Maberly Phillips.

A history of banks, bankers, & banking in Northumberland, Durham, and North Yorkshire, illustrating the commercial development of the north of England, from 1755 to 1894, with numerous portraits, facsimiles of notes, signatures, documents, &c online

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Online LibraryMaberly PhillipsA history of banks, bankers, & banking in Northumberland, Durham, and North Yorkshire, illustrating the commercial development of the north of England, from 1755 to 1894, with numerous portraits, facsimiles of notes, signatures, documents, &c → online text (page 12 of 57)
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failures. On November 30th, 1821, Sir Francis Blake, Reeds, & Co. stopped
payment. They announced that they were preparing a statement of their affairs,
which they would lay before " Persons of the highest respectability." This bank
had a considerable business and a large note circulation.

The constant stoppages of the Newcastle houses brought their notes into
great discredit, and the temper of a long-suffering public was evidently getting
ruffled. Various skits and squibs appeared, tradesmen speculated in the notes of
the fallen bankers, and from Alston was issued a letter from Peter Pry to his
Cousin Bob Fudge in Newcastle, which shows so well the spirit of the times that
it is worthy of being copied in full in the appendix. It commences : — "Away with
Old Rags. Gold for ever ! ! "



[88]



The events of the day were made use of by the street mendicants. " Capt.
Starkey," a well-known character, did a considerable business by raising loans for one

halfpenny. For this he always gave his
promissory note, which was frequently
retained by his creditors as a curiosity.
His memoirs written by himself, with a
portrait (see margin) and facsimile of his
hand-writing, were published in New-
castle in 1818. He died July 9th, 1822.

It is evident that at this time country
bankers generally were not having a very
agreeable time. The failures of the weak
were a constant worry and trial to the
strong. Forgery was not confined to
the notes of the Bank of England ;
probably as their small notes were
discontinued, the forger paid more atten-
tion to those of the country bankers
which were still in circulation. Mr.
William Boyd, one of the partners in
the "Old Bank," Newcastle, appears
to have taken great interest in the
matter, and although he states that their own bank had not suffered for some time,
he, in conjunction with Mr. Bewick the engraver, made diligent enquiry into the
merits of the various projects for preventing forgery that were brought before them,
regarding paper, ink, water marks, and engraving in general, by a number of
would-be inventors.

There was a feeling abroad, especially in Newcastle, that the system of
banking was not on a sound basis, or such constant panics and failures would not
arise. In 182 1 Thomas Jophn, a Raff (timber) Merchant at "Egypt," in the
New Road, Newcastle, was propounding a theory (first to his friends, whom he
button-holed on every possible occasion, and subsequently by more decisive
measures) that the clause in the charter of the Bank of England, which forbade more
than six partners in any one bank, was at the bottom of all the mischief that had
befallen the country banker.

There are now only a very few citizens of Newcastle who personally
remember Joplin commencing his agitation. They state that by most of his fellow-
townsmen he was looked upon as a fanatical dreamer. Nevertheless by such




[J9]

men are reforms often accomplished, and Joplin proved no exception to the rule.
In 1822, he put his ideas into practical form and published a pamphlet, entitled,
" An Essay on the General Principles and Present Practice of Banking in England
and Scotland with Observations upon the Justice and Policy of an immediate
alteration of the Charter of the Bank of England, and the Measures to be pursued
to effect it."* It bears no author's name, but locally it was well known from
whose pen it emanated. An extract from "An analysis and history of the
Currency Question," by the same writer just ten years afterwards, will best show
how he was led to issue his first pamphlet. In the introduction to the work
quoted, Joplin says : —

