The nationalisation of the Bank was the first significant measure of public ownership carried out by the 1945 Labour government. At the time it caused surprisingly little fuss, certainly nothing comparable to the rows about the creation of the health service and, later, the nationalisation of steel. As the Chancellor, Hugh Dalton, said at the time, it merely put on a formal footing what had long been the practical reality.
The Bank of England remains a public corporation rather than a private concern. But the most powerful device which the Chancellor had in his box of tricks - the right to set the rate of interest - has been handed to the Bank or rather, as V I Lenin might have put it, to a committee of workers, peasants and intellectuals. There are nine of them altogether.
The workers and peasants consist of four functionaries of the Bank, including the Governor, Mr Eddie George, together with Ms DeAnne Julius, a former chief economist of British Airways and a native of the United States. To complicate matters, one of the two Deputy Governors, Mr Mervyn King, also regards himself as an intellectual. The four other intellectuals consist of professors from Oxford, Cambridge and the London School of Economics, together with Sir Alan Budd, a former chief adviser at the Treasury and a former professor at the London Business School.
On Thursday they decided to raise the rate of interest by 0.25 per cent. It is reported - I do not know whether it is true or not - that the increase was made because the balance of the committee was altered in favour of the intellectuals with the arrival of Professor John Vickers from Oxford.
All these persons owe their positions to the patronage of Mr George, the Governor, or of Mr Gordon Brown, the Chancellor, or of both. They have certainly not been elected by anybody. Nor are their names well-known or, indeed, known at all by the public at large, except that small, aberrant section of it who peruse the business pages.
There is nothing wrong either with their virtual anonymity or with their unelected state. They are substantially in the position of the Lords of Appeal except that the latter go on for longer in their jobs. But there is an important difference. The law lords may be concerned with politics in its broad sense of the development of society. What they should not - and by and large are not - concerned with is party political advantage. The Monetary Policy Committee, however, cannot help affecting the relative positions of the political parties.
Its members may not be concerned with that aspect of affairs when they ponder their recommendations. They may not even be worried about doing what Mr Brown wants, or what they imagine he wants or, indeed, about doing the opposite just for the hell of it and to demonstrate their independence (though it is said that Mr Brown and Mr Tony Blair both approve of the rise). But they cannot delude themselves, even if they wished to, that their recommendations do not have an immediate political effect.
The surrender of the Treasury's power to fix the rate of interest was, like the nationalisation of the Bank over 50 years previously, accomplished with very little sound or fury. In this it resembled also Sir (as he then was) Geoffrey Howe's abolition of exchange controls in 1979. This was arguably the most important act of the entire Thatcher period: more important even than the selling of council houses, the taming of the unions or the dispersing of public assets. In introducing his exchange control legislation after the war Dalton said it would last "for ever". This only goes to show that it is as rash for politicians to boast that something will last (as, for example, Mr Tony Benn did of his changes to the Labour constitution) as it is for them to use the word "never".
What this shows also is that the most important changes are not those which arouse the greatest opposition or indignation at the time. Two arguments were advanced for handing interest rates to the Bank. One was that, in some objective sense, a "better" decision would be made than one arrived at by a politician. The other was that the politicians could always escape blame if things subsequently went wrong.
The first argument is about truth and value in economics. It could last (and sometimes has lasted) for a whole book. It will not be gone into any more deeply here: except to note that one person's rise in mortgage repayments is another's increased interest on a building society deposit account. The second argument - that the politicians will escape blame - is easier to meet. Of course they will be blamed, and quite right too. Mr Francis Maude, the new Shadow Chancellor, has already attacked Mr Brown. That, after all, is his new job. The voters will suspend judgement. If the Bank's action leads to recession, which some economists thought was on its way in any case, the whole government will be blamed.
It may be that Mr Blair will be able to escape most of the blame by claiming that the slump has been brought about not so much by an obscure committee as by something called "world conditions". People do not understand committees but they do grasp what are supposed to be worldwide economic phenomena.
It was one of the great public relations triumphs of the Thatcher years to persuade the voters that unemployment and other ills were not the result of the government's own actions but of a worldwide, certainly a European movement which the government was powerless to influence in any way at all. Indeed, old Tory hands now confess to their pleasant surprise on discovering how gullible the British public was and how well their specious propaganda - in plain language, their lies - had worked in the 1980s. Though I would not dream of accusing our prime minister of being untruthful, it may be that before the year 2000 he may have to adopt the same approach. In addition, he possesses the kind of charm which Lady Thatcher never had at her disposal. She was admired but not liked; whereas Mr Blair is both liked and admired. None the less it could all change, all end in tears. "Brightness falls from the air."
In idle moments, for want of anything better to do, I sometimes look up the Labour manifesto. It promises to "cut class sizes to 30 or under for five, six and seven year-olds" and, in the health service, to remove "100,000 people off waiting lists". Indeed, these are not promises. In the argot of New and Old Labour alike, they are pledges; nay, solemn pledges. Even without a recession, and with the economy, we are constantly told, in good shape, they show little sign of being fulfilled. In a recession there will be even less chance. I foresee trouble ahead. Mr Blair may blame Mr Brown, much as Lady Thatcher blamed Lord Lawson, though for different reasons. And we all remember how that ended.