The immense reserves held at the central banks in London and Paris might be tapped to help solve the American Panic of 1907. Attracting those resources presented a clear addition to US liquidity rather than simply rearranging the US reserves. We turn now to the five attempts Morgan made to funnel excess reserves from European sources to alleviate the New York crisis. Two were meant to shore up his own firm’s liquidity position and faith in his bills of exchange. The other three were attempts, some successful and some not, to draw gold from Paris to alleviate liquidity stringency at the Bank of England, and in New York and Toronto. These are less well-known actions that Morgan and his London partners took during the panic.

Statistics were the lens through which the Bank viewed the global economy. Although the quantification of economic phenomena had many prewar precedents, the unresolved problems stemming from the First World War led to its reinvention. The Bank originally employed economists, including Oliver M.W. Sprague and Walter W. Stewart, to develop its in-house statistical capabilities. Subsequent developments included the creation of a research division, employment of trained staff members, and publication of a monthly report. With the onset of the British slump and the contentious debates on the (Macmillan) Committee on Finance and Industry, experts gained new opportunities to influence economic policy. Through its research, the Bank of England was able to establish its reputation as an intellectual authority.

During the 1930s, the Bank devised a plan to help prepare the nation for war. In contrast to the Treasury, the Cabinet, and the League of Nations, the Bank was the sole defender of exchange control, a policy that involved restrictions on conversions in and out of sterling. Its experts argued that the necessity of wartime finance, diplomatic tensions with France and the United States, and a potential flight from sterling at the outbreak of war all justified the reform of exchange-rate management. Although exchange control was primarily seen as an overly restrictive arrangement, often associated with authoritarian regimes in Germany or Argentina, the Bank’s advisers claimed to understand the technical requirements and the particular needs of a financial sector preparing for war. With its enactment in early 1939, the Bank had effectively abandoned its commitment to restoring the prewar liberal economic order and instead oversaw a new system of governance that continued well into the postwar years.

After the First World War, the nations of Europe faced exchange-rate volatility, high national debts, and inflationary pressures. In response, many sought to stabilize the economies through extensive fiscal and monetary reforms. One of the key figures in the reconstruction effort was Henry Strakosch. As the Bank’s informal adviser, he was responsible for devising restructuring plans across Central Europe and the British Empire. Leveraging his connections at the League of Nations, the Bank of England, and the City of London, Strakosch led negotiations that resulted in the establishment of both the Austrian National Bank and the South African Reserve Bank. His work exemplified the institutionalization of economic orthodoxy in circles of influence and heralded the rise of the international financial expert. More broadly, Strakosch’s interventions contributed to the state-building process in the interwar years, as new nations drew on expert knowledge to establish their political legitimacy.

Industrial stagnation sparked new discussions about the relationship between the state and the economy. The economic slump compelled Henry Clay, a professor of economics at the University of Manchester, to develop theories on unemployment and wages. Alongside leading academics, including Edwin Cannan, Arthur Pigou, and John Maynard Keynes, Clay reconceptualized the role of the central bank in industrial affairs. His ideas attracted the attention of Bank officials, who subsequently employed him to lead new initiatives, such as Securities Management Trust. The closure of unproductive firms and the provision of loans to failing businesses represented the Bank’s concerted efforts to revitalize Britain’s industrial sector.

Otto Niemeyer imposed the British model of central banking across the “formal” and “informal” parts of the empire. In the 1930s, he conducted a series of overseas advisory missions, during which he promoted the principles of economic orthodoxy, such as balanced budgets, free trade, and fixed-exchange rates. Through his negotiations, he persuaded foreign governments to accept his policy prescriptions by demonstrating how they aligned with prevailing national interests. While Australia and New Zealand both aimed to secure their financial independence, Brazil and Argentina sought to establish their authority after political revolutions. It was a combination of factors related to state legitimacy, economic stagnation, and interwar expertise that shaped the outcome of the Niemeyer missions.

The First World War and its aftermath destabilized the international economic system. From volatile exchange rates and hyperinflation to industrial stagnation and mass unemployment, the collective challenges facing the nations of Europe threatened to undermine the prevailing order. In response, the Bank of England assumed a set of responsibilities aimed at upholding the City of London as an international financial center. It employed technical advisers who were able to shape domestic industrial policy, coordinate the creation of new central banks across the empire, and exert additional pressure on foreign governments abroad. Through these interventions, the Bank established a reputation as a leading monetary and intellectual authority and, in the process, redefined the structures of economic governance.

The Bank sought to deflect blame for the British slump in response to many critics, including John Maynard Keynes. Through correspondence and testimony before government commissions, its technical advisers provided an intellectual defense of the gold standard. However, as the prevailing monetary arrangements proved increasingly untenable as the interwar years progressed, economists and civil servants were forced to confront the flaws and instabilities endemic to the system. The subsequent 1931 crisis might have dealt a major blow to the authority of the central bank. Yet in its aftermath, experts began to devise new ways of thinking about the organization of the international financial system, as well as the Bank’s centrality within it.

The Bank’s transformation as a central bank in the interwar years paralleled many developments in the twenty-first century. Its operational independence in 1997 granted it the freedom to set monetary policy without direct government intervention. With the continued employment of economists, notably embodied by the appointment of Mervyn King as Deputy Governor (1998–2003) and later Governor (2003–2013), the central bank developed a reputation as a leading monetary authority. At the onset of the global financial crisis of 2007–2008, the Bank was able to implement a wide array of unconventional monetary policies due to its independence.

Prior to the First World War, the operations of the British financial sector primarily fell under the jurisdiction of a banking aristocracy. The Old Guard, comprising prominent bankers and industrialists based in the City of London, oversaw a system of indirect regulation, characterized by the lack of direct government intervention and the self-sustaining operations of the classical gold standard. Yet the outbreak of the war fundamentally upended the traditional balance between the state and the economy. With the abandonment of the gold standard and the closure of the London Stock Exchange in 1914, the nation faced a series of unprecedented crises that threatened Britain’s hegemonic position in the global order. By war’s end, the Bank of England had begun to reconsider its position in the City, throughout Europe, and across the empire.

Following the abandonment of the gold standard in 1931, the Bank of England searched for a policies that would stabilize the international financial system. Its officials turned to the empire as a potential solution to pervasive economic problems. Over the course of the 1930s, they sought to create new independent central banks that promoted intra-imperial trade and the use of sterling as a reserve currency. Neither upholding a particular set of “gentlemanly values” nor seeking to exert complete imperial dominance, the Bank envisioned a network of Empire Central Banks would appease rising nationalism and facilitated imperial monetary cooperation. It worked with foreign governments and economists who provided additional legitimacy to these reforms. With the establishment of the Reserve Bank of India and the Bank of Canada, the Bank was able to secure British financial interests abroad amidst the fracturing of the global economy.