" In February, 1822, I published a pamphlet calling upon the inhabitants of my native place
(Newcastle-upon-Tyne) and two or three neighbouring towns to form a Joint Stock Bank with half a
million of capital, and take steps to obtain an alteration of the Bank of England's charter. This I
apprehend was the first pamphlet or publication of any kind in which the nature of the Scotch system of
banking was properly explained. But four or five years before there was a panic in the town, all the
banks, four in number, were in discredit with the public, and there was a run upon them which was in
a great measure allayed by the publication of a paper by the respectable inhabitants pledging
themselves to take the notes of all, or any of them, in payment to any amount. This pledge, to which
I was a party, was one which might have ruined many and injured most of those who gave it, for a
single bank had failed in the same town not many years before, indebted a million sterling, which did
not pay more than 4s. in the pound. It naturally led to reflection, and it appeared to me that instead
of coming forward in time of such danger and blindly entering into an obligation so unlimited in favour
of banks, which, for anything that could be possibly known to the contrary, might be insolvent, it
would be better for each party to become surety for his own banker for a specific sum, not only in
periods of difficulty but at all times, the parties thus coming forward being allowed to nominate a
committee to communicate with the bankers from time to time. Such an idea being once started, it
was only necessary to go a step further and imagine that these parties, instead of guaranteeing another
bank, should pay up a capital and form a bank of their own, to be managed by such a committee, in
order to arrive at the notion of a Joint Stock Banking Company, and be led also to reflect upon the
probable success of such an undertaking."

The original pamphlet is an 8vo. of 70 pages. It gives a masterly resume of
the results of banking in general, and its effect upon the North of England in
particular, during the previous half century. The writer then proceeds to show
the results of the banking system pursued for the same period in Scotland, and
how comparatively free they had been from panic and turmoil. He says : —

" Thus then, it appears to be the result of experience that while our banks are often destructive,
at all times dangerous, and at the very best totally inadequate, from want of stability and credit,
to perform the proper functions of banks, the Scotch banks never fail, nor is any danger ever
apprehended from them, and that in consequence banking is carried on in that kingdom to an extent
unknown to, and, of course, with advantages totally unfelt in, our own. The cause of this difference
proceeds from the charters of the Banks of England and Ireland, which prevent, in their respective

♦ " Newcastle-upon-Tyne : Printed by Edward Walker, Pilgrim Street, and sold by Ridgeway and Co.,
London ; Peter Hill and Co., Edinburgh ; and all booksellers."

L



[90j

countries, more than six persons from entering into a banking concern, while in Scotland there is no
such monopoly and banks can be established on the proper principles and as many people become
partners in them as choose."

The writer then makes a powerful appeal to his friends to take steps to get
the law so altered that Joint Stock Banks may be legalised, adding : —

"The charter of the Bank of England does not however expire until 1833, and the obnoxious clause
will require to be immediately expunged from it. But this can be done without injuring the bank,
and the wishes of Ministers, with the directors of the bank, must necessarily be imperative ; nor is
there anything to fear from the directors themselves, who, in conducting the afiairs of the bank, have
always acted upon disinterested and public-spirited principles ; neither can it be supposed that any
measure for the public welfare which was conceded by the Bank of Ireland without objection, would
be resisted by the Bank of England. The consent of the directors to any alteration which benefits the
public without materially injuring the bank may therefore be also relied upon. The right,
consequently, of the bank to prevent more than six partners entering into a banking concern is, with
respect to the whole kingdom except London, a right which confers no advantage upon it, while it
loosens the whole frame of commercial credit of which banks are the pillars and support. To call it
therefore a right, with respect to the country, is improper; legally it may be termed a right, but

equitably it is nothing but a wrong The only persons who will be injured by it will

be the present bankers. But no set of men can expect a country to continue voluntarily to inflict
itself with a curse, after the cause of it is discovered, merely for their advantage. They must take
the fate incident to all rights or institutions built on a sandy foundation of error — as soon as the truth
appears the fabric must be dissolved."

Joplin's words were almost prophetic. When he wrote in 1822 the number
of private banks in the kingdom was nearly 1,000, to-day they are considerably
under 200. Of those that remain many somewhat partake of the nature of Joint
Stock Banks by annually publishing a statement of their accounts. Joplin used
every means to circulate his pamphlet and spread his ideas. He called a meeting
of his friends by issuing the following notice : —

Newcastle, 1 Mat, 1822.
" Sir, — It appearing to be the Wish of those desirous to promote the
Establishment of a Public Bank, that a Meeting of Gentlemen should be held in
the first Instance to take the Subject into consideration, I have the pleasure to
inform you, that such a Meeting will take place at Dodsworth's, the Queen's
Head, on Monday next, at one o'clock.

I am, Sir, your most obedient Servant,

THOMAS JOPLIN."

