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Americanisation in 20th Century Europe: business, culture, politics. Volume 2

 | 
Nick Tiratsoo
, 
Mathias Kipping

British retail banks, 1955-70: a case of 'Americanisation'?

Alan Booth

Zusammenfassung

Cet article étudie l’impact de la culture, des méthodes et de la technologie américaines sur les banques de dépôt britanniques. Les banques américaines pratiquaient le commerce de masse de leurs services et encourageaient le crédit à la consommation grâce à des prêts personnels standards, en utilisant la publicité directe et en faisant un usage judicieux des relations publiques. Les plus grandes banques américaines s’informatisèrent pour limiter l’essor des coûts de la banque de masse. Les banques britanniques furent influencées par les technologies américaines, employant toujours plus de consultants en management américains. Mais elles conservèrent des pratiques de classe pour l’offre des produits, le marketing et leur culture générale. De même, les consommateurs britanniques issus de la classe ouvrière gardèrent leur préférence pour l’argent liquide et l’épargne dans des institutions financières non bancaires. Ce fut une américanisation partielle.

Volltext

  • 1 Retail banks take deposits from and lend directly to personal and corporate customers of their bra (...)
  • 2 These themes have been explored recently by D. Kynaston, The City of London, Vol. 4: A Club No Mor (...)
  • 3 Barclays was already such an internationally oriented group: Ackrill and Hannah 2001: 268-9.

1Debates on the Americanisation of European industry have hitherto concentrated heavily on manufacturing (especially engineering), but the chapters of Coopey and Porter and Lescent-Giles in this volume mark a welcome, overdue acknowledgement of the importance of services. The retail banks should play an especially important role in Americanisation, since they both mass produce financial services and have a vital role, via credit creation, in the mass consumption of manufactures.1 Research in financial history has grown rapidly, but the impact of US methods, culture and technology on European financial services has yet to be systematically explored. This is unfortunate, as the banks, and the wider financial service sector, have experienced a slow, systemic cultural transformation from the 1950s.2 Before 1939, British banks had Consolidated their position as solid, sober and even dour upholders of financial rectitude and sobriety. Their personal clients were essentially middle-class and expected to remain within the boundaries of financial prudence; access to overdraft facilities was difficult and expensive. The banks had a central role in the production of middle-class respectability by offering steady, secure employment, above-average earnings, good promotion prospects and a tidy pension on retirement. Provincial bankers were the backbone of the property owning, sherry-sipping suburban bourgeoisie. In the inter-war years, and probably down to 1960, British bank managers could expect to reduce their golf handicap in the normal course of their duties. By 1970, however, the banks had introduced credit cards, personal loans and other forms of credit purchase for immediate consumption. They were at the forefront of applying computers to the service sector. They had long been the first of the quasi-professional services to invest heavily in advertising and public relations. They were about to project themselves as internationally-oriented competitors to US, German (and later Japanese) banking groups.3 Moreover, they looked increasingly to the USA for new business ideas. Had they undergone a cultural transformation? This question is addressed in three stages. First, we compare British and American banking structures. Second, attention is turned to the production of financial services and the motives for computerisation in the two countries. Finally, we contrast the development of services for British and American personal customers. The general conclusion is that British banks were driven by similar pressures to those faced in the USA, and often adopted similar solutions to those already pioneered by American banks, but with sufficient differences to raise doubts about the notion of the Americanisation’ of British banks.

banking structure and managerial organisation

  • 4 M. Bordo et al, “A Comparison of the United States and Canadian Banking Systems in the Twentieth C (...)
  • 5 B. Yavitz, Automation in Commercial Banking: Its Process and Impact, New York, Free Press, 1967, T (...)

2In the golden age the structure of the US banking System was unique among industrial nations.4 The McFadden Act of 1927 crystallised the tendency towards a vigorous regulatory System at the State level. Many States, like Illinois, allowed only unit banks or placed severe limits on branch banking, whereas others, like California, permitted state-wide branch banking. The financial collapse of 1929-32 produced new restrictions on retail banks, notably by restricting interest on time deposits, prohibiting interest on demand deposits (usually called current accounts in the UK), enforcing separation of investment banking from retail banking and imposing compulsory insurance and regulation through the Federal Deposit Insurance Corporation. This System rescued US banks and restored customer confidence but was better suited to the price regime of the 1930s than to post-war inflation. After 1945, US banks found the interest rate ceiling on time deposits a handicap and compulsory national deposit insurance a cost, both of which could be evaded by non-bank financial institutions. They found themselves competing relatively ineffectively with savings and loan associations and credit unions for savings and time deposits.5 The most heavily-used accounts tended to remain with the retail banks, but economic growth and inflation simultaneously increased the use and the costs to banks of processing demand deposit accounts. The share of total deposits held by retail banks declined and the regulatory regime made it extremely difficult, especially in States that permitted only unitary banks, to explore solutions through scale economies. In the literature on Americanisation it is customary to assume that US firms set standards of efficiency that their European counterparts could only admire in awe. The East and West Coasts of the USA had enormously powerful and efficient retail banks, with California’s Bank of America a model for the industry internationally, but restrictions on branching in other States left a long tail of structural, legislatively-conditioned inefficiency and limited horizons. In retail banking, the American model was fragmented and diverse.

