IN FEBRUARY 1946 the Attlee Government passed its first nationalisation measure, the Bank of England Act. As Labour's policy document Let Us Face the Future had stated: "The Bank of England with its financial powers must be
18th November 1966 from the Tribune Magazine Archive Economy Of The United Kingdom, Bank Of England, Federal Reserve System, Chief Cashier, Central Bank, Hm Treasury, Bank, Chancellor Of The Exchequer, Nationalisation Of Northern Rock, Bank Of Canada, Business / Finance
brought under public ownership and the operation of the other banks harmonised with industrial needs." The Act was designed to bring the capital stock of the Bank of England into public ownership, to bring the Bank under public control and to lay down the formal relationship between the Treasury and the Bank. The Treasury was authorised to give such directions to the Bank as it thought necessary in the public interest.
As William Robson points out in his book Nationalised In dustry and Public Ownership, legislation bringing industries into public ownership usually insists that Ministers should consult with the Board before giving a direction, "the only exception being the Bank of England
where the Treasury is required to consult only with the Governor of the Bank." But in any disagreement between the two, the Treasury have the last word.
The Bank is administered by a Governor, Deputy Governor and a Court of 16 Directors, all appointed by the Sovereign, with limited terms of office, but all eligible for reappointment. During the debate on the Second Reading of the Bank of England Bill in the House of Commons on October 29, 1945, Hugh Dalton, then Chancellor of the Exchequer, assured the House that the Court of Directors would not resemble a bankers club.
"We shall advise his Majesty to place upon the Court persons of suitable and varied ability and knowledge . . . and we shall seek in particular to compose the Court as adequately to reflect industrial as well as financial experience." Today the Bank's Directors are Lord Kindersley, Michael Babington Smith,, William Keswick, Sir
Harry Pilkington, Lord
Nelson of Stafford, Christopher Morse, all prominent company directors
George Bolton, banker
Maurice Laing, President of the Confederation of British Industries
William Carron, President of the Amalgamated Enginee ring Union; Sir
Henry Wilson Smith, a former high-ranking Treasury official
Ronald Thornton, Vice-chairman of Barclays Bank
Robens, Chairman of the National Coal Board
; Cecil King, Chairman of IPC
; James Bailey, a former Chief Cashier at the Bank
; Jasper Hollom, the present chief Cashier and W. P.Allen.
The present Governor, Leslie O'Brien, is also a former Chief Cashier
Maurice Parsons, .he present Deputy Governor, was formerly Deputy Chief Cashier and private secretary to Montagu Norman
. This list may be a varied one, but it cannot conceivably be said to reflect 'industrial as adequately as financial' experience.
What rewards do members of the Court get for their services? The answer is only partially to be found
in the Bank of England Charter, 1946. This states that the Governor should receive a fee of £2,000 a year, the Deputy Governor £1,500 and the Directors 000. But, it continues: "The Governor and the Deputy Governor and any Director rendering exclusive services to the Bank of England may in respect of their exclusive services receive remuneration at such rates as the Court of Directors may from time to time determine in addition to their fees for services at the Court." The Bank refuses to disclose details of this added remuneration.
It needs little imagination to guess how astronomically this could have risen since 1946.
Those responsible for the Bank of England Act were optimistic about its effects. They envisaged a new era of responsible partnership between the Bank and the Government, in the national interest
. Hugh Dalton said, "we plan . . . for full employment and full production, for an expansive economy . . . against restriction and in favour of abundance. If all this is to be done then we must have the Treasury, the Central Banks and the clearing banks all pulling together . . . and their operations must harmonise with the national interest and industrial needs." William Robson wrote, "The Labour Party determined that never again should the Government and the people be at the mercy of a Bank of England intent on deflation at all costs. (Sounds familiar)
The financial crisis of 1931 was also remembered as an indication of the ease with which financiers can create a state of insecurity and bring about a political crisis by manipulating the instruments they control."
Is the situation very different 30 years later? The power of the Governor of the Bank of England may have become more muted since the days of Montagu Norman, but it has continued to influence the economic policies of successive Governments. Dedication to de flation and stop-go, to periodic and drastic pruning of public expenditure programmes and to leaping unemployment figures has been strenuously and effectively expressed from Threadneedle Street, throughout the last 30 years.
Hand in hand with the Treasury, Governors of the Bank of England have prescribed unpalatable doses of deflation to bolster up confidence in sterling. Who should have the last word in any dispute between the two institutions is irrelevant. There have been no disputes, as far as the public
according to you) can see.
The 1946 Act has allowed the Bank of England to continue to shelter comfortably behind a curtain of secrecy
. It enjoys privileges not granted to other nationalised concerns. The salaries of the Court of Directors are never disclosed and the Bank does not have to publish any annual statements of accounts. It's economic advisors are unknown outside exclusive City circles, and yet its influence on Government policy shows no sign of waning.
The Government's new Cornpanies Bill will demand that the salaries of top directors are subjected to public scrutiny. Yet the Bank of England is granted immunity from such sordid treatment, and members of its.
Court of Directors can continue to sit tight on their undisclosed incomes and criticise the efforts of the trades unions to keep wages level with cost of living increases
. The Government must take courage and bring the Bank into real public ownership.