The Golden Calf

Abstract

This chapter evaluates how, by the spring of 1918, there really had been only one major policymaker to seriously reconsider the gold standard orthodoxy: Bank Governor Walter Cunliffe. But his scheme was less an attack on the gold standard than a tempering — a reforming — of it. He believed that modern financial innovations, better management of the financial system, and capital diversification could allow the UK to circulate a larger quantity of money without sacrificing the currency's convertibility into gold at the prewar rate. Over its eighteen months of work, Cunliffe Committee members interviewed more than a dozen expert witnesses and discussed memoranda from more. From simply reciting the incantations of the gold standard orthodoxy, these witnesses brought varied understandings of the practical operation of the monetary system in their domains of expertise: retail banking, manufacturing, and trading. Unshackled by formal training, these men felt free to think creatively about Britain's likely postwar struggles. Many, including the elite City financiers, even questioned the assumptions that underpinned orthodox theory, although they did so only inadvertently and only until the orthodox committee members maneuvered them into doing otherwise.