As UBS announced plans to chop 10,000 staff this week, many traders reacted with shock. Little wonder: during the past three decades, it might have seemed inconceivable that any bank could slash its workforce so far, so fast. The young(ish) traders who suddenly found themselves locked out of UBS this week built their careers in an era when finance seemed to keep inexorably growing; investment bankers were woven into the fabric of the modern economy, along with ultra-high levels of banking pay.

But viewed through a long lens of history – say 100 years – this week’s news does not seem so unusual. For while finance might have swelled in recent decades, it is often forgotten that in earlier periods it also shrank, to a startling degree.

Take a look, for example, at some research conducted by a New York based economist, Thomas Philippon, partly in association with Ariell Reshef of the University of Virginia. They chart the fluctuations of American finance since 1880 and show, firstly, how dramatically finance swelled from the late 1970s to today. Jobs in banking multiplied and the financial sector, adjusted for defence spending, rose from 4 per cent of gross domestic product to just under 9 per cent at the peak. Banker pay swelled too: although average banking salaries relative to non-banking professional salaries were almost at parity in the 1950s, by 2007 they were 1.7 times higher.