at the end of January 1923, by which the Government sold Treasury bonds to investors and with the proceeds bought Treasury bills held by the banks, thus reducing the banks' investments or discounts, and likewise their deposits. But if trade had been active and the demand for credit keen, this process need not have produced deflation; because the banks might have replaced the Treasury bills paid off by discounting commercial bills or increasing their advances to customers, and so the level of their deposits would have been maintained, the purchasing power in the hands of the public would have been restored and the banks would have been doing their proper business of financing trade instead of providing credit for the Treasury.
In this country, which lives so largely on its foreign trade, trade depression and unemployment are usually produced by external matters which are little influenced by our monetary policy. This is especially so at present. In the same address Mr. McKenna told his Belfast audience that "when we turn to trade we have to deal with conditions, many of which are not under your control. . . . Your prosperity rises and falls with the prosperity of Great Britain and of the world generally, and an impoverished and disorganized Europe can-
