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 ment's balance sheet and its Public and Other Deposits on the other; and the convention by which Bank of England money had come to be regarded as just as good as cash, presented to the British Government a simple and easy method of financing the war. The Government borrowed from the Bank of England on Ways and Means advances and also by selling to it Treasury Bills, War Loans and other forms of securities created during the war. In so far as the Bank of England took these Government obligations it gave the Government a credit in its books which the Government passed on to shipowners, contractors and others to whom it owed money, and it was thus added to the amount of other deposits included in the balances of other banks. By this method not only did the Government get a certain amount of money in hand to meet current payments, but also, by increasing the volume of cash at the Bank of England which the other banks used as part of the basis of their operations it enabled the other banks to carry huge increases in their deposits without diminishing their proportion between cash and liabilities.

Other banks used this increased credit at the Bank of England either by leaving it there in their balance or by taking it out in the form