Imperialism and Hegemony in Global Finance Along with the concentration of private financial institutions,the Bank of England (BoE)altered the functions of its provincial branches.Ernest Edye,the Principal of Branch Banking for the BoE in the early 1900s,wrote that the 1sn6n L raison d'etre of a Bank is to meet the legitimate requirements of its Customers' and that this legitimate purpose was being violated by the BoE's 'locks up' policy that drained capital from the provinces to the central office without recipro- cal credit extension.32 The combined effect of these private and public changes was a further 'credit crunch'that further isolated LIGs,so that,while output in the financial services sector more than doubled during 1890 to 1915,commenta- tors argued that credit for LIGs had diminished.33 Furthermore,while banking concentration was strongly associated with professionalisation,it now became heavily dependent upon personal relations between the lender and the borrower' through gentlemanly networks.34 In addition to this'credit crunch',LIGs with- drew in increasing numbers from the post office savings bank system,which failed to provide sufficient credit despite favourable rates of interest.35 By 1914, 益 during a 'run on banks',the collapse of savings banks and the inadequacy of gov- ernment guarantees to secure deposits led to open street protests.36 In short,and despite public and private contestation,the English state did little to improve LIGs'access to credit. English tax politics Compared to credit politics,tax politics for LIGs fared better.By the early 1900s direct taxes had increased to 38 per cent of government income,from 19 per cent in the 1870s and 33 per cent in 1900.37 However,a push from the Conservative party to protect its key constituency led to a resurgence of interest in tariff protec- tionism and a move away from direct taxes.This proposed policy shift was sup- ported by financial elites in the City of London,despite their avowals to free trade.38 At the same time,'social liberals'such as John A.Hobson pointed to the potential for positive state intervention to redistribute income from the wealthy -especially rentiers''unearned'and 'excessive'incomes -to LIGs to boost domestic consumption and,in doing so,transform imperialist foreign econo- mic policies.39 Following the 1905 transition to the Liberal government,the propagation of anti-rentier policies by figures such as Prime Minister David Lloyd George received popular support,and were typified in the struggle between the House of Commons and the House of Lords over the 'radical' 'People's Budget'of 1909-10.40 This budget proclaimed the legitimacy of a transformation of the English financial reform nexus in favour of LIGs,but was more bluster than substance as it only marginally enhanced national income while government expenditure actually dropped.As the vast majority of LIGs earned too little to benefit from tax breaks,the only tax relief was to those far above median income.In short,the tax reforms were insufficient to assist the development of a broader social source of English financial power (through savings or consumption)and exacerbated the 'years of frustration'LIGs felt immediately prior to the Great War.2 Such frustrations were expressed in chan- ging economic and social conventions.For example,despite increased real wages and declining property prices,LIGs did not save more but rather consumed 5Downloaded By: [University of Sydney] At: 02:46 7 August 2007 Along with the concentration of private financial institutions, the Bank of England (BoE) altered the functions of its provincial branches. Ernest Edye, the Principal of Branch Banking for the BoE in the early 1900s, wrote that the ‘raison d’eˆtre of a Bank is to meet the legitimate requirements of its Customers’ and that this legitimate purpose was being violated by the BoE’s ‘locks up’ policy that drained capital from the provinces to the central office without recipro￾cal credit extension.32 The combined effect of these private and public changes was a further ‘credit crunch’ that further isolated LIGs, so that, while output in the financial services sector more than doubled during 1890 to 1915, commenta￾tors argued that credit for LIGs had diminished.33 Furthermore, while banking concentration was strongly associated with professionalisation, it now became ‘heavily dependent upon personal relations between the lender and the borrower’ through gentlemanly networks.34 In addition to this ‘credit crunch’, LIGs with￾drew in increasing numbers from the post office savings bank system, which failed to provide sufficient credit despite favourable rates of interest.35 By 1914, during a ‘run on banks’, the collapse of savings banks and the inadequacy of gov￾ernment guarantees to secure deposits led to open street protests.36 In short, and despite public and private contestation, the English state did little to improve LIGs’ access to credit. English tax politics Compared to credit politics, tax politics for LIGs fared better. By the early 1900s direct taxes had increased to 38 per cent of government income, from 19 per cent in the 1870s and 33 per cent in 1900.37 However, a push from the Conservative party to protect its key constituency led to a resurgence of interest in tariff protec￾tionism and a move away from direct taxes. This proposed policy shift was sup￾ported by financial elites in the City of London, despite their avowals to free trade.38 At the same time, ‘social liberals’ such as John A. Hobson pointed to the potential for positive state intervention to redistribute income from the wealthy – especially rentiers’ ‘unearned’ and ‘excessive’ incomes – to LIGs to boost domestic consumption and, in doing so, transform imperialist foreign econo￾mic policies.39 Following the 1905 transition to the Liberal government, the propagation of anti-rentier policies by figures such as Prime Minister David Lloyd George received popular support, and were typified in the struggle between the House of Commons and the House of Lords over the ‘radical’ ‘People’s Budget’ of 1909– 10.40 This budget proclaimed the legitimacy of a transformation of the English financial reform nexus in favour of LIGs, but was more bluster than substance as it only marginally enhanced national income while government expenditure actually dropped.41As the vast majority of LIGs earned too little to benefit from tax breaks, the only tax relief was to those far above median income. In short, the tax reforms were insufficient to assist the development of a broader social source of English financial power (through savings or consumption) and exacerbated the ‘years of frustration’ LIGs felt immediately prior to the Great War.42 Such frustrations were expressed in chan￾ging economic and social conventions. For example, despite increased real wages and declining property prices, LIGs did not save more but rather consumed Imperialism and Hegemony in Global Finance 5