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 3 of 57)
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Shipley, J. A. D., Esq., Burdon Buildings, Newcastle-on-Tyne.

Sim College (per W. B. Milman, Librarian), Victoria Embankment, E.G.

Slicer, John, Esq. London and Yorkshire Banking Company, Idle.

Smith, John, Esq., Hodgkin, Barnett, & Co , Newcastle-on-Tyne.

Smith, Mark, Esq., Bookseller, Alnwick.

Smithson, W. R., Esq. Northallerton.

Snellgrove, William, Esq., 11, Clifton Road, Brockley, S.E.

Snowball, Geo. L., Esq., Lyndhurst, Gosforth, Newcastle-on-Tyne.

Snowdon, W. F., Esq., 32, Side, Newcastle-on-Tyne.

Spence, C. J., Esq., South Preston Lodge, North Shields. (Five Copies).

Spioer, William, Esq., Whitley.

Storey, H., Jun., Esq., 1, North Bridge Street, Sanderland (per Hills & Co.).

Spicer, William, Esq., York City and County Bank, Newcastle-on-Tyne.

Sutton, William, Esq., Eskbank, Newcastle-on-Tyne.

Swallow, J. H., Esq., Sowerby Bridge, General Manager Halifax Joint Stock Bank, Halifax.

Taylor, Hugh, Esq., J. P., 57, Gracechurch Street, London.
Thompson, S. D., Esq., Lambton & Co., Newcastle-on-Tyne.
Thompson, Thomas, Esq., Winlaton-on-Tyne.
Thorne, Thomas, Esq., Blackett Street, Newcastle-on-Tyne.
Thorburn, John, Esq., 95, Jesmond Road, Newcastle-on-Tyne.
Tone, William, Esq., Roker, Sunderland (per Hills & Co.).
Towers, Edward, Esq., 4, Latimer Street, Tynemouth.
Turner, J. Grey, Esq , 64, Maple Street, Newcastle-on-Tyne.
Turner, Johnson, Esq., The Bank, Hexham.

Ulster Bank Limited (per G. Higinbotham, Secretary), Belfast.

Waddington, G. W., Esq., Grosmont, York.

Wait, James, Esq., J. P., 16, Northumberland Square, North Shields.

Walker, Rev. John, Whalton Rectory, Newcastle-on-Tyne.

Walrond, Arthur F., Esq., Sub- Agent, Branch Bank of England, Leeds.

Watson, Joseph Henry, Esq., 55, Percy Park, Tynemouth.

Watson, Robert R., Esq., Park Villas, Gosforth.

Watson, Robert Spence, Esq., LL.D., Bensham Grove, Gateshead-on-Tyne.

Watson, Rowland de Araila, Esq., 33, Town Wall, Hartlepool.

West, Reginald J., Esq., Agent, Branch Bank of England, Leeds.

Wilcock, Laurence, Esq., London and Yorkshire Bank, Batley.

Wilson, J. Straker, Esq., Roseworth Tower, Gosforth.

Wilson, Richard, Esq., Westfield, Armley, Leeds.

Winter, John M., Esq., J.P., Percy Gardens, Tynemouth,



A HISTORY OF

BANKS, BANKERS, AND BANKING,



IN



NORTHUMBERLAND, DURHAM, AND NORTH YORKSHIRE.



CHAPTER I.
BANKING IN LONDON.



Introduction of Banking — The Jews — They invent Bills of Exchange — Work in
precious metals — Advance on securities — Massacre at York — The Lombards —
They teach their arts to the Londoners who become Goldsmiths — Charles I.
seizes cash in the Mint — Charles II. closes the Exchequer — Goldsmiths develop
into Bankers — Pamphlet on the "Mystery" of it — Treatment of "juniors" —
Bank of England established — William Paterson the originator — Its Charter —
Began business in Grocers' Hall — Object of its formation — New premises built
in 1734 — Original building —Bank at the present day — Pass-books introduced —
Cheques originated — Provincial Banks commence.

THE arts and mysteries of the banking profession were practised in London
and Edinburgh a long time before their introduction into the provinces.
It will, therefore, be necessary to give some slight account of banking in
the cities named, before proceeding to review its birth and growth in the North of
England.

It is not intended to trace the absolute origin of banking, or its development
through the ages anterior to the Conquest. It will suffice for our purpose to state
that the Jews, who were introduced into England by William the Conqueror,
expanded the art of banking by inventing bills of exchange, and similar modes of
transferring values without the aid of coin. They were the most skilled workers
in the precious metals, which, in times of prosperity, they sold to the ecclesiastical
establishments, and in times of adversity, were equally willing to receive in
pledge for money advanced.

