Till Time's Last Sand by Till Times Last Sand; a History of the Bank of England 1694-2013 (2017)

Author:Till Times Last Sand; a History of the Bank of England, 1694-2013 (2017)
Language: eng
Format: epub
Published: 2017-09-23T04:00:00+00:00

There was no shortage of alarums and excursions during the year after devaluation - starting with the tumultuous gold crisis of March 1968, as the gold pool (which the Bank had been operating since 1961 on behalf of most Western governments) came under intolerable strain from speculators convinced that the dollar was no longer strong enough to hold gold’s price at $35 an ounce.19 During the week beginning the 11th, so much gold had to be flown from Fort Knox to London that eventually the floor of the Bank’s weighing room collapsed; and that Friday, following a request from the Fed supported by O’Brien (but not by Bridge), the new post-devaluation chancellor, Roy Jenkins, agreed to the temporary closure of the London gold market - eventually reopened at the start of April after a meeting of central bankers in Washington, attended by O’Brien, had agreed to a two-tier system for gold, in effect creating an artificial distinction between official and private transactions.20

Then, for light relief, came Cecil King’s attempted coup d’etat in May. A manifestly political appointee to the Court, resented from the start by Cromer and then O’Brien, that non-executive director had become convinced by the spring that there was a conspiracy afoot to conceal the gravity of the financial situation facing the country, specifically in relation to the state of the Bank’s reserves. On 9 May, the day before he tried to overthrow the Wilson government via revelations in the Daily Mirror about what he claimed was the true position, he tendered his unmourned resignation as a Bank director. ‘His scorn for everyone was lofty and unending,’ recalled O’Brien. ‘Not by a long chalk one of Winchester’s most attractive products.’ Even so, and despite the almost capital crime of disclosing what had been reported in confidence to Court, King was correct in his allegation that the reserves figures were fixed, especially by the non-reporting of forward transactions which could be huge. Indeed, it was said during this period that at any one time there were at least five versions in play: the position in the dealing room; the position as reported to the chief cashier; the position as reported to the governor; the position as reported to the chancellor; and the position as published.21

O’Brien himself, as the summer unfolded, was increasingly preoccupied by the problem of how to run down in as orderly and honourable a fashion as possible the sterling area, whose belated demise had been made inevitable by devaluation. Australia was identified as the key country; and, fortified by the recent Basle Agreement (in effect involving the world’s central banks giving the UK a $2 billion credit to enable her in turn to give exchange rate guarantees to all the official sterling holders), the governor set out in late August for secret negotiations, travelling under a false name and smuggled on board a Qantas flight via the freight-loading room at London Airport. The negotiations did the job, with the Australian authorities agreeing not to dump sterling

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