amount of metallic currency being retained than is necessary to maintain, both in fact and in public belief, the convertibility of the paper.
But since gold wanted for exportation is almost invariably drawn from the reserves of the banks, and is never likely to be taken directly from the circulation while the banks remain solvent, the only advantage which can be obtained from retaining partially a metallic currency for daily purposes is, that the banks may occasionally replenish their reserves from it.
§ 3. Effect of the increase of an inconvertible paper Currency. Real and nominal exchange.
When metallic money had been entirely superseded and expelled from circulation, by the substitution of an equal amount of bank-notes, any attempt to keep a still further quantity of paper in circulation must, if the notes are convertible [into gold], be a complete failure.
[A] new issue would again set in motion the same train of consequences by which the gold coin had already been expelled. The metals would, as before, be required for exportation, and would be for that purpose demanded from the