ABSTRACT
The changes in the structure of banking were associated with various pieces of legislation which were designed to meet real or fancied problems. Joint-stock banks, after a shaky start, grew in size and helped to bring stability to the banking system. The main function of the clearing banks, as those within the system came to be called, remained the raising of short-term deposits and the provision of short-term finance for trade, industry and agriculture, rather than long-term investments in industry. The ratio of domestic investment to national income was far lower in Britain than in Germany and the USA, while the ratio of foreign investment was far greater. The sale of securities to provide finance for transport and other capital-hungry projects was one of the main growth areas of the nineteenth century. Railways were typically financed by a mixture of fixed-interest stock for those requiring security, and equity stock for those willing to bear more risk.
