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Accueil du site ::  Publications ::  Les Cahiers Sirice ::  Cahiers n° 9 :: 

Treasury Officials and the European Monetary System (1977-1979) : Unthinkable Regionalism ?

Thomas Raineau

Among several references dealing with Britain and Europe, few have taken the Treasury as the main focus. The exception may be the pro domo plea written by former Treasury official Craig Pickering, with a view to counterbalancing the most deep-rooted prejudices about his ex-Department supposedly European awkwardness. [1] He was pointing with good reason to how much academic works used to minimize, call into question, or simply ignore the commitment of Her Majesty’s Treasury to the affairs of the European Communities. He reminds us of the cardinal involvement of N° 11 [2] in the design and implementation of Britain’s European policy, especially in the domain of monetary affairs.

This article examines Treasury officials in their dealings with the re-born project of a European Monetary System during the year 1978. Officially, there could not be “a Treasury view on EMS” which would have been anything other than the Chancellor’s view at the same moment [3]. Dennis Healey’s refusal that Britain should participate to the Exchange Rate Mechanism (ERM) of the EMS was simply the Treasury view, then endorsed by the Cabinet. A departmental point of view is a concept that is to be summoned with great care, to be well demonstrated and documented, because the constitutional principle of ministerial accountability to Parliament, and the deep sense of loyalty that senior officials most frequently manifest towards their minister, stand as powerful barriers. This study will focus on senior officials in the Treasury, considered individually, and also with the collective process of advice and mutual consultation that led to the final decision. It will investigate by whom and how, many studies and counter-studies were conducted within the department and the Cabinet Office leading to the formulation of congruent advice on EMS : we shall try to identify which economic principles, which historical factors, and also potential sociological determinants or political preferences can explain the policy outcome.

In February 1978, the German Chancellor Helmut Schmidt proposed to transform the European Monetary Snake into a more ambitious and more integrated European Monetary System. It came as a challenge to the Treasury at a time when the department had for a long time been under acute public scrutiny. Compared with those of other countries on the continent, the British economy had performed less well since the mid Fifties : the devaluations of the pound sterling (1949, 1967, 1976), and its brief participation to the Snake (May-June 1972), manifested serious difficulties to manage a positive balance of payments. It had culminated in December 1976 when the UK had resorted to the International Monetary Fund (IMF) for standby loans. [4] Besides, with substantial parts of its industrial sector experiencing severe losses and tough reconversion efforts, and an atone growth rate subject to frequent stop-and-go, Britain was perceived as the sick-man of Europe. At home, this disappointing performance had been thoroughly investigated, and the top officials of the Treasury had been more than once under the fire of critics since the early Sixties : some had questioned the department’s ability to deal with the economy, arguing the lack of expertise in economics for many of its mandarins.

Still a rather small department, the Treasury exerted an undisputable power over all the ministries in Whitehall, being in charge of the control of public expenditure. It was staffed with officials considered as the cream of the crop by their peers, and at some point by themselves, creating among the top ranks of the mandarins at N° 11 a particular ethos. EMS was then a challenge of a calibre they would definitely handle, while they could vividly remember the episode of the IMF rescue in 1976, when the Fund had somehow prescribed its own advice to improve the performance of the British economy. [5]

When the Treasury took hold of the EMS proposal, the administrative framework for EEC Affairs in Whitehall’s core executive had reached its cruising speed, three years after the referendum had confirmed Britain’s participation to the Communities. With the European Unit of the Cabinet Office providing overall coordination, the Treasury contributed to a large extent in shaping the debate and formulating options both at official and ministerial level, in close association with N° 10. For the EMS, and European policy in general, was considered by ministers, and above all by the Labour Prime Minister Jim Callaghan, of high political sensitivity. Consequently, Treasury handlings of EMS used to be conducted under tight political control by both the Chancellor and the Prime Minister. Notwithstanding the constitutional freedom and independence under which mandarins used to work, in 1978 they were undoubtedly aware of the political injunction under which their expertise was eventually delivered.