  • 6 D. Kynaston, The City of London, Vol. 3, Illusions of Gold, 1914-1945, London, Chatto and Windus, (...)
  • 7 J. Fforde, The Bank of England and Public Policy, 1941-1958, Cambridge, CUP, 1991 and the review b (...)
  • 8 Carnevali and Hannah 1995; Griffiths 1978 ; for the bank chairman, see Kynaston 2001 : 105, 216-7.
  • 9 A. Holmes and E. Green, Midland: 150 Years of Banking Business, London, Batsford, 1986, p. 221-30.
  • 10 F. Capie and M. Billings, “Profitability in English banking in the twentieth century”, European Re (...)

3The British System, on the other hand, was characterised by concentration and oligopoly. The Big Five retail banks – Midland, Lloyds, Barclays, National Provincial and the Westminster – secured a dominant position in current account banking and the market for industrial finance, together with a prominent role in time deposit taking by 1918-20.6 The UK financial System was very lightly regulated, with no branching ban, no interest rate caps, no compulsory deposit insurance and no minimum capital requirements, but the Bank of England and the Treasury sought by nods, winks and other informal methods to shape and control banking policy on a purely pragmatic basis.7 This regulatory network intensified after 1950, when government used informal, arm’s length control of bank advances (lending) as its main anti-inflationary monetary policy. The literature has assumed that the cartel and intense regulation turned the big five into increasingly inefficient somnambulists, lacking any competitive edge, and bank chairmen were prone to such statements.8 However, corporate clients certainly changed banks, the extension of branch networks indicated fierce competition over quality, if not price, and non-bank financial institutions increased their presence in deposit-taking.9 In this framework of intrusive regulation and subtle competitive pressures the banks made comfortable, even substantial, profits but this only intensified criticisms of the regulatory regime from all quarters; regulatory change was always on the agenda.10

  • 11 Kynaston 2001: 117-233.
  • 12 T. Lupton and C. Wilson, “The Social Background and Connections of Top Decision Makers’”, Manchest (...)
  • 13 Carnevali and Hannah 1995: 73-4.
  • 14 Kynaston 2001: 103.
  • 15 P. Wardley, “The Commercial Banking Industry and its Part in the Emergence of the Corporate Econom (...)
  • 16 Winton 1982: 171-3; A. Tuke and R. Gillman, Barclays Bank Limited, 1926-1969, London, Barclays, 197 (...)

4In studies of the impact of Americanisation on British firms, it is customary to contrast a British ‘system’ of shallow managerial hierarchies filled by (almost invariably) men who relied on character, contacts and personality, with an American model of more deeply stratified, professionally-qualified management organised into multidivisional structures. In financial services, the US model is restricted to the relatively small number of relatively large banks, but what of the corresponding British pattern? Managerial cultures in British financial services were certainly changing in the 1950s and 1960s from the traditional amateurism towards a more professional approach, but the pace was slow.11 In the 1950s British retail banks were still managed at boardroom and provincial branch levels in the traditional manner. Directors of the big five were still drawn disproportionately from Old Etonians and generals of elite regiments, and ‘outsiders’ tended to find their efforts to shake up this system both frustrating and perplexing.12 Provincial managers also enjoyed the limited commitment that was the hallmark of the amateur, with a shorter working day than their counterparts in either the 1880s or the 1980s.13 But it would be unwise to exaggerate. Branch managers and their staffs in London and other major conurbations routinely worked overtime to cope with rising workloads. Head office management was professionally-trained (the Chartered Institute of Bankers’ examinations and in-service schemes), and possessed expertise that even reform-minded, ‘outsider’ chairmen recognised.14 British retail banks had anyway adopted the multidivisional form in the 1930s.15 The most urgent structural problem for post-war managers concerned the decentralisation of management to the regions in the quest for local directors with contacts to introduce new industrial clients.16 The retail banks diversified into new business areas from the mid-1950s but this tended to be via partially-or wholly-owned subsidiaries that could be accommodated into existing group structures.

  • 17 A. Cairncross, “Prelude to Radcliffe: Monetary Policy in the UK, 1945-57”, Revista di Storia Econo (...)
  • 18 The banks gave evidence collectively as the Committee of London Clearing Bankers: Committee on the (...)
  • 19 Committee on the Working of the Monetary System, Report, cmnd. 827, London, HMSO, 1959, p. 42-52.
  • 20 National Board for Prices and Incomes, Report No. 34: Bank Charges, cmnd. 3292, London, HMSO, 1967
  • 21 The best discussion is in Ackrill and Hannah 2001: 171-84.
  • 22 Holmes and Green 1987: 244-6, 258-60, 281-6.
  • 23 Ackrill and Hannah 2001: 191, 224-5.

