TY - JOUR

T1 - Company fraud in Victorian Britain: the Royal British Bank scandal of 1856

AU - Taylor, James

PY - 2007/6/1

Y1 - 2007/6/1

N2 - Earlier reports of the death of the moral economy in nineteenth-century Britain have been greatly exaggerated. The idea that Victorian social and economic life was shaped by the rigid precepts of political economy needs to be re-evaluated. How to reconcile religious principles with the operation of the market was a pressing concern for Victorians, and nowhere was this more apparent than in the booming joint-stock economy. The divorce of ownership and control inherent to this form of business was thought to greatly expand the scope for commercial immorality. Numerous dramatic company failures, where shareholders' money was negligently or fraudulently lost, seemed to confirm the sceptics' worst predictions. This article explores political responses to fraud by means of a case study of the Royal British Bank scandal of 1856. First, it details the ways in which the state attempted to reconcile the competing claims of shareholders and depositors. Second, it examines legislation to prevent future frauds. Radical reforms were rejected in favour of measures designed to encourage shareholders to fulfil their regulatory duties. Finally, it considers the state-sponsored criminal trial of the bank's directors and manager. The difficulties encountered in establishing the legal basis of the prosecution led the government to amend the law, making commercial fraud less ambiguously criminal. This did not signal a commitment by the state to regulate the market through the courts, however: fraud trials were in fact seen as exceptional devices to restore faith in the fairness of society when this was called into question.

AB - Earlier reports of the death of the moral economy in nineteenth-century Britain have been greatly exaggerated. The idea that Victorian social and economic life was shaped by the rigid precepts of political economy needs to be re-evaluated. How to reconcile religious principles with the operation of the market was a pressing concern for Victorians, and nowhere was this more apparent than in the booming joint-stock economy. The divorce of ownership and control inherent to this form of business was thought to greatly expand the scope for commercial immorality. Numerous dramatic company failures, where shareholders' money was negligently or fraudulently lost, seemed to confirm the sceptics' worst predictions. This article explores political responses to fraud by means of a case study of the Royal British Bank scandal of 1856. First, it details the ways in which the state attempted to reconcile the competing claims of shareholders and depositors. Second, it examines legislation to prevent future frauds. Radical reforms were rejected in favour of measures designed to encourage shareholders to fulfil their regulatory duties. Finally, it considers the state-sponsored criminal trial of the bank's directors and manager. The difficulties encountered in establishing the legal basis of the prosecution led the government to amend the law, making commercial fraud less ambiguously criminal. This did not signal a commitment by the state to regulate the market through the courts, however: fraud trials were in fact seen as exceptional devices to restore faith in the fairness of society when this was called into question.

U2 - 10.1093/ehr/cem093

DO - 10.1093/ehr/cem093

M3 - Journal article

VL - cxxii

SP - 700

EP - 724

JO - English Historical Review

JF - English Historical Review

SN - 1477-4534

IS - 497

ER -