VALUE OF NOTES 
53 
notes, than they will fetch as currency, so that they 
“ disappear,” the heaviest going first, and the others 
following as the price of bullion rises. 
Thus the increase <t inconvertible notes when 
carried, as it can h~ "= f#=~==" causes a rise of the 
price of bullion. 
It has not till lately been well understood, even by 
experts, that when the coin is not convertible into free 
bullion, convertible notes may be issued in quantities 
just as great as inconvertible notes and with exactly 
the same result. Ricardo came near hitting on the 
fact. He noticed that during the suspension of cash 
payments by the Bank of England it was a puzzle 
to many people how the inconvertible note could be 
of less value than the gold it should (through the 
gold coin) represent, although as a matter of fact, 
when they L- 1 a gold coin they found it would only 
circulate at th same rate as prevailed before the 
suspension of conv-itibility.! He explained the 
matter quite correctly is being the result of the 
legislation which prevented law-abiding people from 
doing what they liked with the coin: there were 
penalties against melting and exportation which kept 
the gold coins, so long as they were in the hands of 
law-abiding people, from being used for any purpose 
except currency, while for that particular purpose, as 
has just been shown, the coin cannot in practice be 
used at a value higher than that of the unit of account 
supposed to represent ii. But Ricardo and subse- 
quent writers regarded the point as of little import- 
ance, because it did not occur to them that a well- 
enforced denial of fre Zem to deal with coin would be 
sufficient br itself © low over-issue to take place 
without =~ L-l Ce eonverilll notes 
into ce’ Tiss lc. has chown us to be 
1 «Th: High Price of Bullion a pruot Depreciation 
of Bru" Notes? in Ricardo’s Woe? 
ire te l=