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 39 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 39 of 57)
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£10 each. The avidity with which the shares in Banking Companies are now sought after by the
public in general after an experience of their results in England of several years, at once shows the
high estimation in which they are held, and requires no arguments to point out the great advantages
derived from them not only to the shareholders themselves (who have almost in every instance
acquired large premiums and heavy dividends), but also to the districts in which they are established.
So generally has this been the case that when it is not so, either bad management or the grossest
culpability can be traced, and in fact, it is admitted on all hands that the only requisite for the success
of a new Joint Stock Banking Company is a proper field for its operations, well conducted, and
therefore the projectors of this establishment only ask the Public after looking round them to judge
for themselves whether or no the field here selected, offers to them every probability of success."

Remarks follow regarding the banking accommodation of the town, and the
prospectus continues : —

" The projectors feel they cannot close their observations, without stating their strict determination to
use the utmost of their power and influence, to place this establishment in such hands as from their
respectability and character, will insure its being carried on upon firm, sure, and constitutional
principles, with every possible regard to economy, and with all human caution consistent with the
liberal spirit of the times."

The conditions are then enumerated. They are 18 in all, and much on the
lines of other banks. Shareholders keeping an account are to be allowed a cash
credit to the extent of two-thirds of their paid-up capital, &c., &c.

The rush for shares must have been great, for on March 19th it was
announced : —

" Since the 11th instant the Provisional Committee have received applications for upwards of 18,000
shares, but in accordance with the prospectus, 'influential applicants in the place or places and
neighbourhood of the Bank and Branches, to be preferred to those at a distance,' will still insure to
Residents in this district a Preference on application to Mr. Holmes, Share Broker."

The announcement was repeated in the next week's paper, when the applications
for shares amounted to 26,000. The Provisional Committee met on April 6th,
and found that 39,800 shares had been applied for. They therefore declared
the said bank formed, and stated that " in the meantime the Provisional Committee
will receive applications from such parties as can promise influence on behalf of,
or to open an account with the Bank."

Suitable and commodious premises were required "by the ist of May in
Mosley or Dean Street for a Banking House," and they advertise that "A manager



[336J

is wanted for this bank. The highest testimonials as to Character, Talent, and
Knowledge of District Banking will be required."

On May 7th it is announced : — " The first General Meeting of Shareholders
for the election of directors and other officers will be held at the Queen's Head,
Newcastle, on Thursday, May 12th, at 12 o'clock."

Negotiations were very soon entered into by the executive of the new bank
for the purchase of, or amalgamation with, Messrs. Backhouse & Co., as far as
regarded their branch in Newcastle. Messrs. Backhouse had opened there after
the commercial strain in 1825, and had gathered a substantial though not very
extensive business, their establishment being then situated in Theatre Square, now
the south-east corner of Grey Street. (The premises were subsequently rebuilt,
and assumed their present form in September, 1843.) The terms of amalgamation
must have been soon settled, but the step did not please some would-be share-
holders, who therefore launched a scheme for the Newcastle Commercial Joint
Stock Bank (see page 316).

On May 28th it was announced : —

" At the first General Meeting of Shareholders in the Newcastle, Sunderland, Durham, and North and
South Shields District Bank, held May 12th, Andrew White, Esq., Mayor of Sunderland, in the chair,
the following gentlemen were appointed directors for one year : —



The Right Honourable John Simpson, Lord

Mayor of York.
William Beaumont, Esq., Newcastle.
Thomas Jamieson, Esq., Newton Villa.



John Twizel Wawn, Esq., West Boldon.
Ralph Park Philipson, Esq., Newcastle.
Mr. William Holmes, Newcastle.
Mr. Robert Robinson, Newcastle."



It was further announced that the directors had made arrangements with
Messrs. Backhouse & Co. for the incorporation of the business of their Newcastle
branch in this establishment, and that the company would commence business on
June ist, under the general management of Mr. Jonathan Richardson (subsequently
appointed a director), in the premises occupied by Messrs. Backhouse & Co.
Notice was given that the first call of £2 los. od. per share would be due June
loth, and a second call of the same amount on August loth. Some alterations
were made in the conditions of formation, the most important being the change of
name for brevity's sake to the " Northumberland and Durham District Bank."

