In terms of banking for manufacturing, we need to look outside London to the provincial joint stock banks. The Midland Bank is a wonderful example and its story was written in Midland 150 Years of Banking Business. The Midland story begins in Birmingham in 1836. Before then, private banks dominated and were often run alongside other activities. Their purpose was to receive payments and facilitate simple banking transactions. Their customers were landowners and also traders who would seek to discount bills of exchange received as payment from customers. This was the main form of borrowing and it was only slowly that overdrafts and bank loans grew to become a larger proportion of bank assets. In time these assets came to include investments.
Joint stock banks began to appear alongside their private counterparts. The distinction was that joint stocks banks could be owned by a number of shareholders whereas private banks were limited in the number of partners they could have. Shareholders were frequently businesses which were also bank customers. Early examples with Midland were Boulton and Watt, later joined by Guest Keen. This made business sense, but also scope for conflicts of interest.
In the early days of joint stock banks, shareholders did not enjoy limited liability and so when banks failed, as their did through overextending, failed customers or sometimes fraud, shareholders would be pursued. Midland for a long time prided itself on unlimited liability on the assumption that this added credibility.
Reading the story of Midland unfold, the issue of credibility is always in the background but aligned with the level of deposits. Successive managers of Midland and other banks saw as a major objective the growth of deposits. This was largely achieved by selective mergers with small banks joining for the issue of Midland shares.
The geographical growth of Midland brings into the story that of many manufacturers. For example Midland’s expansion into Lancashire brought in branches with textile merchants as customers. Expansion in Leicestershire came about because the local bank had insufficient deposits to be able to meet the borrowing needs of local textile and boot manufacturers. Yorkshire bankers were struggling as they become overstretched in their lending to steel makers Naylor Vickers and Bolckow Vaughan in Middlesborough.
A key move for Midland was merger with a first tier London bank, City Bank, in 1898 which gave them a vital presence in London, and a grand building in Threadneedle Street, upon which to grow further.
The name Holden comes to mentioned. Edward Holden had joined the bank in 1881 as an accountant. This was not aristocracy nor banking married to aristocracy, but rather professional banking. Holden went on to mastermind the mergers I have mentioned and much more. He knew the key men of business of the time: Dudley Docker who oversaw the creation of Metropolitan Vickers, William Pirrie of Harland & Wolff, Arthur Keen of Guest Keen and Nettlefold and George Selfridge the founder of the Oxford Street store. Holden became chairman in 1908.The net result of many strategic mergers was that by the end of the Great War Midland became one of the big five of British banking.
British Manufacturing History 