AMERICAN PROSPERITY AND BRITISH DEPRESSION 133 
when exactly this policy was pursued? We make no 
such assumption when the increase in bank credit 
is due to certain purely fortuitous circumstances 
which have nothing to do with the requirements of 
British trade. For example, when the Bank of Eng- 
land buys more gold as a result of a decline in the 
Indian or German demand, the increase in bank 
cash, and consequently in the volume of credit, 
gives rise to no alarm. It is accepted as an axiom 
that an influx of gold into the Bank of England 
stimulates trade here. The stimulus, however, is not 
due to the Bank having more or less bullion buried 
in its vaults, but to the additional bank cash which 
the purchase of gold creates. The effect on the total 
of bank cash is precisely the same whether the Bank 
buys gold or bills or War Loan or bricks and 
mortar, whether it lends to the Government, the 
Bank of France or any other of its private cus- 
tomers. The Bank may buy from policy, with a 
steadfast eye on the needs of British trade, just as 
readily as it buys under compulsion when gold is 
tendered to it. But if gold does not flow in, and 
if without additional gold credit is not permitted 
to expand, full employment for our workpeople 
cannot be secured. 
Let me call your attention once more to an 
illustration from the United States of the fact that 
credit may be expanded without being based upon 
any influx of gold and without resultant inflation. 
I have not the full figures for any later date than 
November 1926, but if we compare these with the 
corresponding figures for November 1924 we shall 
see that during the intervening period the mone- 
tary stock of gold in the United States has dimin- 
ished, the deposits of reporting member banks 
have considerably increased, and prices have