|
[ Pobierz całość w formacie PDF ]
self harassed from another, and completely unexpected, quarter. In November 1929, a few weeks after the crash, the new British Labor government responded to criticisms about the endemically poor performance of the British economy by appointing a select committee under an eminent judge, Lord Macmillan, to investigate the workings of the British banking system. Half of its fourteen members were bankers; the remainder, an assortment of economists, journalists, industrialists, among them three of the staunchest critics of the gold standard: Maynard Keynes, Reginald McKenna, and Ernest Bevin of the Transport and General Work- ers Union, the country s most formidable trade union leader. In setting up this committee, the allegedly radical government had made it clear that the issue of whether Britain should remain on the gold standard should be kept off the table. Even Keynes, the unremitting critic of the mechanism and the strains it had imposed on the British economy, was ready to concede that it was a fait accompli and that departing from gold at this stage would be just too disruptive. Nevertheless, the Bank of England and especially Norman approached the committee with great suspicion. Within the City, it had always been said that the motto of the Bank of England was Never explain, never apologize. That he and the Bank were now to be subject to the spotlight of public scrutiny filled him with dread. The committee began its hearings on November 28; Norman was to appear as one of the first witnesses, on December 5. As the date approached, his nervous ailments reappeared, and two days before he was due to testi- fy, he predictably collapsed. His doctors recommended a short leave of absence and Norman duly departed for the next two months on an extended cruise around the Mediterranean, end- ing up in Egypt. In place of Norman, the deputy governor, Sir Ernest Harvey, appeared. Even without its chief, the Bank found its habits of secrecy just too ingrained to abandon lightly. Consider this exchange between Keynes and Harvey: KEYNES: Arising from Professor Gregory s questions, is it a practice of the Bank of Eng- land never to explain what its policy is? HARVEY: Well, I think it has been our practice to leave our actions to explain our policy. KEYNES: Or the reasons for its policy? HARVEY: It is a dangerous thing to start to give reasons. KEYNES: Or to defend itself against criticism? HARVEY: As regards criticism, I am afraid, though the Committee may not all agree, we do not admit there is need for defense; to defend ourselves is somewhat akin to a lady start- ing to defend her virtue. Norman finally returned in England in February 1930 and agreed to provide evidence to the select committee. He was not a good witness. Witty and articulate in private, he became sullen and defensive in public settings, replying to the questions, which in deference to his po- sition were never aggressive, in curt sentences and sometimes even in monosyllables. Unac- customed to having to articulate his thought processes or justify himself, he said things that he did not mean or could not possibly believe, insisting, at one point, that there was no con- nection between the Bank s credit policies and the level of unemployment. He appeared to be callous and indifferent to the plight of the unemployed, reinforcing the stereotype of bankers among the Socialists of the new government and the voting public who were getting their first glimpse of this man. Confronted with Keynes s coldly precise questions, Norman seemed to be dull and slow, retreating behind platitudes. Finally asked by the chairman what the reasons were for a particular policy decision, he initially said nothing but simply tapped the side of his nose three times. When pressed, he replied, Reasons, Mr. Chairman? I don t have reasons. I have instincts. The chairman patiently tried to probe further, We understand that, of course, Mr. Gov- ernor, nevertheless you must have had some reasons. Well, if I had I have forgotten them. Keynes would later describe Norman as looking like an artist, sitting with his cloak round him hunched up, saying, I can t remember, thus evading all questions. Norman testified for only two days the bank s senior staff realized that he was doing more harm than good, and the remainder of the testimony was passed back to the deputy governor. But the damage to Norman s standing had been done. In the aftermath, one banker confided to his colleagues that the governor grows more and more temperamental, freakish, and paradoxical. Lords of Finance 18. MAGNETO TROUBLE 1930-31 To what extremes won t you compel our hearts, you accursed lust for gold? Virgil, The Aeneid IN December 1930, Maynard Keynes published an article titled The Great Slump of 1930, in which he described the world as living in the shadow of one of the greatest eco- nomic catastrophes of modern history. During the previous year, industrial production had fallen 30 percent in the United States, 25 percent in Germany, and 20 percent in Britain. Over 5 million men were looking for work in the United States, another 4.5 million in Germany, and 2 million in Britain. Commodity prices across the world had collapsed coffee, cotton, rubber, and wheat prices having fallen by more than 50 percent since the stock market crash. Three of the largest primary producing countries, Brazil, Argentina, and Australia, had left the gold standard and let their currencies devalue. In the industrial world, wholesale prices had fallen by 15 percent and consumer prices by 7 percent. Despite all this bad news, at this stage Keynes was uncharacteristically sanguine. We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand, he wrote. Comparing the economy to a stalled car, he declared it was a simple matter of some magneto trouble (a magneto was a device then commonly in use for creating an electric spark in the ignition system of automo- biles), trouble that could be easily cured by resolute action by the central banks to start the machine again. There were in fact reasonable grounds for optimism. The downturn that had hit the United States in 1930 in the wake of the stock market crash had indeed been deep, but the U.S. eco- nomy had faced a similarly sharp decline in prices and production in 1921 and had bounced back. There had been as yet no major financial disaster or bankruptcy. Keynes did recognize that it was hard for any single central bank to act alone. To jump- start the economy, a central bank had to have enough gold, the underlying raw material for credit creation under the gold standard. The international monetary system was now operat- ing, however, in a very perverse way. Because of investor fear, capital in search of security was flowing into those countries with already large gold reserves such as the United States and France and out of countries with only modest reserves such as Britain and Germany. As it had been during the 1920s, the United States was major haven for gold flows. Far more damaging than the effect of the protectionist Smoot-Hawley Act was the collapse in cap- [ Pobierz całość w formacie PDF ] |
Odnośniki
|