17th September 1998. One Coat Doesn’t Fit All.

Economic problems in the last 50 years culminating in 2008 turned thoughts to the inter-war Great Depression and what lessons if anything can be learned. However if one is looking for consensus from leading economists, one looks in vain. 


It was Today in 1998, ten years before the great banking debacle that an article in The Economist described how a study of the 1930.s offered little comfort, with still a need for fiscal austerity to restore confidence. It went on: ‘With investment reeling and recession on the march, thoughts turn to the Great Depression. Could it happen again?’


If only the writer could have fast-tracked forward to 2008 with the wholesale collapse of the Banking system, it would have been noted that history hadn’t repeated itself, because of government bailouts of banks such as RBoS and Lloyds.

Also measured steps to reduce the fiscal deficit and the fact that the new millennium, with its more diversified economy, wasn’t the 1930.s, shouldn’t overlook the demise of household names such as Bradford&Bingley and Alliance&Leicester.


The depression of the inter-war period saw a cyclical turn down in demand in heavy industries; ten years after 1998 it was an economy overheated by outrageous mortgage lending by financial institutions,

The article  reflected that the banks, ignoring the crux of what went wrong in the 1930.s, are still causing mayhem 60 years later, and the ‘Regulators haven’t worked out what to do with them’, thus pin-pointing a significant point.

Matters were less volatile in the mid-19thc, a time of the Gold Standard which ironed-out national currency-exchange differences: gold outflow brought an adjustment in exchange rates, eventually bringing equilibrium.

World War I disrupted this happy arrangement with many countries finding their exchange rates in disharmony, and Germany and Britain having a Balance of Payments problem exacerbated by an overvalued currency and a global economy downturn coinciding with one cyclical.

Countries were forced into fiscal and monetary attempts to deflate economies and protect exchange rates, allied with tariffs: result recession and depression particularly in areas of labour intensive, heavy industry, a situation only relieved by Britain going off Bank Rate in 1931, thus freeing the currency.

The lesson we learned from the 1930.s, after the banking collapses of 2008 was Quantitative Easing (printing money),to fend off deflation with Governments pulling out all stops to avoid a complete melt-down.

What would have happened if we had gone into the ‘corset’ of the Euro as nearly happened under John Major in the 1990.s, would have been a high interest, loan-based austerity demanded of us by the EU as a condition of a bail-out. As it was we were kings of our own castle and did it our way.

What we never forecasted was 23rd June 2016: Brexit. Independence of action beckons, a new national identity: scratch us, we are tribal, creatures of our own destiny.


economist.com/blogs/economic-history.8.11.2013. What can we learn from the Great Depression?

The Economist 17.9.1998 Article.

wikia.com/Bradford&Bingley Logo.

hobbydb.com/RBS Logo.

thisisbravetalk.com/Lloyds Logo.



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About colindunkerley

My name is Colin Dunkerley who having spent two years in the Royal Army Pay Corps ploughed many a barren industrial furrow until drawn to the 'chalk-face' as a teacher, now retired. I have spent the last 15 years researching all aspects of life in Britain since Roman times.

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