‘Standstill’, Depression and War 1931–45

Abstract

The international financial crisis of the summer of 1931 was a fundamental turning point for London as a financial centre and for the merchant banks. Economic nationalism, which arose from and exacerbated the worldwide slump in the early 1930s, put paid to the liberal international trading environment in which the City of London and the merchant banks had flourished for a century or so. More and more the City became a domestic financial centre and the merchant banks shifted their attentions to the domestic market.¹ The reorientation presented difficulties for every firm, but those such as J. Henry Schröder & Co. which conducted business on a substantial scale with Germany also had to cope with the German suspension of debt repayments in July 1931, a problem that was unresolved for more than two decades.