Prior to 1979, conservation of the national reserves of gold and foreign exchange was effected by various controls on monies used for payments overseas or ransfers of capital abroad. The legal basis for the restrictions imposed was contained in the Exchange Control Act 1947. The purpose of the controls was principally to help keep a healthy balance of payments and maintain the value of sterling. The restrictions were various and included the dollar premium, but applied more to the larger transactions. Many small foreign payments, by way of subscriptions, etc., were handled without hindrance by the commercial banks – though here again the standard charge made by the bank was itself a deterrent. Restrictions also applied to the amount of money that could be taken out of the country for holidays abroad. These varied from year to year, but their existence was one reason why travel costs were often pre-paid in sterling to the specialist holiday firms. These firms often offered pre-packed foreign holidays totally payable in steriing, as a legal way of avoiding exchange controls. The various controls ing exchange controls. The various controls and restrictions did not apply in the sterling area. All exchange controls were systematically abolished after May 1979.
Reference: The Penguin Business Dictionary, 3rd edt.