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1968 Secret History Friday, 1 January, 1999, 13:51 GMT The truth about 1968
Race, Falklands and economy - the crucial decisions revealed
By Political Correspondent Nick Assinder

Secret Cabinet papers released for the first time reveal the crisis-hit 1968 Labour government drew up plans for a dramatic clampdown on sterling that could have pitched the country into turmoil.

1968 Secret History Besieged Prime Minister Harold Wilson authorised the preparation of Operation Brutus that would have led to "a drastic and permanent abandonment of the sterling system".

If it had gone ahead, it would have meant all sterling assets held abroad would have been frozen, foreign travel banned and no cash allowed out of the country.

It would have represented a kind of economic totalitarianism that would have threatened civil unrest and the collapse of the currency.

Government in panic

The Wilson government had been battered by a series of economic crises, which had finally led to the devaluation of sterling the previous year.

The prime minister had been forced to make his famous "the pound in your pocket" speech aimed at settling the country's nerves by reassuring them their wages had not been devalued.

If the current Chancellor of the Exchequer, Gordon Brown, thinks he has troubles as a result of the global economic slowdown in 1998, he has not seen anything like the panic that gripped the 1968 Labour administration.

All government departments had been forced to make savage cuts and there were serious worries that Britain's standing in the world was being undermined by defence cutbacks and the withdrawal of troops from east of the Suez.

Now, 30 years later, secret Cabinet papers released for the first time by the Public Record Office show just how close that crisis brought Britain to economic collapse.

Harold Wilson never invoked Operation Brutus, but the fact that he had even considered such a draconian measure was a clear sign of the size of the crisis.

Momentous year

The year was marked by one disaster after another for the Labour government. Along with the economic crisis, there was constant sniping from the unions, a series of Cabinet splits over key policies and an almost constant sense of paranoia in Downing Street, which was displaying a siege mentality.

Internationally, 1968 was by any standards a momentous year.

The Vietnam war continued to rage and the campaign against it gained ground by the day. The My Lai massacre of that year contributed massively to the final pull-out.

Richard Nixon became US president, Martin Luther King and Robert Kennedy were assassinated and pop art icon Andy Warhol was shot and wounded by a disaffected follower.

Paris was engulfed by student protests, which seemed set to pitch France into revolution until President de Gaulle threatened to send in the troops.

And the Soviet Union invaded Czechoslovakia with over 200,000 troops to bring to an end the Prague Spring of opposition to Communist rule.

Falklands future

Meanwhile, the so-called "summer of love" gripped the west coast of America and hippies everywhere stuck flowers in their hair.

But the Cabinet papers also show the dramas that had gripped the government during the year.

The Falklands War of 1982 almost never happened
Not for the first time, the future of the Falkland Islands was high on the Foreign Office agenda and the documents show the government was ready to do a deal with Argentina.

Buenos Aires came up with a proposal that would have seen a gradual handover of sovereignty to Argentina, with a leaseback arrangement to Britain.

The plan sparked a serious backlash on the islands with protests demanding Britain did not sell them down the river.

It leaves open the question whether the Falklands war of 1982 could have been avoided and, if so, at what price to the islanders.

Britain was also facing a major immigration crisis with the massive influx of Kenyan Asians into Britain.

It had led to Enoch Powell's infamous "rivers of blood" speech in which he warned of race riots across the country.

Immigrants poured into Britain but Jim Callaghan admits he did wrong
The documents reveal the deep Cabinet splits over the measures being taken to deal with the problem.

The government introduced strict new immigration laws and attempted to balance them by also bringing in race relations legislation.

But that sparked a backlash from some groups and sent shockwaves through the country.

Not for the first time, the documents released under the 30-year rule offer some fascinating parallels with today and some lessons for current political leaders.

Race relations issues, economic problems and the future of the Falklands have all loomed large on the current Labour government's agenda.

A reading of the 30-year-old papers might at least reassure ministers that things could always get worse.

Leviathan - UK Confidential
BBC Two Friday 1 January 6.40pm

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Political Correspondent Nicholas Jones: Former ministers express regret

See also:

01 Jan 99 | 1968 Secret History On the verge of economic catastrophe
08 Jan 99 | 1968 Secret History UK planned to give Falklands to Argentina
08 Jan 99 | 1968 Secret History Callaghan: I was wrong on police and race
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