How far does the apple fall from the tree? The size of English bank branch networks in the nineteenth century

Abstract

How far does the apple fall from the tree? The size of English bank branch networks in the nineteenth centuryAfter the Bank Charter Act in 1833, English banks could branch nationally without legal or geographical restriction. It has been previously thought that despite this freedom, early English joint-stock banks predominantly began as single units. Drawing upon a new dataset, this article maps the growth of branch banking, the size of bank networks and their geographical location and spread. It demonstrates that banks pursued branching strategies energetically against the intentions of regulators and were successful in forming large and complex networks. However, ultimately, before 1880 the majority settled for local, district and multi-regional structures, as opposed to national structures. , "Entry into banking markets and the early-mover advantage

The rise of financial accountability in British joint stock banks: 1825 to 1845

“…Only five of the ‘weaker and riskier banks’ failed (Turner 2012, p. 40). However, the instability of branch network activities and poor bank management contributed to the crisis (Barnes and Newton 2018, p. 459; Collins 1988, p. 84). Parliament was aware of these issues, but the failure of the Northern Central Bank heightened their concern (Barnes and Newton 2018, pp.…”

“…This included mandating measures of financial accountability, commencing in 1826 with the full disclosure of note issues by the Bank of England. The extant literature guided the selection of banking enactments for this study and included those identified as important to the development of early nineteenth-century banking systems in Britain (Horsefield 1944; Collins 1984, 1988; Jones and Aiken 1994; Neal 1998; Barnes and Newton 2018). Table 1 provides a summary of the banking enactments featured within this study.…”

“…The Bank Charter Act 1833 (29 August 1833) further diluted the monopoly of the Bank of England by removing the 65-mile exclusion zone. This allowed banks to establish in London, albeit without note-issuing rights (Barnes and Newton 2018). Lord Althorp was instrumental in driving the proposal to establish a secret committee on the Bank of England charter, and on the system of banks of issue in England and Wales (HC Deb 22 May 1832).…”

“…Items 1–7 were specific to the Bank of England and items 8–11 related to other banking institutions (HC Deb 20 May 1844). The Bank Charter Act 1844 (19 July 1844) restricted note issues to the amounts already in circulation during 1844 and the Bank of England became the only bank able to issue new bank notes (Barnes and Newton 2018, p. 460). The Bank of England was separated into the Issue Department and Banking Department to ensure matters related to the issuing of promissory notes payable on demand (Issue Department) remained distinct from matters relating to the general banking business (Banking Department).…”

“…In the Bank Notes Act 1826, the Bank of England was required to provide and publish a monthly account of note issues under £5 as well as the total amount of notes in circulation. Thereafter, the Country Bankers Act 1826 was passed and was deemed the government's major response to the 1825–6 banking crisis (Barnes and Newton 2018, p. 459). Surprisingly, the government refrained from enforcing more mandates to impose financial accountability.…”