Regional bank-industry relations during the mid-nineteenth century: Links between bankers and manufacturing in Sheffield, c.1850 to c.1885

Business History

Volumn 38, Issue 3, 1996, Pages 64-83

  Newton, Lucy ^a  

^a UNIVERSITY OF LEICESTER   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0002674173     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076799600000095     Document Type: Review

References (85)

1. This paper is based upon L.A. Newton, 'The Finance of Manufacturing Industry in Sheffield c.1850 to c.1885' (unpublished Ph.D. thesis, University of Leicester, 1994) and the Leverhulme Trust-financed research project. 'The Constituencies of English and Welsh Domestic Joint Stock Banks, 1826-1885'.
2. This paper is based upon L.A. Newton, 'The Finance of Manufacturing Industry in Sheffield c.1850 to c.1885' (unpublished Ph.D. thesis, University of Leicester, 1994) and the Leverhulme Trust-financed research project. 'The Constituencies of English and Welsh Domestic Joint Stock Banks, 1826-1885'.
3. This paper is based upon surviving material of the Sheffield Banks in the Midland and Royal Bank of Scotland archives. Specific references only are provided. For a more general discussion of these banks and their lending policies see Newton, 'Finance of Manufacturing Industry', Ch.3. Unfortunately, records of the Sheffield Banking Company, the fourth bank in Sheffield, do not contain material enabling a survey of its directors or lending policy.
4. The discounting of bills of exchange was usually dealt with by a bank manager unless the sum was extraordinarily large.
5. See N.R. Lamoreaux, Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England (Cambridge, 1994)
6. References are from the Midland Bank Archives (hereafter MBA), Sheffield Union Bank (hereafter SUB), Board Directors' Minutes (hereafter BDM), AD 2, 3, 4 and 5; MBA, Sheffield & Hallamshire Bank (hereafter SHB), BDM, AM 6 to AM 15 and Royal Bank of Scotland Archives (hereafter RBSA), Sheffield & Rotherham Joint Stock Bank (hereafter SR), BDM, SR 1 to 14.
7. Public Record Office, London (hereafter PRO), Board of Trade (hereafter BT) series 31, Returns to the Registrar of Joint Stock Companies.
8. L. Pressnell, Country Banking in the Industrial Revolution (Oxford, 1956), p. 14.
9. The few studies include M. Collins and P. Hudson, 'Provincial Bank Lending: Yorkshire and Merseyside 1826-60', Bulletin of Economic Research, Vol.31 (1979); P. Hudson, The Genesis of Industrial Capital: A Study of the West Riding Wool Textile Industry c. 1750-1850 (Cambridge, 1986); and I. Lescent, 'Financing the XIXth Century Iron Industry: A ReEvaluation of the Role of British Banks between 1815 and 1880', N.W. Posthumus Centre European Post-graduate Training Programme: Seminar on the History of Banking and Finance, Odense, Denmark, Nov. 1991.
10. The few studies include M. Collins and P. Hudson, 'Provincial Bank Lending: Yorkshire and Merseyside 1826-60', Bulletin of Economic Research, Vol.31 (1979); P. Hudson, The Genesis of Industrial Capital: A Study of the West Riding Wool Textile Industry c. 1750-1850 (Cambridge, 1986); and I. Lescent, 'Financing the XIXth Century Iron Industry: A ReEvaluation of the Role of British Banks between 1815 and 1880', N.W. Posthumus Centre European Post-graduate Training Programme: Seminar on the History of Banking and Finance, Odense, Denmark, Nov. 1991.
11. The few studies include M. Collins and P. Hudson, 'Provincial Bank Lending: Yorkshire and Merseyside 1826-60', Bulletin of Economic Research, Vol.31 (1979); P. Hudson, The Genesis of Industrial Capital: A Study of the West Riding Wool Textile Industry c. 1750-1850 (Cambridge, 1986); and I. Lescent, 'Financing the XIXth Century Iron Industry: A ReEvaluation of the Role of British Banks between 1815 and 1880', N.W. Posthumus Centre European Post-graduate Training Programme: Seminar on the History of Banking and Finance, Odense, Denmark, Nov. 1991.
