Joint Stock Banks

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The Irish Joint-Stock Banks

The creation of Joint Stock banks of note issue as a result of the 1824 Act

Consequently, the Bank of Ireland’s special privileges were eroded and its effective monopoly broken, leading up to the abolition of all of their special privileges via the 1845 Act. By 1845, the Bank of Ireland was reduced to that of a Joint Stock bank – albeit a very large one with massive assets.

A major consequence of this reduction in status was that the Bank of Ireland now had to compete on a level playing field – making it necessary to expand into the country and compete with the other banks by establishing its own ‘country’ branches

  • The first non-Dublin branch of the Bank of Ireland opened in March 1825, in Cork

Prior to the 1824 Act, the Bank of Ireland had largely ignored the country outside of the city of Dublin. The Bank of Ireland, as previously mentioned, still had a significant advantage insofar as it had a huge asset base, built up over decades and prestige far in excess of any other bank.

  • Its paper money (banknotes) were considered to be ‘as good as gold’
    • Its backers were the wealthiest men of their time
    • It was still considered ‘a bank of last resort’
    • It bought up many ‘failing’ private banks (in the larger market towns) throughout Ireland in the 19th C and utilised their premises (and their books of business) as a basis for their new, expanding branch network
  • 1821

    • To put a ‘gold standard’ into effect, and avoid the pitfalls of bi-metallism, silver coins were declared legal tender only for sums of money up to £2. This prevented an ‘arbitrage market’ in gold and silver coins from forming.
      • The Suspension Period officially ended on 1st May 1821, although it took some time to come into effect.
      • The main benefit of ‘paper money’ was that it gave certainty at a time when much of the copper coinage in circulation was counterfeit and much of the silver coinage was clipped (under-value).
    • In order for a ‘safe’ return to the gold standard, a new coinage was needed.
      • The British Treasury responded with a new gold ‘one pound’ coin known as a sovereign to compliment the Great Recoinage of George III – started in 1816 and rolled out to all corners of the British Empire thereafter.

This sudden burst of silver coin production in England by the Royal Mint was not matched in Ireland and left the smaller, under-capitalised banks vulnerable to runs on their promissory notes.

  • From 1816 onwards, any monetary shocks (due to failed harvests, trade blockades, etc.) in the banking system were severe.
  • Nevertheless, new banks continued to open all over Ireland and they issued notes to facilitate new business.
  • 1826

In 1826, the Irish pound was replaced by the pound sterling and later Irish banknotes were issued denominated in sterling. Thence forward, all transactions in Ireland were in sterling. The Act of Union (1800) was followed by a second (less well known) “union” followed in 1825 – a “customs and monetary” union – the Irish pound was thence tied to sterling and almost “free trade” conditions followed. If the act of 1800 was unpopular, the customs & monetary union was an economic disaster!

  • Unable to compete with a rapidly industrialising neighbour, many of Ireland’s proto-industries collapsed and the economy shifted to the export of food and primary commodities such as wool and leather.
    • This coincided with the rise (post-1800) and fall (post-1826) of the Irish banking industry
      • There was a huge number of small private banks by the year 1800.
      • Despite their numbers and their initial success, few managed to acquire sufficient capital to ensure stability
      • These small banks were vulnerable in a period of economic change.

1834-36: Major Banking Expansion In Ireland

Prior to 1824 only private banks with six partners or less could issue paper money in Ireland, with the sole exception of The Bank of Ireland which was established by Royal Charter on 10 May 1783, by a group of over 200 Irish businessmen, land owners and clergymen, to stimulate and regulate the Irish economy and to provide it with a stable banknote currency. It also operated the Exchequer Account, so it always ran with a substantial cash deposit.

