As the government stepped up its war effort, it needed to exert an ever-increasing influence over the lives of citizens, by persuasion or – if necessary – compulsion. Financial affairs were a key area where it needed good information, as well as ways of encouraging people to act in the national interest. It relied on banks to help achieve both ends.
Some of the banks’ new duties came in the form of new laws, such as the moratorium declared at the outbreak of war, or the Trading with the Enemy regulations that continued throughout hostilities. Many included new bureaucracy; obligations to file returns about enemy assets held in Britain, or British assets held abroad.
Other responsibilities arose from negotiations with the government. Each war loan, for example, was heralded by a series of meetings and correspondence between bank officials and the government, setting out expectations for the support the banks would offer in marketing the loans, as well as administering them and participating directly.
The government knew the influence a trusted bank manager could have over his customers’ financial decisions, and this relationship became a vital part of its war loan marketing operations. Every bank manager was instructed to talk or write to customers, encouraging them to invest. In many cases, banks lent money to customers so that they could participate. Some traditional bankers expressed concerns about the practice. Christopher Smyth, chairman of Northamptonshire Union Bank, remarked that ‘as a general principle it is unsound to borrow for the purpose of investment’ but, he went on to say, ‘on an occasion such as this, within certain limits, it may be commended.’
The government asked bank managers to influence customers’ behaviour in other ways, too. In 1915 the Treasury informed all banks that it disapproved of large building schemes that weren’t directly connected with the war effort. Although no legal controls were mentioned, it remarked that the Treasury ‘would be glad’ if bankers would use their influence to discourage such schemes when handling customers’ loan or overdraft applications.
The banks also felt keenly aware of the role they could play in identifying spies or others who might be conspiring against Britain’s interests. The government’s direct role in prompting their activities in this sphere is less clear, but it is certainly true that at certain moments, public fear of enemies in our midst rose to fever pitch. Banks instructed managers to look out for suspicious accounts or payments. Williams Deacon’s Bank asked branches to notify head office of accounts held by a list of organisations that were suspected of receiving money from the enemy for the purpose of increasing social unrest in Britain. It included various socialist parties, including the Independent Labour Party and the Scottish Labour Party, and anti-conscription organisations. Few reports seem to have been received. One branch explained that two of its lady customers were known to have attended anti-conscription rallies, and were ‘ardent suffragists’, but the manager insisted that he was sure there was nothing untoward going on in their accounts.