5If the amateurishness of British bank management and the stultifying effects of the cartel have probably been exaggerated it is undeniable that the System of bank regulation was deeply unpopular. In the 1950s, the governor of the Bank of England, bank chairmen, Treasury officials and professional economists all expressed dissatisfaction with aspects of the regime.17 The review of the British monetary System undertaken by the Radcliffe Committee examined the performance of the retail banks.18 However, Radcliffe was most concerned with the machinery of monetary policy, and was positive about both the cartel and the quality of retail bank management (in part because, while his Committee was working, the banks demonstrated commercial and competitive vigour by swallowing up hire purchase companies – see below).19 A decade later, however, government opinions changed when rising bank charges threatened counter-inflationary policy. The Wilson government used its National Board for Prices and Incomes (PIB) to pressure the banks to improve their operating efficiency, and recommended more competition, full disclosure of bank profits and greater scale economies in branch networks.20 The report provoked a merger between the Westminster and the National Provincial banks, but a further merger of Lloyds, Barclays and Martins fell foul of the Monopolies Commission.21 The new National Westminster Bank called in McKinsey, the US Management Consultants, who advised the creation of a bigger, more internationally oriented, American-style bank to cope with the growing pressures of globalisation. The PIB’s proposal (endorsed by the Monopolies Commission) to compel the banks to disclose all their financial information ultimately induced the Midland also to call in McKinsey when it saw that it had become the smallest of the new Big Four, with the lowest labour productivity levels.22 Although the Midland did not formally adopt the McKinsey report, it accepted the case for a more systematic and disciplined approach to increase earnings and, by implication, that its whole organisation had to become more professional. Barclays, already the most international of British banks, also used management consultants (Urwick Orr) at this time, but also turned to McKinsey in the early 1970s.23

  • 24 M. Kipping, “American Management Consulting Companies in Western Europe, 1920 to 1990: Products, R (...)
  • 25 The government used management consultancy side of the PIB to extend their use to new sectors: A. (...)
  • 26 Kynaston 2001: 425.

6Thus, there is a complex story to tell of the impact of Americanisation on the managerial culture of British retail banks. The popular story of indolent, amateurish British managers is almost certainly overdrawn. It may have applied at board level, but even here the well-connected, part-time bank director was expected, and could be pressed, to use his contacts to introduce new industrial business to the bank. American business culture had already permeated British bank management in the 1930s, and the adoption of the M-form was paralleled in the late 1960s by the use of US management consultants. British banks may appear to have acted slowly, protected by the cartel, but Kipping has pointed out that McKinsey was slow to approach City firms. Only with the appointment of the former British civil servant, Sir Alcon Copisarow, in 1966 did McKinsey establish firm contacts with the British establishment and begin to expand its London office.24 The PIB report into bank charges ensured that demand would match this supply.25 The impact of McKinsey’s report on the National Westminster was little short of sensational ; McKinsey worked with the bank for many years and even the Bank of England commissioned an investigation (but effectively ignored most of the recommendations).26 However, the real evidence of openness to US ideas occurs when products and processes are examined more closely.

automation, computers and americanisation

  • 27 Wardley 2000: 83-9 ; J. O’brien, The Impact of Computers in Banking, Boston MA, Bankers’ Publishin (...)
  • 28 M. Goldring, “Electronics and the Banks”, Banker.; 100, 1953, p. 140-4, 205-8 and 285-90.
  • 29 O’Brien 1968: 2; Yavitz 1967: 21-2.
  • 30 Yavitz 1967: 7-17.
  • 31 ABA, Bank Management Commission, Magnetic ink character recognition, 1957; Placement for the commo (...)
  • 32 Figures in this paragraph from Yavitz 1967: 27-9.

7Computers have revolutionised post-war retail banking, following on from inter-war mechanisation and the introduction of electromechanical equipment in the 1940s and 1950s.27 The potential of computers in banking had been recognised at a very early stage. The science journalist, Mary Goldring, wrote a series for The Banker in early 1953 on the potential of existing Ferranti computers in bookkeeping and cheque sorting.28 US banks had begun even earlier. In 1950 California’s Bank of America (BoA) began collaborating with the Stanford Research Institute to develop a large computer System for current account banking, and by 1955 it introduced an IBM 702 into its San Francisco branch to manage mortgages and instalment loans and for central-office accounting.29 Both BoA and the First National City Bank of New York had cheque-reading and sorting machines for demonstration in 1956, but with sharply differing Systems.30 The American Bankers’ Association (ABA) thus established committees to work with equipment suppliers to establish a common standard. Five major reports were published within two years, but full agreement on software standards came only in 1960.31 The proliferation of computers through the banking System after 1960 was quite astounding. By the end of 1963, almost every bank with assets in excess of $500 million had its own computer installation, as did 85 per cent of those with assets of between $100 and $500 million, and 52 per cent of banks with assets of $50 and $100 million. But very significantly in 1963-4 this represented less than 3 per cent of all US banks ; and for the 77 per cent of US banks in the smallest size categories, there was virtually no prospect of computerisation in bookkeeping or cheque-clearing.32

  • 33 Capte and Billings 2001; letter from T. Hollis, formerly Assistant General Manager, Group Manageme (...)
  • 34 The Times, 25 February 1957 and 26 February 1959. Tuke and Gillman 1972: 94.
  • 35 British Bankers’ Association, “Automation Enquiry”, 11 January 1957, BT 64/4801, Public Record Off (...)
  • 36 “First Step to Electronic Banking”, Banker 107, 1957, p. 242-8; The Times, 25 February 1957. The A (...)