The Bank of Ireland behaved somewhat like a modern central bank (acting as a banker of last resort for much of the 19th C) but it had several major weaknesses at that time:

  • The Bank of Ireland focused almost entirely on Dublin.
    • The rest of the country had to rely on the private banks
    • These small banks had insufficient capital to cope with the risks they took and many folded, leaving creditors (paper-holders) open to bankruptcy too.
  • Its directors and staff, plus most of its customers were Church of Ireland and it quickly became known as ‘the bank of the Anglo-Irish Ascendancy classes’
    • As such, its loan policies were viewed as sectarian
    • And its overall strategy seemed to ‘maintain the status quo’ of the Establishment
    • Daniel O’Connell was a vociferous critic and helped form The Hibernian Joint Stock & Annuity Company in 1825 by a group of Dublin businessmen was in response to anti-Catholic discrimination by Bank of Ireland

The Irish Banking Acts, of 1821, 1824, and 1825 cleared the way for the formation of adequately capitalised Joint Stock banks in Ireland. All banks with headquarters outside of a 50 mile radius of Dublin had the right to issue banknotes under various rules and restrictions. The so-called Joint-Stock banks were larger and better-capitalised than the small private banks and the Bank of Ireland now had some significant competition in Ireland. They were as follows:

  • 1824
    • The Northern Bank Ltd (1824-2014)
      • Established on 1 August 1824, with 264 shareholders, it took over the business of Montgomery’s Private Bank, operating since 1809
        • Northern Bank notes were always printed on both sides
        • In 1888 the Bank bought the business of Ball & Co., Dublin, for £22,500, and opened an office there
  • 1825
    • The Hibernian Bank (1825-1958)
      • Founded by a group of Dublin businessmen in response to anti-Catholic discrimination by Bank of Ireland and aimed at the Dublin market
        • Despite being a strong bank, with 1,063 shareholders, the Chancellor of the Exchequer refused to grant them permission to issue its own banknotes
        • They issued tokens instead but were forced to withdraw them
    • The Provincial Bank of Ireland Ltd (1825-1966)
      • Founded in London in 1825, with 689 shareholders
        • Opened its first branch in Cork
        • It introduced English capital into Ireland outside of the Dublin area
        • It was organised along the lines of the Scottish banks of the day
  • 1827
    • The Belfast Banking Company ()
      • Formed with 337 shareholders on 2 July 1827 in Belfast
        • It was a merger of the then two remaining private banks in Belfast
          • Batt’s (The Belfast Bank, in business since 1808)
          • Tennant’s (The Commercial Bank)
  • 1834
  • 1835
    • The National Bank Ltd (1935-1966)
      • Formed in 1834 in London by Daniel O’Connell and the Nationalist Party
      • The deed of covenant was signed on 6 January 1835 by 249 shareholders
      • The first Branch opened in Carrick on Suir
        • The Bank’s first Governor was Daniel O’Connell
        • Hence it was known as The Liberator’s Bank.
  • 1836
    • The Royal Bank of Ireland (1836-1966)
      • Founded on 1 September 1836 with 309 shareholders in Dublin
      • It took over Shaw’s Bank, which had been in existence since 1799
        • Shaw’s Bank was a major private bank and issued its own notes
        • It sought the right issue its own notes in 1844, but was refused
        • It was precluded from doing so thereafter by the 1845 Act
    • The Ulster Banking Company (1836 to date)
      • Founded on 22 February 1836 with approx. 830 shareholders
        • Opened an office in Dublin in 1862
        • Changed its name to The Ulster Bank Ltd. in 1883
  • 1837
    • The Provident Bank of Ireland (1837-1839)
      • Founded by Thomas Mooney, founder of the former Agricultural & Commercial Bank
        • Despite being in Dublin, the bank was able to issue banknotes as it had fewer than 6 shareholders.
        • The bank was intended as a farmers’ bank but only had one office
          • It failed to raise sufficient capital for its activities
          • It ceased operations in December 1839
          • Its owners were adjudicated bankrupt on 14 October 1840
    • The Southern Bank of Ireland (1837)
      • Founded in Cork in March 1837 by former officials of the Agricultural & Commercial Bank
        • The Southern Bank of Ireland lasted less than a year
        • It appears to have operated ‘on the fringes’ of legality
          • It issued one series of banknotes
          • Having little in the way of funds to back them, it quickly failed

Many of Ireland’s early banks depended for their survival on the issue of banknotes. Each denomination had its own serial numbers and every note was signed by the chief cashier.  Careful records were kept of issued and returned notes, so that duplicated serial numbers (indicating forgery) would be spotted, and lost or damaged notes could be accounted for.

