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 drawn away, it is essential that the rate of discount in this country should be raised relatively to the rates ruling in other countries. It also sat heavily upon the suggestion that the differential rate for foreign money might be maintained after the war, so that money might be made cheap during the reconstruction period for the purpose of home development. Obviously, this differential rate was a war-time measure, which could not possibly be worked or justified under normal conditions.

The Report then went on to discuss the question of limitation of note issue, pointing out that it had been urged in some quarters that in order to secure the provision of a liberal supply of money at low rates during the period of reconstruction further new currency notes should be created, "with the object of enabling banks to make large loans to industry without the risk of finding themselves short of cash to meet the requirements of the public for legal tender money." This also, as the Committee very easily showed, was incompatible with the maintenance of an effective gold standard.

It next proceeded to consider the particular machinery in regard to the control of the note issue, and what modification, if any, might be desirable in the system in force before the war. In the first place, it considered that, though the