From The Three Banks Review, No. 27 (September, 1955), pp. 42-52.
S. W. Shelton
(Archivist, Messrs. Glyn, Mills & Co., London, Bankers.)
In 1924 Glyn, Mills & Co. purchased the business of Child’s Bank and thus acquired what is probably the oldest existing bank in the country. Its origins as a goldsmith business date back to 1559, to the days of Queen Elizabeth I, when it was owned by John Wheeler who lived in Cheapside. About 1620 the business was transferred to the present premises at the "Marygold," No. 1 Fleet Street, and in the middle of the seventeenth century passed by marriage into the hands of Robert Blanchard and Francis Child.
Although there had been a crude form of moneylending and money-changing in Elizabethan times, and goldsmiths seem to have been moving towards some form of banking, “The crucial innovations in English banking history seem to have been mainly the work of the goldsmith bankers in the middle decades of the seventeenth century,” as a recent writer has pointed out.[1]
Before the Civil War it was the custom for London merchants to use the Mint (then in the Tower) as a repository for their surplus cash. But when, in 1640, Charles I requisitioned some £200,000 which had been thus deposited, they naturally began to seek elsewhere for a place safe from such royal interference. The goldsmiths, with the facilities which they had for the safe storage of their own valuables, were a logical choice, and their acceptance of money deposits in trust, returnable on demand, was really the first stage in the evolution of goldsmith into banker. From "working" goldsmiths—jewellers and makers and sellers of gold and silver ware — providing safe custody facilities, they developed into bankers in the modern sense, and by 1694, when the Bank of England was founded, banking as we now know it was recognisably in being.
The earliest surviving ledger of Child’s Bank covers the period 1662-1670, and the numbering of subsequent ledgers indicates that it was number 3 of a series. It seems reasonable, therefore, to assume that No. 1 —the first methodical record of their banking transactions must have started in the mid 1650’s, almost exactly 300 years ago.
An analysis of these ledgers shows quite clearly the change from goldsmithing to banking. In 1663, 60 new accounts were opened, of which 41 were goldsmith accounts, 9 banking and 10 mixed accounts —containing entries of both types of business. The following year the figures were 48, 25 and 16 respectively, indicating that the business was expanding in an encouraging manner. But disaster was at hand. December of 1664 saw the beginning of the Great Plague of London, and its effect was such that the number of new accounts opened in 1665 dropped to only 9. True, the numbers grew slowly each succeeding year, but it was not until 1679 that the figures rivalled those of the years before the Plague. And by that time the growth of new business had shown a definite change of pattern. Whereas in 1663-1664 the majority of the accounts were devoted entirely to gold- smith business, by 1667 purely banking accounts exceeded the purely goldsmith accounts, and in 1679 the figures for new accounts opened were—banking 206, goldsmith 27 and mixed accounts 20. Despite this change of emphasis, however, the older traditional side of the business remained an important factor until the end of the century. _ In the initial stages the goldsmith merely accepted money for safe custody and gave in exchange a receipt which took the form of a promise to pay on demand. But the practice soon developed of these receipts being presented from time to time for part payment; the face value of the receipt being reduced on each occasion. ‘Thus it was that the goldsmith bankers became known as “keepers of running cashes.”
The following is an example of this simple type of early "running cash" account; the forerunner of the modern current account.
The growth of this practice of keeping “running cashes" led to the goldsmith receipts becoming assignable and passing from one party to another with their eventual development into the modern bank note, the wording of which has changed surprisingly little since those early days.
Another point of interest is that in the modern bank note the letters “I” and “P” of the words “I Promise to pay” are linked together in a rather peculiar form. In fact many people do not realise that the letter “I” is there at all. This method of writing it dates back to the earliest days and a scrap of paper in Francis Child’s own handwriting, bearing the date "Mar. 25th 1685," shows his attempts at design. The first printed bank notes were issued in 1729, but even on these the amount and payee’s name were still written by hand.
A further method by which a customer could withdraw money was by writing a “note” requesting a sum of money to be paid to a third party, or to bearer, adding "and place it to my accompt," or "the receipt shall bee yr. sufficyent discharge." These “drawn notes” were the forerunners of the modern cheque but, though there is an isolated reference in the ledger for 1680 to such a “checque,” the expression does not appear to have become current usage until very much later.
