PAPER PRICES
97
charged to private borrowers will rise and a * deadly
blow be struck at the industry of the country, which
has to support the war.” Economic intelligence is
not sufficiently widespread to enable the government
to reply that the industries serving the war directly,
or, by the provision of necessaries, indirectly, will te
able to pay, and that the more the others are closed
down for the time the better.
And the government can do what the private
individuals and institutions could not do—it can
print lcgal-tender inconvertible paper money for
itself or borrow it from its crez+*ure, the State bank,
which it authorizes to print 2nd lend. This is what
all the European belligerent ~~vernments did, some
of them at once and other: . “later, in the recent
war. In this country the © method was pre-
ferred, the Treasury its.X’ nting the Currency
Notes (popularly known ss Treasury Notes”),
though it issued them all except a small portion by
way of sale to the Bank of England.! In France the
Bank of France was authorized to print the required
notes, and they were lent to the government : how
little the nature of the transaction was understood is
shown by the fact that the Bank of France was paid
one per cent. per annum for lending *’ these notes
to the government and actually got credit for genero-
sity on the strength of it, though it is an outrageously
! The small part was lent to certain savings banks early
in the War and has all been repaid. The rest of the notes
were given to the Bank of England in exchange for gold
coin, bank notes, silver coin, and credits in the Bank’s books.
These credits were from time to time taken from the Currency
Notes Account to be “invested in ”’ Ways and Means Advances
and Treasury Bills, etc. This put the amounts obtained at
the command of the spending departments of the government,
which proceeded to give cheques to persons whom they wished
to pay. These persons then were paid by the note issue
Just as much as if thev had received the notes direct from the
Fences
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