had been the only, or even the predominant, means of payment in England.  But, as every office boy knows, it was not.  Legal tender—­gold and Bank of England notes—­was hardly ever seen in commercial and financial transactions on a serious scale.  We paid, sometimes, our retail purchases of goods and services in gold; and Bank notes were a popular mode of payment on racecourses and in other places where transactions took place between people who were not very certain of one another’s standing or good faith.  But the great bulk of payments was 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 holdings 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 brought into play there will be very grave danger of a credit expansion in this country and a foreign drain of gold which might jeopardise the convertibility of our note issues and the international trade position of the country....  We are glad to find that there was no difference of opinion among the witnesses who appeared before us as to the vital importance of these matters.”  The first measure that they put forward as essential to this end is the cessation at the earliest possible moment of Government borrowings.  “A large part of the credit expansion arises, as we have shown, from the fact that the expenditure of the Government during the war has exceeded the amounts which they have been able to raise by taxation or by loans from the actual savings of the people.  They have been obliged therefore to obtain money through the creation of credits by the Bank of England and the Joint Stock