The London Joint Stock Bank Ltd.

Joint stock banking effectively started in 1826. Private banks had been the major force in English banking throughout the 18th Century and for the first decades of the 19th Century. By the 1820’s there was considerable discussion about the perceived limitations o f the private banks and whether joint stock banks should be permitted, similar to banking developments in Scotland. Up to this period all the private banks, of which there were now 700 or so, were restricted to a simple partnership structure with a maximum of 6 partners. This limited the size of their resources and consequently their ability to withstand periods of financial crisis. In December 1925 there was a widespread financial crisis as a result of which over 100 private banks closed. Whilst some did re-open, about 80 private banks actually failed.

This crisis finally stimulated the authorities to action. In 1826 legislation was passed which allowed banks to be created on joint stock principles (for example, not limited to six partners) provided that they were not situated within 65 miles of London. This 65-mile restriction was to protect the Bank of England from direct competition. At the same time the Bank of England was specifically authorised to open branches anywhere in England & Wales.

All the early joint stock banks were of necessity provincial banks as none were permitted to locate themselves within 65 miles of London. However in 1833 further legislation removed this restriction and allowed joint stock banks in London provided they did not issue their own banknotes. This restriction on banknote issues within 65 miles of London was, once again, intended to protect the Bank of England.

During the next decade just five London joint stock banks were established. Some of these new banks began to develop the branch networks that were one of the major benefits of the joint stock banking structure.

The London Joint Stock Bank, established in 1836, was one of the early joint stock pioneers in London.  The first branch was opened in Coleman Street in the City of London but in 1837 the Bank moved to nearby Princess Street. The London Joint Stock Bank had influential City support and deposits rose from £600,000 in 1837 to £2.25 million by 1845. This was serious money at the time. In 1840 a “Western Branch” was established by the purchase of a private bank (Wright & Co) in Covent Garden. This “Western Branch” quickly moved to 69, Pall Mall and the picture above  shows an early London Joint Stock Bank cheque from this location.

In 1917 the London Joint Stock Bank became a part of the Midland Bank. This amalgamation created the largest bank in the country, known as HSBC on the High Street today.

by Paul Green