IT WAS A far-fetched plot that would have delighted the editor of the Wizard:

Noted Harley Street bacteriologist and amateur racing driver enters his extremely second-hand sports car for the Le Mans 24-hour race. His co-driver, a pipe-smoking journalist with a talent for cartooning, rams into a pile of crashed cars in the small hours, extricates the damaged car from the wreckage, lashes it together with wire - and goes on to win the race.

That was exactly what happened in 1927 when the 3-litre Bentley driven by Dr Dudley Benjafield and Sammy Davis won the second of the marque's five victories at Le Mans. Afterwards, Dr Benjafield continued to use the car for his daily patient rounds. It was a very British achievement. . . In this land of uncertain climate and strictly enforced speed limits, we have always made superlatively good open sports cars. The rolling English drunkard may have made the rolling English road, but the rolling English road calls for cars with pin-sharp handling and rapid acceleration.

Indeed, there is a strong argument that the sports car is a British invention, and certainly some of our oldest motor manufacturers - Morgan, Aston Martin, AC - have been making them for more than eight decades. One can also argue that such companies owe their survival more to the enthusiasm of their owners, customers and staff than to conventional commercial rationale. It was a lack of business acumen that cost the original Bentley company its independence in 1931.

Overheads are not something which ever seem to have bothered Morgan, whose 75-year-old factory in Malvern has been described as "the ultimate working museum". Certainly the company owed its survival between the wars to the parsimonious nature of its founder, H. F. S. Morgan. He was also a good businessman. He realised in the mid-Thirties that the days of the brilliantly engineered Morgan three-wheeler, whose phenomenal power-to-weight ratio gave it acceleration to match the most expensive sporting four-wheelers, were numbered, and a four-wheeled Morgan appeared in December 1935. He considered making his own power units in-house and even had a prototype overhead camshaft four-cylinder engine built by leading motorcycle designer Ike Hatch. But the production costs would have ruined the little company, so engines were bought first from Coventry-Climax and then Standard.

Morgan's financial acumen was unusual, however: most small car makers ran their business on an increasingly frayed shoestring in the hope that something would turn up. "We have never had sufficient working capital," lamented the managing director of the long-forgotten Mercury company in 1920. "I have supported the company myself to the extent of some £32,000 but. . . we must have new money in. . ." Lack of finance didn't stop some of the smaller companies from producing technically advanced cars or pursuing ambitious racing programmes: Alvis, for instance, pioneered high-performance front-wheel drive cars in the late Twenties, while Aston Martin achieved international racing fame on a prewar production of 680 cars and several changes of ownership without ever showing a profit.

More certain was the extrapolation of sports cars from popular family models: this was easy, for the fitting of a lightweight body boosted performance quite remarkably without the need for expensive tuning. Many companies listed sports versions of their best-selling models, but these usually had dull side valve engines. One exception was Wolseley - part of the machine-guns-to-battleships Vickers group which operated under the aegis of that shadowy figure Sir Basil Zaharoff - which had licence-built overhead camshaft V8 Hispano-Suiza aero engines during the Great War. After the Armistice Wolseley translated that overhead camshaft technology into engines for its popular - but unprofitable - cars.

By 1927, the Vickers group was in turmoil; Zaharoff pulled out after 50 years and Wolseley - declared bankrupt - was bought by William Morris for £730,000 to keep his rival, Austin, from getting it. Under development at Wolseley was an OHC four-cylinder engine of just 850cc, which Morris took for his new Minor car. But this lively little engine also attracted Cecil Kimber, head of Morris Garages, an independent venture owned by William Morris. In 1924 "MG" had started making special sports bodywork for Morris cars and developed into a separate marque, its distinctive octagonal badge inspired by Kimber's dining-room table.

MG production was small and the cars exclusive and expensive, but by the autumn of 1927 output was sufficient to justify a proper MG factory, which was outgrown within two years. A new home was found at Abingdon-on-Thames, where output was dominated by the "Midget" sports car based on the Morris Minor. In 1930, its first full year of production, 1,628 Midgets were sold - more than the total of all the MGs built in the six previous years. In 1930 Wolseley launched an 1,100cc six-cylinder version of the Morris Minor as the "Hornet": it was a good engine in an underdeveloped chassis, and though a sports version of the Hornet became available, Kimber wisely took the power unit only when he created a bigger Midget under the name "Magna".

Kimber had a style all his own: his office in the grimly utilitarian administration block at Abingdon was a black-and-white Tudor fantasy with an elegant oriel window from which he could count the Midgets pouring out of the factory. He well understood the psychology of his customers and publicised the marque by building successful competition cars which were sufficiently like the production model to foster the "same-as-you-can-buy" feeling. Lessons learned on the track were fed back into production, and the shapely little MG sports cars of the Thirties became dreams on wheels for would-be racing drivers.

The archetypal MG of the Thirties was the T-Type, which concealed a prosaic overhead-valve power unit beneath a liberally louvred bonnet. It continued after the war and became a hero of the national export drive. But by then Kimber was gone. In 1941 he had been brutally sacked from the company he had created by corporate man Miles Thomas, who was nettled by Kimber's "acute individualism". His death in February 1945 was ironic: while travelling on business for a firm of piston ring makers, the man whose motto had been "Safety Fast" was killed in a freak low-speed railway accident in King's Cross tunnel.