What ‘Monetary Management’ Means

November 21, 1949

Before it has faded too far into the past, let’s look at the record.

When Sir Stafford Cripps announced the devaluation of the pound, Winston Churchill pointed out that Cripps had previously denied any such possibility no fewer than nine times. A United Press dispatch of Sept. 18 listed nine such occasions. A haphazard search on my own part has uncovered three more—on Sept. 22 and 28, 1948, and April 30 of this year. Incorporating these in the UP list, we get the following record of denials:

Jan. 26, 1948—“No alteration in the value of sterling is contemplated by the British Government following the devaluation of the franc.”

March 4, 1948—A reported plan to devalue the pound is “complete nonsense.”

May 6,1948—“The government has no intention of embarking on a program to devalue the pound.”

Sept. 22, 1948—“There will be no devaluation of the pound sterling.”

Sept. 28, 1948—The government has “no idea whatever” of devaluing the pound sterling. Devaluation would “increase the price of our imports and decrease the price of exports, which is exactly the opposite of what we are trying to accomplish.”

Oct. 5,1948—“Devaluation is neither advisable nor even possible in present conditions.”

Dec. 31, 1948—“No one need fear devaluation of our currency in any circumstances.”

April 30, 1949—“Sterling revaluation is neither necessary nor will it take place.”

June 28,1949—“There has been no pressure on me by America to devalue the pound.”

July 6, 1949—“The government has not the slightest intention of devaluing the pound.”

July 14, 1949—“No suggestion was made at the conference [with Snyder and Abbott] . . . that sterling be devalued. And that, I hope, is that.”

Sept. 6, 1949—“I will stick to the . . . statement I made [July 14] in the House of Commons.”

In brief, Sir Stafford emphatically denied at least a dozen times that he would do what he did. The excuse has been made for him that naturally he could not afford to admit any such intention in advance because no one would then have accepted sterling at $4.03. This “defense” amounts to saying that unless the government had lied it could not have successfully deceived the buyers of British goods and the holders of sterling.

For this is what “devaluation” means. It is a confession of bankruptcy. To announce that IOU’s hitherto guaranteed to be worth $4.03 are in fact worth only $2.80 is to tell your creditors that their old claims on you are now worth no more than 70 cents on the dollar.

When a private individual announces bankruptcy, he is thought to be disgraced. When a government does so, it acts as if it had brought off a brilliant coup. This is what our own government did in 1933 when it jauntily repudiated its promises to redeem its currency in gold. Here is how the London Bankers’ Magazine describes the recent devaluation of the pound by the British Government: “The political technique for dealing with these issues has worn thin. It consists of strenuous, even vicious repudiation beforehand of any notion of devaluation. It insists that the move would be ineffective and utters portentous warning about the dangers. When the unthinkable happens the public is slapped on the back and congratulated on the best piece of luck it has encountered for years.”

This is what governments have now been doing for a generation. It is the modern equivalent of medieval coin clipping. This is what “monetary management” really means. In practice it is merely a high-sounding euphemism for continuous currency debasement. It consists of constant lying in order to support constant swindling. Instead of automatic currencies based on gold people are forced to take managed currencies based on guile. Instead of precious metals they hold paper promises whose value falls with every bureaucratic whim. And they are suavely assured that only hopelessly antiquated minds dream of returning to truth and honesty and solvency and gold.