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

. (page 38 of 57)
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 38 of 57)
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a dividend at the rate of seven and a half per cent, per annum, and have also carried a considerable
sum to the formation of a reserve fund."

On April 13th, 1872, Mr. Ovenden writes an indignant letter to the editor of
a local paper, drawing his attention to the fact that he had omitted the Northern
Counties' Bank from a list of the banks of the town of that day, stating : —

" We are registered under the same Acts as the North Eastern Bank ; have our London Agents,
Banker's Licenses, Open Current Accounts, Issue Drafts, Advise Bills, Compound with Government
for the issue of unstamped Bills of Exchange, and transact every operation connected with banking."

At the fourth general meeting held in August, 1872 (William Henry Darnell,
Esq., presiding), the directors reported that " the accounts and securities having
been thoroughly audited and investigated by the accountants, show a considerable
increase of business during the half-year." After making due allowances for
depreciation, &c., a dividend was recommended of 10 per cent. It was further
reported —

" that your directors are of opinion that the time has now arrived when the continual increase of
business renders an increase of capital essential ; this may be done either by allotting the remaining
shares or making further calls. This subject will receive careful and due deliberation and the result
be communicated to the shareholders."

At the meeting in February, 1873, it is stated : —

" The accounts having been thoroughly audited and certified, the directors congratulate the share-
holders on the steady progress the Bank continues to make,"

a dividend of 10 per cent, being recommended. In 1874, July 31st, they state : —

" Notwithstanding the general dulness in trade the bank has continued to make steady progress,
every department showing some degree of advancement. Deposit accounts continue to increase and
now amount to £38,925 123. 9d."

A dividend of 8 per cent, is recommended. At the meeting in Januarj'-, 1875, the
directors say : —

" In pursuance of the necessity for increased capital referred to in the last report, the directors
propose to offer 2CX) new shares to the present shareholders at £4 per share premium, such premium to
be paid by two instalments, viz., £2 with the first call and £2 not within six months after, but should
these not be speedily taken up by the present proprietary, they will be offered to the public at a
premium of £5, of which £3 is to be paid on allotment, and the remaining £2 six months after."

A dividend of 7^ per cent, was recommended. In January, 1876, the dividend
dropped to 5 per cent., the same amount being paid the next year. At the
meeting held February 5th, 1878, it was announced that Mr. Darnell had retired



[328]

from the management, and that Mr. Henry John Robson had been appointed in
his stead. Things progressed to the pubhc eye, much in their usual manner, until
September, 1881, when reports began to be circulated regarding the stability of the
bank, which unfortunately became confirmed on September 13th, by the doors
being closed and the following notice posted on them : — " The Northern Counties
Bank, Limited. Payment suspended, September 13th, 1881."

A meeting of the shareholders was held during the day ; it was then stated
that if voluntary liquidation were adopted, they hoped to be able to pay 20s. in
the £. The investigations that followed disclosed a melancholy state of affairs,
and, the more they were looked into, the worse they appeared. Mr. Edmund
Nichols was appointed liquidator.



IRortb^'iEastern Banking Co*, Xt). iRewcastie-upon irrne.

Established 1872.

THE collapse of the Northumberland and Durham District Bank in the late
autumn of 1857, left the trade of Newcastle again in the hands of the
private banker. It was fifteen years before another vigorous effort
was made to establish a bank on the joint stock principle. It is true that
three flickers appeared, the "London and Northern" in 1862, the "London Bank
of Scotland " in 1864, and the "Tyne Exchange" in 1865, but they each came so
quietly, and passed from the busy centre of Newcastle life so rapidly, that in the
present day their short existence has been almost forgotten.

The earliest note that I have of the formation of the North-Eastern Bank, is
contained in a private letter from a London banker to a friend in Newcastle, dated
March 25th, 1872. He writes that it had been talked of for some time, and that
the promoters were all gentlemen in good position, namely : — William John
Wilkinson, Ealing, solicitor ; Sir James Anderson, 16, Warrington Crescent ; Lord
Wm. Montague Hay, The Albany ; J. B. Wauklyn, i. Angel Court ; Wm. M.
Wilkinson, 44, Lincoln's Inn Fields ; John S. Louth, 28, Palmerston Buildings ;
W. Abbott, 10, Token House Yard, stock-broker. During the following month
the prospectus was issued. It announces : —

