Money, Profits, and Prices Under Full Employment

Abstract

Difficult years followed Britain’s decision to return to gold. After the brief boom of 1924 unemployment increased persistently. The government, by devaluing sterling, had forced itself into a deflation corner; the monetary policy of the Bank of England, fully coherent with the government line, was to darken the situation. In the spring of 1926 came the crisis in the coal industry, which with its low profit margins had been the unsheltered industry most exposed to revaluation. Bearing in mind the competition of German and Polish coal on the European market, no other exporting industry was in more dire need of a cut in production costs. Unfortunately, any hope of greater productivity, at least in the short term, was considered illusory. The mine owners and the Conservative government insisted on slashing money wages, and the miners proclaimed an all-out strike with the other unions joined in solidarity. Thus, the first General Strike in the history of British trade unionism shook the country to its roots.