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The War Accountant

The War Accountant

© Doug McLean /

06th November 2020

Dexter Lawrence Written by Dexter Lawrence

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The war was responsible for altering almost every aspect of banking business, from the staff they employed and the customers they served, to the tools they used and the way they functioned as part of the wider economy.

What was banking like before the Great War?

In 1914, there were 38 shareholder-owned banks with a total of 5,869 branches in England and Wales. There were also 29 private banks with 147 branches. The population of England and Wales at the time was around 38 million people - yet very few of them had direct dealings with any bank.

Scotland’s banking system was separate from England and Wales and operated in a different way. A larger percentage of the population used banks in Scotland and they had their own banknotes.

Many people in England and Wales were paid weekly in cash. They paid their bills in cash and in the unlikely event they accumulated any savings, they often didn't find it appealing to put them in the bank.

The people who used banks were often more well-off and would deposit their savings there and receive payments. In particular, business customers could obtain a loan or arrange an overdraft from the bank, although borrowing was usually short-term. Banks offered relatively few products compared with modern times.

Today, just over a century later, there are around 300 banks and 45 building societies in the UK, operating approximately 9,000 branches and 70,000 ATMs between them - making it Europe's largest banking system.

How did banking change in 1914?

Before the war, British banks had few international dealings, apart from business in the British Empire, with virtually no trading with other independent economies.

The manager of each larger branch was assisted by an accountant, bank tellers to serve at the counter, ledger keepers behind the scenes, apprentices and messengers. Each local bank relied heavily on its manager, who was vital to the decision-making process when it came to loans - they needed good local knowledge. The manager was assisted by his accountant, who would also be a knowledgeable and well-educated man, whose contribution was vital to the bank.

Accountants were members of the Institute of Chartered Accountants in England and Wales. When the war broke out, a total of 1,625 members and 1,803 articled clerks served in the armed forces. Sadly, 510 of them were killed in action and a memorial to the fallen was unveiled at the organisation's headquarters in Moorgate Place, London, in 1926. Of the members who survived, 129 of them were decorated for gallantry in WW1.

The call to arms in 1914 brought the old order of financial institutions to an end and sadly also halted the careers of many young men who were training to become accountants.

In 1918, Sir Harold Gibson Howitt, who was to become president of the ICAEW in 1945, was taken prisoner by the Nazis. He famously escaped the PoW camp and his life story was later immortalised in the John Buchan novel, Mr Standfast, first published in 1919.

How did WW1 change banking?

The wartime world of bonds created its own legacy, which was to change banking forever. The Bank of England led the changes to the banking system, as it was very busy issuing war bonds. These were essentially loans and investments, offered at low interest to the public for them to help the government. They were offered tax-free over a period of 25 years.

The war had a huge impact on the social and economic aspects of society. The crisis was of a magnitude banking had never experienced before. Suddenly, banks became the financial nerve centre of Britain. With most of the men away in the trenches on the Western Front, women took over a number of banking roles for the first time to manage the extra workload.

By the end of the war, the banks' services had expanded and the number of staff almost quadrupled as a result of the increased business. It was described as an "extraordinary expansion" due to the additional war work and the more diverse duties required.

A prime example was the Bank of England, which employed only 66 women at the start of 1914. During the war, it hired more than 2,400 female employees, due to the two-fold effect of most of the men being away at war and the extra duties the banks dealt with.

There was a huge amount of extra paperwork and the female clerks took it on. In 1916, conscription was increased as a result of the Military Service Act, so even more men had to join up. More women were taken on to fill the gaps. Their role evolved into an incredibly important one during WW1.

Of the Bank of England staff deployed to the Front, 71 were killed in action. They are remembered to this day on Armistice Day, when current workers gather around the London memorial outside the Royal Exchange to pay tribute to the fallen.

Why were accountants so important?

The role of the accountant became particularly important during WW1, as the nation had been thrown into a state of turmoil. The cost of war was massive and financial institutions played a key role in funding it.

Accountants were needed to provide an accurate record of the costs of equipment, medical services, training, vehicles, food, travel and other war expenses. The role of the financial sector as a whole changed dramatically and it began to play a key role in planning and financing the war.

Loans were made directly to the government and also the banks encouraged and helped the public to invest in the war effort.

How expensive was the war?

As the war continued, the cost of funding it increased to unprecedented levels. By 1918, the cost of ammunition for just one day's combat was recorded as being a staggering £3.87 million.

The total cost of the Great War to Britain was £3.25 billion. The money borrowed from the banks to fund the war effort was known as the "national debt". It took a century to fully pay off the debt.

In 2014, Chancellor George Osborne announced the Treasury was finally going to pay off the UK government's remaining debt from WW1. The Treasury redeemed the outstanding £1.9 billion in an attempt to "tidy up" the nation's finances.

What happened to banks after the Great War?

The next major changes for banks occurred between the two world wars in terms of advances in technology. Task automation was introduced in the 1920s to streamline operations and increase efficiency.

An innovative "accounting machine" was launched to help speed up data processing, as the larger base of investors and the boom in banking activities during the war had led to a need for increased levels of bookkeeping.

New office equipment included the Burroughs Adding Machine that could post combinations of numerous financial records; the Remington Typewriter Co's desktop bookkeeping machine; and various tech gadgets manufactured by the Powers Accounting Machine Company to sort and tabulate punch cards.

What did accountants do in WW2?

No sooner had Britain started to recover from the 1914-18 war than the rumblings of the Second World War began. In September 1939, when Britain was officially at war against Nazi Germany, the government had hardly even begun to pay off the national debt run up from the First World War. By the end of WW2, Britain had run up a huge national debt of £21 billion - this included £3.4 billion owed overseas, particularly to creditors in the United States.

Just like during the Great War, there was a high demand for accountants to manage the nation's finances, as Britain ploughed billions into the war effort. The role of accountant became one of the top professions in the UK in the 1940s. In the ensuing years to the present day, accountants have become more successful in reaching the top rung of the managerial ladder than any other profession.

On 11th November, DL Accounts will be observing the 2-minute silence as a mark of respect for the brave men and women who gave their lives fighting for our freedom. We will remember them.

Further Suggested Reading: How WWII Changed Taxes