ABSTRACT
It was tempting to choose an alternative title for this chapter, namely ‘The economic effects of Mrs Thatcher’, with apologies to John Maynard Keynes, who wrote an essay in 1931 under the title ‘The economic consequences of Mr Churchill’. That essay by Keynes was written soon after Britain, with Winston Churchill as its Chancellor of the Exchequer, went back to the Gold Standard in 1925. The exchange rate chosen to return Britain to the Gold Standard proved to be substantially out of line with economic reality, with disastrous consequences for export industries in general and the coal industry in particular. As Keynes (1931) wrote:
On grounds of social justice, no case can be made out for reducing the wages of the miners. They are the victims of the economic Juggernaut. They represent in the flesh the ‘fundamental adjustments’ engineered by the Treasury and the Bank of England to satisfy the impatience of the City fathers to bridge the ‘moderate gap’ between $4.40 and $4.86. They (and others to follow) are the ‘moderate sacrifice’ still necessary to ensure the stability of the Gold Standard. The plight of the coal miners is the first, but not-unless we are very lucky-the last, of the Economic Consequences of Mr Churchill.
