TRANSACTIONS OP SKOTION F. 601 



was no guarantee that they ^YOuld not have taken it into tlioir heads to ruin a 

 number ui their customers. The ruin of these would have brought with it the 

 ruin of brokers who had trusted them ; and so the trouble would have spread 

 from one class to another.' 



On the question of Provision for the Suspension of the Bank Act we may 

 again quote the opinion of Sir Inglis Palgrave : ' The experience of the only 

 occasion on which the suspension of the Bank Act has occurred shows that it 

 was fortunate for the trade and credit of the country that this suggestion was 

 not carried out in 1915, During three crises which Iiave occurred since the Bank 

 Act was passed in 1847, 1857, and 1866, permission was given each time to 

 suspend the Act. On one occasion only, in 1857, did the suspension actually take 

 place. The strict limits of the Act of 1844 were only exceeded in the returns 

 of November 18 and 25, 1857.-' But the impression abroad was very injurious 

 to this country. It was considered that the United Kingdom had become 

 bankrupt. It is quite true that internal anxiety was quieted, but the effect on 

 our foreign trade was very different. As one of the few persons now living who 

 can remember all the crises which have occurred in this country since 1845 I 

 still bear in mind the distress which followed. The crisis of 1866 was indeed 

 more terrible in England, but the effect on the Continent in 1857 was very serious. 

 The crisis of 1847 was severe, but the resulting troubles were far less than those 

 of the two later crises. The main reason for this was that in 1847 the difficulties 

 were caused by the too rapid extension of our Railway System, and through 

 speculations that resulted. Great distress was caused at the moment, but the 

 railways remained and were of such service to the trade, industry, and the 

 economic conditions of the country that the troubles were soon overgot.' 



The power of suspending the Bank Acts of 1844-1845 is given in Sections 

 3 and 4 of the Currency and Bank Notes Act, 1914. The terms are more 

 sweeping than any alteration of the legislation established by Peel that has yet 

 been suggested. Section 3 enacts that not only the Bank of England, but any 

 Scottish or Irish Bank of Issue ' may, so far as temporarily authorised by the 

 Treasury, and subject to any conditions attached to that authority, issue 'notes 

 in excess of any limit fixed by law.' Section 4 enacts that 'any bank notes 

 issued by a bank of issue in Scotland or Ireland shall be legal tender for a 

 payment of any amount in Scotland or Ireland respectively, and any such bank 

 of issue shall not be under any obligation to pay its notes on demand except at 

 the head office of the bank, and may pay its notes, if thought fit, in currency 

 notes issued under this Act.' The power thus given to suspend the Bank Act 

 of 1844 and the Bank Acts of 1845 has not at present been exercised. 



The use of postal orders as legal tender was very small. By most people it 

 seems to have been welcomed as an opportunity of securing these convenient 

 means of remittance for small amounts without paying the usual poundage. The 

 facilities may have been useful, and no objection can be taken to the measure. 

 After a time these facilities were withdrawn, and no one complained. The 

 Moratorium, however, was a very serious innovation in British financial policy, 

 and can only be justified by the great seriousness of the crisis which it was 

 designed to meet. Undoubtedly it was useful in giving people time to think, and 

 to gather together their resources. But as actually constructed by successive Pro- 

 clamations under the Postponement of Payments Act it showed' certain delects, 

 which are well set out by Professor Dicksee. He admits that both the four 

 days Bank Holiday and the Moratorium were probably necessary in order to 

 give time for reflection and recovery. ' But,' he continues, ' while they may have 

 served to allay panic, and perhaps even to restore confidence, in the nature of 

 things they could not re-establish Credit, for Credit is a matter of trust, rather 

 than of calculation.' 



The Moratorium was somewhat unsatisfactory in several ways. It extended 

 the time for the execution of contracts involving the payment 'of certain kinds 

 of debts, but not the time for the execution of contracts involving the delivery 

 of goods or the rendering of services. But many business houses that were 

 under contract to deliver goods at stated intervals against payment on specified 

 dates broke their contracts and refused to continue "delivery," unless they could 



" Palgrave's Dictionary of Polifiml Economy, vol. i., p. 463, article on 

 ' Crises.' 



