Capturing Profit from Disaster: The Assets Company Ltd and the Afterlife of the City of Glasgow Bank

Abstract

Abstract The City of Glasgow Bank’s collapse in 1878 was the largest bank failure of its time. The causes of the crash and its impact on joint-stock banking and the Scottish and British economy have been well-studied, but how its liquidation was concluded remains under-explored. At the same time, the legal and commercial milieu of nineteenth-century Britain spawned a new type of commercial entity—the investment trust. At the intersection of these two historical moments lies the Assets Company Ltd, which is both the legal device that finally concluded the liquidation of the City of Glasgow Bank and a fascinating case study of an early investment trust. Employing little-used archival sources—primarily the Assets Company’s records kept by the Board of Trade and published court judgments—this article investigates the significance and legacy of the Assets Company, from its incorporation in 1882 to its winding-up in 1956. Beyond merely concluding the legal process of liquidation, the Assets Company would go on to manage and profit from the recovery of the City of Glasgow Bank’s assets as well as conduct its own investment activities well into the twentieth century. This article concludes that the Assets Company provides a noteworthy example of how the Bank’s shareholders responded to the winding-up of a large failed bank, particularly, one with unlimited liability, and how an investment trust can be used to maximise the proceeds of liquidation. The winding-up of the City of Glasgow Bank was thus unique relative to previous bank failures in how its shareholders were able to avoid the prolonged liquidation experienced by other Scottish banks. Finally, the Assets Company is an interesting case study of the diversity of the early investment trust industry, and a company that would go on to inspire numerous successor enterprises.