Pecuniary Promissory Notes. - William Stanley Jevons, Money and the Mechanism of Exchange [1875]
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Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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Pecuniary Promissory Notes.
Applying these considerations to the special matter of money, we find that pecuniary promises are nearly always of a general kind. He who undertakes to pay a sum of money on a future day, rarely specifies the individual coins which will be paid. In fact the Coinage Act, in defining legal tender, makes any sovereigns, shillings, and pence, duly coined and of proper weight, a discharge for a corresponding sum named in a contract. It is true that just as pipes of wine are warehoused in the London docks, cases of gold and silver bullion or, it may be, of foreign or English coin, are warehoused in the vaults of the Bank of England. In fact, imports of gold and silver, at whatever port in the kingdom they may arrive, are almost always sent up for delivery at the bullion office of the bank, which acts precisely as if it were a dock warehouse, and delivers the packages on production of the bills of lading. These bills of lading are specific promises, and may yet be passed by endorsement from one person to another. Such consignments of bullion, however, do not enter into banking accounts.
A Bank of England note is neither more nor less binding upon the bank authorities than a bill of lading, but it does not specify the bag or box of money to be employed in paying it. Almost all other pecuniary engagements are in the same way general engagements. No banker could make any profit if he were obliged to put away the sovereigns deposited by a customer until that customer presented a checque for them, nor would there usually be sufficient motive for desiring such a special pledge. The idea never enters into our heads in mercantile matters. Disputes, however, have occasionally arisen upon this point. Some people have a peculiar fancy for collecting particular coins, and an old lady, having formed a hoard of fourpenny pieces, died after bequeathing them to a relative. Although wishing to keep them out of respect to the old lady, this relative was in want of ready cash, and desired to realize their value; he thought to achieve both objects by pledging them with a pawnbroker. The broker readily received them, but after a time thoughtlessly used the groats as change. When the pawn-ticket was presented he considered that the tender of the equivalent sum in sovereigns and shillings was a sufficient discharge. Here, however, the pledge should have been held as a special one.
Now, if pecuniary promises were always of a special character there could be no possible harm in allowing perfect freedom in the issue of promissory notes. The issuer would merely constitute himself a warehouse-keeper, and would be bound to hold each special lot of coin ready to pay each corresponding note. But this is not the case, and much harm may arise from the excessive issue of promises to pay gold on demand. The gold market may be rigged as well as the iron or any other special market. One difference is that the gold market is the most extensive of all markets, so that a great many individuals or companies, each acting under the separate impulse of self-interest, must over-issue notes in order to produce any appreciable effect. A further difference is that gold, being itself the measure of value, the rise or fall in its price cannot be apparent except in the average fall or rise in the price of many commodities. This subject must be pursued in Chapter XXIV.
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