MONEY MATTERS A Modern Pilgrim's Economic Progress All rights reserved. No pari of this publication may be reproduced or transmitted in any form or by any means, including photocopying and record- CONTENTS ing, without the written permission of the copyright holder, application fcr which should be addressed to the Publishers. Such wriffen permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. Foreword by Dr John Paxron vii 1 How it all started 1 First published 1986 2 Plans for reform 10 @ Edward Holloway 1986 3 The Economic Reform Club 21 4 Economic tribulation 33 The Sherwood Press Ltd, 88 Tylney Road, London E7 OLY 5 War-time developments 40 ISBN 0 907671 21 7 6 The post-war scene 47 7 Rural reconstruction 56 Typeset in Times by BookEns, SalTron Walden 8 An economic milestone 62 Printed and bound by Redwood Burn Ltd, Trowbridge. Wiltshire 9 What money is 13 10 A tribute to Professor Soddy 92 11 Rhodesian interlude 101 12 The Economic Research Council 109 13 A Programme for National Recovery 118 14 Dialogue with Downing Street 125 15 Lecture programme 134 16 United Europe 140 17 Letters to the press 148 I8 The swing of the pendulum 166 Conclusion 180 Appendices 183 Index 193 LIST OF PLATES FOREWORD The proofs ofMoney Matters arrived on the day that Edward Holloway died. He had been a good friend ofmine for over forty Between pages 104 and 105 years and I have been associated with many of his projects during those years. Edward‘s work for a sane monetary system The author’s birth certificate goes back to the depression of the 1930s. He aimed at an Parents economic utopia but was a realist, and, when people ‘pinched Early days in Rovno with family and friends his clothing’, he was delighted that the fruits of his research were being used to further the aims he had so much at heart. Passport for travelling in Russia in 1909 When he talked about what he had achieved in half a century of The author in his office at 26 Grosvenor Place (1937) voluntary work he was very modest about his own input, but 1 Vincent Cartwright Vickers (1 939) am aware, and so are many of his friends, that his influence on Parliamentary candidate ( 1945) other people, people with more power than he, was significant Sr Ian MacTaggart and all this work was done without expecting rewards of any sort. Patrick de Laszlo There is still much to be done to achieve sane monetary Damon de Laszlo systems in the world and it is to be hoped that this work will go The author in his later years on through the aegis of the Economic Research Council - that would be Edward Holloway’s best memorial. John Paxton Bruton, Somerset December 1985 1 I HOW IT ALL STARTED Looking back over the past fifty years it is still a matter of some amazement to me that for the greater part of my life I have been closely involved with questions of economic and monetary policy. Had I been asked in the 1920s what I knew about economics I should have truthfully replied'absolutely nothing'. I subsequently found that this was by no means an unusual state of affairs and that this ignorance was shared by the majority of the population, including MPs, industrialists and others. There was nothing in my early life to indicate that I would be closely concerned with economic questions. My father was employed by the Indo-European Telegraph Company, and at the time when I was born, in 1906, he was stationed in a small town in Russia, near the Polish frontier, called Rovno. This was a relay station between Warsaw and Odessa on the Black Sea coast. The Indo-European Telegraph Company operated a direct overland telegraph line from London to Karachi via Tehran in Persia (or Iran, as it is today), and many of its staff were stationed in Russia and Persia. My father died in Rovno ' when I was quite young and, after staying in Odessa with an uncle and aunt for some months, my mother returned to England with my sister and myself. I do not remember very much about these very early days in my life, though I do recall a tremendous storm in Rovno, when hailstones as big as golf balls smashed all the windows in our house. Also, in Odessa, my uncle took me to the Black Sea . coast and I saw men and women bathing with nothing on, but on separate parts of the shore. Subsequently I told my very Vic- torian grandmother about this, and she summed it up in one word-'disgusting'. I still wonder what was disgusting about it. I have a rather splendid birth certificate, issued in Odessa 1 2 MONEY MATTERS HOW IT ALL STARTED 3 which shows my date of birth as 13 and 26 July 1906. For but in 1925 the Indo was swallowed up by a merger with many years I have tried to cash in on having two birthdays, but Imperial and International Communications, later Cable and signally failed. One friend does, however, send me a greetings Wireless. One thing my short experience working in this field card on my Russian birthday! brought home to me was the value in human terms of the The Indo-European Telegraph Company was one of the smaller company, where the relationship between the indi- pioneers in the telegraph communications business. My family viduals who worked together were on a much better basis. This had close connections with this company, and my uncle was was demonstrated by the fact that fifty years after the company stationed in Sukhum on the Black Sea coast when the Russian closed down the staff still met at an annual dinner in London, Revolution broke out and he and his family were marooned and even today they keep in touch through a circular letter sent from 1917 until they were rescued in 1919. to the remaining few. The Indo line operated from 18 Old Broad Street in the City The merger which took place in 1925 meant that the closely of London via North Walsham, then by cable to Emden and knit Indo staff were swallowed up in a much larger and more from there an overhead telegraph line through Berlin; Warsaw; impersonal concern. This brought my first realisation that Rovno (later Berdichev); Odessa; Sukhum; Tiflis; and Tabriz economic forces, completely outside my control, could to Tehran. From then on to Karachi it was operated by the materially alter my future. My interest in telegraph com- Indc-European Telegraph Department, one line going through munications as a career progressively declined as a result of the Persian Gulf. this experience. The Indo line was closed down when war broke out in 1914, The Indo Company had a rather enlightened approach to the staff working for the war period with the Eastern Telegraph employment conditions. A 36-hour week was worked and, Company, with whom the Indo Company had a joint purse although these were performed round the clock (unsocial hours agreement. When the line re-opened after the war it was largely they call them now) it left quite a lot of time when other interests operated with pre-war equipment, Wheatstone transmitters could be pursued. I attempted, with a colleague, to build up an which had to be wound up like a grandfather clock, stick per- importing business for motor accessories, starting with the forators to punch out the dots and dashes on tape and so on. I import of a car-theft device called'the Guardsman. These were believe that the late Mr Stratford Andrews, one-time Managing shipped from the USA and the firm concerned gave us sole Director, was the inventor of the porcelain insulator which rights in the UK. We set up agencies in various parts of the made possible the carryingofoverhead lines for such a longdis- country and arranged for publicity in the motoring press. Our tance. It was said that these insulators were a favourite target first consignment arrived, and with great hopes we distributed for Persian tribesmen, who could not resist taking pot-shots at the supply to our agents. But it was 1931 and Britain went off them, leading to grave interruptions in communications. The the gold standard. The cost of importing from the USA became Persian government then issued a decree that anyone caught prohibitive and subsequently we had to close down with a loss doing this would have his ears cut off and nailed to the nearest of our investment. This was my second lesson in economics, telegraph pole! and 1 realised that I had not the foggiest notion of the reasons for There are many fascinating stories to be told about this and all this happening. 1 began to read and study the subject a little similar enterprises, and they deserve better chronicling than more closely. they have so far been given. Perhaps the most influential factor which led to my life taking I joined the Indo Company in 1922 when it re-opened after a new direction was the impact of unemployment. Although not the First World War with the youthful expectation ofspending affected personally, no-one could fail to be concerned at the much of my time overseas. This idea attracted me very much, level of unemployment which so gravely disrupted the lives of 4 MONEY MATTERS HOW IT ALL STARTED 5 so many ofour fellow-countrymen.