ABSTRACT
W. S. Churchill was anxious to cast off the stigma of his actions during the General Strike of 1926 and to pursue a policy of industrial conciliation and appeasement. Treasury officials and the Bank of England pressed for severe cuts in public expenditure, a rescheduling of the rearmament programme and a reactivation of monetary policy, which had not been used for stabilization purposes by Labour. Robert Hall, the Director of the Economic Section, agreed that perhaps the economy was being run at too high a pressure of demand, but was not convinced that traditional deflationary action could remove all the pressure for wage increases without going to extremes and creating massive unemployment. Several drafts were prepared by the Economic Section and the Treasury’s Economic Information Division which made clear that it was impossible to combine full employment, free collective bargaining and price stability without workers exercising restraint.
