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Competition and collusion in the finance sector in the postwar period1

Published online by Cambridge University Press:  12 September 2008

Sue Bowden
Sue Bowden
Affiliation:
Sheffield University
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Information
Financial History Review , Volume 4 , Issue 2 , October 1997 , pp. 161 - 179
Copyright
Copyright © European Association for Banking and Financial History 1997

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References

2 The most recent expositions of this view would include Broadberry, S. N. and Crafts, N. F. R., ‘Explaining Anglo-American productivity differences in the mid twentieth century’, Oxford Bulletin of Economics and Statistics, 52 (1990)Google Scholar; idem, ‘Britain's productivity gap in the 1930s: some neglected factors’, Journal of Economic History, 52 (1992)Google Scholar; and Mercer, H. J., Constructing a Competitive Order: The Hidden History of British Anti-Trust Policies (Cambridge, 1995).CrossRefGoogle Scholar

3 Committee on the Working of the Monetary System [The Radcliffe Report] (1959)Google Scholar, Cmnd. 1959, vol. 2: AppendicesGoogle Scholar; part VI: Banking and other financial associations and institutions, Memorandum of Evidence Submitted by The Finance Association Ltd, Memorandum No, 7, paras 19–40, pp. 26–8.Google Scholar

4 Consumer Credit [The Crowther Committee] (1971)Google Scholar, Cmnd. 4596, vol. II: Appendices, para. 178, p. 502.Google Scholar

5 Radcliffe, , Financial Institutions in the Private Sector: Hire Purchase and the Finance Houses, vol. I: Report, Cmnd. 1959, ch. IV: para. 202, pp. 72–3.Google Scholar

6 ibid., para. 206, pp. 73–4.

7 See, for example, the survey of the historical background in Crowther, , Report, part Two, ch. 2.1, pp. 42–48.Google Scholar

8 See Artis, M. J., ‘Monetary policy and financial intermediaries: the hire purchase finance houses’, Bulletin of the Oxford University Institute of Economics and Statistics, 25 (1963), pp. 16–17.Google Scholar

9 Sayers, R. S., Modern Banking (Oxford, 7th ed., 1967), p. 161.Google Scholar

10 Crowther, , Appendices, para. 181, p. 504.Google Scholar

11 Finance Houses Association, Archive, London [hereafter FHA]: Evidence to the Restrictive Practices Court (London, 1964) [hereafter FHARPC[Google Scholar, File H1, Proof of Evidence of P. J. Creaves, O.C.A. [Managing Director of North Central Finance], para. 56, p. 28Google Scholar; and File H6, Proof of Evidence of P. R. Pollard [Director and Group Chief Accountant, Mercantile Credit], para. 21, p. 9.Google Scholar

12 The restrictions were imposed from 05 1947 to 02. 1959Google Scholar and for most of this period the limit was set at £50,000. Between Mar. 1956 and Jul. 1958 it was lowered to £10,000: FHARPC, Greaves, para. 57, p. 28.Google Scholar

13 ibid.

14 Harris, R., Naylor, M. and Seldon, A., Hire Purchase in a Free Society (London, 1961), p. 40.Google Scholar

15 Crowther, , Appendices, para. 182, p. 504.Google Scholar

16 Bowden, S. and Collins, M., ‘The Bank of England, industrial regeneration and hire purchase between the wars’, Economic History Review, 45 (1992), pp. 120–36.CrossRefGoogle Scholar

17 Crowther, , Appendices, para. 74, p. 449.Google Scholar

18 ibid., para. 11, p. 467.

19 Radcliffe, , Financial Institutions, para. 215, p. 76.Google Scholar

20 Crowther, , Appendices, para. 79, p. 451.Google Scholar

21 For a review of this literature, see Capie, F. and Collins, M., Have the Banks Failed British Industry? An Historical Survey of Bank/Industry Relations in Britain, 1870–1990 (London, 1992).Google Scholar

22 Shepherd, D. K., The Growth and Role of UK Financial Institutions 1880–1962 (Cambridge, 1971), Table (A) 2.10, p. 169.Google Scholar

23 ibid., Table (A) 3.4, pp. 184–5.

24 Radcliffe, , Memorandum No. 7, para. 15, p. 26Google Scholar; and Wilcox, M. G., ‘Instalment finance and the banks’, Credit: Finance Houses Association Quarterly Review, 10 (1970), p. 17.Google Scholar

25 London Clearing Banks, Evidence by the Committee of the London Clearing Banks to the Committee to Review the Functioning of Financial Institutions [The Wilson Committee] (1977), para. 2.21, p. 28.Google Scholar

26 Wilcox, , ‘Instalment finance and the banks’, p. 19.Google Scholar

27 Crowther, , Report, para. 2.3.17, p. 69.Google Scholar

28 FHARPC: no file reference, Proof of Evidence of Sidney Alfred Jones [Managing Director of North West Securities], para. 18, p. 7.Google Scholar

29 FHARPC: Greaves, para. 52, pp. 25–6.Google Scholar

30 Crowther, , Report, para. 2.3.15, p. 67.Google Scholar

31 Radcliffe, , Memorandum No. 7, para. 20, p. 27.Google Scholar

32 ibid., paras 25–6, p. 27; para. 29, p. 27 and paras 35–6, p. 28.

33 FHARPC: Greaves, para. 52, pp. 25–6.Google Scholar

34 FHARPC: Jones, para. 16, p. 6.Google Scholar

35 FHARPC: no file reference number, Supplemental Proof of Evidence of A. D. Bain, p. 1.Google Scholar

36 ibid., pp. 1–6.

