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Economic crises and the development of the industrial state: the industrial intervention of the Bank of Italy and the Bank of England, 1918–1939


  • Valerio Cerretano

    (University of Glasgow)


Although it is little known at least among economists, central banks in industrial countries became involved with industry in the past and particularly after the First World War. This was at least the case in Italy and Britain where central banks provided long-term finance to ailing firms and banks, becoming important industrial players in their countries. This article explores this episode in a comparative setting, and concludes that intervention did not stem from a grand design of policy or from anti-market ideologies. It was, rather, piecemeal and a consequence of financial austerity. It is also argued here that intervention was the outcome of the over-expansion of the heavy industries more than the consequence of the weakness of one particular financial system. Moreover, this history also seems to indicate that the direct management of ailing firms and banks proved less expensive for central banks than the continuous provision of funds to concerns whose managers were alien – and therefore unaccountable – to the central banks' bureaucracy.

Suggested Citation

  • Valerio Cerretano, 2013. "Economic crises and the development of the industrial state: the industrial intervention of the Bank of Italy and the Bank of England, 1918–1939," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(3), pages 314-321, January.
  • Handle: RePEc:elg:rokejn:v:1:y:2013:i:3:p314-321

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    References listed on IDEAS

    1. David A. Martin, 1968. "Bimetallism in the United States before 1850," Journal of Political Economy, University of Chicago Press, vol. 76, pages 428-428.
    2. Garbade, Kenneth D., 2012. "Birth of a Market: The U.S. Treasury Securities Market from the Great War to the Great Depression," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016370, January.
    3. Knodell, Jane, 2003. "Profit and duty in the Second Bank of the United States' exchange operations," Financial History Review, Cambridge University Press, vol. 10(01), pages 5-30, April.
    4. Knodell, Jane, 1998. "The Demise of Central Banking and the Domestic Exchanges: Evidence from Antebellum Ohio," The Journal of Economic History, Cambridge University Press, vol. 58(03), pages 714-730, September.
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    More about this item


    central banks; industrial policy; public intervention in industry;

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N2 - Economic History - - Financial Markets and Institutions
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy


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