This article seeks to develop a twofold reflection about the role of Treasury officials in the definition of Britain’s response to the proposal of creating a European Monetary System in 1978.

I shall first describe and explore the canals at the top of the Treasury’s hierarchy through which the final policy was gradually elaborated. While the decision-making process on the EMS has already been exposed, [6] scrutiny of the individual profiles and positions of Treasury mandarins, of the intellectual framework and the social and institutional context in which they operated, will help to enlighten us as to how the final policy response was finally delivered by their ministers.

Secondly, we shall demonstrate that the idea of the EMS as a proper regional monetary bloc in a more global monetary environment was largely ignored or dismissed by most Treasury officials, along with their serious doubts about its actual feasibility or sustainability. We shall argue that it was mainly perceived as a German project that clashed with important interests for Britain in the short and longer term. The advice of the Treasury men converged towards three main imperatives : to preserve the status of the Pound Sterling, to present a conciliatory policy towards the United States and the dollar and to avoid any additional constraining continental binding.

This paper focuses on the senior officials in charge of the EMS working in the departmental Treasury between the end of 1977 and the beginning of 1979. The lowest level of seniority considered will be the rank of Assistant Secretary, totalling a population of 30 individuals.

The department and the challenge

The Treasury has the lead

From the Bremen Summit in July 1978 up to 1979, most of the relevant ministries’ contributions were drafted to feed the debates conducted within the Cabinet’s Ministerial Group on European Monetary Co-operation (EMC), also known as GEN 136 [7] and chaired by the Chancellor of the Exchequer Denis Healey. While the Cabinet had its final discussion on EMS on 2 November 1978, the last meeting of GEN 136 had taken place, with Callaghan in the chair, on 10 October 1978 when it was presented with the final advice from the Treasury.

The flood of policy papers discussed at ministerial and official committees was alimented mainly by Treasury people, under the supervision of Kenneth Couzens, second Permanent Under-Secretary (PUS) to the Treasury and the most senior official in charge of the EMS [8]. The team of officials dealing with the EMS at N° 11 then centralised the papers coming from other ministries, mainly the Board of Trade and the Ministries for Employment, Agriculture, Energy and Industry, to feed their own drafts to the Cabinet committee. Following the conventional Whitehall practice of inter-departmental sharing of information, policy papers were largely circulated among top officials of all the relevant departments, including the Governor of the Bank of England and his staff : the average number of recipients for most confidential policy papers included at least 35 people of whom the Treasury lot was always by far the largest with at least 50 % of the people in the loop. [9] With the Chancellor usually in the chair of GEN 136, the Treasury clearly had the lead in the gradual elaboration of advice, which suggests that the proposal of EMS was mainly, if not exclusively, examined through the economic lens, much rather than the political one.

This explains also why the Foreign and Commonwealth Office (FCO) remained largely on the second line in the EMS debate and negotiations. In this phase of the ancient rivalry between the two ministries most untitled to deal with European Affairs, the FCO was undoubtedly a follower, though it had kept the lead during not only the negotiation for Britain’s entry in 1971-1972, but also during the delicate renegotiation that had followed Labor’s return to government in 1974. Michael Butler, then Deputy Under-Secretary in the FCO was the main correspondent for the Foreign Office and a respected though suspicious partner, [10] but it was Couzens who was nominated to the secret committee of three [11] and who accompanied and briefed the Chancellor and the Prime Minister for most international summits in 1978.

For the number of staff involved and also the political line to follow, the punching power was clearly on the Treasury’s side, while at the same time, the political impetus was in the hands of the Chancellor and the Prime Minister. David Owen, then Foreign Secretary, had obviously not seized the proposal as a significant opportunity, though he was then considered one of the few pro-Europeans in the Cabinet. Owen was notoriously at odds with members of his senior staff whom he suspected of vested federalist preferences – such as Michael Butler and Michael Palliser [12] - and he seemed to be paradoxically courting the left of the Party : this split between the minister and part of his officials allowed the Treasury, where such a divergence did not exist, to keep a powerful grip on EMS.

