A Short Walk through London’s History during the Second World War: Financial Experts in Exile

It is a great source of satisfaction to me to feel that we are taking advantage of the wonderful opportunity which fate has afforded us of getting to know and understand each other better. We are meeting as a family. Family discussions can be pointed, but often that spirit strengthens the family.¹

This quote stems from a speech given by the British Chancellor of the Exchequer, Sir Howard Kingsley Wood, to a group of Continental European financial policymakers and central bankers in London in 1942, including the finance ministers of the Allied governments in exile, their principal advisers and secretaries of state, and the governors of the central banks in exile. What had happened? Why had the leaders of European economic and financial policy come together in the midst of the Second World War, and why did the British Chancellor of the Exchequer speak of a ‘wonderful opportunity’ in this context?

A brief explanation is necessary. When the National Socialists conquered the European Continent in 1939–40, economic and financial figures from all over Europe fled or relocated to London² to wait for the war’s end at a supposedly safe distance. But they also wanted to shape the European post-war order. They often worked in, or at least with, their respective governments in exile in London and were of central importance to them in exile. For one thing, they helped their national governments to achieve financial security by, for example, negotiating loans with British government representatives and attempting to access private property in the UK and the USA. For another, they engaged in transnational exchanges of knowledge in order to lay the ground for European and international economic and financial cooperation after the war.

London thus established itself as the centre of free Europe—the seat of European governments in exile and the exiled branches of European central banks. And it was precisely this ‘wonderful opportunity of fate’ that Kingsley Wood referred to in his speech. He recognized that there was a chance to plan the post-war economic order from the ground up on a European and transnational level. The cohabitation of European economic and financial elites in close proximity in the centre of London allowed networks to form that could not have come about in any other context. People came together in governmental and independent bodies, clubs, and think tanks to discuss, philosophize, and negotiate their ideas for the aftermath of the war.

In order to show the different character of these groups, as well as their immediate geographical proximity to each other in central London, I would like to take you on a short walk through Bloomsbury, Mayfair, and the City of Westminster, which I discovered during my research stay at the GHI and enjoyed very much despite the cold March weather. Along the way, I will introduce three different groupings of exiled economic and financial professionals and explain their work in more detail.

The walk, which takes only about an hour and a half to complete, begins at the German Historical Institute London, where I held a scholarship between March and April 2023. From here, we head west to Oxford Circus. After walking a little further down Hanover Street, we reach the first stop of the tour: the famous Claridge’s Hotel. This long-established luxury establishment has long been a venue for opulent receptions and elegant banquets in an informal setting. Kingsley Wood appreciated this ambience, and so he invited the exiled finance ministers and central bankers of the Continental European states along with their most important advisers to an annual luncheon, followed by the opportunity for an informal exchange.³ In each of the war years, he gave a speech that invoked the cohesion between the Allies and—as in my opening quotation—did not miss any opportunity to emphasize that there were advantages to be seen even in the situation of exile. In the course of the war, Kingsley Wood, together with representatives of the Treasury, initiated a working group in the same constellation as the lunch meetings to develop common ideas for the immediate ‘relief’ phase after the war. These were mostly pragmatic issues, such as the reprinting of banknotes in exile. The latter fulfilled two purposes: first, to provide the Allied liberation armies with local currency during their military operations on the ground, making it easier for them to pay for goods and services; and second, to help the Allied governments in exiles to implement anti-inflationary measures (such as the withdrawal and freezing of parallel currencies circulating under German occupation and the subsequent introduction of new currencies) once they returned to their respective homelands after the war.⁴ The annual meetings at Claridge’s thus served mainly to keep up the morale of the Allies while they made decisions in the parallel working group. Claridge’s remained a place of informal exchange and encouragement of the Allied strategy of working as closely as possible together to develop concrete post-war economic and financial policy measures.

The route then continues south towards Buckingham Palace. Right on the edge of Green Park, in Stratton Road, is Stratton House, which during the Second World War was the seat of several exiled politicians—including the Polish Prime Minister. In his offices, in a way, the groundwork was laid for an organization that still exists today: the European League for Economic Cooperation (ELEC). In this office, three politicians met who, following the end of the war, transferred their ideas for far-reaching economic cooperation to Continental Europe: Józef Retinger, Paul van Zeeland, and Petrus Kerstens. In consultation with van Zeeland and Kerstens (along with the Belgian Foreign Minister Paul-Henri Spaak and the Greek diplomat Panagiotis Pipinelis), Retinger initiated regular meetings in the Polish Prime Minister’s office to discuss European unification after the war.⁵ Although there are unfortunately no records or minutes of these rather informal gatherings, the great interest of the three ELEC founders in a European community is already evident at this point. The desire for European unification—especially on an economic level—united the three men during their time in exile. They had a common vision: to strengthen the ‘small’ nations of Europe through one federation, or several regional ones, and to advance economic cooperation on the European Continent.⁶ And so they came together again after the end of the war to further develop their shared ideas. With the foundation of the ELEC in 1946, an organization came into being whose primary task was to produce studies on the economic problems of Europe and a future European Union. The ELEC has retained its focus on research and debate to this day, and it now also holds a consultative status in the Council of Europe and in the United Nations Economic Commission for Europe.⁷ In this way, the three exiled friends van Zeeland, Retinger, and Kerstens, starting out from the Polish Minister’s office in Stratton House, made a concrete contribution to the rise of the European movements and to European integration.

