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 15 of 57)
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him to give his attention to the subject. Many of Mr. Headlam's remarks are so
striking that I quote freely from his speech. He says : —

" When banks are well conducted, the result is that not only the surplus capital of the wealthy, not
only the gains of the middle classes, but also the savings of the poor, large in the aggregate though
small in the individual amount, are collected into one fund, which is again sent forth to give life and
energy to new trade and industry, and to call forth the natural resources of the country. When a
failure of a joint stock bank occurs, the first question asked is, ' Will the public be paid ? ' The answer
probably is, ' That though there will be great pressure upon the shareholders, sooner or later the
creditors will be paid,' little regard being given to the unfortunate shareholder. . . . The social
evils are perhaps still greater. The poorer part of the shareholders, who have invested their whole
fortune in the purchase of shares, find themselves suddenly ruined by the loss of their investment.
The middle class not only lose the value of their shards, but find themselves suddenly liable to sums,
the magnitude of which is to them almost unintelligible. The wealthier portion are selected as the
first victims, and however small their interest may have been in the concern, they are called upon to
pay sums which no private fortune can meet. The courts of bankruptcy and insolvency then become
wonderfully active. Others have not strength of mind to contend against such calamities. It is
within my own knowledge that suicide and lunacy have been amongst the consequences of such
failures."

He points out that many are deluded by the prospectus announcing limited
responsibility, and shows that " the law distinctly prohibits any such limitation."
Mr. Headlam quotes some very strong cases of hardship that have resulted from
the state of the law : —

" A shareholder died, his executors received a dividend from a bank share ; they never intended to
make themselves shareholders, and were not on the register. The bank failed, and, to their utter
astonishment, they were held liable to the extent of their private fortunes. ... A single woman



[^

had some shares left her ; she never received any dividends upon them in consequence of there being
some arrears due for calls. Some years afterwards she married. Subsequently the husband was made
liable, and judgment obtained against him."

The speaker further shows that with the law in this state no substantial
people will become shareholders : —

" The tendency of the law, therefore, is gradually to place the whole control of the banking system of
this country in a speculating class of men. It is impossible to conceive a law more likely to give such
a character to a trade than that which imposes this unreasonable liability upon the shareholders in a
joint stock bank. ... If losses are made, the directorate consider the risk of re-establishing the
bank too great, and allow things to drift to their ruin, while they quietly dispose of their share, which, if
they are fortunate enough to do three years prior to the crash that must eventually come, their
responsibility comparatively ceases."

The honourable member proceeds : —

" The storm that raged in the commercial world during the year 1825 almost swept away the private
banks, while the Bank of England stood firm. Public opinion, struck with this fact, demanded that
the law should be altered so that banks might be formed similar in their constitution to the constitution
of the Bank of England. The result was the statute of 7 Geo. IV., cap. 46, which law regulates the joint
stock banks to the present day. . . . The Bank stipulated that these new establishments should
not be within sixty-five miles of London, that all partners in them should be individually liable, and
they made other conditions for the purpose of weakening the strength of the new banks. It was not, as
many men suppose, a prudent precaution taken for the public by the Legislature. On the contrary, it
was forced upon the Government against its own views by the Bank of England stipulating for its own
interests. The statesmen who sought to obtain for the public this principle of limited liability were
the late Lord Liverpool and Mr. Huskisson — men whose authority is of no small weight on
such questions. The late Lord Ashburton was of the same opinion. He says : — ' If the Right
Honourable Gentleman (Mr. Huskisson) had allowed persons to combine together on condition
of depositing their capital and of limiting their responsibility to their capital, he would have
found plenty of individuals ready to engage in such associations. Landed gentlemen would put
down their five, their ten, or their twenty thousand pounds as might be convenient, and banks would
be formed all over the country on the best principles.' To which Mr. Huskisson replied that ' he
allowed that it would be a great improvement if under a proper system chartered banks were
established with only a limited liability. But the bank objected to the extension of this limited
liability, it would no doubt induce many persons of great credit and fortune to invest their money in
shares in such banks.' When the Bank Charter was renewed in 1833, Lord Althorp made an attempt
to get the law altered but he was unsuccessful. Since then the Bank of England had given up
many of the conditions it stipulated for, it is now strong in public opinion, it is beyond the fear of
competition, it does not stand in need of enactments made for the purpose of weakening rival
establishments, it has discovered that its interest is identical with that of the public. I have
therefore good reason to hope that no opposition will arise from the Bank of England, but that it will
adopt with respect to this last remaining condition, the same liberal policy that it has pursued with
respect to the other conditions for which it stipulated in 1826 and which it has subsequently given up."

