The Times – We survived the last banking Armageddon<br/> The 1931 crash casts a grim shadow over the present financial crisis. History Notebook by Graham Stewart

The spectre of 1929 hangs over the present financial crisis. Indeed, the City of London’s exposure to America’s toxic debts makes reference to the Wall Street Crash inevitable. It is assumed that what happened then had comparable results on both sides of the Atlantic.

But in the short term, damage to British banks is more apparent now than then. The eye of the financial storm hit Britain in 1931, two years later, and was as much a consequence of exposure to failing banks in Central Europe as to the panic in New York.

Historians usually focus on three immediate consequences of the 1931 crisis: cuts in state spending, the fall of the Labour Government and sterling’s departure from the gold standard. At least the third of these will not be repeated this time.