The manellous proclivity of the Jews for accumulating money has ever been
proverbial. It was their practice to deposit the securities for advances in some
public building, and it is related that '^^t the general massacre of the Jews at York,



[^j

in the early part of the reign of Richard I., the gentry of the neighbourhood, who
were all indebted to the Jews, ran to the cathedral, the place where their bonds
were kept, and made a solemn bonfire of the papers before the altar." Many
such stories of the atrocities practised upon the Jews, blacken the pages of the
history of our country, culminating in the expulsion of the race and the confiscation
of their property.

Their place in the banking world was taken by the Lombards, who settled in
London, and gave tlieir name to the street, renowned as the abode of the banker
of the present day. The early Lombards were artificers in gold and silver, dealers
in pawns, and money-lenders. Their arts and their crafts they imparted to the
Londoners, who, as years advanced, became the noted goldsmiths of the sixteenth
and seventeenth centuries. These tradesmen, in their turn, grew exceeding rich,
and lent their wealth to commoners and to kings, many of whom behaved to them
almost as shamefully as their predecessors had treated the Jews.

Some deeds stand out prominently — such as the act of Charles L, in seizing
the bankers' surplus cash, that was then kept in the Mint, amounting to some
^200,000 ; and the no less monstrous injustice practised by his royal son Charles
IL in 1672, when he offered the "White Staff," or Lord Treasurer's position, to
any one who could mention a way of raising ;^ 1,500,000. Sir Thomas Clifford
suggested the closing of his Majesty's Exchequer, which contained a million and a
half of money belonging to the bankers. The king was not slow to avail himself
of such a bold idea, however unjust and tyrannical it might be. "The money thus
forcibly seized, did, in point of fact, belong to the trading community, and the
failure of the bankers, which was the natural result, caused, for a time, a general
suspension of all monetary transactions."

In spite of such treatment, the goldsmith grew more and more wealthy, and
gradually developed into the banker, as known in the present day. The transition
from goldsmith to banker is admirably and quaintly described in a pamphlet
published in 1676 (a copy will be found in the Guildhall Library), entitled,
" The Mystery of the New Fashioned Goldsmiths or Bankers : their Rise,
Growth, State, and Decay, Discovered in a Merchant's Letter to a Country Gent
who desired to bind his Son Apprentice to a Goldsmith ; printed in the year 1676."

It commences : —

" Sir, — Since you be pleased to demand my advice in the disposal of your Son to the Goldsmiths
Trade, and my opinion of the Trade itself, I must trouble you more than I was willing to set down
what I have observed of the Goldsmiths since I have Traded, and the steps of their Rise and Progress,
and leave the judgment of the whole to your Self, 'tis but fit that a Son should owe the good choice of



[J] ,

his employment and way to his fortunes to the prudence and love of his Father. If I could now
discourse you, I ought to be satisfied whether you have thoughts to put your Son to a Goldsmith of the
Old or New Fashion, those of that profession having of late years wholly changed their way of Trading.

" In my time their whole imployment was to make and sell Plate, to buy forreign Coyns and
Gold and Silver imported, to melt and cull them, and cause some to be coyned at the Mint, and with
the rest to furnish the Refiners, Plate Makers, and Merchants, as they found the price of gold and
silver to vary. But about thirty years since, the civil Wars giving opportunity to Apprentices to leave
their Masters at will, and the old way having been for Merchants to trust their cash in one of their
Servants custody, many such Cashiers left their Masters in the lurch and went to the Army and
Merchants knew not how to confide in their Apprentices ; then did some Merchants begin to put their
Cash into Goldsmitlis hands to receive and pay for them (thinking it more secure) and the trade of
Plate being but little worth, most of the Nobility and Gentry and others melting down their old plate
rather than buying new, and few daring to use or own plate, the Goldsmiths sought to be the ^lerchants
Cash keepers, to receive and pay for nothing, few observing or conjecturing their profit they had for
their pains."

The pamphlet is answered by another, headed, " Is not the Hand of Joab in
all this ; or An Enquiry into the Grounds of a late Pamphlet Intitled the Mystery
of the Xew-fashioned Goldsmiths or Bankers, &c., And answering the Exceptions
in it to the Bankers Trade, Printed in the Year 1676."

From these papers we gather the spirit of the times, and with the aid of
"A Handbook of London Bankers," by Mr. Hilton Price, we can trace, in a most
interesting manner, the history and lineage of many of the London firms of the
present day.

