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 be offset by fresh borrowings for capital expenditure, that it was essential to the restoration of the effective gold standard that the money for such expenditure should not be provided by the creation of new credit, and that, in so far as this expenditure was undertaken at all, it should be undertaken with great caution, that this caution was particularly applicable to far-reaching programmes of housing and other development schemes. "The shortage of real capital must be made good by genuine savings, it cannot be met by the creation of fresh purchasing power in the form of bank advances to the Government, or to manufacturers under Government guarantee or otherwise, and any resort to such expedients can only aggravate the evil and retard possibly for generations the recovery of the country from the losses sustained during the war."

"Under an effective gold standard all export demands for gold must be freely met." This observation once more shows that the Committee's whole basis was free export of gold. It went on to point out that some machinery must exist to check foreign drains when they threaten to deplete the gold reserves; that the recognized machinery for this purpose is the Bank of England discount rate; and that when the exchanges are adverse, and gold is being