The unsatisfied fringe in Britain, 1930s-80s

Business History

Volumn 38, Issue 3, 1996, Pages

  Ross, Duncan M ^a  

^a UNIVERSITY OF LONDON   (United Kingdom)

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EID: 0040034375     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076799600000092     Document Type: Review

References (76)

1. M. Binks, 'Finance for Expansion in the Small Firm', Lloyds Bank Review, No.134 (1979), p.34.
2. Committee on Finance and Industry (P.P. 1930-31, XIII); Committee on the Working of the Monetary System (P.P. 1958-59, XVII); Committee of Inquiry on Small Firms (P.P. 1971-72, \ IX); The Financing of Small Firms; Interim Report of the Committee to Review the Functioning of Financial Institutions (P.P. 1979, VII); Advisory Council on Science and Technology, The Enterprise Challenge: Overcoming Barriers to Growth in Small Firms (London, 1990).
3. Committee on Finance and Industry (P.P. 1930-31, XIII); Committee on the Working of the Monetary System (P.P. 1958-59, XVII); Committee of Inquiry on Small Firms (P.P. 1971-72, \ IX); The Financing of Small Firms; Interim Report of the Committee to Review the Functioning of Financial Institutions (P.P. 1979, VII); Advisory Council on Science and Technology, The Enterprise Challenge: Overcoming Barriers to Growth in Small Firms (London, 1990).
4. Committee on Finance and Industry (P.P. 1930-31, XIII); Committee on the Working of the Monetary System (P.P. 1958-59, XVII); Committee of Inquiry on Small Firms (P.P. 1971-72, \ IX); The Financing of Small Firms; Interim Report of the Committee to Review the Functioning of Financial Institutions (P.P. 1979, VII); Advisory Council on Science and Technology, The Enterprise Challenge: Overcoming Barriers to Growth in Small Firms (London, 1990).
5. Financing of Small Firms, pp.39-40.
6. This phrase was coined by Keynes in the Treatise on Money. See D.E. Moggridge (ed.), The Collected Writings of John Maynard Keynes (Cambridge, 1973), Vol. VI, pp.326-9.
7. This phrase was coined by Keynes in the Treatise on Money. See D.E. Moggridge (ed.), The Collected Writings of John Maynard Keynes (Cambridge, 1973), Vol. VI, pp.326-9.
8. O.E. Williamson, Economic Institutions of Capitalism (New York, 1985), Chs.4-6.
9. G. Bannock and H. Albach, Small Business Policy in Europe (London, 1991), p.19.
10. G. Bannock, 'Small Firms in Modern Economic History', Economic and Social Research Council Business History Seminar, London School of Economics, May 1995.
11. M. Binks and P. Vale, Entrepreneurship and Economic Change (London, 1990), p.19.
12. M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York, 1985), pp.4-5.
13. D. Storey, 'Entrepreneurship and the New Firm', in J. Curran, J. Stanworth and D. Watkins (eds.), The Survival of the Small Firm, Volume 1: The Economics of Survival and Entrepreneurship (Aldershot, 1986), p.83.
14. G.C. Reid and C.R. Jacobsen, The Small Entrepreneurial Firm (Aberdeen, 1988), p.47.
15. J. Stanworth and C. Gray, Bolton 20 Years On: The Small Firm in the 1990s (London, 1991), p.18.
16. Ibid., pp.3-8; G. Bannock and M. Daly, 'Size Distribution of UK Firms', Employment Gazette (May 1990), pp.255-8.
17. Ibid., pp.3-8; G. Bannock and M. Daly, 'Size Distribution of UK Firms', Employment Gazette (May 1990), pp.255-8.
18. This point was also made in J. Jewkes, D. Sawers and R. Stillerman, The Sources of Invention (London, 1958).
19. Innovation in Manufacturing Industry, First Report of the House of Lords Select Committee \ on Science and Technology (P.P. 1990-91, H.L. 18-1), para.3.10.
20. R. Rothwell, 'Small Firms, Innovation and Industrial Change', Small Business Economics, Vol.1 (1989), pp.51-64.
21. Reid and Jacobsen, Small Entrepreneurial Firm, p.26.
22. Rothwell, 'Small Firms'; An earlier version of this study can be found in 'The Role of Small Firms in Technological Innovation', in Curran, Stanworth and Watkins (eds.), The Survival of the Small Firm.
23. Rothwell, 'Small Firms'; An earlier version of this study can be found in 'The Role of Small Firms in Technological Innovation', in Curran, Stanworth and Watkins (eds.), The Survival of the Small Firm.
24. M. Binks and A. Jennings, 'Small Firms as a Source of Economic Rejuvenation', in Curran, Stanworth and Watkins (eds.), The Survival of the Small Firm.