37 FHARPC: Pollard, para. 8, p. 3.Google Scholar

38 Crowther, , Report, para. 2.6.18, p. 105.Google Scholar

39 ibid., para. 2.6.18, p. 105; and Report of the Registrar, 1 Jul. 1963 to 30 Jun. 1966, Restrictive Trading Agreements [hereafter RTA] (1967), Cmnd. 3188, p. 28.Google Scholar

40 FHARPC: Greaves, para. 59, pp. 29–30.Google Scholar

41 FHARPC: Pollard, para. 70, p. 42.Google Scholar From 1947 to 1958 there were severe restrictions on bank lending for hire-purchase purposes. Except for a short respite between Aug. 1954 and Feb. 1955, the Capital Issues Committee refused applications for the raising of new capital by finance companies, with the result that the finance houses were restricted to raising of unsecured deposit money during these years. The lifting of sources of funds control between 1958 and 1960 was seen as causing a ‘scramble for bank credit’ which, it was alleged, caused the houses to seek more credit than they immediately required and a consequent attempt to find immediate outlets for these funds. Oliver, F. R. and Runcie, N., ‘The economic regulation of instalment credit in the United Kingdom’, in Diamond, A. L. (ed.), Instalment Credit (London, 1970), pp. 156 and 161.Google Scholar See also Runcie, N., ‘UK finance companies: the uses and sources of funds, 1949 to 1958’, The Bankers Magazine, 187 (1959), pp. 453–64Google Scholar and Artis, ‘Monetary policy’, p. 14.Google Scholar

42 FHARPC: Greaves, para. 65, pp. 32–3.Google Scholar

43 FHARPC: Pollard, para. 22, p. 10.Google Scholar

44 ibid., para. 25, pp. 11–12.

45 FHARPC: Proof of Evidence of H. Oliver [Director of United Dominions Trust], File HO, para. 13, p. 6.Google Scholar

46 See, for example, Daily Mail, 20 06 1957.Google Scholar

47 See, for example, Financial Times, 17 06 1957.Google Scholar

48 FHARPC: File H5, Proof of Evidence of N. S. Fosh [Director of Lombank], para. 29, p. 16Google Scholar; and Pollard, para. 22, p. 10.Google Scholar

49 FHARPC: no file reference, Proof of Evidence of P. Livsey [Director of Mercantile and Chairman of its subsidiary company, Mutual Finance], para. 5, p. 1.Google Scholar

50 ibid., paras 4–7, p. 1.

51 ibid., para. 6, p. 1.

52 FHARPC: Greaves, para. 64, p. 32 and para. 33, p. 66.Google Scholar

53 FHARPC: Oliver, para. 18, p. 7.Google Scholar

54 FHARPC: Greaves, para. 80, p. 39Google Scholar; and Report of Registrar, RTA, p. 28.Google Scholar

55 Down from 37% in 1955 to 23% in 1960; see FHA: File – Restrictive Practices Act, Press Cuttings and Background Material, p. 2.Google Scholar

56 FHARPC: Jones, para. 20, p. 7.Google Scholar

57 FHA: File – Restrictive Practices Act, Press Cuttings and Background Material, p. 2.Google Scholar

58 FHARPC: Greaves, , para. 70, p. 35.Google Scholar

59 ibid., para. 69, p. 35.

60 ‘Hire Purchase Faces Ford’, The Economist, 31 08 1963, p. 757.Google Scholar

61 ibid.

62 FHARPC: Oliver, para. 19, p. 8.Google Scholar

63 ibid., para. 20, p. 9.

64 ibid., para. 16, p. 7.

65 ibid., para. 18, p. 7.

66 ibid., para. 19, p. 8.

67 FHARPC: Greaves, para. 87, p. 42.Google Scholar

68 FHARPC: Oliver, para. 20, p. 9.Google Scholar

69 ibid., para. 22, p. 10.

70 Ford Motor Credit was incorporated on 3 Sep. 1963 (Ford Annual Report, 1964).Google Scholar

71 FHARPC: Pollard, para. 54, p. 31.Google Scholar

72 ibid., para. 31, p. 15.

73 FHARPC: Greaves, para. 96, pp. 46–7.Google Scholar

74 ibid.

75 FHARPC: Pollard, para. 72, p. 44.Google Scholar

76 FHARPC: Greaves, para. 97, p. 47.Google Scholar

77 FHARPC: Pollard, para. 32, p. 15.Google Scholar

78 ibid., para. 33, p. 16.

79 FHARPC: Greaves, para. 99, p. 48.Google Scholar

80 ibid., para. 100, p. 49.

81 Report of the Registrar, RTA, p. 31.Google Scholar

82 ibid., p. 30.

83 Foreman-Peck, J., Bowden, S. and McKinlay, A., The British Motor Industry (Manchester, 1995), p. 146.Google Scholar

84 ‘Hire Purchase’, The Economist, 31 08 1963, p. 758.Google Scholar

85 In 1970, Ford had 2,000 retail outlets in the UK; BMC had 4,900. Rhys, D. G., The Motor Industry: An Economic Survey (London, 1972), p. 340 and Table 9.3, p. 339.Google Scholar

86 Foreman-Peck, et al. , Motor Industry, p. 146.Google Scholar

87 Crowther, , Report, para. 2.6.19, pp. 105–6.Google Scholar