1st Edition

The Banks and the Monetary System in the UK, 1959-1971

Edited By J.E. Wadsworth Copyright 2006
    544 Pages
    by Routledge

    542 Pages
    by Routledge

    The annual Monetary Surveys published in the Midland Bank Review have become an established and authoritative source of reference for all students of money and banking and related topics, and for those concerned with general economics and current affairs.

    This superb volume brings together reprints of these Surveys with a selection of special articles published in the Review since the 1959 Radcliffe Report on the working of the monetary system. In his introduction the editor discusses in outline Britain’s financial dilemma. The period covered is an interesting and exciting one{emru}economic conditions in the UK were swinging from achievement in the early 19605 to near calamity, and in the international monetary field policy moved from convertibility for current transactions through tighter restrictions and devaluation, to the experiments of 1971.

    The book is set out in four sections. The first section contains articles dealing mainly with official activities in the management of government debt, of the money supply, and of the banking system. In the second section are five articles describing and analysing London’s money market operations, and examining the swift growth of non-bank financial intermediaries and the markets in which they are active, including the Eurodollar market. These are followed by the annual Monetary Surveys for the years 1959 to 1971, which tell the story of the struggle to preserve the parity of sterling, the devaluation of 1967, and the consequences for Britain’s position at home and abroad; they also record developments in banking and the first effects of the new methods of credit control. The final section of appendices presents up-to-date statistics and charts and relevant documents illustrating the monetary and economic background of the period covered. This excellent text was first published in 1973.

    Acknowledgements page ix

    Introduction 1

    section a banking and credit policy since the radcliffe report

    {ensp}1 The Radcliffe Report and the Banks (November 1959) 19

    {ensp}2 The Failure of ‘Packages of Restrictions 31

    Three credit squeezes (November 1965) 31

    Devaluation – for the record (February 1968) 46

    {ensp}3 Debt Management and Credit Control 53

    Government debt policy and the banking system (February 1958) 53

    Managing the gilt-edged market – a temporary change of emphasis? (May 1969) 61

    The gilt-edged market and credit control (August 1971) 65

    {ensp}4 The Supply of Money 77

    Bank deposits and currency (November 1957) 77

    Money supply, and the banks (February 1969) 82

    Another look at money supply (November 1970) 93

    {ensp}5 Regulating Banks and Credit 99

    Banking regulation in Britain – by suasion not statute (November 1967) 99

    Towards an effective liquidity ratio (May 1970) 110

    Banking regulation and competition – a résumé with commentary of the new arrangements (November 1971) 118

    Banking enters a new era (extracts from the Monetary Survey in the Review for May 1972) 130

    section b london’s markets for money

    {ensp}6 Old and New Activities 141

    The Treasury bill – the story of an economist’s invention (February 1961) 141

    Long-term trends reversed (May 1966) 152

    London’s new markets for money (August 1966) 159

    {ensp}7 Further Developments in London’s Money Markets 173

    Clearing banks and discount houses (August 1969) 173

    Continued expansion in ‘complementary’ markets (November 1969) 183

    section c the annual monetary surveys 1959–1971

    {ensp}8 Stimulation and Expansion 203

    1959 – Stimulation 203

    1960 – Expansion: the best post-war year 219

    {ensp}9 Years of Disappointment 235

    1961 – Uncertainty and paradox 235

    1962 – Inflation: the ‘little budget’ and the ‘pay pause’ 254

    1963 – Awaiting improvement 272

    10 Uneven Growth 291

    1964 – Rapid expansion 291

    1965 – Sterling under attack 308

    1966 – Further uncertainties and restraints 327

    11 Stagnation and Devaluation 345

    1967 – Resolute restrictive measures 345

    1968 – The worst post-war year: crisis and devaluation 359

    12 Achieving External Stability 377

    1969 – The surplus elusive 377

    1970 – Growth resumed 394

    1971 – A sound external situation 412

    section d appendices

    1 Monetary chronology 1957–1971 435

    2 Statistics 455


    {ensp}1 UK balance of payments 1959–1969 456

    {ensp}la UK balance of payments (new presentation) 1959–1971 457

    {ensp}2 UK reserves and liabilities 1959–1970 458

    {ensp}3 Assistance for sterling 1959–1971 459–60

    {ensp}4 UK central government receipts and outgoings 1958–9 to 1971–2 461

    {ensp}5 Fluctuations in bank liabilities and assets, quarterly, 1959–1972 462–3

    {ensp}6 Clearing banks asset ratios 1938, 1946, 1958–1971 464

    {ensp}7 Special Deposits of London clearing banks with Bank of England 1960–1971 465

    {ensp}8 Classified advances of members of the British Bankers’ Association 1946, 1958–1966 466

    {ensp}8a Classified advances of the banking sector 1967–1972 467

    {ensp}9 Interest rates at selected dates 1959–1971 468–9

    10 Changes in UK bank rate since 1951 470

    11 The price of gold 1958–1971 471

    3 Charts illustrating monetary and economic background 1958–1971 473

    (a) Production, employment and sales 474

    (b) Prices and wages 475

    (c) Interest rates and yields 476

    (d) Overseas trade 477

    (e) External position of sterling 478

    (f) The London clearing banks – liabilities and assets 479

    (g) The London clearing banks – percentage distribution of assets 480

    (h) The London clearing banks – composition of liquid assets 481

    Notes on charts, giving series used 482

    4 Monetary documents 485

    (a) Letter of Intent, 23 November 1967 485

    (b) Letter of Intent, 22 May 1969 488

    (c) Letter from Chancellor of the Exchequer calling for reduction in bank advances, 1955 490

    (d) Notice from Bank of England giving guidance on bank lending, 1968 491

    (e) Bank of England paper: Competition and Credit Control, May 1971 492

    (f) Bank of England press notice on the discount market, July 1971 496

    (g) Bank of England notice to banks and finance houses: Credit Control – The New Approach, 10 September 1971 498

    (h) Bank of England pamphlet on the new arrangements for the control of credit: Reserve ratios and Special Deposits, September 1971 499

    5 Banking structure 503

    (a) Companies treated as banking or discount companies 503

    (b) Major subsidiary and associated banks of the clearing banks 506

    (c) Mergers between major banks of the United Kingdom 1959–1971 507

    6 Articles of monetary interest published in Midland Bank Review 1958–1971 and not reprinted 509

    Index 513


    J.E. Wadsworth