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 were paid." And this continued rise in bank loans was actually encouraged by the Federal Reserve Board. It had to be so because if the banks had not given the necessary helping hand to industry and commerce there must have been widespread disaster. Governor Strong states frankly that during this period of declining prices "our policy was designed to encourage the extension of needed credits."

Thus out of the mouth of this witness whose knowledge of the whole course of events is from the nature of his office unrivalled, we learn that the tumble in prices began in the Far East and spread to the rest of the world, which does not look as if advances in money rates in London and New York had much to do with it; and further, that when the tumble was in progress the New York Federal Reserve Bank was busily encouraging the extension of credits. And this shows very clearly that the fall in prices was not caused by any contraction of credit because credit was officially encouraged to expand, certainly in New York, and probably in London also.

We thus have very valuable evidence for the view that the rise in money rates here and in New York at the end of 1919 and the beginning of 1920 did not cause the fall in prices and the check to speculation, or if it did, it did so through