25. Constraints on the Growth of Small Firms: A Report of a Survey of Small Firms By Aston Business School (London, 1991), p.36.
26. A recent example of this sort of approach can be found in Colin Mayor's view that the market-oriented financial structure which exists in Britain encourages risk-aversion and short-termism in the financing process generally. See C. Mayer, 'The Assessment: Money and Banking: Theory and Evidence', Oxford Review of Economic Policy, Vol.10 (1994).
27. For a discussion of the relative importance of debt and other forms of finance, see A. Cosh and A. Hughes, 'Size, Financial Structure and Profitability: UK Companies in the 1980s', in A. Hughes and D.J. Storey (eds.), Finance and the Small Firm (London, 1994).
28. M. Binks, C. Ennew and G. Reed, 'Information Asymmetries and the Provision of Finance to Small Firms', International Small Business Journal, Vol.11 (1992).
29. J. Stiglitz and A. Weiss, 'Credit Rationing in Markets With Imperfect Information', American Economic Review, Vol.71 (1981).
30. D. de Meza and D. Webb, 'Too Much Investment: A Problem of Asymmetric Information', Quarterly Journal of Economics, Vol.102 (1987).
31. Stanworth and Gray, Bolton 20 Years On, p.59.
32. For recent evidence on this, and a conclusion which suggests that this may be a reasonable level to be charging, see M. Middleton, M. Cowling, J. Samuels and R. Sugden, 'Small Firms and Clearing Banks', in N. Dimsdale and M. Prevezer (eds.), Capital Markets and Corporate Governance (Oxford, 1994), p. 151.
33. M. Binks, 'Small Businesses and their Banks in the Year 2000', in J. Curran and R.A. Blackburn (eds.), Paths of Enterprise: The Future of Small Business (London, 1991). See also Stanworth and Gray, Bolton 20 Years On, Ch.4. For an alternative view, that the British banks in the 1930s at least were willing to lend without much collateral, see D.M. Ross, 'Information, Collateral and British Bank Lending in the 1930s', in Y Cassis, G.D. Feldman and U. Olsson (eds.), The Evolution of Financial Institutions and Markets in Twentieth Century Europe (Aldershot, 1995).
34. M. Binks, 'Small Businesses and their Banks in the Year 2000', in J. Curran and R.A. Blackburn (eds.), Paths of Enterprise: The Future of Small Business (London, 1991). See also Stanworth and Gray, Bolton 20 Years On, Ch.4. For an alternative view, that the British banks in the 1930s at least were willing to lend without much collateral, see D.M. Ross, 'Information, Collateral and British Bank Lending in the 1930s', in Y Cassis, G.D. Feldman and U. Olsson (eds.), The Evolution of Financial Institutions and Markets in Twentieth Century Europe (Aldershot, 1995).
35. M. Binks, 'Small Businesses and their Banks in the Year 2000', in J. Curran and R.A. Blackburn (eds.), Paths of Enterprise: The Future of Small Business (London, 1991). See also Stanworth and Gray, Bolton 20 Years On, Ch.4. For an alternative view, that the British banks in the 1930s at least were willing to lend without much collateral, see D.M. Ross, 'Information, Collateral and British Bank Lending in the 1930s', in Y Cassis, G.D. Feldman and U. Olsson (eds.), The Evolution of Financial Institutions and Markets in Twentieth Century Europe (Aldershot, 1995).
36. J. Edwards and K. Fischer, Banks, Finance and Investment in Germany (Cambridge, 1994) suggests, however, that the benefits of the Universal Banking approach to financing have been over-stated.
37. K. Keasey and R. Watson, 'Banks and Small Firms: Is Conflict Inevitable?', National Westminster Bank Quarterly Review (May 1993), argue that there is no evidence - at least in the recent period - of collusion or cartelised behaviour by the banks in dealing with small firms. See also K.A. Chrystal, 'Don't Shoot the Messenger: Do Banks Deserve the Recent Adverse Publicity?', National Westminster Bank Quarterly Review (May 1992).
38. K. Keasey and R. Watson, 'Banks and Small Firms: Is Conflict Inevitable?', National Westminster Bank Quarterly Review (May 1993), argue that there is no evidence - at least in the recent period - of collusion or cartelised behaviour by the banks in dealing with small firms. See also K.A. Chrystal, 'Don't Shoot the Messenger: Do Banks Deserve the Recent Adverse Publicity?', National Westminster Bank Quarterly Review (May 1992).
39. Macmillan Committee, para.403; R. Frost, 'The Macmillan Gap, 1931-53', Oxford Economic Papers, Vol.6 (1954).
