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Continuing with an earlier tradition

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  • Continuing with an earlier tradition

    Due to the phenomenal spread of the British Empire, traces of British models are even now in existence across the whole world. The English Agency Houses in the United States began to serve as a lead banker of the then trading community. They financed the movement of goods, issued paper money and passed the bills for the establishment of joint stock banks. The earliest of these was established in early 1700s by one of the Agency Houses and its business was closely connected with that of other houses. But it was wound up later, when the firm, with which it was intimately connected, failed. However, these banks failed owing to the inability to earn profits.

    These banks operated in the private sector and were chartered by the British trading company, and were followed by banks established under an act of the government. The latter may be divided into two groups, the first consisting of a few banks amalgamated into a single bank, and the second functioning as a Joint Stock Bank.

    When the Joint Stock Company Act was passed, the bulk of the shares of all these banks were subscribed by the immigrating Europeans. All these banks were given monopoly in government banking. The private banks were allowed to operate under a Joint Stock Company when the principle of limited liability was applied with respect to the joint stock banks. Till the end of the 19th century, several joint stock banks came into existence.

    The concept introduced by the British is continuing even now but with certain alterations. The private sector banks in the United States are a class apart in innovating with various financial systems and concepts. While the lead regulatory bank is in overall charge of the financial sector, the private players do enjoy limited autonomy in the various financial transactions.

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    Last edited by admin; 6th January 2010, 00:25. Reason: removed advertising link