High-flyers on the deck

With a large team of senior officials involved, the Treasury mobilized its finest staff of officials and economists to study a proposal to which the response was considered crucial for the future of the British economy and also for the reputation of the department itself.

The Treasury was in charge of the EMS due to its long-developed prerogatives in the domain of both monetary policy and financial relationships with other countries. [13] According to the diplomat Paul Lever, the EMS episode represented an increase in the international missions and interactions with foreign counterparts, for high officials at N° 11. [14] In 1978, most of the upper hierarchy of the “Overseas Finance” sector was devoted to the study of the EMS proposal, in association with the closest collaborators of the Chancellor and the Cabinet Office. [15]

All of these people were usually dubbed as “high-flyers” in Whitehall : having completed a prestigious academic training, many of them were considered to be the most able people of their generation : [16] 62 % of them had first studied at a Public School, and 85 % of them had completed a degree from Oxford or Cambridge, with a small minority holding a degree in Economics. These figures show first that if the generalist mandarin was still fairly well-represented, officials trained in economics were an expanding species which contributed to providing the government with a strong expertise, as the documents in the Treasury files prove. [17] Unsurprisingly, social and cultural homogamy were still a very strong tendency, particularly in that section of the Treasury where most of the individuals had spent most of their – albeit short - career in the Treasury. Consequently, it was a group of very like-minded men who, collectively, came to the decision that EMS was not suitable for Britain.

With regard to their training in economics and political economy, it can be postulated that many officials and advisers in the Treasury were sharing a common reading of the problems that affected the British economy, and of the solutions that could be implemented to solve them. For some of the officials, this intellectual framework had been complemented by their experience, and especially that of the IMF crisis in early 1976, which was then a fresh memory in the Department.

This intellectual like-mindedness helped to formulate congruent advice, and it was also strengthened by the strong leadership of Dennis Healey. Geoffrey Littler then a Deputy-Secretary in charge of the Domestic Economy sector and a major adviser on EMS in 1978 confirmed the importance of the ministerial leadership in the building of powerful consensus among officials, and of their own pragmatism : “If they ministers give us a strong lead, the fact that there is no body of received doctrine which is in conflict with that lead make it much easier to for us all to accept it and fit in with it”. [18]

Was the Treasury hostile to the EEC in principle ? The next part will show that officials were claiming for the power of the facts, but Richard Butt who entered the Treasury in 1973 and was Secretary to the Policy Coordinating Committee in 1978 testifies : “In my first seven or eight years in the Treasury, I’d never come into contact with the Community in any positive sense. Occasionally, I’d been aware of it, usually – to be perfectly frank – I’d regard it as a bit of a nuisance”. [19]

From the survey of this team of specialists, we suggest a classification of the individuals involved, in the following typology that considers the function, seniority, age and career, and, where they’re known, personal policy preferences.
A first type was the Mandarin, the coordinator of the specialists and main interlocutor of the ministers. He is usually in the last section of the chain of advice at official level, and most of the material submitted to ministers for discussion is ultimately checked by him. Kenneth Couzens (1925-2004) has long since embodied that type of orthodox Treasury mandarin whose hostility to the European project was somehow public in Whitehall. He had spent most of his career in the Treasury which he had entered at the age of 26, until he reached the prestigious position of Second PUS in charge of Overseas Finance in 1977. [20] Couzens has kept the reputation of a man who would advise obstinately against any commitment from Britain to the EMS. For those who deplored the British abstinence, he was somehow the wrong man in the wrong place, another “sacrificial agent” [21] of Britain’s European policy. Couzens was a polite but non-committed partner in the talks of the “Gang of three” [22] and Edmund Dell states that he had been deliberately chosen for his views on EMS : “a sceptical mind imbued with memories of past UK devaluations and of the attempt in 1972 to link sterling to the snake which had led to its humiliating departure six weeks later”, adding that Callaghan had put him under “strict instructions not to agree to anything” which was the core of its delaying tactics for a large part of the year 1978. [23] Was Ken Couzens only His Master’s voice over EMS ? For some of his colleagues, he was not particularly qualified to advise on the subject, having “always been on the public finance side of the Treasury.” [24] but for others, he was the “intellectual architect of a lot of the papers.” [25] Of that mandarin type were obviously men like Douglas Wass, Geoffrey Littler, Francis Baratts or the woman Mary Hedley-Miller.

