It has become conventional wisdom that the eruption of Mt. Vesuvius in 1906 led to the transfer of the 1908 Olympics from Rome to London. This claim appears from time to time. Indeed, I am sure I have repeated it in some of the early articles that I wrote about the Olympics and risk. However, an article by Matthew Llewellyn in The International Journal of the History of Sport sets the record straight on this matter. It notes a lack of progress with preparations at the time of the IOC meeting in 1905 and that the political context — and specifically that financial support had not been forthcoming from Italian government — was the motivation behind withdrawal of Rome from hosting the Games. The eruption of Mt. Vesuvius was used to distract attention from the lack of government support. Perhaps the most convincing evidence for this version of events is the fact that the secretary of the British Olympic Association wrote to Baron Pierre de Coubertin in January of 1906 regarding the possibility of London hosting the Games (requesting an estimate of costs), whereas Mt. Vesuvius erupted in April.
The full citation is: Llewellyn, Matthew P.(2011) ‘A British Olympics.’ The International Journal of the History of Sport 28(5): 669-687.