N? comparison with the past can teach us much abaft the prospect for British banking during and after this war. Hitherto the essential feature of banking development in England has been its slow growth and gradual adaptation to changing conditions in the world in which it has had to function. Even during the war of 1914-1918 there was no real disturbance of this traditional process of evolution, except perhaps a hastening of the forces which had for long been working towards greater integration in the structure of British banking. "Business as usual" remained the motto for banking as for every other part of our economic machine during the last.
The orgy of mammoth amalgamations which occurred towards the end and immediately after the war were not a direct product of it. Some such concentration of forces among joint-stock banks would have occurred, war no war. The conflict, then, left the organization of British banking fundamentally unchanged.
The return to an orthodox gold vances and probably in a correspond-}W standard was a symbol of the caning increase in the supply of Gov-collation of anything abnormal which ernment securities—both long and wav. the war might have introduced into short, The decline in the commercial our currency and credit system. The and industrial demand for bank acposition of the Bank of England in commodation is a trend of already its relation with the Government long standing. It derives much of its and as controller of currency and force from the concentration move-credit was during} the 1920's essenment in British industry and from tially what it had been before 1914. the greater financial self-sufficiency The organization of commercial which has been attained by our giant banking in this country remained combines. These mammoths are so equally undisturbed. Joint-stock institutions, merchant banks, discount houses, all continued to perform bonking credit facilities than were functions roughly similar to those their component parts in the days of which they were performing before their autonomous existence. That the outbreak of hostilities. The most independence of bank advances must discernible change in the distribution be increased as a result of the Gov-of these functions was a tendency errment control of large branches of for the clearing banks to encroach industry and of important commodity on business which had previously markets, Stocks of controlled raw been the preserve of the private and materials which previously were fin-merchant banks—foreign exchange anced, in the normal course, by bank and acceptance credits. But these advances and acceptance credits, wi changes were mere ripples in the now find their financial support in states "The the borrowing operations of the Government. From the banks' point of view, this will mean a diversion of assets from advances and commercial bills to Treasury bills and medium-Today the position is altogether term Government loans. It does not different. We are no longer in a take much imagination to visualize period of dignified evolution. The the general character of such a trend chenges in our financial system It is one which must, make for a 1000 which have occurred over the past more mechanical type of banking, for ten weeks are revolutionary, in.the a diminution in the exercise of initia-full sense of the word. We have tive, of judgment in the granting of within this short period travelled credit, of all the qualities which had in most of the way from a free to a come to be regarded as the special rigorously controlled economy. From attributes of the sound and intelligent the banking point of view, this banker, The big, banks will, of change has been most apparent in course, continue their function of the new control of the foreign ex-providing repositories for funds which change and capital markets. But must be kept liquid and for the this tradition has found its counter-savings entrusted to deposit accounts. part in most other facets of our By their current accounts and clear-economic system—in the commodity ing machinery, they will continue to about the markets, in our industrial organiza-provide an elaborate and extremely tion, in the world of insurance, It is still too early to estimate whether we can as an economic unit ultimately reverse the trend towards increasing controls and State interference in which we find ourselves, But we can already discern some of the permanent effects which this revolution is having on our orga n.
Text read from the printed page and cleaned; old type leaves the occasional error.