The second type was the Technician, a specialist who contributed to produce the hard economic facts that would justify the final decision of not getting in. Officials of that kind were rather younger, usually trained as specialists in economics or statistics, such as Rachel Lomax (born in 1945) who had entered the Treasury in 1968 and was then senior Economic adviser. Having studied at Cambridge and the LSE, [26] she was in charge a several technical surveys on, for instance, “the implications of more fixed exchange rates for the UK economy in the medium term” or an “Assessment of how long a fixed exchange rate for sterling would be tenable on certain assumptions about inflation differentials.” [27] Having usually entered N° 11 right after the university, these specialists had contributed to increase the level of the Treasury expertise in Economics, as Mrs Lomax remembered in 1983 : “The administrators had become economically a good deal more literate.” [28] Intervening very frequently in the discussions at the top level, the technicians indeed provided the strong arguments on the consequences of joining the EMS. Hard facts were their lot, not political insights or economic theory, even if a few of them, such as Mrs Lomax had been familiar with monetarist economics that would become the great story in the 1980s. That aspect of the EMS was not explored at all, while the dominant philosophy of the Department was overwhelmingly Keynesian, with many officials or economists warning about the deflationary aspect of the scheme that would damage Britain’s economy. [29]

The third type was the isolated pro-EMS official. If he had the opportunity to have his voice heard, he was not able to influence the dominant trend in the team advising the Chancellor. Among the senior staff, David Hancock (born in 1934) was in favour of the project of EMS for it seemed to be in the British interests in the medium and longer terms. The remarkable difference between Hancock and many of his colleagues advising on EMS was twofold. Firstly, he had studied Economics in America, holding the post of Harkness Fellow at Harvard, and then he had been posted as Financial and Economic Counsellor in the office of the UK Permanent Representative in Brussels, between 1972 and 1974. He then had an international and European background that had broadened his views on monetary affairs and convinced him that the UK should stay outside of EMS, even if the scheme was not completely satisfactory. [30]

“The facts, Minister” : Why EMS was not desirable for the UK ?

As Peter Ludlow rightly put it, Treasury officials had “buttressed their hostility to the system with impressive looking appeals to hard economic ‘facts’”. [31] Summoning those “facts” was indeed a powerful way to frame and influence the ministerial decision on the EMS and the study of the Treasury papers show how precisely and exhaustively the studies were conducted by officials at N° 11. Several notes in the archives show the progression of the ambitious work programme that was launched immediately after Bremen : it was meant to embrace all the possible aspects and consequences of a British participation to the EMS and as it was said before, the conclusions were crystal clear : entering the EMS was not in the economic interest of Britain, at least in the short term.

The economic demonstration

Since the main lines of the Treasury’s position have been thoroughly described [32], we shall focus on a few core ideas that were the most strongly hammered in the Treasury files.

One of the prevalent arguments of the specialists was that according to past monetary developments, there was a risk that the weakness of the pound sterling would prove difficult, if not impossible, to keep it within the parity grid of the Exchange Rate Mechanism. Obviously, the expulsion of sterling from the European Snake in June 1972, less than six weeks after it had joined it, had been considered as a public humiliation for the Department which was reinforced by the liquidity crisis of 1976 that led to ask for the help of the IMF. Besides, the recent stability of the pound and the “rough balance” of current accounts, consequence of the incomes policy and of the first benefits of North Sea oil, were positive enough to deter Treasury officials from such a significant monetary change. The status quo had to prevail, while linking sterling to the DM would have potential deflationary effects, or at least imply counter-inflationary commitments, then reducing the room of manœuvre of the UK, which the current government could not afford.

