Abstract

After a period of monetary and political turmoil, the British crisis of 1931 culminated with the abandonment of the gold standard. Sterling fell immediately by 25% against the US dollar. These events marked a turning point for London as an international financial centre. The London merchant banks had been an important part of the British monetary system. The Macmillan Report of 1930-31 described these firms as ‘highly specialised’ and of ‘world-wide standing’, but the 1931 financial crisis was a major calamity for many of these long-established houses. During the 1920s the merchant banks had faced increasing competition from other financial institutions. Furthermore, the rise of the US dollar acceptance posed a significant threat to the sterling ‘Bill on London’. In response to these developments, did the merchant banks take unacceptable risks? Did they believe that they would be safeguarded from commercial failure as they had been in 1914?

Brian is a Visiting Research Fellow at King’s, London. He is a graduate of the University of London and completed his Ph.D. in 2015 at Birkbeck, London. He has spent most of his career in the City, and is currently Chief Operating Officer of Thomas Miller Investment. He is a Fellow of the Institute of Chartered Accountants.