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The Role of Banks in the Finance of the West Yorkshire Wool Textile Industry, c. 1780–1850*

Published online by Cambridge University Press:  11 June 2012

Pat Hudson
Pat Hudson
Affiliation:
Lecturer in Economic History, University of Liverpool
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Abstract

The view of early British commercial banks as almost exclusive suppliers of short-term accommodation loans is further diminished by Dr. Hudson's intensive research in the surviving records of banks operating in the expanding wool manufacturing district of West Yorkshire from the turn of the century to the 1840s. By means primarily of the overdraft expedient, private banks and, after they were permitted by law, joint-stock banks, routinely made nominally short-term loans for such long-term capital purposes as construction of new plants and replacement of obsolete machinery. No laws and frequently little practical business acumen governed policies with respect to posting of collateral, holding of bank reserves against deposits, ratio of overdrafts to the borrower's level of profits, or even the special privileges granted stockholders and directors. It thus was not institutional rigidities that drove British investors to prefer overseas opportunities, Hudson theorizes, but the sheer excess of long-term capital sources, of which banks were an important one, in relation to opportunities to use them. Most striking, however, is the slowness with which old business habits gave way to new practices more appropriate to the maturing of a system of industrial finance.

Type
Research Article
Information
Business History Review , Volume 55 , Issue 3 , Autumn 1981 , pp. 379 - 402
Copyright
Copyright © The President and Fellows of Harvard College 1981

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References

1 See Pressnell, L.S., Country Banking in the Industrial Revolution (Oxford, 1956), 284–343Google Scholar; Cameron, R.E. et al., Banking in the Early Stages of Industrialisation: a Study in Comparative Economic History (New York, 1967), Ch. 2, especially 49ffGoogle Scholar; Mathias, P., The First Industrial Nation (London, 1969), 176–177Google Scholar, Collins, M. and Hudson, P., “Provincial Banking Lending: Yorkshire and Merseyside 1826–60,” Bulletin of Economic & Social Research, vol. 31, no. 2 (November, 1979).Google Scholar

2 T.S. Ashton, “The Bill of Exchange and Private Banks in Lancashire, 1790–1830,” 37–49. Ashton, T.S. & Sayers, R.S., eds., Papers in English Monetary History (Oxford, 1954).Google Scholar Committee on Bank of England Charter, 1832, Evidence of Henry Burgess Q. 5331. See, Newmarch, W., “An Attempt to Ascertain the Magnitude and Fluctuations of the Amount and Bills of Exchange,” Journal of the Statistical Society, XIV (1851), 153Google Scholar on Sir George Saville's Small Notes Bill of 1775. Also Roth, H. Ling, The Genesis of Banking in Halifax (Halifax, 1914).Google Scholar

3 For example, Ingram Kennet & Co., 1773–6; Bros, Swaine & Co., 1802–7; Raswon Rhodes & Briggs, 1807–16, and John Williams & Christopher Rawson & Co., 1811–36, all of Halifax. Leach, Pollard & Hardcastle, 1777–81; Bradford, Benjamin Wilson & Sons, 1802–32; Mirfleld, Nicholson Brown & Co., 1813–1900; and Leeds, Hagues & Cook, 1810–1836, Dewsbury.

4 On May 26, 1803, 148 merchants and manufacturers publicly offered to accept the notes of Bros. Swaine & Co., bankers of Halifax, to allay panic after the resumption of war with France. Halifax Guardian Historical Almanack (Halifax, 1892). In the crisis of 1825, seventy local businessmen signed a statement of confidence in the stability of Messrs. Leatham Tew & Co.'s bank in Wakefield. Matthews, P.W. & Tuke, A.W., A History of Barclays Bank Ltd. (London, 1926), 247.Google Scholar In the same crisis, a large petition was produced in Bradford in support of Harris & Co. Its signatures included the foremost names in industry and commerce in the town and they declared that their joint worth of over £2,000,000 was pledged in support of the bank. Centenary Souvenir of Bradford Old Bank A50/10. See, also, Declaration in support of Whitby Old Bank Feb. 22nd 1797, both in Barclays Bank Archives (hereafter Barclays), and Petition in support of Leeds Banks, Leeds Mercury 17 Dec. 1825.