Several memos circulated in August and September 1978 also pointed out what the experts saw as the flaws of the mechanism itself : from the proposals they had concluded that there was no big difference with the Snake in the case when two currencies of the system would come to diverge. What the British wanted, along with the French, was a real symmetry in the actions of correction to excessive monetary fluctuations from the agreed rate. It required the intervention of the central banks of both countries whose currency would be depreciating and appreciating, for the former not to bear alone the burden the intervention. If N° 11 acknowledged that the parity grid coupled with the basket of currency and the ECU were a better scheme for mutual intervention, there was no real political assurance of a monetary solidarity, and a real risk that an intervention from the stronger currency, ie the DM, would be impeded by the concern of inflationary effects. It would be unlikely that the independent Bundesank, being in a position of strength, would take this risk.

To what extent did the shadow of the IMF crisis of 1976 prevail on the analysis of the N° 11 mandarins ? The psychological argument of the legacy of the “humiliation” remains quite debatable, but it may be said that the high level of uncertainty in the EMS venture, after the Snake had proved unsustainable, may have emphasized the “imperative of credibility” for Treasury officials [33]. The department had to prove that it was capable of fulfilling the objectives it had announced in terms of the balance of payments and inflation control. Then, just as both government and officials had rejected any constraining commitments to any particular measure of policy in 1976, they would not accept any foreign comment on Britain’s policy with sterling. From the team of officials involved in 1976, at least ten of them were also in the core team discussing the EMS proposal in 1978, usually at a very senior level.

Either international economics or a domestic focus : the absence of a regional perspective

In the second half of 1978, several officials in the Treasury were assigned to contribute to the “concurrent studies”. That series of surveys was meant to explore by different means how to compensate the burden that the parity grid would put on the “weaker” countries and then design primary mechanisms for transfer of resources between the members of EMS. [34] Paradoxically enough, Britain had been in the forefront with the weaker countries (Italy and Ireland) to launch the concurrent studies, while it was – with France – the country most likely to refuse in principle that first form of fiscal federalism. The contradiction can be explained by the delaying tactics of Callaghan, and by the fact that the Treasury saw in the concurrent studies the opportunity to amend the budgetary deal that Britain had obtained in 1971, and superficially renegotiated in 1974, a deal that was by no means satisfactory nor sustainable for the Department. Since the very early days after Britain’s entry, Treasury mandarins and their successive ministers had been convinced of the inevitability of a new deal on the budget which, for a large part of the 1970s, explains the regular implementation of a “linkage strategy” that would often irritate their continental partners. While the end of the transitional period was looming in 1978, the budget issue was once again a crucial issue.

In their analysis of the EMS project, officials of the Treasury kept describing, with some reasons indeed – the scheme as fundamentally German and meant to serve first and foremost the interests of the German economy. Since the reduced Snake had become a DM zone and since the EMS was not foreseen as anything other than an extended snake, especially after the “French capitulation” over the parity grid, [35] British officials were advising for a pragmatic assessment of the balance of power, considering that the concessions of the Germans Chancellor were likely to be just rhetorical while the Bundesbank remained openly sceptical about the pooling of reserves and simply hostile to any transfer of resources between the countries. Giscard had surrendered to Schmidt because he hoped it would help him to achieve his programme in domestic economy (Plan Barre), but with such a risk of a deflationary impact on the British economy, the Plan would never go through Parliament, even with the disguise of a regional solution for more monetary stability.

When they were not concerned by the consequences of the EMS at home, Treasury officials were nonetheless worried about the implications of the system at a global level. If the Treasury probably did not feed any illusion about the role of Sterling as an influential reserve currency, they were still careful about the reactions of the United States. They favoured further consultations with the Americans and tended to dismiss any arrangement that would contribute to weaken the international position of the dollar.

