‘Rather a faith than a theory’: Central Bank Co-operation, 1916–1930

Abstract

Abstract Central bank co-operation in the inter-war period has generally been either damned with faint praise or condemned as an outright failure with grave consequences. Stephen Clarke’s path-breaking study of central bank co-operation concluded that central banks achieved considerable success in stabilizing currents after the war. but that co-operation functioned as a ‘fair weather instrument’. After 1928, central bankers were overwhelmed by economic problems beyond their competence and capacit to control: Clarke judged their co-operation from mid-1928 to 1931 a clear failure.1 Kindleberger agreed. ‘Central bank cooperation, never deeply rooted, wilted even before the hot sun of 1929, and the torrid blasts of 1931,’2 and he doubted that co-operation could have done more to avert the Great Depression without strong leadership from one country.3 Temin has cauctioned that An operation was ‘not a good in and of itself’. Greater co-operation within the reigning gold standard orthodoxy in the early 1930s would have polished little: fidelity to the gold standard was the main problem, wok greater central bank co-operation to stay on gold would have prolonged.4