" Issue at Two Pounds per Share Premium of 50,000 Shares of £20 each, £10 per share to be
paid up, of the North Eastern Banking Company, Limited. Head Offices — Newcastle-on-Tyne,
Middlesborough-on-Tees. Incorporated under . . . conferring Limited Liability,
Total Capital .. .. .. .. £1,020,000

Cash Capital to be Paid up .. .. .. £500,000

Reserve Fund (derived from Premiums) . . £100,000



[3^9]

The Capital of the Company is composed of —
I. — " Fifty thousand Ordinary Shares of £20 each (now issued at £2 premium), £10 per share to be paid
as follows : — £1 on application, £2 on allotment, £1, and £2 per share premium, in three months
from date of allotment, £6 in six months from date of allotment.
II. — One thousand Deferred Shares receiving no dividend in any one year until seven per cent, has been
earned on the paid-up capital of the Ordinary Shares, then to receive one-fifth of the surplus
profits, to be given in payment of all promotion and preliminary expenses. No Cash preliminary
expenses of any kind whatsoever are to be charged to the Company, which will commence
business with its Ordinary Capital perfectly intact and a Reserve Fund of £100,000 equal to £20
per cent, of the £500,000 Capital to be paid up.
Directors : — William Brown, Gateshead (late John Abbott & Co.) ; George Cayley, Malton ; Thomas
Hedley, Coxlodge (Chairman of Gas Co.); R. W. Hodgson, Gateshead; Sir Harcourt Johnstone,
Bart., M.P., Hackness Hall, Scarborough; the Hon. George Edwin Lascelles, Sion Hill, Thirsk ;
J. Stovin Pennyman, Ormesby HaU Middlesboro' ; George Wilson, Whitby. Managing Director —
Benjamin Noble, Newcastle upon-Tyne (late manager of the Clydesdale Bank at Greenock). Bankers —
Glyn & Co., London ; Union Bank of Scotland, Glasgow. Solicitors — Wilkinson & Son, London.
Auditors— John Cleghorn and Robert Fletcher. Secretary {pro tern.), Hurst Daniell. Temporary
Offices, Newcastle — St. Nicholas' Buildings ; Middlesboro' — Royal Exchange Buildings."

The prospectus states that the bank is formed to supply further banking
facihties which are required in the North Eastern counties, especially Newcastle-
upon-Tyne, and the Cleveland Iron district. It draws attention to the development
of the North Eastern district in trades connected with Iron, Coal, Machinery,
Chemicals, Shipbuilding, &c. — to the great increase in the value of North Eastern
Railway Stock — the vessels cleared on the river Tyne — and gives the usual tempting
hst of prices of other prosperous Joint Stock banks.

The directors state they " have secured as managing director the services of
Mr. Noble, who has successfully managed the Clydesdale bank at Greenock, up to
the present time, and who is thoroughly acquainted with the principles of banking
prevailing in Scotland, which this company proposes as far as possible to adopt."

Mr. Hugh Rose (from Messrs. Glyn & Co., London) was appointed Secretary,
June 27th, 1872. The bank opened for business May 21st, 1872, at Newcastle,
and about a week later at Middlesborough.

The first report of the company was issued in February, 1873, the meeting of
shareholders being held at the Station Hotel, York.

" The directors congratulate the shareholders on the success which has attended the operations of the
company. Since it commenced business in Newcastle and Middlesborough at the end of May last,
branches have been advantageously opened at West Hartlepool, Consett, Jarrow, and Gateshead ; and
also under circumstances of much promise at Barrow-in-Furness. . . . The balance sheet shows
that after paying all expenses, and allowing for depreciation of bank property, and for rebate on
undue bills, there remains an available balance of profit amounting to £4,756 2s. 8d., equal to rather
more than four per cent, per annum on the capital as paid up. . . . The directors recommend that
£4,000 be paid out of the profits by way of dividend at the rate of two shillings per share free of
income tax, being equivalent to three-and-a-half per cent, per annum, and that the balance of £756
2s. 8d. be carried forward."

The business of the bank was considerably augmented in 1875 by the purchase



[330]

of the Alnwick and County Bank (see page ijj). From time to time" various
branches have been opened, and the business expanded until 1892, when another
considerable addition was made by the amalgamation with Messrs. Dale,
Young, & Co., of Newcastle and South Shields (see page 255).

The branches now exceed forty in number, and are stationed at most of the
business centres in the two northern counties. The shares have steadily increased
in market value.

