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The economic history of Ireland in the eighteenth century online

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endorsement,' and from this Act may be traced the growth
of the gigantic circulation of more or less worthless paper
with which the country was flooded in later years.

1 Malcolm Dillon. History of nanking in Ireland. '^ 8 Anne. c. 11 (Ir)



354 THE ECONOMIC HISTORY OF IRELAND

Every shopkeeper was at perfect liberty to issue, on
his own account, not alone notes, but, even if
he so desired, silver and copper coin. This dan-
gerous power was unregulated by any law; the only
occasions on which the law interfered were when a more
than usually serious failure occurred, when Parliament
would, by means of a special Act, bolt the stable door
after the departure of the horse.

Of course, some firms devoted their whole energy to
banking alone, and in this way there arose many of the
rich families which, in later years, came to adorn the Irish
House of Lords. In 1735 there were already five big
banking houses in Dublin — James Swift and Co., of
Eustace Street ; Hugh Henry, of Upper Ormond Quay ;
Nuttall and McGuire, of Lower Ormond Quay ; La
Touche and Kane, of Castle Street ; and Joseph Fade and
Co., of Thomas Street. Failures were frequent at all
times,* but the years 1755-6 saw such a spread of ruin in
the banking world as had never been seen before. " Owing
to the great shortage of coin, bankers were tempted to
open and circulate their notes. Bankers have set up in
numbers as cobblers do their stalls, with some show of
leather and a seat for their work. They collect old shoes
and boots sufficient for their purpose, and then off they
march.'"' These failures were largely caused by the great
reaction which followed the prosperity of 1748.' A Select
Committee of the House of Commons was appointed to
inquire into the state of public credit, and recommended,
as the result of its deliberations, that persons in future
setting up as bankers should register their real and per-
sonal estate in a public register, so that the public might
ascertain what security was available to honour their
notes; that the names of the issuers should be stated on
all notes; and that bankers should not be permitted to
trade as merchants. All these recommendations, except

» Lawrence. T/ic Interest of Ireland in its Trade and Wealth Stated, London, 1682.
^ Remarks on Conduct of Messrs. W ks S D n, Dublin, 1755.

I^tt!^r^^^4u!^r^^;^: * '■ \ hf**^"" '° ""^ Peot>le of Ireland, by R. Sharp, Dublin, 1755 : A
Letter to i}ie Creditors of Messrs. W ks S D n 1755.



IN THE EIGHTEENTH CENTURY. 355

the first, were embodied in the statute 29 Geo. II., c. 16.
In 1759 another Act was passed forbidding a banker from
making a marriage settlement on his son or daughter that
would be good against his creditors, and from issuing
notes or receipts bearing interest after that date.' This
legislation very singularly failed to obtain its object, for
in 1760 there arose a worse crisis in the banking world
than at any previous time. In that year, three out of the
six Dublin banks failed, and the other three, though they
kept open, refused to discount any bills, and practically
ceased to carry on business. The shock to credit was so
severe that Parliament was obliged, on the petition of a
number of Dublin merchants, to support the three solvent
banks to the extent of ;^5o,ooo each.

In 1767 there were four banks in Dublin, two in Cork,
and one in Waterford, and the number seems to have
remained almost stationary until 1797. The first bank was
established in Belfast in 1752, and broke up in 1757. The
town was without a bank until 1787, when several sprang
up, but they had all collapsed before 1798.''

In 1797 the Bank Restriction Act prohibited the
Bank of Ireland from making payments in coin.
This led to greatly increased issues on the part of
the existing private banks, and also to the growth all
over the country of mushroom banks which grew up in
the night, issued notes to a large amount, and then closed
down before the time came for honouring their promises.
The Report of the House of Commons Committee, which
sat in 1804 to report on the circulating paper, specie and
current coin of Ireland, states that in 1797 there were about
twelve banks in Ireland ; that in the next three years
numerous banks started and failed, so that in 1800 there
were only eleven still open ; in 1801 there were twenty-
three ; in 1802, twenty-nine, and in 1804, forty.

But these figures onlv deal with the recognised banks,
and we must not be led by them to believe that these con-
cerns represented the sole issues of notes in Ireland. On the

' 33 Geo. II., c. 14. 2 Benn. History of Belfast.



356 THE ECONOMIC HISTORY OF IRELAND

contrary, every little shopkeeper was able to issue I O U
notes, which circulated freely in his own district. In Youghal
alone, we are told, notes were issued by ten grocers, three
general shopkeepers, one stationer, one chandler, one
hardware shopkeeper, two bakers, one corn factor, one
cabinet-maker, one shoemaker, one linen draper, one wool
comber, and one firm of registered bankers. It is easy to
imagine the petty tyranny to which such a system would
give rise, as well as the low state of credit which it would
inevitably cause. Indeed, the poorer Irish were deeply
ignorant in the most elementary money matters. They
are said to have preferred notes to gold on account of the
issuer's personal signature being present on the former,
whereas it was absent on the latter ; and on one famous
occasion the Dublin mob, infuriated against one of the
Beresfords, could think of no better way of wreaking
vengeance upon him than by burning big bundles of notes
issued by his bank. In Wakefield's time Ireland was
flooded with notes for small amounts, as low as threepence
halfpenny, many of them forged.'

