nal balances.

It is the object of Lord Cunliffe's Committee to restore as quickly
as possible the system which, has thus been tried by the test of
experience, "After the war," they say in their Report, "our gold
holdings will no longer be protected by the submarine danger, and it
will not be possible indefinitely to continue to support the exchanges
with foreign countries by borrowing abroad. Unless the machinery which
long experience has shown to be the only effective remedy for an
adverse balance of trade and an undue growth of credit is once
more brought into play there will be very grave danger of a credit
expansion in this country and a foreign drain of gold which might
jeopardise the convertibility of our note issues and the international
trade position of the country.... We are glad to find that there was
no difference of opinion among the witnesses who appeared before us as
to the vital importance of these matters." The first measure that they
put forward as essential to this end is the cessation at the earliest
possible moment of Government borrowings. "A large part of the credit
expansion arises, as we have shown, from the fact that the expenditure
of the Government during the war has exceeded the amounts which they
have been able to raise by taxation or by loans from the actual
savings of the people. They have been obliged therefore to obtain
money through the creation of credits by the Bank of England and the
Joint Stock banks, with the result that the growth of purchasing power
has exceeded that of purchasable goods and services." It is therefore
essential that as soon as possible the State should not only live
within its income but should begin to reduce indebtedness, especially
the floating debt, which, being largely held by the banks, has been
a cause of credit creation on a great scale. "The shortage of real
capital must be made good by genuine savings. It cannot be met by the
creation of fresh purchasing power in the form of bank advances to
the Government or to manufacturers under Government guarantee or
otherwise, and any resort to such expedients can only aggravate the
evil and retard, possibly for generations, the recovery of the country
from the losses sustained during the war." With these weighty words
the Committee brushes aside a host of schemes that have been urged for
putting everything right by devising new machinery for the manufacture
of new credit. That new credits will be needed for ind