12. For example J. Ottosson, 'Network Analysis and Inter-Locking Directorships: Inter-War Sweden', in P.L. Cottrell, H. Lindgren and A. Teichova (eds.), European Industry and Banking Between the Wars: A Review of Bank-Industry Relations (Leicester, 1992); and P. Eigner, 'Interlocking Directorships Between Commercial Banks and Industry in Interwar Vienna', in A. Teichova, T. Gourvish and A. Pogany (eds.), Universal Banking in the Twentieth Century: Finance, Industry and the State in North and Central Europe (Aldershot, 1994).
13. For example J. Ottosson, 'Network Analysis and Inter-Locking Directorships: Inter-War Sweden', in P.L. Cottrell, H. Lindgren and A. Teichova (eds.), European Industry and Banking Between the Wars: A Review of Bank-Industry Relations (Leicester, 1992); and P. Eigner, 'Interlocking Directorships Between Commercial Banks and Industry in Interwar Vienna', in A. Teichova, T. Gourvish and A. Pogany (eds.), Universal Banking in the Twentieth Century: Finance, Industry and the State in North and Central Europe (Aldershot, 1994).
14. M. Collins, Money and Banking in the UK: A History (London, 1988); and F. Capie and M. Collins, Have the Banks Failed British Industry? (London, 1992).
15. M. Collins, Money and Banking in the UK: A History (London, 1988); and F. Capie and M. Collins, Have the Banks Failed British Industry? (London, 1992).
16. C.W. Munn, The Scottish Provincial Banking Companies 1747-1864 (Edinburgh, 1981); and P. Ollerenshaw, Banking in Nineteenth Century Ireland: Belfast Banks, 1825-1914 (Manchester, 1987).
17. C.W. Munn, The Scottish Provincial Banking Companies 1747-1864 (Edinburgh, 1981); and P. Ollerenshaw, Banking in Nineteenth Century Ireland: Belfast Banks, 1825-1914 (Manchester, 1987).
18. The leading examples are W.F. Crick and J.E. Wadsworth, A Hundred Years of Joint Stock Banking (London, 1936); T.E. Gregory and A.H. Henderson, The Westminster Bank through a Century (Oxford, 2 vols., 1936); R.S. Sayers, Lloyds Bank in the History of English Banking (Oxford, 1957); and G. Chandler, Four Centuries of Banking (London, 2 vols, 1964).
19. The leading examples are W.F. Crick and J.E. Wadsworth, A Hundred Years of Joint Stock Banking (London, 1936); T.E. Gregory and A.H. Henderson, The Westminster Bank through a Century (Oxford, 2 vols., 1936); R.S. Sayers, Lloyds Bank in the History of English Banking (Oxford, 1957); and G. Chandler, Four Centuries of Banking (London, 2 vols, 1964).
20. The leading examples are W.F. Crick and J.E. Wadsworth, A Hundred Years of Joint Stock Banking (London, 1936); T.E. Gregory and A.H. Henderson, The Westminster Bank through a Century (Oxford, 2 vols., 1936); R.S. Sayers, Lloyds Bank in the History of English Banking (Oxford, 1957); and G. Chandler, Four Centuries of Banking (London, 2 vols, 1964).
21. The leading examples are W.F. Crick and J.E. Wadsworth, A Hundred Years of Joint Stock Banking (London, 1936); T.E. Gregory and A.H. Henderson, The Westminster Bank through a Century (Oxford, 2 vols., 1936); R.S. Sayers, Lloyds Bank in the History of English Banking (Oxford, 1957); and G. Chandler, Four Centuries of Banking (London, 2 vols, 1964).
