The First World War, the City of London, and Globalization

25 05 2014


History and Policy, the London-based historical think tank, recently hosted an event at which the impact of the First World War on international finance n was discussed. George Osborne, Britain’s Chancellor of the Exchequer (i.e., Finance Minister), was present. Professor Richard Roberts spoke about ‘The Great Financial Crisis of 1914 – Then and Now’ at an event on 20 May 2014. The event was held at No. 11 Downing Street, the seminar was part of a series about the Treasury and the First World War.


Richard Roberts is Professor of Contemporary History at the Institute of Contemporary British History at King’s College London. His new book, Saving the City: The Great Financial Crisis of 1914, is published by OUP.  Richard will also be presenting some related research at workshop I have organised called Armageddon and Mammon: the Impact of the First World War on
International Business. This workshop will take place on Thursday 10 July and Friday 11 July 2014 at East India House in the City of London (closest tube station is Liverpool Street).  I have pasted the programme below.

The historical research presented at this workshop should interest many non-historians because the world economy on the eve for the First World War resembles in the present. The world economy in 1914 was highly globalized and interconnected. Britain and Germany were each other’s largest trading partners. There was massive cross-border investment and international financial activity was extensive. The globalized economy was suddenly disrupted by the rupture between the Great Powers, as trade with enemy countries suddenly became illegal. The rapid de-globalization of the world economy caused economic chaos but also opportunities for some companies. The recent imposition of some trade sanctions on Russia gives us reasons to think about what the impact of a major war on our interconnected world economy would be like. Looking at the historical record can help us to make sense of the situation.

Non-presenters, including journalists, are welcome to attend, but should RSVP at least 48 hours in advance. They should do so by emailing

Thursday 10 July 

9:00-9:15 Welcome Message:  Neil Forbes, Coventry University

9:15-9:30 Opening Remarks: Andrew Smith, Simon Mollan, Kevin Tennent

9:30-11:00 Session 1:  Science, Technology, and Business at War

Wartime scents: the First World War and the modern perfume industry (Galina Shyndriayeva). Commentator:   Rory Miller

The Essential French Connection: Comptoir des textiles artificial and the Movement of Du Pont from Military to Consumer Products Development, 1916-1939 (Jacqueline McGlade)  Commentator:   Neil Pyper

Taming the War Octopus, 1915-1921: Labour Dilution, Scientific Management, and the impact of the Ministry of Munitions on Interwar British Manufacturing (Michael Weatherburn) Commentator:   John Singleton

11:00-11:15 Coffee Break

11:15-12:15 Session 2 The City of London At War

The 1914 moratoriums: banks, business, government and financial crisis management  (Richard Roberts) Commentator:   Neil Forbes

Rock Bottom? Just when they think it’s all over! Rothschild  and the Royal Mint Refinery (Michele Blagg) Commentator:   John Singleton

12:15-1:00 Lunch

1:00-2:30 Session 3: Profiting from Neutrality

Setting sail for an uncertain future Three Dutch steamship companies and the First World War, 1914-1918 (Samuël Kruizinga) [via teleconference] Commentator:   Neil Forbes

Enhancing the neutrals: Organizational change of Swiss and Dutch multinationals as a result of the First World War (Takafumi Kurosawa, Ben Wubs) Commentator:   John Singleton

The Impact of the First World War on Swedish Economic  Performance: a Case Study of the Ball Bearings Manufacturer SKF (Eric Golson and Jason Lennard) Commentator:  Dr Neil Pyper

2:30-2:45 Coffee Break

3:15:5:15  Session 4: The Impact of the War on Developing Countries

Global finance, trade and war: the influence of the First World War on investments on the Johannesburg Securities Exchange, 1914-1920 (Grietjie Verhoef) Commentator:  Neil Forbes

Profiting despite the Great War:  Argentina’s grain multinationals (Phillip Dehne) Commentator:  Neil Pyper

The impact of the First World War on British investment in the Anglo-Egyptian Sudan (Simon Mollan and Kevin Tennent)  Commentator:  John Singleton

Trading With the Enemy: HSBC’s Relationships with German Companies during the First World War (Andrew Smith) Commentator:  Chris Kobrak

