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 of credit by means of rationing, since bankers could not refuse the demands of good customers for advances, especially when it was against their own interests to do so, the fact nevertheless remains that it was just this process which first checked and finally reversed the expansion of credit. There was no definite system of rationing but the banks did succeed in bringing home to their customers the need for moderating their demands for credit and for contracting the accommodation that they had received by reducing advances, as soon as sales of goods began to be possible at a lower level of prices. It was this action by the banks in persuading their customers that unlimited expansion of credit had to stop, that stopped it far more than the rise of a couple of points in Bank Rate. Banking figures went on expanding long after the rise in Bank Rate and only contracted appreciably when Bank Rate was being reduced again. It was not dear money that put the brake on, but recognition by bankers, and their communication of this conviction to their customers, that a brake was needed: though it is quite possible that the rise in Bank Rate helped to produce a state of mind which enabled the banks and their customers to reach and act on these conclusions.

All this had to be recalled firstly because