Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-23T06:40:27.446Z Has data issue: false hasContentIssue false
  • English
  • Français

‘Unwept, unhonoured and unsung’: Britain's import surcharge, 1964–1966, and currency crisis management

Published online by Cambridge University Press:  28 May 2013

Richard Roberts
Richard Roberts*
Affiliation:
King's College London
Get access Rights & Permissions [Opens in a new window]

Abstract

This article examines Britain's temporary import surcharge introduced in October 1964, a largely overlooked but significant dimension of the 1964 sterling crisis. Import surcharges (temporary supplementary tariff) were illegal under GATT rules and aroused fury among trading partners. Britain's surcharge is placed in context by consideration of the use of import surcharges by other countries under Bretton Woods as currency crisis management and balance of payments measures, notably Canada's import surcharge of 1962–3 that inspired Britain's. Developed by the Conservative administration from 1963, a 15 per cent surcharge was introduced by the newly elected Wilson government as a radical alternative to deflation or devaluation to help correct the record balance of payments deficit and meet the gathering sterling crisis. As a currency crisis management measure the surcharge worked in Canada but in Britain it made matters worse and was soon supplanted by conventional measures. Deemed a failure and discredited, the surcharge was eventually lifted in November 1966 ‘unwept, unhonoured and unsung’ (Financial Times). Nevertheless, while in place the surcharge provided significant temporary assistance to the improvement of Britain's balance of payments.

Keywords

currency crisisimport surchargesterlingWilson administration

JEL classification

N2: Financial Markets and Institutions N7: Transport, Trade, Energy, Technology, and Other Services F1: Trade F3: International Finance
Type
Articles
Information
Financial History Review , Volume 20 , Issue 2 , August 2013 , pp. 209 - 229
Copyright
Copyright © European Association for Banking and Financial History e.V. 2013 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