Whether the meeting was ever held, or what was the result, we have no
record, and can only draw inferences from a subsequent statement of Joplin's.
Writing in 1827, he says : —

" His (the author's) first step was to distribute his pamphlet among the leading people of Newcastle,
Durham, Shields, Sunderland, Manchester, and Liverpool. The influence of the existing banks so far
preponderated, that the only meetings which assembled to consider the project, occurred in Liverpool
and the County of Durham. Some of the leading merchants of the former place memorialized



[9^

ministers, and in the latter, -which had suffered much by bank failures, a meeting was held ; at which
the Right Honourable Lord Barrington presided, and resolutions were passed declaratory of opinion in
favour of the author's principles."

In 1823, Thomas Joplin presented a petition to "The Honourable the
Commons of the United Kingdom of Great Britain and Ireland in Parliament
assembled." It contains 39 clauses, and prays : — "That your Honourable House
will institute an enquiry into the state of the circulation of the kingdom with a
view to ascertain whether it is deficient : and if so, whether any immediate remedy
can, with prudence and safety be applied, and also, whether sounder principles
for the management of the currency might not be adopted." — Here for the present
we must leave Joplin and his projects : it will however be necessary to revert to
him at a subsequent page of this work.

In 182 1, cash payments were resumed by the Bank of England, after a
suspension of a quarter of a century. The resumption does not appear to have
made any perceptible impression upon the trade of the north, which like that in
other parts of the country, was at this time unusually brisk. The year 1824 was
one of marked prosperity in every channel of business. It is most difficult now
to decide what portion of that business was legitimate demand, and what was rash
speculation. A mania set in for the formation of Joint Stock Companies,
which were lawful for all trades but banking. Many of these Companies were
hollow and rotten, yet we read that " no year has ever exceeded that of 1824 in
its exports, and the Chancellor of the Exchequer, in an exultant tone of triumph,
congratulated the House on the auspicious circumstances of the period." The
early months of 1825 found men restless and excited. New bubble companies
were daily announced ; the shares of most of them were eagerly applied for, and
again dealt in at high premiums ; trade and toil appeared to be growing old-
fashioned; every one seemed drawn into a huge wave of speculation. The
bankers all discounted freely, and consequently the note circulation increased
enormously. But the highest tide must turn at some point, and November was
the time of this tide's commencing to recede.

From various causes the bullion in the vaults of the Bank of England was
getting lower and lower; so much so, that the directors felt compelled to
restrict their discounts. On November 23rd, a most exciting scene was witnessed.
An eager crowd was outside the bank parlour waiting to know the result of the
bills they had previously left. The directors accommodated all they possibly
could, but many would-be discounters were disappointed. The restrictions, once
commenced, soon resulted in panic. Early in December, Messrs. Wentworth & Co.,
bankers at York, stopped payment, which produced great consternation in



[92j

the district. A meeting was speedily called to support the notes of the York
bankers, and the following resolution was passed : —

" We, the undersigned merchants, traders, and others, of the City of York, think it right to express
our determination to receive in payment the notes of Messrs. Swann, Clough, & Co., and Messrs.
Wilson, Tweedy, & Co., being perfectly satisfied with their stability, and also considering the great
inconvenience that would result to the public should their notes be withdrawn from circulation." It
is further stated, " The above measure took place for the convenience of the public, and not from any
wish on the part of the bankers, who, from their known respectability and caution, are at all times
ready to meet any demands upon them, but it was thought that should their notes be taken in for
payment, great inconvenience would be caused to the public by so large a part of the circulating
medium being withdrawn from the city and neighbourhood."

On December 12th, the London house of Sir Peter Pole & Co. suspended,
and as they were agents for upwards of forty firms in various districts, sudden
alarm and consternation was created, each holder of "rag" money being eager
to have it changed for gold. Bankers at Carlisle, Leyburn, Penrith, Richmond,
Scarborough, Stockton, and Stokesley drew upon Sir Peter Pole & Co., and would
all be seriously affected by their sudden stoppage. The partners in the country
banks rushed to London to try and obtain gold, but found the greatest difficulty
in converting the best bills or securities into specie. Failure after failure
was announced, and the gold of the Bank of England was almost exhausted,
when the officials bethought themselves of a stock of £\ and £2 notes
that they still had remaining. Government sanction was obtained to issue
these, and they were freely accepted by many country bankers. At Norwich, it
is said, the very sight of them allayed the panic, and in London they worked
wonders. One writer says : — " The Bank of England would have been compelled
to have suspended cash payments had not the directors fortunately stumbled over
a lot of One Pound Notes which had not been issued." This is incorrect ; the
existence of the notes was well known. In the writer's possession is a note of
this period ; it is a curious circumstance that it bears two dates.