This method of operating an account is demonstrated in the following letter to Francis Child, written by George Evelyn, brother of the diarist-
Sr
Haveing occasion for yt litthe Sume of Money yt lyes in your hands, I have ordered the bearer hereof my servt Chapman to receave it. There is still in your hands 122l 06s 06d for when I left the Towne you had of my monys 150l. Since wch I have rec. upon two notes I sent you 27l 13s 6d the first note was 10l payd to Susan Scoggs my mayd Servt the other was 17l 13s 06d payd lately to Mr Spencer by my Lre to you— Both these Sums comes too 27! 13s 06d so yt remaynes in yt hands 122l 6s 6d which when my Servt hath rec¢d from you, I have ordered him to deliver up to you the Note y* partner gave me when I came out of Town: I shall desire yt the two receipts or notes my mayd Servt & Mr Spencer left wt you (when they recd the moneys I have here mentioned) may be given to my Servt yt their may be no mistake hereafter, when all accounts are made even between us.
— Se I did expect more moneys to be payd unto you this Tearme for my Use; but my Creditor fayling me; I shall have occasion for 40! which if you please to Accomodate meat 6l ye cent. till my own moneys be paid to you by my order, I shall take it as a favor, and when my Servant Chapman the bearer hereof receaves it from you, be pleased to make a Bond for it for 3 months, and send it down to me, & Ì I will Syne & Seale it, and return it up to you wt all Speed. I have no more to add, but my service to yu I am
Sr
Yr humble Servt,
GEO. EVELYN
Wotton 24
Novb [16] 84
The purely goldsmith accounts operated as one would expect, customers being debited for plate or jewels supplied—often with a charge for making or engraving—and credited either with cash which they paid in or allowances for old plate returned. The account of Francis Wyndham, for example, was debited July 31, 1663,
When the plate was out of fashion and they wanted a change, or some ready cash was needed, customers would sell it back or, alternatively, make use of another facility provided by the goldsmith banker, and pawn the plate, receiving a loan against its deposit. These "pawnes" were a common feature of the business and the records show that the facility was availed of by many customers, including the famous "Nell" Gwyn, for whom there are several entries, including— “Nov. 26. (1685) Lent on plate £4,600," [2] for which she paid interest at 6 per cent. Eventually all loans, of whatever description, were entered in a separate “P” or “ Pawns” ledger, a practice which continued until well into the present century.
There are isolated instances of mortgages on property in the early days, but they all occur in Francis Child’s “Own Posting Book,” and appear to have been undertaken by him as a private venture rather than as part of the normal business. This book also contains details of exchange accounts showing dealings in foreign bills, as well as references to his “ Adventures” in the East India trade.
Acting as goldsmith and banker to many national figures of the period, the firm’s ledgers contain a large number of interesting accounts, amongst them being that of King William and his Queen, Mary. The first entries on the debit side of this account, dated May 17, 1689, are
For Loan of Jewells for ye Coronation to ye Queen £222
For a pre. of Diamd. Earings to ye Queen 300
In his own personal account-book, Francis Child records £10 18s. 6d. “ Paid for a Place att ye Coronation,” while a later entry, dated April 30, 1691, records the receipt of £50 “‘ Recd. of ye Queen to be given away.”
The ledgers, then called posting books, varied considerably in size and shape, being referred to as “ ye greate poaste Booke,” "little Posting booke,” “long new Po. Booke,” etc. The earliest surviving ledger for 1662-1670 contains 235 accounts and occupies 514 pages. Most of these are simple accounts consisting of only a few entries each. The second ledger, running concurrently with the first—from 1663 to 1679—is a larger volume of 656 pages but contains only 18 accounts. Of these, three alone occupy two-thirds of the ledger; Christopher Cratford has 205 pages, Roger Jenyns [3] 100 pages and Lord Herbert (subsequently Marquess of Worcester) 106 pages. This division of the accounts into active and non-active seems to have been the regular practice, for the ledgers show a similar pattern throughout the whole of the seventeenth century. Taking one year with another, 11 per cent. of all the accounts were those of ladies.