The rage for the formation of joint stock banks was certainly great at this
time, for ere the "District" had fairly started, three other joint stock banks
were in the field, the " Commercial," the " Newcastle-upon-Tyne," and the
" Sunderland Joint Stock Banking Co.," and before the month of June was out,
Messrs. Chapman were turning their private bank into a "joint stock." Shortly
after the formation of the District Bank, their business was extended to Sunderland



^ [337]

and South Shields by incorporating the branches of Messrs. Backhouse & Co. in
those towns. They were opened under the new title on July ist, 1836. On the
2ist of the same month, a branch was opened at North Shields. Some little time
after they had got well into working order, the situation of the bank was changed.
Grainger was then building Grey Street, and the proprietors of the District Bank
negotiated with him for the premises now numbered 33, Grey Street (the southern
half of the present Branch Bank of England). While the " District " was in these
offices, a clearing house was instituted [see page 118). The bank counter ran
from east to west. The south-east room was occupied by the partners, and the
south-west room was used for the "clearing."

A copy of the report of the Directors at their second General Meeting, held
January 23rd, 1838 (after eighteen months of trading), will show the position of
the bank at that time.

" In meeting the proprietors the directors have the gratifying duty to perform of rendering a highly
satisfactory Statement of the affairs of the Company.

Since the establishment of the Bank the Business has been very considerably extended and
continues progressively to increase ; the Directors consider this the more important, inasmuch as they
have not deemed it for the interest of the Proprietors to establish any new Agencies since their former
report.

The further experience which has been had of the advantages consequent upon the issue of the
notes of the Bank of England has confirmed the directors in the opinion that in adopting that system
instead of an issue of Local Notes they effectually promoted the best interests of the establishment.

The amount of paid-up capital on the 30th December, 1837, is £139,787 10s., and the gross
profits arising from the usual Business of the Bank for the past half year amount to £10,879 8s. 6d.,
from which is to be deducted for current expenses £1,9G2 4s., leaving net profit £8,917 4s. 6d., out of
which the Directors propose that a half-yearly Dividend at the Rate of 10 per cent, per ann. should be
made to the proprietors, which upon present paid-up capital amounts to £6,989 7s. 6d., leaving a balance
of £1,927 178. Od. to be carried to the guarantee fund, which (including Interest) will then amount to
£8,070 lis. 2d. In addition to the above, the Bank receives the premiums on shares allotted, a further
sum of £3,115 10s.

The Directors in surrendering to the proprietors the highly important trust received at their
hands, have to express their high sense of the confidence reposed in them, and their conviction that
the Bank is now placed on so satisfactory and firm a basis as to afford the highest expectation of its
increasing and permanent Prosperity. (Signed) Ralph Park Phiupson, Chairman."

In the following year a very important event happened in the life of the
District Bank, namely, the amalgamation with the "Old Bank" — Messrs. Ridley,
BJggG, & Co. — who had been trading in Newcastle as bankers from 1755.
When the negotiations for the amalgamation were completed, Messrs. Ridley,
Bigge, & Co. issued a circular which explained the circumstances that led to the

0^



[_338J

junction. The following is copied from the MS. left by one of the then partners : —

"Newcastle Bank, March 20th, 1839.
Sir, — The terms of our partnership with Sir M. W. Ridley expiring on the 31st December, we had, in
anticipation of the arrival of that period, completed the requisite arrangements for the continuance of
our Banking business, when a proposal was made to us by the directors of the Northumberland and
Durham District Bank to form a junction with that establishment.

Having long observed an increasing preference on the part of the public for the proprietory
system of Banking as affording under proper management both the most unquestionable security, and
at the same time, a very advantageous investment of Capital for the Proprietors, we were not indisposed
to entertain the proposition.

