The british exchange equalization account

Great Britain's little-know but successful expretment in foreign exchange control ended its first year on June 30, 1933. The Exchange Equalization Account, wich came into forse with the Finance act of 1932-33, was given resources of 150.000.000, plus the assets of a former exchange account. The porpouse of the accouunt was officialy stated to be the control of capital movements and the prevention of a rise in sterling. Its operations were secret. The pound was permitted to fall to 3.14 in November, 1932; but it rose soon afterwards. and a rapis drain of gold to Great Britain was achieved by means of the operations of the Exchange Equalization Account in connection with the flight of American capital. The flow of gold was halted by the American gold embargo in April, 1933. At this time the resources of the exchange account were enlarged by 200.000.000. This addiction, together with gains from skilfull trading, compensated the Exchange Equalization Account for losses incurred in gold transactions with the Bank of England. Altrough the exchange fund has operated succesfully, its prolonges use of would produce a serious expansion of the public debt.