It is now just over twenty years since Rondo Cameron published, in 1967, his pioneering study on Banking in the early stages of industrialization in which he set out to reassess the role of banking and of the financial intermediaries generally in the phase of the industrial revolution. The conclusion he reached was that their significance was greater than had up to then been allowed. A second volume of essays followed five years later.

Not all financial intermediaries operating in the early stages could be properly called ‘banks’, but we shall, following Cameron's example, use this term as a shorthand for all the relevant institutions. We should emphasize also that we shall be concerned, as was he, with the early or breakthrough stages of industrialization, including what has come to be known as the ‘take-off’, which is a stage considerably earlier than is covered by most of the other chapters in this book. But we hope to be able to show that the discussion of the role of banking in the earlier phase has relevance to the wider discussion of the significance of banking in all phases of modern economic development.

In his introduction, Cameron described the stark contrast existing in the literature. There were those, ‘the majority of economists who have dealt with this question’, who assumed that financial intermediaries would appear as soon as they were needed – ‘a case of demand creating its own supply’. At the other extreme, there were actual historical instances ‘in which financial institutions constituted leading sectors in development: these institutions were “growth-inducing” through direct industrial promotion and finance’.