The Exchange Business of the Irish Banks in the Eighteenth Century

Throughout the eighteenth century, Ireland was a peasant economy producing for export beef and dairy produce together with an increasing amount of linen cloth. With the passing of the English protectionist Cattle Acts of the 1660's, France and the foreign and English islands of the West Indies became the main outlet for Irish agricultural produce until about the middle of the eighteenth century, although exports of wool, woollen yarn and tallow to England remained at all times substantial. Despite this protectionism, however, England re-established itself after 1689 as Ireland's major foreign market, largely because of the Irish tariff system which favoured Anglo-Irish commerce above all others, and the growth of the linen trade. After 1758, the hegemony of the English market was further strengthened by the re-admittance of Irish pastoral products. The vicissitudes which characterised Irish exports to England were not, on the other hand, paralleled in the Irish imports from across the Irish Sea. Dublin and Cork were the main centres through which this trade was transacted, and though Belfast was a growing centre, it was dependent on Dublin as a point of shipment in the first half of the century and then, as later, for much of its foreign exchange business. The movements of commodity trade in this period were on the whole favourable to Ireland. Even the initial impulse of the Industrial Revolution was felt more as a demand for food for the growing industrial masses of England than as a herald of doom for Ireland's nascent and modest industry. Despite the sharp rise in population, and the country's grievous social and agrarian sores, it seems certain that there was some increase of prosperity in Ireland in the last four decades of the eighteenth century. There was, however, apart from the larger seaport towns, little urban development, the middle class remained small and the gentry largely absentee. In these circumstances, it is highly probable that the bulk of inland transactions was effected by cash of one kind or another; and in the early part of the period the inland remission of funds presented grave difficulties. This arose from the relatively underdeveloped nature of the economy which provided scant opportunity for a widespread growth of specialised financial institutions. In the seventeenth century there were no banks in Dublin apart from a few which specialised in mortgages on land. In the provinces there was only a bank of sorts, conducted by the Cork merchants Edward and Joseph Hoare, whose overseas trade at the end of the century enabled them to draw bills on merchants in Bristol and London and on the Commissioners for Victualling the Navy. But generally recourse was always had to merchants who were only prepared to draw on London as the course of trade enabled them to do so. In Dublin, as the chief centre of Irish trade, there was, however, already a class of “ exchangers “, loosely described as bankers, in the business between Ireland and London. It was around this foreign exchange activity that, in contrast to the position in England, Irish banking developed. As a consequence, most of the early banks were mercantile in origin. Such, for example, was the famous Dublin private bank of La Touche. David Digues La Touche established a silk, poplin and cambrick manufactory in Dublin at the end of the seventeenth century and also acted as a Dublin agent for many of the Huguenot manufacturers in the Irish provinces. It was thus but a small step forward to undertake the regular remission of funds between Dublin and various Irish provincial centres. Nor is it surprising that when the bank was established on a formal basis, the names of several of its correspondents were French : Vashon and Son in Waterford, Alexander Crommelin in Lisburn, William Crommelin in Kilkenny, Solomon Le Blanc in Lurgan. Once engaged in the internal remission of funds, La Touche was led as a matter of course into the remission of money to London. As several of La Touche's correspondents belonged to the Crommelin family, the founders of the Irish linen industry, it may not be altogether fanciful to surmise that La Touche's foreign exchange had its origins in discounting bills drawn by linen drapers and shippers. Certainly, La Touche's English correspondents were in London, Chester and Bristol, the three points of entry for the bulk of the Irish linen exports, and his sole continental correspondent was in Holland, from whence part of Ireland's supply of flax-seed came. Similar examples in the rise of Dublin banking are the bank of Dillon founded by a merchant family trading with Holland and France, and having members of the family established in Rotterdam and London; and the bankers James Swift, Thomas Gleadowe, Richard Dawson, William Lennox, John Macarell and Thomas Finlay. The mercantile origins of the provincial banks are no less striking. With perhaps one or two exceptions, they were all established by merchants and remained subsidiary in many cases to the trading activities of their founders. Apart from merchants who opened banking houses, there were others who, like Edward and Richard Weekes, merchants in Waterford, might issue promissory notes payable not as bankers' notes to bearer but to “ persons or their orders “. As these notes circulated’. it is obvious that the line dividing merchant and banker was tenuous. An Act of Parliament passed in 1756, shortly after the failure of three Dublin banks closely identified with the merchant community, prohibited bankers