To what extent can the growth of banking be explained by the expansion of a more commercially minded nation in the years 1825-1844??

Question 1

To what extent can the growth of banking be explained by the expansion of a more commercially minded nation in the years 1825-1844??

Answer 1

To what extent can the growth of banking be explained by the expansion of a more commercially minded nation in the years 1825-1844??

Question 2

Expansion of Commercially minded nation

Answer 2

Facts- Before economic depression:
- slow shift towards commercially minded nation.
-1784, 119 banks in the country, set up by business men with financial experience to make transactions easier, no nationwide banks\
-1797, county banks given permission to issue bank notes, easy way for employers to pay wages
AFTER ECONOMIC DEPRESSION-
-1825, depression hits and many banks fail
-1826, subsequently cap on formation of joint stock banks is removed and banks begin to see potential, small banks absorbed into larger companies.
-1833, act of parliament allows Joint stock banks to issue cheques, and by 1866, 154 JSB with 850branches nationwide.
Shift from cottage to commercial industry- cotton industry increased imports from 3mil to 300mil between 1761-1833, employing 883,000 people.

Explanation- There was an increase in commercially minded nation, but as a result of other factors, economic depression triggered the realisation of the importance of banking. Middle class were early customers of banks to pay their employees, and as their size and impact grew, so did banking. Middle class used banks first and banks were needed to recover economically.

Question 3

Growth of middle class

Answer 3

Facts-

• between 1816-1831, 75% growth from 160,000 to 214,000
• Banks provided source of capital which allowed men to undergo business ventures, key feature of industrialisation (expansion/investment)
• Early entrepreneurship from people like Arkwright (1769 invented water frame, died with network of £500,000) proved to govt that banking was an important necessity for these men whose ideas were expensive but reaped rewards for the govt in the form of IR.
• Originally middle class invested in industries similar to their own but more JSB widened their investment confidence

Explanation- The middle class were most significant long term cause because their importance had grown from 1769 and Arkwright, to the mid 1830s where they’d grown in size and driven the IR through their investment in industry. The banking growth was inevitable as financing grew to the forefront of middle class business.

Question 4

Economic depression

Answer 4

Facts-

• By 1825 the depression following the napoleonic wars had caused many banks to fail, leading to financial panic.
• Subsequent lift on cap of JSB in 1826, banks grew in size and became more stable
• Investors grew in confidence and this allowed the economy to stabilise, back and forth between banks growing and IR, help each other
• First JSB in October 1826 opened, Lancashire banking company

Explanation- most important short term factor, the parliamentary trigger that allowed the removal of the cap on JSB, realised it was for greater good of the country, and coincided with the middle class drive of IR, so wasn’t really any way it could be a bad decision

Question 5

Decline of old industries

Answer 5

Facts- Banking served to link landed gentry to industrialising centre.

• As urban areas boomed, rural men wanted to reap the profits and chose to invest in new tech rather than watch traditional incomes not grow.
• 1839, the Marquess of Bute built the Cardiff Bay docks.
• Money invested in ling term commitments and infrastructure
• Many land owners also bought mills to supplement their income and employed managers to run them

Explanation- secondary long term cause of the growth of banking, but a consequence of the middle class growth, as even rural people were getting involved with the IR, showing the govt that accessible banking was not only necessary, but a key feature of Britains widespread economic growth.

Question 6

Judgement/intro/line of argument

Answer 6

The growth of the middle class was the most important long term cause of the growth in banking because their growing size led to their growing economical impact that needed funding. The decline in old industries and commercially minded nation came as by-products of the work of the middle class in shedding light on the importance of funding and finance. The economic depression was a short term trigger for bank growth which was recognised by parliament, who then went on to realise the importance of the growing middle class which they had often previously ignored.