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Jealous Monopolists? British Banks and Responses to the Macmillan Gap during the 1930s

Published online by Cambridge University Press:  18 February 2015

Peter Scott  and
Newton Newton
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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.

Type
Articles
Information
Enterprise & Society , Volume 8 , Issue 4 , December 2007 , pp. 881 - 919
Copyright
Copyright © The Author(s) 2007. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved.

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