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 again would have the option of paying him in gold or in Bank of England notes, but in ordinary times would certainly be prepared to provide its own customer with gold. If for some special reason it stood on its right to pay in notes then the customer would have to go to the Bank of England for the gold that he wanted.

Thus before the war all our money was gold or claims to gold. Since cheques give their holders the right to take gold, the banks could not make themselves liable to meet cheques unless they had a proportion, such as experience had shown to be sufficient, of gold or of claims on the Bank of England's gold against the deposits of their customers. And so our money—in which terms I include coins, notes and cheques—could only be increased in quantity—except within the limits laid down by banking prudence—by bringing in more gold from abroad to be used either in circulation or in reserves against notes or deposits.

This foundation on which the English monetary system rested was taken from under it during and after the war. Its importance is not, at first sight, very evident. To the man in the street it might seem that all he need ask