As early as the year 1695 the merchants of Dublin
had petitioned the Government to found in Ireland a
bank similar to the Bank of England, which had been
recently opened. In 1720 a number of powerful
noblemen petitioned the King, " in view of the great
scarcity of coin which every day increased," for permis-
sion to start a public bank. The King, in reply,
authorised the Lord Lieutenant to grant a Charter and
commission to erect a bank. In September, 1721, the
House of Commons passed a resolution " that the estab-
lishment of a public bank upon a solid foundation under
proper regulations and restrictions will greatly contribute
to the restoring of the credit and support the trade and
manufactures of this Kingdom," and leave was given to
bring in the heads of a bill on the resolution.' The
capital of the bank was to be ;£5oo,ooo, of which ;^ioo.ooo
was to be paid up ; no person was to hold more than ;{;4,ooo

• Wakefield. II.. 167. 174. 2 i.cj., m., 253.



IN THE EIGHTEENTH CENTURY. 357

stock; the bank would be authorised to issue bills not
exceeding the amount of its capital ; and not more
than five per cent, was to be charged for advances.'
A subscription list was opened, but public opinion was
against the scheme, which was bitterly ridiculed by Swift.'
It was argued in particular that, as the bank would depend
for its existence on the King's charter, it could be sup-
pressed at any time if it appeared to be really benefiting
Irish trade. The chief arguments in favour of the bank were
the swindling of their creditors by the private banks, and
the shortage of coin.* When the matter came on again
in Parliament, the House of Commons had changed its
mind, and passed a resolution " that the erecting or estab-
lishing a public bank in this Kingdom w^ill be of the most
dangerous and fatal consequence to the trade and liberties
of this nation.'" It is possible that this change of attitude
may have been prompted by the constitutional considera-
tion that the proposal originated in England.'

Nothing more was heard about a National Bank
for more than half a century. In 1780, however,
with the general revival in trade which was then
taking place, the project was again mooted. The
need for a great public bank was keenly felt, as it
was seen by all that Irish trade and commerce were
suffering severely from the instability of the existing
system. "The complaints against the present bankers,"
says Jebb, writing in 1780, " are that they are dastardly ;
have narrow selfish views ; that they will not extend their
credits in proportion to the extension of trade; and that
they are capricious in their discounts, issuing paper monev
abundantly at one period, and standing still at another
without any obvious rule to direct the dealers to guard
against the calamity.'" The result of this state of affairs

1 Reasons for Erecting a Rank in Ireland, by Henry Maxwell. Dublin, 1721.

2 >4 Prof>osal for the Universal Use of Irish Manufactures: The Weavers' Rank:
A Letter to the King at Anns, all by Swift: Answer to a Rook. etc.. by Hercules
Rowley. Dublin, 1721 ; Remarks on Mr. Maxwell's and Mr. Rowley's Letters,
Dublin, 1721.

" Reasons Offered for Erecting a Bank in Ireland, by Henry Maxwell, Dublin, 1721.

* I.e..].. III.. ?89.

* Malcolm Dillon, p. 41 : Monck Mason. History of St. Patrick's Cathedral, p. 325.
^Considerations of Bxf'cdiency : A National Circulation Bank in Ireland,

Dublin, 1780.



358 THE ECONOMIC HISTORY OF IRELAND.

was the statute 21 and 22 Geo. III., c. 16, by which the
Bank of Ireland was founded. The capital of the bank,
which was to be /;6oo,ooo, was to be lent to the Government
at four per cent. No other persons exceeding six in
number were henceforth to take up or owe any sums on
their bills payable on demand or for less than three months.
This gave the bank practically a monopoly. The charter
was renewed in 1791 by 31 Geo. III., c. 22, whereby the
capital was raised to ;{;i, 000,000, and in 1797, by 37 Geo.
III., c. 50, a further issue of ;£5oo,ooo capital was sanc-
tioned. From the first the bank was a great success, and
won the whole-hearted confidence of the public'

The legal rate of interest on borrowed money at the
beginning of the eighteenth century was ten per cent., at
which it had been fixed by a statute of 1635. In 1703 it was
reduced to eight per cent.,^ in 1722 to seven per cent.,' and
in 1 73 1 to six per cent.* In 1788 it was proposed to reduce
the rate to five per cent., owing to the greatly increased
prosperity of the country. This proposal was opposed in
Parliament on the ground that the rate should be kept
higher in Ireland than in England, as otherwise it would
be difficult to borrow money on the security of Irish landed
property, owing to an idea which was prevalent in Eng-
land that the security on such loans had been rendered
unsafe by the bad administration of the law in Ireland."
The proposal was, nevertheless, passed, and from that
time the legal rates in Ireland and England were the
same.'



Pror*«ci)il"R^!,ki"^^'''''t^ l^ ^'■"'="«^ °" " ^''^ OZd Dublin Bankers," and " The Old
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Online LibraryGeorge Augustine Thomas O'BrienThe economic history of Ireland in the eighteenth century → online text (page 31 of 38)