The original managers (Messrs. Noble and Rose) are still in office. The hfe
of the bank is now longer than that ever attained by any joint stock bank in the
Newcastle district.



IRortb of lEnolanb 3oint Stoch Banking Co,
IRevvcastle = upon - 'Q;^ne.

Established 1832. Failed 1847.

DOUBTLESS the vigorous writings and strenuous advocacy of " Banking
upon Joint Stock Principles," by Thomas Joplin, were effective in
leading the people of the north to establish a joint stock bank, though it
was not until four years after the passing of the Act which enabled banks to have
more than six partners, that they availed themselves of its provisions. Before me
is a prospectus that was issued in 1832, and as it is almost the first of its kind that
appeared in Newcastle, I extract from it extensively : —

" Prospectus of a Joint Stock Banking Company to be established at Newcastle-upon-Tyne, under the
title of ' The North of England Joint Stock Banking Company.' Capital, Two Millions. 20,000
Shares, £100 each.

Until the year 1826, Joint Stock Banks which had for so long a period, proved highly beneficial
to Scotland, could not legally be formed in England. At that eventful crisis of commercial panic and
distress, the Legislature wisely removed those restrictions which had for many years been imposed in
favour of the Bank of England, and which limited the number of partners in other Banking
Establishments to six— restrictions which were the chief cause of our Banking system being formed
upon principles not merely inadequate in their operation, but ruinous in their tendency."

Then follow quotations from speeches of Mr. Peel, made in the Parliamentary
Debates of 1826; and some remarks upon the note question. The prospectus
continues : —

" Little more need be added in recommendation of Joint Stock Banks; the subject has for the last
10 years attracted the attention of the people of England. The principles upon which they are
formed have been fully investigated and fully approved. Their peculiar advantages consist : —

1. In affording ample and unquestionable security to the Public.

2. In being able to transact business at a cheap rate.

3. In the extensive accommodation they are able to afford.

These and other advantages of Joint Stock Banks arise, First, from the individual and collective
responsibility of the Shareholders.



l33i]

Second, from their having a large available capital devoted solely to the business of Banking.

Third, being under no apprehension of a run, they can discount Bills of longer date, and lend
Money on proper security for longer periods, than can be expected in Banking Establishments where
the number of Partners is limited.

Joint Stock Banks have been formed in Liverpool, Manchester, Birmingham, SheflBeld, Norwich,
Huddersfield, Bradford, Halifax, York, Lancaster, Carlisle, Darlington, Workington, Whitehaven, &o.
Many of these Banks have established Branch Banks . . . and we are compelled to believe
that the time is close at hand when a Joint Stock Bank will be formed in every Town of importance
in this Kingdom."

A most tempting list is given of the comparative value of shares in many of
the existing joint stock banks, and the promoters finally state : —

" The success of Joint Stock Banking Companies is thus sufficiently proved. If this town and
neighbourhood had never suSered from private banks, and if a sufficient number of them existed, so
that capital and competition caused the greatest accommodation to be afforded on the lowest possible
terms, yet the superiority of the principle on which Joint Stock Banks are formed, renders it of the
highest importance to the welfare and prosperity of the district, that such a public company should be
established in Newcastle."

A list is given of solicitors in London and all the principal towns from
Darlington to Berwick where prospectuses may be obtained. Messrs. Carr and
Jobling, and George Tallentire Gibson, were the local solicitors. A meeting was
fixed for September 6th, in the Assembly Rooms, Newcastle, to receive the report
of the provisional committee, to appoint directors, and make arrangements for
commencing business.

On September 20th a General Meeting was held, when the directors appointed
were : — " Thomas Richard Batson, Nathaniel Grace, Thomas Brown, James
Lowndes, Anthony Clapham, James Carr, Charles Attwood, George Burdis, John
Scott, William Maude, esquires, and Lieut.-General Austin." Thomas Richard
Batson and Nathaniel Grace were elected managing directors. It was announced
that premises had been taken in the west end of the Arcade, and as soon as possible
business would be commenced. The offices were in Pilgrim Street, on the north
side of the entrance to the Arcade, now owned and occupied by Thos. Young and
Sons.

