of currency notes or Bank notes. Obviously, there are limits to which the ordinary joint stock banks can regard a credit with the Bank of England as just as good as cash. It is only so because they can rely, if sudden demands for cash come upon them, on turning this cash at the Bank of England into legal tender currency with which they can meet these demands. But this is a process which takes time and it is necessary for the other banks to be able to meet demands upon them on the spot. Consequently, it is true that the great expansion in bank deposits could not have been carried out if the increase in legal tender currency, provided through the issue of over £300,000,000 of currency notes, had not been available. To this extent it is true that the expansion of credit could not have been carried out without the expansion of currency and to this extent those people are right who maintain that the increase in currency, provided by the Treasury note issue, was the real cause of the credit expansion, which together with the currency increase had such a stimulating effect upon prices and consequently upon the cost of the war. But it is surely idle to spend time in arguing whether the credit increase or the currency increase was the real cause of the rise in prices.