22. For example, C.A.E. Goodhart, The Business of Banking, 1891-1914 (London, 1972); K. Watson, 'Finance of the Brewing Industry' (unpublished D.Phil, thesis, University of Oxford, 1990); J.-J. van Helten and Y. Cassis (eds.), Capitalism in a Mature Economy: Financial Institutions, Capital Exports and British Industry, 1870-1939 (Aldershot, 1990).
23. For example, C.A.E. Goodhart, The Business of Banking, 1891-1914 (London, 1972); K. Watson, 'Finance of the Brewing Industry' (unpublished D.Phil, thesis, University of Oxford, 1990); J.-J. van Helten and Y. Cassis (eds.), Capitalism in a Mature Economy: Financial Institutions, Capital Exports and British Industry, 1870-1939 (Aldershot, 1990).
24. For example, C.A.E. Goodhart, The Business of Banking, 1891-1914 (London, 1972); K. Watson, 'Finance of the Brewing Industry' (unpublished D.Phil, thesis, University of Oxford, 1990); J.-J. van Helten and Y. Cassis (eds.), Capitalism in a Mature Economy: Financial Institutions, Capital Exports and British Industry, 1870-1939 (Aldershot, 1990).
25. For example, P. Mathias, The First Industrial Nation: An Economic History of Britain 1700-1914 (2nd edn. 1983); F. Crouzet, The Victorian Economy (London, 1982); D.N. McCloskey, 'Did Victorian Britain Fail?', Economic History Review, 2nd series, Vol.23 (1970); N.F.R. Crafts, 'Victorian Britain Did Fail', Economic History Review, 2nd series, Vol.32 (1979); B. Elbaum and W. Lazonick, The Decline of the British Economy (Oxford, 1986); and S. Pollard, Britain's Prime and Britain's Decline: The British Economy 1870-1914 (London, 1989).
26. For example, P. Mathias, The First Industrial Nation: An Economic History of Britain 1700-1914 (2nd edn. 1983); F. Crouzet, The Victorian Economy (London, 1982); D.N. McCloskey, 'Did Victorian Britain Fail?', Economic History Review, 2nd series, Vol.23 (1970); N.F.R. Crafts, 'Victorian Britain Did Fail', Economic History Review, 2nd series, Vol.32 (1979); B. Elbaum and W. Lazonick, The Decline of the British Economy (Oxford, 1986); and S. Pollard, Britain's Prime and Britain's Decline: The British Economy 1870-1914 (London, 1989).
27. For example, P. Mathias, The First Industrial Nation: An Economic History of Britain 1700-1914 (2nd edn. 1983); F. Crouzet, The Victorian Economy (London, 1982); D.N. McCloskey, 'Did Victorian Britain Fail?', Economic History Review, 2nd series, Vol.23 (1970); N.F.R. Crafts, 'Victorian Britain Did Fail', Economic History Review, 2nd series, Vol.32 (1979); B. Elbaum and W. Lazonick, The Decline of the British Economy (Oxford, 1986); and S. Pollard, Britain's Prime and Britain's Decline: The British Economy 1870-1914 (London, 1989).
28. For example, P. Mathias, The First Industrial Nation: An Economic History of Britain 1700-1914 (2nd edn. 1983); F. Crouzet, The Victorian Economy (London, 1982); D.N. McCloskey, 'Did Victorian Britain Fail?', Economic History Review, 2nd series, Vol.23 (1970); N.F.R. Crafts, 'Victorian Britain Did Fail', Economic History Review, 2nd series, Vol.32 (1979); B. Elbaum and W. Lazonick, The Decline of the British Economy (Oxford, 1986); and S. Pollard, Britain's Prime and Britain's Decline: The British Economy 1870-1914 (London, 1989).
