The banking position and the banking system have stood calm amidst it all. Even had the banks or the nation possessed that hypothetical reserve advocated by some, and had it at hand in some safe corner of London, this would not of itself have made the position more secure. Other remedial or precautionary measures would still have had to be taken. Had it not been the particular measures that were actually conceived and taken, there would have been others. But we happened to be fortunate in the measures that were adopted, measures that deepened and strengthened the nation’s confidence. CHAPTER XXII FROZEN WEALTH We are now in a position to look more closely into the wealth of the banks and at their position in the early days of the crisis, and to regard them from what I call the standpoint of confidence. Many happenings were foretold years ago by the prophets as the outcome of a European war, but they never foretold the closing of the Stock Exchange, nor foretold a moratorium. I think it will be safe to say that in the closing days of July no one in this country dreamed that the Stock Exchange would be closed. I think it will be safe to say that if this had been foreseen, many would undoubtedly have predicted disaster as its consequence. Though the Stock Exchange may be regarded by moralists and puritans as the shrine of Mammon, a place frequented only by gamblers and parasites, it came home to them, as it came home to the entire nation, that the institution plays a vital part in our economic organism. If we destroyed it, we should have to set up a similar institution in its place. It is the market for the exchange of certain essential species of the community’s wealth. The closing of the Stock Exchange not only froze up a considerable portion of the wealth possessed by banks, but a far mightier portion of wealth possessed by the general community. The banks could not liquefy their wealth, and the community could not liquefy its wealth. Their wealth was useless to both. There was no market for it, and when markets no longer work, the machinery of exchange, of production and distribution, works more slowly, and in some directions comes to a standstill. This was one market, but, as I have said, it was a vital market. Its closing restricted the power of the banks to liquefy capital, it restricted the facilities of merchants, tradesmen, and others to exchange investments for cash, or liquid capital. In other words, it had the same effect as the destruction of a vast amount of capital, and trade and employment suffered accordingly. Banks, therefore, found themselves in possession of unsaleable securities, those they held as collateral for loans and those in which their reserve funds were invested. The Stock Exchange owed to them approximately £80,000,000. Unable, therefore, to realize this wealth and to call in their loans, their position was considerably weakened.