Banking developed rather differently in Anglo-Saxon countries than on the European Continent and in Japan. In Anglo-Saxon countries, notably the UK and the USA, banks started up before the emergence of large scale industry. Such banks were usually small, unlimited liability partnerships in the UK, and financially fragile. An important determinant of successful continuing business was to avoid getting too involved in concentrated lending to (associated) private firms; lending was to be at arms length and diversified. Where, even then, there was a need for large-scale finance, e.g. for canals and then railroads, this could and should be provided by, relatively efficient, capital markets, both for bonds and equities. But the entrepreneurs of such large firms and governments, at various levels, did not generally have the necessary information and skills to access financial (and foreign) markets, so there sprung up another tier of financial intermediaries who used their market skills and information to provide such large entities with access to capital markets. These were the merchant banks (or Accepting Houses) in London, or the broker/dealers (at a somewhat later date, especially after Glass-Steagall) in the USA. Thus in these countries banks were, originally, primarily retail in character, serving the (well-to-do in the) local community, with a separate tier of investment banks acting as keepers of the gateway to efficient capital markets for those large institutions needing access to such markets.
