Describe an attraction as “an exhibition about inflation”, and you can
probably kiss goodbye to Waterlilies-style queues round the block. But the
Bank of England has never been about crowd-pleasing, and the exhibition now
on at its museum, The Pound in your Pocket, is a noble attempt to
make an important concept interesting and accessible.
For those of us of a certain disposition, there is a geekish thrill in gazing
on the bound proceedings of the Bretton Woods conference, or inspecting the
original letter by which Gordon Brown gave independence to the Bank of
England. We can also marvel at his oddly childish handwriting, as if he has
scrawled his signature hurriedly in crayon during a lunchbreak. The most
hawk-eyed will note that, on this historic document, the new Chancellor of
the Exchequer managed to get the Bank’s address wrong (it’s EC2, not EC1).
The exhibition opens with a display of historic coins, and five silver pennies
spanning the reigns of William the Conqueror to Charles II display the cause
of inflation in the clearest way, by getting progressively smaller. As
governments tried to make their money go farther by reducing the precious
metal content of the coins, prices rose. Britain’s currency might have got a
bit more sophisticated since then, the exhibition seems to suggest, but the
tendency of politicians to fiscal indiscipline have remained the same.
Banknotes emerged in England in the 17th century, always carrying the promise
of repayment in gold or silver. The first big inflationary crisis broke
during the Revolutionary wars against France, when Pitt the Younger, as the
Government ran out of money, suspended the convertibility of Bank of England
notes into gold. As prices soared, this proved highly unpopular. A
wonderfully angry James Gillray cartoon depicts a bloated Pitt, his stomach
bulging with gold coins, as an inverted Midas — gorging on gold and
excreting it as paper.
During this crisis, the Bank issued ever smaller-denomination notes, and here
is an example of the first £1 note, issued in 1798. But just as this note
was issued because of inflation, so it was withdrawn for the same reason, as
£1 became ever less valuable; not far away sits the last “Isaac Newton” £1
note of 1984, next to a barbed Peter Brookes cartoon of a forlorn Newton
joining a queue at the Jobcentre.
The centrepiece of the exhibition, though, is an interactive exhibit in the
shape of a hot-air balloon. Standing in a wicker basket, visitors are
instructed to pull one handle to add hot air and another to let it out, so
mimicking the Bank’s use of interest rates to control inflation. A digital
balloon must then be guided across a landscape of looming thunderstorms and
sudden updrafts, keeping steady to its two per cent target.
It’s a tricky task and seems designed to boost one’s appreciation of the job
done by the Monetary Policy Committee. A touch of verisimilitude is added by
the balloon’s delayed response time to the pilot’s commands — just as
interest rate changes take many months to affect the economy.
Sadly, Mervyn King, the Bank’s Governor, has not yet tried his hand at the
game. But the exhibition seems quietly pleased with the Bank’s real-life
record. Near by sit two photographs showing the perils of ignoring
inflation: a child uses bundles of worthless German marks as toy building
blocks during the 1920s hyperinflation, and a street cleaner in postwar
Hungary sweeps away flurries of pengo notes, with money no longer worth the
effort of picking it up from the pavement.
On a recent visit to the museum, a party of schoolchildren do not seem to have
grasped the message. They are rather mystified by the experience and
confessed to having learnt little about inflation. Some of their number seem
entirely unconcerned with the general rise of prices and more interested in
trying to steal a model cat that, for some reason, sits in the gallery.
Such indifference might pain the curators, but the central bankers themselves
do not usually mind if their work is far from the forefront of the public
mind. In the good times people can get away with caring little for the
mysteries of inflation. As the economic storm clouds gather, however, the
Bank’s pilots are going to need all their hot-air ballooning skills to get
us through smoothly. If they get it wrong, those children will find they
have no choice but to start paying attention.
The Pound in your Pocket, Bank of England Museum, London EC2, until October
31. Admission free
