Don't bite
The pound, certainly, will not look after itself. Governments which forget that tend to learn it again, the hard way. But it does not follow that the pound would be any safer in the clammy coils of the Snake. First, to join the European Monetary System would not in itself protect the pound. All it would do would be to commit us to keeping the exchange rate at or near a certain level. We could do that by raising interest rates, by cutting back on public borrowing and spending, or by buying sterling in the markets. But then, if we wanted to protect the pound, we should have to do one or more of things anyway. There would be times, in any case, when we would not want to keep sterling in line with continental currencies, which may naturally move in the opposite direction to sterling. Higher oil prices, for instance, are good for Britain as an oil producer and thus good for sterling — but bad for the oil importers on the Continent, and so for their currencies. But wherever we publicly fix the target for sterling, we are telling the enemy where to shoot. It is as though, like the French commanders in Vietnam, we are parachuting our forces into the jungle, to hoist the flag, saying: 'Here we are — come on, hit us.' It is to throw away all the advantages of surprise. Anyone minded to speculate against sterling knows this. His risk is limited, his reward, if you should be driven out of your position, unlimited. The System does not allow you to fold your tents and slip away. There must be agree- - ment between the members, weekend meetings of central bankers, all plainly visible to the attackers concealed in the jungle. The defence can only sit and suffer. The first principle of fighting for sterling must be to make the other side guess. President Franklin Roosevelt used to set the dollar's gold exchange rate by throwing dice. In any event, is the Snake worth defending? As a European currency bloc, meant to counterbalance the strengths of the dollar and the yen, it has simply failed. It could no more resist the advance of the dollar than a hedgehog can stop a tank. And as for the idealists' hope, that it is the forerunner of a common currency — as well pursue a common European tempera- ture by trying to jam the thermometers. No more Buts, Mr Lawsington, N-n-n-n-Nuts, Mr Lawsington, don't put our money in the Snake!
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