Explaining London’s Dominance inInternational Financial Services

Contemporaries and historians have highlighted London’s position asthe world’s leading financial centre, and its dominance of both tradefinancing and international capital investment at this time. The cur-rent historical literature focuses on the presence of the London StockExchange and Britain’s role as leader of the Gold Standard as thekey reasons behind the City’s position. This paper presents a richerexplanation, that treats the international financial services industryas a footloose sector that can migrate around the globe. By focusingon how the individual merchant banks operated and the forces thatwere important in driving the banks to agglomerate to the City, thiswork provides an alternative explanation for London’s dominance offinancial services prior to 1913, and can explain how London was ableto maintain its position for so long, despite competition from othercentres....