On November 24th, it was announced that the Deed of Settlement was ready for
execution at the office of Messrs. Carr and Jobling, solicitors, Mosley Street, where
copies might be had by shareholders, and all subscribers were requested to pay in the
amount of the first call before December ist, on which day it was intended to open
the bank. It would appear that some dispute or difference must have arisen
amongst the promoters, as the Newcastle Chronicle of December ist has the
following advertisement : —

" North of England Joint Stock Bank. — Notice is hereby given that we the undersigned do not
continue members or co-partners in the North of England Joint Stock Bank, and we do hereby



[33^]

expressly dissolve the said co-partnership or company, and require the same or the affairs thereof to
be immediately wound up, and the present funds applied to the satisfaction of the debts and engage-
ments of the concern, and the surplus distributed. — November 23rd, 1832."

The document bears about seventy signatures. This probably led to changes
in the officials, which according to the Deed of Settlement were : —

Managing Directors— Thomas Richard Batson, Esq., Chairman ; Nathaniel Grace, Esq. Directors-
Thomas Brown, Esq. ; Benjamin Thompson, Esq. ; Mr. Anthony Clapham, Merchant ; John Carr, Esq. ;
George Burdis Esq. ; William Maude, Esq, ; General Austin ; Mr. George Walker, Merchant ; Mr.
Andrew White, Merchant. . . . Manager— Mr. George Lockwood. Solicitors— Messrs. Carr and
Jobling. Bankers in London — Messrs. Jones, Loyd, & Co.

Notwithstanding the notice quoted, the bank was opened on December ist,
1832, and the event was commemorated by a dinner in the Assembly Rooms,
General Austin in the chair. The bank soon availed itself of the presence of the
Branch Bank of England, and opened an account with them early in 1833. In
1844 Samuel Hedley is recorded manager. The bank issued its own notes (of
which the following is an example) until 1842, when they were withdrawn, and
only the paper of the Bank of England circulated. The business extended
rapidly, and branches were opened at Sunderland, North and South Shields,
Durham, Berwick, Morpeth, Blyth, Hexham, Alnwick, and Wooler.











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In 1846 an extensive robbery occurred at the Berwick branch.

" Great sensation was created in Berwick (on August 21st), on it becoming known that the North of
England Branch Bank had been entered through the night, and notes and coin to the amount of £3,000
carried away. It appeared that Mr. Thompson, the agent, was from home, and Mr. Short, the senior



[333]

clerk, slept on the premises in his absence. In the morning, the robbery was discovered by a servant,
when the safe was found unlocked, a bolt proceeding from the room above having been raised, and the
whole of the property removed. On the police examining the premises, it was suspected that the
robbery had been effected by some one in the house, and on search being made, a large quantity of
silver and notes was discovered in the yard, and the remainder of the missing property in Mrs.
Thompson's bed-room, where it was concealed in pillow-cases, &c. Mrs. Thompson was immediately
apprehended, and was tried for the ofEence on the 26th October, before the Recorder, Mr. Ingham, but
the testimony of the female servants being somewhat contradictory, she was acquitted."

By 1847, the shareholders had reason to find that banking, even on joint stock
principles, if not properly managed, is subject to disaster and failure.

In the spring of the year named, the officials were pressed for money.
Eventually, two of the directors went to London to make final arrangements with
the London and Westminster Bank for the future working of the account. Matters
were almost settled when on Saturday morning, March 6th, the London house
"came to the determination to refuse to honour the drafts of the Newcastle bank,"
which step necessitated closing the doors of the Newcastle establishment, and of
all the various branches.

It soon transpired that of the ;^2 ,000,000, the proposed capital, the amount
really paid up was only ^^340,9 5 5, on 18,098 shares, with 420 proprietors, who
were on the register at the time of failure. Very heavy losses had been incurred
soon after the commencement of business, and it was stated that within five years
of its birth, all the original capital had been lost, and the shares written down from
;^ioo to ^20. At the time of suspension, the liabilities were said to be ^1,864,856,
and the deficiency estimated at ^144,493, but eventually the shareholders had to
pay about three times the latter amount.

Attempts were made to raise the required sum by voluntary call, but it was
unavailing, and the bank had to be wound up under the Joint Stock Companies'
Winding-up Act, in November, 1848. Three official managers were appointed —
Messrs. Henderson, Hewson, and Ross. A call of ;^30 per share brought in
;^240,ooo ; a second call of ^20 produced ^100,000 ; a third of ^15 only ^35,000 —
showing the difficulty the shareholders had to meet the payments. Subsequently,
the small number of shareholders who had met all the calls, received
repayments first of £},, then of £^, and lastly of I'j per share.

