THE CONTROL OF MONEY 173

and spends, but to a firm with assets and liabilities. Ten years
ago some prominent members of the Liberal Party pointed out
that the Budget treats in the same manner ordinary spending
and spending which is really investment, so. that the real financial
position is obscure.1 They recommended that the Commons
should be given a statement of the nation's assets and
liabilities, in addition to an ordinary income and expenditure
account; and there is no .doubt that this reform will one day
have to be made. Meanwhile one economic activity has sprung
up which gives the Government uncontrolled power over a large
sum of money in a manner which would have startled previous
centuries. In 1931 Britain went off the Gold Standard: that is
to say, the £ was no longer worth a fixed amount of gold, and
the number of francs, dollars and other* foreign units for which
it would exchange became uncertain. There was reason to fear
that speculators would take advantage of the situation and
aggravate the uncertainty. The Government formed an Exchange
Equalisation Fund, to be used for the buying and selling of £'s
and foreign currencies in such a manner as to keep the £'s value
stable on the foreign exchange market. In such work secrecy is
essential to success, and the Commons have therefore to. take
the Chancellor's word that a sum of, perhaps, £400,000,000 is
being properly handled.

The Management of the National Debt and allied problems
is highly technical and there is therefore dose connection between
the Chancellor and those persons and institutions whose work
is the borrowing and lending of money. At the centre of these
is the Bank of England. Strictly speaking, the Bank is a private
institution possessing special privileges given it by successive
Act$ of Parliament. It has the sole right to issue notes in England;
it keeps the Exchequer Account and makes Advances to the
Government. Further, the advice of the Governor of the Bank
and other prominent figures in the banking world, will carry
great weight when the Government proposes to raise loans,

1 See Britain's Industrial Future, Ch. XXIX.