A Comparative Chronology of Money

Monetary History from Ancient Times to the Present Day

1960 - 1979

© Roy Davies & Glyn Davies, 1996 & 1999.

Based on the book: A History of Money from Ancient Times to the Present Day by Glyn Davies, rev. ed. Cardiff: University of Wales Press, 1996. 716p. ISBN 0 7083 1351 5. (Page numbers in the 3rd edition published in 2002 may be slightly different).

1935-c.1970 Continuous moderate inflation in Britain
The general level of prices rises every year but at a moderate rate.

p 395-396

1944-1971 The Bretton Woods agreement
The agreement, reached at Bretton Woods in New Hampshire, USA, envisages a system of convertible currencies, fixed exchange rates, and free trade. New financial institutions are to be established; the International Monetary Fund and the International Bank for Reconstruction and Development. Plans for an International Trade Organization fail as they are not ratified by the US Congress but they pave the way for the General Agreement on Tariffs and Trade (GATT).

p 21,444-445,516

1950-1970 Japanese economic miracle
Average annual growth in the 1950s is 9.2%, comfortably exceeding an ambitious plan for doubling the average income in a decade. In the 1960s growth is even higher, averaging 10.7% annually.

p 589

1952-1967 Mergers and amalgamations greatly reduce the number of Indian banks
The authorities encourage mergers and amalgamation among smaller banks to strengthen the banking system. The number of reporting banks declines from 517 in 1952 to reach its low point of 90 in 1967.

p 624

c. 1960- The Population Explosion becomes a matter of increasing concern
The rapid increase in the world's population, especially in the Third World, hampers the attempts of the poorest nations to escape from their poverty and adds to inflationary pressures, which tend to be far worse in developing countries than industrial ones, as well as exacerbating environmental problems.

p 5-9,43,593-597

c. 1960 Primitive money largely superseded
By the 1960s primitive forms of money, e.g. cowrie shells and manillas, that were still in widespread circulation only a few decades earlier have virtually disappeared from use in most countries, with a few minor exceptions (e.g. the use of fei stones in Yap). The replacement of primitive by modern money, together with the move from subsistence to market economies, means that the lives of more people are directly affected by monetary policy.

p 8,36,600

1960 French currency reform
The main recommendation of the Rueff committee is carried out with the replacement of the old franc by a new heavy franc equivalent to 100 of the old.

p 564

1961 Organization for Economic Cooperation and Development founded
This is created by broadening the membership of the old Organization for European Economic Co-operation.

p 444

1961 Lagos Stock Exchange starts operations in Nigeria
Initially it deals in only 19 securities but by 1983 the total reaches 168 and the number of shareholders exceeds 700,000.

p 612,620

1962 West African Currency Board abolished
The new central banks in Ghana and Nigeria have taken over its functions.

p 609-610

1963 Repeal of the US Silver Purchase Act
The longevity of the Act, passed in 1934, was a sign of the lingering power of the silver lobby.

p 515

1965-1987 Rapid expansion of US banks abroad
From 13 US banks with a total of about 200 foreign branches the numbers increase to about 200 banks with around 800 branches. The growth is temporarily interrupted by the stock market crash of 1987.

p 525

1965-1967 Liberalization of the French financial markets
The rigid barriers between deposit and investment banking are broken down and opening new bank branches is made easier. Freedom is given for the leasing of capital goods on hire purchase and various other restrictions are removed.

p 564

c. 1965 Fei stone currency still in use in Yap
Despite the inroads of coins and banknotes the use of fei stones as currency in the central Pacific islands of Yap has still not completely disappeared by the mid-1960s. These stones, varying in size from saucers to millstones were quarried in Palau, 260 miles from Yap, or the even more distant Guam.

p 37

1967 Britain devalues the pound against the dollar, from $2.80 to $2.40
The prime minister Harold Wilson's pronouncement that the pound in your pocket is not devalued is rendered invalid by an increase in inflation.

p 398,521

1968 National Giro set up in Britain
Much later than most European countries, Britain sets up a postal giro system for money transfer. Because of the lateness of its creation the clearing banks and building societies have already captured a large part of the working class market that is one of its main targets.

p 405

1968 US balance of payments in deficit
For the first time since 1893 the US runs a deficit in its balance of trade.

p 521

1968 Development Bank of Singapore founded
It is created to provide long-term finance for industry and to support the government's chosen priority sectors.

p 628

1969-1983 Number of banking offices in India increases five-fold
The government's attempts to control rural moneylenders result in such a shortage of credit in many villages that agricultural output falls. The authorities react by stimulating the growth of cooperatives and the formation of bank branches in villages. The number of banking offices increases from 8,262 to 42,016.

p 624-625

1969 India nationalizes its 14 largest private banks
Later other private Indian banks are also nationalized but not foreign banks.

p 624

1969 International Monetary Fund creates Special Drawing Rights
These are to tide over countries with balance of payments difficulties. By this time all countries have dispensed with internal circulation of gold and, in most cases, do without gold backing for their currencies. The creation of SDRs makes international trade less dependent on the constraints of an almost fixed supply of gold or the vagaries of favourite currencies.

