An Exclusive Interview with Lewis E. Lehrman, Part 18

It is an extraordinary privilege to present this exclusive interview with Lewis E. Lehrman, in 21 installments, of which this is the eighteenth. 

Lewis E. Lehrman has written widely about economic and monetary policy.  He has co-authored the book Money and the Coming World Order (1976) with renowned MIT Economist Charles Kindleberger and others.  Lehrman has written about economics in publications such as Harper's, The Washington Post, The New York Times, The Wall Street Journal, Weekly Standard, Crisis, Policy Review and National Review.  His writings about monetary economics earned him an appointment by President Ronald Reagan to the Presidential Gold Commission in 1981.  Along with Congressman Ron Paul, Lewis Lehrman collaborated on a minority report of the commission, which was published as The Case for Gold (1982).

Lehrman published seven volumes on “Rueff Monetary Economics” (The Collected Works of Jacques Rueff, 1997, Plon, in French).  Jacques Rueff, the distinguished French monetary economist, established the monetary and economic plan of the Fifth French Republic, as President DeGaulle's chief financial advisor. The primary purpose of the plan was to restore economic prosperity, a stable French currency, and the end of French inflation by means of convertibility to gold of the French franc.  Lehrman has been named to the advisory board of the American Principles Project’s Gold Standard 2012 initiative.

 Lewis E. Lehrman [Photo by Ralph Benko]

Q.  Winston Churchill, when Britain's Chancellor of the Exchequer, in 1925, restored gold convertibility at pre-war parity, precipitating a severe recession which led to the General Strike of 1926. This resulted his banishment into the political wilderness for a decade.  Churchill considered this the greatest blunder of his career. 

What caused him to blunder and what are the risks of a future blunder when it comes to restoring a 21st century gold standard?

The truth is that Winston Churchill, in 1925, actually wanted to do the right thing.  He wished to restore gold convertibility at a level which would recognize a major change in the general price level (inflation) from 1914 to 1925.  He was persuaded, against his own judgment, by the treasury and London banking establishment, to restore sterling convertibility to gold at the prewar parity.  Mr. Churchill was a man of tremendous self-confidence, but not in economic affairs, so he allowed himself, against his better intuition, to be influenced by the city bankers and the treasury advisors (not unlike consensus Wall Street and Washington today).  He did consider his decision a blunder, but as Chancellor of the Exchequer, he accepted responsibility for the 1925 decision. 

It is worth knowing that the issue was much debated in the British Treasury.  Churchill had the right instincts, but he failed to follow them. 


Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

In Memoriam
Professor Jacques Rueff

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