BRITISH BANKING

A Skelding Summary

Banking & the current world monetary system has ancient origins though there are few detailed records prior to the 1200s. (The history of money is quite another subject) The idea of buying things with coinage and gold bullion had already gained common currency by the time centralised storage and distribution caught on. People had realised that use of coins was far more convenient than reliance on bartering - a quaint system where, for example, if you wanted a bucket you gave your local bucket dispenser a goat as exchange - coins being far easier to carry in your purse than goats or buckets.

One early feature was the emergence of deposit accounts where money or other valuables were stored for safe keeping. Loans based on oral agreement, recorded in early banker's journals, again were established very early on.

The 1600s saw the introduction of the cheque which rapidly superseded coins as an agent for large transactions and the first European banknotes were issued in 1661 by the Bank of Stockholm. As such, the concept of 'credit' was born. Banks traded & thrived via 'interest' which was renting out cash for a fee. The assumption was always that account holders had the capital to honour their obligations. To this day, especially in the City of London a verbal agreement and a handshake is a legally binding contract based on the word of a gentleman. (More recently ladies)

Lending money to get more money on return (usury) had been most frowned upon throughout history but by this stage, London banks had established themselves on a grand scale. They started dealing in foreign exchange, attracting coin deposits by paying interest and using these self same deposits as loans to private or business borrowers.

Barclays Bank was formed in 1896 through the merger of the concerns Barclay, Bevan, Tritton, Ransom, Bouverie and Co with Gurney and Co. Aware of the absurd length of these names, the Bank's fathers plumped for Barclays as a name - as the name Ransom also struck them as having unfortunate connotations in the financial world. In the past Century not only did Barclay's establish itself as one of "the big four" in the United Kingdom (the others being Midland, Lloyds and National Westminster) but they also established a presence all over Europe and North America.

Midland Bank began trading in England as the Birmingham and Midland Bank in 1836. In 1891 it merged with the Bank of London to become the London and Midland Bank. After a period of expansion throughout the British Isles it became Midland Bank Ltd in 1923, and had established itself as the largest deposit bank in the world by 1934. In 1981 Midland dropped a clanger by investing in the Californian Crocker National Bank and lost money hand over fist. These losses severely damaged the company. Indeed, Midland - that great British institution - lost its independence not to mention it's Britishness in 1992 when the HongKong and Shanghai Banking Corporation (HSBC) acquired a controlling interest in the company's affairs.

Lloyds Bank started life as Taylor and Lloyd in 1765 becoming Lloyds in 1853. Since 1865 Lloyds has absorbed over 50 other banks and by the late 1970s had a presence in 43 countries throughout the world providing international and commercial banking with massive insurance and reassurance services.

Rather bigger than the Big 4 was the Bank of England who used to do a little retail banking for the convenience of its retinue, holding the tradition of the white five pound note in its cheque design while the National Westminster Bank (the 4th) was issuing cheques that looked like the fancy blue fivers which replaced the famous white one to foil the forgers.

When the big 4 became impersonal and Building societies were allowed to act as banks many other banks sprang up in high streets and now, every Tom Dick and Harry supermarket can brand their own banking facilities and card services under the big 4. - after all it's all numbers on the computer now - provided the computer says yes.

Notable exceptions are Coutts where you have to deposit thousands to be able to write a cheque that is every bit as reliable as money (specially nowadays) and as good a status symbol as a Rolls. The other non high Street bank with impeccable manners and integrity is the Bank of Scotland - (not the royal one)) which reeks of old world and worth a visit. It's like a workiing museum of how Banks used to be.