the world of private banking

INtRODUctION
xix
In chapter 4, Philip Cottrell provides a thorough analysis of the institutional
changes taking place in the centre of world finance, the City of London, during
the middle decades of the nineteenth century. Cottrell describes the years 1855–
1883 as London’s ‘First Big Bang’, a critical period comparable, in terms of
institutional restructuring, to the ‘Financial Revolution’ of the late seventeenth and
early eighteenth centuries and ‘Big Bang’ in the late twentieth century. The changes
were brought about by a combination of economic and political developments – the
decline of the inland bill of exchange and Britain’s increasing exports of capital and
the liberalization of company legislation, with the introduction of limited liability
and its later extension to banking. The result was the creation of numerous corporate
financial institutions which came to dominate most of the City’s activities.
However, as Cottrell clearly shows, the institutional restructuring taking place
over the mid-nineteenth century was a long-drawn process, if only because of
the period’s financial instability, and personal enterprise remained a leading or a
significant force in a few areas. In the money market, a couple of corporate discount
houses ended up handling most of the business, without eliminating a dozen or so
partnerships from the scene; while in domestic commercial banking, the London
private banks held their own until 1890. The period witnessed a wave of creation
of overseas corporate banks as well as finance companies. The latter, mostly
short-lived second-rate affairs, were active in company promotion and railway
finance but made no inroads in foreign loans and international acceptances, which
remained the preserve of the merchant banks – the only type of bank ultimately
managing to remain ‘private banks’.
This pattern of business development, leading to the ultimate demise of private
banks, is reflected in the banks’ archives. Large commercial banks, especially
in Britain, have been formed through an amalgamation process involving
scores of private banks – well over 100 in the case of the NatWest Group (now
incorporated into Royal Bank of Scotland), discussed by Fiona Maccoll in chapter
5. Their records are uneven, the archives of small, short-lived banks having often
disappeared. In the case of private banks, the distinction between family and
business papers is not always apparent, especially in the early days of private
bankers, and the former can often fruitfully complement the latter. However, some
family papers, including private account books and correspondence, did find their
way into the parent bank’s archives, thus shedding further light on the activities of
several houses, including the Smith banking partnerships, Jones Loyd, Becketts,
Prescotts, or Stuckeys – all well-known names in Victorian Britain.
The International Economy
International finance has traditionally been private bankers’ privileged domain of
activity. This is vividly illustrated by the activities and organization of the leading
Anglo-American houses in the nineteenth century, studied by Edwin Perkins in
chapter 6. Perkins takes a long-term view and shows how the Anglo-American