chapter  3
Siegmund Warburg, the City of London and the financial roots of European integration
ByNiall Ferguson
Pages 19

The economic integration of Western Europe after World War II proceeded by a circuitous route. It began with the creation of a ‘Community’ to regulate the production and pricing of coal and steel in six European states: West Germany,

France, Italy, Belgium, the Netherlands and Luxembourg. The Treaty of Rome then created a ‘Common Market’, formally prohibiting barriers on trade between these countries. Trade between them had been growing rapidly before the formation of this European Economic Community; it continued to grow thereafter – as did world trade generally. However, in other respects economic integration proceeded slowly. In agriculture the development of an integrated market was positively hindered by the persistence of national subsidies until a Common Agricultural Policy superseded these. In manufacturing, too, national governments continued to resist panEuropean competition by subsidising politically sensitive sectors or by imposing non-tariff barriers. Such practices were less frequently adopted in the case of services, but only because services were less easily traded across national boundaries even under conditions of perfect free trade. In short, national markets were not being integrated because they were not really being liberalised. The exception to this rule was financial services, one of which – the sale of long-term corporate and public sector bonds to relatively wealthy investors – became integrated in a quite novel way in the course of the 1960s.