Bankers' ramp

From  Black Diamonds by Catherine Bailey, a superb book on the Fitzwilliam family of coal magnates; here, she writes about the coming of the Great Depression to Britain; it is starkly similar to what Ireland now faces:

ON 11 JULY [1931], Clive Wigram, George V's Private Secretary... wrote a stark letter to the King: "We are sitting on the top of a volcano, and the curious thing is that the Press and the City have not really understood the critical situation..."
The eruption came exactly one month later. On 11 August there was a dramatic run on the pound as foreign investors scrambled to remove their money from the City of London. Ramsay MacDonald's government was already grappling with a deficit in the forthcoming autumn budget; the flight from sterling threw it into crisis...
Hitherto, it had been assumed that the country lived by trade, exporting manufactured goods and raw materials which paid for the foodstuffs and other imports that came in. In fact, Britain's trading account had not shown a credit balance since 1822. It was the 'invisibles' - shipping and banking - that had always put the balance right. These were the very things that had been hit by the global Depression... in the same period the volume of Britain's exports had almost halved...
As the country's gold and currency reserves continued to drain away, the government collapsed...
Once again labour - the impoverished working class in Britain's old industries... was being asked to pay the cost of capital's mistakes.
Historians would condemn the crisis of the summer of 1931 as the 'bankers' ramp'. The flight from sterling on 11 August was not precipitated by the budget deficit - the millions being paid out in unemployment benefits - but by the speculative activities of London's bankers.
In the years after the Great War, striving to restore the City's position as the financial centre of the world, the bankers had borrowed money from French depositors at 2 per cent and lent it to Germany at 8 or 10 per cent. In the summer of 1931, a period of political tension between France and Germany, the French, objecting to the fact that their money was being used to help Germany, withdrew it from London. Simultaneously, a financial collapse in Central Europe caused the German banks to renege on their international loans. The London bankers were caught out, facing short-term foreign liabilities estimated at £400 million. It was the Bank of England's decision to allow them to draw on the gold reserves that had caused sterling to run down.

 Lucille Redmond's ebook, Love, gripping dark and funny stories of love and revolution, is available on Amazon and iTunes