{"id":19700,"date":"2022-10-30T20:38:26","date_gmt":"2022-10-30T20:38:26","guid":{"rendered":"https:\/\/legalblog.ie\/?p=19700"},"modified":"2024-01-27T18:32:57","modified_gmt":"2024-01-27T18:32:57","slug":"early-banking","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/early-banking\/","title":{"rendered":"Early Banking"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/early-banking\/#Background\" title=\"Background\">Background<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/early-banking\/#18th_Century_Merchant_Banks\" title=\"18th Century Merchant Banks\">18th Century Merchant Banks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/early-banking\/#Bank_of_Ireland\" title=\"Bank of Ireland\">Bank of Ireland<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/early-banking\/#Bank_Collapses\" title=\"Bank Collapses\">Bank Collapses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/early-banking\/#Failed_Banks\" title=\"Failed Banks\">Failed Banks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/early-banking\/#Monetary_Conditions\" title=\"Monetary Conditions\">Monetary Conditions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/early-banking\/#Insurance\" title=\"Insurance\">Insurance<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Background\"><\/span>Background<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Early Banks were not effective at mobilising capital.\u00a0 They largely facilitated the transfer of funds. Anti-usury legislation fixed interest rates at a maximum of 7 percent in 1721.<\/p>\n<p>Monies were most commonly transferred by bills of exchange written between merchant houses.\u00a0 Bills of exchange facilitated international and domestic trade.\u00a0 Government bills drawn on the treasury had a greater security and less risk of default.\u00a0 They were more marketable.<\/p>\n<p>Bills were bought and sold generally at a discount, representing an implicit interest rate and risk premium.\u00a0 Bills drawn on reliable houses and merchants were more valuable.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"18th_Century_Merchant_Banks\"><\/span>18th Century Merchant Banks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>By the middle of the 18th century there were a number of merchant houses of London\/Irish origin which facilitated Irish trade.\u00a0 London was a centre of international commerce with connections to North America, the Indies, Caribbean etc. Merchants required reliable correspondents in foreign ports and places to reliably undertake business.<\/p>\n<p>The most famous Irish bank in the 18th century was the La Touche Bank.\u00a0 It developed from business established by Huguenot refugees in 1710 and was a family business.\u00a0 The bank were bankers to many of the landed gentry. The bank had correspondents in many English and European cities.<\/p>\n<p>A statute was passed in the middle of the 18th century following a collapse of a bank prohibiting merchants also trading as bankers. The legislation was circumvented in practice.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bank_of_Ireland\"><\/span>Bank of Ireland<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In 1696, the Bank of England had been formed providing services for the British government. \u00a0In 1782, governmental and financial interests pressed for the establishment of a national bank leading to establishment of Bank of Ireland.\u00a0 It was established with an authorized capital of \u00a3600,000 subscribed by directors.<\/p>\n<p>The Bank was incorporated and remains to this day incorporated as the Governor and Company of the Bank of Ireland.\u00a0 Provision in 1756 legislation restricted the banks to six partners was varied for the bank.<\/p>\n<p>The Bank commenced with a initial \u00a3600,000 with power to borrow another \u00a3600,000 serviced and secured against a government loan.\u00a0 The board of directors of the bank were subject to the oaths of allegiance and supremacy.<\/p>\n<p>From 1797 the bank managed the national debt and by the end of the 18th century it had matched in size all of the private banks in Dublin.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bank_Collapses\"><\/span>Bank Collapses<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Most banks in Ireland in the 18th century were relatively local, small-scale and were almost always partnerships.\u00a0\u00a0Banking was very unstable in the 18th century.\u00a0 There were frequent bank runs and bank partnerships commonly went bankrupt.<\/p>\n<p>A bank run could be engendered by rumour.\u00a0 There were a number of periods of severe financial instability in the middle of the 18th century.<\/p>\n<p>A number of banks collapsed in the middle of the 18th century due to economic circumstances and strained liquidity arising from bad debt experience. Hints or rumours of financial crisis could engender a lack of confidence.\u00a0 Famines, \u00a0rebellions and international wars were common in the 18th century caused bank runs as persons tried to convert banknotes into gold or other valuables.<\/p>\n<p>Legislation in 1756 precluded merchants involved in foreign trade from engaging in banking.\u00a0 Banking and commerce were insulated.\u00a0Private banking in the latter part of the 18th century did not display the same innovative character as earlier in the century.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Failed_Banks\"><\/span>Failed Banks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>1731\u2013 The banking firm of Mead &amp; Curtis (established 1710) in Dublin failed with debts of \u00a310,500 and\u00a0a relief Act was passed<\/li>\n<li>1733\u2013 Burton\u2019s Bank crashed\u00a0leaving debts of 79,128 pounds, 5 shillings and 4 pence<\/li>\n<li>1754-55\u2013 There was a major banking crisis when 3 banks failed due to frauds\n<ul>\n<li>Dillon &amp; Farrell Bank<\/li>\n<li>Willcox &amp; Dawson Bank<\/li>\n<li>Lennox &amp; French Bank<\/li>\n<\/ul>\n<\/li>\n<li>1758\u2013\u00a0Clements, Malone &amp; Gore Bank failed<\/li>\n<li>1759\u2013 R. &amp; T. Dawson Bank and Mitchell &amp; Macarill Bank suspended payments which \u00a0led to widespread panic and the remaining banks were government guaranteed<\/li>\n<li>1779\u2013 there was a further crisis, leading to failures of 2 banks\n<ul>\n<li>Mitchell Bank<\/li>\n<li>Underwood Bank<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Monetary_Conditions\"><\/span>Monetary Conditions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There was no Irish mint.\u00a0 A range of coins circulated with value pegged to their metallic value.\u00a0 Traders minted coinage in terms of metallic value and weight.<\/p>\n<p>In the wake of international financial crisis arising from the French wars the Irish rebellion and other international factors, the British government went off the gold standard for most purposes.<\/p>\n<p>The lack of confidence made other investments unattractive and appears to have increased interest in government stock.\u00a0 Legislation of the Irish Parliament in 1799 regulated the past legislation, regulating an Irish Stock exchange for the purpose of sale and purchase of government securities.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Insurance\"><\/span>Insurance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The first insurance businesses were formed in the mid-18th century in Dublin.\u00a0 Numbers of merchants associated themselves for the purpose of insuring lives, merchandise.<\/p>\n<p>Marine insurance was available in Dublin and Cork in the middle of the 18th century.\u00a0 Life, fire and marine business were the most commonly transacted.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-19700\" data-postid=\"19700\" class=\"themify_builder_content themify_builder_content-19700 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Background Early Banks were not effective at mobilising capital.\u00a0 They largely facilitated the transfer of funds. Anti-usury legislation fixed interest rates at a maximum of 7 percent in 1721. Monies were most commonly transferred by bills of exchange written between merchant houses.\u00a0 Bills of exchange facilitated international and domestic trade.\u00a0 Government bills drawn on the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[282],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/19700"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=19700"}],"version-history":[{"count":7,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/19700\/revisions"}],"predecessor-version":[{"id":31105,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/19700\/revisions\/31105"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=19700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=19700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=19700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}