Regarding the liability of holding a share in a joint stock bank, Mr. Leatham
in his "Letters on the Currency, addressed to Charles Wood, Esq., M.P.," says : —

" I am informed by a gentleman, ' he would not accept the gift of one share with £5,000 added ; ' and
on conversing with aaiother gentleman high in the monied world in London, he said, * I would not



[^

be a holder of one share in a joint stock bank, if £20,000 were offered with it, as they are now
constituted.' I name these facts to get the law of construction improved."

Mr. Headlam's efforts were not immediately successful, but the seed sown
was not lost, and eventually the law of limited liability was placed on its present
footing in 1862.

In 1852 an idea of the gold circulation is gained from an extract from the
" Larchfield Diary." " I observe gold is extending in the country ; * bankers pay
more frequently than they did in that coin. This is inconvenient to the receiver,
for he must be prepared with his scales to weigh sovereigns as in olden times when
every man had his scales and weights."

In 1856, a useful Bill (which subsequently became law) was brought in by Mr.
Apsley Pellatt, member for Southwark, to legalise the "crossing" of cheques. This
had been the custom for some time, but a recent decision of Lord Campbell's had
thrown doubt upon a banker's right to decline to pay a cheque to bearer, although
it was crossed. On introducing a second reading of the Bill, Mr. Pellatt said " he
believed that the system of crossed cheques arose in this way : — ■

" A gang of swindlers paid into a bank some bills due on a certain day at a certain house. When the
banker's clerk presented himself, they seized him, tied him up, took away all his bills, went round
with them to the different bankers, and then left the town with their booty. The system of crossed
cheques was adopted in order to prevent the repetition of such wholesale robbery."

Great as had been the havoc amongst the joint stock banks of the north, the
atmosphere was not cleared. In 1855, the "Commercial," a comparatively small
bank, had to close its doors, but the culmination of the storm came in 1857, when
the Northumberland and Durham District Bank failed for an enormous amount,
and by the misery and distress it caused, eclipsed all previous bank failures in the
North of England. Of the joint stock banks so hastily formed around Newcastle,
the "District" was the largest. It had incorporated the Newcastle branch of
Backhouse & Co., and the entire business of Sir M. W. Ridley & Co.

It was the last joint stock to survive, and when it exploded, Newcastle was
again left (with the exception of the Bank of England) in the hands of the private
bankers, who duly availed themselves of the situation. From the ashes of the
departed " Union," Phoenix-like, arose the private bank of Messrs. Woods & Co.,
who retain their position to the present day. Similarly from the District 'Bank,
arose the firm of Hawks, Grey, Priestman, & Co., but they soon dissolved their
establishment. Messrs. Lambton & Co. removed from Dean Street to the spacious
premises in Grey Street (originally occupied by the District), where they have ever

* The increase of the gold circulation was no doubt attributable to the recently obtained supplies from
California.



[iiTJ

since been located. Two years later (1859) a new private bank was formed.
Mr. Robert Spence, who had had a long experience of banking, gathered round him
three other gentlemen, all members of well-known commercial families. Unitedly
they formed the firm of Hodgkin, Barnett, Pease, & Spence. They are the
youngest of the Newcastle private banks, and may be, judging from the signs of
the times, the last ever formed in Newcastle.

