officers like Colonel Chapman tending their estates in the shires.
Other suggestions carried aggressive titles like “Means of Overcoming the Hun.” That particular letter was sent in May 1941 by a Royal Air Force pilot on behalf of his wing commander, H. B. Maund, obviously flush with the aerial victory in the previous autumn’s Battle of Britain. Maund felt confident enough to suggest that Britain’s credit was good enough for the nation to borrow an astonishing $3.5 billion in gold from the United States and issue currency in shiny new coins instead of printing pound notes. Maund argued that this would prevent the Germans from dropping their own printed counterfeits. All these brainstorms received a polite brushoff, although one Treasury official privately gave the wing commander more credit than “the present prime minister” — Churchill — for his foresight in devising an ingenious if financially implausible scheme to forestall German retaliation.
The barrage of suggestions not only tried official patience but created its own form of internecine warfare. With the German war machine unable to loot Russia as profitably as the richer and more pliable nations of occupied Europe, the propaganda people at the British Foreign Office sought permission to discredit German currency by dropping forged bills, some with lewd messages. Waley was still opposed because “we should look rather silly when we were found out.” He passed the suggestion to Keynes, with whom he worked closely as a specialist in international finance. Keynes had a greater understanding than any purely public servant of how the activities of the Treasury and the Bank interacted with the real world of finance, and of the importance of the fine balance between economic liberty and social justice. From his days as a young Treasury official, he also understood how government worked, and to him, counterfeiting must have seemed like a reversion to precisely the type of the moral barbarism against which Britain was fighting. He gave the idea the back of his hand: “Mr. Waley: I agree with your comments. The proposal to introduce forged currency has been made at least a hundred times before and always rejected for good and sufficient reasons. JMK 28.5.42.”
Right through the war, the Treasury doubted the British could successfully pull such a trick on the Germans, while realizing that Britain’s less tightly controlled society remained vulnerable to enemy counterfeits. Some limited experimentation took place. From time to time, Britain’s secret “black propaganda” units dropped forged German ration books to disrupt the official food distribution system. In 1943 Radio Berlin reported one of these air-drops and warned that anyone caught using fake ration cards could be executed for sabotaging the war effort. Similar penalties could be imposed for holding foreign currency without official permission, so the British knew that the Nazis would retaliate mercilessly against their own people for passing counterfeit foreign bills. They were the defense mechanisms of the totalitarian state; no British government could countenance such draconian punishments against its own people, even in wartime.
The Treasury’s David Waley had the wit to put himself in the Germans’ place as soon as he had seen the Athens memo outlining the German counterfeit plan. He thought the British might forestall the scheme by publicly announcing they knew all about the plot to undermine sterling and would simply refuse to honor any pound notes held abroad. “Perhaps it is a fairy story,” he wrote Basil Catterns, deputy governor of the Bank of England, “but it certainly seems a good idea from the German point of view.”
Waley was gently tweaking Catterns, because the Treasury had warned him of such plots before the war and had been rebuffed. In May 1939, as war loomed, Sir Frederick Phillips had attempted to arouse the Bank of England from its torpid superiority. Phillips,
Other suggestions carried aggressive titles like “Means of Overcoming the Hun.” That particular letter was sent in May 1941 by a Royal Air Force pilot on behalf of his wing commander, H. B. Maund, obviously flush with the aerial victory in the previous autumn’s Battle of Britain. Maund felt confident enough to suggest that Britain’s credit was good enough for the nation to borrow an astonishing $3.5 billion in gold from the United States and issue currency in shiny new coins instead of printing pound notes. Maund argued that this would prevent the Germans from dropping their own printed counterfeits. All these brainstorms received a polite brushoff, although one Treasury official privately gave the wing commander more credit than “the present prime minister” — Churchill — for his foresight in devising an ingenious if financially implausible scheme to forestall German retaliation.
The barrage of suggestions not only tried official patience but created its own form of internecine warfare. With the German war machine unable to loot Russia as profitably as the richer and more pliable nations of occupied Europe, the propaganda people at the British Foreign Office sought permission to discredit German currency by dropping forged bills, some with lewd messages. Waley was still opposed because “we should look rather silly when we were found out.” He passed the suggestion to Keynes, with whom he worked closely as a specialist in international finance. Keynes had a greater understanding than any purely public servant of how the activities of the Treasury and the Bank interacted with the real world of finance, and of the importance of the fine balance between economic liberty and social justice. From his days as a young Treasury official, he also understood how government worked, and to him, counterfeiting must have seemed like a reversion to precisely the type of the moral barbarism against which Britain was fighting. He gave the idea the back of his hand: “Mr. Waley: I agree with your comments. The proposal to introduce forged currency has been made at least a hundred times before and always rejected for good and sufficient reasons. JMK 28.5.42.”
Right through the war, the Treasury doubted the British could successfully pull such a trick on the Germans, while realizing that Britain’s less tightly controlled society remained vulnerable to enemy counterfeits. Some limited experimentation took place. From time to time, Britain’s secret “black propaganda” units dropped forged German ration books to disrupt the official food distribution system. In 1943 Radio Berlin reported one of these air-drops and warned that anyone caught using fake ration cards could be executed for sabotaging the war effort. Similar penalties could be imposed for holding foreign currency without official permission, so the British knew that the Nazis would retaliate mercilessly against their own people for passing counterfeit foreign bills. They were the defense mechanisms of the totalitarian state; no British government could countenance such draconian punishments against its own people, even in wartime.
The Treasury’s David Waley had the wit to put himself in the Germans’ place as soon as he had seen the Athens memo outlining the German counterfeit plan. He thought the British might forestall the scheme by publicly announcing they knew all about the plot to undermine sterling and would simply refuse to honor any pound notes held abroad. “Perhaps it is a fairy story,” he wrote Basil Catterns, deputy governor of the Bank of England, “but it certainly seems a good idea from the German point of view.”
Waley was gently tweaking Catterns, because the Treasury had warned him of such plots before the war and had been rebuffed. In May 1939, as war loomed, Sir Frederick Phillips had attempted to arouse the Bank of England from its torpid superiority. Phillips,
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