the world of private banking

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THE WORLD OF PRIVAtE BANKING
V
The formation of domestic limited joint-stock banks from 1861 was soon
accompanied by the founding of overseas corporate banks, both colonial and
foreign (see figure 4.8). 57 Their promotion became publicly evident from early
1863. Many initially had ‘Anglo-continental-European’ titles whilst their
foundations were thought, at the time, to have been encouraged by the London
money market’s ‘comparatively favourable aspect’. 58
British-based overseas banking was a comparatively new development. A few
English banks, comparable in nature to domestic private country banks, had been
established abroad, primarily in French Channel packet ports and Paris. Otherwise,
there was overseas ‘trade’ banking, largely undertaken by branch houses of
London merchants and merchant banks. This private foreign banking, albeit of
a restricted kind, built upon Britain’s early established position as the linchpin of
the world economy. During the late 1840s, according to a contemporary British
survey, there were about 1,500 British mercantile houses overseas compared with
500 French, with nearly half of the latter located in the Mediterranean and Levant
region. However, that survey overlooked German commerce which, in 1845, had
340 extra-European houses, largely sited in the New World – 170 in the United
States and 100 in Latin America.
Alongside English mercantile branch houses from the 1830s were a number
of banks, incorporated by royal charter, 59 each operating within a specific area
of the British Empire, the only major exception being the Ionian. Together with
English private mercantile houses, these institutions financed international trade
and operated in the foreign exchange markets, but also developed local deposit
branch banking. 60 In 1860, immediately prior to promoters of overseas banks
responding to the opportunities of the new permissive company law, there were 15
British incorporated overseas banks with, collectively, 132 branches. The majority
of their assets were located in Asia and Australasia. 61
London-based colonial banking expanded under the new company law, with
at least 30 new institutions formed between 1857 and 1866 (13 during the mid-
1860s boom). However, many were highly speculative in nature and so unable to
withstand the 1866 crisis, of which the most spectacular example was the collapse
of Agra & Mastermans. Initially an expatriate Indian private bank founded during
the 1830s, it became a London-based corporate concern from 1857, and in 1864
57
Data drawn from Shannon, ‘Limited Companies of 1866–1883’, Table C, pp. 312–13.
58
Bankers’ Magazine (1863), p. 53; and A.S.J. Baster, The International Banks
(London, 1935).
59
The exceptions to incorporation by charter were: Bank of Australasia (1835), Union
Bank of Australia (1837) and the Australian Joint Stock Bank (1853).
60
G. Jones, British Multinational Banking 1830–1990 (Oxford, 1993), pp. 13–15,
19–21.
61
Jones, Multinational Banking, p. 23.