8Immediately after the war British banks commissioned a prototype photo-electric cheque-sorter but failed to agree its development. Thereafter, cushioned by rising profitability in the 1950s and having not yet completed branch mechanisation, they made slower progress on computerisation than their US counterparts.33 However, their long-run competitive position was uncertain. The banks made little headway in the market for working-class savings, and nonbank financial institutions dominated the markets for mortgages and the purchase of consumer durables, and had a secure foothold in the finance of industrial machinery. The real value of current accounts fell and of deposit accounts stagnated during the 1950s, while cheque use increased at approximately 7 per cent per annum. The banks sought (and were given in the Cheque Act of 1957) legislative easement in processing the rising tide of cheques but they looked to primarily automation, especially as they feared further explosions in the use of cheques.34 In 1956, the British Bankers’ Association looked forward to extensive use of computers to thwart an anticipated rise in business costs.35 In October 1955, the Committee of London Clearing Bankers (CLCB) established its own committee of computer experts. Its “preliminary forecast in general terms” of February 1957 followed the American lead very closely, both opting for magnetic ink character recognition and encoding the key information on cheques rather than using “carrier” or “slave” accompaniments.36 The next key technical decision concerned the type-font to be employed, and it took the ABA 30 months to produce a consensus on the E-13B design. The CLCB took more than 40 months, primarily to allow European manufacturers to perfect their own Systems, but bankers’ patience had limits. Once Lloyds ordered an E-13B reader from Burroughs in March 1960, and CLCB had no real choice but to recommend E-13B. Barclays was also in discussions with US suppliers before the final decision was announced, and placed its order for an IBM reader in mid-December 1960.

  • 37 “Electronic Bookkeeping for Martins”, Banker 110, 1960, p. 133; The Times, 1 February 1960; Winton(...)
  • 38 “The Computer and the Story Behind it”, Midbank Chronicle, 12, 1963, p. 432-3.
  • 39 House of Commons Select Committee on Science and Technology (Sub-Committee D), Session 1969-70, Th (...)

9In bookkeeping, however, the initial equipment choices favoured British suppliers. In 1959 Barclays became the first British bank to order a computer (an EMI Emidec 1100) for bookkeeping at Cavendish Square, London, but it was beaten into operation by Martins Bank’s Ferranti Pegasus II at South Audley Street, London.37 Lloyds installed Burroughs computers into its Pall Mall branch. Although there had been experiments with data transmission via telephone lines, most banks chose to input data on paper tape (using the latest US electronic ledger-posting machines), which was physically transported to the bank’s computer centre for overnight batch processing.38 The banks quickly saw the potential for on-line, real-time computing. Only eight-and-a-half years after its first branch computer had become operational, Lloyds became the first British bank to have transferred its entire branch network to a common on-line computer accounting system. The other major banks followed and the computerisation of the entire retail banking System was much faster in Britain than in the USA, despite the slow start. The shift to on-line, real-time computing was achieved on US hardware. The Midland and Barclays had earlier ‘bought British’ but switched to US suppliers (in the Midland’s case only after major difficulties with its UK supplier, English Electric, also a major customer of the bank). Both, however, endured enormous and expensive disappointments with their US hardware provider, Burroughs, and both were well behind Lloyds in going on-line.39

  • 40 R. Coopey, “A Passing Technology: The Automatic Teller Machine”, in P. Lyth and H Trischler (eds.) (...)

10Thus, the record of British banks in automating is better than the literature on their managerial deficiencies might suggest. Despite the cartel and the generous profits flowing therefrom, British banks saw themselves in longrun cost difficulties. Their core personal client business was becoming more costly to operate and threatened to become even more so if the ‘banking habit’ extended down the social scale (as it continually threatened to do). Britain may have lagged behind the larger US banks in computerisation, but initial hesitations can be explained partly by prudence in the face of technological uncertainties and partly by a laudable hope that British firms, the banks’ own customers, might carve a niche in the market. If subsequent experience showed that US hardware suppliers enjoyed decisive advantages, the extremely rapid pace of diffusion of computers throughout the British banking System owed much to remote terminal software developed in the UK.40 The economics of network computing were changing rapidly in the 1960s, and the banks, which saw themselves as technological pioneers for the entire service sector, made major contributions to the pace and direction of change. Thus, there was much more to the rapid diffusion of leading edge electronic technologies than can be captured by the term ‘Americanisation’, even if the hardware was developed and designed in the USA.

new products and americanisation

  • 41 O’brien 1968: 51-2; Yavitz 1967: 49-51, 113-7.

11The US pioneers of bank automation inevitably pushed out from the computerisation of core activities into new product development using spare hardware capacity and their in-house Systems analysts. They offered ‘external’ customers a variety of accounting operations, payroll management, the analysis of income and expenditure flows and even timetabling for State schools.41 Yavitz cites the case of (what he calls) ‘Manufacturers National Bank’ which established a separate division, the ‘Automated Services Center’, to sell computerised services to other bank divisions and outside clients on a fully commercial basis. Its capabilities and range of services was determined in large part by ‘external’ commercial demand. Larger US banks followed similar strategies. Medium-sized banks lacked the internal capacity to extend computerisation beyond their immediate internal needs, especially if like Yavitz’s ‘Merchants Midwest Bank’ they had bought hardware and software ‘off the shelf’. These smaller-scale, (comparatively) late automaters relied heavily on equipment suppliers to install, ‘de-bug’ and make fully operational the new Systems, and that often implied relying on the local office of the equipment supplier (usually IBM) to provide staff training. Medium-sized US banks generally lacked the internal Systems analysis capacity to make more than limited extensions to their established portfolio of services.

