6 
National Provincial Bank of England, Ltd., with the Union of London and Smith's Bank, 
Ltd., resulted in a reduction of over 1,000,000Z., or 16 per cent., in the total paid-up capital, 
and of over 9,000,000L., or over 48 per cent., in the uncalled liability of the Union share- 
holders. The amalgamation of Parr’s Bank, Ltd, with the London County and Westminster 
Bank, Ltd., while it resulted in an addition of 243,000L to the total paid-up capital, brought 
about a reduction of nearly 1,770,000L, or 17 per cent, in the uncalled liability of Parr’s 
shareholders. The proposed amalgamation of the London City and Midland Bank, Ltd., with 
the London Joint Stock Bank, Ltd., would effect a reduction of nearly 1,000,0007. in the total 
paid-up capital, and of over 9,000,000L., or over 50 per cent., in the uncalled liability of the 
Joint Stock Bank shareholders. In each of these three cases, therefore, substantial benefits 
to shareholders are purchased at the expense of some of the security of the depositors. But 
the reduction of capital (as opposed to the reduction of uncalled liability) resulting in two 
of the cases appears to be only nominal, the sum written off, or some sum approximating to 
it, being added to the inner reserves, at any rate at present. 
(b) Dangers of reduced Competition.—Although, in the past, we believe that amalgama- 
tions have not, in most instances, led to a reduction of bank competition, yet, as we have 
pointed out in paragraph 6 (a) above, in London (and possibly before long in certain large 
towns) amalgamations between large joint stock banks must now usually mean a net reduction 
in the number of competing banks. It is true that this reduction is only slight in each case, 
and that there still remain at present a fair number of competing banks. But we have 
received representations from certain municipal corporations to the effect that banks vary very 
much in their willingness to allow reasonable overdraft facilities to corporations, and that 
sufficient money, and cheap enough money, has only been obtained hitherto by resorting to 
different banks, the number of which is now falling steadily. On this ground a number of 
resolutions have been forwarded to us by corporations protesting against further amalgama- 
tions, and suggesting that it is not in the national interest that large funds belonging to the 
public should be in the hands of a few companies. 
Strong representations have, on similar grounds, been made to us on behalf of the 
Stock Exchange and the Money Market. It is claimed that the world-wide fame of the 
London Market before the war was due to the freedom with which London bills could be 
negotiated, owing to the ease with which Discount Houses obtained ample funds from a 
wide number of banks, and that the fewer the lending constituents in the Discount Market, 
the less flexible is the market and the less fine the rates. It is added that the number of 
members in the Clearing House is already becoming very small, and that any further 
decrease in the number of its constituent members, or any greatly preponderant power on 
the part of particular members, might impair confidence in its smooth working and raise 
apprehensions in the market. Moreover, it is pointed out that a reduction in the number of 
important Banks must mean, and has already meant, a reduction in the number of first-class 
acceptors of bills, and that if this reduction proceeded very far, it would become a question 
whether the Bank of England would not have to place a limit on the amount of acceptances 
which they would take from any particular bank doing a large accepting business, and 
whether Continental buyers would not limit the number of bills taken by them. 
(e) The Danger of Monopoly.—It has been represented to us that there is a real danger 
lest one bank, by the gradual extension of its connections, may obtain such a position that 
it can attract an altogether preponderant amount of banking business: or, alternatively, lest 
two banks may approach such a position independently and then achieve it by amalgamation. 
Any approach to a banking combine or Money Trust, by this or any other means, would 
undoubtedly cause great apprehension to all classes of the community and give rise to a^ 
demand for nationalising the banking trade. Such a combine would mean that the financial 
safety of the country, and the interest of individual depositors and traders, would be placed 
in the hands of a few individuals, who wouid naturally operate mainly in the interests of the 
shareholders. Moreover, the position of the Bank of England—which would, it may be 
assumed, stand outside any such Trust—would be seriously undermined by so over- 
whelming a combination, and the Bank might find it extremely difficult to carry out its very 
important duties as supporter and regulator of the Money Market. Any such result would, 
in our opinion, be a grave menace to the public interest. 
Further, it has been represented to us that the Government of the day might not find it 
easy to adopt a course of which the combine, for its own reasons, disapproved. 
While we believe that there is at present no idea of a Money Trust, it appears to us not 
altogether impossible that circumstances might produce something approaching to it at a 
comparatively early date. Experience shows that, in order to preserve an approximate equality 
of resources and of competitive power, the larger English banks consider it necessary to meet 
each important amalgamation, sooner or later, by another. If, therefore, the argument from 
size, referred to in paragraph 6 (b) above, is to prevail, it can only lead, and fairly rapidly, 
to the creation of a very few preponderant combinations; and if those combinatious amal ga- 
mated, or entered into a joint agreement as to rates and policy, &c., the Money Trust would 
immediately spring to birth. 
8. Such are the main arguments laid before us against further amalgamations. Un- 
doubtedly some of the dangers feared are somewhat problematical and remote, and we