Abstract: "Jealous Monopolists"? British Banks and Responses to the Macmillan Gap during the 1930s

Peter Scott and Lucy Newton


By the end of the First World War successive merger waves had produced an oligopolistic, tightly cartellised English banking system, which was widely viewed as having restricted lending to small-medium- sized firms—the famous "Macmillan Gap" in industrial finance. We explore the reasons behind the failure of market entry to bridge this gap. The clearing banks are shown to have acted as "jealous monopolists," obstructing the activities of CFI, the only significant firm established to breach the gap (rather than narrow its upper limit). By poaching many clients it had vetted and approved, the banks blocked CFI's growth, deterring further market entry and thus preserving their monopoly position.