Churchill Considered 1950's Plan for European Single Currency - where France would Peg
Originally Published 28 June 2001
Recent work by Dr Peter Burnham, of the University of Warwick's Department of Politics and International Studies, has shown that a 1952 plan considered by Churchill and his cabinet to resolve the UK's balance of payments problems came close to producing a de facto single currency area based on several currencies from former British colonies and European countries (including the French Franc) being pegged to Sterling.
A number of Historians have looked at the "Robot" scheme considered by the British cabinet on 28th and 29th Feb 1952 but most have concentrated on the technical detail within the plan intended to address the balance of payments problems being faced by the country. However Dr Burnham shows that the core of the plan would have used the pound sterling to create the core of a single currency bloc with several currencies pegged to sterling long before the single currency or Britain's ill fated participation in the exchange rate mechanism. The impetus for the plan followed the termination of the US European recovery programme (Marshall Aid) in December 1950 and a disappointing visit by Churchill and Eden to Washington in 1952 which made it clear that future aid for Britain from the US would be modest.
The "Robot" plan would have created 3 currency blocs: a US area - with convertible currency (dollar) at a fixed rate, an enlarged sterling area with floating convertible currencies based around sterling, and the rest with fixed inconvertible currencies.
France at the time was in the throes of balance of payments crisis and was thus increasingly dissatisfied with one of the main planks of European monetary strategy at that time - the European Payments Union. Many leading figures in the Bank of England and the Treasury thought that France could be persuaded to join with the Scandinavian countries, Belgium, Holland, Portugal and most of Britain's former colonies, in a new "payments club" with a floating exchange rate pegged to Sterling. Austria, Germany, Greece, Italy, Spain Switzerland and Turkey it was thought would stick with the US camp.
In the end the cabinet postponed consideration of the plan. In the following month UK Dollar reserves improved dramatically, the sense of imminent crisis began to abate and support for a revamped version of the Robot scheme to be considered in midsummer fell away.
For further details please contact:
Dr Peter Burnham, Dept of Politics and International Studies
University of Warwick Tel: 024 76 523084
Email: P.R.Burnham@warwick.ac.uk
Recent work by Dr Peter Burnham, of the University of Warwick's Department of Politics and International Studies, has shown that a 1952 plan considered by Churchill and his cabinet to resolve the UK's balance of payments problems came close to producing a de facto single currency area based on several currencies from former British colonies and European countries (including the French Franc) being pegged to Sterling.
A number of Historians have looked at the "Robot" scheme considered by the British cabinet on 28th and 29th Feb 1952 but most have concentrated on the technical detail within the plan intended to address the balance of payments problems being faced by the country. However Dr Burnham shows that the core of the plan would have used the pound sterling to create the core of a single currency bloc with several currencies pegged to sterling long before the single currency or Britain's ill fated participation in the exchange rate mechanism. The impetus for the plan followed the termination of the US European recovery programme (Marshall Aid) in December 1950 and a disappointing visit by Churchill and Eden to Washington in 1952 which made it clear that future aid for Britain from the US would be modest.
The "Robot" plan would have created 3 currency blocs: a US area - with convertible currency (dollar) at a fixed rate, an enlarged sterling area with floating convertible currencies based around sterling, and the rest with fixed inconvertible currencies.
France at the time was in the throes of balance of payments crisis and was thus increasingly dissatisfied with one of the main planks of European monetary strategy at that time - the European Payments Union. Many leading figures in the Bank of England and the Treasury thought that France could be persuaded to join with the Scandinavian countries, Belgium, Holland, Portugal and most of Britain's former colonies, in a new "payments club" with a floating exchange rate pegged to Sterling. Austria, Germany, Greece, Italy, Spain Switzerland and Turkey it was thought would stick with the US camp.
In the end the cabinet postponed consideration of the plan. In the following month UK Dollar reserves improved dramatically, the sense of imminent crisis began to abate and support for a revamped version of the Robot scheme to be considered in midsummer fell away.
For further details please contact:
Dr Peter Burnham, Dept of Politics and International Studies
University of Warwick Tel: 024 76 523084
Email: P.R.Burnham@warwick.ac.uk