236 THE CURRENCY REPORT

made in the cheque currency which our bankers had
developed outside of the law and could create as fast
as prudence—and an eye to the supply of legal tender
which every holder of a cheque had a right to demand
—allowed them to do so. While cheques provided
the currency of commerce, another form of " money ''
was produced, again without any restriction by the
Act, by the pleasant convention which caused a
credit in the Bank of England's books to be regarded
as " cash " for balance-sheet purposes by the banks.
These advantages gave the English system a freedom
and elasticity, in spite of the strictness of the law that
regulated the issue of paper currency, that enabled
it to work in a manner that, judged by the test of
practical results, had one great advantage over that
of any of the rival centres. It alone in days before
the war fulfilled the functions of an international
banker by being ready at all times and without
question to pay out the gold that was, in the last
resort, the final means of settling international
balances.

It is the object of Lord Cunliffe's Committee to
restore as quickly as possible the system which has
thus been tried by the test of experience. " After
the war/' they say in their Report, " our gold hold-
ings will no longer be protected by the submarine
danger, and it will not be possible indefinitely to
continue to support the exchanges with foreign
countries by borrowing abroad. Unless the
machinery which long experience has shown to be
the only effective remedy for an adverse balance of
trade and an undue growth of credit is once more