Cork history, Dublin History, General History, Political History

The road to an Irish national bank

The road to an Irish national bank

Niall C.E.J. O’Brien

Up until the end of the seventeenth century banks were often establishments that were attached to another principal business such as a merchant business. The first stand-alone bank was founded in Cork in 1680 by Edward and Joseph Hoare. The Hoare brothers were city merchants who were extensively involved in overseas trade and foreign exchange.[1]

About the same time a Huguenot refugee, David Digues La Touche settled in Dublin. There he developed a successful cloth dealership and merchant business. In the early 1690s David La Touche opened a bank with other partners. Through David’s business contacts the bank grew beyond its Dublin base.[2]

But this growing banking sector was without a head. In 1694 the Bank of England was established as the national bank of that country. This was followed in 1695 by the Bank of Scotland as the national bank of that country. Although great efforts were made in 1695 to establish a national bank in Ireland no such institution was founded.[3]

In 1692 the Irish House of Commons claimed ‘sole right’ to initiate financial legislation.[4]

In the years since 1680 many of the newly formed banks in Dublin, Cork and half a dozen other towns were both innovative and versatile in their business accruement. Among the activities of the banks was the remitting of large sums of money around the country, and between Ireland and England for merchants, landlords and government agencies. The banks also provided much needed short-term credit to merchants by issuing their own bank notes for bills of exchange prior to maturity.[5]

One characteristic of the early eighteenth century banks was their embodiment of merchant and landlord interest in mutual benefit.[6] The forthcoming debate on a national bank would test this mutual involvement.

Beginning in 1719 another attempt was made at forming a national bank. In 1720 about thirteen members of the House of Commons held senior positions within the Irish revenue service.[7] In December 1721 Lord Chancellor Midleton described a group of MPs as being ‘dependents on the Custom house’ during the final days of the national bank debate.[8] But the monetary interest in setting up a national bank was not as strong as the landed gentry block in the House of Commons.

On 9th December 1721 the Irish House of Commons voted on the issue of a national bank. The proposal for a national bank was defeated but the margin of the defeat is in some dispute. Two documents among the Rosse Papers give different votes. One document claims that one hundred and fifty members voted against and eighty voted for the bank but the other document said that one hundred and fifty-two voted against with ninety-eight for the proposal.[9] The divisional list among the Midleton papers at the Surrey History Centre (MS 1248/5, ff 105-6), records a different vote, but the same result.[10]

 

Parliament house dublin

Parliament House, Dublin and later HQ of the Bank of Ireland

The defeat of the national bank proposal was a telling display of the landed gentry’s dominance of parliament. There was no countervailing ‘moneyed interest’ as at Westminster.[11]

The failure to establish a national bank in Ireland was highlighted in a big way in 1722 with the granting of a royal patent to William Wood to coin copper halfpence pieces.[12] William Wood, a Wolverhampton manufacturer, was licenced to produce £100,800 worth of coins.[13] Lord Justice King and the Irish revenue commissioners separately wrote to the government with strong objects. They warned that the patent would be strongly opposed in Ireland because such a large production of copper coins would destroy the Irish economy.[14]

The political establishment in Ireland united in near one voice in opposition to the Wood patent. Both Houses of Parliament passed resolutions against it and members of the Privy Council and the revenue commissioners refused to use the coins in official receipts and payments.[15] When the Irish Parliament met in September 1732 opposition had become so strong that nobody would defend the patent in public. Even the government’s chief parliamentary manager, Speaker William Connolly, refused to defend the government’s position.[16] The London ministry of Sir Robert Walpole promised to reduce the amount of coins to £40,000 but the opposition remained firm. The patent was eventually cancelled in September 1725.[17]

In 1757 the Irish Parliament passed the Banking Act. One of the Act’s chief provisions was the exclusion of wholesale merchants from the business of private banking. This Act was possibly a reaction of fear by many Protestant landlords at the growing number of prosperous Catholic merchants across the country. Yet even after decades of economic growth by 1775 less than a third of Dublin merchants were Catholic and less the a quarter were so in Cork.[18] But, as in many other times and issues, perception is always a more powerful mover in times of fear than hard facts.

A consequence of this Act was that the surviving older banks and the small number of new banks founded after 1757 were primarily ‘conservative money-moving agencies’ and very reluctant providers of merchant credit.[19]

The old proposal for a national bank resurfaced amidst the economic crisis of 1778-1780. In 1778 three leading Dublin banks had gone bankrupt. Yet the supporters of the new proposal view the established of the bank as a patriotic measure. By 1781 the government came to see the national bank, along the lines of the Bank of England, as a necessary economic measure. In contrast to the 1720 proposal the landed gentry supported the 1780 scheme.[20] The pockets of the gentry had suffered during the crisis of 1778-1780 and money or even the lack of it always talks and persuades the most reluctant of people.

In 1783 Ireland finally got a national bank when the Bank of Ireland was established by royal charter. One of the Bank’s perks was that it was the only bank within a 50-mile radius with a licence to print its own bank notes. The Bank soon became the government’s banker as well as forming a number of public and commercial functions. Yet it did not establish branches within or outside Dublin.[21] After the Act of Union of 1800 ended the independent Irish parliament, the Bank of Ireland purchased the disused parliament building in College Green for its own headquarter. Yet a fully fledged central bank did not come into existence until 1943 with the formation of the Central Bank of Ireland.[22]

 

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[1] Ollerenshaw, P., ‘Banking’, in Connolly, S.J. (ed.), The Oxford companion to Irish History (Oxford, 1998), p. 36

[2] Ollerenshaw, ‘Banking’, in The Oxford companion to Irish History, p. 36

[3] Ollerenshaw, ‘Banking’, in The Oxford companion to Irish History, p. 36

[4] McNally, P., Parties, Patriots & Undertakers: parliamentary politics in early Hanoverian Ireland (Dublin, 1997), p. 191 accessed 3rd March 2014

[5] Dickson, D., New Foundations: Ireland 1660-1800 (Dublin, 2000), p. 135

[6] Dickson, New Foundations: Ireland 1660-1800, p. 135

[7] McNally, Parties, Patriots & Undertakers, p. 114

[8] McNally, Parties, Patriots & Undertakers, p. 114

[9] Malcomson, A.P.W. (ed.), Calendar of the Rosse Papers (Dublin, 2008), pp. 235-38

[10] Malcomson (ed.), Calendar of the Rosse Papers, p. 235

[11] Dickson, New Foundations: Ireland 1660-1800, p. 86

[12] McNally, Parties, Patriots & Undertakers, p. 127

[13] Anon, ‘Wood’s Halfpence controversy (1722-5)’, in Connolly, S.J. (ed.), The Oxford companion to Irish History, p. 598

[14] McNally, Parties, Patriots & Undertakers, p. 127

[15] Anon, ‘Wood’s Halfpence controversy (1722-5)’, in The Oxford companion to Irish History, p. 598

[16] McNally, Parties, Patriots & Undertakers, p. 127

[17] Anon, ‘Wood’s Halfpence controversy (1722-5)’, in The Oxford companion to Irish History, p. 598

[18] Dickson, New Foundations: Ireland 1660-1800, pp. 86, 134

[19] Dickson, New Foundations: Ireland 1660-1800, pp. 86, 135-6

[20] Dickson, New Foundations: Ireland 1660-1800, pp. 184-5

[21] Ollerenshaw, ‘Banking’, in The Oxford companion to Irish History, p. 36

[22] Ollerenshaw, ‘Banking’, in The Oxford companion to Irish History, p. 37

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