5 William Pollard was a partner in a banking business in Halifax as well as a founder of the first Bradford Bank in 1779. H. Ling Roth, The Genesis of Banking in Halifax, Ch. 1. The main banking families in Halifax formed an interlocking group in the early decades of the nineteenth century. Records of Rawson & Co., Rawsons, Rhodes & Briggs, Rhodes, Briggs & Garlick, Barclays. Hagues & Cook, blanket manufactures and bankers of Dewsbury, were also partners in a bank at Malton, 1816–25. Glover, F J., “Dewsbury Mills” (unpublished D.Phil, thesis, University of Leeds, 1959)Google Scholar, Ch. V. These close relationships between bankers of the area are illustrated by the formation in 1824 of the Committee of the Association of Bankers in Yorkshire. The aim was to mutually protect against forgery and frauds. At least twenty-three different banks were involved. Bill Book A, Haxby and Scholey, solicitors. John Goodchild loan collection, Wakefield City Library (hereafter, Goodchild MSS.).

6 Few West Riding banks had branches before the third quarter of the nineteenth century.

7 For detailed analysis of the localization of shareholders, see M. Collins & P. Hudson, “Provincial Banking Lending.” A further example is provided by The Halifax Joint Stock Company's Deed of Settlement (Lloyds, November 25, 1829), which shows that almost 50 per cent of shareholders lived in Halifax itself and less than 1 per cent resided outside the West Riding. The Mirfield and Huddersfield District Banking Company agreed that no one should own a share unless his residence or place of business was within twenty miles of Mirfield or Huddersfield. Chandler, G., Four Centuries of Banking (London, 1964), vol. 2, 265.Google Scholar

8 Deed of Constitution, Bradford Co. (B.B.C.), June 1, 1827, (B1) Midland. This was the subject of some anxiety – the fear of potential bank customers that commercial rivals may be on the board of a bank and thus have access to details of their accounts. The Bradford Joint Stock Bank, for example, would not have as Director anyone interested in the spinning trade, the main industry of the town. Lloyds, Halifax file. Other banks got round the problem by insisting on oaths of secrecy or by denying the full board access to accounts, e.g. Leeds Banking Co. 1832, Hartley, W.C.E., Banking in Yorkshire (Clapham, 1975), 52.Google Scholar

9 For details of this analysis see M. Collins and P. Hudson, “Provincial Banking Lending,” 5–9.

10 See H. Ling Roth, The Genesis of Banking in Halifax, Ch. 1, Halifax and Huddersfield Union Banking Co. Deed of Settlement, 1836. F.W. 108 Halifax Public Library Archives Department. G. Chandler, Four Centuries of Banking, Ch. 5. Directors Minute Book of Mirfield and Huddersfield District Banking Co. 1833–42. W.B.M. Barclays. Halifax Commercial Banking Co., Directors Minute Books 1836–40s, Barclays. Leeds Commercial Banking Company, Deed of Settlement 1836, Goodchild MSS.

11 This section owes much to L.S. Pressnell, Country Banking in the Industrial Revolution, 284–289.

12 On the tendency for the usury laws to encourage the re-investment of profits, see, Shapiro, S., Capital and the Cotton Industry in the Industrial Revolution (New York, 1967), 10–22 and 56–74 passim.Google Scholar

13 The following section is based upon material in F.J. Glover, “Dewsbury Mills,” and in the archives of Messrs. Wormalds & Walker Ltd., Brotherton Library, University of Leeds.

14 G. Chandler, Four Centuries of Banking, 270–272. Directors Minute Book, Mirfield and Huddersfleld District Banking Company, 1833–412, Barclays.

15 H. Ling Roth, The Genesis of Banking in Halifax, Ch. 1. H.D. 1807, Barclays.

16 H. Ling Roth, The Genesis of Banking in Halifax, Ch. 1. Buck, J.W., Cases in Bankruptcy, vol. 1, 1816–20 (New Haven, 1820), 368.Google Scholar Rawsons Rhodes & Briggs, General Balance H.D.B. 1818–23 Barclays.

17 Anon., British Losses by Bank Failures 1820–57 (London 1858). See, also, case of Wentworth & Co. Ibid., and below, and Harrop & Co. in W.C.E. Hartley, Banking in Yorkshire, 36–38. Jenkins, D.T., The West Riding Wool Textile Industry 1770–1835: A Study of Fixed Capital Formation (Edington, 1975), 208, 247.Google Scholar Report by Inspectors of Factories, 1835 (342) XL.

18 H.D. 1809, H.D.B 1818–23, Barclays.

19 H.D. 1814, Barclays.

20 H.D. Moore, 1815–1816, Barclays.

21 Leeds Mercury, March 14, 1826, W.C.E. Hartley, Banking in Yorkshire, 41; L.S. Pressnell, Country Banking, 530. D.T. Jenkins, The West Riding Wool Textile Industry 1770–1835: A Study in Fixed Capital Formation. University of York Ph.D. thesis 1969 vol. II, Appendix A and John Goodchild MSS.

22 Bill book of Haxby and Scholey c. 1819–20s. Various mortgage agreements. Goodchild MSS. Leeds Mercury, March 14, 1826.

