the world of private banking

LONDON’S FIRSt ‘BIG BANG’? 97
The collapse of the City of Glasgow Bank in 1878 brought to an end the ‘Big
Bang’ of the mid-nineteenth century. This was most evident in the resulting less
expansive monetary environment that prevailed from autumn 1878 until the mid-
1880s. New banks continued to be publicly formed but not in such numbers as had
led to cascades of prospectuses during the mid-1860s and early 1870s. Indeed, the
creation of domestic limited banks during the 1880s was related more to existing
institutions adopting reserved liability than to the founding of entirely new
corporate houses. Corporate overseas banking waxed, especially with the apogee
of the Australian pastoral boom during the mid-1880s that sucked in medium-term
deposits from all over the British Isles but particularly the east coast of Scotland.
The finance companies were replaced by more solid and more worthy investment
trusts, the first of which, Foreign & Colonial, was established by Glyn, Mills in
1868.
The ‘Big Bang’ largely sounded the death knell of personal private enterprise
within most of London’s financial markets. The money market after 1866 was
dominated by, first, the National and, then, the Union. Private houses continued,
indeed new private discount houses were established, but although many enjoyed
considerable longevity, they remained minnows, never expanding to challenge the
position of the corporate houses. In provincial commercial banking, joint-stock
institutions totally gained the upper hand as a result of the promotional booms of
the mid-1860s and early 1870s, followed by the consequences of the 1878 collapse
of the City of Glasgow Bank. Even when, in the occasional instance, conversion
meant in practice just that – the former partners became the principal shareholders
– this only delayed the extinction of the local private banker for a decade or
so. After 1878, size became of increasing consequence, and the amalgamation
movement from the 1880s led to the sweeping up into bigger units of small jointstock
and private banks alike.
Private banking persisted in the City but its days were numbered after 1878
except for the most specialist house. Although its members continued to refer
to themselves as partners, Glyn, Mills was converted into a ‘private’ joint-stock
concern in 1885. They had rejected the idea of constituting a block of private
banks as a defensive measure, instead adopting the strategy of specialism, which
one partner explained in terms of ‘I believe that we shall do best by preserving a
characteristic which we alone of all the large and serious banks possess namely
of having only one door’. 89 Barclays, a decade later, drew precisely the opposite
conclusion. At the time, there was no clear guidance. Dimsdales amalgamated
with Prescotts in 1891 to form a corporate concern, only to be acquired by the
Union of London & Smith’s Bank two years later. Fullers was taken over by
Parr’s Banking Co. Ltd in 1891, paralleled by the Midland’s acquisition of Lacy,
Hartland, Woodbridge, whereas in 1893 Herries Farquhar amalgamated with
Lloyds. Whatever hesitations over how to respond, time was running out, of which
89
Fulford, Glyns, pp. 226–7.