  • 42 Tuke and Gillman 1972: 90.
  • 43 Winton 1982: 188.
  • 44 P. Cottrell, ‘Finance and the Germination of the British Corporate Economy’, in P. Cottrell et al. (...)
  • 45 Holmes and Green 1987: 229.

12British banks, with their concentrated structure, centralised O&M and Systems analysis capabilities were also able to exploit excess capacity on their computers once core tasks had been automated. Like ‘Manufacturers National Bank’, Barclays created a new division, ‘Computer Services’, to utilise spare computing capacity', and found such strong demand that it established a joint venture with ICL to supply commercial and technical bureau services to outside customers.42 Midland had a similar operation. More routine was Lloyds’s extension of computing to much of its work for commercial clients (the executor and trustee department, the registrar’s department and in foreign exchange dealing).43 It has been suggested that the computer revolution helped awaken British bank management from a deep slumber induced by the cartel and administrative regulation.44 However, British banks offered their customers new products throughout the 1950s. The City branches of all banks competed in offering commercial services to public industrial companies (especially those to whom they were supplying more traditional banking services), notably through a registrar’s department to handle various aspects of the management of their share registers.45

  • 46 Kynaston 2001: 101-3; FFORDE 1992: 690-1, 761-79.
  • 47 Holmes and Green 1987:224-30.
  • 48 Radcliffe Report 74-5.

13As noted, the cartel and administrative guidance inhibited British banks from competing directly in lending to either personal or business customers, resulting in friction between the banks, their customers, the regulators and ministers. The Bank of England’s response was to use the recession of 1958 to end the administrative guidance on bank lending and replace it with a System of special deposits, by which the Bank could influence bank lending more transparently.46 The formal relaxation of credit control unleashed a phase of hectic competition in banking. The most obvious growth areas of new business for US banks had been in personal loans for the purchase of consumer durables. The Bank of England had actively discouraged the retail banks from entering this business, and the non-bank finance houses had come to dominate the market with hire purchase. The recession of 1958 raised severe doubts about the financial soundness of some of these companies, and in the new, more liberal atmosphere the Bank of England indicated that the retail banks could now participate in hire purchase as long as they separated this business from ordinary banking and channelled it through subsidiary or associated companies. The Midland, which had earlier established a new business committee to study developments in the USA and Australia, had long been ready to go.47 In September 1958, it launched new personal loans for private customers modelled on US practice. Like its competitors, the Midland had been looking into hire purchase; and by September every major retail bank had a controlling interest in a hire purchase company.48 The banks hurtled into this area, persuading the Radcliffe Committee (very interested observers of these developments) that the commercial bank cartel was perhaps less restrictive and stultifying than previously thought. The other main fruit of Midland’s new product development was a US-style, cheque-only current account, which acted as a feeder of new clients into more profitable services, but was ultimately disappointing in extending ‘the banking habit’ down the social scale.

  • 49 “The Changing Face of Bank Publicity: By a Special Correspondent”, Banker, 113, 1963, p. 766-74.
  • 50 Holmes and Green 1987:224-5.
  • 51 The retail banks successfully lobbied for the repeal of the Truck Acts to allow employers to pay w (...)

14But this rather frenetic extension of personal financial services forced British banks to reassess the image that they presented to the public. Bank advertising for personal customers probably began only in the inter-war years, but the style and content were stiff and stuffy.49 In the 1950s advertising improved and banks began to establish public relations departments. Significantly the Midland accompanied its push for new personal customers from 1958 with the first television advertising campaign by any British bank and the appointment of a full-time public relations officer.50 From the late 1950s the banks began to supply the newspapers with tasty morsels, notably the bookkeeping machine that glowed red when it sensed an overdraft and the opening of ‘drive-in’ bank branches in deepest Essex. Indeed, the rediscovery by Britain’s criminal underworld of the techniques of bank robbery in the late 1950s provided the press with a steady stream of human interest stories about plucky bank staff. The banks derived the maximum, sober publicity for the opening of their central London computer centres. But sobriety remained the watchword. In 1960, they collectively agreed to withdraw from competitive ITV and cinema advertising and anyway were much more comfortable with prestige advertising than with hard sell copy that the biggest, most commercial US banks were beginning to deploy. There were comparatively few cloth caps evident in British bank advertising and the central theme remained the bank account as a symbol of prestige. Whether existing customers demanded ‘dignity’ or whether banks calculated that working-class customers were unprofitable is difficult to judge. The overwhelming target audience was the relatively young, relatively affluent adult, whether embarking on a university degree, a white-collar career or blissfully happy family life — as befitted class rather than mass banking. The cultural attachment of the British working class to weekly payment in cash remained strong. For all these efforts by the banks to portray themselves as friendly, welcoming organisations, British manual workers and their families overwhelmingly preferred to handle cash rather than cheques and to deposit their savings into industrial Insurance companies and mutually-owned savings banks and building societies, not least for the preferential position in the queue for mortgage finance that the last provided.51 Britain’s Big Five did not create US-style mass banking.

  • 52 Coopey (forthcoming).
  • 53 “Credit Card from Barclays – Cheque Card from Midland”, Banker, 116, 1966, p. 72-3.
  • 54 J. Thomson, “The Case for the Credit Card”, Banker, 116, 1966, p.444-6.
  • 55 Coopey (forthcoming).
  • 56 Tuke and Gillman 1972: 90.
  • 57 Coopey (forthcoming); The Times, 27 June 1992; TUKE and Gillman 1972: 90.

