Abstract
The Conservative MP Edward Heath was elected Leader of the Opposition in July 1965 and subsequently led the party to victory in the 1970 general election. This period witnessed a tidal wave of currency speculation, which swept across Britain from 1965 to 1967. While Britain was finally forced into the 1967 devaluation, the exigencies of the sterling crisis in the mid-1960s urged furtherance of an international credit facility — the 1968 Basle Agreement. This had the intended effect of stabilising sterling, but seriously undermined its standing as a reserve currency, prompting leading Conservatives and UK officials to address European monetary cooperation when the Conservative Party returned to power. The agreement, it seems, was a major tipping point which drove the Conservatives from the rhetoric of sovereignty over sterling towards realistic policy options.
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Notes
F. Capie, The Bank of England, 1950s to 1979 (New York, 2010), p. 406.
A. Cairncross, Managing the British Economy in the 1960s: A Treasury Perspective (Oxford, 1996), p. 262.
HMSO, United Kingdom Balance of Payments 1973 (London, 1973), p. 7.
A. P. Thirwall and H. D. Gibson, Balance-of-Payments Theory and the United Kingdom Experience (London, 1992), p. 238.
A. Cairncross, ‘The Heath Government and the British Economy’, in S. Ball and A. Seldon (eds.), The Heath Government, 1970–1974: A Reappraisal (London, 1996), p. 112.
J. R. Artus, ‘The 1967 Devaluation of the Pound Sterling’, IMF Staff Papers, Vol. 22, No. 3 (1975), p. 631.
US Congress (Joint Economic Committee), The European Monetary System: Problems and Prospects (Washington, DC, 1979), pp. 15–16.
Ibid., p. 16. See M. G. de Vries, The International Monetary Fund 1966–1971: The System under Stress. Volume I: Narrative (Washington, DC, 1976), pp. 500–3.
D. Gros and N. Thygesen, European Monetary Integration (London, 1992), p. 14;
P. Coffey, The European Monetary System — Past, Present and Future (Lancaster, 1984), p. 7.
B. Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton, NJ, 2007), p. 246.
Commission of the European Communities, Report to the Council and the Commission on the Realization by Stages of Economic and Monetary Union in the Community [The Werner Report] (Luxembourg, 1970), p. 27.
J. Monnet, Memoirs, transl. Richard Mayne (New York, 1978), p. 413. One of the important backgrounds to setting up the Committee was the ending of the European Defence Community (EDC) in 1954. After the failure of the French to ratify the EDC treaty in 1954, ‘Monnet sought a new strategy to restart the move toward integration’. See F. J. Fransen, The Supranational Politics of Jean Monnet: Ideas and Origins of the European Community (London, 2001), p. 115.
E. Heath, Old World, New Horizons: Britain, the Common Market, and the Atlantic Alliance (Mr. Heath’s 1967 Godkin Lectures) (Oxford, 1970), p. 53.
P. Murphy, Party Politics and Decolonization: The Conservative Party and British Colonial Policy in Tropical Africa, 1951–1964 (Oxford, 1995), p. 150.
Ibid. Cairncross also argued for control of long-term capital movements on the grounds that long-term outward capital movements would lead to ‘the presumed loss or misuse of resources’ available to Britain. He furthermore provided jus-tifcation for control of international capital flow, as uncontrolled inflows and outflows of capital would pose ‘an embarrassing threat to pursue an independent monetary policy’. See A. Cairncross, Control of Long-Term International Capital Movements: A Staff Paper, The Brookings Institution (Washington, DC, 1973), p. 5.
F. Hirsch, The Pound Sterling: A Polemic (London, 1965), pp. 25–6.
E. Heath, The Course of My Life: My Autobiography (London, 1998), p. 375.
See L. Tsoukalis, The Politics and Economics of European Monetary Integration (London, 1977), p. 114.
H. James, International Monetary Cooperation since Bretton Woods (Oxford, 1996), p. 241.
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© 2015 Kiyoshi Hirowatari
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Hirowatari, K. (2015). The Conservatives and European Monetary Cooperation. In: Britain and European Monetary Cooperation, 1964–1979. Palgrave Studies in the History of Finance. Palgrave Macmillan, London. https://doi.org/10.1057/9781137491428_2
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