The treatment that some of the clerks or apprentices received at the hands of
these old goldsmith bankers, would hardly be acceptable to the present "junior."
One good master and his wife complained " to the Wardens, of their apprentice,"
William Bowden, " who irreverently, shamefully and of frowwinesse " had beaten
his said mistress. His punishment, as ordered by the Wardens, was that he should
be " had into y^ kechyn of the Hall, and there stripped naked, and by the hands
of his master beaten until such times as he raised blood upon his body, in
likewise as he did upon his mistress, and that he should then be made to ask his
master and mistress of g'ace and m'cy, nakyd as he was betyn."

In 1694 a great event happened in the commercial world, namely, the
establishment of the Bank of England. Its origin was due to William Paterson,
a Scotsman, who commenced his scheme as early as 1691. On July 27th, 1694, he
obtained the incorporation of the society, the style of which was "The Governor
and Company of the Bank of England." The present year, therefore, is its
bi-centenar}'. One most important clause of the Charter, was that which gave
the proprietors the exclusive right of banking in England for a teim of twelve
years.



[±]

On January ist, 1695, they commenced actual business in the Grocers' Hall
in the Poultry, and on the nth of the following month, they authorised their
cashiers to give notes on their behalf, " either for payment of money or bills, for
which they are to be accountable." Notes w^ere not then issued for less than £20.
In the primitive days of note issue, it was not an uncommon practice to repay
the notes by instalments, the amount so paid being endorsed on the back.

The primary object of the formation of the bank was to raise ^1,200,000 by
voluntary subscription, which was to be lent to the Government ; and a further
sum of ^300,000, for which the contributors were to receive annuities for one, two,
or three lives. The Government was to pay 8 per cent, for the accommodation,
and ^4,000 per annum for management. The whole amount was subscribed
in a very few days. Mr. Price quotes an interesting letter, written to Sir
Francis Child, by the first Duke of Leeds, dated 25th June, 1694: — "Sir, — I
am informed that the subscription to the Bank do fill so fast that there is att this
day neare ^700,000 subscribed, so that it must now necessarily be a bank ; I,
therefore, desire that you will subscribe foure thousand pounds for mee, and pay in
one thousand pounds on my account as the Act directs."

Business was carried on in Grocers' Hall until 1734, when new premises were
built upon the site of the house and garden of Sir John Houblon. A church — St.
Christopher-le-Stocks — five taverns, and upwards of twenty houses, were required
in addition, before " The Bank," as known in the present day, was completed.
The original building was from the design of George Sampson ; but great alterations
and additions were made by Sir John Soane, the founder of the valuable (though
too little visited) museum that bears his name and retains the treasures that he
accumulated in his old mansion in Lincoln's Inn Fields, where yet may be seen
most of the working drawings from which the designs of Sir John were executed.

After the establishment of the Bank of England, many customs and practices
gradually developed, the record of some of which we find in Mr. Price's work.
Pass books were introduced early in the eighteenth century. A letter
from the Earl of Litchfield to Messrs. Child in 1713 shows the method prior to
their invention. He says : — " I love to go on in old formes if there be no
reasons of consequence to y® contrar}^, and therefore I send you y® writing that
was all ways put to y® foot of y^ accounts between Mr. Coggs (Coggs & Dann,
Bankers) and I when they were passed for every halfe yeares rents, and to this
writing Mr. Dann and I sett our hands." Lady Carteret evidently prefeiTed the
new introduction of the pass book, as two years later she writes to Mr. Child,
" I should be glad of a Book as I used to have at Mr- Mead's w*^- an account
of all that you have reC^^- upon this article." The cheque was of prior origin,



[5]

though it was a long time before it came into general use. " The goldsmiths
usually issued receipts or cash notes (for money left with them) payable on
demand, and these receipts passed from hand to hand, and were called goldsmiths'
notes. A customer wishing to withdraw any sum would draw a note or draft
payable to his own or some one else's order, and this was the origin of cheques."

As trade in the provinces increased, substantial men began to feel the
inconvenience of being their own bankers, and retaining all their wealth in their
oaken chests. Gradually they began to open accounts with some of the London
bankers, which the}' utilised for their business transactions. Doubtless such men
were beset by many friends and customers to accommodate them through their
banking account, and thus the well-to-do-trader developed into the country banker,
with his London agent, who much preferred to do business and incur carriage and
postage with some one leading fimi in a town, to having several small customers in
the same place. My impression is, that towards the end of the last century,
the London bankers grew jealous of the trading banker, and in many cases
introduced some junior member of their firm, who, in conjunction with local
gentlemen, started as provincial bankers. I give, at the end of these chapters, a list
of the North-country banks that have struck me as probably owing their
origin to this cause.



