Evolution of the Exchange Control

IT is a fact sometimes forgotten by those whose business brings them into touch with the Exchange Control Regulations now existing in the United Kingdom, that up to the outbreak of war in 1939 such Regulations were non-existent. The very comprehensive publication of the Bank for International Settlements, which at that time ran into many volumes and reproduced, not only in the original but in multi-lingual translations, the official texts of the Foreign Exchange Regulations existing in all important countries, contained a mere page regarding the United Kingdom and that concerned only with the movement or ownership of gold. With the outbreak of war the position changed immediately and, in many different forms, a most comprehensive set of regulations was gradually produced, framed to meet the particular requirements of the period and subjected to revision as conditions changed. Even the shortest sketch of the stages through which these regulations went would be beyond the scope of this article, but it is well to emphasise at the outset that the regulations have not at any time been officially published as a comprehensive whole, and that it has throughout been for the banks and those immediately concerned with the practical operation of the controls to interpret the various Orders emanating from the Bank of England or the Treasury, and to incorporate them in the operating system. From the point of view not only of the foreign observer, but also of most critics in this country, it often seems strange that no cut-anddried answer can be obtained to many categorical questions as to what can and what cannot be done under the regulations. The authorities of the Bank of England are, it is true, always accessible for enquiries, but beyond indicating certain general requirements they will, as a rule, refuse to give a general ruling, and demand submission of a specific case upon which they will give their yes or no. Even the terms which have come to be accepted in City circles as defining certain features of the organisation, such, for instance, as the nomenclature of the groups into which the various countries have been divided, have not been officially laid down by the Bank of England, and it is doubtful if the style bi-lateral account or residual account has ever actually received the official blessing of Threadneedle Street. Thus, during the war, there grew up a system of foreign exchange control touching every branch of commercial activity and conveyed through a long series of Statutory Rules and Orders which commenced in I939, and it was only in I947 that an Exchange Control Act was, in fact, introduced on the Statute Book

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