We have now to announce to you the completion of this arrangement, and that the junction of
the banks takes place on the 22nd instant. Our partners Mr. Bigge of Linden, Mr. Boyd, Mr. 0. J.
Bigge, Mr. Robert Boyd, and Mr. Spedding, become large proprietors in the bank, in which also the
three last-named gentlemen will be directors. The Company thus extended, will offer an amount of
security, available capital, and power of conducting banking operations which we cannot doubt will be
duly appreciated by friends and the public at large. We trust that the confidence which you have
hitherto placed in the Old Bank will be continued to the united establishment, and that you will
permit your account to be transferred to our new books. Its note circulation will be exclusively that
of the Bank of England, under arrangement with the Governor and Company of that corporation.

For the convenience of our friends, the business will for some time be carried on both in our
present premises and at the banking house in Grey Street. We shall be happy personally to give you
any further information, and are. Your faithful and obliged servants,

RIDLEY, BIGGE, & CO."

The amalgamation thus formed, made the "District" undoubtedly the strongest
bank in the North of England. Besides the Newcastle business, they had branches
at Alnwick, Durham, North Shields, South Shields, and Sunderland. That the
two establishments in Newcastle might be brought under one roof, larger
premises were required. In November, 1838, Mr. Richard Grainger, who was
building the higher part of Grey Street, proposed to the Corporation of
Newcastle that he should erect new Assize Courts and Corporate offices
upon a very eligible site that he had at disposal for the sum of ;^20,ooo,
but before the negotiations were settled, Mr. Grainger withdrew his offer,
and treated with the Directors of the District Bank for the magnificent
buildings now occupied by Messrs. Lambton & Co. To these premises the
"District" subsequently removed their staff from s^, Grey Street, and
from Messrs. Ridley's old premises at the corner of Mosley Street and Pilgrim
Street. The business and apparent prosperity of the bank were great, and from
time to time the directors favoured the shareholders with dividends ranging from
10 to 12 per cent. A guarantee fund was formed, which gradually rose, and was
quoted in 1847 as ;^90,ooo.



[339]

A wave of misfortune passed over the Newcastle banks in 1847. The North
of England Joint Stock Banking Co. and the Union Bank both stopped payment.
The District Bank was hard pressed, but timely and judicious assistance granted
by Mr. Grote, the local Agent of the Bank of England, enabled them to weather
the storm. The directors perceived that the calamity that had befallen the other
banks was their opportunity for greater business had they the necessary capital to
meet the requirements. Mr. Charles Wm. Bigge, the chaimian, addressed a
circular to the shareholders calling a meeting for Monday the 15th September
(1847), intimating that the Directors would then bring forward the following
proposition : —

" That the capital of the bank be doubled by the creation of 60,000 additional shares of £10 each, and
that the same be offered to the proprietors at par, in the proportion of one new share for each old
share, and in case any part of the shares so offered shall not be accepted on or before the 15th day of
January next, such shares may be disposed of by the directors at their discretion ; that the sum of £5
per share be paid when the shares shall respectively be taken, and that the holders thereof shall be
entitled to dividends from that time."

" With the additions of the new shares the capital of the bank will be £1,200,000, of which
£600,000 will have been paid up. . . . The extensive and increasing business of the bank has for
some time past impressed the directors with the conviction that a commensurate increase of the
capital should be made, and this conviction has been strengthened by the recent events which have
so greatly diminished the number of similar establishments in this district ; the directors consider the
present juncture offers a favourable opportunity for employing an increased capital with advantage to
the proprietors and benefit to the trading community of the counties of Northumberland and Durham.
. . . Under the circimistances the directors confidently recommend the proposed measure to the
proprietors, satisfied as they are, that it will tend in an eminent degree to promote the true and
permanent interests of this large establishment, and enable it at the same time more effectually to
support the extensive and legitimate commercial transactions of the important locality which is the
seat of its operations."

The resolutions were eventually adopted by the shareholders. A circular
dated September, 1848, gives notice of a call of £s per share in four equal
instalments — on the 9th of November, December, January, and February next. For
this step the directors give the reason that a great accession of business must
naturally require more capital.

Another clause of the circular states : —

*' The propriety of an alteration in the law so as to facilitate the formation of Chartered Banks with
limited liability has been much under discussion during the current year, and it is not improbable that
this change may bo made in the next session of Parliament. It would be most important that the
Bank should be able to avail itself of any opportunity that may be presented for obtaining a charter,
and this, it is obvious, can only be done by an increase of the paid-up capital."

