After the Fall

The devaluation of the pound was followed by the equally traumatic devaluation of Harold Wilson and his government. Crowds mounted a week-long vigil on the sidewalk opposite No. 10 Downing Street, some of them crying: "Get out, you silly nits." In most un-British fashion, eggs were hurled at Chancellor of the Exchequer James Callaghan. A poll published by the Daily Mail reported that 54% of British voters thought that Wilson should resign, and that 56% believed that devaluation was the result of Labor's mismanagement. In the only chance that Britons had to express their judgment with ballots, the by-election voters of West Derbyshire more than doubled the Tory majority and dropped the Laborite candidate into third place behind the Liberal Party man. "It was a setback," Wilson said of devaluation on a TV panel. "The chancellor said that it was a defeat. The last two weeks for him and for me, and for a number of others, have been hell."

When Wilson entered the Commons for the first time since devaluation, he was greeted by raucous cries of "Out! Out! Out!" and "Resign!" Wilson faced the inevitable vote of confidence in the Commons and won it with only a single Laborite breaking ranks. But the debate produced bitter invective and bile unparalleled during his three-year tenure. Tory Iain Macleod thundered to the House that "the country is sick to death of this whining and whimpering from the Prime Minister." When Wilson claimed to have answered a question that he really had not, Tory Chairman Anthony Barber exclaimed: "That confirms the suspicion of the whole country that the right honorable gentleman is a twister." The Speaker asked Barber to withdraw the remark. Some of the harshest criticism was leveled at Wilson by the former head of the Bank of England, Lord Cromer. Unlike Britain's two previous devaluations in 1931 and 1949, he said, "this time devaluation was the outcome solely of the government's policies."

Advent of Minipounds. The Tory attacks were predictable, of course, but their unexpected ferocity stemmed from Wilson's tricky presentation of devaluation. To Callaghan, formerly known as "Sunny Jim," Wilson delegated the plain speaking about devaluation: the inevitable rise in domestic prices, the need to hold down wage increases. Callaghan, whose frankness enabled him to emerge from the affair looking much better than Wilson, may well be moved to a new post in a Cabinet reshuffle within a month or two. Wilson, on the other hand, was conveniently obscure or deftly evasive in his television address to the country. What particularly irked his critics was his declaration to the British that devaluation "does not, of course, mean that the pound here in Britain in your pocket or purse or in your bank has been devalued."

In the most literal sense that was right. But Britain has been a trading nation far too long for its citizens to forget that devaluation sooner or later must hurt their pocketbooks by raising prices. Some unhappy Britons discovered that fact immediately. In Florence, British tourists who had bought their round-trip tickets in London before devaluation were not allowed to embark for home before paying an additional 14.3% to cover the pound's loss; at week's end 70 airlines agreed to increase by some 17% the price of airline tickets bought with pounds. A Scottish football team, traveling in Naples on a tight budget that became even tighter with the advent of the minipound, also had to ante up the difference. Miss Peru, winner of the Miss World contest two weeks ago in London, found her -L-2,500 prize suddenly 14.3% poorer. And several cities in Britain reported that the number of inquiries about emigration was suddenly running double and triple the normal rate.

Unless Britain tightens its belt still further, by holding wage increases down while the price of imports bought in minipounds rises, the gains of devaluation will be dissipated by inflation. Though the giant Transport and General Workers' Union agreed to go along with a voluntary pay freeze, the striking dock workers refused to go back to work last week. There were also undisguised rumblings for bigger pay packets from the rank and file that may make it difficult for Wilson to hold the line on wage increases.

Triumph of Mischief-Making. By any logic, devaluation could have been expected to better Britain's chances of entering the Common Market, since that was one of the conditions made by France and the Common Market Commission. But Charles de Gaulle, far from trying to create a prosperous Europe that would include Britain, seemed more bent on mischief. De Gaulle's machinations, charged no less an authority than Robert V. Roosa, former U.S. Treasury Under Secretary, began a month ago when the French President caught the scent of approaching trouble for the pound. Hoping to demonstrate that Britain is unfit for Common Market membership, the French began a clandestine campaign to create a sterling crisis by spreading damaging rumors and innuendo, including false reports of loans to Britain. "This," said Roosa, "was a triumph of mischiefmaking, a parade of viciousness."

The French insisted that they were not guilty, arguing with excellent Cartesian logic that it was not, after all, in the interest of French exporters for Britain to devalue and thus be able to compete better against French products. It may be, of course, that the French miscalculated, hoping for a crisis that did not go as far as devaluation. In any event, De Gaulle's emissaries in Brussels this week made it clear that the devaluation certainly had not brought Britain any closer to Common Market membership.

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