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 The New York exchange which expresses the sterling price of money in New York had been, as we all remember, "pegged" since January 1916 in the neighbourhood of $4.76½ to the £. This peg was withdrawn in the Spring of 1919 and the American exchange immediately began to move against London owing to the great demand for American goods at high prices, not only in this country but all over Europe—and Europe's demand for dollars was, then as at other times, largely financed through London—and also owing to the rapidity with which inflation was proceeding here. Under such circumstances, since the submarine danger was no longer protecting the English gold standard, it was inevitable that people abroad who had balances in London should want to turn them into gold and send the gold to America to be converted into dollars and so miake the handsome profit which was offered by the rate of exchange. English bankers, when these demands for withdrawal came upon them naturally asked the Government what they were to do and the Government met the situation by prohibiting the export of gold except under licence.

Most people thought that it had to be done, but it is interesting to wonder whether it would not have been possible for England to meet