In 1848 an account was opened to meet "bad and doubtful debts," and after
this time a certain portion of the profits was annually placed to this
account. Want of space prevents my recording the annual growth of the business



[340]



of the bank, but a copy of their balance sheet issued December 31st, 1856 — the
twentieth year after their foundation — will show to what extent the transactions had
been carried. The business of the town must have increased enormously during
the period from 1836 to 1856, and the "District" had certainly obtained a good
share of custom. Had more prudence guided the actions of those in
responsible positions, a very different future might have been its lot.

Liabilities. Assets.

Proprietors' Capital . .
Deposit and Credit Balance . .
Guarantee Fund
Balance being Gross Profit . .



£
655,491
3,379,816
90,874



s. d.

5

8 4

3 6



5,574 12 11



£4,214,756 9 9



Cash, Bills, Notes, Debit

Balances, and other Securities 4,152,085 5
Dividend of £3 10s. per cent, for

half year to 30th June, 1856 23,191 11 9
Bank premises in Newcastle and

branches .. £20,431 10 8

Rebuilding the premises of the

South Shields branch £734

21,165 10 8



Expenses of Establishment —
Salaries .. £11,646 5
OtherCharges,&c. 6,668 1 11



38,314 6 11



£4,214,756 9 9



PROFIT AND LOSS ACCOUNT.



Dr. £ s.

Dividend paid of £3 10s. per cent, for
half year to 30th June, 1856, less
interest retained on unpaid calls 23,191 11

Dividend of £3 10s. per cent, for
half year to 31st December,
1856, less interest retained on
unpaid calls 23,227 9

Balance 23,841 4



£70,260 6



Cr.

Gross Profit . .

Deduct expenses as above



£ s. d.
88,574 12 11
18,314 6 11



Net Profits



£70,260 6



At this time their customers were requiring upwards of ;^3 5,000 in cash each
week for the colliery and other pays. The shares were held by 402 proprietors.

The next annual meeting was held on February 24th, 1857. The balance
sheet and report were adopted — a dividend declared of £7 per cent., and
;^23,84i 4s. 8d. carried to the contingent fund. One clause in the report states : —

•' The business of the bank during the preceding year has fully answered the expectations of the
directors and affords a very satisfactory result."



[34^j

Such was the state of things in February ; — before the close of the year the
bank had failed and spread disaster and ruin on every side. It was known that
they were very large creditors of a firm of Newcastle merchants who had failed
the previous August for £^20,000, and that an undue amount of their capital was
locked up in iron-works and collieries. Distrust gradually crept in, and although
there was no great rush or panic such as foreshadows the stoppage of many banks,
still, depositors were urgent throughout the summer to withdraw their money, and
by the middle of November many would only accept gold. A story was related
to me by a gentleman who witnessed the incident. One man drew some seven
or eight hundred pounds in sovereigns ; he had no bag, and of course the bank
would not give one, so he took the money in his hat. When on the door step, the
crown came out, and he had the greatest difficulty to save his treasure. The bank
had been re-discounting their customers' bills at the local branch of the Bank of
England for very large amounts, and by the middle of November matters had
become so complicated that the local authorities desired the personal presence
of a director from the head office. So long as the Bank of England would
continue to discount, it was hoped matters might be tided over, but if that
establishment once declined — then all was lost. As usual in such cases,
the first real alarm that the public experienced was caused by reports from
London. On Saturday evening, November 22nd, a telegraphic announcement was
made from London to the effect that a North of England Joint Stock Bank had
been mentioned in the afternoon on the Stock Exchange as in embarrassed
circumstances, but it was added, that the agency house in London disclaimed all
knowledge of such being the fact.