29. For example, P. Mathias, The First Industrial Nation: An Economic History of Britain 1700-1914 (2nd edn. 1983); F. Crouzet, The Victorian Economy (London, 1982); D.N. McCloskey, 'Did Victorian Britain Fail?', Economic History Review, 2nd series, Vol.23 (1970); N.F.R. Crafts, 'Victorian Britain Did Fail', Economic History Review, 2nd series, Vol.32 (1979); B. Elbaum and W. Lazonick, The Decline of the British Economy (Oxford, 1986); and S. Pollard, Britain's Prime and Britain's Decline: The British Economy 1870-1914 (London, 1989).
30. For example, P. Mathias, The First Industrial Nation: An Economic History of Britain 1700-1914 (2nd edn. 1983); F. Crouzet, The Victorian Economy (London, 1982); D.N. McCloskey, 'Did Victorian Britain Fail?', Economic History Review, 2nd series, Vol.23 (1970); N.F.R. Crafts, 'Victorian Britain Did Fail', Economic History Review, 2nd series, Vol.32 (1979); B. Elbaum and W. Lazonick, The Decline of the British Economy (Oxford, 1986); and S. Pollard, Britain's Prime and Britain's Decline: The British Economy 1870-1914 (London, 1989).
31. Collins and Hudson, 'Provincial Bank Lending'.
32. Hudson, The Genesis of Industrial Capital, p.218.
33. Lescent, 'Financing the XIXth Century Iron Industry'.
34. Monika Pohle, 'Risk, Information and Noise: Risk Perception and Risk Management of French and German Banks During the Nineteenth Century', Financial History Review, Vol.2 (1995).
35. Thomas Bullion [George Rae], The Internal Management of a Country Bank (London, 1850), p. 18.
36. Ibid., p. 102.
37. See MBA: BDM North & South Wales Bank and Collins and Hudson, 'Provincial Bank Lending', pp.77-8.
38. See P.L. Cottrell, Industrial Finance 1830-1914: The Finance And Organisation Of English Manufacturing Industry (London, 1979), pp.223-8.
39. Banks also reduced risk by demanding collateral security for accommodation. See L.A. Newton, 'Provincial Banking in Sheffield during the Mid-Nineteenth Century', Papers in Business History, Banks and Customers Institutional Theory and Banking Practices: Banking and Client Relations in Interwar Central Europe and Scandinavia (London School of Economics, 1991).
40. For a survey of the concept of information in risk management by banks see Pohle, 'Risk, Information and Noise'.
41. See Cottrell, Industrial Finance, pp.211, 223, 228; and M. Collins, 'English Bank Lending and the Financial Crisis of the 1870s', Business History, Vol.32 (1990), pp.208-13 concerning the iron industry.
42. See Cottrell, Industrial Finance, pp.211, 223, 228; and M. Collins, 'English Bank Lending and the Financial Crisis of the 1870s', Business History, Vol.32 (1990), pp.208-13 concerning the iron industry.
43. Cottrell, Industrial Finance, pp.205-6.
44. MBA: SUB, BDM, AD 4, 16 May 1876, f.120.
45. RBSA: SR Annual Report, 7 Feb. 1844
46. Ibid., Annual Report. 1 Feb. 1860.
47. MBA: SHB, BDM, AM 14, 23 Nov. 1881, f.342.
48. Ibid., SUB, BDM, AD 3, ff.264 and 266.
49. Ibid.
50. Trade Directories have also been utilised to identify individuals.
51. The Walker family, founders of the bank, were also instrumental in the development of Rotherham as an iron and steel town. See the Royal Bank of Scotland plc, 'Sheffield & Rotherham Bank: A Banking Bicentenary, 1792-1992'.
52. Reference to bank directors' personal accounts are mentioned when found. However, the board minutes rarely reveal details of such accounts, the only reference for the three banks examined being that of William Beet. This implies that the directors did not receive credit on their personal accounts or credit received was not discussed at board level (only likely if advances were very small).