Confidence was so shaken in the joint stock banks, that it was many years
before another could be firmly established. Several feeble attempts were made —
in 1862, the " London and Northern " ; in 1864, the " London Bank of Scotland " ;
and in 1865, the "Tyne Exchange." But other enterprises were more successful.
Mr. John B. Dale (who had been a partner in Hawks, Grey, Priestman, & Co.),
joined other gentlemen, and in 1858 formed the firm of Dale, Miller, & Co., at
South Shields. After sundry changes in partnership and locality, they were
absorbed into the vortex of the joint stocks in 1892. In 1865 that octopus-hke
establishment — the National Provincial Bank of England— opened a branch in
Newcastle, and laid the foundation of the important position that it now occupies
in the district. Not till 1867 — ^just ten years after the failure of the " District" — was
a substantial and successful effort made to establish another joint stock. In that
year the North Eastern Bank was announced, was duly constituted, and by
judicious management has inspired confidence in both shareholders and clients, and
proved that a joint stock bank can be planted and flourish in Northumbrian soil.
It has turned the quarter century of its history, the first and only Newcastle-born
joint stock bank that has ever done so. In 1871, the "Northern Counties Bank "
was instituted, and in the following year the " Industrial Bank " appeared, both
being Newcastle establishments. Their lives were neither long nor glorious.

In 1872 a Bankers' Clearing Association was instituted in Newcastle, but
before giving an account of it, it will be well to record the earlier practices that
were in vogue to facilitate bankers' exchanges.

Unfortunately very little information upon the subject is available. It has been
stated (page 25) that the Newcastle bankers prior to 1788 had a properly organised
association, with rules framed by mutual consent, to guide and regulate many of
their charges. A custom also seems to have prevailed of periodically presenting
their notes upon each other, when as far as possible notes per contra were given,
the balance being settled by a draft upon London, but from the account of Messrs.
Davison-Bland we plainly see that in 1788-9 this was only aistofnary and not
cofnpulsory. Bitter complaints were made against Mr. Benjamin Dunn, banker,
at Durham, Messrs. Surtees, Burdon, and Co., Newcastle, and others, because they



[^i8j

would demand gold in settlement. The following letter, dated March 19th, 1790,
shows the custom of settling weekly, and also proves that no fixed rules existed
for settlement.

" Baker, Hedley, and Co., (Commercial Bank, Newcastle) present their compts. to Messrs.
Lambton, Williamson, and Co. In future they would wish the Balance of their weekly settlements to
be paid either in Gold or in a Bill at 10 Days upon London, and five shillings per cent. Carriage, in the
option of the Payers."

From the same source we gather what the Scotch custom was at a little
earlier period. (Interesting particulars are given besides those relating to clearing,
so the letter is given in full). Mr. Graham, of the Thistle Bank, Glasgow, writing
January 8th, 1788, says : —

" Five pound notes are bound in books of £300 each. They are numbered No. J, J, &c.. No. f , |, &c.
A book is kept for entering the particular number of notes destroyed when worn out. This we call our
burning book. We settle with our neighbours in Glasgow once a week and the same in Edinburgh,
paying the balances by drafts on Edinburgh. We settle in this manner with none but our neighbours
of Glasgow, Paisley, and Greenock, and the banks in Edinburgh. Other country notes we send to
Edinburgh as' money, every bank in the country exchanges as we do in Edinburgh. In numbering
you may make under every letter as many notes as you please, thus No. Al, No. A2, &c. All notes
payable at 35 d'sight payable to order and in London only. Surplus money in London when the sum
comes to be large and is to be stationary, may be vested in the public funds. The Three per cent.
Consols are generally supposed the most eligible, but these funds and all the rest are so much affected by
war, rumours of war, and many other circumstances, that they may often be locked up when most
wanted. Exchequer biUs are thought the least liable to be affected by such circumstances, and at all
times command money without much loss and sometimes with profit, though not so great as the other
funds sometimes bring. We have generally found that they may be purchased to most advantage about
the month of June, wlien the new ones are usually issued."

Further information upon the subject is wanting until shortly after the panic
of 1825, when the northern bankers instituted a periodical meeting for purposes of
" clearing." Mr. Burgess, in his " Circular to Bankers," March 20th, 1829, says : —

" We are glad to notice any circumstances which indicate that the Country Bankers of England are
actuated by a cordial and more general feeling of union and co-operation than has heretofore prevailed
amongst them. Since the panic in 1825, a meeting has taken place, once a week or once a fortnight,
at Northallerton (previously at Thirsk for a short time), at which Bankers from Stockton, Darlington,
Richmond, Ripon, Knaresborough, Thirsk, Boroughbridge, &c., attended. And this meeting, we are
informed, has been found useful, instructive, and agreeable. It is a little centre of exchange for the
Bankers of that part of the country, where demands upon each other are cleared, as at the clearing-
house in London, bnt in a somewhat different manner — the transactions being so different."

