highly apposite to today’s crisis. Writing at the time of the collapse of the South Sea Company, James Milner MP said;

I owne I thought

they would carry on their cheat somewhat longer. I said indeed that ruin must soon come upon us, but I own it came two months sooner than I

expected.

In the 1930s, those that opposed the substantial reform of the financial

system that was taking place under Keynes and Roosevelt restorted to the same sort of rhetoric.

Lionel Robbins of the LSE was at the front

line of the attack:

“… [I]t is clear … that control of local policy should be removed as far as possible from the influence of local

governments; that, whatever their ultimate destiny, the different reserve systems should cease to be the instruments of monetary nationalism. The

banking policy of the twenties, which sought to remove the central banks from the interferences of governments, was right. The banking policy of

the thirties, which has been to bring them once more under government control, is wrong. The immediate objective of policy, therefore, must be to

reverse this tendency. In a world free from monetary nationalism, the solution of the remaining problems of banking policy should not present

insurmountable difficulties.”

(Economic Planning and International Order, 1937, London: Macmillan, pp. 304-5)

Fortunatley the

authorities chose to ignore him. And, as you regularly remind us, finance was set as servant to the world from the 1930s to the early 1970s. A

golden age of stability and prosperity followed. Tragically, his views – or those that followed in his theoretical tradition – were not denied

forever.

Richard Lambert of the CBI raised the same spectre of monetary nationalism on the BBC’s ‘Question Time’ last thursday (in

response to a question about Irish deposit insurance). He also aired the fallacy that economic nationalism was responsible for the great

depression. This is to stand the facts on their head, and make the cure the culprit. Financial liberalisation was responsible for the great

depression. It was only when governments took their economies off the gold standard and started to take finance out of private hands that the world

economy began to recover. If that is economic nationalism then so be it. But the phrase is not helpful and its use sinister, perhaps seeking an

association with the actions of totalitatrian economies.

We deserve a better level of argument than this.