p 519-522

1970 Building society deposits overtake those of London clearing banks
The building societies' success in capturing a growing share of the rising total of personal savings is partly due to the huge growth in their branch network and partly due to the official belief that only banks create money and hence need to have their powers controlled.

p 408-410

1970 American banks in Britain overtake the London clearing banks
By the end of 1970 deposits in American banks in Britain have grown seventy-one times since 1959 and exceed those of the London clearing banks and are also 10 times those of the Scottish banks.

p 408,412-418

1970 US Bank Holding Company Amendment Act
This is intended to close the loophole allowing banks to evade restrictions on opening branches. However its effect is limited as subsidiaries are allowed to engage in certain banking activities.

p 539

1971 The Bretton Woods agreement breaks down
After a big drop in US gold reserves and a large increase in foreigners' claims on US dollars, the US suspends the convertibility of the dollar to gold. Although the IMF had been set up to promote exchange rate stability it adapts quickly to a world of floating exchange rates.

p 445,518,521

1971 Britain decimalises its currency
Instead of 12 pence in a shilling and 20 shillings in a pound, the pound is divided into 100 new pence.

p 442

1972 Britain leaves the EEC Snake and floats the pound
The EEC narrower margins scheme (the so-called snake) sets narrow limits for fluctuations in the values of members' currencies. After only 6 weeks Britain leaves and the pound floats freely against all other currencies for the next 18 years.

p 445-446

1973 Britain joins the European Economic Community
The European Economic Community is enlarged by the accession of Britain, Denmark and Ireland in January 1973.

p 443

1973 The US abandons the gold standard
As the system of fixed exchange rates starts to break down the US devalues the dollar twice and then gives up the attempt to fix its price in terms of gold.

p 521-522

1973-1974 Secondary banking crisis in Britain
Partly as a result of the Bank of England's adoption of a new policy in 1971 of increasing competition in the supply of credit a crisis develops in finance houses lending money for the purchase of consumer durables. A lifeboat operation prevents about 30 secondary banks from collapsing and at least another 30 receive other forms of assistance.

p 406-407,414,419-423

1974 OPEC oil shock
The price of oil is quadrupled transferring large sums which would have been spent, to OPEC countries whose powers of absorption are low and savings high. The rate of growth of world trade is greatly reduced as is the growth of the Japanese economy compared with its miracle years. Although western economies are badly hit the less developed countries fare worst of all.

p 590,594,597,599,615,632

1974 Eurodollar market crisis
The failure of the West German Bankhaus I.D. Herstatt precipitates an international crisis. Prompt co-operation by various international authorities averts widespread failure.

p 427

1976 Maine legalizes entry by banks from other states
This starts a widespread move in other states to legalize interstate banking. In most cases entry is restricted to banks from neighbouring states but some states allow entry from any part of the US.

p 541

1976 British government adopts monetarism
A financial crisis causes the socialist government to abandon Keynesian policies after inflation reaches over 25% and adopt monetarism instead.

p 429-430

1976 Friedrich Hayek calls for choice in currency and the denationalization of money
Hayek argues that the freedom of consumers to use whatever currency they choose would be a better guarantor of the value of money than government monopoly.

p 647-648,650

1978-1980 2nd OPEC oil price shock
OPEC doubles the price of oil between 1978 and 1980. This leads to an increase in interest rates, pushes industrial countries into a deep recession, and is a contributing factor in the Third World debt crisis of the 1980s and 1990s.

p 633-634

1978 US Humphrey-Hawkins or Full Employment and Balanced Growth Act
This seeks to combine Keynesian concern for full employment with monetarism: two incompatible bed-mates.

p 531

1978 Occidental Petroleum in $20 billion barter deal with Soviet Union
Barter is still widely used in world trade, particularly in deals involving communist countries and countries short of hard currency.

p 20,21

1979-1990 Thatcherism in Britain
Margaret Thatcher greatly strengthens the commitment to monetarism. Manufacturing industry is badly affected but the financial sector is strengthened. The average rate of inflation is actually higher than during the Keynesian era from 1934-1976.

p 431-441

1979 European Monetary System created
This includes an exchange rate mechanism allowing narrow fluctuations of 2.25% (6% in the case of certain weak currencies) either side of an agreed central rate, a strengthening of the European Monetary Cooperation Fund, founded in 1973, by the deposit of 20% of each member's gold and dollar reserves, and the creation of the new European Currency Unit or Ecu, based on the weighted average of 10 European currencies.

p 447-448

1979 Britain abolishes all foreign exchange controls
Their removal strengthens the role of the City of London in the world's financial markets.

p 448

1979 Banking Act increases regulatory powers of the Bank of England
The purpose of the Act is to rectify weaknesses in the financial system revealed by the secondary banking crisis in 1973-1974.

p 424-425

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Roy Davies - Last updated 25 May 2005.