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 new money merely replaces the Government money that had been cancelled.

Bankers, however, were severely lectured at the time by politicians and officials who thought they knew best about the needs of business, and contrasted, as did Professor Pigou, the highly meritorious action of the Government in reducing, as it began to do after the end of 1919, the credits that had been created for it during and after the war, with the nefarious policy of bankers who made the Government's action "useless" by giving fresh credit to customers. One day a banker turned on one uf these official lecturers and showed that not only were the bankers justified in their policy but if they had not carried it out the Government could not have effected the much boasted contraction. For the margin of revenue over expenditure which enabled the Government to redeem debt and cancel credits was not produced by genuine taxation, but, as shown above, by the sale of assets; and the Government could not have sold these assets if the bankers had not lent their customers the wherewithal to pay for them. So that all these scoldings of the bankers were based on ignorance of what was really happening.

As to Professor Pigou's demonstration that it was hardly possible to produce a contraction