Exchanges breathes a refreshing
blast of sound common sense. Everybody ought to read it. It costs but
twopence; it is only a dozen pages long, and it is described (if you
want to order it) as Cd. 9182. In view of the many attacks that have
been made on our banking system--especially the Bank Act of 1844--by
Chambers of Commerce and others before the war, it is rather
surprising that so little criticism should have been heard of this
Report, which practically advocates a return, as rapidly as possible,
to the practice and principles imposed by that Act. It may be that
peace, and all the preoccupations that have followed it, have absorbed
men's minds so entirely that questions of currency seem to be an
untimely irrelevance; or possibly the very heavy weight of the
Committee's authority may have silenced the opposition to its
recommendations. Presided over by Lord Cunliffe, the late Governor of
the Bank, and including Sir John Bradbury and Professor Pigou and an
imposing list of notable bankers, it was a body whose opinion
could only be challenged by critics gifted with the most serene
self-confidence.

One of the most interesting--especially to advocates of sound
finance--points in its Report is the implied condemnation that it
pronounces on the methods by which the war has been financed by our
rulers. It points out that "the need of the Government for funds
wherewith to finance the war in excess of the amounts raised by
taxation or by loans from the public has made necessary the creation
of credits in their favour with the Bank of England.... The balances
created by these operations passing by means of payments to
contractors and others to the Joint Stock banks have formed the
foundation of a great growth in their deposits, which have also
been swelled by the creation of credits in connection with the
subscriptions to the various War Loans.... The greatly increased
volume of bank deposits, representing a corresponding increase of
purchasing power and, therefore, tending in conjunction with other
causes to a great rise of prices, has brought about a corresponding
demand for legal tender currency which could not have been satisfied
under the stringent provisions of the Act of 1844." Here we have the
story of bad war finance put as clearly as it can be. Because the
Government was not able to raise all the money needed for the war on
sound lines--that is, by taxation and loans to it of money saved by
investors--it had rec