from engaging in trade as merchants1 : but loose in wording, it was ineffective in practice, because merchants could still issue notes, without assuming the formal status of bankers. The rapid growth of banking in the eighteenth century was partly in response to the development of trade and partly to the acute shortage of coin which made bankers more capable of forcing their notes on the community which, in turn, was ready to accept them in the place of the medley of worn or underweight English and foreign gold. From the start, exchange became their most important function. Dublin's first regular bank, that of Burton, embarked from its foundation on the discounting business, and as early as 1696 Sir John Lowther, writing from London, informed the agent of his collieries in Whitehaven that, “ if any money could be returned out of Ireland there is one Burton at Dublin which makes ye most returns and his correspondent here is one Haistwell of my acquaintance ”.2 Many other Dublin banks were to follow. A few were destined to have a long life, but many were ephemeral. Their pattern of business was, however, alike in all cases, and as London was the centre through which the greater part of Irish commercial finance was transacted, all had agents in the English capital. Thus, in their first year, Messrs. Swift & Co. spent £100 in “ charges in sending a person to London and [to] sundry persons in Ireland to fix upon proper persons for correspondents for the company ”.3 The amount of commission paid by them in that year to their correspondents for bills of exchange negotiated was considerable, being £672 9s. lid. It was far and away their greatest charge, amounting to 40 per cent. of their total expenses. La Touche and Kane's banking followed a similar pattern. They had correspondents not only in the principal towns of Ireland but also in Bristol, Chester and London; in whose hands were funds enabling La Touche and Kane to draw bills for their Irish customers.4 These balances must have originated in bills discounted by the bank and paid for by their own note issue, and the bills when honoured increased the funds in the hands of their correspondents in London and elsewhere. By keeping their discounting and drawing of bills at a fairly even rate, they maintained their London balances at a steady level, and a pamphlet of 1729 suggests that the varying of the exchange with this object in view was already a normal procedure among Irish bankers.5 The reasons for the prominence of exchange dealings in the business of the Irish bankers arose primarily from the pattern of Irish commodity trade. The balance appears to have been highly favourable under normal conditions, which meant that it was not always easy for a merchant to find a ready purchaser for a bill drawn on London. There was, of course, a large body of temporary or permanent Irish absentees, requiring the remission of their rents to London, but direct dealing between an absentee's agent and merchant was difficult. The merchant might not be in a position to draw at any time or for the amount the remitter might require. This provided the opportunity for the bankers. By taking bills from all merchants and at all times, it was possible for the banker to meet all requirements on him for remitting funds to London. To an increasing extent throughout the first half of the century, merchants seem to have discounted their bills with the banks rather than among their fellow-merchants, and remitters to London increasingly relied on bankers' bills. The abstract ledger of La Touche and Kane which survives1 throws some light on Irish banking of the early eighteenth century. Their business relates practically exclusively to the internal or external exchange of money, and of the quarterly balances in the hands of their correspondents those in England invariably form between 40 and 70 per cent. Their principal business was with London where they had two well known correspondents, Jonathan Gurnell & Company and John Puget, and intermittent dealings with Edward Flower & Son and Ellijad Edward. The balances in the hands of La Touche's agents there were far greater than those either in Bristol and Chester or in their largest provincial centre in Ireland. The size of the bank's English balances increased steadily over the years 1719–26. The following table reproduces a summary of their October-December balances, normally the largest of the year. These sums indicate a rather large business, and assuming that all bills were at 21 days' sight, as was the practice in Anglo-Irish payments, their turnover must have been substantially greater than the actual balances in the hands of their correspondents at the end of the quarter. The drawings on the bank's resources were severest in the first half of the year, but as one would expect from the nature of the Irish economy, they were always able to increase their balances in the second half, when their discounting was most active. By the early ‘thirties there were as many as six or seven banks in Dublin, and the growth in their number and volume of business is to be associated with the high exchange of the ‘twenties. This high exchange led to a disappearance of most of the exportable and thus the greater demand than supply bills was an important in forcing many remitters to have recourse to the bankers. A of the of Dublin banking is that the bankers were remitting money to The sums in were large for merchants to and for that recourse was had in the seventeenth century to London to these The growth of banking in however, meant that there were in