War Finance and Reconstruction, 1939–51

  • G. A. Fletcher


For the discount houses the approach of the Second World War appeared to offer no comfort at all. The only distinctive contribution that the houses could offer to justify their existence in the later 1930s was their provision of the call-loan market, based upon bill dealing. Because bill business yielded no profit the houses subsidised it through their bond dealing, which itself was hardly tolerated by the authorities. The ‘rescue’ operation of 1934–5 had been mounted in the hope that because the existence of a separate call-money market suited both the Bank of England and the clearing banks, it might again, one day, become a profitable activity for the houses as the business in commercial bills revived or as the return on Treasury bills was increased by the ending of the cheap money policy. Now the houses faced the possibility that a major war would not only dash all hopes of a revival of commercial paper but would demand finance on such a scale that the authorities would be forced to modify the financial process — to the possible exclusion of the discount market.


Monetary Policy Bond Price Treasury Bill Bank Deposit Discount Market 
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  1. 2.
    R. S. Sayers, Financial Policy 1939–1945, History of the Second World War: United Kingdom Civil Series (London, 1956) p. 6.Google Scholar
  2. 10.
    See W. T. G. King, ‘The Changing Discount Market’, Banker (Mar 1947) 176.Google Scholar
  3. 22.
    H.C. Deb 15 April 1947, pp. 61–4. Quoted in J. C. R. Dow, The Management of the British Economy 1945–60 (Cambridge, 1964) p. 224.Google Scholar
  4. 23.
    See J. M. Keynes, The General Theory of Employment, Interest and Money (London, 1936) p. 203. In view of the outcome of Dalton’s experiment, this reference is particularly apposite.Google Scholar
  5. 24.
    C. N. Ward-Perkins, ‘Banking Developments’, The British Economy 1945–50, ed. G. D. N. Worswick and P. H. Ady (Oxford, 1952) pp. 214–15.Google Scholar
  6. 27.
    W. T. C. King, ‘The Market’s Changing Role’, The London Discount Market Today, 3rd ed. (London, 1969) p. 10.Google Scholar

Copyright information

© G. A. Fletcher 1976

Authors and Affiliations

  • G. A. Fletcher
    • 1
  1. 1.University of LiverpoolUK

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