Abstract: The "Working-Class Bank" That Never Was: Britain's Post Office in Financial Services, 1945-1975
By the 1960s, in Britain's growing, mildly inflationary economy, with rising living standards and asset prices, affluence was visibly trickling down the social scale. But the majority of wage earners did not hold bank accounts. The large commercial banks, which dominated the country's payments system, were perceived as conservative and unadventurous institutions, the result of constraints on competition imposed by the rules of their "cartel" and government restrictions for monetary policy purposes. Britain's Post Office already had significant involvement in financial services through the long-established and conservatively run Post Office Savings Bank, which held a large share of the nation's savings. In 1968 the Post Office opened the technically advanced National Giro to provide a cashless money transfer system for retail and business customers as an alternative to the commercial banks' traditional check-clearing system. In this paper, we examine the Post Office's apparent failure to exploit the opportunity to create a single "working-class bank" from these two institutions. We conclude that its decision-making was influenced by its (mis-)understanding of the market for basic retail banking services and institutional, technological, and political obstacles.