British austerity served foreign holders of sterling assets more than domestic workers
Evidence
As the lynchpin of the gold standard and the largest foreign investor of the nineteenth century, Britain had major offshore liabilities in the form of foreign holdings of sterling-denominated assets. Returning to gold at a lower than pre-war parity would quite literally devalue those assets. This would have led to a serious run on the pound as investors tried to dump sterling en masse, just as the gold standard intended, which would have resulted in massive losses for the City. So when Churchill put Britain back on gold in 1925, the domestic economy was quite deliberately going to be squeezed so that the value of sterling and, not coincidentally, the profits of finance, would be maintained. — Mark Blyth, Austerity, 513
Categorization
- CANDY: The counterintuitive line — ‘just as the gold standard intended’ a run to punish devaluation — is a punchy way to explain why interwar Britain chose domestic pain to protect financiers.
- XREF: connects to: Monetary austerity, by raising sterling, crushed British exports and unions — Clara E. Mattei, The Capital Order: How Economists…, 414; Deflation increased the wealth of British financial asset holders — Clara E. Mattei, The Capital Order: How Economists…, 1697; Austerity policies required sacrificing the welfare of most British citizens — Clara E. Mattei, The Capital Order: How Economists…, 860 (+1 more)
Broader Connections
- Monetary austerity, by raising sterling, crushed British exports and unions
#expands(0.85) — Clara E. Mattei, The Capital Order, 414 - Deflation increased the wealth of British financial asset holders
#expands(0.80) — Clara E. Mattei, The Capital Order, 1697 - Austerity policies required sacrificing the welfare of most British citizens
#corroborates(0.75) — Clara E. Mattei, The Capital Order, 860 - Foreign-backed monetary systems subordinate a state to that foreign country.
#qualifies(0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 369