ABSTRACT
We proceed forthwith to consider in detail that process of absorption and amalgamation which, by extinguishing the private banks, and the less powerful joint-stock institutions, prepared the way for banking centralisation as a factor of the modern Money Power. Bank absorption had its origin in rivalry, not in scientific aspiration for more effective control. Like other movements, it was simply doliogenic, and not orthogenic. The fact that centralised scientific control has been one of the results of the movement need not blind us to the truth that this was not one of its initial purposes. In their anxiety to extend their clienteles the new joint-stock banks began to buy up everything and anything that was on offer in the way of old banking businesses. Darwin had not then propounded his immortal hypothesis, but its principles were vaguely enunciated with reference to banking evolution. Lord Liverpool declared in 1826 that “the solid and more extensive banks would not fail, in time, to expel the smaller and weaker.” The 1836 Committee, like other contemporary observers, saw natural selection at work, and remarked upon it, without grasping its meaning. Contemporaries are not likely to see any economic process in its true perspective. “A principle of competition exists,” said the Committee, “which leads to the extinction of all private banks, and to their conversion into banking companies.” These observations are strangely prescient, especially as Catastrophism 412still held the scientific field. One of the modes of operation was the transfer of the services of the experienced private bank manager or cashier to the new joint-stock institutions, which offered him a better salary and far brighter prospects of professional advancement. 1 In 1832 there were 62 private banks in the metropolis. Taking the wider survey of England as a whole, Mr. Easton estimates 2 that there were 600 private banks in 1808 and 721 in 1810. In England, down to the year 1837, during the opening years of the movement, a total of 113 private banks had been merged in the joint-stock banks. 3 In 1844 their number had been reduced to 335 with 93 branch offices. In 1894 it was 101 and 464 branch offices. In 1903 only 42 private banks remained. In the 23 years to December 31, 1913, private banks were reduced in number from 38 to 8. The “principle of the issue of transferable shares acts at once in private banks,” the 1836 Committee had said. Between the years 1830 and 1869, not a single new private bank was established in London. 4 No fewer than 24 private banks failed in 1840, 17 without paying any dividend. The annexed figures, from a Parliamentary return of the number of private banks and joint-stock banks from 1826 to 1842, display in juxtaposition the record of declining private banks and the increasing joint-stock institutions :—413At the time of the Jubilee in 1897, the Bankers’ Magazine printed the annexed informative survey with reference to English banks :—