40. Y. Cassis, 'The Emergence of a New Financial Institution: Investment Trusts in Britain, 1870-1939', in J.-J. van Helten and Y. Cassis (eds.), Capitalism in a Mature Economy: Financial Institutions, Capital Exports and British Industry 1870-1939 (Aldershot, 1990). See also D.C. Corner and H. Burton, Investment and Unit Trusts in Britain and America (London, 1963).
41. Y. Cassis, 'The Emergence of a New Financial Institution: Investment Trusts in Britain, 1870-1939', in J.-J. van Helten and Y. Cassis (eds.), Capitalism in a Mature Economy: Financial Institutions, Capital Exports and British Industry 1870-1939 (Aldershot, 1990). See also D.C. Corner and H. Burton, Investment and Unit Trusts in Britain and America (London, 1963).
42. H. Clay, 'The Financing of Industrial Enterprise', Transactions of the Manchester Statistical Society (1931-32).
43. A.T.K. Grant, A Study of the Capital Market in Britain From 1919-1936 (London, 2nd edn. 1967), pp.215-16; T. Balogh, Studies in Financial Organization (Cambridge, 1947), pp.301-2. A history of Charterhouse can be found in L. Dennet, The Charterhouse Group 1925-79: A History (London, 1979). See also R. Baird, 'The Charterhouse Group', Royal Bank of Scotland Review, No. 157 (1988). A description of the inability of investment trusts and small company financing institutions to locate sufficient business is in J.B. Kinross, Fifty Years in the City (London, 1982).
44. A.T.K. Grant, A Study of the Capital Market in Britain From 1919-1936 (London, 2nd edn. 1967), pp.215-16; T. Balogh, Studies in Financial Organization (Cambridge, 1947), pp.301-2. A history of Charterhouse can be found in L. Dennet, The Charterhouse Group 1925-79: A History (London, 1979). See also R. Baird, 'The Charterhouse Group', Royal Bank of Scotland Review, No. 157 (1988). A description of the inability of investment trusts and small company financing institutions to locate sufficient business is in J.B. Kinross, Fifty Years in the City (London, 1982).
45. A.T.K. Grant, A Study of the Capital Market in Britain From 1919-1936 (London, 2nd edn. 1967), pp.215-16; T. Balogh, Studies in Financial Organization (Cambridge, 1947), pp.301-2. A history of Charterhouse can be found in L. Dennet, The Charterhouse Group 1925-79: A History (London, 1979). See also R. Baird, 'The Charterhouse Group', Royal Bank of Scotland Review, No. 157 (1988). A description of the inability of investment trusts and small company financing institutions to locate sufficient business is in J.B. Kinross, Fifty Years in the City (London, 1982).
46. A.T.K. Grant, A Study of the Capital Market in Britain From 1919-1936 (London, 2nd edn. 1967), pp.215-16; T. Balogh, Studies in Financial Organization (Cambridge, 1947), pp.301-2. A history of Charterhouse can be found in L. Dennet, The Charterhouse Group 1925-79: A History (London, 1979). See also R. Baird, 'The Charterhouse Group', Royal Bank of Scotland Review, No. 157 (1988). A description of the inability of investment trusts and small company financing institutions to locate sufficient business is in J.B. Kinross, Fifty Years in the City (London, 1982).
47. A.T.K. Grant, A Study of the Capital Market in Britain From 1919-1936 (London, 2nd edn. 1967), pp.215-16; T. Balogh, Studies in Financial Organization (Cambridge, 1947), pp.301-2. A history of Charterhouse can be found in L. Dennet, The Charterhouse Group 1925-79: A History (London, 1979). See also R. Baird, 'The Charterhouse Group', Royal Bank of Scotland Review, No. 157 (1988). A description of the inability of investment trusts and small company financing institutions to locate sufficient business is in J.B. Kinross, Fifty Years in the City (London, 1982).
48. PRO T230/72, Memorandum by the Board of Trade to the Committee on Post-War Employment, Annex II, Finance for Industry.
49. Central Office of Information, The Growth of Venture Capital and the Expansion of the Small Firms Sector in Britain (London, 1989), p. 1.
50. R.Coopey and D. Clarke, 3i: Fifty Years Investing in Industry (Oxford, 1995), pp.160-65.
51. R. Clarke, Venture Capital in Britain, America and Japan (London, 1987), p.87.
52. Coopey and Clarke, 3i, pp. 165-72. For an American perspective on this, see P.A. Gompers, 'The Rise and Fall of Venture Capital', Business and Economic History, Vol.23 (1994).
