¹ This study follows a tradition of international comparisons in banking history, notably those of Rondo Cameron. See Cameron, Rondo, Banking in the Early Stages of Industrialisation (Oxford, 1967)Google Scholar; and Cameron, , ed., Banking and Economic Development: Some Lessons from History (Oxford, 1972).Google Scholar

² Lamoreaux, Naomi, Insider Lending: Banks, Personal Connections and Economic Development in Industrial New England, 1784–1912 (New York, 1994).CrossRefGoogle Scholar

³ The word “proprietaries” is used, rather than “shareholders” or “stockholders,” as these were not modern joint-stock corporations. Shares did not have limited liability, and therefore shareholders, or proprietors, who owned the company were responsible for the financial stability of the institution in which they invested. They were also not distant investors: they were active members of the business community in which the bank was located. Thus, the success of the banks upheld the success of the local economy. They were effectively copartners. The next section on bank shares and shareholders expands on this topic.

⁴ Cameron, “Scotland,” in Banking in the Early Stages of Industrialisation; Checkland, Sydney G., Scottish Banking: A History, 1695–1973 (Glasgow, 1975)Google Scholar; Munn, Charles W., The Scottish Provincial Banking Companies, 1745–1864 (Edinburgh, 1981).Google Scholar

⁵ The Bank of England was permitted to establish branches outside London, which serviced other banks, thus limiting their competition with JSBs. Ziegler, Dieter, Central Bank, Peripheral Industry: The Bank of England in the Provinces, 1826–1913 (Leicester, 1990), 6–7, 8–31.Google Scholar

⁶ Collins, Michael, Money and Banking in the U.K.: A History (London, 1988), 24.Google Scholar A total of 46 banks out of the 138 established have been analyzed here.

⁷ The number of private banks fell from 650 in 1825 to 236 by 1875 (with 595 offices and branches), while joint-stock banks numbered 0 in 1825 and rose to 122 by 1875 (with 1,364 offices and branches). Collins, , Money and Banking, 27, 52.Google Scholar

⁸ The Banking Co-partnerships Act, 1826, 7 Geo. IV, c.46, XIII. See Hickson, Charles R. and Turner, John D., “Shareholder Liability Regimes in English Banking: The Impact upon the Market for Shares,” European Review of Economic History, vol. 7, issue 1 (2003): 99–125.CrossRefGoogle Scholar

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¹¹ Bodenhorn, Howard, Store Banking in Early America: A New Economic History (Oxford, 2003), 73, 78, 85.Google Scholar

¹² Bodenhorn, Howard, A History of Banking in Antebellum America: Financial Markets and Economic Development in an Era of Nation-Building (New York, 2000), 12.Google Scholar See also Schweikart, Larry, Banking in the American South from the Age of Jackson to Reconstruction (Baton Rouge, 1987), ch. 5Google Scholar; and Green, George, Finance and Economic Development in the Old South: Louisiana Banking, 1804–1861 (Stanford, 1972), 18.Google Scholar

¹³ Lamoreaux, , Insider Lending, 4, 12–18.Google Scholar

¹⁴ Following the New York Free Bank Act of 1838, the principle of “free banking”-whereby banking was not to be restricted to a privileged few but rather was to be open to all-was largely adopted in the United States. By 1860, over half of the states had enacted some type of free banking law. Rockoff, Hugh, The Free Banking Era: A Reexamination (New York, 1975).Google Scholar

¹⁵ See Newton, Lucy A., “Regional Bank-Industry Relations during the Mid-Nineteenth Century: Links between Bankers and Manufacturers, c.1850 to c.1855,” Business History 38, no. 3 (1996): 64–83CrossRefGoogle Scholar; and Lamoreaux, , Insider Lending, 82.Google Scholar

¹⁶ Rhode Island banks chartered in the early 1830s were an exception. Lamoreaux, , Insider Lending, 29.Google Scholar

¹⁷ For the variety in legislation in early nineteenth-century New England alone, see Bodenhorn, , State Banking, 81–87Google Scholar; and Lamoreaux, , Insider Lending, 57.Google Scholar

¹⁸ Two national banks had been chartered before this date: the First Bank of the United States in 1791, and the Second Bank of the United States in 1816, which ceased in 1836.

¹⁹ Bodenhorn, , Sfare Banking, 12–18, 250, 270.Google Scholar

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²⁴ For example, HBC Prospectus, H41/18, HSBCGA.

