Chapter 16, As for the future of England (August 21 - September 17). As the Banque de France and NY Fed loans to Bank of England are used, a French and US loan to the British government is contemplated and arranged through J.P. Morgan and with assistance from the NY Fed and Banque de France. The arrangement leads to the ’bankers’ ramp’ accusations and the relationship between Harrison and Harvey deteriorates. Harrison visits Norman who is unhappy with the Bank for England’s and Harvey’s actions and the decision to peg sterling to the US dollar at 4.86. J. P. Morgan also question the policy of the Bank of England and wonders why Harvey doesn’t raise the bank rate. Harvey seems to be focused on forcing the British government to cut the budget, adn the BIS argues that Great Britain is now the European country with the most serious financial conditions.

Chapter 9, Where and how to place (June 8 - June 13) the question of the placement of the government loan comes front and center. Since the second BIS loan to ANB is conditional upon the placement of the bond loan, the National Bank is increasingly under pressure and the money supply has increased as it has rediscounted for the Credit Anstalt. The CA has no more solid collateral and ANB is losing foreign exchange at an increasing rate. Meantime, Hungary is also suffering from capital flight and the nervousness over contagion and the psychology of the crisis is increasing. The conflicts between the Austrian government and the central banks increases and information is still very hard to come by, all of which contributes to the uncertainty of the situation.

In chapter 2, central bankers and their world, I first present the most important protagonists and a few other actors. They include Montagu Norman and Harry Siepmann of Bank of England, George L. Harrison of the Federal Reserve Bank of New York and Francis Rodd of the Bank for International Settlements. I discuss their background and worldview as they were headed into the 1931 crisis. Having presented these main actors and a few others, I proceed to present their world and how they saw it in 1930 and early 1931. The world was already in the midst of the great depression and private bankers as well as central bankers and other decision-makers were aware that they were dealing with crisis and radical uncertainty that might bring about the end of the gold standard and capitalism. I discuss the actors view of the "present world depression" and how they viewed the gold standard and their options as they got ready for trying to save the world from economic disaster.

Chapter 17, Exit (September 16 - October 23). In this chapter I follow the last few days before Britain leaves gold on September 21 after having exhausted the credits on the peg to the US dollar. The decision makes sterling decline by 20 per cent, which lead to massive losses not least for the Banque de France. J.P. Morgan is unhappy as well, seeing how the credits are gone with nothing to show for them. As Norman returns to Britain and the Bank, he is unhappy with the situation and Bank of England’s bad reputation following the devaluation. Rodd and Siepmann struggle to make sense of the situation, and Norman - some years later - expresses that it was all in vain. He was left ’a bitterly disappointed man.’ The narrative ends with this chapter.

The Introduction provides the general context for what this book calls the communal currency tradition in British society. Its chronology starts in the early 1790s when the French revolutionary government’s experiment with the state-issued fiat paper currency, the assignat, caused heated discussion in Britain, which eventually consolidated Britain’s currency exceptionalism. The recent revival of the state theory of money (neo-chartalism) provides a reference point for the book’s unique theoretical outlook, which is explained by drawing upon the existing literature on economics, sociology and historical studies. After an overview of the development of monetary ideas, the communal currency tradition, which was closely associated with the idea of voluntary acceptance, is further explained based upon the writings of Edmund Burke and his involvement in the legal ban on the circulation of assignats in England. The broad outline of the book’s discussion is delineated by presenting the scope of communal currency as it impacted the economic, political, cultural and social aspects of British society.

If political independence provided Africans more latitude in how to pursue economic sovereignty, it hardly settled the matter of how it should be institutionalized. Debates about currency, for instance, persisted in East Africa after formal decolonization, and only in 1965-66 was the colonial money replaced by money issued by the independent states. This chapter traces the unexpected trajectory of decolonization, including the persistence of the imperial East African Currency Board. Decisions about the postcolonial monetary regimes were delayed, in part, by the machinations of British officials who tried to protect the racial capitalism of East Africa from the challenge of African independence. Yet, the establishment of national currencies and central banks was also delayed by Africans’ own commitment to supranational linkages, including an East African common market and currency. This chapter shows that the fortunes of a proposed East African Federation rose and fell on the dynamics of uneven and combined development in the region. And, finally, it examines how the central banking model adopted by postcolonial leaders reinforced the dependence of their nations on the accumulation of foreign currencies. The “moneychanger state,” in which postcolonial governments intermediated between domestic and foreign currencies, was critical to their own survival and ideas about development. Ultimately, though, it was the rural cultivators who would bear the burden of maintaining national solvency, a material reality that spurred a productivist ideology in which merit was revealed through earning export value.

This final chapter discusses the role of the Bank within a selective history of central banking. “Exchange bank” institutions such as the Bank became obsolete by the end of the eighteenth century. The new model for central banks was the Bank of England, which incorporated features such as private equity capital, large holdings of sovereign debt, a discount window, and the issue of circulating banknotes. It is argued that the Bank of England nonetheless gravitated to a two-bank structure following the 1844 passage of Peel’s Act, with many similarities to the eighteenth-century Bank of Amsterdam. Peel’s Act split the Bank of England into two banks, a passive bank (“Issue Department”) that issued notes against gold deposits and paid out gold coins, and an active bank (“Banking Department”) used its ledger money to commercial paper and engage in various types of open market operations. A concluding section argues that the active—passive dichotomy bears some relevance for modern financial markets, with active liquidity arising from traditional central bank open market operations, and passive liquidity arising from arrangements such as repo transactions. It is argued that recent crisis events have revealed the interconnectedness of these two forms of liquidity.

