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Jealous monopolists? British banks and responses to the Macmillan Gap during the 1930s

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  • Peter Scott

    (Centre for International Business History, University of Reading)

  • Lucy Newton

    (Department of Management, University of Reading)

Abstract

By the end of World War I successive merger waves had produced an oligopolistic, tightly cartelized, English banking system, which was widely viewed as having restricted lending to small-medium-sized firms—the famous 'Macmillan Gap' in industrial finance. We explore the reasons behind the failure of market entry to bridge this gap. The clearing banks are shown to have acted as 'jealous monopolists', obstructing the activities of the Credit for Industry Ltd (CFI), the only significant firm established to breach the gap (rather than narrow its upper limit). By poaching many clients it had vetted and approved, the banks blocked CFI's growth, deterring further market entry, and thus, preserving their monopoly position.
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Suggested Citation

  • Peter Scott & Lucy Newton, 2006. "Jealous monopolists? British banks and responses to the Macmillan Gap during the 1930s," Economics Discussion Papers em-dp2006-36, Department of Economics, University of Reading.
    • Handle: RePEc:rdg:emxxdp:em-dp2006-36
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    Cited by:

    1. Mark Billings & Simon Mollan & Philip Garnett, 2021. "Debating banking in Britain: The Colwyn committee, 1918," Business History, Taylor & Francis Journals, vol. 63(6), pages 944-965, August.

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