Bank clients and the development of personal banking in London, 1672-1780

In 1780 many of the aristocracy and upper middling sort were using banks to meet their financial needs: it is estimated that in that year London’s banks together held around 55,000 accounts of personal clients. Such clients are rarely visible in histories of banks and banking during the seventeenth and eighteenth centuries. Yet banks could not have developed and flourished if they had not attracted and retained clients. Only by understanding who those clients were, why they turned to banks to meet their financial needs, why they continued to do business with them, and how banks responded to that demand, is it possible to explain the growth of personal banking in the capital.

This thesis charts the banking experience of personal clients of London banks between 1672 and 1780. It argues that by end of the period clients’ use of banks and banking services might best be characterised as a ‘culture of banking’. This culture was underpinned by personal, and increasingly long-standing, relationships between clients and their bankers, as use of banks became commonplace among elite and wealthier middling members of society, and as a stable banking system emerged. It took shape as bankers learned how to respond to clients’ growing and varied demands, and those clients’ expectations were themselves shaped by bankers. The culture of banking encompassed much more than simply the operation of a bank account and the development of a banking habit. Core to the culture was bankers’ provision of a single, trusted point of access to a suite of banking services. Bankers thereby also acted as gatekeepers of the financial system, mediating their clients’ access to credit and debt markets. For the majority of clients, banking was above all convenient, offering them a range of familiar, mostly straightforward, safe and flexible services which they increasingly found it necessary to take up.

This thesis charts the development of the culture of banking by undertaking the first detailed study of clients of London banks, and those clients’ banking activity, across multiple banks and over an extended timescale. It draws on a sample of nearly 4,000 client bank accounts and around 1,400 loans recorded in the ledgers of five private ‘West End’ banks in London, spanning more than a century. The experience of a small group of selected clients is examined at a number of points in the thesis to complement the broader statistical analysis. In order to place the study in context, the thesis first surveys existing work on personal financial activity in the late seventeenth and eighteenth centuries. It then moves on to establish the identity and development of banks and their clienteles, demonstrating that from the 1730s an increasingly stable banking system emerged capable of serving a rapidly expanding customer base. It is argued, from a comparison of the social status of bank clients and that of the population of England and Wales, that by 1780 the majority of male elite and wealthier middling members of society used banks. The study then examines, and compares over time and between banks, the nature of clients’ engagement with banks during three sample periods, the 1670s, 1730s and 1780s. Whilst many individuals, including bank clients, would have used financial services and forms of financial intermediation provided outside the banking system studied in this thesis, it is shown that many elements of the culture of banking were emerging by the 1730s, and that individual banks found their niche serving distinct groups of clients in a banking market which was complementary as much as it was competitive. Two of the most commonly used banking services, borrowing and saving or investment, are then considered in greater detail, demonstrating the importance of personal relationships between clients and bankers in enabling clients to borrow and to invest, or save, money.

Although by 1780 some of London’s banks had well over 1,000 clients, many of those clients engaged with banks in ways which required them to know, and be known by, their bankers. Such interaction involved an interplay between clients’ and bankers’ expectations, motivations and needs. Bankers learned how best to satisfy their clients whilst also developing sound and enduring businesses. Clients gained greater financial understanding, competence and confidence. All of these inter-related factors shaped the development of banks and banking services, and contributed to the emergence of an eighteenth-century ‘culture of banking’.