If some officials objected a “But, Chancellor” it was only to Harold Lever who was Chancellor of the Duchy of Lancaster, member of the Cabinet, and one of the main supporters of Britain’s participation in the EMS. It seems from the papers of the Treasury that Lever and a large group of the officials debated thoroughly about the economic consequences of the British participation, and above all about the impact of the EMS on the dollar. If they obviously disagreed, it was rather on perspective and timing than a fundamental disagreement about the nature of the problem. A whole box is still dedicated to the several notes shared by Treasury officials who meticulously refute the Chancellor’s approach, sometimes pointing out that he was “playing down the importance of the fundamentals” [36] and admitting here and there that the views could not be reconciled on an issue as capital as the “primary reason for the excess supply [of dollars].” [37]

Understanding the Treasury’s modus operandi on the EMS

Denying European politics ?

It seems from the files of the Treasury that officials from N° 11 never seriously considered the relevance or importance of the political project that was supposedly behind the EMS. Understandably, they had been asked in haste to assess the impact of the system on the British economy and it was a matter of departmental deontology to leave the political interpretation of the scheme to the Foreign Office, and ultimately to the politicians who were accountable to Parliament. The weight of this departmental position is obvious when it appears that David Hancock was the only senior official to advocate for a broader view of the benefit that Britain could get from its full participation to the EMS. Having served in UKREP for two years and then having the experience of multilateral negotiations in Brussels, he might have been more inclined to compromise with Britain’s partners. Still, David Hancock stated very clearly that his position was founded on economic grounds and by no means on any political assessment of the scheme. [38] As we have seen, the politicians had deliberately marginalized the Foreign Office on this case, and also the Cabinet Office where the officials of the European Secretariat led by Michael Franklin could not counterweight the influence of N° 11. [39] A few years afterwards, Geoffrey Littler who was Deputy Secretary in 1978, and then took over from Couzens as Second Permanent Secretary for Overseas Finance, summed up bluntly the division of roles in Whitehall at that time :

The Treasury is concerned primarily, has to be concerned, with the economic and financial well-being of this country. The FO does tend to think much more in considerations of global strategy and peaceful world. These concerns are not necessarily irreconcilable, but they do occasionally mean that we take different views of things. […] We do have separate fields. [40]

No continental commitment

On monetary affairs, it seems, from the very early 1970s, that the Treasury tried by all means to avoid any compelling commitment to Britain’s continental partners. It was then in line with a very durable trend of British Foreign Policy which had long since distinguished Britain’s political and administrative elite.

If the British were favourable to consultations and cooperation between fully sovereign states, they remained highly reluctant to any kind of durable commitment, especially in monetary affairs. It was both a matter of pride and strategy. The men of the Treasury were not disposed to surrender part of the UK’s sovereignty over its currency which, no longer than 60 years ago, was still the symbol of the first financial Power in the world. Despite the misfortunes the pound sterling had endured since the war, the mandarins were still convinced that Britain should keep a special and global voice in monetary affairs.

In strategic terms, the uncertainty affecting the march of the British economy made too risky a venture for the British Treasury to be even slightly deprived of the use fundamental instruments such as the exchange rate and the currency reserves. When asked about the apparent contradiction there was in advising against joining the EMS, first Jim Callaghan by saying the pound would rise too high, and then Margaret Thatcher by saying the pound would have to fall, Geoffrey Littler replied : “The thread running between both is that one is unhappy about a situation in which you are too closely bound. At time, you need the maximum of flexibility.” [41]

The aloofness of Britain that was later dubbed as an attitude of “semi-detachment” [42] prevented the men of the Treasury from even contemplating the idea of playing the Community game by building a coalition with potential allies. If the French had some concerns in common with the British, it was clear for London that the Franco-German tandem could not be divided. Nevertheless, the period of the “concurrent studies” was a clear opportunity to experience that kind of coalition building that was already mere routine in the Community, especially with Italy and Ireland. The Italians were approached for a short moment, but no serious discussion ever started. It sounds clear from the papers that the Italians were considered as a junior partner with whom the discussions would never amount to any serious alliance, the problems of the two countries being far too different, and their respective attitude towards the other partners being quite divergent too [43]. Italy was clearly in a position of demandeur that Britain wanted to avoid by any means, especially while a sort of directoire with France and Germany may have been emerging, as it had been proved by the experience of “gang of three”.

