The Bank Rate Decision of 19 September 1957: A case study in joint decision‐making
| DOI | http://doi.org/10.1111/j.1467-9299.1965.tb01610.x |
| Published date | 01 June 1965 |
| Date | 01 June 1965 |
The
Bank Rate Decision
of
19
September
1957
:
A
case study in joint decision-making
K
I
CHA
R
D
A .CHAPM.4hT
Mr.Cha$man is
a
Lecturer in the Department
of
Political ‘Theory and Institutions
in
the
llniversity
of
Liverpool.
It is generally recognized that informal communications play an important
part in decision-making, but there has been little work published on
how
informal discussions are arranged
or
how important they are in the
decision-making process.
This
applies particularly to the higher levels of
government, and Professor W.A.Robson has observed ‘Few studies have
appeared showing how government departments really do their work
-
I
can say this after having read all the volumes of
The flew [Vhitehall Series.’l
The main purpose of this study is therefore to contribute to
our
know-
ledge of how institutions work by studying how they worked on one
particular occasion
-
the decision to raise Bank rate by two per cent on
19 September
1957.
But because of the peculiar relationship between the
Bank
of
England and the Treasury the case is also an example of how the
t\vo
institutions work together.
In
the nineteenth century the Bank was virtually independent
of
government control. The Prime Minister, Lord Liverpool, speaking in the
House of Lords in 1822, described as extraordinary and injurious the
refusal
of
the Bank
of
England to discount at
a
lower rate than five per
cent, when the market rate of interest was not more than four. ‘Finding it
impossible’, he said, ‘to induce the Bank
to
lower the rate
of
interest
on
their discounts, conformably with expectations held out in 1819,
His
Majesty’s Government resolved on borrowing four million pounds on
Exchequer Bills from the Bank with
a
view to applying that
sum
in some
manner to the relief
of
the country.’2
During the First World War Bonar
Law
regarded the Bank
of
England
l\V.A.Robson,
‘The
Present State
of
Teaching and Research
in
Public Administration
,
?Quoted in R:G.Hawtrey,
A
Cenfiiry
of
Bank
Rate,
London, Longmans, Green and
Co.,
Public
Administration,
Autumn
1961,
Vol.
39,
pp.
221-3.
Igllj,
p.
‘4.’
‘99
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