullion dealers 
will give more for them in “ money,” that is, in