A disagreement has emerged over whether advanced countries such as Britain engaged in financial repression following the Second World War. A review of the historical and archival evidence shows that policies associated with financial repression played an important role in sustaining post-war Britain's record-setting levels of public debt. In Britain, eleven pieces of legislation and sixteen policies/directives are identified that supported financial repression during this period. A critique of two leading methods for measuring financial repression highlights the need for additional measurement tools, such as a proposed composite indicator of financial repression. The paper discusses various aspects of British financial repression, such as interest rate policy, capital controls, directed lending, and the conscription of the British banking system. Free market bond yield data are used to calculate British government savings attributable to financial repression of over 8% of GDP in 1948, which is more than double previous estimates for Britain and significantly greater than estimates for developing countries during 1970s-80s.
Click here to access the complete research article (.pdf)
HILEMAN (Garrick)(2016): Origins and Measurement of Financial Repression: The British Case in the mid-20th Century. Financial History Workshop, Brussels, 27 May 2016. 78 pp.