Cash crisis, 1797
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The Distress of the Publick in general & Individuals in particular seem daily encreasing… We have had Hints from our Friends that a run is intended on our Bank ...
When I started Histories at the end of 2020, my impetus was to focus on the unheard voices of history, the diaries, letters and other writings of people not known to the school history textbooks or the covers of popular magazines. I’ve managed that often enough I hope (explore the archive here), but inevitably the louder voices of well-known figures (right up to royalty) have barged in, too. But this week, we’re back in the realms of the quieter ones.
I spotted that this week marks the 225th anniversary of the introduction of the £1 note by the Bank of England. I can remember the last incarnation of these from childhood – they were replaced by the £1 coin in 1988. Anyway… the new notes in 1797 were released due to a currency crisis1 – to put it in a nutshell, the cost of fighting the French in this era led to a shortage of gold (plus there was a context of credit panic due to a property bubble bursting, and poor harvests). The botched French invasion of Fishguard at the end of February fed into this mix, and many people rushed to withdraw money. On 3 March 1797, The Times noted that ‘specie’ (money in the form of coins) was being hoarded:
There can be no doubt whatever, but that large sums of specie have been drawn out of the Bank, and concealed in the houses or gardens of private persons. As this stoppage of general circulation is highly prejudicial to the Public Weal, we have only to observe to such persons, that their extreme and foolish timidity may produce to themselves the very consequences they seek to avert; and that instead of being richer, they may fall the first victims of their alarms.
A bit like people hoarding toilet paper in the early days of the Covid-19 outbreak, eh?
So the Bank of England began to print money in this new form (higher-value notes already existed, but the problem was now cashing them). This only lasted until 1821, when the £1 note and its £2 sibling were withdrawn, and the next time the pound reappeared in paper form was during a similar shortage of gold during the First World War.
I wondered if anyone had written about the new notes, whether in outrage or delight. I have only managed to find one source: a banker in Bury St Edmunds, Suffolk by the name of James Oakes. His diaries were published in two volumes in 1990 (spanning 1778–1827 in total) by Suffolk Records Society.2
James Oakes (1741–1829) was a pillar of his community – by the time he started the surviving diaries (which survive in 14 bound volumes), he had been a yarn merchant for 16 years, was town alderman and was involved with various local charities; he had a wife, Elizabeth Adamson, three years his senior, and four children. In 1794, he opened his own local bank (Bury New Bank), where he continued to work until in his eighties. The editor of his diaries, Jane Fiske, describes him as “a methodical and orderly man” – he began by recording factual details of their social lives and business affairs, but over time the writing bug clearly gripped him as his ‘account books’ became ‘journal books’ giving us a good record of provincial life and society, even if his inner life is somewhat absent and, as Fiske notes, his diary “has no literary merit and was clearly written in haste”! His account of the national banking situation is therefore terse, but at least shows us how it affected ordinary middle-class people.
Monday February 27
At home alone. By order of Council the Bank issued a publick Notice that to guard against a want of Specie all Dividends & Bank Stock would be paid in Bank Paper & not in Guinies. [sic]
This day all the 5 Norwich Banks suspended transacting any more Business until it could be known what Parliament would do in Consequence of the order.
Wednesday March 1st Ash Wednesday
The three Banks in Bury, JO & Son, Spink & Carss & B & T Cork thought it expedient to follow the Example of the Norwich Bankers & suspend all their Transactions in their Business for the present waiting the Event of Parliament. A general Meeting of the Inhabitants was calld by the Alderman & many attended with the principal Merchants, Farmers & Others & an Agreement was signd by upwards of 100 to support the Credit of [the] said Banks & Town by receiving their Cash Notes as usual.
Thursday March 2
The Suspension of Business continued by the Bankers, excepting in trifling matters for mere accommodation. The Gentlemen, Traders &ca all in general very well satisfied…
Saturday March 4
The Bankers commencd transacting Business as usual excepting that they paid only in Bank of England Notes & no specie excepting the fractional parts as not a Guinea could be procur[e]d from Town. The Bankers accepted the Notes of other banking Houses usually in Circulation in payment on acc[oun]t but did not give Bank [i.e. Bank of England notes] for these if Payment was requird then by Dr[af]t on a month on Town.
