How far can these two authorities control their own actions and how far must they remain passive agents? In my opinion the control, if they choose to exercise it, is mainly in their own hands. As regards the Treasury, the extent to which they draw money from the public to discharge floating debt clearly depends on the rate of interest and the type of loan which they are prepared to offer. A point might be reached when they could not fund further on any reasonable terms; but within fairly wide limits the policy of the Treasury can be whatever the Chancellor of the Exchequer and the House of Commons may decide. The Bank of England also is, within sufficiently wide limits, mistress of the situation if she acts in conjunction with the Treasury. She can increase or decrease at will her investments and her gold by buying or selling the one or the other. In the case of advances and of bills, whilst their volume is not so immediately or directly controllable, here also adequate control can be obtained by varying the price charged, that is to say the bank rate.[54] [54] It is often assumed that the bank rate is the _sole_ governing factor. But the bank rate can only operate by its reaction on (_c_), namely, the Bank of England’s assets. Formerly it acted pretty directly on two of the components of (_c_), namely, (_c_) (iii.) advances to customers and bills of exchange and (_c_) (iv.) gold. Now it acts only on one of them, namely, (_c_) (iii.). But changes in (_c_) (i.) the Bank’s advances to the Treasury and (_c_) (ii.) the Bank’s investments can often be nearly as potent in their effect on the creation of credit. Thus a low bank rate can be largely neutralised by a simultaneous reduction of (_c_) (i.) or (_c_) (ii.) and a high bank rate by an increase of these. Indeed the Bank of England can probably bring the money-market to heel more decisively by buying or selling securities than in any other way; and the utility of bank rate, operated by itself and without assistance from deliberate variations in the volume of (_c_) (ii.), is lessened by the various limitations which exist in practice to its freedom of movement, and to the limits within which it can move, upwards and downwards. Therefore it is broadly true to say that the level of prices, and hence the level of the exchanges, depends in the last resort on the policy of the Bank of England and of the Treasury in respect of the above particulars;--though the other banks, if they strongly opposed the official policy, could thwart, or at least delay it to a certain extent--provided they were prepared to depart from their usual proportions.