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

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

Tables

{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

Biography

J.E. Wadsworth