TREASURY PAPERS
Series One: Papers of the Economic Section, 1941-1961
(Public Record Office Class T 230)

Part 1: T 230/1-36

Introduction by Professor Rodney Lowe, Department of Historical Studies,
University of Bristol and Consultant Editor for the Microfilm project:

The papers of the Economic Section are one of the most compact and important set of records of post-war British Government. Written by economists such as Lionel Robbins and James Meade who were to dominate economics until the 1970s, they provide a wealth of information and opinion on the reconstruction of post-war Britain, Europe and the international economy. Individual policy files, for example, cover the creation of the IMF, GATT and NATO as well as the revolutionary commitment of the British Government in 1944 to the maintenance of a ‘high and stable’ level of employment. In addition, individual discussion papers consider the theoretical issues raised by the need, among other things, to estimate national income, manage aggregate demand and curb inflation.

The Section pioneered, for better or for worse, the application of Keynesian economics to the real world problems facing the European and international economies after the Second World War. Its papers are therefore of equal importance to historians and those interested in the development of economic thought. They provide a storehouse of information for research at undergraduate & postgraduate level and beyond.

The Economic Section

In the 1930s there were many experiments in Britain, as in other western countries, to provide expert economic advice to central government. At the outbreak of the Second World War these experiments culminated in the creation of a central Economic Information Service which in turn in January 1941 was divided into the Economic Section of the War Cabinet and the Central Statistical Office. The Economic Section, which became the channel for the first application of Keynesian economics to practical real world problems, has long been regarded as one of the most important and exciting developments of the war. It consisted of a small group of professional economists, normally numbering between ten and twenty, to provide general advice on economic policy. Its first four directors were John Jewkes (Jan-Sept 1941), Lionel Robbins (Sept 1941-autumn 1945), James Meade (autumn 1945-April 1947) and Robert Hall (Sept 1947-1961).

During the war, the Section acted as the staff of the Lord President of the Council, Anderson (1940-Sept 1943) and Attlee (Sept 1943-May 1945). Given the
Lord President’s role as the focus of decision making on domestic issues, the Section was heavily involved in the planning of post-war Britain. For example, one of its mentors, Norman Chester, was the secretary to the Beveridge Committee on
Social Insurance and Allied Services and James Meade, in particular, was involved in employment policy. In 1941 he had written The Prevention of General Unemployment which had broken new ground by placing demand management at the centre of employment policy. During 1943 a similar line was taken in his Maintenance of Full Employment for the Cabinet’s Reconstruction Priorities Committee and thereafter members of the Section continued to play an active role in the discussion of employment policy, most importantly in the drafting of the
White Paper on Employment Policy (Cmd 6527). Related to this was revolutionary work on the estimating of the post-war national income. The Section was also involved in discussions on international reconstruction, including Bretton Woods, commodity policy and the UK balance of payments.

During the war there had been consideration of a peace-time central economic staff but nothing new materialized. At the end of the war, Lionel Robbins and some other members of the section returned to academic life, leaving James Meade to become the director and to spend most of the time serving the new Lord President, Morrison, who had assumed responsibility for (among other things) domestic economic planning. The full range of the Section’s responsibilities can be discerned from the files listed below; but its most important role was the preparation from 1946 and publication from 1947 of an annual Economic Survey reviewing the existing situation and forecasting the expected development of the British economy in the coming year. Between 1945 and 1947 an Overseas Economic Survey was prepared as well (T230/19-24) and the Section was further involved in the initial work on the long-term plan. It was through these assignments that the Section played an important role in the reconstruction of Europe and the implementation of the Marshall Plan.

During Meade’s directorship, the importance of the Section temporarily declined for three major reasons. First, Morrison did not dominate domestic economic policy as had Anderson before him; he was also not fully at ease with economics and had an alternative source of economic advice in his private secretary, Max Nicholson. Secondly, Dalton, as Chancellor of the Exchequer, was himself a trained economist and felt little need for advice from other professional economists. Finally, Meade himself limited his influence both by taking too theoretical an approach with Morrison and by advocating financial policy, as opposed to direct controls, in his advice to Dalton and the Budget Committee.

Meade left in April 1947, disillusioned and ill, and was replaced as director by
Robert Hall. Hall was a more pragmatic figure, with considerable experience of Whitehall, and he was able to restore the status of the Section with the assistance of two major organisational changes in 1947: the appointment after March of the Central Economic Planning staff under Edwin Plowden, and Cripps’ supersession first, in September, of Morrison as minister in charge of economic planning and second, in November, of Dalton as Chancellor. The relationship between the Section and CEPS was not without difficulties but, once the professional economists had left CEPS, a good working relationship - especially between Hall and Plowden - was established. The Section provided CEPS with economic analysis within the Treasury. Plowden’s close relationship with Cripps also gave Hall and the Section direct access to the Chancellor and forced the Treasury to be more helpful.

Beneath Hall, a continual turnover of staff meant that other members of the Section were mainly young and inexperienced; and it was not until 1949 that Hall was supported by two experienced economists, Russell Bretherton and Marcus Fleming, as deputy directors. These junior staff continued to work as the Section’s representatives on various committees, drafting the annual Economic Survey with CEPS and keeping the economic situation under review. However, the influence of the Section (for example over devaluation) can largely be attributed to Hall, although he did gain increasing support from colleagues who were later to become distinguished economists in their own right: Christopher Dow, Fred Atkinson,
Jack Downie and Bryan Hopkin.

For papers on the development of the Section see T230/283. For further information see A K Cairncross and N Watts, The Economic Section 1939-1961 (Routledge, 1989), which includes a full list of the Section’s staff; A K Cairncross (ed),
The Robert Hall Diaries 1947-1953 (Unwin Hyman, 1989) and S Howson (ed),
The Collected Papers of James Meade vols I to IV (Unwin Hyman, 1988 and 1989.) For a detailed listing of government records relevant to the Section’s work, see
B W E Alford, R Lowe and N Rollings, Economic Planning 1943-51 (HMSO, 1992).

Professor Rodney Lowe
Department of Historical Studies
University of Bristol