4th February 1797. From Goldsmith to Banker.
By 1776 there were said to be 150 banks outside London and many founders, as the Gurneys, married into other Quaker banking families such as the Barclays.
TODAY in 1797 news reached Prime Minister, William Pitt of Napoleon’s victory at Rivoli, causing panic and cash shortages due to the large advances made by the Bank of England to the Government to finance the war.
There was also fear of invasion, which caused farmers and others to withdraw their money and hoard it, especially in the East Anglian coastal areas, which were nearer to France.
Parson Woodforde’s Diary, recorded: ‘that he had been told that there had been a proclamation from the Privy Council to stop payment in Cash at the Bank of England, fearing that if not stopped there would not be enough to transact business. On that Account, All Country Banks have done the same, and are at present shut up.’(2)
‘Even the Excise Officers were refusing to take Country Notes for the payment of several Duties’; thus many people were confused as they had very little cash by them’.
The merchants of London had traditionally left their money and valuables under the Crown’s protection at the Royal Mint. However in 1640 the impecunious Charles I, refused money by Parliament for the Army, raided the bullion, ‘borrowing’ £150,000.
The merchants, once bitten, thus turned to goldsmiths to deposit their cash, to be given notes in exchange, the forerunner of the modern note. Any sums ‘idle’ could be lent at interest. It was a system under-pinned by the trustworthy nature of ownership by Quakers.
We now see the roots of modern British banking with Sir Francis Child said to have been the first goldsmith to lay aside his trade in 1664, to become a banker, under the sign of the ‘Marygold’, in partnership with Robert Blanchard.
Another early bank, later to be Coutts, was started by the Scotsman John Campbell as a goldsmith-banker’s shop at the sign of the Three Crowns in the Strand, London in 1761.
It was through marriage that it acquired the Coutts’ name, a bank, whose customers was later to include Jane Austen, Admiral Nelson and Charles Dickens.
The Glyns had moved from dry salting in Hatton Garden, London to banking as Glyn Mills in 1753. One banker, outside London, to make its name later was Sampson Lloyd II, who in 1765 entered into banking with John Taylor, a button-maker. We know it now as Lloyds Plc.
To meet the needs of economic growth, many banks had been founded in the 18th century, so soon there were over 70 banks in London, along with 400 private ‘country banks’.
The early 19th century saw much legislation to regulate banking. The Bank Charter Act of 1826 permitted formation of joint stock banks more than 65 miles from London, which helped to spread risk.
The number of ‘country banks’ totalled 554, but were small and restricted by law from competition with the Bank of England, leaving them vulnerable during financial crises, as in 1816.
In 1828 Fry’s Bank collapsed and in 1857 over 130 banks collapsed. The bank bubble had burst.
In the new millennium Childs, Coutts and Glyn, Mills were all subsumed under The Royal Bank of Scotland (RBS).
(1) Woodeforde’s Diary for Wednesday, 1st March 1797.
Ref: archiseek.com Picture Ref. Childs Bank.
Ref: heritagearchives.rbs.com. Picture for Coutts.
Ref: E, Healey Portrait of a bank 1692-1992 Hodder & Stoughton 1992 P.3.