The Scottish 'option clause' let banks suspend note redemption while paying note holders the maximum legal 5% interest during suspension, converting the note into a small bond; it developed to defend against rival banks staging note 'raids,' and was an incentive-compatible device never actually used against customer runs.
factualpending
Speaker
George SelginEvidence Quote
“during the period of suspension we have to pay what was then the maximum allowed rate of interest to 5% to the note holder in other words the note holder waiting for the their payment accumulates the 5% return on the note gets converted to a little bond”
Created: 6/15/2026, 9:20:23 AM
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