The standard of book-keeping was decidedly poor. The writing was often very bad, items being entered and then crossed out or altered in a rough and heavy hand, while the spelling of the names was more often than not purely phonetic, varying even from page to page. The account of John St. Leger, for example, is carried forward as “Sellinger,” while there are many variations of such names as Beauvoir, Villiers, Wolseley, etc. This question of spelling was not all one-sided, however, for we find Sir Benjamin Maddox originally signing his account as “ Maddoks,” changing later to “Maddox.”
Accounts, particularly the goldsmith accounts, often ended with a small balance either way. If it was a credit balance it was usually ignored; if a debit, it would be balanced by an entry “amount abated.” In the case of purely banking accounts the records are rather franker. That of the Dowager Lady Anne Brooke, for example, contains a credit entry, “ Per Mistake some way to Ball. £5. 4. 3.,”. while another account, that of John Mawson, was balanced by the entry, “Recd. I suppose though not posted before ... £436. 16. 6.”
At this early stage in the development of banking there were no passbooks and it was the practice for the customer to call from time to time and check his account in the actual ledger in the presence of one of the partners. Having agreed his account, the customer would append his signature at the foot, and the partner present would often append his as well. A typical form of wording was
Feb. 17. 1688. I allow of this acct. there
resting due to mee £640. 17. 7.
JOHN HARVEY
In this particular case, however, the customer seems to have been aware of the fact that mistakes were often made, for he adds— “errors excepted.”
By the 1680’s the practice had developed of sending the customer a copy of his account on a sheet of paper, similar to the modern statement of account. The ledger would be balanced and a note made that the account had been sent. The Earl of Danby’s account, for example, was balanced on November 9, 1686, and the entry made—“ By an acct then delld his honr there rested due to his honr £2362.-.9 1/4.” An entry in another account, dated March 22, 1686—1687, records the sending of the account “‘ with all his Vouchers since Aprill the 2d.” ‘The issue of passbooks was a logical development of this practice and the earliest mention of these is found in the records in 1715.
Balance night, for so long a headache each half-year to banking staffs, was a very different affair in the seventeenth century. Then known as “Casting up ye Shop,” it was done at very irregular intervals, varying from eighteen months to as long as eight years. Individual accounts were not necessarily balanced on these occasions, this usually being done only when an account was asked for, or the customer called to agree and sign the ledger. Records of these periodic assessments of the state of business survive from 1686 onwards and, in most cases, sufficient information is available to draw up fairly accurate balance sheets. It is interesting to note that the dates chosen for this irregular “Casting up ye Shop”usually bore some relationship to national events. For example, William of Orange landed at Torbay on November 5, 1688, and James II abdicated on December 11; the books were balanced on December 8. Similar action was taken six days prior to the final incorporation of the Bank of England on July 27, 1694.
The balance sheets reveal that the ratio of cash to deposits was normally about 35 per cent. On two occasions, however, in September, 1697, and again in October, 1712, it rose to over 50 per cent. Today the corresponding figure is under 10 per cent., but the higher figure then is understandable. The comparative newness of the system, together with the fact that the times were uncertain, made it difficult to assess just what demands would be made by customers withdrawing their cash, and the banker of the day had to keep a large stock of actual cash in his strong-room ready to meet any eventualities.
Apart from actual cash, the assets included the stock of jewels, gold and plate held in the shop, and the figures show very clearly the decline in this side of the business as the partners concentrated more and more on banking. From 1686 until 1696 the ratio of these assets to deposits averaged just over 17 per cent. In 1697 and 1704 they were 7 per cent. and in 1712 only 1 per cent. On two occasions the assets included an item “Sweep” of £40 and £220, obviously referring to the sweepings from the goldsmith’s workshop.
The total of deposits varied fairly considerably, being £109,000 in 1694 and again in 1712, while the figure rose to £160,000 in 1690 and to £177,000 in 1704.
