the world of private banking
the world of private banking
the world of private banking
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82<br />
THE WORLD OF PRIVAtE BANKING<br />
London clearing banks by some provincial banks, such as Lloyds and <strong>the</strong> Midland,<br />
in order to secure <strong>the</strong>ir direct institutional entry into <strong>the</strong> clearing. 43<br />
None<strong>the</strong>less, when examining why corporate banks founded after 1870 failed<br />
to make a mark nationally, it has to be borne in mind that <strong>the</strong> majority <strong>of</strong> <strong>the</strong>m<br />
were conceived as local institutions, like <strong>the</strong>ir predecessors <strong>of</strong> <strong>the</strong> 1830s. Their<br />
managements had little intention <strong>of</strong> developing ei<strong>the</strong>r major regional or national<br />
business catchment areas. In <strong>the</strong>se terms, it is not surprising that none became a<br />
significant deposit holder. They were not competing in <strong>the</strong> national deposit market,<br />
however defined, but ra<strong>the</strong>r at a parochial level. Instead, <strong>the</strong>ir main national impact<br />
arose from <strong>the</strong>ir promotions collectively increasing <strong>the</strong> number <strong>of</strong> English and<br />
Welsh joint-stock banks to a historic maximum <strong>of</strong> 128 in 1880. As, generally, <strong>the</strong>ir<br />
objective was providing local <strong>banking</strong> facilities, <strong>the</strong> prime competitive edge <strong>of</strong> <strong>the</strong><br />
post-1870 corporate banks bore upon <strong>the</strong> remaining <strong>private</strong> country banks. 44<br />
The Lancashire & Yorkshire was different, being nationally successful. This<br />
was due in part to its not being an entirely new bank in 1872, having arisen out<br />
<strong>of</strong> <strong>the</strong> Alliance <strong>of</strong> London & Liverpool’s Manchester branch. Its manager, John<br />
Mills, began to free his local domain from 1866, his efforts achieving success from<br />
April 1871. As such, <strong>the</strong> Lancashire & Yorkshire was <strong>the</strong> product <strong>of</strong> particular<br />
personal enterprise. On its establishment, <strong>the</strong> bank soon began to branch, opening<br />
four <strong>of</strong>fices over <strong>the</strong> first year <strong>of</strong> its separate existence and a fur<strong>the</strong>r two by <strong>the</strong><br />
close <strong>of</strong> 1874. Expansion went along with riding out <strong>the</strong> minor financial crisis<br />
<strong>of</strong> 1875 by <strong>the</strong> employment <strong>of</strong> significant reserves, which cushioned <strong>the</strong> bank<br />
against London bill brokers ‘rejecting some <strong>of</strong> <strong>the</strong> very finest paper’. 45 Except for<br />
<strong>the</strong> conversions <strong>of</strong> existing <strong>private</strong> banks, no o<strong>the</strong>r post-1870 corporate <strong>banking</strong><br />
creation began with such a head start, given by customer accounts accumulated<br />
over a previous decade. 46<br />
43<br />
P.L. Cottrell, ‘The Domestic Commercial Banks and <strong>the</strong> City <strong>of</strong> London, 1870–<br />
1939’, in Y. Cassis (ed.), Finance and Financiers in European History 1880–1960<br />
(Cambridge, 1992), p. 48.<br />
44<br />
For one example <strong>of</strong> <strong>the</strong>ir lending business – that <strong>of</strong> <strong>the</strong> Swansea Bank (1872–1888)<br />
– see Cottrell, Industrial Finance, pp. 213, 219–23.<br />
45<br />
G. Chandler, Four Centuries <strong>of</strong> Banking, II, The Nor<strong>the</strong>rn Constituent Banks<br />
(London, 1968), pp. 516–29; Anon., The Story <strong>of</strong> <strong>the</strong> Lancashire & Yorkshire Bank Limited<br />
1872–1922 (Manchester: n.d. [1922]); and, for John Mills in particular, see L.H. Grindon,<br />
Manchester Banks and Bankers; Historical, Biographical, and Anecdotal (Manchester, 2nd<br />
edn, 1878), pp. 311–12; and Cottrell, ‘Credit, Morals and Sunspots’, esp. pp. 54–5, 58–61.<br />
46<br />
The o<strong>the</strong>r bank in Capie’s tabulations that enjoyed some initial, rapid deposit<br />
growth, albeit relative, was <strong>the</strong> Birmingham, Dudley & District. However, Capie is mistaken<br />
in regarding this as a new institution formed in 1874. Ra<strong>the</strong>r, it was <strong>the</strong> reconstitution <strong>of</strong><br />
a bank first established during <strong>the</strong> 1830s. See Capie, ‘Structure and Performance’, Table<br />
3.5c, p. 98 and, for <strong>the</strong> Birmingham, Dudley & District, Crick and Wadsworth, Hundred<br />
Years, pp. 55, 66; and A.R. Holmes and E. Green, Midland: 150 Years <strong>of</strong> Banking Business<br />
(London, 1986), pp. 15, 16, 19, 26, 38, 59, 69, 71, 73, 75, 83, 104.