Joining the ‘Europe’ and Shrinking the Pound

Abstract

As Chancellor of the Exchequer after 1868, Lowe, like other Chancellors before 1914 (and after 1997), assumed no direct responsibility for monetary matters. The framework in which he operated was the Bank Charter Act of 1844. This restricted the issue of notes by the Bank of England to the equivalent of its gold and silver reserves plus £14 million, and represented a belated victory for the Currency School, associated with Ricardo, whose theories implied that such a rule was both necessary and sufficient for a stable volume of credit. As Chancellor, however, Lowe was drawn into the debate over whether Britain should join a European currency union.