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 though in fact the New York exchange, and others to a less extent, were kept "pegged" by borrowing for that purpose. And so money was made artificially dear by the rates at which Treasury Bills were offered and also by the measure already referred to by which the banks' surplus balances were borrowed by the Bank of England for the Government. And it was only in the last year of the war that a special rate was allowed on foreign balances and the market rate for home money was allowed to slacken slightly.

Another influence that made our war borrowing dearer than it need have been was a curious delusion long cherished by our financial rulers which made them think that in war time each loan issued by the Government must necessarily be offered with a higher rate of interest attached. In spite of the fact that the German Government was borrowing steadily with 5 per cent. loans issued in the neighbourhood of 98, our wiseacres insisted on an ever rising rate which culminated in the Autumn of 1916 when some 6 per cent. Exchequer bonds scored the high-water mark of this absurdity, and gave a quite unnecessary handle to well-meaning enthusiasts who were arguing that the capitalists were "doing their bit" by battening