The banks on the eve of war, 1914

Although telephones, typewriters and other new technologies were beginning to be used, the banks had not really changed since the 1870s. The war was destined to challenge and alter nearly every aspect of their business, from the tools they used to the staff they employed, and from the customers they served to the way they worked within the wider economy.  

In England and Wales in 1914 there were 38 shareholder-owned banks, operating 5,869 branches. There were also 29 deposit-taking private banks, operating 147 offices. Between them, they provided a bank branch for every 6,300 people, although in fact many of those people would have had no direct dealings with a bank. Weekly wage earners were paid in cash, and could pay their bills the same way. Even if they managed to accumulate some savings, it would not necessarily appeal to them to put the money in a bank account.

Those who did have bank accounts could use them to keep their savings safe and to make and receive payments of all kinds. They could arrange overdrafts if necessary, and business customers in particular could obtain loans, usually for relatively short terms. By modern standards, the range of products and services offered was extremely narrow.

Scotland’s banking system was separate, and quite different from that in England and Wales. There were 8 publicly-owned banks operating 1,261 branches; more than one for every 4,000 people. A larger proportion of the population had accounts, but still by no means everybody. In addition to offering current and deposit accounts and loans, the Scottish banks issued their own banknotes. These notes were a core element of Scotland’s circulating economy, issued in denominations down to £1. In England, by contrast, all paper money was for higher denominations, and therefore less useful in day-to-day life. Most people in England never saw or used banknotes.

Most British banks, including all our Scottish constituent banks, had offices in London. London was a major global financial centre, probably still the world’s largest. Although the two biggest banks in the world were France’s Crédit Lyonnais and Germany’s Deutsche Bank, the next three were all London-based, including – at number five globally – our constituent London County & Westminster Bank, with assets worth £105m and 341 branches. Even for smaller banks, operating at least one office in London was necessary for supporting customers who had dealings there, or overseas.

British banks were not generally advanced when it came to international dealings. British businesses tended to focus their overseas interests on the Empire, rather than on trading with other independent economies. Banks were therefore not called upon to provide as much international finance, exchange and investment as, for example, German banks had begun to do. A number of the larger British banks had London-based foreign departments to handle this kind of business, but their scale was limited. Only one of our constituents, London County & Westminster Bank, had any direct overseas operations, having established a Paris-based subsidiary in 1913.

Even domestically, banks limited the scope of their activities. They stuck to short-term lending, remaining at arm’s length from the workings of their business customers. Many openly disapproved of the system in Germany, where some banks made long-term investments in companies, taking seats on their boards and becoming directly involved in their development and decision-making.

Locally, banks relied heavily on their branch managers. Their community standing and local knowledge were vital to decision-making – not only about loans to customers, but about expanding the bank into new areas. In larger branches, the manager was assisted by an accountant or chief clerk, tellers to serve at the counter and ledger keepers working behind the scenes, as well as apprentices and messengers. All would have been male, although a few banks had started to employ women in junior clerical roles at head office.

In Scotland some branches, particularly in larger towns and cities, were run by professional bank managers, like in England. Others were still operated by agents. These men represented their bank in local communities, but were not strictly employees. They usually had another career, most often as a solicitor, and were quasi-independent, although the staff beneath them were bank employees.