It will be seen in the account of the Northumberland, Durham, and District
Bank that about 1837, shortly after their commencement, "clearing" was con-
ducted in a room at their establishment, then No. 35, Grey Street. This informa-
tion was given by a gentleman who, in his youthful days, attended the meetings ;
he further stated that he believed it was soon discontinued, but from what cause
he could not remember.



[l^

The earliest published record that has been met with upon the matter is in
the Banker s Magazine for 1845, p. 219, which says : —

" The Newcastle Banks formerly kept up a sort of local or provincial clearing house, at which a clerk
from each bank attended to exchange notes and cheques daily, and the balance of exchange was paid
at once in Bank of England notes or gold. Since they have opened drawing accounts with the branch
bank, it is now the practice for each bank to send in for its credit with the Bank of England, against
a certain hour daily, any cheques or notes of the other banks it may have received in the course of the
day, which are collected by a clerk from the Bank of England, who goes round before the usual hour of
closing, and receives the amount in notes or cheques upon their respective accounts."

This statement explains why the clearing held at the District Bank was
discontinued.

In i860 the banking houses in Newcastle besides the Bank of England were
Lambton and Co., Woods and Co., and Hodgkin, Barnett, and Co.; the business of
the town having returned to the hands of the private banker exclusively. These
firms all kept accounts at the Branch Bank of England and conducted their
exchanges very much in the way recorded in the Bankers Magazine. By 1872
the trade of the district had greatly increased, every confidence was felt in the
local banks, the custom of keeping a banking account had become general, and
* cheques were used for all payments. It was therefore deemed expedient to
establish a " Clearing House " for the Newcastle banks, mainly upon the lines of
the London establishment. A local association was duly formed, the agent of the
Bank of England elected chairman, and accommodation secured at the Branch Bank
for a " clearing room." The banks in the town at this time were the same as
those named as existing in i860, with the addition of a branch of the National
Provincial Bank of England, and the North Eastern Banking Company. All the
banks became members of the association, and for a short time the system adopted
worked smoothly, and proved a great advantage to its members. Unfortunately —
disintegration set in, which spoiled the unity and consequently the utility of
the system. One very important rule of the association was, that the balances at
the close of each day should be settled by draft upon the Branch Bank of England,
thus compelling any member of the Association to retire from the clearing house if
at any time he should discontinue his working account with the Bank of England.
Three of the five bankers who, with the Bank of England, originally joined the
clearing association, at various times closed their accounts with the bank. One
soon re-opened, but two important banks are still non-customers of the Bank of
England and therefore excluded from the clearing house. By these withdrawals
the system has been disorganised, and the remaining members put to great
inconvenience. It is most desirable that all the Newcastle bankers should be again
united, and the rules of the association so firamed, that any member not requiring



[I20]

a working account with the Bank of England could have a clearing account only,
the bank being re-couped by a pro rata payment from each other clearing banker
for all extra labour entailed, upon a scale to be mutually agreed upon by all the
members of the Clearing Association. For the reason stated, the "Clearing
House Returns " give no adequate idea of the business of the Newcastle district.

Up to 1882 the Association was only for Town Clearing, but in that year it
was extended to Country Clearing, most of the banks north of York becoming
members.

In 1874, the "Association of English Country Bankers" was reconstituted.
The local firms that joined it were Backhouse & Co., Darlington ; Bower,
Hall, & Co., Beverley ; Dale, Young, & Co., South Shields ; Hodgkin,
Barnett, & Co., and Lambton & Co., Newcastle ; Roper and Priestman,
Richmond ; Simpson, Chapman, & Co., Whitby ; Woodall, Hebden, & Co.,
Scarborough ; and Woods & Co., Newcastle ; Mr. E. Backhouse, M.P., Mr. George
Fenwick, and Mr. Thos. Hodgkin, being placed upon the General Committee.