23 Report from the Committee on the Bank of England Charter VI, 1831–2, Q. 1414. Evidence of John B. Smith of the Joint Stock Bank, Manchester Q.Q. 4360, 4377. Loans were made “in many cases on the security of the mills that were built with the money so lent.”

24 Ibid. Q.Q. 1238–1436. “Account of Failures in and connected with the Wool and Woolen Trade, 1839–48,” handwritten account, item 62 in archives of Robert Jowitt and Sons, Brotherton Library, University of Leeds.

25 Various mortgage agreements, Goodchild MSS. Record of Half-yearly meetings of Partners 1833–41. A22/77, Barclays. Ibid. First Half-year Report 1833. Bond of Halliley, Brooke and others to Messrs. Richard B. Milnes for securing monies on a banking account 1811. Goodchild MSS. A22/77. Barclays.

26 G. Chandler, Four Centuries of Banking, Ch. 5. Minute Book of the Directors of the Mirfield and Huddersfield District Banking Company, WBM 1833–42, Barclays.

27 E.g., B.B.C. Order Book 1827–30, July 19, 1827, September 6, 1827, January 17, 1828, February 14, 1828. Midland.

28 For comparison of the lending policies of Joint Stock Banks in the West Riding and Merseyside in this period, see, M. Collins and P. Hudson, “Provincial Banking Lending.” See, e.g., Deed of Settlement of the Halifax Joint Stock Bank, 1829, Lloyds. Deed of Settlement of Halifax and Huddersfield Union Banking Co., 1836, FW 108, Halifax Archives. Deed of Settlement of Yorkshire District Bank, 1834, DB 255, Leeds City Archives.

29 Report from the Secret Committee on Joint Stock Banks 1836 (591) IX. passim. Bank Order Books, Directors Minute Books, Directors Minute Books (Barclays, Lloyds, Midland), and B.B.C. Securities Register (B28) Midland.

30 For general discussion of this, see, M. Collins and P. Hudson, “Provincial Banking Lending.” Halifax Commercial Banking Company, H.C. Minutes 1844–50s, Letters (H.D. Hartley), 1847–52. Report of Meeting of Creditors, January 14, 1848. Barclays. See also H.C. Minutes, November 14, 1841, February 6, 1839, which document large loans to other directors.

31 Leeds and West Riding Banking Company and Leeds Commercial Banking Company both failed in 1846. For comments on these failures, see Anon. British Losses by Bank Failures 1820–57. Leeds City Archives DB 255 (1834). “Account of failures…,” Jowitt archives, Brotherton Library, University of Leeds. Quote in Crick, W.F. and Wadsworth, J.E., A Hundred Years of Joint Stock Banking (London, 1958), 213.Google Scholar

32 Anon., British Losses by Bank Failures 1820–57, Comments on failure of Northern and Central Bank of England (failed 1836) and Commercial Bank of England (failed 1840).

33 The major problem is that the figures exclude “re-discounts” and therefore would tend to underestimate the total volume of credit financed through bill discounting. For further details of the balance sheet calculations, see, M. Collins and P. Hudson, “Provincial Banking Lending.” The banks examined were Yorkshire Banking Co., 1843–52; York City and County Banking Co., 1839–42, 1844, 1846–52; Leatham & Co., 1838–42, 1849–52; Beckett and Co., 1839–44, 1847–52; West Riding Union Banking Co., 1837–50; Wentworth & Co., 1826; Halifax Joint Stock Banking Co., 1830. See also Goodhart, C.A.E., The Business of Banking 1891–1914 (London 1972), 15–39Google Scholar, Nishimura, S., The Decline of Inland Bills of Exchange in the London Money Market 1855–1913 (Cambridge, England, 1971)Google Scholar, passim.

34 See, e.g., West Riding Union Banking Co. Book of Accounts (WBB) 1833–77 Barclays. Local overdrafts were four times larger than money at call and invested in London in the 1830s. By 1850, debit balances on bank accounts were still almost twice as large as cash at brokers. See also Halifax Joint Stock Banking Company, Letter Book 1830. Lloyds. Letter to Jones Lloyd & Co., London, February 2, 1830 requests them to invest a few thousand pounds for a short time “after which we hope to find better employment for it here.”

35 The banks surveyed are the following: Bradford Banking Co., Huddersfield Banking Co., Halifax Commercial Banking Co., West Riding Union Banking Co., Halifax Joint Stock Banking Co., and Leatham, Tew and Co.

36 See various Directors Minute Books, in particular that of West Riding Union Banking Company including Reports of Annual General Meetings 1840, 1841, Barclays.