The interwar decades saw the emergence of central banking institutions in the prosperous white settler ‘dominions’ of Australia, South Africa, New Zealand, and Canada. Local political and business interests promoted central banks with a view to fostering domestic economic and financial stability, while the Bank of England and British government imagined a chain of central banks across the empire that would support their policies. Given that financial markets in the dominions were underdeveloped, it was difficult for the new central banks control monetary conditions, mirroring problems in Central and Eastern Europe. In addition, the British discovered that they could not impose their ideas on the dominions, especially when local economic concerns conflicted with those of the imperial centre.

The Fed was keen the cooperate with the Bank from early in the 1960s. The Bank on the other hand took time to warm up and share information with colleagues at the Fed. But progressively swaps became a key feature of the United Kingdom's exchange management strategy. They offered cheap and discreet short-term dollar loans. The Bank started to use and abuse these loans to manage sterling.

Far from improving the situation of sterling, the 1967 devaluation made things worse. Currency dealers were now more nervous. There was more volatility and stress on London currency markets. The Bank was also running out of reserves and decided to creatively hide its reserves losses using window dressing.

This book looks at the people managing sterling, the Bank of England's foreign exchange dealers. They were at the forefront of all currency crises sterling went through from 1944 to 1992.

Unlike 1720 or 1793–97, the bubble of the 1820s was generated by the financial system itself: The new expansion of the banking system both domestically and internationally, the Bank of England’s monetary policies, the structure of corporate finance, and sovereign lending practices produced the bubble without any need for malfeasance or exogenous shocks. The bubble burst in late 1825, leading to the failure of more than 100 British banks and more than 1.000 businesses. At the height of the Panic of 1825, the decision about priorities and interests was taken not by a political sovereign or a regulatory legal institution, but by a private bank: Rothschilds bailed out the Bank of England, showing the power of financial markets over governance. For the first time, it was clear that financial markets could both cause and end financial crises regardless of political institutions. After 1825, financial crises became a predictable and intelligible part of life, caused by impersonal and abstract international markets, managed by central banks independent of political accountability, explained and analyzed by a self-authorized body of economic thought, with the costs borne by domestic populations and nobody in particular at fault.

Between 1797 and 1815, Britain and France each developed modern central banks, albeit in very different forms. The Bank of England’s powers expanded enormously after the suspension of gold convertibility in 1797, and it also developed a vast system of investigation and prosecution of forgery and counterfeiting, whose records form the evidentiary core of the chapter. The Bank used its powers to protect itself, but also to aid in broader English governance, helping to produce a modern money-using financial public. As with the aftermath of 1720, the Bank’s powers produced widespread political condemnation, especially accusations of illegitimate elite conspiracy. In France, the brief chaos of free banking was replaced by the centralized Bank of France, mostly under government control and with limited policy discretion. In both cases, impunity was institutionalized as a function of governance, delegated to a private bank with political obligations. These new institutions, exercising new forms of monetary policy, would reconstitute the operation of international financial system after 1815.

This chapter explores the operation of the classical gold standard from the end of the nineteenth century to the verge of the First World War. Beyond providing context, surveying the classical era sheds light on a recurrent theme throughout this book: gold is not monolithic. There is not one way to be "on" gold, and there are many ways to be "off" it. Even during the classical gold standard, when reality came as close as ever to approximating the textbook model, no two countries had precisely the same monetary setup, and this multiplicity would only intensify in the postwar era.

This chapter focuses on the reciprocal gold facilities created in the weeks after the Tripartite Agreement to enable exchange intervention, viewed as essential for the Agreement to have any chance of success. Each country agreed to convert its currency into gold for other members at a price set each day. The system squared the circle of how to enable countries to intervene in currencies that were not universally convertible into gold and played a crucial role in keeping members on the same page during a time of immense political and economic strain. It established a technical foundation for broader collaboration and was integral to the Tripartite Agreement's success in preventing policymakers from relapsing into the antagonisms of earlier years.

This chapter studies developments in Britain’s monetary system and relations during the harrowing run-up to war. The pound depreciated substantially beginning in the summer of 1938 as war scares caused capital to flee. While the depreciation could have led to the reemergence of a crippling animus among club members, a middle ground developed whereby Britain made good faith efforts to support the pound and other members acquiesced to its decline. The Tripartite Agreement continued to embody democratic solidarity and survived all the way up to the eruption of hostilities in fact and for some time thereafter in name, falling into abeyance due to the necessities of war finance rather than any disagreement between the parties. To defend the pound, Britain transferred the gold in the Bank of England to the Exchange Equalisation Account, thereby severing the remaining threads that had tied sterling to the metal and readying monetary policy for battle in what would become a total war.