In 1686 the balance sheet shows liabilities exceeding assets by £39 Os. 11d., but thereafter a credit balance was maintained varying up to £8,500. Only once—in 1697—do the balance sheets mention any division of profits. On that occasion the amount divided was £2,250 and at the same time £1,878 8s. 5d. was allocated as “Provision for Bad Debts.” Some idea of the profits, however, can be obtained by reference to the partners’ own accounts. Francis Child joined Robert Blanchard as a partner in the goldsmith business at about the time he married Blanchard’s step-daughter, Elizabeth Wheeler, in 1671, and we find him credited with £50 on October 22, 1674, “ p. Pfitt to Mich. 74,” with a further £50 a year later. No further entry can be found until 1697, by which time Blanchard had died and Sir Francis Child (he was knighted in 1689) was the senior partner. In September of that year, as has already been stated, £2,250 was divided, of which Sir Francis received £1,000. There is then a further gap until 1701 from which year the figures are more regular—and astonishing, considering the size of the business. In August, 1701, he was credited with £3,000; October, 1702, with £4,000; February, 1704, with £8,000 together with a further £4,000 in the July of the same year. From that time until his death in 1713, Sir Francis took a smaller share in the profits amounting only to £1,200 a year: a further £1,000 being divided between the other partners. It is of interest to note that throughout this latter period the entries always record the same detail— "Recd. on acct. of profits of ye Shop since Mich. 1704,” confirming the fact that there was no “ Casting up ye Shop ” during the intervening years.
Sir Francis Child kept accounts in his books for a number of his fellow goldsmith bankers, entries in which show that they were in the habit of paying each other’s notes and leaving amounts with each other to meet such liabilities. Examination of these accounts raises an interesting question as to their business arrangements. It would appear that while not actual partners in their business as bankers, they did, in fact, combine for the purpose of their goldsmith business in some form of co-partnership. The ledger for 1669-1679, for example, contains a lengthy and detailed account, headed by the clerk “Inventory of Dyamonds and Jewels betweene Mr. E(ast) and my M(aste)r.” And for the better identification of these partnership assets there are appended several pages of drawings of individual items with a note of their value and eventual disposal.
In the same ledger is the account of this John East—who carried on his business in the Strand, only a few doors away from Child’s— and this is debited and credited with “4 pte” of sales and purchases - of jewels. As an instance of the way this worked, Robert Flatman’s account with Child’s is debited September 30, 1670, with £23 10s.— for a diamond ring; John East’s account being credited the following February 22 with £11 15s.—"4 pte of a ring sold Mr. Flatman.” Similarly, debit entries in John East’s account, such as “ Pd. by 4 pte of a Ring he sold of ours," shows that the partnership operated both ways.
Contemporary with these accounts, but in the ledger for 1677-1682, there is a further account of "Dyamonds bought betweene Mr. Mawbert, Mr. Churchey, Mr. East and ourselves," and Mr. Churchey’s separate account in the same ledger is debited and credited with items “in pte of” various transactions.
As has already been said, the prominence of the goldsmith side of the business diminished considerably towards the end of the seventeenth century, but cheques continued to be addressed to “ Sir Francis Child & Compy., Goldsmiths ” until well into the next century, and it is not until 1729, the year they first issued printed bank notes, that we find a cheque addressed to the firm as “ Bankers.”
The personal banking, started so many years ago, is still carried on at Child’s Branch on the very same site where it started, and among the bank’s customers are many who can find the accounts of their ancestors in the early ledgers. These contain not only much material of considerable banking interest, but they also have a lighter side. What could be more human, for instance, than the little note penned by the young son of the Ist Duke of Beaufort in 1686—when he would have been about eighteen—addressed to his father’s banker?
Pray do mee the favour to pay this bird-man four guineas for a paire of
parckeets that I had of him. Pray dont let any body either my Ld. or
Lady know that you did it and I will be sure my selfe to pay you honestly
againe.
ARTHUR SOMERSET
Chelsey
the 23d. of September 86
Notes:
1. D. M. Joslin, "London Private Bankers, 1720-1785," Economic History Review, second series, VII (1954).
2. The security for this loan appears to have been over-valued, for when she died two years later, in debt to the bank, they purchased the plate in part settlement for the sum of £3,791 5s. 9d. only.
3. Cousin of the celebrated Sarah, Duchess of Marlborough.
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