37 For explicit statements see HC Minutes, June 21, 1836, Barclays. BBC Order Books B2, B4. June 21, 1827, June 27, 1838, November 28, 1838, Midland. See also Circular to Bankers, no. 763, October 14, 1842, 137–139. M. Collins and P. Hudson, “Provincial Banking Lending.”

38 B38, Midland.

39 The six were Daniel Salt & Son, woolstaplers; Thomas Milthorp, woolstapler; Cousen, Leach & Co., worsted spinners and weavers; William Akroyd, worsted spinner; Wm. & Thos. Marshall, woolen manufacturers; and William Rouse & Son, worsted spinners and manufacturers.

40 E.g., E.C. Lister (firm No. 48, Table 2) & Thos. Gill, Baildon (Firm No. 42 who had a discount account only with the bank).

41 E.g., Turner, Mitchell & Co. (No. 39) Horton worsted spinners had a verbal guarantee from Henry Leah, bank director to secure their account to £2,000.

42 Holly Park Mill Co., Item 1, Brotherton Library, University of Leeds.

43 Hudson, P., The West Riding Wool Textile Industry: A Catalogue of Business Records (Edington, 1974), 275.Google Scholar

44 B.B.C. Securities Register 1827–74 (B28), Midland. Directors Minute Books West Riding Union Banking Co., 183M5 (W.B.M.), Barclays.

45 Directors Minute Books 1836–55, Barclays.

46 H4 and H5. See also Securities Register 1842–1850 (H24), Midland. H4, July 28, 1830. In the previous year, bad debts had amounted to almost £2,000. H4, July 17, 1829, Midland. Securities Register (H25), September 6, 1844, Midland. Watt, H., The Practice of Banking in Scotland and in England… (London, 1833), 36.Google Scholar

47 Information in this section on mil) building and extension and on profit figures, unless otherwise specified, is obtained from the business records in the Brotherton Library, see P. Hudson, The West Riding Wool Textile Industry. BBC Order Book (B4), February 18, 1834, April 18, 1838, Midland.

48 Quoted in Ingle, G., “A History of R.V. Marriner Ltd., worsted spinners, Keighley” (unpublished Master's dissertation, University of Leeds, 1974).Google Scholar The primary source material has since been mislaid.

49 Crump, W. B. and Ghorbal, G., History of the Huddersfield Woollen Industry (Huddersfield, 1935), 118–119.Google Scholar Religious affiliation between the Brookes and the Becketts was of importance here; interview with Mr. Edward Brooke, 1979.

50 Sigsworth, E.M., Black Dyke Mills: A History (Liverpool, 1958).Google Scholar List of new shares allotted July 1, 1831 (B46), Midland.

51 It is argued that the trend towards amalgamation brought increasing control and direction from the London head offices where business was becoming increasingly oriented overseas and that this orientation was common to the British capital market as a whole. See Cairncross, A.K., Home & Foreign Investment, 1870–1913 (Cambridge, England, 1953)Google Scholar; Coppock, D.J. “British Industrial Growth During the Great Depression: A Pessiminist's View,” Economic History Review, XVII (1964)Google Scholar; Musson, A.E., “British Industrial Growth During the Great Depression: A Balanced View”, Economic History Review, XVII (1964)Google Scholar; S.B. Saul, The Myth of the Great Depression 1873–1896 (1969); and particularly Kennedy, W.P. “Foreign Investment, Trade and Growth in the United Kingdom, 1870–1913,” Explorations in Economic History, XI (1974).Google Scholar

52 W.P. Kennedy, “Foreign Investment.”

53 Edelstein further notes that bank overdrafts and renewal of commercial credit notes remained one of the most important sources of long term external finance for British industry throughout the nineteenth century. Edelstein, M., “Rigidity and Bias in the British Capital Market, 1870–1913” in McCloskey, D., ed., Essays on a Mature Economy (London, 1971).Google Scholar

54 See Item 7 and Section X, John Foster & Son Queensbury, Items 24 and 25, George Hattersley & Sons Ltd., Haworth and Keighley, Item 21, Isaac Holden & Son Ltd., Bradford and Rheims, Items 29, 38, 41–44, R. Jowitt & Sons Ltd., Bradford, Item 3, John Reddihough Ltd. Bradford (all in the Brotherton Library, University of Leeds). Item 5, David Little & Co. Ltd., Leeds (Leeds City Archives). Items 30–32, Marshall, Kaye & Marshall, Dewsbury (Dewsbury Public Library Library). See also Hudson, P., The West Riding Wool Textile Industry (Edington, 1975).Google Scholar

55 “Bullion, Thomas,” Letters on the Internal Management of a Country Bank (London, 1850)Google Scholar, Letters IX–XII. L.S. Pressnell, Country Banking 295–296.