Abstract

Competition and Credit Control was a new framework for monetary policy introduced in the UK in 1971. It was an attempt by the monetary authorities to replace the post-war system of credit ‘rationing by control’ with credit ‘rationing by cost’ through more active use of interest rates. The policy was devised by the Bank of England and imposed on an apparently reluctant Treasury. This paper examines the practical and ideological reasons for change within the Bank and how Bank officials were able to win over their counterparts in Whitehall. The policy was a spectacular failure. When it was de facto abandoned in December 1973, the money supply had grown by 62 percent and Britain was enduring its worst banking crisis for over a century. This paper will examine the reasons for that failure and discuss some of the long-term political and economic consequences. As such, it will situate Competition and Credit Control in the ideological sea-change from post-war Keynesianism to the ‘practical monetarism’ of the Callaghan government and the ‘sado-monetarism’ of the first Thatcher administration.

**Please note, this seminar as been moved to the Sidgwick Dining Room in order to accommodate larger audiences.