British Overvaluations and Devaluations
| DOI | 10.1177/002070205000500107 |
| Date | 01 March 1950 |
| Published date | 01 March 1950 |
| Author | V. W. Malach |
| Subject Matter | Article |
British
Overvaluations
and
Devaluations
V.
W.
Malach
T
he
recent
devaluation
of
the
pound sterling
will
obviously
have
widespread
ramifications for
international relations
for
years
to
come.
In
trying
to
gauge
its
probable
effectiveness
in
curing
Britain's
ills
a
comparison
of
the
British
overvaluation
and
devaluation
in
the
1920's
with
the
recent
case
is
most
instructive.
COMPARISON
There
appear
to
be
at
least
six
similarities between
the
pre-
vious
case of
pound
overvaluation
and
devaluation
and
the
present
one.
(1)
As
in
the
1920's,
so
also
in
the recent
post-war
period,
too
high
a
value
was
chosen
for
the
pound,
partly
to
increase
the
prestige
of
London
as
a
"sound"
financial
centre.
A
low
value
of
the
pound
would have been
an
admission
of
a
weakness
in
Great
Britain's international
trade
and
financial
position-an
admission
that
the
glories
of
the
past
were
not
for
the
future-
and
no
one
wants
readily
to
admit
such
a
state
of
affairs.
The
attempt
to
maintain
a
relatively
high
value
for
the
pound
in
the
recent
immediate post-war
years
was
less
blameworthy
than
the
return
to
the
pre-war
parity
in
April,
1925.
Then,
"nor-
malcy" was
blindly
assumed
to
mean
pre-1914
conditions.
Britain
thought
the
best
way
to
return
to
the
gold
standard
was to
take
up where
she
left
off,
at
the
same
par
as
before. The
problem
was
merely
when
to
return
and how much
deflation
would
be
necessary.
After
the
Dawes
Plan
and
after
MacDonald's
decision
that
the
financial
policy
of
the
Labour
government would
be
guided
by
the
principles
of
the
Cunliffe
Report,
1
the
speculative
community
thought
the
pound
was
bound
to
go
up and
bought
'The
Cunliffe
Committee was
set
up
in
January,
1918
to
recommend
sound
reconstruction
policies.
Its
final
report
issued
toward
the
end
of
1919
(like the
first
one
issued
on
August
15,
1918)
recommended
the
restoration
of
the
gold
standard,
mainly
via
a
sharp reduction
of
the
monetary
issue
uncovered
by
gold.
48
To continue reading
Request your trial