NOTES AND MEMORANDA 539 An honest debtor an precedent. debtor will pay all he can pay. This bargain offers the opportunity to shirk. The badness of the plan lies in its If adopted, we shall have every other unscrupulous state which finds itself in difficulties, or whose finance minister thinks that
he can get popularity at home by fleecing the creditors who hold the bonds of his government, making some such arrangement. The Spanish precedent of 1881, when 3 per cents. of Spain were so converted and reduced as .to yield 1? per cent. only, is the worst of all. Whether Uruguay w?ll reap much benefit from the cutting down of interest remains to be seen The chances are that it would have better con- sulted its own credit and interest generally if it paid as much's?s.it could in the bad times, giving evidence of good faith and good intentions in the future by promising to resume the full rate on Uruguayan 5 and 6 per cent. bonds, whenever its resources should permit. Men of business shrug their shoulders, and affirm that "half a loaf is better than no bread," and that is, perhaps, how the great financiers excuse their not very creditable action in the matter of Uruguay. A. ELLIS THE EVOLUTION OF OUR BANKING SYSTEM. THE financial disturbance which culminated on the 15th of Novem- ber, 1890, will probably pass into history as the Baring crisis. At the same time no more complete misnomer than the word ' crisis' could be applied to a condition of affairs in which the commercial public is content to surrender its critical faculties, and to be guided by the un- reasoning suggestions of fear and panic. But the word' crisis'may with propriety be used to describe a movement in the banking system towards which events had evidently long been tending, which was distinctly accelerated by the catastrophe of November, and which, when it has spent its force, will probably be found to have established new relations between the banking community and the public with which it deals, as the result of the considered judgment of both parties. It is, moreover, not impossible that these changed relations may entail changes of an economic nature in the general trade and commerce of the country. The 'Mystery of Modern Goldsmiths or Bankers' came gradually into being about the time of the Restoration, when the goldsmiths proper, who were also dealers in exchange, began to receive deposits of coin at interest from traders, merchants, and private ?persons. This new departure evoked no small amount of hostile criticism, and a cloud of pamphlets or tracts. The coin of the realm, said the critics, would, under the new departure, be .collected from the pockets of the people into the chests of the goldsmiths; facilities would be given for lending large sums to reckless traders or spendthrift borrowers; ?he money required for the purposes of trade would thus be diverted