Dublin with resources to large In for example, was paid to the bankers and Burton to to of the prominence which the bankers of the were in exchange is that they were able to a for their which was about per cent. than that by This suggests that bills were relatively few in Dublin with partly as a of the increased of merchants to their bills to the bankers, and that the bankers were in a position normally to a for the bills they In for a agent to a of money to an the and and to be it be at per cent. less than from the bankers ”.2 The Dublin banker was described as “ one of the in always per cent. than one could bills ”.3 were able to draw only as a of the large of bills which they discounted and which, being at sight, meant that a of funds was to them in London. As drawings were largely to the of the bankers were the sole persons to a regular and in the informed his that the reasons bankers bills at “ a or half per cent. less than others is that they bills from as have bills to and others bills but and as their being remitters who had the acquaintance among merchants and who were not under to merchants who were in a position to an or agent was to have sums and a merchant had funds to him in London, an between the two was at times The merchant bills at a and than the course of exchange in for cash at his but still was the inland exchange business. bank in its first year correspondents, and over the years La Touche and Kane had correspondents in provincial centres. Their dealings with Cork and were by far the most and there was a course of exchange on of these centres. with agents in other centres were much and to have been effected under a course of “ exchange “. The more important towns this exchange in Waterford, Kilkenny, and there were and more intermittent dealings with agents in Lisburn, and These correspondents in most cases, and perhaps in merchants and some of were to banking on their own Thus, John was a merchant in and was the of a well known merchant of was the of who opened bank in Cork and the who as with was of La Touche's Cork correspondents, is of the of and merchants in the trade and bankers. the names of La Touche's correspondents, and the origins of the bank of From the early decades of the century, the of the Dublin and provincial agents to the of internal as was the in a rather similar in As the provincial banks became more after the middle of the century, and generally a Dublin private bank as one of their correspondents, it is easy to the passing of the century a growing of internal writing after the of the bank of and in 1758, were led to that the main business of Irish banking was on and have been into following the by to the bankers of the period in the of two Acts of There however, not the to this and it is one which was not by most the because of their in of having the country's supply of and English gold. a still a that the banks had the business of exchange from the and a in that “ the principal object of the banking trade in Ireland is the business of discounting the of Ireland itself was in the early years of its primarily a discounting The of the Irish banks arose from the shortage of which, as all the Irish banks were to exchange made them a period of high exchange The supply already in was still further as a of the of exchange in the decades following the Cattle Acts of the the of the eighteenth century it was even to by Act of Parliament the time for of in Ireland to of the because had to be possible on of the of the appears to have increased in the early years of the century, as a of a favourable balance of over the years the increase to the growth of and external remained and in some cases were to their rents through of In the trading of the by and at times conditions, exchange became to even for the that the bulk of the of foreign gold. There was thus a demand for to which a on the They prepared to meet a by of their The that notes in and that only two important banks to “ “, may perhaps be to the of and by foreign gold. This the of the Irish and its of would have the high of bills. returned in the ‘thirties and the of the foreign in the exchange This the of as the of the remained favourable for the and this with a probable of no were by the bankers, apart from a to in After the of however, imports increased and a in and The balance of trade itself not but as the volume of to was a or in years of increased exports, a exchange became This led to a demand for to and the bankers were in difficulties. A writing in six years after the failure of bank, that in which they had in two had been as But were as the of the bank's notes had of the financial of the bank's foreign correspondents and in trade. all the Irish banks were by a shortage of This was in part to the in to the of the which, as they had been in the of a large and perhaps the of the Irish The shortage was further by the rise in the of and by the that the in was much more The of cash was felt in the and as the balance of to exchange in the of a of to a high “ but even at that bills are and per cent. this been this from ye of money among ”.3 It is not surprising that the at this Their made the of the other banks more and in the banks of & and & French The merchants to accept the notes of the banks and this in them over their difficulties. But in exchange above a shortage of and two further banks in in similar conditions, there was a on the The shortage of money under any circumstances, have made banking in but it was the bankers' in exchange which made them most external the bankers had to by a exchange on their bills on