References

Bale, T. (1999). Dynamics of a non-decision: the ‘failure’ to devalue the pound, 1964–7. Twentieth Century British History, 10, pp. 192–217.Google Scholar
Barker, T. (1970). Aggregation error and estimates of the UK import demand function. In Hilton, K. and Heathfield, D. F. (eds.), The Econometric Study of the United Kingdom. London: Macmillan.Google Scholar
Baston, L. (2004). Reggie: The Life of Reginald Maudling. Stroud: Sutton.Google Scholar
Bergsten, F. (1972). The new economics and US foreign policy. Foreign Affairs, 20, pp. 199–222.CrossRefGoogle Scholar
Bergsten, F. (1977). Reforming the GATT: the use of trade measures for balance-of-payments purposes. Journal of International Economics, 7, pp. 1–18.CrossRefGoogle Scholar
Bergsten, F. (1990). The Dilemmas of the Dollar: Economics and Politics of United States International Monetary Policy. New York: New York University Press.Google Scholar
Bergsten, F. and Williamson, J. (eds.) (2003). Dollar Overvaluation and the World Economy. Washington, DC: Institute for International Economics.Google Scholar
Bergsten, F. and Williamson, J. (eds.) (2004). Dollar Adjustment: How Far? Against What? Washington, DC: Institute for International Economics.Google Scholar
Boatright, B. (1969). The impact of the UK import surcharge 1964–66. University of Reading Discussion Papers in Economics, No. 21.Google Scholar
Bordo, M., Eichengreen, B., Klingebiel, D., Martinez-Peria, M. and Rose, A. (2001). Is the crisis problem growing more severe? Economic Policy, 16, web appendix.Google Scholar
Bordo, M., MacDonald, R. and Oliver, M. (2009). Sterling in crisis, 1964–1967. European Review of Economic History, 13, pp. 437–59.Google Scholar
Brandon, H. (1966). In the Red: The Struggle for Sterling. London: André Deutsch.Google Scholar
Brittan, S. (1969). Steering the Economy. London: Pelican.Google Scholar
Brown, G. (1971). In My Way. London: Gollanz.Google Scholar
Browning, P. (1986). The Treasury & Economic Policy 1964–1985. London: Longman.Google Scholar
Cairncross, A. (1996). Managing the British Economy in the 1960s: A Treasury Perspective. Basingstoke: Macmillan.Google Scholar
Cairncross, A. (1997). The Wilson Years: A Treasury Diary 1964–1969. London: Historians Press.Google Scholar
Cairncross, A. and Eichengreen, B. (1983). Sterling in Decline: The Devaluations of 1931, 1949 and 1967. Oxford: Blackwell.Google Scholar
Callaghan, J. (1987). Time and Chance. London: Collins.Google Scholar
Coombs, C. (1965). Treasury and Federal Reserve foreign exchange operations. Federal Reserve Bank of New York Monthly Review, 47, pp. 42–50.Google Scholar
Davis, C. and Wilf, M. (2011). Joining the club: accession to the GATT/WTO. Paper presented at the Annual Meeting of the American Political Science Association.Google Scholar
Destler, I. (2003). The dollar and US trade politics. In Bergsten, F. and Williamson, J. (eds.), Dollar Overvaluation and the World Economy. Washington, DC: Institute for International Economics, pp. 77–9.Google Scholar
Drabek, Z. and Brada, J. (1998). Exchange rate regimes and the stability of trade policy in transitions economies. Journal of Comparative Economics, 26, pp. 642–68.CrossRefGoogle Scholar
Eichengreen, B. (2003). Three generations of crises, three generations of crisis models. Journal of International Money and Finance, 22, pp. 1089–94.Google Scholar
GATT Secretariat (1962). GATT: What It Is; What It Does; How It Works. Geneva: GATT.Google Scholar
Glick, R. and Hutchinson, M. (2011). Currency crises. Federal Reserve Bank of San Francisco Working Paper Series. Working Paper 2011–22.Google Scholar
Gowa, J. (1983). Closing the Gold Window: Domestic Politics and the End of Bretton Woods. Ithaca, NY: Cornell University Press.Google Scholar
Helleiner, E. (2006). Towards North American Monetary Union? The Politics and History of Canada's Exchange Rate Regime. Montreal and Kingston: McGill-Queen's University Press.Google Scholar
Hirsch, F. (1965). The Pound Sterling: A Polemic. London: Gollanz.Google Scholar
Irwin, D. (2011). Esprit de currency. Finance & Development, 48, pp. 30–3.Google Scholar
Irwin, D. (2012a). The Nixon shock after forty years: the import surcharge revisited. NBER Working Paper Series. Working Paper 17749. Cambridge, MA: NBER.Google Scholar
Irwin, D. (2012b). Trade Policy Disaster: Lessons from the 1930s. Cambridge, MA: MIT Press.Google Scholar
Jackson, J. (1969). World Trade and the Law of GATT: A Legal Analysis of the GATT. New York: Bobbs-Merrill.Google Scholar