The next and final stop on our tour is just a few minutes’ walk to the east. It is one of the top-rated think tanks in the world: Chatham House (formerly the Royal Institute of International Affairs). Here, shortly after the beginning of the war, various research groups were formed to discuss the post-war order. One of these groups was the Economic and Statistical Seminar of British and Allied Economists, which was headed by the famous economist Paul Rosenstein-Rodan. In addition to numerous British participants, the seminar was mainly attended by economic and financial experts with an Eastern or South-Eastern European background, and it was partly intended to deal explicitly with questions of economic reconstruction in this region.⁸ The participants had a common goal, which Rosenstein-Rodan defined as follows: ‘The main task of the seminar will be to assemble some of the statistical and other factual data on which any plans of reconstruction must rest, and which only co-operation between economists of all the countries concerned can provide.’⁹ Between its foundation and the end of the war, the Economic and Statistical Seminar produced an enormous amount of material with instructions for specific measures and proposals for the industrialization of Eastern Europe. Unfortunately, the accumulated material was never published. Nevertheless, the group’s work led to a number of publications, including the two most famous essays by Rosenstein-Rodan. With ‘Problems of Industrialisation of Eastern and South-Eastern Europe’ and ‘The International Development of Economically Backward Areas’, he not only laid the foundation for his later theory of the ‘Big Push’ and the discipline of development economics, but also briefly summarized the discussions and evaluations of the seminar.¹⁰ So in some ways, the work of this association had an impact long into the post-war period, and also complements my previous example with an Eastern European perspective.

As we start to make our way back to the to the GHIL, the opportunity naturally arises to reflect on what we have seen. A portrait of London emerges as the bedrock for the future economic integration of Europe—a ‘wonderful opportunity’ to make the most of the situation of exile during the Second World War. This formative period is at the heart of my Ph.D. project¹¹ and its analysis of the international groups, informal gatherings, and committees involved in generating ideas for a post-war European order. And even though this project will probably not be a walk in the park, I am looking forward to the challenges ahead.

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The featured image shows the stations of the walk on a satellite view of Central London, generated with GraphHopper.

1. National Archives, T 172/2015, Speech at Lunch to Allied Finance Ministers, 22 Feb. 1942. [↩]
2. For more information, see the blog of the project ‘The London Moment’: https://exilegov.hypotheses.org/. [↩]
3. See National Archives, T 172/2015. [↩]
4. National Archives, FO 371/31522, Memoranda of a Meeting of Allied Finance Ministers on Post-War Currency Requirements of the Allies, 24 July 1942; see also Lea Levenhagen, Lea, ‘The Political Importance of Printing Banknotes in Exile’, The London Moment: Exile Governments, Academics, and Activists in the Free Capital of Europe, 1940–1945, 15 Feb. 2023. Link: <https://exilegov.hypotheses.org/2790> [↩]
5. Joseph Retinger, Memoirs of an Eminence Grise, ed. John Pomian (Ithaca, NY, 1972), 100. [↩]
6. See Michel Dumoulin, ‘Les débuts de la Ligue européenne de coopération économique (1946–1949)’ Belgian Foreign Policy, 29/1 (1987), 99-118; Archives of the Catholic University of Leuven, Archives of the European League for Economic Cooperation, B 1. 1. Naissance de la Ligue (1946–1949), File 1 Correspondance 1946–1947, Letter from van Zeeland to Retinger, 5 Oct. 1946. [↩]
7. See the website of the ELEC: https://eleclece.eu/ [↩]
8. See Royal Institute of International Affairs (hereafter RIIA), 9/23, Committee on Reconstruction: Economic and Statistical Seminar of British and Allied Economists, Papers and correspondence of the Group´s work on Economic Development of Eastern and South-Eastern Europe, under direction of Dr P. N. Rosenstein-Rodan; Eric Helleiner, Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order (Ithaca, NY, 2014), 236. [↩]
9. RIIA, 9/23, Invitation letter from RIIA to Prof. Bowley from OIS, 29 Jan. 1943. [↩]
10. See Paul Rosenstein-Rodan, ‘Problems of Industrialisation of Eastern and South-Eastern Europe’, Economic Journal, 53/210–11 (1943), 202–11; id., ‘The International Development of Economically Backward Areas’, International Affairs, 20/2 (1944), 157–65. [↩]
11. For more insights into my Ph.D. research as well as ‘The London Moment’ project as a whole, see: https://exilegov.hypotheses.org/. [↩]

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