SHOULD  THERE  BE  A LIMIT?     271
limiting systems the old one advocated by the Com-
mittee, though apparently more severe, would seem
to have much less alarming possibilities behind it.
A point on which the commercial world does not
seem to have made up its mind, however, is whether
there should be a limit at all. Under the old Act
there was a limit which could only be passed by a
breach of the law. Under the Cunliffe proposal the
limit could be passed with the consent of the
Treasury. Sir Edward has not told us of what
machinery he proposes for the passing of the limit
which he lays down; but in view of the great
apprehension that an approach to the limit point
would, as shown by the Committee, produce, it is
clear that there would have to be a way round.
In Germany there is no limit; you pay a tax on the
excess issue and go on merrily. In America it
would seem that the-German system has been taken
for a model. In his speech on January 2gth Sir
Edward quoted Senator Robert Owen, who was the
principal pioneer of the Federal Reserve Bill
through the Senate, as follows :—" The central
idea of the system is elastic currency issued against
commercial paper and gold, expanding and con-
tracting according to the needs of commerce. . . .
It is of great importance that the volume of these
notes should contract when the commerce of the
country does not require the notes to be circulation,
and the reserve board can require them to be
returned by imposing a tax upon the issue. . . .
Under the reserve system a financial panic is impos-
sible. People will not hoard currency nor hoard