Shortly after the suspension, the directors determined to return all deposits
under £-^o, and all sums deposited for special purposes. "One firm had paid
in on Saturday, upwards of ^1,000 to meet an engagement on Monday. The
determination of the directors is spoken of as highly creditable." For some time
prior to the stoppage, a dividend of 5 per cent, had been regularly paid.



[334]

A very great deal of distress was caused throughout the north of England,
many of the shareholders having to seek the protection of the Bankruptcy Court.
One quotation will indicate how some other unfortunate investors were affected : —

" lS'i7, April 26. Mr. Thomas Harrison, a repectable plumber and glazier in Alnwick, GO years of
age, committed suicide this morning while in a depressed state of mind, arising from his heavy
liabilities as a shareholder in the North of England Joint Stock Bank."

A shareholder, who at one time had been a managing director, at his death had
left special instructions that his shares should be sold at whatever price they might
fetch. This led some to suspect that the business was not sound.

Mr. Mewburn, in the Larchfield Diary, says :

" It is often asked what led to the stoppage of this Bank. The answer is that the first directors drew
out in the first twelve months one half of the capital ; the consequence was, that to enable them to
get business, they accommodated all sorts of speculators. Thus they went on, until there was an
enquiry into the state of their affairs, when it was ascertained there was so large a loss that the shares
were reduced from £100 to £20 per share. A new manager was appointed, who conducted the concern
securely, but in truth profitlessly. This gave dissatisfaction, another new manager was appointed, and
some fresh adventurous directors also. They plunged into all sorts of accommodations; corn
speculators and coal owners cum multus aliis, opened accounts with them. In short, the Bank was
found in most of the bad concerns in and about Newcastle. The shares being reduced to £20 each,
and the dividends apparently large, persons of small capital purchased into the Bank, and even persons
of substance were tempted to buy shares. But observers of passing events in Newcastle saw how the
concern was conducted, and for two years previously to the failure pressed on their friends the
prudence of selling out. The directors durst not refuse their assent to sales of shares for fear of too
early an exposure. The result was that on the stoppage of the Bank there were found few good
proprietors."

A Newcastle paper, dated November 3rd, 1870, states : —

" North of England Joint Stock Banking Company. — We understand that the official managers of
this Bank propose, forthwith, with the sanction of the Master of the Rolls, to make a further return
of £6 per share out of surplus assets to the contributors, making with returns already made, £29 per
share. The Bank stopped payment on the 6th March, 1847, with liabilities exceeding £1,864,000.
On the 17th November, 1848, an order was obtained for winding-up its affairs, the official managers
appointed being John Henderson, Esq., M.P., of Leazes House, Durham ; John Hewson, Esq., of
Carlisle ; and James Ross, Esq., of Stanwix, near Carlisle, three shareholders, to whom the winding-
up of the Bank was originally entrusted. Mr. Hewson died in 1856, and since that date the
liquidation has devolved solely upon the survivors. On 17th November, 1848, the liabilities had been
reduced to about £522,000, and it is now many years since the creditors were paid their debts in full,
with interest at five per cent. Three several calls were made by the court, amounting altogether to
£65 per share. The amount divided among the contributories, including the proposed return, is over
£85,000. This result, we believe is unparalleled in the liquidation of public companies, and has been
obtained only by the most unwearied exertion on the part of the official managers. Many of the
assets were of a very doubtful value, and had they been forced upon the market in the earlier stage of
the liquidation, great loss must have resulted to the shareholders. Much has been done by judicious
compromises, by patiently waiting until a market could be found for securities, and for the issue of
the various Chancery suits, over many of which the official managers had very little control. The
liquidation has been a long one, but it contrasts most favourably with others pursued under different
circumstances. It is hoped before long the labours of the official managers will be brought to a
final close."



[ 335 ]

IRortbuinberlanb an^ 2)ui'bam 5)i6trict Banking Company.

IRewcastle-upon-Upne.

Established 1836. Failed 1857.

THE Newcastle Chronicle of March 12th, 1836, prints the following announce-
ment : —

"Prospectus of a Joint Stock Banking Co., to be entitled 'The Newcastle, Sunderland,
Durham, and North and South Shields District Banking Co,' Capital — £500,000, in 50,000 shares of



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 38 of 57)