In 1967 bitter disputes over the devaluation of sterling and a secret operation codenamed Patriach led to threats of resignation from the Labour government led by Harold Wilson.
Official papers, released under the 30-year rule on Wednesday at the Public Record Office, show that the government was extremely nervous about the prospect of devaluation and its effect on relations with friendly countries.
Ahead of devaluation, which took place on November 18th, 1967 the government had sent officials from the Bank of England to take "confidential soundings" from around the world.
In the event, the pound was devalued against the dollar from $2.80 to &2.40 and Mr Wilson assured the public TV that the decision would not affect "the pound here in Britain in your pocket, or the purse in your bank;."
The problem with the pound stemmed from Britain's application in May 1967 to join the EEC. But it was also clear that since 1964, when Labour was voted into power, a strong pound would be too difficult to maintain against the backdrop of industrial disputes and a decline in economic competitiveness.
Other measures designed to reduce the trade deficit - spending cuts and tax increases amounting to £500 million - were proposed by the Chancellor of the Exchequer, Mr James Callaghan, and led to bitter opposition from the Bank of England. Mr Callaghan indicated his intention to resign.
The cabinet met on November 21st and concluded that devaluation had gone "very well". Mr Callaghan and the Home Secretary, Mr Roy Jenkins, exchanged places at the cabinet table.