“I went to work at first with caution. I never by any chance issued a single note for more than ten pieces, and when ever any one of these notes was presented for payment, even though that event should take place within an hour of my issuing it, I promptly honoured it from the reserve of metal which I had kept back for the furtherance of my plan. I was careful to make these notes identical, to stamp them all in the same place with my metal seal, and in every way to make them, so far as I could, a sort of currency, which, as you may imagine, they promptly became. When a man carrying one of these instruments might find himself called upon to pay, at some distance from my place of business, he would at first tentatively offer my note (perhaps at a small discount) to his creditor. But as my integrity was by this time a proverb (and never forget, dear boys, that integrity is the soul of business) the Notes were more and more readily accepted as time proceeded.
“The convenience of carrying such paper compared with the heavy weight of metal they might represent, the ease of negotiation, and so forth, rapidly increased their circulation; and in a short time I was able to calculate with assurance what the experts in this amiable science term ‘the Rate of Circulation’ which my notes had attained. I found that, roughly speaking, for every five pieces to which I had thus pledged myself upon paper two were sufficient to meet the claims of those who presented them at any one moment. And this proportion is known to this day in that happy valley as ‘the Proportion of Metallic Reserve’ which must lie behind any Issue of Notes--but I hear that since my departure they have got badly muddled.
“Oh! dear, dear!” said the eldest nephew. “I am getting muddled myself, Uncle.”
“Don’t listen to him!” said his brothers in chorus.
“Yes! my children,” answered the old man vividly, “it is indeed a difficult subject. Only a few experts really understand it ... and I am one ... anyhow, you all see that I could now make new money as I chose out of nothing?”
“Oh! yes, uncle!” they all agreed, including the eldest. “We quite see that!”
“Well,” said their revered relative in a subdued tone, “that is a great advantage. But to proceed.