James
Callaghan was born in Portsmouth in
1912. After being educated at Portsmouth Northern School, he joined
the staff of the Inland Revenue. In 1931 he joined the Labour
Party and
began work as a trade union official.
Callaghan
was selected as the parliamentary candidate for South Cardiff and
was elected to the House of Commons in
the 1945 General Election and held minor
posts in the government of Clement
Attlee.
When Hugh
Gaitskell died in 1963, Callaghan was one of the main contenders
for the party leadership. Callaghan, who represented the right-wing
of the party, was defeated by Harold Wilson.
When the
Labour
Party was
elected in the 1964 General Election, Callaghan
became the Chancellor of the Exchequer. In this post he created a
great deal of controversy by introducing corporation tax and selective
employment tax. After a long struggle, Callaghan was forced to devalue
the pound in November 1967.
Callaghan
resigned from office but was recalled as Home Secretary in 1968. He
held the post until the defeat of the Labour government in the 1970
General Election.
Edward
Heath
and his Conservative government came into conflict with the trade
unions over his attempts to impose a prices and incomes policy. His
attempts to legislate against unofficial strikes led to industrial
disputes. In 1973 a miners' work-to-rule led to regular power cuts
and the imposition of a three day week. Heath called a general election
in 1974 on the issue of "who rules". He failed to get a
majority and Harold Wilson and the Labour
Party were returned to power.
Wilson
appointed Callaghan as his foreign secretary. In this post he had
responsibility for renegotiating Britain's terms of membership of
the European
Economic Community (ECC).
in 1975 Callaghan was demoted to the position of minister of overseas
development.
Now aged
63, political commentators thought Callaghan's political career was
coming to an end. However, when Harold
Wilson resigned in 1976, Callaghan surprisingly defeated Roy
Jenkins and
Michael Foot for the leadership of the Labour
Party.
The following
year Callaghan, and his Chancellor of the Exchequer, Denis
Healey, controversially began imposing tight monetary controls.
This included deep cuts in public spending on education and health.
Critics claimed that this laid the foundations of what became known
as monetarism. In 1978 these public spending cuts led to a wave of
strikes (winter of discontent) and the Labour
Party was easily defeated in the 1979 General
Election.
Margaret
Thatcher
became the new prime minister and Callaghan was leader of the opposition
until he resigned in 1980. Callaghan was made a life peer in 1987.
His autobiography, Time and Chance,
was published in 1987.
(1)
Denis
Healey, The Time of My Life
(1989)
Nowadays exchange rates can swing to and fro continually by amount
greater than that,
without attracting much attention outside the City columns of the
newspapers. It may be difficult to understand how great a political
humiliation this devaluation appeared at the time - above all to Wilson
and his Chancellor, Jim Callaghan, who felt he must resign over it.
Callaghan's personal distress was increased by careless answer he
gave to a backbencher's question two days before the formal devaluation,
which cost Britain several hundred million pounds.
Wilson himself regarded
the sanctity of sterling as so absolute that he allowed Cabinet to
discuss the issue only once, on July 19th, 1966; and he refused to
circulate the minutes of that meeting, even to the Cabinet ministers
who attended it. Thereafter he vetoed all attempts to discuss-the
exchange rate in Cabinet, or even in any of the Cabinet committees
on economic affairs. After the 1966 election Wilson had set up a small
committee of key ministers to consider the major issues of economic
policy - SEP; but every time we tried to raise the subject of devaluation,
it was evaded. Michael Stewart, Dick Crossman and I soon joined a
lobby for devaluation led by Roy Jenkins, Tony Crosland and George
Brown, who had forced the abortive Cabinet meeting on devaluation
in 1966. But Wilson continued to veto any formal discussion of the
matter until the last moment, when he had already agreed with Callaghan
that devaluation was inevitable. It was not until four days before
the date fixed for the change in parity, that he set up a small group
of ministers to supervise the details; he made me a member, I suspect,
only because he wanted to commit me to yet another cut in defence
spending as part of the accompanying economic measures.
(2)
Harold
Wilson,
Memoirs: The Making of a Prime Minister, 1916-64 (1986)
Jim Callaghan I felt I
could handle. He was a substantial figure in the Party, with strong
trade union support, and always a potential rival. But I knew more
about the Treasury and the economy than he did and the Prime Minister
is also First Lord of the Treasury and holds the whip hand.
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