53. Cottrell, Industrial Finance, p.211.
54. Ibid., pp.223, 228.
55. Collins, 'English Bank Lending', pp.212-13.
56. Advances made by the Sheffield Union to industrial customers ranged from £10 to £60,000 and by the Sheffield & Hallamshire from £10 to approximately £100,000. The average size of advances granted to manufacturing firms by the Sheffield Union was approximately £1,750. See Newton, 'Finance of Manufacturing Industry'.
57. Difficulties also arose with accounts held by customers which had no direct ties to bank directors between 1850 and 1885. However, only one example has been found which resulted in serious losses or destabilisation of the banks considered: the Sheffield Union and the Albion Steel & Wire Co. Ltd. This example is discussed in detail below.
58. RBSA: SR, BDM, 15 Oct. 1856, f.529. The bank had to press for repayment of money owing on all these accounts at various times.
59. Ibid., 22 Oct. 1856, f.531.
60. The paid-up capital of the Sheffield & Rotherham was £121,000 and therefore the advance to Beet represents only six per cent of this sum. Banking Almanac (1856).
61. RBSA: SR, BDM, 24 Oct. 1856, f.533. The land held as security was subject to a payment of £2,000 on the death of Beet's sister, a sum almost matching its total value.
62. Ibid., 14 Sept. 1857, f.91.
63. Ibid., 9 Dec. 1857, f.147.
64. Ibid., 30 Dec. 1857, f.153.
65. See MBA: SUB, BDM, AD 3, ff.17, 18, 37, 80, 122, 126, 132, 133, 145, 148, 149, 172.
66. Ibid., SUB, Deed of Settlement, AD1, 1 Oct. 1843. Vickers held 200 shares in the Sheffield Union in 1843, the year of its formation.
67. Ibid., SUB, BDM, AD2, balance sheet up to 30 June 1856. The paid-up capital of the bank in 1856 was £61,200.
68. Ibid., balance sheet up to 30 June 1858. The paid-up capital of the bank in 1856 was £81,600.
69. Newton, 'Finance of Manufacturing Industry', p.123.
70. Ibid.
71. MBA: SUB, BDM, AD 2, 22 Dec. 1858.
72. Ibid., SHB, BDM, AM 11, f.13.
73. The paid-up capital of the Sheffield & Hallamshire was approximately £183,000 in 1879. Bankers' Almanac (1879).
74. See MBA: SHB, AM 8, f.271, AM 13, 9 Aug. 1876, f.198, and AM 14, 15 Jan. 1879, f.27.
75. Ibid., AM 14, 7 Aug. 1878, f.439.
76. Ibid., AM 12, 7 Feb. 1872, f.87.
77. Ibid., AM 13, 28 March 1877, f.273. In 1877 £80,000 was spent on a new colliery at Rockingham, without which Thomas Newton claimed the company would not have been in debt to the bank. Such purchases during the depression suggests that Newton Chambers was taking advantage of the slump to procure collieries at a cheap price.
78. For example, ibid., 28 March 1877, f.273.
79. Hudson, Genesis of Industrial Capital, p.224.
80. PRO: BT31 series. Also see Newton, 'Finance of Manufacturing Industry', Ch.4.
81. MBA: SHB, BDM, AM 13, f.92 and f.122. William Cooke & Co. Ltd was incorporated in 1873 with a nominal capital of £160,000. The company received advances of £15,000 in 1874, £25,000 in 1875 and £30,000 in 1876. All were amply secured and repaid.
82. The equity of the bank in 1876 was £180,000. The debt of Albion Steel & Wire represented just over half this sum. Ibid., SUB, BDM, AD4 AGM, 30 June 1876 and Banking Almanac (1876).
83. The bank's Annual General Meeting in 1877 reported to shareholders that losses from the Albion Steel & Wire account would come from the surplus fund which stood at £51,000 in 1877. Ibid., SUB, AD 4, BDM, f.157-8 and AGM 19 July 1877.
84. For details of lending policies of the Sheffield Union and Sheffield & Hallamshire see Newton, 'Finance of Manufacturing Industry', pp.87-138.
85. See ibid. pp.87-116.