Rethinking Operation Robo: A prelude to monetary 'genuflection'

This article re-examines Britain's Operation Robot of 1952 and the subsequent Collective Approach from both economic and monetary perspectives. Operation Robot was a radical plan to restore sterling convertibility through a floating exchange rate. It faced fierce resistance in Churchill's Cabinet and was dismissed after six months. Following Robot's failure, Britain shifted to the Collective Approach, which sought floating-rate convertibility through combined action by the Commonwealth, Western Europe, and the United States. However, America's "pretty frosty refusal" led to its demise. Britain subsequently adopted de facto fixed-rate convertibility, becoming incorporated into the IMF's "fixed but adjustable system." Traditional historiography has treated Operation Robot as merely a transitional experiment. This article positions Robot and the Collective Approach as interconnected events examined through dual rationales. Economically, floating rates would provide automatic adjustment, while opponents feared depreciation would trigger inflation and unemployment. In monetary terms, Robot aimed to protect sterling's international status. Sterling's "marginal inconvertibility" created exchange control leakages through cheap sterling markets, undermining its credibility as an international currency. The Collective Approach replaced "floating" with "flexible" rates and attempted to revive the IMF's scarce currency clause. Britain proposed that while debtor countries would adopt deflationary measures, the US should pursue "good creditor policies," particularly tariff reductions. However, the US Treasury remained skeptical, and Congressional protectionism prevented the expected support. By mid-1955, the Collective Approach had failed. Although floating convertibility was abandoned, the monetary rationale persisted, eventually achieving fixed-rate convertibility through gradual stages. The article recontextualizes Operation Robot within the "impossible trinity" framework. Through flexible exchange rates, the Robot planners sought to expand policy discretion to achieve full employment. This was not a return to nineteenth-century laissez-faire but a search for a conservative "third way" that would maintain Keynesian full employment and the welfare state while shifting from Labour's control-oriented planning toward market mechanisms. Robot's failure demonstrated that Britain lacked the power to unilaterally reshape the international monetary system as it had in the 1930s, nor could it rely on Anglo-American alliance diplomacy. The failure, together with the Suez Crisis, pushed Britain toward European integration and onto a path of "genuflection" to the IMF under US dominance. Ironically, this pre-emptive crisis had transformative effects, marking Britain's transition from the American rescue of the nation-state toward the European rescue.