the world of private banking
the world of private banking
the world of private banking
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80<br />
THE WORLD OF PRIVAtE BANKING<br />
<strong>the</strong> only two English banks that each had more than 100 <strong>of</strong>fices – 149 and 138<br />
respectively. 36<br />
A fur<strong>the</strong>r structural change in English domestic <strong>banking</strong> arose from <strong>the</strong><br />
acceleration in <strong>the</strong> rate <strong>of</strong> <strong>banking</strong> amalgamations, with eight in 1863 and ten<br />
in 1864. These mergers included some <strong>of</strong> considerable significance, as <strong>the</strong>y<br />
caused <strong>the</strong> disappearance <strong>of</strong> major <strong>private</strong> banks. Heywood, Kennard & Co. was<br />
acquired by <strong>the</strong> Bank <strong>of</strong> Manchester in 1863 and, in <strong>the</strong> following year, Jones<br />
Loyd & Co. was taken over by <strong>the</strong> London & Westminster. 37 Expectations, arising<br />
from investor interest in bank shares during <strong>the</strong> mid-1860s, no doubt also led<br />
to many stillborn schemes. An example is <strong>the</strong> International Financial Society’s<br />
<strong>banking</strong> fusion plan. This City finance company’s directors participated, along<br />
with members <strong>of</strong> a ‘first-class London house’, in an attempt from July 1864 to<br />
bring about ‘<strong>the</strong> amalgamation <strong>of</strong> existing <strong>banking</strong> interests throughout England’.<br />
Within four months, <strong>the</strong> scheme had got as far as involving specific banks, like<br />
Messrs Becketts <strong>of</strong> Leeds, while o<strong>the</strong>r bank managements, such as that <strong>of</strong> <strong>the</strong><br />
Birmingham Banking Co., approached <strong>the</strong> London finance company to be<br />
included. Yet <strong>the</strong> project dragged, and by January 1865 its promoters’ continuing<br />
discussions had concluded that success required <strong>the</strong> inclusion <strong>of</strong> an existing<br />
London bank. However, this potentially far-reaching scheme finally ran into <strong>the</strong><br />
sands during <strong>the</strong> opening months <strong>of</strong> 1865. Prices <strong>of</strong> bank shares had weakened<br />
but <strong>the</strong>re were also o<strong>the</strong>r particular reasons. Bagehot ‘was unable to take part in<br />
<strong>the</strong> Direction’ while <strong>the</strong> North Western Bank, <strong>the</strong> Commercial Bank <strong>of</strong> Liverpool<br />
and <strong>the</strong> Birmingham Banking Co. withdrew, formally or informally. By spring<br />
1865, with <strong>the</strong> collapse <strong>of</strong> <strong>the</strong> bull market in bank shares, <strong>the</strong>re were no longer any<br />
grounds for <strong>the</strong> promoters’ expectation <strong>of</strong> a pr<strong>of</strong>itable share issue. 38<br />
As in <strong>the</strong> London money market, <strong>the</strong> 1866 crisis cut a swa<strong>the</strong> through <strong>the</strong> ranks<br />
<strong>of</strong> <strong>the</strong> new limited banks and also established institutions. It brought down <strong>the</strong><br />
Bank <strong>of</strong> London, <strong>the</strong> Consolidated and <strong>the</strong> Metropolitan & Provincial while, in<br />
<strong>the</strong> provinces, <strong>the</strong> recently converted Barned’s Bank failed, as did <strong>the</strong> Birmingham<br />
Banking Co., <strong>the</strong> Preston Banking Co. and <strong>the</strong> South East <strong>of</strong> England. O<strong>the</strong>rs,<br />
such as <strong>the</strong> Alliance, <strong>the</strong> East London and <strong>the</strong> Liverpool Union were badly shaken.<br />
Some – <strong>the</strong> Consolidated, <strong>the</strong> East London (as <strong>the</strong> Central Bank <strong>of</strong> London), <strong>the</strong><br />
Metropolitan and <strong>the</strong> Preston – were ei<strong>the</strong>r re-established or reconstituted. 39 It was<br />
not only, variously, bad business, bad management and lack <strong>of</strong> reserves due to<br />
36<br />
Crick and Wadsworth, Hundred Years, pp. 36–7; and Nishimura, Decline <strong>of</strong> Inland<br />
Bills, Table 2, p. 84.<br />
37<br />
J. Sykes, The Amalgamation Movement in English Banking 1825–1924 (London,<br />
1929), pp. 31–2.<br />
38<br />
Cottrell, Investment Banking, I, pp. 335–8.<br />
39<br />
Bankers’ Magazine (1866), p. 1325; Crick and Wadsworth, Hundred Years, pp.<br />
68, 150, 302–7; T.E. Gregory, The Westminster Bank Through a Century, vol. I (London:<br />
1936), pp. 42–7, 51, 54, 57–68; and R.S. Sayers, Lloyds Bank in <strong>the</strong> History <strong>of</strong> English<br />
Banking (Oxford, 1957), pp. 208, 209, 211, 212.