the world of private banking

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