the world of private banking

72
THE WORLD OF PRIVAtE BANKING
opening years of the 1880s. Consequently, if there was a mid-century ‘Big Bang’,
it took place during the mid-1860s boom.
The arrival of corporate financial institutions had a range of significant effects.
These included: activity in the new issues market, especially over the mid-1860s,
arising from their very promotion; changing the organization of both the domestic
banking system and the London money market; augmenting the domestic provision
of banking facilities; giving a new basis to British overseas banking; and the
founding of corporate institutions that were to challenge briefly the position of
private merchant-banking houses. Their impact upon private enterprise in finance
will be reviewed by examining each financial market in turn as the presence
of corporate institutions came to bear. This gives some order to the following
review, but it must be borne in mind that there were also some interconnections.
These arose particularly from the finance companies’ activities, as some promoted
domestic and overseas banks while one – General Credit & Finance (Co. Ltd.)
– was reconstituted as a corporate discount house during the aftermath of the 1866
crisis. Furthermore, the International Financial Society (Co. Ltd.) had personal
connections with some London merchant banks and Glyn, Mills, a London private
bank. Moreover, Albert Gottheimer (subsequently Baron Albert Grant) used the
post-1856 permissive company law to enhance his notorious, two-decade career as
a financier and promoter, beginning with establishing his own corporate discount
house in 1860. 15
III
In his detailed studies of London registrations of limited companies, Shannon
used the term ‘finance companies’ to assist classification, albeit that he further
distinguished among these particular institutions depending on whether they
were designed to be colonial, or domestic or foreign concerns. However, ‘finance
companies’ had a particular meaning for mid-Victorians, being the corporate
City undertakings set up over the mid-1860s to operate in the money market and
undertake new issues. What proved to be their brief impact will be examined later.
The discussion here will begin by considering effects of the establishment of
corporate discount houses, the first sub-type of significant City ‘finance companies’
to be founded.
The forces that motivated the creation of corporate discount houses from 1856
appear to have been the London money market’s rapid growth over the mid-1850s,
cyclical upswing and the substantial profits generated by London joint-stock banks.
The first were the National Discount and the London Discount, both of which
survived the 1857 crisis, while the General Discount was established amidst that
financial upheaval. The need for further principals in the London money market
15
See P.L. Cottrell, ‘Albert Grant’, in D. Jeremy (ed.), Dictionary of Business
Biography, vol. II (London, 1984).