Limits to Intervention: The Bank of England and Industrial Diversification in the Depressed Areas
During the I930s the Bank of England embarked on an unprecedented, and subsequently abandoned, episode of intervention in British industry. 1 The bulk of its efforts focused upon schemes to reorganize ailing traditional industries such as textiles, iron and steel, and shipping and ship-building. But it also became involved, through its role in the creation of the Special Areas Reconstruction Association, Ltd. (hereafter S.A.R.A.), in efforts to promote industrial diversification in the depressed areas where declining industries were concentrated. Special finance for "new" industries in those areas became a major focus of the government's regional policy as it evolved in the I930s from a policy of "taking the workers to the work" to one of "taking the work to the workers".2 S.A.R.A. was one of three special finance organizations with similar aims set up in the late i930s. The other two were the Nuffield Trust, a private foundation established through a gift from Lord Nuffield, and the Treasury fund, a government fund set up partly in response to criticisms of S.A.R.A. These three organizations were tiny in relation to the size of the unemployment problem, and they had been in existence only a short time when World War II began. Maximum estimates of employment to be provided by all three together did not exceed 20,000-25,000, while in December I937 there were i,665,407 registered unemployed persons in Great Britain and 290,877 in the Special Areas for which the assistance was intended.3 Total funding was ?5