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Sir,-The "Courier" In its anxiety to de- nounce the fiduciary noto issue of the Commonwealth Government insists almost passionately that a private bank, the Bank of England, may have a really "fiduciary'.» note issue without a gold back- ing, but that the nation cannot. A Com- monwealth fiduciary note issue is said to be "flagrant dishonesty." The fiduciary note Issue ol the Bank of England Is allegedly "merely for convenience of cur- rency." And, of course, the fiduciary Issue of the Bank of England, or any other Issue of notes. Is a loan from the public, although the public does not know It, The "Courier" rightly says that the gold backing of Commonwealth notes is ,33.7 per cent, of the present note Issue, and that the £18,000,000 fiduciary note Issue would decrease that gold backing to 24 per cent. But the Bank of England's note Issue Is £660,000,000; £400,000,000 of the main note Issue, and £260,000,000 of a "fiduciary Issue," and the gold backing ol tho lot la but 22 per cent, of the total. So even with the £18,000,000 of new notes the Commonwealth Bank position would be better than that of tho Bank of Eng- land.

At times the Bank of England backing has been as little as 73,4 per cent, of tho note Issue. In 1810-11 there was but 15 per cent, of gold to circulation; In 1812, 12>,_ per cent.; In 1813, 12 per cent.; 1814,

B\i per cent.; 1815, 7% per cent.; 1816, 15 per cent.; 1817, 30 per cent.; 1819, 16 per


In Saturday's "Courier" appears this re- ply to an enquirer:-"Confused" (East Brisbane).-It Is quite Incorrect to say that the proposed Theodore fiduciary issue Is similar to that of the Bank of England. In Australia there would bo no backing. In England the Bank of England has adequate backing for every not« that Is issued. Its present note issue in, roughly £350,000,000 (about 50,000,000 are not in circulation, but are kept for replacement purposes). The total note issue has a gold backing of £140,000,000; the remain- der has a backing of Government securi- ties and other assets,

Tho Bank of England banking returns, published by the "Courier," show general noto Issue, £400,000,000; fiduciary note Issue, £260,000,000, and gold backing (ol total), £140,000,000. And If you lump Australia's ordinary note issue and the proposed fiduciary issue together you must do the same with the Bank of England. Your misuse of tho words "total note Issue" and "remainder" surely serve to make "Confused" even more confused than before his Inquiry. And as to the £260, 000,000 having "a backing of Government securities and other assets" the total note Issue of Australia has the backing of Gov- ernment property and of the nation.

In the "Courier" of even date answer- ing "Austral" the reply gives deposits as a liability against the gold reserve of the Commonwealth Bank. But in quoting £140,000,000 Bank of England gold hold- ing against £400,000,000 of notes (really £060,000,000) you Ignore deposits. And what is the value of the gold backing anyhow, when the Bank of England nota Is legal tender, and Its promise to re- deem it is only a promise to redeem It with another note? So little docs the gold backing count that In one run on the Bank of England the doors would have had to bo closed but for the sud- den discovery of a million-not gold, but a million pound notes put aside to be burned.-I am, sir. &c"


March l8.