[6]



CHAPTER II.

BANKING IN SCOTLAND.

North-Humber-land more affected by Scottish than by London Banking — Bank of
Scotland founded in 1695 — Notes issued — One Pound Note — Bank stopped
payment in 1704 — Importance of Note issue — Branches started — Charter expires
— Free Banking — Royal Bank of Scotland — War between the Banks — Bank of
Scotland stops payment in 1728 — Optional Notes — British Linen Company
become Bankers — A mutual foe — Banking Company of Aberdeen — Its failure —
The " Ship" Bank — " Glasgow Arms" Bank — Notes paid in Sixpences — Private
Bankers — John Coutts of Edinburgh — Connection with Newcastle — Rapid
Development of Banking in Scotland — Publicans issue notes — Forgery on the
" Thistle" Bank.

IN times remote, " North-Humber-land " was perhaps as much if not more
influenced by the ways and doings of her neighbours across the northern
border, as by the events that transpired in the great metropolis of the
south. It is therefore necessary that we should scan the development of banking on
the north, as w^ell as on the south of the district under review.

The success that attended the establishment of the Bank of England in 1694,
naturally led to a desire for the formation of a similar institution in Scotland.
Little time could have been lost, for in 1695 the Scottish Parliament passed " An Act
for Establishing a Public Bank." The Capital was to be " a joynt stock amountmg
to the soume of twelve hundred thousand pounds money" (Scots, equal to ^100,000
sterling). Subscriptions for the same to be received in Edinburgh and London,
from ist November, 1695, to ist January, 1696, the body corporate to bear the name
of the Governor and Company of the Bank of Scotland. They w^ere granted
the exclusive privilege of banking in Scotland, for a period of twenty-one years.
The directors very soon issued notes for the value of ;^ioo, ^50, £20, £10,
and £^. Useful as these proved for many purposes, a great want of small change
was felt. Coin was very scarce and subject to considerable depreciation from wear
and tear. The Bank of Scotland therefore in 1704, commenced the issue of one
pound notes, little thinking of the mighty power they w^ere creating for the
development of the country, and little dreaming that after a trial of nearly
two hundred years, the one pound note would still be the cun^ency dearest to the
heart of a Scotchman.



l7l

For some years the issue of one pound notes was given up. The Scots'
Magazifie for August, 1768, announces : — "The Edinburgh Banks have discontinued
issuing 20'- Notes since May, and have issued 21 -." This was occasioned by the
scarcity of silver for change. The Guinea notes were put up into packets
containing nineteen, which with i/- added, provided convenient change for a
twenty pound note.

In 1 704, the Bank of Scotland stopped pajTnent from want of specie. An almost
unaccountable run occurred which could not be met, though its solvency was un-
qestionable. Ere we condemn the early bank for not being prepared for this emergency,
we must think of the difficulty and cost of obtaining specie, which was principally
in silver, and had to be collected in London and forwarded north, at a cost of £y
or £8 per cent. The note issue was looked upon by the directors as all-important,
and to extend it and prevent a rival entering the field, branches were opened in
Glasgow, Aberdeen, Dundee, and Montrose, but they did not answer the
expectations formed and were soon closed, the money used by them being brought
back to Edinburgh by " Horse Carriage." The directors soon began to receive
money upon deposit at fixed rates of interest; they also granted cash credit
accounts. At the expiration of their original charter in 17 16, the proprietors of
the Bank of Scotland made no effort to get it renewed. The neglect was probably
from inadvertency, or possibly from an idea that they were so well established that
they need fear no rival ; but from whatever cause the non-application arose, it
was not long before they deeply regretted it. There can be little doubt that the
lapse of the charter proved a great boon, as it enabled banking to become a free
trade in the country, w];jile in England, it was hedged around with restrictions and
protection.

