In the early years of the 19th century England suffered a succession of financial crises, the most devastating of which, in 1825, ruined 60 banks. In an effort to increase stability, the government changed the law to permit the formation of so-called ‘joint stock banks’; larger shareholder-owned banks like those that already existed in Scotland. The first sizeable example of the new banks was Lancaster Joint Stock Banking Company, established in 1826 and later to become part of NatWest. Within a decade, there were almost 100 such banks in towns and cities across England and Wales.
As British trade and industry expanded, banks became more important than ever. Much of the transport infrastructure that still exists around us today was first built in this period, using finance from banks. One of the most ardent supporters of the growing railway network in the mid-19th century was George Carr Glyn, of RBS constituent Glyn, Mills & Co. Thanks to his enthusiasm for railways, his bank was involved in financing dozens of key railway building schemes, not only in the UK, but all around the world. In consequence, Glyn, Mills became popularly known as ‘the Railway Bank’.
By the mid-1840s, the contrast between the English and Scottish systems of banking was already well-established, but the gulf was widened by legislation in 1844 and 1845. In England and Wales, the new law was designed to bring a gradual end to the practice of banks (other than the Bank of England) issuing their own notes, but in Scotland the new law was a little different. It made it easier for banks to keep up their note issues and, indeed, three Scottish banks have done just that to this day.