the world of private banking

76
THE WORLD OF PRIVAtE BANKING
proposal on various grounds, depending on who was the listener: the National’s
current difficulties provided a market opportunity; or the firm in any case required
greater capital, which his own social connections could supply; or all involved
would benefit from the substantial premium likely to be obtained on the shares.
William’s grandiose plan for incorporation was intricate, involving a partnership
acting for his proposed limited company, but miscarried when executed. Few
shareholders were attracted, many having been put off by the adverse effects upon
principals in the money market of the sudden rise in interest rates during February
1873. Worse still, existing customers closed their accounts with Gillett Brothers
because of distrust and distaste of corporate enterprise. The arising imbroglio
led to long-lasting legal disputes between William and his brothers, Alfred and
George, who continued the old private business. The consequences of the tiered
conversion contracts of 1873 were not legally resolved until 1894, only for fresh
problems immediately to arise as a result of Alfred’s sudden death. 26
Gilletts’ business during both the 1860s and 1870s was largely with provincial
banks, private and joint-stock, insurance companies and a few railway companies.
Initially, the house primarily dealt in trade bills, endorsed by their banking
clientele, which Gilletts screened and monitored for quality on the basis of the
creditworthiness of the originating parties. London credit agencies were used but
Gilletts developed their own expertise that they shared, probably most often with
the banks on their ‘special’ customer list. At the height of the early 1870s boom,
Gilletts handled £2m. in bills, but this thereafter fell away, to average £1.3m.
during the decade’s latter years. The business had begun on a country banking
connection, reflecting Gilletts’ own origins, but subsequently the house’s staple
came increasingly to be Indian bills. These bore the names of the institutions with
which exporters of cotton, jute, rice and tea etc. banked, together with those of the
British overseas banks that financed international commerce. Such varying types
of commercial paper were joined over the 1880s by Treasury Bills, which acted to
a degree as a counterweight to give a broad stability to Gilletts’ bill case. 27
Gilletts’ experience shows that there was still room for personal enterprise on
mid-Victorian Lombard Street and that ‘joint-stock-ism’ had not been accepted
by all. Nevertheless, the London market money’s organizational structure
was completely changed during the decade after 1856 through the National’s
becoming the dominant house, until it too was overshadowed by another corporate
institution – Union Discount – during the closing decades of the nineteenth century.
Furthermore, Gilletts’ particular experience points to the general, secular waning
of private enterprise within domestic banking, as the bulk of their money-market
business shifted from relationships with private country banks to Oriental bills
over the 1880s and 1890s. In the case of the London money market, the ‘Big
Bang’ of the 1860s had significant immediate effects, and its subsequent, rippling
aftershocks were also potent shaping forces.
26
Ibid., pp. 17–29.
27
Ibid., pp. 35–62.