+08
MONEY
Advances from Government Departments, and few
persons suspected that the Currency Note Account
was the largest holder of Treasury Bills and the largest
Advancer among Government Departments. Ques-
tions intended to bring out the facts were always
smothered by Ministers in the House of Commons,
and the uninstructed public imagined that the reduc-
tion of the aggregate currency by some fifteen per
cent. was due to the fall of prices, just as they had
supposed that the increase of currency from 1915 to
1919 was due to the rise of prices. This doubtless
made it somewhat easier to carry out the policy, but
it was unfortunate in that it prevented foreign coun-
tries from understanding what was done, and thus
deprived them of what ought to have been a useful
example.
By the end of the three years the work of restoring
the pound to the old parity with gold was nearly
done. In March, 1920, the paper pound was only
worth about 70 per cent. of the gold contents of a
sovereign : in March, 1923, it was worth over 96 per
cent.—four months more at that rate of progress
should have brought it to par. But as often happens
in monetary history, the cup was allowed to slip from
the lip. The policy of reducing the paper currency
was abandoned in favour of keeping it stationary
(except of course for the seasonal and other temporary
variations). It is as yet unknown whether this was
due to a change of personnel which had taken place
at the Treasury, to ministerial fears of unpopularity,
to timidity on the part of high financial authorities
about the return to the gold standard, or to a belief
that gold and the paper pound would now approxi-
mate in value without any further reduction of the
paper currency. Anyhow this belief turned out to be
correct, though two more years were required for the
process ; after a shocking 8 per cent. relapse in the