This is the latest volume of the official history of the Bank of England, following on from the works of Clapham (which covered the period up to 1914), Sayers (1891–44) and Fforde (1941–58). It uses internal Bank of England papers supplemented by numerous interviews to examine the evolution of the Bank's policies and actions in all their various domains. The narrative starts with ‘the Bank in the 1950s’ and covers domestic monetary policy from the Radcliffe report to the introduction of monetary targets in the second half of the 1970s; recurring sterling crises and exchange rate policy from the 1950s to the late 1970s and the associated issue of sterling balances; regulation and supervision of banks and the wider financial system; and the changes in both the Bank's own internal structure and its relationship to the Treasury and government. Along the way the book also takes in the Bank's activities in the field of industrial finance.

The strength of the book is its use of internal Bank papers, which provide a wealth of detailed information, most of which embellishes but does not enormously change received interpretations of the Bank's views and actions at different times. On domestic monetary policy, for example, the book shows how close Bank attitudes on the importance of money were in the 1950s and 1960s to those of the Radcliffe report, and how those attitudes began to change under the impetus of the work done by the economists who were recruited to senior positions from the late 1960s (notably Charles Goodhart). It puts rather less emphasis than might have been expected on the initial studies of money demand, which rejected the Radcliffe view of the velocity of circulation as highly variable. And it stresses instead as the key obstacle to monetary targeting the difficulty of monetary control (Capie appears to think that monetary base control might have solved the problem but this is never spelt out).

On exchange rate policy the book documents the problems posed by the repeated sterling crises (and the measures the Bank thought should be undertaken to deal with them), the discussions of a floating rate alternative in different periods, the trouble the Bank (and the Treasury) had in thinking about exchange rate policy once the Bretton Woods system of fixed exchange rates had broken down, and the contributions of the IMF to the internal debates.

Capie also provides valuable data on both the UK's foreign exchange reserves (which were reported in a markedly untransparent way for most of the period) and the Bank's own income, expenditure and profit accounts. The insights here include the remarkable fact that for much of the period the Bank undercharged the Treasury for the agency services it provided, because it did not want to reveal quite how large its profits really were. It was also keen to defend the independence it had, and Capie is surely right in suggesting that the fixed parity of the 1950s and 1960s constituted a government-set target in the pursuit of which the Bank had operational independence of a kind that was lost in the 1970s and restored only in 1997.

One problem faced by a book of this kind is the relationship between domestic monetary and other policy issues, on the one hand, and exchange rate and other external policy issues, on the other. Integrating the two in a single narrative risks losing clarity about each strand on its own, while separating them runs the danger of neglecting the important links between them. Capie has chosen essentially to consider domestic and external matters in separate chapters (3, 6, 9, 10 and 13 for the former; 4, 5, 8 and 14 for the latter). Even for the fixed rate period this is problematic, because although Bank Rate decisions were sometimes made largely for external reasons the authorities tended to think in terms of policy packages which included more obviously domestic instruments (such as credit ceilings and hire purchase terms changes) and because it was sterling weakness and crises that led to repeated periods of fiscal (plus monetary) contraction. But for the post-Bretton Woods years it is more serious: the long sterling crisis of 1976 was surely fundamental in pushing the authorities towards monetary targeting, and this can be found in the discussion of the adoption of monetary targets in chapter 13, but it is hard to locate in the discussion of the 1976 sterling crisis itself, in chapter 14.

A second, and more serious, problem is the balance between detailed internal history told through Bank papers and the wider context in which the Bank was operating. Capie's approach is essentially to focus on the former, with very limited material on the latter, so that the reader sometimes cannot see the wood for the trees. Moreover, the limited comments which the book offers on the wider context are sometimes rather casual and even unbalanced. For example, Capie gives the reader almost no idea of the thinking behind the expansions of 1963-4 or 1971-3, or of the (not entirely unrelated) difficulties which the Labour governments of the 1960s and 1970s believed they were facing. Some knowledge of and reference to the key works which have attempted detailed and specific assessments of macro-policy in these periods would surely have been useful.

A third weakness in the book is the way it is written. On the one hand, the language is uneven: it sometimes mixes more colloquial with more formal expressions in an uneasy way, but more importantly there are too many sentences or phrases that have to be read twice, and too many cases where the grammar and phrasing needs some copy-editing. On the other hand, while a few chapters contain concluding paragraphs which summarise and comment on what has been presented, this useful practice is not consistently followed, and the book's final statement – that ‘the Old Lady left undone those things she ought to have done and did those things she ought not to have done’ – does injustice to the author's own work as well as the Bank.

Overall, this is an important book, which makes use of its access to the sources to add significantly to the detail, and sometimes the broader lines, of our understanding of the evolution of the Bank of England and its policies. But it needs to be read in conjunction with macroeconomic analyses which can give a wider and more balanced perspective.