3 - The Monetary Setting and the Bank

Summary

When the Governor Cameron Fromanteel Cobbold was being chauffeur driven in his Rolls Royce from his country seat, Knebworth House, to give evidence to the Radcliffe Committee, the car broke down. Cobbold and his chauffeur had to walk to the nearest railway station. Neither of them was carrying any cash. Cobbold approached the ticket clerk and said, ‘Now look, I am the Governor of the Bank of England but I don't have any money.’ There would be those in the following years who would have wished that he and his successors had taken a similar line with the long list of Chancellors who knocked on their door. The Radcliffe Committee began taking evidence in 1957 and completed its report in 1959. It was the most important document on money and banking in the period. Its origins lay in dissatisfaction with how monetary policy was believed to be working in the 1950s. The findings and recommendations provoked immense debate and subsequent controversy. It set the scene for the next decade. For the Bank though, the enquiry had relatively little impact on the way in which it conducted its operations. It prompted a little more openness, more research, and the provision of statistics, even if it could be argued that the Bank was already moving in that direction.

Antecedents: Old and New Orthodoxy

Before the First World War, a considerable body of central banking theory and practice developed.