Banking from Leeds, not London: regional strategy and structure at the Yorkshire Bank, 1859–1952

Abstract

Industrial philanthropist Edward Akroyd created the Yorkshire Penny Savings Bank in 1859. Despite competition from the Post Office Savings Bank after 1861 and a serious reserve problem in 1911, it sustained his overall strategy to become a successful regional bank. Using archival and contemporary sources to build on recent scholarship illustrating how savings banks were integrated into local economies and the complementary roles of philanthropy and paternalism, we analyse an English regional bank's strategy, including an assessment of strategic innovation, ownership changes and management structure. This will demonstrate that the founder's vision continued, even though the 1911 crisis radically altered both strategy and structure.

Keywords:

• penny savings banks
• Edward Akroyd
• regional strategy and structure
• Yorkshire Penny Bank
• philanthropy
• Midland Bank

Acknowledgements

The authors gratefully thank the editors of the journal and anonymous reviewers for their comments and assistance in preparing this paper.

Notes

The exception here is Daunton (1985) which provides a valuable insight into this institution.

Improvements included the purchase of Heineman's combing patent (at a cost of £33k) and the Luddenden Foot factory (no dates given, but probably 1840s or early 1850s). See ‘Edward Akroyd’, Malcolm Bull's Calderdale Companion online: http://freepages.history.rootsweb.ancestry.com/~calderdalecompanion/mma26.html

After the original organisational meeting in 1856, Akroyd collected a guarantee fund for the venture of £2990 which supported the Penny Bank in its early days. In addition to this lump sum, guarantors promised an annual subscription of £19 15s to continue growing the reserve. These contributions are noteworthy because the company did not re-register as a company limited by guarantee until 1871, i.e. more than a decade later.

One shilling equalled 12 pennies in the pre-decimal currency, or 5 pence today.

Until 1911, these men were the Hon. Edwin Lascelles (1859–1866), the Marquis of Ripon (1866–1870), Akroyd himself (1870–1880), the Earl of Wharncliffe (1880–1882) and the Earl of Harewood (1882–1911).

The term ‘actuary’ has had several meanings since the sixteenth century. In the nineteenth century it commonly meant ‘one who manages the deposits of a savings bank’. Today's understanding, one who examines statistical mortality tables for insurance purposes, also began in the mid-1800s and endured while other terms, such as clerk, cashier or teller, replaced the term ‘actuary’ within banks.

The point here is that the Yorkshire Penny Bank management consciously weighed the financial value of closing some part-time branches (thus reducing costs) against the harm to their customers by withdrawing the Penny Bank's services from areas where no other financial institution existed. The Yorkshire Penny Bank management concluded it was more important to provide banking services, however modest, in the many small rural communities with part-time branches, even if it cost the institution itself a little more money to do so.

This operational limitation was removed in new Articles of Association following the change of ownership of the Bank in 1911.

Bell insisted that the reserve fund was safe specifically because ‘every shilling of [it] was invested in British Consols’, this represented £191,000 by 1893. As we point out below, however, this was not entirely accurate.

This report also claimed that ‘many are the big joint-stock banks which regard the Yorkshire Penny Bank with envy’.

Bank Rate during 1895 was 2% and remained at that level until September 1896, when it rose by 0.5%.

The picture is further complicated by some confusion over where the Bank's investments had been made. Bell claimed that the entire reserve had been invested in Consols (see above), but published records by the Bank suggest a more diversified portfolio containing investments in Consols, railways and public utilities such as gas companies.

In the 1930s, new arrangements allowed traveller's cheques to be cashed at banks abroad, which required expertise in overseas transactions which the Yorkshire Penny Bank had not developed internally.