  • The penalty for forging a promissory note was death but this did not seem to deter some

In 1845, a period of financial crisis prompted new legislation to regulate the issue of notes.  Only six Irish banks were authorised to issue banknotes and this new law allowed notes in ’round pounds’ only, so banks had to withdraw (over time) any of their banknotes in guineas, fractional guineas and such oddities as 25s, 30s and 35s denominations.  The ability to print their own banknotes gave these banks a huge commercial advantage over their new and emerging 19th C rivals.

Banknotes of the Irish Joint-Stock Banks

  • The Northern Banking Company (1824-1929)

    • First Issue (1825) – Belfast issue in Irish Currency

      • Thirty Shillings
        • Proof – Belfast
      • Twenty-five Shillings
        • Proof
      • One Pound
        • Circulating Note
        • Proof
    • Second Issue (1825-1850) – Individual branch issues in British Currency

      • Twenty Pounds
        • Proof – Belfast
        • Proof – Londonderry
      • Ten Pounds
        • Proof – Belfast
        • Proof – Londonderry
      • Five Pounds
        • Proof – Belfast
      • Four Pounds
        • Proof – Belfast
      • Thirty-five Shillings
        • Proof – Londonderry
        • Proof – Carrickfergus
        • Proof – Downpatrick
      • Thirty Shillings
        • Type 1 –
          • Londonderry
          • Proof – Carrickfergus
          • Proof – Downpatrick
        • Type 2 –
          • Proof – Belfast
          • Coleraine
          • Proof – Londonderry
      • Twenty-five Shillings
        • Type 1 – similar design to the One Pound
          • Belfast
        • Type 2 -ornate upper border (known only as proofs)
          • Ballymena
          • Coleraine
          • Carrickfergus
          • Lurgan
      • One Pound
        • Belfast
          • Circulating note
          • Proof
        • Armagh (Proof only)
        • Ballymena
        • Carrickfergus
        • Clones
        • Coleraine
        • Downpatrick
        • Newtownlimavady / Limavady
        • Lisburn
        • Londonderry
        • Lurgan
        • Magherafelt
    • Third Issue (1850-1883) – Consolidated branch issues
    • Fourth Issue (1883-1919) – Change in title (Limited status)
      • Type A – Transitional issue (Overprints)
      • Type B – New heading (Northern Banking Company Limited)
    • Fifth Issue (1918-1920) – Branches in six lines in central panel
    • Sixth Issue (1921-1927) – No branches

      • Twenty Pounds
        • Type 1 – Single Prefix Letter in Red, Red Serials
      • Ten Pounds
        • Type 1 – Single Prefix Letter in Red, Red Serials
      • Five Pounds
        • Type 1 – Single Prefix Letter in Red, Red Serials, Hand-signed
        • Type 2 – Reduced Size (150mm x 85mm)
      • One Pound
        • Type 1 – Single Prefix Letter in Red, Red Serials, Hand-signed
        • Type 2 – Fraction Prefix in Black, Red Serials, Printed Signatures
  • The Hibernian Joint-Stock Banking Company (1825-1929)

  • The Provincial Bank of Ireland Ltd (1825-1929)

    • First Issue (1825)
    • Second Issue (1825-1827)
    • Third Issue (1826-1837)
    • Fourth Issue (1830-1846)
    • Fifth Issue (1838-1857)
    • Sixth Issue (1841-1869)
    • Seventh Issue (1869-1870)
    • Eighth Issue (1870-1881)
    • Ninth Issue (1882-1901)
    • Tenth Issue (1903-1919)
    • Eleventh Issue (1919-1927)
  • The Belfast Banking Company (1827-1929)

    • First Issue (1827-1843)
    • Second Issue (1843-1850)
    • Third Issue (1851-1866)
    • Fourth (Incorporated) Issue (1867-1878)
    • Fifth (Black & Blue) Issue (1879-1920)
  • The Agricultural & Commercial Bank (1834-1841)