ONE.




BANK OP ENGLAND, 1821.


No. 94141.


I promise to pay Mr. Henry Hase or bearer No. 94141.
on Demand the Sum of ONE POUND.




1826. Jany 10. London. 10 Jany- 1826.


XjOne


For the Govr. and Compy.
of the Bank of England.

H. BOCK.



We may presume that the note was printed in 1821, but numbered and
re-dated when issued.



[93} ^_

By Saturday, December 17th, the storm had spent itself, but between sixty
and seventy country bankers had bowed their heads to the gale. The effect in the
Newcastle district was exceptionally light. The Newcastle Chrojiicle of December
17th, says : — "The distress now prevailing in the money market in London has
scarcely extended to this part of the country. After the failure of the York Bank
slight runs took place upon the banks of this town (Newcastle), Sunderland,
Durham, &c., but they were promptly met and soon subsided." In some parts of
Durham the result was not so satisfactory. The Darlington banks had a smart
raid made upon them. Skinner and Co., of Stockton, were saved by a timely
arrival of specie (see account of that bank). A declaration of acceptance of their
notes was issued. Messrs. Hutchinson & Place, of Stockton ; Baxter & Co., a
small bank at Darlington ; and Messrs. Hague, Strickland, & Co., of Malton ; all
suspended, and two years afterwards the list was swollen by the failure of
Goodchild, Jackson, & Co., of Sunderland. The demand for gold must have been
very great. The Hertford Mercury, for December, 1825, says : — " Upwards of a
million sovereigns passed through Ware on Saturday last and considerable quantities
subsequently, as a rehef to country bankers."

Tradesmen again speculated in the notes of the bankers under suspension. In
many shop windows notices were posted stating that the proprietors would give
goods for the notes of such and such a banker. Squibs were issued that contained
more sarcasm than learning. Two of those published about this date are shown
on the next page — doubtless they are samples of many others that appeared.

When men had time to breathe after the exciting incidents of December 1825,
every one was ready to denounce some invisible foe who had been the cause of so
much disaster. Some blamed the Bank of England, some the formation of the
bubble companies, others the over-issue of the country bankers. Whatever the
cause, the effect was, that the Chancellor of the Exchequer and the representatives
of the Bank of England entered into negotiations that very soon resulted in the
establishment of two radical changes in the banking world, viz.. That the Bank
of England should establish branches of its own in different parts of the country,
and that the bank should give up its exclusive privilege as to the number of
partners engaged in banking, except within a radius of 65 miles from the
metropolis, and that steps should be taken to suppress the issue of all bank notes
under ^5.*

* In "A Century of Banking in Dundee " is the following announcement.— 1826. " Emancipation of Banks in
England. The Act of 1708, forbidding the issue of notes in England by banks having more than six partners
was, with the consent of the Bank of England, it being one of its protections, now repealed, except as to London
and its neighbourhood, to the extent of sixty-five miles on all sides. From this date commences the
establishment of the Provincial Joint Stock Banks in England, which were formed as follows— in 1826, 3; 1827,
4 ; 1829, 7 ; 1830, 1 ; 1831, 9 ; 1832, 7 ; 1833, 9 ; 1834, 10; 1835, 9 ; 1836, 45."



[94]



COANQ^ Md4j0tm QOOPS' itsTTO Q^OhV J'QWRETQUS^WB^C^H

KHfiP A^j'Bofiv TiMn, ^ramr you Ai^y ^Ujr tbj^ ^dJU^
tRor^mj TOO Em Cf,^rr hOM^m tban ,youf< y)5'/;^/2V'<T mc«



TCXC A re re jata mJ^Kcnsdn

PAVMt iArcolj)^ mi wi))



[_95^

About this time Joplin again renewed his efforts for the formation of a bank
in Northumberland and Durham, to be incorporated by Royal Charter. The
propositions were much the same as those contained in his pamphlet of 1822.

A circular dated from Newcastle, December 27th, 1826, issued by the solicitors
to the undertaking (Messrs. C. & P. Fenwick) will explain how matters stood.