Jay, D. (1980). Change and Fortune: A Political Record. London: Hutchinson.Google Scholar
Johnson, H. (1970). Canada's floating dollar in historical perspective. International Currency Review, 2, pp. 4–9.Google Scholar
Johnston, J. and Henderson, M. (1967). Assessing the effects of the import surcharge. Manchester School, 35, pp. 89–110.CrossRefGoogle Scholar
Kaempher, W. and Willet, T. (1987). Why an import surcharge wouldn't help America's trade deficit. World Economy, 10, pp. 27–38.Google Scholar
Krugman, P. (2000). Introduction. In Krugman, P. (ed.), Currency Crises. Chicago: University of Chicago Press.Google Scholar
Kunz, D. (1995). British post-war sterling crises. In Louis, W. Roger (ed.), Adventures with Britannia. Austin, TX: University of Texas Press.Google Scholar
Lyon, P. (1968). Canada in World Affairs 1961–1963. Toronto: Oxford University Press.Google Scholar
MacDougall, D. (1987). Don and Mandarin: Memoirs of an Economist. London: John Murray.Google Scholar
Matusow, A. (1998). Nixon's Economy: Booms, Busts, Dollars & Votes. Lawrence: University Press of Kansas.Google Scholar
Middleton, R. (2002). Struggling with the impossible: sterling, the balance of payments and British economic policy, 1949–72. In Arnon, A. and Young, W. (eds.), The Open Economy Macromodel: Past, Present and Future. London: Kluwer.Google Scholar
Muirhead, B. (1999). Against the Odds: The Public Life and Times of Louis Rasminsky. Toronto: University of Toronto Press.CrossRefGoogle Scholar
Newton, S. (2009). The two sterling crises of 1964 and the decision not to devalue. Economic History Review, 62, pp. 73–98.Google Scholar
Oliver, M. (2011). The management of sterling, 1964–1967. English Historical Review, 126, pp. 582–613.Google Scholar
Oliver, M. (2012). The two sterling crises of 1964: a comment on Newton. Economic History Review, 65, pp. 314–21.Google Scholar
Pearce, R. (ed.) (1991). Patrick Gordon Walker: Political Diaries 1932–1971. London: Historians Press.Google Scholar
Pliatsky, L. (1982). Getting and Spending: Public Expenditure, Employment and Inflation. Oxford: Blackwell.Google Scholar
Plumptre, A. (1977). Three Decades of Decision: Canada and the World Monetary System, 1944–75. Toronto: McClelland and Stewart.Google Scholar
Ray, G. (1967). Post mortem on the import surcharge. Intereconomics, 3, pp. 65–7.Google Scholar
Rickards, J. (2011). Currency Wars: The Making of the Next Global Crisis. London: Penguin.Google Scholar
Roberts, R. (2011). Nixon's import surcharge – an attention getter and bargaining chip. Lombard Street Research. Monthly Review, 271.Google Scholar
Saywell, J. (ed.) (1963). Canadian Annual Review, 1962: A Reference Guide & Record. Toronto: University of Toronto Press.Google Scholar
Scott, R. (2011). Growing US trade deficit with China cost 2.8 million jobs between 2001 and 2008. Economic Policy Institute, Briefing Paper no. 323.Google Scholar
Shultz, G. and Dam, K. (1978). Economic Policy Beyond the Headlines. New York: Norton.Google Scholar
Solomon, R. (1977). The International Monetary System, 1945–1976: An Insider's View. New York: Harper & Row.Google Scholar
Tew, J. (1979). Policies aimed at improving the balance of payments. In Blackaby, F. (ed.), British Economic Policy 1960–74. Cambridge: Cambridge University Press.Google Scholar
Thirlwall, A. and Gibson, H. (1991). Balance of Payments Theory and the United Kingdom Experience. Basingstoke: Macmillan.Google Scholar
Tomlinson, J. (2004). The Labour Governments 1964–1970: Economic Policy. Manchester: Manchester University Press.Google Scholar
Toniolo, G. (2005). Central Bank Cooperation at the Bank for International Settlements 1930–1973. Cambridge: Cambridge University Press.Google Scholar
Wilson, H. (1971). The Labour Government 1964–1970: A Personal Record. London: Weidenfeld and Nicolson.Google Scholar

Sources

Bank of England ArchiveGoogle Scholar
Foreign Relations of the United States, 1961–1963 (1995). Vol. XIII: Western Europe and Canada. Washington, DC: United States Government Printing Office.Google Scholar
Foreign Relations of the United States, 1964–1968 (2001). Vol. XII: Western Europe. Washington, DC: United States Government Printing Office.Google Scholar
GATT Documents – www.wto.org/english/doc_e/gattdocs_e.htmGoogle Scholar
The National Archives, Kew, London: Treasury papers, Cabinet papersGoogle Scholar
Parliamentary DebatesGoogle Scholar
American BankerGoogle Scholar
Daily ExpressGoogle Scholar
Daily MirrorGoogle Scholar
EconomistGoogle Scholar
Financial TimesGoogle Scholar
The TimesGoogle Scholar