Podcast Summary:

Podcast: New Books Network
Episode: Robert Yee, "The City's Defense: The Bank of England and the Remaking of Economic Governance, 1914-1939"
Host: Mark Clobus
Guest: Robert Yee, Lecturer at Yale
Date: January 30, 2026

Episode Overview

The episode explores Robert Yee’s new book "The City's Defense: The Bank of England and the Remaking of Economic Governance, 1914-1939" (Cambridge UP, 2025). Yee discusses how the Bank of England transformed from an insular institution into a pioneering force in global economic governance during the tumultuous early 20th century. The dialogue covers the Bank’s adaptation to wartime pressures, its pivotal role in shaping monetary policy and central banking worldwide, and its embrace of new expertise, especially in response to the challenges posed by World War I, the gold standard debates, and the interwar economic crises.

Key Discussion Points & Insights

1. Origins and Motivations of the Book

• Robert Yee’s background in economic history, specializing in finance and central banking (01:33).
• Motivation: Exploring not only the rise of economic powers but how established powers persist, with Britain as a fascinating example (02:38).
  • Quote:

    “One lingering question I had was not related to not only how do powers rise but also how powers persist, how they maintain their influence over the global economy.” — Robert Yee (02:38)

• Britain’s sustained economic influence post-Industrial Revolution, largely thanks to the Bank of England.

2. Transformation of the Bank of England

• The Bank, pre-WWI: A small, elite, and insular club tied mostly to the City of London merchant banks (04:25).
• The seismic shift brought by WWI, forcing the Bank to look outward and question its role in economic governance (03:47).
  • London Stock Exchange’s closure for six months underscored the scope of the crisis (04:25).
• The emergence of competition and cooperation with other economic institutions, notably the Treasury and the Federal Reserve (06:16).

3. The Gold Standard Debate

• Traditional narrative centers on the Treasury and figures like Churchill and Keynes, often overlooking the Bank's role (07:23).
• Yee’s revision: The Bank of England was an intellectual defender of the gold standard, not just a passive institution.
  • Hired economists and experts to justify policy decisions, even after the gold standard’s collapse (08:10).
  • Quote:

    “And for that reason, the bank of England begins to hire economists and experts who are able to justify the decision.” — Robert Yee (08:55)

4. The Rise of Expert Economists at the Bank

• A revolutionary shift: After over 200 years, the Bank begins hiring outside economists, including from the US and the British Empire (10:45).
  • This signified a move from an amateur to a professionalized, technical approach to economic governance.
• The tension and eventual collaboration between experts and traditional bankers (13:19).

5. Role of Governor Montagu Norman

• Norman, a figure of tradition, paradoxically spearheaded the expert revolution, despite projecting a façade of sole authority (15:21).
  • Quote:

    "We have appointed an economic advisor, but he's not here to tell us what to do, but to explain to us why we have done it." — Robert Yee quoting common historical interpretation (15:44)

• In practice, Norman relied extensively on expert advice, especially for technical and international matters.
  • The McMillan Committee episode illustrated Norman’s limitations and growing reliance on expert staff (17:27).

6. Professionalization and Expertise in Governance

• The Bank’s transformation mirrored a broader western shift toward valuing professional expertise in complex policy-making (19:28).
• Economics emerged as an indispensable social science, with new roles in both academia and policy (19:28).

7. The Bank’s Global Missions and Central Banking Diplomacy

• Experts like Otto Niemeyer and Henry Strakos were sent abroad to help establish central banks in the Empire and other nations (21:38).
  • Tying new central banks’ currencies to sterling was a way to maintain British financial hegemony.
• However, this was also a pragmatic adaptation to rising economic independence in the Dominions (24:14).
  • Negotiation and alliance-building became essential to Britain’s continued global influence.

8. Interventions in Industrial Policy

• The Bank broke tradition by intervening in industrial policy to counter the decline of British industry (26:27).
  • Motivated less by direct concern for industry than by fear of systemic financial destabilization.
  • Economist Henry Clay advised on rationalization—mergers, closures, and credit support of struggling firms (26:27).

9. Policy Innovation During Instability: The 1930s and Pre-War Era

• Initiated exchange controls in the late 1930s, often against the advice of key figures like Keynes and the Treasury (28:54).
  • This technical intervention left Britain better prepared for WWII (29:40).
• The Bank at this stage displayed newly acquired policy confidence and autonomy.

10. Legacy: Postwar Influence and Modern Central Banking

• Nationalization in the 1940s did not mark the end of the Bank’s global relevance; London remains a top financial center today (30:30).
  • The Bank’s postwar resilience stemmed from authority and expertise forged in the interwar period.
• Redefined central banking worldwide—pioneering not only monetary policy, but also adaptation, technical expertise, and international relations (32:12).
  • Quote:

    “It starts to turn to economists and statisticians and quantitative tools to help them analyze this thing we call the macro economy, you know, much earlier than other central banks and much earlier than the kind of post war institutions of the Bretton woods, institutions of the IMF and the World Bank.” — Robert Yee (32:18-32:32)

11. Current and Future Research

• Yee’s ongoing work focuses on Germany’s rise as an economic power, investigating the interplay between industrial and financial policy from the mid-19th to mid-20th centuries (33:35).

Notable Quotes & Memorable Moments

• On the persistence of British economic power:

  “It sort of maintained this influence much longer than we historians have previously known, partly because of the bank of England's work.” — Robert Yee (02:56)

• On the rationale behind hiring international experts:

  "They saw experts as a tool, almost as a way of fostering closer connections with other countries, but also... maintaining the City of London's own financial interests." — Robert Yee (11:40)

• On Montagu Norman's leadership style:

  "He frequently turned to his advisors and he requested information from them and he asked them to represent him in meetings when he couldn't go. And he really relied on this new class of experts, more so than the bankers who had traditionally been employed at the bank, especially in foreign and imperial affairs." — Robert Yee (16:20)

• On the revolutionary shift in industrial policy:

  “Virtually no central bank then and even very few today are heavily involved directly with intervening in industry. And so it's seen as kind of this radical break from tradition.” — Robert Yee (26:31)

Important Timestamps

• 01:33–02:38: Introduction to Robert Yee’s background and the genesis of the book
• 03:47–05:35: The Bank’s transformation post-WWI, responding to new global pressures
• 07:23–09:33: Gold standard debates and hiring of expert economists
• 10:45–13:19: Recruitment of foreign and domestic economists; tensions in the Bank
• 15:21–16:51: Montagu Norman’s leadership and increasing reliance on advisors
• 17:27–18:53: Norman’s vulnerability during the McMillan Committee hearings and turn to experts
• 19:28–20:37: The larger trend of professionalization in British and Western governance
• 21:38–25:42: Establishing central banks abroad; balancing loss of control with new influence
• 26:27–28:15: Industrial policy innovations to stabilize the financial sector
• 28:54–30:00: Currency policies of the 1930s, exchange control, and prewar readiness
• 30:30–32:12: The Bank’s legacy and modern financial governance
• 33:35–34:29: Yee’s new research on Germany’s economic ascent

Concluding Tone

The conversation is engaging, richly detailed, and reflective, capturing both the intellectual rigor and pragmatic adaptation required by the Bank of England during a period of profound change. Yee’s narrative challenges long-held assumptions about central banking, demonstrating the institution’s pivotal role in crafting modern economic governance through innovation, expertise, and flexible adaptation.

Recommended for listeners interested in:

• Economic history and the evolution of central banking
• The interplay of expertise and policy
• British and global financial governance in the early 20th century

End of summary.