15One US product, however, translated more easily to the UK, the credit card. US bank credit cards spread rapidly in the 1950s and within a decade became dominated by two rival groups, the Interbank Card Association, with its Mastercharge/Mastercard and the pioneer, National Bank Americard Inc., with Visa.52 Once established in the USA, in the 1960s the two companies began to explore the global market. BoA linked with Barclays, which announced its new Barclaycard in February 1966.53 It was a bold idea to issue credit cards to any credit-worthy customer whether or not already an account holder with the bank, especially at a time of rising concern about credit-fuelled inflation. Barclays argued that the credit card was yet another measure to expand their customer base and to cap costs by offering a cheaper alternative to the cheque.54 The other British banks eventually had to follow suit and established the Joint Credit Card Company and the Access card, aligned with ICA and MasterCard.55 Card technology could also be used to increase the use of banknotes as another way to cap the growth of cheques. In June 1967, the world’s first cash dispenser was installed by Barclays, outside its Enfield branch, to allow customers to withdraw cash at any time.56 Despite initial fears about the reliability of the technology, these machines spread very rapidly.57 British banks also developed a note payment machine, pictured in the press giving “ten florins in exchange for a £1 note”! Although somewhat outside the period covered, it should not be surprising, given British banking expertise in on-line computing from remote locations, that the first on-line cash dispenser should have been installed by Lloyds in 1972. Thus, British bankers, for all their fabled conservatism, lack of imagination and preference for a very easy life, oversaw an enormous expansion in the range of banking services from the mid-1950s. This chapter has tended to concentrate on services for the private consumer and has emphasised the responsiveness to new products developed by the large banks in the USA, but an equally impressive list of developments for agricultural, manufacturing and service sector clients could have been produced. British bankers were professionally interested in US developments; their professional journal, the Banker, monitored the American scene very closely, with particular attention to consumer products and technological advances. Indeed, all the major US banks were operating in London and their methods and dynamism could be seen at first hand.

conclusion

  • 58 Comparative productivity measurement in services is notoriously difficult, but levels in financial (...)

16Does this catalogue of American influences on British banks amount to the Americanisation of the British financial services? First, it is necessary to bear in mind that US banking contained the notoriously inefficient banks in addition to the world renowned Bank of America, Citibank, Chase Manhattan et al. The huge variation in US banking efficiency was caused by the peculiarities of its regulatory regime, just as Bank of England regulation imposed a distinctive stamp on domestic financial performance.58 Given the impact of the regulatory regime on performance in any national financial sector, it is unlikely that Americanisation could ever shape British banking or Anglicisation shape US banking for that matter. Nevertheless, British banks played a full part, when allowed by the Bank of England, in the development of a post-war, credit-led, age of mass consumption in the UK. The British banks were not slow to appreciate the importance of advertising or good public and press relations. They were also surprisingly quick and nimble, given the customary and justifiable criticisms of bank management at many levels, in seeing the potential of automation and in pushing the technology of computers to meet distinctively British branch banking needs. The main weakness of British banks was excess confidence in the ability of British firms (almost invariably customers of the bank) to supply computer hardware. But the buy-British banks had been successful in the first phases of automation and British firms successfully supplied other technology, notably the cash machine. Precisely how this most conservatively-led industry became quite so technologically dynamic in a field with so much potential for disaster, while at the same time resisting reform of its own top managerial structures, remains to be answered. Even imperfect managerial structures can identify the obvious targets for an organisation – to increase the number of customers and reduce costs in the most threatening area – especially when they have long been ingrained into the business culture. The real changes occurred in the later 1970s, when British banks found that they no longer needed to be retail banks, relying on an increasingly tenuous position in domestic deposit-taking. The growth of London’s Wholesale money markets and the huge opportunities in the Eurocurrency markets (both evident in the 1960s) and the expansion of foreign exchange dealing in the 1970s allowed British banks to exploit greater freedoms in the regulatory environment. But this was for the later 1970s; until then the Americanisation of British financial services before 1970 had a distinctively British coloration. This was Americanisation overlain with British notions of respectability, and represented more extensive financial services for the comfortably off. Cheaper, more plentiful financial services reached the democratic mass more by accident than design, and the problem of uncertain access to credit for the poorest 25 per cent remains in the Twenty-First Century.

***

Literaturverzeichnis

Ackrill M. and L. Hannah, 2001. Barclays: The Business of Banking, 1690-1996, Cambridge, CUP.

American Banking Association, Bank Management Commission, 1957a. Magnetic ink character recognition, New York, ABA.

American Banking Association, Bank Management Commission, 1957b. Placement for the common machine language on checks, New York, ABA.

American Banking Association, Bank Management Commission, 1958a. Location and arrangement of magnetic ink characters for the common machine language on checks, New York, ABA.

American Banking Association, Bank Management Commission, 1958b. Account numbering and check imprinting, New York, ABA.

American Banking Association, Bank Management Commission, 1958c. A progress reportmeibanization of check handling, New York, ABA.

Bordo M., A. Redisch and H. Rockoff, 1995. “A Comparison of the United States and Canadian Banking Systems in the Twentieth Century: Stability versus Efficiency?” in M. Bordo and R. Sylla (eds.), Anglo-American Financial Systems: Institutions and Markets in the Twentieth Century, New York, Irwin, p. 11-40.

