Management of the British national debt (1950-62) with special reference to monetary policy

Abstract

This thesis is interested in the problem of debt management during the nineteen-fifties. National debt has now a days grown, especially after two world wars, to fantastic figures in many of the advanced countries. For this reason, the problem of the national debt has become an inevitable subject for discussion not only in Britain, but also in many other countries. National debt was, indeed, on incidental subject in the Britain literature. One of the prominent economists wrote, in the early years of the fifties, a little book expressing his dissatisfaction with this neglect of the problem of the debt: "its aim [the book's] is primarily to provoke discussion on the subject of the role of the national debt in our economic system, a question which has never been treated in full in any published work in this country. A quarter of a country has passed since Eargeaves wrote the only exhaustive study of the national debt, and a great deal of water has passed under the bridge since then. Even the learned journals are innocent of any full discussion of the significance and functions of the British national debt, in very sharp contrast with their opposite numbers in the united states of America." The events of the 1950's, with the activation of monetary policy, have however attracted more and more attention to the role of the national debt in the economic life of the nation. And become a lively subject for discussion. This thesis will try to discuss the significance of the British national debt form different points of view. Nevertheless, the close relationship between debt management and the monetary policy obliges us to devote the greater part of the study to the impact of debt on the monetary policy. However, For purposes of analysis, this work is divided into five parts as follows:- I- an introductory part on the structure, the growth and the ownership of the debt. II- Part two traces the impact of various types of debt on the course of monetary policy, i.e. discusses monetary policy in relation to debt management. III- Part Three tries to assess the effectiveness of this function of the debt. IV- Part four gauges the cost of monetary policy. V- The analysis is extended in part five to involve economic growth in relation to debt management. The period of the analysis covers the 1950's. "The nineteen-fifties are a particularly interesting period in the economic history of the United kingdom." This period has been, indeed, one of real growth in output. But it has been also characterized by severe inflation. To be more accurate, the analysis deals with the period beginning with the end of 1951 when monetary policy started to be applied more actively than in the preceding years. However, it may be profitable to extend the analysis to include the early years of the 1960's (i.e. 1960-62) in order to bring it, as far as possible, up to date. Lastly, this thesis is a theoretical as well as a statistical one.