those who guided our monetary policy to keep up the price of money in Lombard Street, when its cheapness would have enabled the Government to borrow at much lower rates and so would have left a much less onerous debt charge. The natural effect of the big creations of new credit involved by the war was to make money cheap and in the early months of 1915 the market rate of discount was below 1½ per cent. Since as the war went on the Government was practically the only borrower, exports of capital being forbidden and new issues at home being only permitted with the sanction of a most exacting Committee, it is clear that if the Government had chosen to adopt this policy it could have helped itself to all the available capital at any price that it chose to offer, especially if it had at the same time administered to capitalists the very broad hint of compulsion if they did not subscribe, to which they were treated by Mr. Bonar Law—as good a borrower as he was a bad taxer—when he was appealing to them to support his great and successful War Loan of 1917. But our rulers feared that if money was too cheap in Lombard Street, foreigners would withdraw their balances from London and so turn the exchanges against us by offers of sterling in foreign centres,
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