Ford to Britain: Drop Dead

The UK Cabinet papers from 1976 are now public under the 30 year rule. The papers confirm what was evident from the papers 2 years ago -- that the most unhinged views about Northern Ireland's prospects were held by the Prime Minister, Harold Wilson. Also of interest are the attempts of Wilson's successor, James Callaghan, to deal with the exchange rate crisis and in particular meet the demands of the IMF in return for an emergency loan.

Callaghan tried to soften the IMF conditions by conjuring up for the benefit of the key diplomatic allies -- the US and West Germany -- a nightmare vision of a future Britain with someone like Maggie Thatcher in charge, and when that didn't work, he worked some more on President Gerald Ford with the implications for Britain's NATO commitments if overly severe budget cuts were imposed:

In one telephone conversation with the American President, the Prime Minister gave warning that imposing spending cuts on the scale that the IMF was demanding would play into the hands of the Labour Left, who had vowed to resist them. That could alter Britain’s “whole attitude as a Western partner”, jeopardising the British Army of the Rhine. “They will say, why should we go on paying £600 million in this way?” In a further attempt to alarm Ford into action, the Prime Minister sent a follow-up letter giving warning of severe domestic unrest caused by economic meltdown. “I do not think you would want to see us either as irresolute as an ally or turning to political extremes of either Left or Right.”

In private, both Ford and Schmidt [German chancellor] offered their support.

Of course, Callaghan should have known what he was in for from the previous year's financial crisis in New York City:

But neither [Ford or Schmidt] was prepared to put their warm words into action. Callaghan was left to fight both the Labour Left and his military chiefs, who were eventually able to save both Polaris [nuclear subs] and the Rhine presence by cutting back on equipment programmes.

To the extent that Ford could have induced the IMF to go a little easier on Callaghan and did not do so, he therefore might have indirectly contributed to the rise of Maggie -- although Callaghan's decision to wait too long to hold the election didn't help either. We might find out more in a few years about the internal calculations behind that decision.