The historical claim of this section is that the Act of 1931 suspended the Bank of England's obligation to sell gold without naming any event, date or parity on which the obligation would return, leaving the end to the government's own proclamation; that its one fixed term belongs to a power over the exchanges, not to the suspension; and that its only statement about who bears the change is a shield for the Bank. For the debate between the escape-clause reading and the golden-fetters reading, the section adds that the text of 1931 is written, in its form, as an exit rather than as a clause of a continuing rule.
5.1The Act
The Act is short. Its long title, in this article's words, says that it stops one subsection of the Gold Standard Act, 1925, from operating, and deals with related matters. Its heading gives the date of 21 September 1931. Its first section has three subsections and its second gives the short title.
The first subsection is the suspension, and the rules allow it to be quoted in full: "Unless and until His Majesty by Proclamation otherwise directs, subsection (2) of section one of the Gold Standard Act, 1925, shall cease to have effect, notwithstanding that subsection (1) of the said section remains in force."
The study's reading note on the Act explains what subsection (2) of the Act of 1925 was: the provision that obliged the Bank of England to sell gold at a fixed price (Parliament of the United Kingdom 1931). The note does not describe subsection (1), and this article does not either. What the sentence does with the two subsections can be read from its words alone. One provision of the earlier Act stops having effect; the other, the sentence takes care to say, stays in force. The gold standard as a legal structure is not repealed. One obligation within it is switched off.
The end of the suspension is written in the opening words: "Unless and until His Majesty by Proclamation otherwise directs". That is a procedural end, like the Minute's, with one difference. The Minute's procedure was a step towards another body, Parliament, which would then decide; the Act's procedure is a step by the executive itself, acting through the Crown, which Parliament has here authorised in advance. No condition is attached to the proclamation. The Act does not say in what circumstances His Majesty should direct otherwise, at what price the Bank should resume selling gold, or within what time. "Unless" allows that no proclamation may ever come.
The second subsection, in this article's words, frees the Bank of England from liability for whatever it has done contrary to the suspended provision since 18 September 1931, and forbids anyone to sue the Bank, or anybody else, over those acts. The Act thus reaches back to a date before its own. Whatever the Bank had done in those days, which the Act does not describe and the reading note does not either, is made lawful after the fact.
The third subsection lets the Treasury issue, and alter as it goes, orders permitting whatever steps on the exchanges, or elsewhere, it judges useful for dealing with the problems the suspension brings. A separate sentence then gives that subsection, and that subsection alone, a life of six months once the Act is passed.
5.2Three dates and one term
The Act contains three dates, of which the modern record keeps one. The first is 18 September 1931, from which the Bank's past conduct is indemnified. The second is 21 September 1931, the date in the heading. The third is the end of a period of six months after the Act's passing, when the Treasury's power over the exchanges lapses. A fourth moment is written into the Act without a date: the proclamation that would end the suspension.
The distribution of these terms is the most telling feature of the text. The suspension, the main act, has no term and no condition. The ancillary power, the one that lets the Treasury manage the consequences, has a term. In 1797 the order that stopped payment was the provisional one, awaiting Parliament; in 1931 Parliament made the stopping open-ended and set a deadline only for the means of handling it.
5.3Who is named
The Act names one party as protected and leaves the rest unnamed. The Bank of England is discharged from liability, and no one may sue it, or anybody else, for what was done. The Act names no bearer. This article infers that the suspension fell on those who would otherwise have bought gold from the Bank at the fixed price; in the Act they appear, if at all, only among the people whose actions are barred.
Thornton's argument of 1802 had answered the contract objection on its merits: everyone is both creditor and debtor, and the suspension carries out a common wish. The Act of 1931 does not argue. It indemnifies. The difference is between a pamphleteer defending a suspension to the public and a statute shielding the institution that suspended.
5.4The modern record
Skeptron's record, Britain Leaves Gold, gives the event and its background in its scenario:
The economic contraction and pressure on the pound preceding it form the background, and the monetary constraint of maintaining gold parity changed. The channels of exchange rates, exports and imports, debt currency, and price adjustment must be examined separately. The date of the institutional transition does not itself prove the magnitude or direction of the effects.
Its answer on concrete fact repeats the date and background in slightly different words, speaking of convertibility where the scenario speaks of parity:
Presented as 21 September 1931. The preceding economic contraction and pressure on the pound form the background, and the monetary constraint of maintaining gold convertibility has changed.
The record keeps the date of the Act and the fact of a change of constraint. It names a background, contraction and pressure on the pound, which the Act itself does not mention; the Act gives no reasons at all. The record's caution, that the date of the change does not by itself prove the size or direction of its effects, is consistent with what a reader of the golden-fetters literature needs to remember: that literature's claims about recovery are claims about comparisons across countries and years, not about what a statute's date shows (Eichengreen and Sachs 1985).
The record does not say that the suspension was temporary or permanent. It does not mention the proclamation on which the suspension's end depended, the indemnity from 18 September, or the six months of the Treasury's power. It says nothing of what became of the suspension. Its answer to the fifth question, like that of the record of 1797, is Skeptron's condition for a modern comparison:
What is to be observed is maturity-by-maturity liquidity, the borrowing entity, and the actual performance record. Counting expected inflows as available cash, or aggregating the support of another entity, recalculates the plan.
That sentence concerns how a later comparison of liquidity should be checked; it is not the Act's condition, and the Act has none.
Meridian's ledger, reading this summary, found a suspension with no end named, no word on what became of it, no figure, no one named as paying and no second date; its two readings split on whether the word suspension alone makes the act temporary (see the Appendix). All of that is true of the summary. The Act, read for the same questions, gives two dates and a third moment by term, a bearer by implication, a protected party by name, and an end by procedure.
5.5What the case adds
For the debate between the escape clause and the value of leaving, the case adds a text whose form is that of an exit. It switches off the obligation to sell gold while keeping the rest of the earlier Act in force, leaves the end to the executive's proclamation without condition, names no parity, and gives a fixed term only to the power to manage the consequences. Bordo and Kydland's escape clause requires an expected return to the old parity (Bordo and Kydland 1995); the Act writes nothing on which such an expectation could rest. Eichengreen's account of the 1930s values leaving because it freed policy to expand (Eichengreen 1992); the Act's form is consistent with that freedom, since it binds no one to go back. Neither reading is proved by the text. The text shows which one its authors chose to leave room for.