    • The Agricultural & Commercial Bank of Ireland had 40 branches and, as such, was quite a substantial operation for a Joint-Stock bank startup. Given that its failure was so sudden, it is not surprising that examples of banknotes from many of these branches seem to have survived.
      • O’Brien Banknote Guide: The Agricultural & Commercial Bank (1834-36)
        • First Issue (1834-1836)
          • One Pound
          • All issued with the same date (10th March 1835)
            • Type 1 – Hand-written serial numbers
            • Type 2 – Printed serial numbers.
        • Second Issue (1838)
          • Three Pounds
          • One Pound
        • Third Issue (1836-1840)
          • Type 1 – Handwritten serial number without prefix
            • Five Pounds
            • Thirty-five Shillings
            • One Pound
          • Type 2 – Printed serial number without prefix
            • Thirty Shillings
            • One Pound
          • Type 3 – Printed serial number with prefix
            • One Pound
  • The National Bank Ltd (1835-1929)

    • First Issue (1835)
    • Second Issue (1835-1843)
    • Third Issue / Independent Bank Branch Issues (1835-1836)
    • Third Issue / Transitional Issues (1835-1836)
    • Fourth Issue (1836-1843)
    • Fifth Issue (1843-1856)
    • Sixth Issue (1856-1869)
    • Seventh Issue (1870-1881)
      • One Hundred Pounds
    • Eighth Issue (1882-1900)
    • Ninth Issue (1900-1915)
    • Tenth Issue (1915-1918)
    • Eleventh Issue (1919-1920)
    • Twelfth Issue (1921-1927)
  • The Ulster Banking Company (1836-1929)

    • First Issue (1836-1850)
    • Second Issue (1845-1856)
    • Third Issue (1857-1861)
    • Fourth Issue (1862-1883)
    • Fifth Issue (1883-1906) – changed to Ulster Bank Limited
    • Sixth Issue (1906-1919)
    • Seventh Issue (1920-1928)
  • The Provident Bank of Ireland (1837-1839)

    • First Issue (1837)
  • The Southern Bank of Ireland (1837-1839)

    • First Issue (1837)

 

Non-Issuing Irish Joint-Stock Banks

  • 1836

    • The Drogheda, Meath & Louth Banking Company (1836)
      • Issued a prospectus but lacked local support
      • The scheme was dropped
    • The Imperial Bank of Ireland (1836)
      • Issued a prospectus in 1836 but never opened its doors
        • This bank’s promoters were based in Manchester
        • They opened The Imperial Bank of England there in 1836
          • The Imperial Bank of England failed in 1839
    • The Metropolitan Bank of Ireland (1836)
      • Issued a prospectus in 1836 but never opened its doors
    • The Royal Bank of Ireland (1836-1966)
      • Established with the support of the Quaker community, this bank created a more competitive banking climate within the Dublin region
      • It took over the business of the highly successful and well respected private bank of Sir Robert Shaw (Shaw’s Bank 1799-1836)
        • Shaw’s Bank issued its own banknotes
        • The Royal Bank of Ireland was refused permission to do so
      • In 1844, a petition was presented to the Chancellor of the Exchequer to allow The Royal Bank of Ireland to issue its own banknotes
        • Once again, The Royal Bank of Ireland was refused permission
          • Issuing notes was a lucrative business for banks
          • The Bank of Ireland used to have a monopoly in Dublin
            • Many of its directors were MPs at Westminster
          • The Royal Bank of Ireland’s business was based in Dublin
            • It was a business threat
      • In 1929, however, it was one of eight banks that issued its own notes under the auspices of the Currency Commission of the Irish Free State
        • See O’Brien Banknote Guide: Ploughman Notes of The Munster & Leinster Bank
  • 1837

    • The Dublin Commercial Bank (1937)
      • This bank may not have existed.
      • There is a reference + sketches of proposed banknotes to Perkins & Heath
      • Sketched designs are similar to those of The Provincial Bank of Ireland
  • 1838

