Page:Bankers and Credit (1924).pdf/84

 in Chapter I, the banks for their own safety maintained a certain proportion between their liabilities in the form of deposits and their holding of legal tender cash, plus "cash" at the Bank of England, which meant a credit in its books. Before the war legal tender cash could only be increased (apart from the inward and outward flow of the home circulation) by additions to the country's stock of gold. Cash at the Bank of England could be increased as fast as it chose to make loans and discount bills and this gave our system the necessary elasticity. The great expansion has already been shown (page 65) in the Bank of England's holding of securities and also in its deposits, by which its power to create credit was used for war purposes, and it was also shown that the figures did not do full justice to its achievement. The expansion in legal tender currency was as follows:—