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the poorer developing nations where hunger and poverty remain a fact of
life.

9. BANKING

Banking in Great Britain

Since the 17th century Great Britain has been known for its

prominence in banking. London still remains a major financial center,
and virtually all the world's leading commercial banks are represented

there.
Aside from the Bank of England, which was incorporated, early
English banks were privately owned rather than stock-issuing firms.
Bank failures were not uncommon; so in the early 19th century, joint-

stock banks, with a larger capital base, were encouraged as a means of
stabilizing the industry. By 1833 these corporate banks were permitted
to accept and transfer deposits in London, although they were prohibited

from issuing banknotes, a monopoly prerogative of the Bank of England.
Corporate banking flourished after legislation in 1858 approved
limited liability for joint-stock companies. The banking system,
however, failed to preserve the large number of institutions typical of

U.S. banking; at the turn of this century, a wave of bank mergers
reduced both the number of private and joint-stock banks.
The present structure of British commercial banking was

substantially in place by the 1930s, with the Bank of England, then
privately owned, at the apex, and 11 London clearing banks ranked
below. Two changes have occurred since then: The Bank of England
was nationalized in 1946 by the postwar Labour government; and in

1968 a merger among the largest five clearing banks left the industry in
the hands of four (Barclays, Lloyds, Midland, and National
Westminster).

The larger clearing banks, with their national branch networks,
dominate British banking. They are the key links in the transfer of
business payments through the checking system, as well as the primary

source of short-term business finance. Moreover, through their
ownership and control over subsidiaries, the big British banks influence
other financial markets dealing with consumer and housing finance,

merchant banking, factoring, and leasing. The dominance of the clearing

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