Protector of the Pound

The Governor of the Bank of England is both the country's fiscal conscience and one of the most important subjects in the realm. So powerful can the post be that one governor, Montagu Norman, almost singlehanded brought down the Labor government in 1931 by publicly criticizing its extravagant policies. Since then, little love has been lost between Labor's leaders and the Old Lady of Threadneedle Street. Last week the bank's current governor, George Rowland Stanley Baring, the third Earl of Cromer, stirred Britain and shocked Labor with the sternest public lecture on economy yet issued by a public servant under the Wilson government. The tough talk showed the considerable extent to which British politics are being influenced by the country's bankers.

A day of reckoning is at hand, Lord Cromer told a gathering of Scottish bankers in Edinburgh. The $3 billion international rescue that saved the Brit ish pound last November "no more guarantees our future than Dunkirk presaged swift victory in 1940." If the government is to prevent hardship for every British family, he said, it must quickly and decisively put its house in order by boosting productivity and cutting back on its spending schemes. Said he: "I only hope we face up to this need whilst there is still time."

The King & J. P. Morgan. Lord Cromer thus stepped right into a behind-scenes Cabinet hassle over what kind of budget the government should present to Commons in April. Chancellor of the Exchequer James Callaghan reportedly wants to temper spending with a basically deflationary budget, is willing to risk a rise in unemployment; Economics Minister George Brown argues that Britain must proceed with wage rises and welfare spending. For candidly coming out on the side of Callaghan, Lord Cromer earned criticism from both left and right. The Laborite New Statesman lashed him for "calculated political intervention," and the Financial Times faulted him for daring to make "a public challenge that no government can be expected to tolerate." By prescribing a belt-tightening diet, he nonetheless voiced the strongly held opinion of London's City and foreign central bankers.

Few bankers are better connected or more respected than this distinctly unstuffy and independent lord, who, at 46, is known in London's clubby society circles as "Rowlie." He is the heir to the Baring banking fortune, a godson of the late King George V, and son-in-law of Lord Rothermere the press lord. He has all the marks of aristocracy: Eton, Cambridge (he dropped out after a year), wartime service in the Grenadier Guards, and a postwar stint with J. P. Morgan & Co. in Manhattan before he became managing director of the family bank in 1947. Sent to Washington in 1959 as Britain's chief economic representative to the U.S., Lord Cromer won a reputation for entertaining well and reporting incisively. In 1960 Harold Macmillan appointed him as the youngest governor of the Bank of England in two centuries. Soon after he took office, he stirred a tempest by publicly criticizing the Tory government for spending too heavily.

Wary Wilson. The fact that the Continent's orthodox moneymen regard Cromer as their champion against the free-spending governments of either party is money in the bank for Britain. It was Cromer who acted for Britain in persuading world bankers to ante up the crucial $3 billion overnight last November and to extend that credit for another three months two weeks ago. The outspoken aristocrat often irritates the middle-class socialist who uneasily occupies No. 10 Downing Street; since taking office, Harold Wilson has met with Lord Cromer only once or twice. But the Prime Minister can scarcely afford to ignore the advice of the man whose influence may have to be used again to help Britain out of her monetary troubles.

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