Explaining London's dominance in international financial services, 1870-1913

Contemporaries and historians have highlighted London's position as the world's leading financial centre, and its dominance of both trade financing and international capital investment at this time. The current historical literature focuses on the presence of the London Stock Exchange and Britain's role as leader of the Gold Standard as the key reasons behind the City's position. This paper presents a richer explanation, that treats the international financial services industry as a footloose sector that can migrate around the globe. By focusing on how the individual merchant banks operated and the forces that were important in driving the banks to agglomerate to the City, this work provides an alternative explanation for London's dominance of financial services prior to 1913, and can explain how London was able to maintain its position for so long, despite competition from other centres.