ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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How and Why Labour Lost it

The Battle for Better Britain

[From the lecture delivered by Professor Hahn on 28th July 1966 at the Gokhale Institute of Politics and Economics, Poona. Text revised by the author.]

Before the 1964 election, the conservatives had attempted to beat the unfavourable public opinion polls by a nice bout of inflation and had left  £800 million loss in reserves. In addition, foreign bankers were shaking in their shoes at what the wicked socialist government might do.

Wilson was in a very strong position either to devalue or to threaten to devalue. Instead, he discovered that the chastity and dignity of the pound was very dear to him.  

Contrary to the advice of a number of people, Wilson announced his determination to preserve the pound and so delivered himself and the country into the hands of the most obscuriantist and foolish group in the world — the bankers and ministers of Finance. 

At one stroke he had jeopardised every single one of the desirable things both social and economic he had claimed to do. The subsequent economic history of the UK could easily be predicted. 

Britain, having been governed for thirteen years first by a romantic warrior with a dislike for economics, then by a somewhat neurotic scholar of Arabic and finally by an Edwardian relic and his family, had been conspicuous amongst European nations for the low rate of growth of its GNP.Amusing and unlikely figures like Amery and Selwyn Lloyd were Chancellors of the Exchequer. Competent people like Butler were clearly disliked and not allowed to exert themselves. While no one seriously claimed that all our ills were ascribed to this rather sorry crew and the views they represented, it was widely felt that they did bear some responsibility and that, in any case, a change would at worst take us from frying pan to frying pan.

Tory romanticism and susceptibility to bankers and the city amongst other things, many people believed, was responsible for the aura of sanctity with which $ 2.80 per pound had been endowed. This exchange rate, however, could only be maintained at the cost of periodic crisis and deflationary measures about which I shall have more to say later.

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