The 18th Century saw the roots of modern day banking in England. International trade and the various wars, most importantly, the war with France, led to the development of the British banking system. Checks and banknotes appeared, as well as the founding of the Bank of England.

Before banks, many of the services we think of when it comes to banking were provided by merchants and brokers, but, most assuredly, by goldsmiths located in most cities and large towns, but, especially, in London. Goldsmiths, as early as the 16th Century, accepted deposits, made loans, and transferred funds. Goldsmiths did more than deal with coins, meaning gold coins, deposited with them. Their promises to pay were accepted as “legal tender,” and these receipts were known as “running cash notes.” They were made out in the name of the depositor and were a promise to pay him on demand. These Goldsmiths were men of character, whose word was as good as the law. They issued endorsed receipts, which one could return to collect his money.

After the name of the depositor, these receipts would carry words “or bearer,” permitting a certain style of circulation of funds, not found previously.

The Bank of England was founded in 1694 as a means to raise money for King William III’s war against France. “Almost immediately the Bank started to issue notes in return for deposits. Like the goldsmiths’ notes, the crucial feature that made Bank of England notes a means of exchange was the promise to pay the bearer the sum of the note on demand. This meant that the note could be redeemed at the Bank for gold or coinage by anyone presenting it for payment; if it was not redeemed in full, it was endorsed with the amount withdrawn. These notes were initially handwritten on Bank paper and signed by one of the Bank’s cashiers. They were made out for the precise sum deposited in pounds, shillings and pence. However, after the recoinage of 1696 reduced the need for small denomination notes, it was decided not to issue any notes for sums of less than £50. Since the average income in this period was less than £20 a year, most people went through life without ever coming into contact with banknotes.” [A Brief History of Banknotes]

In addition, people with money could write to the goldsmith to transfer money into another person’s account, which was an early form of writing a “check.” However, with more access to international trade and investments, a need to move money more efficiently was required. Thus, goldsmith houses became the banks of the 1700s.

As mentioned above, fixed denomination notes were common. The Bank of England began issuing partly printed notes for completion in manuscript around 1730. “The £ sign and the first digit were printed but other numerals were added by hand, as were the name of the payee, the cashier’s signature, the date and the number. Notes could be for uneven amounts, but the majority were for round sums. By 1745 notes were being part printed in denominations ranging from £20 to £1,000.

“In 1759, gold shortages caused by the Seven Years War forced the Bank to issue a £10 note for the first time. The first £5 notes followed in 1793 at the start of the war against Revolutionary France. This remained the lowest denomination until 1797, when a series of runs on the Bank, caused by the uncertainty of the war, drained its bullion reserve to the point where it was forced to stop paying out gold for its notes. Instead, it issued £1 and £2 notes. The Restriction Period, as it was known, lasted until 1821 after which gold sovereigns took the place of the £1 and £2 notes. The Restriction Period prompted the Irish playwright and MP, Richard Brinsley Sheridan, to refer angrily to the Bank as ‘… an elderly lady in the City’. This was quickly changed by cartoonist, James Gillray, to the Old Lady of Threadneedle Street, a name that has stuck ever since.”

A great source for everything “normal” during the Regency era is the book, In These Times, by Jenny Uglow. [As the Napoleonic wars raged, what was life really like for those left at home? Award-winning social historian Jenny Uglow reveals the colourful and turbulent everyday life of Georgian Britain through the diaries, letters and records of farmers, bankers, aristocrats and mill-workers. Here, lost voices of ordinary people are combined with those of figures we know, from Austen and Byron to Turner and Constable. In These Times movingly tells the story of how people really lived in one of the most momentous and exciting periods in history.]