" SiH, — Since we had the honour of addressing you on the subject of the proposed Joint Stock Banking
Company for the Counties of Northumberland and Durham, we have endeavoured to ascertain the
feelings and sentiments of Her Majesty's Ministers regarding it, and we are happy to state that they
have expressed themselves highly in its favour.

We have reason, however, to believe, that ministers would be unwilling to have the subjects
either of Banking or Currency forced upon their consideration this Session of Parliament. It is
probable they wish for the opportunity of giving them their more undivided attention.

This being the case, it appears to us that it might be impolitic to take the steps at this moment,
pointed out in our last circular, and in the exercise of what we trust, the friends of the undertaking
will consider a sound discretion, we shall venture to postpone for the present, the meeting that was to
have been held this month. Should nothing occur to render an earlier meeting desirable, we propose
to take the liberty of calling upon the friends of the measure to meet shortly after the prorogation
of Parliament. In the meantime, we shall not be inattentive to the interests of the establishment,
and as a few months' delay cannot diminish the necessity for, or the value of, the undertaking, we
hope it will have no other effect upon its numerous and we trust rational supporters, than to confirm
them in the sentiments they at present entertain."

The negotiations between the Bank of England and the Chancellor of the
Exchequer were soon brought into shape, and steps taken for the formation of
branch banks, Gloucester being fixed upon as the first field of enterprise. There
on July 19th, 1826, the earliest Branch Bank of England was opened. The agent
was ready to do ordinary banking business, but the primary object was the
circulation of notes. These were dated from the branch and made payable in the
town of issue or in London. The country bankers were naturally alarmed at this
invasion of their territory. Great diversity of opinion was expressed as to the
poHcy of the directors of the Bank of England adopting such a course. The
country bankers do not appear to have had any organised association for self-
defence. Not till Messrs. H. Burgess & Co. commenced their "Circular to
Bankers, etc.," (the first number of which is dated July 27th, 1827) do any active
steps by way of opposition appear to have been taken. Mr. Burgess denounces the
action of the Bank of England in no doubtful language, and urges the provincial
bankers to combine for their own defence, and proposes " that a committee of the
principal country bankers to digest a plan of operation in London, would be the
most likely means of speedily attaining the object in a satisfactory manner."
The Circular to Bankers was issued weekly, the latest news being often recorded



M

in MS. The following is extracted from the MS. in Circular No. 3, dated
August loth, 1827 : —

" There have been many meetings privately of late, amongst bankers in the North and in the West of
England, to deliberate on the present state of the banking interests, it is clear that if the London
bankers are made to act in such a manner as from their station they ought, it vyill be only because
the country bankers present to them some powerful motive for doing so. The bank directors certainly
intend to take the whole circulation of the country into their own hands. They receive and pay
dividends and transfer money gratis, and they will certainly be resorted to by some amongst the
country gentlemen for depositing without interest their surplus money."

Mr. Burgess is most persistent in his defence of the provincial banker. By
Tuesday, October 9th, 1827, arrangements were made for a committee of the
London bankers '' to receive and consider a communication from the country
bankers then in London, respecting the unreasonable, grasping, and dangerous
proceedings of the bank directors, manifested in their establishing branch banks
and endeavouring to obtain as much as possible of the business of private bankers."
Mr. Swann of York is the only north-country banker reported present. At the
meeting, documents were laid before the London firms, one of which
commences : —

" While some difference of opinion, as might naturally be expected, exists among Country Bankers, as
to the course most expedient to be pursued, they all entertain a common feeling of apprehension as to
the effect which the establishment of Branch Banks must have upon their interests and the general
interests of the public, and are anxious that some well digested plan for their protection should, if
possible, be devised."

The case was fully discussed, and it was agreed to adjourn the meeting till
Saturday the 13th, when more bankers were expected to be in town. At the
adjourned meeting the following resolution was passed : —

" That this Committee deeply feel impressed with the injurious tendency of the measure in question,
and will be happy to receive from the body of Country Bankers any plan of proceedings applicable to



Online LibraryMaberly PhillipsA history of banks, bankers, & banking in Northumberland, Durham, and North Yorkshire, illustrating the commercial development of the north of England, from 1755 to 1894, with numerous portraits, facsimiles of notes, signatures, documents, &c → online text (page 12 of 57)