53. Coopey and Clarke, 3i, pp. 165-72. For an American perspective on this, see P.A. Gompers, 'The Rise and Fall of Venture Capital', Business and Economic History, Vol.23 (1994).
54. C. Mason and R. Harrison, 'Informal Venture Capital in the UK', in Hughes and Storey, Finance, p.65. See also R. Harrison and C. Mason, 'Finance for the Growing Business: The Role of Informal Investment', National Westminster Bank Quarterly Review (May 1993), and Advisory Council on Science and Technology, Enterprise Challenge, chapter 5.
55. C. Mason and R. Harrison, 'Informal Venture Capital in the UK', in Hughes and Storey, Finance, p.65. See also R. Harrison and C. Mason, 'Finance for the Growing Business: The Role of Informal Investment', National Westminster Bank Quarterly Review (May 1993), and Advisory Council on Science and Technology, Enterprise Challenge, chapter 5.
56. C. Mason and R. Harrison, 'Informal Venture Capital in the UK', in Hughes and Storey, Finance, p.65. See also R. Harrison and C. Mason, 'Finance for the Growing Business: The Role of Informal Investment', National Westminster Bank Quarterly Review (May 1993), and Advisory Council on Science and Technology, Enterprise Challenge, chapter 5.
57. For a similar approach in a different context, see R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton, NJ, 1990).
58. S. Barret et al., An Evaluation of the Loan Guarantee Scheme, Employment Department Group Research Paper, No.74 (London, 1990). See also T. Lorenz, Venture Capital Today (Cambridge, 1985), pp. 145-6.
59. S. Barret et al., An Evaluation of the Loan Guarantee Scheme, Employment Department Group Research Paper, No.74 (London, 1990). See also T. Lorenz, Venture Capital Today (Cambridge, 1985), pp. 145-6.
60. Barret et al., Loan Guarantee Scheme, p.42.
61. L. Nakamura, 'Commercial Bank Information: Implications for the Structure of Banking', in M. Klausner and L.J. White (eds.), Structural Change in Banking (New York, 1993).
62. C.E. Heim, 'Limits to Intervention: The Bank of England and Industrial Diversification in the Depressed Areas', Economic History Review 2nd series. Vol.XXXVII (1984); Political and Economic Planning, Report on the Location of Industry (London, 1939).
63. C.E. Heim, 'Limits to Intervention: The Bank of England and Industrial Diversification in the Depressed Areas', Economic History Review 2nd series. Vol.XXXVII (1984); Political and Economic Planning, Report on the Location of Industry (London, 1939).
64. F. Carnevali and P. Scott, 'The Treasury as Venture Capitalist: DATAC Industrial Finance and the Macmillan Gap, 1945-1960'. Paper presented to Economic and Social Research Council Business History Seminar, London School of Economics, May 1995.
65. D.M. Ross, 'British Monetary Policy and the Banking System in the 1950s', Business and Economic History, Vol.21 (1992).
66. Carnevali and Scott, 'The Treasury', p.29.
67. This and the following sections are based on Coopey and Clarke, 3i, Ch.1; and D.M. Ross, 'The Clearing Banks and the Finance of British Industry, 1930-1959' (unpublished Ph.D. thesis. University of London, 1990), Ch.5.
68. This and the following sections are based on Coopey and Clarke, 3i, Ch.1; and D.M. Ross, 'The Clearing Banks and the Finance of British Industry, 1930-1959' (unpublished Ph.D. thesis. University of London, 1990), Ch.5.
69. See, for example, British Library of Political and Economic Science, Piercy Papers, 9/108; letter from Momtchiloff (Bank of England) - Piercy (Chairman of ICFC), 14 Oct. 1945: 'the banks are either sending ... practically worthless applications or trying to get from the Corporation loans enabling their customers to repay debts embarrassing to the banks. Among the applications reaching you direct, there is little worth serious consideration.'
70. An example is contained in the letters and note attached. Bank of England Archives, C40/532, 18 Jan. 1955.
71. Coopey and Clarke, 3i, p.74.
72. Modern Records Centre, CBI Predecessors Archive, FBI MSS 200/F/3/E3/3/3; meeting between the ICFC and the Federation of British Industry, 8 Oct. 1945.
73. BLPES, Piercy Papers, 9/108; draft memorandum, Oppe-Piercy, 12 July 1948.
74. Coopey and Clarke, 3i, p.38.
75. For a favourable review of the ICFC's operation, see BLPES, Piercy Papers, 9/108; Corporate Directors International Report on ICFC.
76. A. Hughes and D. Storey, 'Introduction', in Hughes and Storey (eds.), Small Firms Finance, p.15.