THE 1931 CRISIS
The 1931 crisis, the culminating point of which was Britain's suspension of the gold standard on 19 September, was one of the turning points in the monetary history of the twentieth century. It forces itself on the historians of almost all financial institutions, and is part of the political history of western Europe. The account that follows does not comprehend every facet of the crisis, but is concentrated on the leading part taken by the Bank of England. The events of these weeks threw a searchlight on the political and international relationships of the Bank, and they jolted it into more conscious searching into its own ends and means.
The defence of sterling in these circumstances, the eventual departure from gold, and the conduct of both foreign exchange and internal credit policies after the break, were all major policy matters and therefore the final responsibility of Ministers. Even on these major issues, however, it was the Bank's responsibility to advise Ministers; where these, for one reason or another, failed to give explicit guidance, the Bank had to decide, since it had to operate from day to day. Because explicit guidance was not always forthcoming (it was not always sought) the Bank's role in the course of events was a very large one. It was always the executor; its action, however clearly within the accepted framework of policy, had to attune itself daily to sharp and unforeseen changes of circumstance, and the process involved implicit commitment to fresh developments in policy. And it had always to advise; to advise, moreover, on matters in which it had deliberately cultivated a mystique that at best befuddled discussion and at worst intimidated those who had to take the political responsibility. At some moments the Bank was cautiously standing on its role as adviser. Sometimes it was restricting itself to the implementation of policy