Broadberry S. 1998. “How Did the United States and Germany Overtake Britain? A Sectoral Analysis of Comparative Productivity Levels, 1870-1990”, Journal of Economic History, 58 (2), p. 375-407.

Cairncross À. 1987. “Prelude to Radcliffe: Monetary Policy in the UK, 1945-57”, Revista di Storia Economica, 4, p. 1-20

Capie F. and M. Billings, 2001. “Profitability in English Banking in the Twentieth Century”, European Review of Economic History, 5, p. 367-401.

Carnevali F. and L. Hannah, 1995. “The Effects of Banking Cartels and Credit Rationing on UK Industrial Structure and Economic Performance since World War Two”, in M. Bordo and R. Sylla (eds.), Anglo-American Financial Systems : Institutions and Markets in the Twentieth Century, New York, Irwin, p. 65-88.

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Committee on the Working of the Monetary System, 1960b. Minutes of Evidence, London, HMSO.

Coopey R. (forthcoming). “A Passing Technology: The Automatic Teller Machine”, in P. Lyth and H. Trischler (eds.), Prometheus Wired.

Cottrell P. 1997. ‘Finance and the Germination of the British Corporate Economy’, in P. Cottrell, A. Teichova and T. Yuzawa (eds.), Finance in the Age of the Corporate Economy, Aldershot, Elgar, p. 5-36.

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Griffiths B. 1978. “The Development of Restrictive Practices in the UK Monetary System”, Manchester School, 41 (1), p. 3-18

Holmes A. and E. Green, 1986. Midland: 150 Years of Banking Business, London, Batsford.

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Lupton T. and C. Wilson, 1959. “The Social Background and Connections of ‘Top Decision Makers’”, Manchester S chool, 27 (1), p. 30-53.

Moran M. 1986. The Politics of Banking: The S frange Case of Competition and Credit Control, London, Macmillan, 2nd edition.

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Anmerkungen

1 Retail banks take deposits from and lend directly to personal and corporate customers of their branches.

2 These themes have been explored recently by D. Kynaston, The City of London, Vol. 4: A Club No More, 1945-2000, London, Chatto and Windus, 2001; and M. Ackrill and L. Hannah, Barclays: The Business of Banking, 1690-1996, Cambridge, CUP, 2001, chs.5-8.

3 Barclays was already such an internationally oriented group: Ackrill and Hannah 2001: 268-9.

4 M. Bordo et al, “A Comparison of the United States and Canadian Banking Systems in the Twentieth Century: Stability versus Efficiency?”, in M. Bordo and R. Sylla (eds.) Anglo-American Financial Systems: Institutions and Markets in the Twentieth Century, New York, Inwin, 1995, p. 11-17.

5 B. Yavitz, Automation in Commercial Banking: Its Process and Impact, New York, Free Press, 1967, Table 2.1.

6 D. Kynaston, The City of London, Vol. 3, Illusions of Gold, 1914-1945, London, Chatto and Windus, 1999, p. 45-6; B. Griffiths, “The Development of Restrictive Practices in the UK Monetary System”, Manchester School, 41 (1), 1978, p. 3-18; F. Carnevali and L. Hannah, “The Effects of Banking Cartels and Credit Rationing on UK Industrial Structure and Economic Performance since World War Two”, in Bordo and Sylla 1995: 66-7.

7 J. Fforde, The Bank of England and Public Policy, 1941-1958, Cambridge, CUP, 1991 and the review by C. Goodhart, in Economica 60 (238), 1993, p.242.

8 Carnevali and Hannah 1995; Griffiths 1978 ; for the bank chairman, see Kynaston 2001 : 105, 216-7.

9 A. Holmes and E. Green, Midland: 150 Years of Banking Business, London, Batsford, 1986, p. 221-30.

10 F. Capie and M. Billings, “Profitability in English banking in the twentieth century”, European Review of Economic History, 5, 2001, n. 10, Figure 7; M. Moran, The Politics of Banking. The Strange Case of Competition and Credit Control, London, Macmillan, 2nd edition 1986, p. 47-54.

11 Kynaston 2001: 117-233.

12 T. Lupton and C. Wilson, “The Social Background and Connections of Top Decision Makers’”, Manchester School, 27 (1), 1959, p. 50-1; on the failure of Oliver Franks to invigorate Lloyds Bank, see J. Winton, Lloyds Bank, 1918-1969, Oxford, OUP, 1982, p. 157-8; A. Danchev, Oliver Franks, Oxford, OUP, 1993, p. 154; Lord Monckton had more success at the Midland; Holmes and Green 1987: 234-6.

13 Carnevali and Hannah 1995: 73-4.

14 Kynaston 2001: 103.

15 P. Wardley, “The Commercial Banking Industry and its Part in the Emergence of the Corporate Economy in Britain Before 1940”, Journal of Industrial History, 3 (2), 2000, p. 77-9.

16 Winton 1982: 171-3; A. Tuke and R. Gillman, Barclays Bank Limited, 1926-1969, London, Barclays, 1972, p. 78-80; Holmes and Green 1987: 156-67; Ackrill and Hannah 2001: 139-42.

17 A. Cairncross, “Prelude to Radcliffe: Monetary Policy in the UK, 1945-57”, Revista di Storia Economica, 4, 1987, p. 1-20; E. Green, “The Treasury Resignations of 1957: A Reconsideration”, Twentieth Century British History, 11 (4), 2000, p.409-30.