Another tactical error of the Treasury officials in their dealing with the EMS project was the obsessional linkage with this issue of the British contribution to the Community budget, a behaviour that was notoriously disliked by their partners [44]. The permanence of the budget as a major preoccupation for many British officials would prove useful later, and would arm Mrs Thatcher with all the firepower of Whitehall, but it probably undermined the capacity of the British negotiators to bring their partners to a better comprehension of Britain’s specific problems in 1978. Dyson and Featherstone have analysed that the Treasury “existed within a different intellectual and cultural milieu from that of its major continental partner” while “in 1978-1979, the Treasury eschewed a longer-term perspective or wider calculations of political interest. It lacked any strong pro-European lead”. [45]

Observing the attitude of the Treasury, via a handful of its key officials, we can conclude that the team of civil servants dealing with the proposal of EMS demonstrated some features that have long since contributed to building the reputation of N° 11 of being rather sceptical about the European Community. First, a strong and coherent ethos of those civil servants who, if they had some disagreements at some point, were firmly following the political line, when it had been indicated by their Minister. In the case of the EMS, the ministerial instruction for non-participation, coupled with the clear conviction that the project would not pass through the Cabinet or the Parliament probably helped the mandarins to build their demonstration that EMS would be detrimental to the British economy in the short-term, despite the rapid disclaimer of the facts, with the Americans taking strong deflationary measures to strengthen the dollar in late October 1978, and the inexorable rise of the pound sterling from 1979.

National Treasuries were understandably hostile to the EMS for it would by definition undermine their prerogatives and their departmental monopoly over national monetary policies. The French Ministry of Finance was roughly on the same line as the British Treasury, advising against the participation of France. [46] It was the personal determination of Giscard d’Estaing, coupled with the weight of the Presidential power that allowed him to by-pass the Minister and its senior staff, giving a full power of negotiation to Bernard Clappier from the Banque de France, one of the few – if not the single – official who was openly favourable to the EMS. When the tandem Giscard-Clappier was secured, the Ministry had to surrender. On the British side was the trio Callaghan-Healey-Couzens who would not allow any deviation from the department orthodoxy.

[1] Craig Pickering, “Sir Douglas in Euroland. Treasury Officials and the European Union, 1977-2001”, Public Administration, vol. 2, n° 80, (2002), p. 583-599.

[2] The official residence of the Chancellor of the Exchequer is located at N° 11 Downing Street. Hence the shortened designation of the departmental Treasury as N° 11.

[3] Craig Pickering, “Sir Douglas in Euroland….” op. cit., p. 597.

[4] Kathleen Burk, Alec Cairncross, Good-bye Great Britain : The 1976 IMF Crisis (New Haven : Yale University Press, 1992).

[5] Ben Clift, Jim Tomlinson, “Negotiating Credibility : Britain and the International Monetary Fund, 1956-1976”, Contemporary European History, vol. 4, n° 17, (2008), p. 561-563.

[6] Edmund Dell, “Britain and the Origins of the European Monetary System”, Contemporary European History, vol. 1, n° 3, (1994), p. 1-60.

[7] Edmund Dell, “Britain and the Origins of the European Monetary System”…, op. cit., p. 31-56. See also United-Kingdom National Archives (henceforth UKNA), CAB 130/1047, meetings 1-5, papers 1-17.

[8] UKNA, T 381/178, Thank-you note of 19 December 1978.

[9] UKNA, T 385/146, Annex A, « Full Circulation list for EMC papers ».

[10] UKNA, CAB 193/209, 1-2-3, passim. Interview of Rachel Lomax by the author, 23 February 2012.

[11] After the Copenhagen Summit in April 1978, Schmidt, Giscard and Callaghan had set up an informal committee of three personal representatives to hold secret consultations, with a view to forging a common proposal that would be submitted at the Bremen Summit in July. See Emmanuel Mourlon-Druol, A Europe Made of Money : The Emergence of the European Monetary System (Ithaca, Cornell University Press, 2012), p. 177-183.

[12] Interview of Sir Brian Crowe by Gwenda Scarlett, 15 October 2003, British Diplomatic Oral History Programme (henceforth BDOHP) :, p. 33.

