GIPE-PUNE-OIIOI2 - DSpace@GIPE

50 THE RE~MAKING OF THE REICHSBANK
have the same principle as in Germany, namely, ""no
cover, no note." Every note is a coin~ce~tificate, and .is
identical with gold~money.
But between the British and the Germap. systems
there were wide differences relating to the character or
quality of the cover. And these deserve prominent notice.
especially as indicating, perhaps, how far the German
law of 1875 while imitating the British Act of 1844 tried
to introduce certain new features likely to impart elasticity
to the currency'system.
The Bank of England is not permitted to issue notes
beyond its gold. The note~circulation is limited by the
amount of gold possessed by this institution. As for
the securities, however good they be, there is a maximum
fixed. We may, then, say that the system is not merely
one of "no cover, no note" -but really has its foundations
in the principle, ""no gold, no note." In other words,
the British paper currency reserve is virtually all gola
(but see infra, p. 53).
The old Reichsbank (Act of 1875), on the other
hand, was very much emancipated from gold. The
"securities" played here the preponderant role. No
matter how large the volume of notes issued by the
Reichsbank, two~thirds could always be covered by the
securities in its possession. But in the British system the
securities play but the second fiddle. The larger the
volume of notes issued by the Bank of England, the larger
must be the amount of bullion in its coffers. and the pro~
portion of the securities (£2'60,000,000 maxiimim) to the
notes or: to the bullion becomes less· and less, .
The' , place of gold~cover in the Reichsbank's system:
was to be found in the "cash," compulsory. on .the:·