Notwithstanding this rumour, the bank kept open on Monday and Tuesday.
On the latter day, the London Express says : — " The London agents of this bank
(The Northumberland and Durham District Bank) refuse to honour their drafts."
It is difficult to say what really was " the last straw," but after bank hours on
Tuesday, it was pretty generally believed that the bank would not open again.
On Wednesday morning the following announcement was posted on the doors — a
large crowd of eager people struggling to read it : —

*' The Directors of the Northumberland and Durham District Bank lament to announce that owing to
a long continued monetary pressure, and the difficulty of rendering available the resources of the Bank
they have felt themselves obliged to suspend its operations. Deposits and Credit Balances will be
fully paid with as little delay as possible. A meeting of the shareholders will be convened for an
early day."

A notice to the same effect was posted at all the Branches. Before me is the
identical notice (which is here reproduced) that gave the unwelcome news to



[342] ^

South Shields, in the handwriting of W. B. Ogden, Acting Director, who was killed
in the railway accident at Brockley Whins in 1871.

^ jf^u/la /uiLdO ^a^//i Ox/ ^i^^ ^e(^c^</

A meeting of shareholders was held the next day and the following circular
issued : —

•' At a meeting of several of the shareholders of the Northumberland and Durham District Bank held
in their Banking House this 27th day of November, 1857, George Ridley, Esq., M.P., in the chair.
' Resolved that a call of £5 per share be now made and be payable on the 14th day of December next,
at the banking-house in Grey Street, Newcastle.' "

A copy of this was forwarded to the shareholders, accompanied by a letter
which stated : —

*' I have to transmit to you the copy of a resolution passed at a meeting of a considerable number of

shareholders held here this day, and have to impress upon you the absolute necessity of the payment

of this call being promptly made, and that if it be possible, the day of payment should be anticipated.

This is imperatively necessary for the protection of the shareholders, and if this intimation be not

complied with, it may subject them to the most serious consequences. I am enabled to assure you

that a large number of the shareholders have already expressed their entire approval of this measure.

It is hoped that it may also receive your sanction and that you will convey to me your decision

without delay.

(Signed) W. B. OGDEN, Acting Director."

At the same time an advertisement stated : — " The parties who have Accounts
with the above Establishment and the public in general are respectfully informed
that arrangements are in progress for the future transaction of the business
heretofore conducted by the Bank." For a few days things hung fire. Messrs.



[343]

Hawks and Allhusen journeyed to London to interview some of the London
bankers. Rumours were afloat of a new Private Bank being formed. The
newspapers abounded in articles and letters of all shades of opinion. The share-
holders were summoned for Tuesday, December 15th ; notice was also given that
one object of the meeting " is for the purpose of assenting to the registration of
this company under the Joint Stock Companies' Act, 1857." Prior to the time of
the meeting, the formation of the private bank of Hawks, Grey, Priestman, & Co.,
was announced. The old premises were utilised, customers for the new bank were
welcomed by the main door, while persons having business with the old bank
were referred to the " door round the comer." This bank was opened on Saturday,
December 12th.

The meeting of shareholders in the old bank as announced was held on the
following Tuesday ; so great was the gathering that an adjournment had to be
made to the long room of the Royal Exchange Hotel. At first none but
shareholders were admitted, their names being checked against the registered list.
A small army of reporters were denied entrance, but subsequently they were
allowed to attend.

" A report was read by Mr. Ogden, which stated in general terms that things
were not so bad as had been contemplated. That Mr. Jonathan Richardson had
guaranteed payment of the Consett Works, that Mr. Bigge and Mr. Richardson had
withdrawn from the directorate, Jonathan Priestman and J. Richardson being
appointed in their stead. A Committee of five shareholders, with power to add to
their number, was appointed to confer with and assist the directors, and to
report within three months. Messrs. Mackreth, Milner, Joicey, Graham, and
J. Priestman, jun., to be the Committee."

The new bank was referred to by Mr. Allhusen. It was generally
understood that the gentlemen who formed the undertaking had only done
so to try to retain and accommodate the bank's clients, and that they
would be quite willing to turn it over to a joint stock company if one could
be formed. Other meetings were held, and John Fogg Elliott, William
Bainbridge, and Joseph Fairs, were appointed liquidators. They submitted
the affairs of the bank to Mr. J. E. Coleman of the firm of Coleman, Turquand,



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 39 of 57)