    • The Tipperary Joint-Stock Bank (1838-1856)
      • This bank was built on the foundation of Scully’s Bank (Clonmel)
      • Its first directors included James Scully Snr, James Scully Jnr and James Sadlier
        • They issued Bank of Ireland notes @ 1% discount (to themselves)
        • It was effectively, an agency of the Bank of Ireland
        • This arrangement came to an end in 1845
      • By this time, they had branches in:
        • 1838: Tipperary
        • 1839: Nenagh
        • 1840: Thurles
        • 1841: Carrick-on-Suir, Thomastown (Co Kilkenny)
        • 1842: Clonmel, Roscrea
        • 1845: Athy (Co Kildare), Carlow (Co Carlow)
      • The Tipperary Bank crashed spectacularly in 1856 due to James Sadlier’s unwise speculations in various railway shares of the time
  • 1841

    • The District Bank of Ireland (1841)
      • Promoted in 1841, with the intention of issuing Bank of Ireland notes
      • The Bank of Ireland refused to support them
      • The District Bank of Ireland scheme was dropped
  • 1842

    • The Dublin Banking Company (1842)
      • Established in 1842 but was found to have been a fraudulent flotation
      • This bank never traded
  • 1843

    • The London & Dublin Bank (1843-1848)
      • They first issued a prospectus in 1841, registered as Joint-Stock Bank in 1842 but didn’t open their first branch (Dublin) until 1843
        • They had 250 partners, 21 directors and only 20 were non-Irish
        • They issued Bank of Ireland notes
          • In 1843, they had branches in Dublin, Dundalk, Parsonstown, Carrick-on-Shannon, Kells, Mullingar and Wicklow
          • In 1844, they opened a branch in Carrick-ma-cross
          • In 1845, they opened branches in Athy and Kinsale
        • They ran into difficulties in 1847 (at the height of The Great Famine)
          • It was dissolved in 1848
          • The National Bank of Ireland bought its assets
            • It kept 7 of its 10 branches open
  • 1862

    • The Union Bank of Ireland (1862-1868)
      • Founded in 1862, The Union Bank of Ireland was very profitable for its first four years of trading and it exapnded its base accordingly
      • Branches included:
        • Dublin, Cork, Limerick, Bray, Charlevill, Kells, Abbeyleix, Fethard, Bruff and Kilmallock
      • In 1866, a monetary crisis caused its profits to plummet and, despite an upward trend in its fortunes, the company went into voluntary liquidation in 1868.
        • Its branches in Munster were bought by The Munster Bank
        • Its Dublin HO and Leinster branches were bought by The Hibernian Bank
  • 1863

    • The English & Irish Bank (1863-1864)
      • Based on the private bank of Robert Grey & Co (Dublin)
      • It was established with a nominal capital of £2 million
        • Its headquarters was in London
        • Considerable trading losses were made during its short history
        • It was sold to The European Bank in 1864
          • The directors made good their losses beforehand
          • Four of them joined The European Bank as directors
  • 1864

    • The European Bank (1864-1865)
      • Opened in Dublin in 1864, having taken over The English & Irish Bank
        • Its business was transferred to The Munster Bank in 1865
    • The Munster Bank (1864-1885)
      • Established in Cork, it was first known as The National Investment Company Ltd. It was first registered in 1862 and re-registered in 1879.
      • In 1870 it absorbed the business of La Touche & Co (Dublin) – one of the largest and most respected private banks in Ireland.
        • Initially very successful but ran into difficulties in 1883-85
        • Suspended payments on 14th July 1885
        • Liquidated in Sept 1885, with final completion in 1889
      • The Munster & Leinster Bank took over its remaining in 1889 and agreed responsibility for all remaining departments and liabilities
  • 1885

    • The Munster & Leinster Bank (1885-1966)
      • Founded chiefly by the shareholders of the failing Munster Bank
      • Commenced trading on 19th October 1885
        • Purchased the Dublin and Cork offices of the Munster Bank
        • Also purchased 30 of the 41 Munster Bank ‘country’ branches
      • It was refused permission to issue its own banknotes
      • In 1929, however, it was one of eight banks that issued its own notes under the auspices of the Currency Commission of the Irish Free State
        • See O’Brien Banknote Guide: Ploughman Notes of The Munster & Leinster Bank

 

 

 


 

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