journal of european integration history revue d'histoire de l ...

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Book reviews – Comptes rendus – Buchbesprechungen
John FFORDE. – The Bank of England and Public Policy 1941-1958. Cambridge, Cambridge
University Press, 1992, pp. xix + 861. ISBN 0-521-39139-3. 75,-£
This volume is the latest in a series of official histories of the Bank of England, following
on from Sir John Clapham’s two volumes covering 1694-1914 (first published 1944) and
R.S. Sayers’ two volumes plus a volume of documents covering 1891-1944 (first published
1976). The current volume differs from its predecessors in several ways. First of
all, rather than cover two centuries or even half a century, it does not even make two decades.
On the other hand, it does come in one volume – and since that volume sells for £75,
this is just as well. Secondly, the earlier volumes were written by distinguished economic
historians who had a command of the world beyond that of the Bank; in contradistinction,
John Fforde is a former Executive Director of the Bank and not a trained historian. There
is a gain in the sense of a banker conveying the culture and approaches of his Bank and
delineating the art of the possible, but there is a loss in that he clearly does not have the
light-handed command of Sayers of the general economic context, domestic and international.
One outcome is that thirdly, this is internalist history with a vengeance. Finally,
publications of this sort should really have references more forthcoming than those supplied
by Fforde. When Sayers wrote, the Bank was not nearly as welcoming to outside
scholars as it now is; indeed, its archives were not as well listed and organised. It was not,
therefore, surprising that he eschewed references, but both the Bank and the expectations
of scholars have since changed.
Violating strict chronology, the book begins with what should have been the single most
important change in the nature of the Bank since its establishment in 1694: its nationalisation,
and therefore its transformation from a private to a public institution, by the Labour
Government in 1946. Actual change, however, was evolutionary rather than revolutionary.
We then reverse back to 1944 and 1945 and look at the Bank’s involvement in Bretton
Woods and the American Loan of 1945, both unhappy experiences for the Bank, as, with
Britain under ferocious American pressure, the Bank fought against principles and conditions
which it thought likely to be profoundly damaging to future British interests. The following
chapter delineates one immediate result: the sterling convertibility crisis of July-
August 1947. For Fforde, Britain’s claim to be a monetary Great Power disappeared through
the window along with her reserves.
There then follows two long chapters tracing themes. The first looks at external monetary
problems from 1947 to the Korean War, with a substantial portion of the chapter being
devoted to European payments problems and the European Payments Union (EPU), while
the second concentrates on domestic monetary policy 1945-51, such as it was: Fforde makes
clear that it was not very effective. This is followed by a transition chapter looking at both
domestic policy and approaches to convertibility 1951-52: here the main themes are the reordering
of monetary policy (the Conservative Government which came into power in 1951
proposed to treat Bank Rate as a flexible instrument of monetary policy, rather than fixed, as
had Labour); the proposal to float the pound (Robot); and the beginnings of the Collective
Approach (capitalised by the Bank) to convertibility. The following chapter looks at the rise
and fall of the Collective Approach 1952-55, paying close attention to the inability of the
Bank and the Treasury to agree on how to deal with the fact that Britain’s interests appeared
to demand convertibility while the country was unable to satisfy the conditions laid down in
the Collective Approach. In the end the Bank failed to convince the Treasury to take what it
believed were necessary measures, resigning itself to warning the Government that it would
all end in tears.
After a short chapter on the Bank and the Suez Affair of 1956, there follows two thematic
chapters on external and domestic policy. The first, on the march to convertibility 1957-58,
details a fascinating exercise in European financial diplomacy. The second, on domestic