[13] See Craig Pickering, “Sir Douglas in Euroland”…, op. cit., p. 587. See also Anne Sloman, Hugo Young, But Chancellor. An Inquiry into the Treasury (London : BBC, 1984), p. 84-102.

[14] Ibid. p. 87.

[15] Among this group of 21 people, only three women are counted, with only one at the top level : Mary Hedley-Miller who was Under Secretary.

[16] Anne Sloman, Hugo Young, But Chancellor…, op cit., p. 21-43.

[17] UKNA, T 385/146-157 : “Circulated papers and Concurrent studies”.

[18] Anne Sloman, Hugo Young, But Chancellor…, op. cit., p. 34.

[19] Ibid., p. 91.

[20] “Couzens, Sir Kenneth (Edward)”, Who Was Who, A & C Black, 1920-2008 ; online edn, Oxford University Press, December 2007 :, (accessed 17 November 2011).

[21] Hugo Young, This Blessed Plot. Britain and Europe from Churchill to Blair (London : Macmillan, 1998), p. 71-98.

[22] Peter Ludlow, The Making of the European Monetary System, A Case-Study of the Politics of the European Community, London, Butterworth Scientific, p. 104-117.

[23] Edmund Dell, “Britain and the Origins”…, op. cit., p. 4. Sir Kenneth Couzens himself commented on the earlier draft of E. Dell’s article.

[24] Interview of Michael Butler by Malcolm McBain, 06 October 1997, BDOHP,, p. 26.

[25] Interview of Rachel Lomax by the author, 23 February 2012.

[26] “Lomax, (Janis) Rachel”, Who’s Who 2011, A & C Black, 2011 ; online edn, Oxford University Press, December 2010 ; online edn, October 2010 : (accessed 17 November 2011).

[27] UKNA, T 385/146, “Work programme”, non dated.

[28] Anne Sloman, Hugo Young, But Chancellor…, op. cit., p. 29.

[29] Interview of Rachel Lomax by the author, 23 February 2012.

[30] Interview of Sir David Hancock with the author, 09 April 2012.

[31] Peter Ludlow, The Making of the EMS…, op .cit., p. 295.

[32] Peter Ludlow, The Making of the EMS…, op .cit., p. 151-153 et p. 295-297 ; Edmund Dell, “Britain and the Origins”…, op. cit., p. 38-56 ; Emmanuel Mourlon-Druol, A Europe Made of Money…, op. cit., p. 242-246.

[33] Ben Clift, Jim Tomlinson, “Negotiating Credibility“…, op. cit., p. 561-563.

[34] Emmanuel Mourlon-Druol, A Europe Made of Money…, op. cit., p. 219-224.

[35] Emmanuel Mourlon-Druol, A Europe Made of Money…, op. cit.

[36] TNA, T 382/72, note by A. C. Allan, « Chancellor of the Duchy and the dollar problem », 14 December 1978.

[37] TNA, T 382/72. Note from Rachel Lomax « International Monetary System and the Chancellor of the Duchy », 14 December 1978.

[38] Interview of sir David Hancock with the author, 09 April 2012.

[39] Interview of sir Michael Franklin with the author, 07August 2012.

[40] Anne Sloman, Hugo Young, But Chancellor, op cit., p. 92.

[41] Ibid. p. 100.

[42] Stephen George, Britain and the European Community : The Politics of Semi-Detachment (Oxford : Oxford University Press, 1992).

[43] UKNA, CAB 193/210/1, note from A. Battishill, “Visit of Signor Pandolfi and Signor Baffi”, 28 July 1978.

[44] UKNA, CAB 193/201/1, “Economic Policy Committee, 11 August, General Objectives”.

[45] Kenneth Dyson, Kevin Featherstone, The Road To Maastricht : Negotiating Economic and Monetary Union ( Oxford : Oxford University Press, 1999), p. 544.

[46] Emmanuel Mourlon-Druol, A Europe Made of Money…, op. cit., p. 169.

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