The Bankers' Almanack for 1876 contains some very interesting tables
regarding the note issue of the private and joint stock banks of the kingdom.

In 1883, the first joint stock bank estabhshed in the district — the
Darlington District Bank — was absorbed by the " York City and County," which
extended its borders to Newcastle in 1890, and subsequently opened a branch at
Sunderland. In 1892 the old-established private bank of Simpson, Chapman, & Co.
of Whitby, was made over to the York Union Banking Company.



[121]



CHAPTER XII.

COINING AND CLIPPING. TONTINES AND LOTTERIES.

Governments constantly troubled with "Coiners" and "Clippers" — Some cases of
coming in the North — Thomas Peebles at Berwick — Hugh Partridge at
Newcastle — Thomas, "a Scotts man coining hard heddes on Cokett Island " —
John Maben — Instances of Clipping in "Depositions from the Castle at York "
Daniel Auty — Rev. John Booth at Bothal — Specimens of Mint and " clipped "
half-crowns — Clipping by Wm. Guest of the Bank of England — Tontines — Act
prohibiting lotteries — Government break their own law — Great rage for lotteries
between 1785 and 1823 — Banks supply tickets — Illustrations of Lottery Bills —
State Lotteries abolished in 1826.

THE practice of coining spurious money, and of filing or clipping good
money, and so robbing it of part of its value, has ever been a trouble to the
banker, and has constantly occasioned perplexities to the Governments who
were responsible for the currency of the country. The north of England was
not free from these frauds. A few of the most interesting cases are recorded
here.

In 1564, Thomas Peebles was arrested for coining at Berwick. He confessed his guilt and
implicated others. One of those examined was " Hugh Partridge, gentleman." He also confessed, and
named as a confederate, John Bennet, of Newcastle, a well-known personage, being master of the
ordnance. Bennet denied the charge, but " admitted that Partridge had been in his house, ' The

Nuns,' in Newcastle, and told him of a way to coin Scotch moneys that Partridge had

called upon him at Christmas Eve, and paid him £5, which was used in paying artificers, who sent it
back ; stated further, that on his reproaching Partridge for bringing such money, the latter promised
he would never utter another penny, whereupon he condoned the offence." Edward Shadbolt, goldsmith,
of Wakefield, deposed that he had helped Partridge, at Newcastle, to forge plates for 12d. pieces,
amounting to £5, four of which he received for his pains, and having uttered one at Newcastle, he
threw the rest into the Tweed because they changed colour.

Bennet was in danger of losing his post but subsequently obtained forgiveness.
Partridge appears to have escaped for a time, but Mr. Welford, in his records from
the State Papers of 1565, gives the following : —

•' This yeare Partrage was put downs for coyninge fals monnye in the Great Innes in Pilgrame Streat."

P



1^22]

The master of the ordnance did not long survive the trouble into which he had
fallen. He died on July 8th, 1568.*

Very soon after these occurrences, some coiners (probably of the same gang),
selected the quietude of Coquet Island (which lies off the Northumberland Coast,
near Warkworth), to experiment in the art of coining.

"In 1569, Rowland Foster, Captain of Wark (? Warkworth), on examination admits or states that 'he
had in his house at Wark about two years past before the going of the soldiers to Newhaven, one
Thomas a Scotts man, and then the said Thomas did take in hand to coyne hard heddes,] the which




he could not bring to any perfection there, and required me to get him a place of more secretnes to
work more at liberty .... before I had got hym an other place one Barber a soldier of Barwick,
which was acquaynted with the said Thomas before, did bring one Arthur in the night time to my
house to the said Thomas and said he could skill in the same art, and they both did there put in use to
have stamped hard hedds and could bring it to no perfection and thereupon I put them in a place
called the Cokett Island and there was the space of twenty days and more and yet could not bring it to
no perfection that was good, and having made thereof to the value of ten pounds, I took the same and
threw it a-way and caused them to swear on a book that they should never use that art again and so
they and I departed and had never more to doo.' "|

In 1744 James Maben and John Samuel were convicted of coining, and



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 15 of 57)