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²⁶ For example, Coventry Union Banking Co. [CUBC], Board of Directors minutes [BDM], AB3, HSBCGA.

²⁷ Lamoreaux, , Insider Lending, 18–19, 58, 62–63.Google Scholar

²⁸ Coventry & Warwickshire Banking Co. [CWBC], BDM, 24 Oct. 1835, 045, LTSBGA.

²⁹ The influence of specific families on boards of banks was often long lasting. See Lamoreaux, , Insider Lending, 23–25Google Scholar; and Newton, Lucy A., “Change and Continuity: The Development of Joint Stock Banking in the Early Nineteenth Century,” University of Reading discussion paper, 2007.Google Scholar

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³² For example, see Sheffield Union Bank [SUB], BDM, 12 June 1844, AD2, HSBCGA.

³³ See Bradford Banking Company [BradBC], book no. 5, 25 May 1846, B6, HSBCGA.

³⁴ Nottingham & Nottinghamshire Banking Co. [NNBC], BDM, 21 Jan. 1834, 574, RBSGA. The rejection rate of 29 percent was higher than the rate for credit applications (24.3 percent). See also Hickson, Charles R. and Turner, John D., “The Trading of Unlimited Liability Bank Shares: The Bagehot Hypothesis,” Journal of Economic History 63, no. 4 (2003): 940.CrossRefGoogle Scholar

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³⁷ Ibid., 19,71,68.

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⁴⁰ Liverpool Union Banking Co., BDM, 24 Apr. 1835 and 17 Sept. 1835, book no. 093, LTSBGA.

⁴¹ CUBC, BDM, 13 May 1836, AB3, HSBCGA.

⁴² North & South Wales Bank, prospectus, 1836, M166, HSBCGA.

⁴³ CUBC, BDM, 13 May 1836, AB3, HSBCGA.

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⁴⁷ BradBC, Prospectus, B42/3, HSBCGA.

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⁴⁹ Ibid., 74.

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⁵² Newton, Victorian Economy in Transition, chs. 3, 4.

⁵³ Bill discounting could also act as a source of information about customers and a point of regular contact with them. Nishimura, Shizuya, The Decline of Inland Bills of Exchange in the London Money Market, 1855–1913 (Cambridge, U.K., 1971).Google Scholar

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⁵⁶ Ashton, Stalybridge, Hyde and Glossop Banking Co. [ASHGBC], 14 Feb. i860, 10145, RBSGA.

⁵⁷ LamoTeaux, Insider Lending, 1–3, 19.

⁵⁸ Ibid., 26, 76.

⁵⁹ Lending data that corresponded in time to shareholding data were found for twelve of the forty-six banks surveyed. Lending data were sampled, taking three years that corre sponded with shareholding data from the following sources: LTSBGA: Halifax Joint Stock Bank (Securities notebook, 1668), LUBC, BDM, 93; HSBCGA: BBC (BDM, A12 and A16), BradBC (BDM, B2 and B28), HBC (BDM, H4 and H7), CWBC (BDM, 45 and 47), SUBC (BDM, AD2); and RBSGA: ASHGBC (BDM, 10144 and 10145), Bilston District Banking Co. (BDM, 11342), NNBC (BDM, 574), Sheffield & Rotherham Banking Co. (BDM, SR/1/1, 01095S and SR/1/5, 01097S).

⁶⁰ SUBC, BDM, AD2, HSBCGA.

⁶¹ Similar localization of lending occurred in the northeastern United States in the early nineteenth century. More lending occurred outside the area after 1870. See Beveridge, Andrew A., “Local Lending Practice: Borrowers in a Small Northeastern Industrial City, 1832–1915,’ Journal of Economic History 45, no. 2 (1985): 397.CrossRefGoogle Scholar

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⁶⁴ The two Sheffield banks are fairly representative, in terms of lending practices, of the industrial regions of England.

⁶⁵ Under the National Banking Act of 1864, country banks were allowed to hold a fraction of their reserves as deposits with reserve city banks located in New York or other large financial centers. Yet this system was not sensitive to changes in demand for credit. Degen, Robert A., The American Monetary System: A Concise Survey of its Evolution since 1896 (Lexington, Mass., 1987), 18Google Scholar; Klebaner, Benjamin J., American Commercial Banking: A History (Boston, 1990), 92–98.Google Scholar

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⁷⁴ For example, deposits and balances due by the Sheffield Union Bank increased from £86,000 in 1850 to £161,000 in i860. SUB, BDM, AD 2, 3, 4, and 5, HSBCGA.

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