Monetary Policy and Financial Repression in Britain, 1951 - 59

1. Front Matter

   Pages i-xii

   PDF

2. Introduction

   • William A. Allen

   Pages 1-2

3. 1945–51: Labour’s Macro-Economic Policies

   • William A. Allen

   Pages 3-18

4. 1951–52: The Reactivation of Monetary Policy

   • William A. Allen

   Pages 19-35

5. 1952–54: Years of Growth

   • William A. Allen

   Pages 36-43

6. Moves towards Convertibility and Their Implications for Monetary Policy

   • William A. Allen

   Pages 44-47

7. Short-term Interest Rates in Late 1952 to Mid-1954

   • William A. Allen

   Pages 48-54

8. Government Debt Management 1952–54

   • William A. Allen

   Pages 55-63

9. The Debacle of 1955

   • William A. Allen

   Pages 64-92

10. 1956: Macmillan as Chancellor

    • William A. Allen

    Pages 93-113

11. 1957: The Year of Thorneycroft

    • William A. Allen

    Pages 114-140

12. 1958: The Sunny Uplands

    • William A. Allen

    Pages 141-156

13. 1959: Here We Go Again

    • William A. Allen

    Pages 157-171

14. Monetary Policy Techniques

    • William A. Allen

    Pages 172-180

15. Financial Repression

    • William A. Allen

    Pages 181-193

16. Management and Communication of Monetary Policy

    • William A. Allen

    Pages 194-217

17. An Assessment of Monetary Policy

    • William A. Allen

    Pages 218-235

18. Epilogue: The Next Reactivation of Monetary Policy

    • William A. Allen

    Pages 236-242

19. Back Matter

    Pages 243-287

    PDF

British monetary policy was reactivated in 1951 when short-term interest rates were increased for the first time in two decades. The book explores the politics of formulating monetary policy in the 1950s and the techniques of implementing it, and discusses the parallels between the present monetary situation and that of 1951.

• 1950s
• monetary policy
• sterling
• exchange rate
• gilt-edged
• money market
• Attlee administration
• Churchill administration
• Eden administration
• Macmillan administration
• politics
• Bank of England
• Treasury
• Radcliffe committee
• fiscal policy
• Stafford Cripps
• Hugh Gaitskell
• R. A. Butler
• Harold Macmillan
• Peter Thorneycroft
• Debt Management
• growth
• interest rates

'How do you manage an economy with long-standing rock-bottom interest rates, a financial system awash with liquidity, and uncomfortably high public sector debt and deficit ratios? While that might sound like a current problem, it was actually much worse in the early 1950s, as Bill Allen's detailed and careful history of British monetary policy in the 1950s makes clear. The answers then involved quite a lot of repression, the first persistent, non-war-related, rise in inflation, and some hotly debated upwards spikes in interest rates, largely triggered by external weakness. Although the Bank of England was subservient to Whitehall, personalities mattered, then as now; Bill Allen records how Cobbold, despite a quite weak institutional position, managed to lead the debate on domestic monetary policy, though his stance on transparency would now be regarded as antediluvian. Meticulous history and a good read.' Charles Goodhart, Emeritus Professor, London School of Economics, Member of Bankof England Monetary Policy Committee, 1997 - 2000.

'A timely and fascinating account of Britain's emergence from the previous era of cheap money and analysis of the accompanying dark arts of financial repression. Allen has a commanding grasp of monetary economics and the era.' Professor Richard Roberts, Director of the Institute of Contemporary British History, King's College London

'This is a brilliant, extended, monetary essay on the 1950s. By the end of the decade monetary policy was run out of Downing Street, directed by misplaced objectives and Keynesian dogma, with pernicious effects on inflation and the fabric of society. A lesson for today will strike the reader: monetary policy should be directed at price stability and not subordinated to debt management, however tempting that may be to politicians confronting a high debt stock.' Andrew Tyrie, MP, Chairman of the House of Commons Treasury Committee and the Parliamentary Commission on Banking Standards.

'Allen haswritten a fascinating and coherent account of British monetary policy in the 1950s... [Yet] Allen's book is not just skilful history: it offers a major warning to current policy-makers looking for what may happen after the low interest rate environment. Is the future likely to be a replay of the past, in which economic openness (capital movements) and fiscal constraints combine to limit the room for policy maneuver? For a long time we have been obsessed by the policy mistakes of the 1930s; Allen draws our attention to the policy traps of the 1950s.' Harold James, Princeton University in Central Banking - read the full review here: http://www.centralbanking.com/type/review/category/central-banks/monetary-policy

• Cass Business School, London, UK

  William A. Allen

William A. Allen worked for the Bank of England (1972-2004) in a range of positions related to the formulation and implementation of monetary policy and government debt management. He is a visiting fellow of Cass Business School, UK, and is the author of International liquidity and the financial crisis (2013) and numerous published articles.

Policies and ethics