Out of a fund termed the Equivalent Fund (into the particulars of which it
is not necessary to enter), arose the Royal Bank of Scotland, a company that
obtained a charter for banking purposes in 1727. The granting of it was bitterly
opposed by the proprietors of the Bank of Scotland. They used every conceiA^able
means to prevent the fonnation of the bank, going so far as to petition the King,
and endeavouring to show that although their charter had expired, they had a vested
interest in the trade of banking. The consequence of this opposition was, that
when the Royal Bank commenced business, the two establishments were not only
rivals, but foes openly pronounced. Then began the Battle of the Banks ! Each
one deliberately tried to " rush " the other. The old bank relied upon its age and
respectability, the Royal upon that popularity which often attends new ventures,
especially when their supporters hope to receive extended credit from them. It
also had a certain amount of government work, and declined to receiv^e the notes



[8]

of the Bank of Scotland in payment of taxes. Each estabhshment dihgently
hoarded the notes of its opponent until it had collected a greater number than it was
probable could be met in specie. Disappointment often followed, but the
Royal had the best of the fight. It was new, its capital was large and
comparatively intact, while that of the old bank was locked up in advances, re-
gardless of its note issue. The crisis was reached in March, 1728. The
Lord Provost of Glasgow, a patron of the Royal, presented /900 worth of notes
to the Bank of Scotland, demanding coin which they could not supply. The
Royal most politely cashed the notes for their client, and lost no time in
instituting proceedings against the old bank, which suspended its cash payments
for a few months, but afterwards redeemed its notes with interest. To avoid the
repetition of such a difficulty, they introduced the celebrated " option clause "
on November 19th, 1730. Their ;^ 5 notes read, "on demand, or ^5 2s. 6d. six
months after being presented for payment, in the option of the Bank," and on
December 12th, 1732, their £1 notes had a clause to the same effect.

In 1746, an important company obtained a charter for the manufacture of
linen, their registered name being " The British Linen Company." They soon
commenced to issue notes for the raw material that they purchased. These notes
obtained a distinct standing in the financial market. Gradually they found —

" that it would be of more utility, and better promote the objects of their institution, by enlarging
the issue of their notes to traders and manufacturers than by being traders and manufacturers them-
selves They therefore relinquished all mercantile and manufacturing operations in the

year 1763, confining themselves to the discount of bills, advances on discounts, and other banking
transactions."

An interesting history of the early Scottish banks will be found in " The One
Pound Note," by William Graham (James Thin, Edinburgh), from whose pages I
cull much information.

By 1750 the Bank and the Royal Bank of Scotland had lost much of their earl)-
bitterness. There was a common foe to attack, which has been the cause on many
occasions of bringing old enemies to fight shoulder to shoulder. Messrs. Living-
ston, Mowat, Bremner, and Dingwall, had begun a private bank in Aberdeen, under
the title of '' The Banking Company of Aberdeen." They had gathered a con-
siderable connection, their notes were freely accepted, and in that district displaced
those of the two old banks. Recently these old banks had commenced a system
of note exchange between themselves, and thought it no sin to compel their
northern rival to respond to their lead. Unitedly they presented such batches of
notes upon the Aberdonian that it could not meet the payment. A lengthy
and expensive law suit was. the result, ending in the extinction of the Aberdeen
bank in 1753.



[9}

In Glasgow, "The Ship Bank," (Dunlop, Houston, & Co.) was founded
under the auspices of the Bank of Scotland. Their early rival, the Royal, not to be
out-done, soon after contrived the establishment of the "Glasgow Arms Bank,"
(Andrew Cochrane and John Murdock.) For a little time the old fighting was
resumed, but before long the new firms threw off the patronage of their promoters.
This so incensed the parent banks, that they once again arranged joint war
against the enemy. Their mode of procedure was to send to Glasgow as their
agent, Mr. Archibald Trotter, whose mission was to collect the notes of Murdock
and Co., which he presented at inter^^als, demanding gold or Edinburgh notes. Mr.
Trotter's polite attentions were duly weighed by the Glasgow banker, who was
prepared for the occasion. Payment was not refused, but was delayed in all
conceivable ways. Mr. Trotter has left a record of the affair, and says :—

" When their notes were presented at the office for payment a Bag of Sixpences was with great delibera-
tion produced and laid upon the table ; the Teller then proceeded with ridiculous slowness to open up
the Bag and Count the Money. He would first Tell over a pound sterling, in Single Sixpences ranked
upon the Table, and then affecting to be uncertain about the Reckoning, he would gather this small
money, and count it over again from One hand to the Other, sometimes letting fall a Sixpence for a
Pretence to begin anew and count it over again ; on other occasions he would make Time by ridiculous
discourses upon the odd size or shajye of Particular Sixpences, SOUND another upon the Table, to try
if it was sufficient coin, and sotnetimes he would quit his occupation altogether upon Pretence of some



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 3 of 57)