Operation Robot: Restructuring the Domestic and the World Economy

Abstract

In the form finally presented to the Cabinet on 28 February 1952, Operation Robot comprised five elements which, the Chancellor hoped, would be introduced on Budget day, 11 March.¹ Firstly, ‘overseas sterling’ would be made fully convertible. In effect, this meant convertibility into gold, dollars or other currencies for all ‘unblocked’ sterling balances and new sterling earned abroad or acquired by Sterling Area governments (this was subsequently referred to as ‘external sterling’). Convertibility would not be automatically extended to residents of Sterling Area countries. Secondly, the government would abandon its commitment to the fixed rate system and publicly accept the principle of a variable rate of exchange. It would, in modern parlance, be a ‘dirty float’ since privately the government resolved to use the Sterling Area reserves, via the Exchange Equalisation Account, to keep the rate initially within the limits of 15 per cent of the official parity of $2.80 (in effect between $2.40 and $3.20).