Introduction

It is just over a hundred years since Bagehot, writing his Lombard Street and looking out upon the world scene, drew attention to features which we now recognise as distinctive of the modern international economy. In the forty years which separate the publication of Lombard Street (1873) from the First World War, the international economy established itself. As distance shrank with the revolution in transport and communication, international trade grew swiftly in volume. Financial services for payments and the mechanisms of foreign exchange ramified. Loans and investment, both direct and portfolio, moved with increasing ease along smooth channels from the affluent savers of the old world to the risk-takers and entrepreneurs of the new. The financial centres — London, Paris, Frankfurt, Amsterdam — became institutional nerve centres for an increasingly self-conscious international community. Gold, long recognised as a leading form of national money, became established as an international unit of account and a vehicle for the holding of reserves in world payments.