The conventional and intellectually lazy answer is that the people who lost confidence in Britain were the overseas bankers—the "gnomes of Zurich", as they are sometimes called, and people of that kind. I do not know whether hon. Members opposite have had the chance to see the very respectable comments on this thesis. One appeared in The Times on 21st December, written by a Mr. Heymann, who is a considerable Swiss authority on currency matters and banking and the balance of payments. He wrote
… non-resident liquid sterling holdings were already short long before the change of Government on October 16 ".—
I have already demonstrated that—
and the wave of short-selling £s by foreign speculators has been far exaggerated by superficial or uninformed publicity. The uncomfortable truth is that, when the dust has settled and the counting has been completed, it will be seen that, of all the sterling offered over the exchanges during the past two months much more than half, and probably nearer three-quarters than two-thirds, has been the result of precautionary covering transactions by United Kingdom residents for imports of goods and the payment abroad for every conceivable type of services.
This distinguished Swiss gentleman went on:
… in recent weeks discipline and restraint have been thrown to the winds and the impact that this scramble for cover had had abroad—especially among Britain's most loyal friends —has been appalling.
I now turn to what is a corroborative quotation from the Financial Times. An editorial on 20th January quantified the effects of British movements of capital or British speculative activity on the balance of payments. They based it on the returns of two of our larger commercial banks. The Financial Times said
Of the £650 million to £700 million of extra foreign exchange commitments by British firms in 1964 as opposed to 1963, not much more than £100 million can be attributed to the growth of trade. What is emerging is the picture, in fact, of a major exchange crisis quite different from the 'Gnomes of Zurich' view.
In other words, the massive flight of capital that has come about was the result of decisions taken in London and not abroad.