Friday 11 July2014,

9:00-10:00 Session 5: Post-War Reconstruction

 American Big Business and the Attempt to Reconstruct War-Torn Western Europe in 1918-1920 (Volker Berghahn) Commentator:  Chris Kobrak

Mammon Unbound: The International Financial               Architecture of Wall Street Banks, 1915-1925 (Trevin Stratton) Commentator:  Rory Miller

Germany’s Sonderweg in Corporate Development in Comparative Perspective: the effects of the European “civil war” of 1914-45 (Leslie Hannah) Commentator:  Chris Kobrak

10:00-10:15 Coffee Break

10:15-12:00 Session 6: Legacies

The Great War: Matrix of the International Chamber of Commerce, a fortunate Business League of Nations (Clotilde Druelle-Korn)  Commentator: 

Imperial Business at War: The British Imperial Council of Commerce, the Great War, and the Empire, 1914-1918 (Andrew Dilley) Commentator:  John Singleton

The Flows of International Finance after the First World War: the Bank of England and Hungary, 1920 – 1939 (Neil Forbes) Commentator:  Chris Kobrak



The Eurozone Crisis and the Misleading Historical Analogy of the Austro-Hungarian Empire

15 05 2012

Right now, the attention of the financial world is focused on the political crisis in Greece, where there is every sign that the next government will reject the terms of the EU bailout, effectively pulling Greece out of the Euro and plunging the Eurozone into crisis. There has been a lot of commentary and analysis of the crisis in the press, but not enough of this analysis looks to history. The Euro isn’t the first currency union ever, so it worthwhile looking to see how past currency unions have operated.

With this in mind, I would like to bring your attention to an interesting new blog post by Richard Roberts, a financial historian who is also the Director of the Centre for Contemporary British History at King’s College London. His lengthy post, which was carried on the History & Policy blog, talks about the currency union that existed in the Austro-Hungarian Empire between 1867 and 1917.

Austro-Hungarian Banknote from 1880

Roberts reminds us that after the constitutional reforms of 1867, the Hapsburg Empire was made up of two sovereign governments that shared only a monarchy, army, diplomatic service, legal system and currency. Both Austria and Hungary had their own parliaments, governments and national debts. Robert’s is suggesting that the multinational Hapsburg Empire was, in a sense, a precursor of the modern Eurozone. Roberts examines precisely how this central bank of Austria-Hungary functioned and then concludes that “the case of Austria-Hungary demonstrates that a currency union between different states can last, and prove stable, over a sustained period”.

Richard Roberts

Roberts’s conclusion will doubtless cause some readers to feel a bit optimistic about the Euro’s chances of surviving. I’m not convinced that the historical analogy Roberts is making is actually much help in trying to understand the Eurozone. The Austro-Hungarian monetary union included just two fiscal units, Austria and Hungary, although there were many ethnic groups living in both units.

In contrast, the Eurozone includes a much larger number of nation-states, each with their own parliament, system of taxation, national debts, armies, etc. More importantly, the Hapsburg Empire wasn’t a democracy, which helped to make its adherence to the gold standard possible. As Barry Eichengreen has shown, one of the reasons so many 19th century Western nations choose to endure the rigorously deflationary monetary policies required by the gold standard was that they weren’t yet democracies: most male wage earners didn’t have the right to vote, which meant that the social classes most likely to be hurt by fiscal and monetary restraint (the poor) didn’t have much say in how their countries were governed. (Some Western countries did have universal male suffrage in this period, but found ways of diluting the political power of wage earners: for instance, Prussia gave extra votes to the wealthy).

Once universal adult suffrage coupled with competitive elections came along, it became politically impossible to sustain the gold standard. This is why most Western countries were politically unable to remain on the gold standard during the Great Depression of the early 1930s: by that point, workers and the poor, who would have suffered from the policies necessary to remain on gold, had acquired too much power. Since then, these groups have acquired even more political clout.

The situation was very different in Austria-Hungary.  Even in 1917, the Hapsburg Empire was still be run by a coalition of Austrian and Magyar aristocrats. It really can’t be compared to the Eurozone, which includes 17 social-democratic countries in which groups such as pensioners and public-sector workers have both the right to vote and actual political power.

European Central Bank, Frankfurt

I have a lot of respect for the scholarship of Richard Roberts. However, I think that in this case he needs to go back the drawing board and find a better historical analogy for understanding the Eurozone’s predicament.