(Weather continud dry w[it]h Cold South East winds.) Family at home alone.
Coroner’s Inquest sat on the Body of Sparham supposd to have died by taking some poisonous potion. The [Jury’s] verdict cleard the Person suspected.
We this Day receivd by post the joyful News that John Jervis’s Fleet consisting of only 15 sail of the Line had defeated the Spanish Fleet … At this Critical Juncture perhaps the most providential & happiest Event that could have happend to this Kingdom…
Sunday March 5
We din’d at Mr Adamson’s, drank Tea & staid till 8 O’Clock… My Son Orbell went to London by this Evening’s Mail to bring home some of the new small Bank 20/- & 40 [i.e. 20 and 40 shillings = £1 and £2 notes], also, if possible, some specie & Dollars and to bring home our own Cash Notes. [These were Spanish dollars but with George III’s head stamped on them.]
Tuesday March 7
Market Day on [account] of the Fast on the Morrow. A great number of applications for Cash. We paid [our] own Notes with Bank £5, £10 & had abt £50 of 20/- & 40/- to distribute but soon gone. We parted with as little Cash as possible & upon the whole rather encreasd our Specie. The Day passd off upon the whole very pleasantly every Body seemd disposd to make the best shift that was possible hoping a few weeks might remedy the prest Inconveniencys…
Wednesday March 8
The General Fast wch was duly observd thro out the Town.3 Son Orbell returnd home this Morng by the Mail from London. Not any small Bank 20/- & 40/- to be procurd at prest of any Consequence. We are deliberating abt the issue of our own small Notes of 20/-, 15/- & 5/-.
Monday March 13
… Mess B & T Cork stopp’d payment at their Bank… This Day abt 12 O’Clock Mess Spink & Carss’s Bank stoppd Payment. The Consternation & Confusion occasiond in the Town by this Event passes Description.
Thursday March 16
Bury continued in much Confusion on acct [of] Mess Spink & Carss Stopping. A Dockett is said to be struck by Mr Leech. Very few of our own Cash Notes continue coming in. Several applications from most respectable People as Customers to our Bank & every attention shown us.
Friday March 17
From the Reports of the Day Mr Carss’s Affairs are in an very perplexd State & apparently a large Number of Creditors. It is said that £6,000 remains unp[ai]d by Mr Spink[’s] Executers to the Exchequer. Our Banking Concerns continue to go on very smoothly—no Quantity of our Notes brot in for payment.
Monday March 20
The Distress of the Publick in general & Individuals in particular seem daily encreasing… We have had Hints from our Friends that a run is intended on our Bank ... next Wednesday. Son Orbell to London by Norwich Coach this Eveng to return with a further Supply of Bank against Wednesday.
Tuesday March 21
The rumour continued to prevail that we should certainly have a sharp run upon my House this day as to Morrow but have no question shall be most amply provided being determind to carry it thro’ with Spirit. Thank God, situated as we are, [we] have nothing to fear. All continued this Day very pleasant our Business encreasing from all Quarters.
March 22 Wednesday
This Day passd off with us most pleasantly. So far from any run upon Us the No. of Notes came in were very inconsiderable. The Town extremely full & our Bank was resorted to from Morng till Night by the most respectable Merch[ant]s, Farmers &c &c. It is impossible the prospect can be more flattering to Us. Son Orbell returnd by Norwich Coach this Morng very amply supplyd with Bank &ca… We have nearly enough in Bank & Specie brot to Us to discharge every Cash Note of our own now in Circulation.
Oakes was very much the beneficiary of the local cash deficit, at this point temporarily becoming the only functioning bank operator in town, thanks in part at least to his prudence, and his son’s efforts to dash off to London regularly. Every crisis has winners, too…
See this article from the British Numismatic Society for the context in detail, and this page on the Bank Restriction Act 1797.
From the late 17th to the mid-19th centuries, sometimes General Fasts were declared nationally in times of crisis to encourage prayer and reflection.