278 REPORTS ON THE STATE OP SCIENCE. — 1916. 



The Effects of the War on Credit, Currency, and Finance. — 

 Report {Abstract) of the Committee, consisting of Professor 

 W. E. ScoTT {Chairman), Mr. J. E. Allen {Secretary), Sir 

 Edward Brabrook, Professor C. F. Bastable, Professor L. 

 E. DicKSEE, Professor F. Y. Edgeworth, Mr. Barnard 

 Ellinger, Mr. A. H. Gibson, Professor E. C. K. Gonner, 

 Mr. Francis W. Hirst, Professor A. W. Kirkaldy, Mr. 

 D. M. Mason, Professor J. Shield Nicholson, Sir E. H. 

 Inglis Palgrave, and Mr. E. Sykes. 



I. Introduction. 



Communications invited from America and allied countries. The 

 Committee records its thanks to Professor Gide (Paris), Professors 

 Einaudi, Loria, and Supine (Italy), and Mr. S. Metz (Argentina). 



II. Credit. 

 Last year's Eeport dealt with the period of transition from peace 

 to war ; ' Credit has now adapted itself to a state of war. ' The 

 marked increase in banking deposits is apparently anomalous, but 

 explained by various considerations — e.g., calling in of floating foreign 

 balances from abroad, decrease in outstanding London acceptances, 

 subscriptions by the public and by banks to War Loans, Exchequer 

 bonds. Treasury bills, issue of currency notes, &c. 



III. Currency. 



Since last year's Eeport the credit position has become less 

 abnormal, and the need for emergency currency less; but it is now 

 desirable to concentrate the country's stock of gold. Notes should 

 be marked convertible into gold at Bank of England, though actual 

 conversion undesirable. Adequate gold reserve against notes essen- 

 tial : no increase since last year, while the note issue has been 

 trebled. It is difficult to estimate quantity of gold in country before 

 the war : some of it hoarded, and hoardnig seems to have increased. 



How far is issue of cun-ency notes an addition to the circulation? 

 The Mint calculation gave 78,000,000L of gold in hands of public 

 on June 30, 1914 : notes in hands of public now may not be much 

 more. It is conceivable that there is no increase in money in circula- 

 tion; but it is possible that the Mint calculation is an over-estimate. 

 Mr. A. H. Gibson thinks pre-war amount under 50,000,000Z. 



IV. Prices. 

 What has caused rise in prices ? Many reasons offered, ' prompted 

 by certain aspects of the situation which are forced upon the attention 

 of each writer by his own personal experience. ' Thus those engaged 

 in monetary transactions explain rise by alterations of the currency; 

 those engaged in manufacture and distribution explain it by quasi- 

 monopoly of producers, intensity of demand of home and foreign 

 Governments, inci'eased cost of production (plant, labour, capital), 



