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 England was allowed to issue notes. Since these forms of currency or money were, as has been stated, legal tender, and so by the law of the land had to be accepted in payment by any creditor who had a claim for money, it was clear that they had to be subject to legal restriction. But the Bank of England's ordinary banking business, apart from its strictly regulated note issue, was left entirely to the discretion of its Governor and Directors; and we shall find that they, by the growth of a convenient monetary convention, were able to give quite unregulated elasticity to the otherwise too tight-laced system devised by Parliament. And still further elasticity was provided by the fact that the cheques, which had come to be the form of currency in which nearly all the big commercial transactions of the country were settled, were drawn on the banks by their customers according to mutual arrangements which were subject to no legal regulation, but depended solely on the prudence and sagacity of the bankers in granting credits against which cheques could be drawn.

Thus in the three generations before the war the bankers had taken the manufacture of money, in the widest sense of the word, out of the hands of the Government into their own,