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The Treasury as a venture capitalist: DATAC industrial finance and the Macmillan gap, 1945–601
Published online by Cambridge University Press: 12 September 2008
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2 The Macmillan Report noted that ‘It has been represented to us that great difficulty is experienced by the smaller and medium-sized businesses in raising … capital … even when the security offered is perfectly sound’ ([Macmillan] Committee on Finance and Industry, Report, Cmd. 3897 (1931), para. 404). Although ‘capital’ could be interpreted as not strictly encompassing loan finance, the reference to ‘security’ indicates that the committee was using the word in a broad context. As a Bank of England memorandum noted, ‘resources’, rather than capital, might have more adequately reflected their meaning (Bank of England Archive [hereafter BoE], SMT2/308, ‘Finance for small businesses’, 8 May 1944).
3 Carnevali, F. and Hannah, L., ‘The effects of banking cartels and credit rationing on UK industrial structure and economic performance since World War Two’, in Bordo, M. and Sylla, R. (eds), Anglo-American Financial Systems (Homewood, Ill., 1995).Google Scholar
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14 ibid., p. 539.
15 ibid., p. 547.
16 Public Record Office, Kew [hereafter PRO]: Treasury files [hereafter T] 233/1332, E. G. Compton to E. H. D. Skinner, 16 Jun. 1945.
17 PRO: T233/1333, memorandum by E. A. Shillito, 21 Jun 1948.
18 PRO: T233/1332, memorandum by E. G. Compton, 12 Jun. 1945.
19 ibid.
20 PRO: T233/1332, Memorandum of Guidance, 17 Oct. 1945.
21 PRO: T233/1332, E. G. Compton to E. H. D. Skinner, 16 Jun. 1945.
22 PRO: T233/1332, note on discussion of Memorandum of Guidance with Sir N. Campbell, 21 Sep. 1945.
23 PRO: T233/1332, Sir Campbell, N. to Sir Eady, W., 19 Oct. 1945.Google Scholar
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25 PRO: T233/1332, note, 22 Oct. 1945.
26 PRO: T233/1332, letter from S. Cohen, 15 Oct. 1945.
27 PRO: T233/1332, note by J. Hyman, 22 Oct. 1945.
28 ibid.
29 ibid.
30 PRO: T233/1332, note by E. A. Shillito, 23 Oct. 1945.
31 ibid.
32 PRO: T233/1332, note by E. A. Shillito, 8 Nov. 1945.
33 PRO: T233/1333, Memorandum of Guidance, 30 Mar. 1947.
34 PRO: T233/1332, letter to Sir N. Campbell, signed ‘B.T.’, 25 Nov. 1946.
35 PRO, T233/1333, Points for discussion with the Chancellor on D.A.T.A.C. by E. A. Shillito, 13 Jan. 1947.
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37 Sources: 1946 – PRO: T233/1332, note by J. Hyman, 20 Dec. 1946; and 1947–51 – BPP (1955–56), VII; Second Report from the Select Committee on Estimates, 1955–56, Development Areas, p. 23.Google Scholar DATAC loans were generally granted for periods of 5–20 years. Interest rates were initially 4% p.a., an additional 0.25% being added in December 1948 to cover the cost of ‘after-care’ service. This compares with typical rates for bank advances during 1950 of 3% for large corporate borrowers and 5% for small businesses (see Carnevali and Hannah, ‘Effects of banking cartels’). During the 1950s, the rate of interest on new DATAC loans was progressively increased, largely in line with increases in market rates.
38 Source: BPP (1955–56), VII; S. C. on Estimates, p. 23.Google Scholar
39 Coopey, R. and Clarke, D., 3i: Fifty Years Investing in Industry (Oxford, 1995), p. 63.CrossRefGoogle Scholar
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42 ibid., p. 68; and PRO: BT177/1410 and -/1812.
43 PRO: T233/1335, Questions on D.A.T.A.C., J. Hyman, 31 Mar. 1958.
44 PRO: BT187/58, C. Douglas Campbell, Board of Trade, to J. Hyman, 29 Dec. 1951.
45 ibid.
46 PRO: BT187/1, DATAC minutes, 18 Jan. 1949.
47 Source – based on an analysis of loan applications in PRO: BT187/1, DATAC minutes, vol. 1.
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49 PRO: BT187/1, DATAC minutes, 25 Oct. 1946.
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51 PRO: BT187/1, DATAC minutes, 31 Mar. 1947.
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57 PRO: BT187/1, DATAC minutes, 27 Sep. 1949.
58 PRO: BT187/1, memorandum by Mr Roney, Dec. 1949.
59 ibid.
60 BPP (1955–56), VII; S. C. on Estimates, pp. 20, 182–3.Google Scholar
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62 ibid.; and Coopey, and Clarke, , 3i, p. 39.Google Scholar
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67 ibid., reports by Barclays and Midland.
68 BoE: C40/688, reports on Midland, 25 Feb. 1954Google Scholar; Westminster, , 26 Feb. 1954Google Scholar; National Provincial, 11 Mar. 1954Google Scholar; and Barclays, , 16 Mar. 1954.Google Scholar
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79 Approvals do not correspond exactly to loans made as they required confirmation by the Treasury, though the degree of distortion is not likely to be significant.
80 PRO: T234/21, letter from Shillito, E. A., 18 Nov. 1955.Google Scholar
81 PRO: T234/21, note by Shillito, E. A., 18 Nov. 1955.Google Scholar
82 BPP (1955–1956), VIIGoogle Scholar; S. C. on Estimates, pp. 22.Google Scholar
83 PRO: BT187/3, DATAC minutes, 9 May 1956.Google Scholar
84 PRO: BT187/3, DATAC minutes, 12 Sep. 1956.Google Scholar
85 Coopey, and Clarke, , 3i, p. 63.Google Scholar
86 ibid.
87 The Local Employment Act (1960) transferred the provision of financial assistance to Development Area firms from the Treasury to the Board of Trade, DATAC being replaced by the Board of Trade Advisory Committee [BOTAC].
88 PRO: BT177/1812, Parliamentary Secretary's Committee on Local Unemployment, Applications for financial assistance under the Distribution of Industry (Industrial Finance) Act, 1958. Final Report by the Treasury, n.d., c. April 1960.
89 Lloyds Bank Archive: Winton File, Sir Oliver Franks, ‘Bank advances as an object of policy’, 1960, pp. 5–6.Google Scholar
90 Carnevali, , ‘Finance in the regions’.Google Scholar
91 Carnevali, F., British and Italian banks and small firms: a study of the Midlands and Piedmont 1945–1973, unpublished Ph.D. thesis (University of London, 1997).Google Scholar
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