This book contains a lot of information on banks. It concerns the impact of the Wars on life in England, and follows certain families, some involved in banking, for the duration.  You might be surprised by the number of local banks and the amount of commerce it discusses. There are several references to banking and banks.– city banking and country banking. The Bank of England. ” Several private banks dotted down Fleet street and the Strand to Charing Cross, a busy corridor between the city and Westminster and the West end, all dealing with wealthy landed customers in need of mortgages and loans,or, if they were flush, a safe house for their deposits. …. Each bank had its distinctive clientele: Praed & Co in Fleet Street had the West Country and Cornish business; Drummond’s catered for army agents, Gosling’s and Child’s for East India company tycoons; Coutts dealt with the aristocracy and never with industry; Wright’s in Covent Garden looked after the Catholic gentry and Herries Bank in St. James Street, further west, issued cheques for smart travellers setting out on the grand tour.The rule at Hoare’s was that one partner was in attendance at all times…. Ten clerks. One must be in at all times even on Sundays and Christmas day. They could live there.”

Baring’s was a merchant banker even if the word was not used at that time. The Quakers had several banks: Lloyd’s in Birmingham, Backhouse in Darlington, and Gurney’s in Norwich.

Supposedly, Child & Co. was one of the London banks that catered to aristocrats, so I’m using that as my hero’s London bank.

In Jane Austen, Edward Knight & Chawton : Commerce and Community by Linda Slothouber, the author says Edward Austen Knight’s primary London bank was Goslings Bank. He also used a bank founded by his brother Henry. Austen, Maunde & Austen, which went bankrupt, causing Edward to suffer a substantial loss.

Book Blurb: When Jane Austen’s third brother, Edward, inherited the estates of his rich relatives, he took on their surname, Knight, and he took control of property scattered across five English counties. Jane visited her brother at his home in Kent, and she spent her final years in a cottage he owned in the village of Chawton in Hampshire. From these vantage points, she observed Edward’s approach to managing his estates and learned about the concerns and activities of wealthy landowners, knowledge that is reflected in her novels.

Using original estate books, bank records, letters, and other archival sources, Linda Slothouber has created the most detailed portrait to date of Edward Knight. With Edward as an example, along with excerpts from Jane Austen’s novels, the reader discovers how the landed gentry of fact and fiction made their money, tried to ensure the prosperity of their heirs, and interacted with workers on their estates. People at all levels of the estate economy are represented, with profiles of specific individuals that Jane Austen would have known during her years in Chawton.
To fully understand the social criticism and subtle humor in Jane Austen’s novels, it is necessary to understand her world; while the pastimes of the gentry are often in the foreground, the business of estate ownership is an essential foundation. Learn what being “Lord of the Manor” and having “ten thousand a year” really meant; what stewards, bailiffs, overseers, and churchwardens did; who administered the civic affairs of the village; how attitudes toward natural resources and common property changed during Jane Austen’s lifetime; and why the estate-owner, though at the top of the social order of the village, was often judged according to the well-being of his humblest cottagers.

Goslings bank had records of money deposited in country banks. One such was Hammond & Co, in Canterbury. That bank consistently sent large deposits to the Gosling bank. I imagine these deposits would travel with guards. Agents also regularly made deposits in the Gosling bank. They were close enough to town to do so.

Sparrow & Co., an Essex bank also made deposits into the Gosling account. Money for current expenses and for current wages were kept on hand so not all money was sent to the bank. People were not quite in the habit of writing checks. Coin was preferred to paper, and most servants and such were paid in coin. Though this book is about the finances of Edward Austen Knight, it is the only one so far that I have found that actually discusses the bank deposits. Others discus the debts, the expenses, loans made by the landowner to others or taken out from a bank.

Banks in the countryside grew exponentially after the recoinage of guineas in 1774, meaning an institution/established business was required to collect coins and provide alternate currency for the people in the surrounding villages and neighborhood.

If one was involved with government securities, were part of the aristocracy, or the gentry, or was a wealthy barrister, one would customarily use these banks: Hoares, Coutts, Childs, and Drummonds.

If one was a member of the stock exchange, acted as a liaison for country banks, or did business with traders and manufacturers, one would deal with Martins, Mastermans, Curries, or Glyn Mills.

Other Resources: 

BANKING AND BANK NOTES:

Banking in Eighteenth Century England

http://www.umich.edu/~ece/student_projects/money/banking.html

British Banking History

http://www.banking-history.co.uk/history.html

Regency England and Money

http://hibiscus-sinensis.com/regency/money.htm