London, but this increase itself the of bankers' notes by private more than to on their own to the on bankers' bills. all the Irish banks which in of high when was the only being the bank of & the last years of the century the balance of was favourable and the exchange led to the of in large With a growing of in the the banks were from and more able to by their discounting of bills in time of commercial or The for their notes in in other bankers' notes and in bills in and other bankers' notes together a fairly of about per cent. to their though the total of cash and bankers' notes remained the by the two followed a Their cash in which to as much as to quarterly in the years and had in to on the other hand, bankers' notes from in the the first in which this is to in the of and to in the This is a of the acute of money in and of the increasing of bankers' notes in By the first of La Touche & Kane their other than that to their note This had the of the amount of their the of cash and other bankers' notes to between 40 and per cent. of their The and some of a relatively The that banking were suggests that La Touche & Kane were on the more and more bill trade. The growth in the number of banks led to an note issue, and the “ “ from an increased of into in the discounting of The a of which was a of the Irish in the following the provincial note issue with banks in only three or four towns other than Cork must have remained relatively and in Dublin itself the private banks at have by their of the In part this from the of the of which in had a issue to that of all the Dublin private banks in part from the steady of under a favourable course of exchange on private and for the of the of the Irish banks were primarily discounting houses, the issue of notes was, in a only and had been by the of Even for some development of provincial banking in the second half of the century, and for the provided by the of itself a bank of size and in the main to the Dublin the discounting made by the banks were to with the growth of internal and external trade. This rise in the second half of the century to a class of merchants with a specialised bill trade. Their were similar to those of the Irish the only being that they not issue notes in largely because of an supply of In an the of in into the of William a for a that had “ the bill trade, that is to that had an and of and that their money with him ”.2 of in Co. had been in the of his rents into and drawing on him as as was in of from and at times when there was on on in These bill merchants also to one because following one might have resources was under They also had recourse to the for example, on the bank of to the amount of a year, and at the time of From the of the century provincial merchants had to have financial and commercial dealings with Dublin This rise to an increased of inland bills of and some of the Dublin merchants who acted as correspondents a bill business to meet the various requirements of internal payments, as well as of external In the Cork Richard the bank of Thomas & Company as his Dublin correspondents, but had also some financial dealings with the Dublin of & with “ do all my business and some bill business The large Dublin merchant of & Joseph discounted bills on a In the they were discounting bills on English merchants for & merchants in Waterford, and drawings on them by merchants in the on Waterford, from and and Their discounting for & in to and when drawings on them to be in of bills they or had sums one or other of two London who also for & The Dublin of & Son had a business, with large provincial and bill and even acted as a correspondent for two banks in one in and one in negotiated and bills for the bankers, their drawings on and large of to the The volume of this business was amounting in the of the bankers to varying between and times the bankers balances to in but also them large In for to the of & the bankers, to “ on “. dealings with his correspondent in London were rather from transactions on of his was a merchant in a of the inland trade, and money to merchants on of their in This was at the of his bill trade, and as early as had a fairly business which was to his commodity trade. By the commodity trade had a to the growing volume of his discounting and In his business on his own and became a in the of Thomas & which opened a bank in Dublin in the following year. The business was only in its for the nature and of their was in other Dublin and provincial mercantile at this The pattern of Irish was to in the century. of the most important was, of course, the of the Irish in which in the of an Irish in any been and not a The of a course of exchange on London had a on the Irish which even the of its relatively large felt The of the Irish and of the exchange strengthened the Irish banking system in with other the of its business. Dublin, Cork and Belfast had all been centres of exchange with London in the eighteenth century, of which Dublin was the most being by an bill trade with the provincial The early century, however, the of this in its as well as its of its first from when the of in Ireland made the Belfast linen who had still to find to their in the of where in remained the to accept bills on Dublin from their English financial from the various of Ireland to in the following and in the of of the of Ireland that the inland bill trade was in and direct to England more than This an increased on London, which was to Dublin in the of the Irish financial which to the increased on England in and

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