The head of the Bank of England generally enjoys his post for two years, but Montagu Norman set a record of twenty-four. More than any other man he caused the Great Depression. Montagu dabbled in the spiritualism boom and apparently informed a colleague that he could walk through walls. He suffered regular nervous breakdowns and was a patient of no other than CG Jung. He made a surprise return to the news in 2013. His famed portrait in the inner sanctum of the Bank of England was removed in disgrace over a Nazi gold transfer. I say it’s a bum rap.
Montagu Norman.
Such rakish couture was considered “artsy.”
It all started with The Great War a.k.a. World War One. The various governments involved had run out of gold after six months or so. Instead of ceasing to fight they resorted to IOUs, leading to inflation. After the war Montagu led the West in an attempt to restore the old order. Not just the gold standard but exactly the old order, with exactly the same exchange rates as before the war. The great shift of economic power to the USA from Merry Old made this nonsensical. The old exchange rates could not possibly work any more. To avert mass exchange of overvalued pounds for undervalued dollars, US interest rates had to be kept grossly low and the UK’s absurdly high. The UK thereby suffered a deflation approaching rigor mortis while the US was awash in a tsunami of easy-credit dollars. It being impossible to invest so much money productively, the cash poured into the stock market leading to the extreme bubble and resounding crash.
Montagu Norman and his counterparts in the US, France, and Germany were the architects of this travesty. Surely they had the support of their respective ruling classes, but even so they didn’t have to take retrogression to such an extreme. It clearly wasn’t working.
Montagu later expressed regret for this policy. “We achieved absolutely nothing,” he said, “except that we collected a lot of money from a lot of poor devils and gave it to the four winds.”
In our next episode: Seventy-five years on, Montagu Norman is blamed for the Nazi gold scandal.
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