18 The banks gave evidence collectively as the Committee of London Clearing Bankers: Committee on the Working of the Monetary System, Principal Memoranda of Evidence, vol. 2, London, HMSO, 1960, p. 49-61; see also, Minutes of Evidence, London, HMSO, 1960, cols. 3523-4000, 13045-13268.

19 Committee on the Working of the Monetary System, Report, cmnd. 827, London, HMSO, 1959, p. 42-52.

20 National Board for Prices and Incomes, Report No. 34: Bank Charges, cmnd. 3292, London, HMSO, 1967.

21 The best discussion is in Ackrill and Hannah 2001: 171-84.

22 Holmes and Green 1987: 244-6, 258-60, 281-6.

23 Ackrill and Hannah 2001: 191, 224-5.

24 M. Kipping, “American Management Consulting Companies in Western Europe, 1920 to 1990: Products, Reputation, and Relationships”, Business History Review, 78 (2), 1999, p. 213-4.

25 The government used management consultancy side of the PIB to extend their use to new sectors: A. Fels,The British Prices and Incomes Board, Cambridge, CUP, 1972, ch. 11.

26 Kynaston 2001: 425.

27 Wardley 2000: 83-9 ; J. O’brien, The Impact of Computers in Banking, Boston MA, Bankers’ Publishing Company, 1968, p. 1-2.

28 M. Goldring, “Electronics and the Banks”, Banker.; 100, 1953, p. 140-4, 205-8 and 285-90.

29 O’Brien 1968: 2; Yavitz 1967: 21-2.

30 Yavitz 1967: 7-17.

31 ABA, Bank Management Commission, Magnetic ink character recognition, 1957; Placement for the common machine language on checks, 1957 ; Location and arrangement of magnetic ink characters for the common machine language on checks, 1958 ; Account numbering and check imprinting, 1958; A progress report-mechanization of check handling, 1958 (all published by the ABA in New York).

32 Figures in this paragraph from Yavitz 1967: 27-9.

33 Capte and Billings 2001; letter from T. Hollis, formerly Assistant General Manager, Group Management Services, Midland Bank, 5 December 2001.

34 The Times, 25 February 1957 and 26 February 1959. Tuke and Gillman 1972: 94.

35 British Bankers’ Association, “Automation Enquiry”, 11 January 1957, BT 64/4801, Public Record Office, London.

36 “First Step to Electronic Banking”, Banker 107, 1957, p. 242-8; The Times, 25 February 1957. The American lead was reported fully in “Automatic Handling of Cheques: Results of an American Study”, Banker 106, 1956, p. 716-9. Technical details are discussed in J. Revell, Banking and Electronic Fund Transfers: A Study of the Implications, Paris, OECD, 1983, p. 108-10.

37 “Electronic Bookkeeping for Martins”, Banker 110, 1960, p. 133; The Times, 1 February 1960; Winton 1982 : 185-7.

38 “The Computer and the Story Behind it”, Midbank Chronicle, 12, 1963, p. 432-3.

39 House of Commons Select Committee on Science and Technology (Sub-Committee D), Session 1969-70, The UK Computer Industry, Vol. 2: Appendix 62: Memorandum by the Midland Bank, 13 March. 1976; Ackrill and Hannah 2001: 332-5.

40 R. Coopey, “A Passing Technology: The Automatic Teller Machine”, in P. Lyth and H Trischler (eds.), Prometheus Wired, (forthcoming); Revell 1983: 33-9; Winton 1982: 189.

41 O’brien 1968: 51-2; Yavitz 1967: 49-51, 113-7.

42 Tuke and Gillman 1972: 90.

43 Winton 1982: 188.

44 P. Cottrell, ‘Finance and the Germination of the British Corporate Economy’, in P. Cottrell et al. (eds.), Finance in the Age of the Corporate Economy, Aldershot, Elgar, 1997, p. 5-36.

45 Holmes and Green 1987: 229.

46 Kynaston 2001: 101-3; FFORDE 1992: 690-1, 761-79.

47 Holmes and Green 1987:224-30.

48 Radcliffe Report 74-5.

49 “The Changing Face of Bank Publicity: By a Special Correspondent”, Banker, 113, 1963, p. 766-74.

50 Holmes and Green 1987:224-5.

51 The retail banks successfully lobbied for the repeal of the Truck Acts to allow employers to pay wages and salaries by cheque and credit transfer, but workers were profoundly uninterested.

52 Coopey (forthcoming).

53 “Credit Card from Barclays – Cheque Card from Midland”, Banker, 116, 1966, p. 72-3.

54 J. Thomson, “The Case for the Credit Card”, Banker, 116, 1966, p.444-6.

55 Coopey (forthcoming).

56 Tuke and Gillman 1972: 90.

57 Coopey (forthcoming); The Times, 27 June 1992; TUKE and Gillman 1972: 90.

58 Comparative productivity measurement in services is notoriously difficult, but levels in financial services and banking more narrowly appear similar in the USA and UK at this time: S. Broadberry, “How Did the United States and Germany Overtake Britain? A Sectoral Analysis of Comparative Productivity Levels, 1870-1990”, Journal of Economic History, 58 (2), 1998, Table 1; Carnevali and Hannah 1995: 74-5.

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