Posts Tagged ‘Montagu Norman’

Labour history uncut: Splitters! The fall of the second Labour government

31/07/2013, 10:24:04 PM

by Pete Goddard and Atul Hatwal

Panic gripped the Bank of England.

By the 7th August 1931, just a week after the publication of the doom-laden May report on Britain’s finances, unhappy foreign investors were selling sterling at a record pace.

The Bank of England reported that its gold and foreign exchange reserves had lost £60m in the past few weeks in its attempt to prop up the value of the nation’s currency and keep Britain on the gold standard.

A first-ever Brexit seemed imminent. Although nobody actually used the word “Brexit” because these were more civilised times.

Only a hastily arranged £50m credit from French and American bankers was keeping the Bank of England solvent. This wouldn’t last long and future loans were in doubt – it’s hard to take a payday loan when you’ve got no payday in sight.

In order to secure more international loans to sustain the currency, a plan to pay down the deficit was needed.

Governor of the bank of England, Montagu Norman talks to Ramsay Macdonald who has chosen, appropriately, to dress as an undertaker for the occasion

The bankers wanted £80m of cuts. So prime minister Ramsay Macdonald and chancellor Philip Snowden put together a programme to deliver them, including a painful reduction of over £40m to unemployment benefit.

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