The Banking Crisis of 1825

Banking Crisis – Lloyds was a safe bank in 1825

The recent banking crisis and the failure of the Scottish attempts to take over the banking world in the UK two years back has set me thinking about the earlier attempts at setting up regional banks and in particular the setting up of the first real retail type banks in the UK. Many years ago numerous county banks were created in different parts of Britain, including Gods Country Wales. There were a number of so called drovers’ banks set up in mid-Wales at that time. Drovers as in ‘rawhide’, the famous cowboy series took the cattle (and sheep) to market and returned the money from the sale to the farmers – which could mean they had quite a considerable sum of money on their person. They would set off with chuck wagon, outriders etc. and fighting off Indians and Brumies would travel the some 180 miles to market to sell their stock.

This growing trade with London’s Smithfield market demanded a relatively secure way of transmitting bills of exchange – i.e. bank notes. One such example was the ‘Black Ox’ drovers’ Bank set up by David Jones of Llandovery in 1799 in the tap room of the Black Ox Pub where the deposits were kept in the coal scuttle behind the bar. The notes depicted the Welsh Black breed of cattle as the motif (shown below) – definitely a better idea than some second rate prince or monarch we now have to put up with nowadays. This Bank is claimed to be the first (real) bank in Wales founded by the drovers John Jones and David Lloyd although I cannot confirm both these names – The bank originally occupied The Black Ox at Llandovery, and later on had premises at The King’s Head inn from 1799 – 1848. An interesting side note on this bank is it later became the Lloyds Bank we all know and love as a main street player in the UK and taker of vast sums of tax-payers money in bailouts. A little earlier in Aberystwyth in 1762 there was a bank formed in the same year a customs office opened in the town, a bank called Banc y Llong (the Ship Bank), followed by a bank known as the Black Sheep Bank because of the picture of a sheep on its notes being chased by a shepherd with his trousers down. There is an example of a note shown below (no shepherd in this version).

In 1825 a crisis occurred which saw the collapse of many private banks across the country. A major factor was the over-issuing of notes and the allowing of debt to spiral out of control such that the sum total of the issued notes could not be honoured if they all came in for payment together. Other contributory factors included a tighter fiscal policy by the London banks a latter day ‘credit crunch’ and bad speculation in the booming industries in the north of the country coinciding with a slump in agriculture. I think this is surprising for the parallelism with what has gone on recently. The collapse of one or two banks caused a run on the others creating a ‘domino effect’ and general panic set in – there were runs on the banks! There are numerous stories from this period about the ruses used by the banks in an attempt to allay the panic. Staff would haul large sacks of scrap metal across the bank in full view of the customers, the sacks having a handful of gold coins on the top to make it appear that the bank had large funds. Nowadays we do this by pumping huge sums of taxpayers money by the European Central Bank to make out the banks in Spain for example are stable and we have Major Merkosy telling us not to panic as they have everything under control so the similarities could not be more obvious.

This is an Article I found on the Black Ox Bank

The Bank was called Banc yr Eidion Du in Welsh, because the notes issued by it were engraved with the picture of a black ox. This bank was opened in 1799 by David Jones *in rooms at the King’s Head, Llandovery. He was a*local farmer’s son and a former drover whose wife brought with her a fortune of £10,000. The business was very profitable, it was said that its founder “knew of more ways of making money than there are public houses in Llandovery.” There were a few !*When he died David Jones left an estate of £140,000 plus landed property. He was High Sheriff of Carmarthenshire in 1825, during the financial crisis of 1825/6, when 70 private banks in England and Wales failed, the reputation of the Black Ox was so high that customers had more faith in its stability than *in the Bank of England. He was followed in the business by 3 sons who opened branches in Llandeilo and Lampeter. The firm continued under the name of David Jones & Sons until 1909 when it was amalgamated into Lloyds Bank


Nice link to a post on the Welsh Pound

A local provincial banknote from Wales
A local provincial banknote from Wales

This is an example of a Black bull from Wales