the world of private banking

LONDON’S FIRSt ‘BIG BANG’? 81
recent creation that had brought these institutions low but also the ‘bear’ selling of
their shares, a feature of 1866’s opening months. This led to Leeman’s Act, which
attempted to prevent speculators from selling shares that they did not possess but
it soon became a dead letter, totally disregarded by the London Stock Exchange
within a decade. 40
The memory of some of the new limited banks’ relatively brief lives failed to
check further promotions of domestic banks, especially during the upswings of the
early 1870s and of the opening years of the 1880s. A number were once more the
conversions of private banks, such as the Cornwall (Tweedy, Williams), the Craven
(Birkbeck, Robinson), Crompton & Evans Union Bank and Manchester Joint
Stock (Robertson Fraser & Co.). Some of these were undertaken as responses to
the consequences of the City of Glasgow Bank crash for unlimited banks, whether
private or joint-stock. Other promotions were mayflies of boom periods and
especially of the weak upswing of the early 1880s: Cheshire Banking Co. (1882–
4), Hull District (1879–80), and National Mercantile (1878–81). The remaining
18 had business careers of some longevity – on average 17 years – which for
at least eight came to an end only because of the amalgamation movement that
further accelerated over the 1880s. 41 However, only one of the post-1866 new
corporate banks – the Lancashire & Yorkshire (1872–1928) – had any immediate
major impact upon the market. In this, it was unusual amongst all new corporate
domestic banks established between 1870 and 1920.
Capie has put forward that limited banks formed after 1870 generally failed
to rapidly establish significant positions because the market was not wholly
contestable. A constraint to their progress arose from the monopolistic position
of the London Clearing House, formed by London private banks during the late
eighteenth century, which accepted joint-stock institutions as members only from
1854. 42 However, membership was not automatic and some London corporate
banks of the mid-1860s – the Imperial and the Metropolitan & Provincial – were
initially refused entry. Opposition came from not only the continuing vested
interests of metropolitan private bankers but also the London unlimited jointstock
banks founded between 1834 and 1857. The managements of the latter
still considered that all the assets of every shareholder were required to back
an institution’s business. Certainly, one factor at work within the amalgamation
movement from the 1880s supporting Capie’s interpretation was the acquisition of
40
The Economist (2 Mar. 1867), pp. 231–2, 237–8; and E.V. Morgan and W.A.
Thomas, The Stock Exchange (London, 1962), pp. 147–8.
41
Data drawn from F. Capie and A. Webber, A Monetary History of the United Kingdom,
1870–1982, I, Data, Sources, Methods (London, 1985), Appendix II, pp. 539–76.
42
F. Capie, ‘Structure and Performance in British Banking, 1870–1939’, in Cottrell
and Moggridge, Money and Power, pp. 96–100.