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Robert E. Gross 
Colleftion 

A Memorial to the Founder 
of the 

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Business Administration Library 

l/w'versi/u o^^ Va/^ot^nta 

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MEMOIRS 



BANKING-HOUSE 



BY THE LATE 

SIE WILLIAM FORBES OF PITSLIGO, BABT. 

AUTHOR OF THE 'LIFE OF DR BEATl'IB.' 



SECOND EDITIOIT. 




WILLIAM AND ROBERT CHAMBERS, 

LONDON AND EDINBURGH. 

1860. 



Edinburgh : 
Printed by W. and R. Chambers. 



Gross Collection 
Bus. Adm. Lib. 

3 COG 



INTRODDCTORY NOTICE. 



The public is here presented with a Memoir, the genuine composi- 
tion of Sir William Forbes, regarding the history of a mercantile 
establishment, of which he was long the chief The manuscript 
having been accidentally shewn to the editor, he saw in it so much 
that was interesting, as to be induced to plead with Sir William's 
surviving friends for permission to place it before the world. It 
is consequently published at the distance of fully fifty-six years 
from the time when it was written, for the author appears to have 
closed his narration in May 1803. 

The private banking-house so long known in Scotland in con- 
nection with the name of Sir William Forbes — merged since 1 838 
in the joint-stock Union Bank of Scotland — had a somewhat com- 
plicated genealog}^, reaching far back in the last century — the 
century of progress in Scotland — and even faintly gleaming through 
the obscurities of the one before it, when mercantile efforts and 
speculations were taking their birth amidst the embers of scarcely 
extinct civil wars and all kinds of private barbarisms. The 
genealogy is here traced through a firm styled John Coutts «fe Co., 
of which the principal member was John Coutts, lord-provost of 
Edinburgh in the years 1742 and 1743, to Patrick Coutts, who 
carried on considerable merchandise at Montrose in the reign of 
William III. The concern is shewn as the main stock from which 
branched off the eminent London banking firms of Coutts & Co., 
Strand, and Herries & Co., St James's Street. 



1557G34 



11 INTRODUCTORY NOTICE. 

Tlie earlier part of the narrative exhibits banking In Its original 
condition as a graft upon ordinary merchandise. The goldsmith, 
the corn-merchant, the commission agent, were the first who gave 
bills of exchange or discounted private notes ; and such were the 
only bankers known even in England till near the close of the 
seventeenth century. The house of John Coutts & Co. was entirely 
of this nature, and it had several rivals in Edinburgh. It Is curi- 
ous to trace the banking part of their business as rising, from a 
subordination to corn-dealing and other traffic, to be the principal, 
and finally the sole business, and to learn that the banker, in 
consequence of early connections, long continued to supply distant 
correspondents with articles which would now be ordered from 
the family grocer and oilman. It has strangely come about In our 
own time, that banking companies have, in some instances, been 
drawn once more into what might be called merchandise, or more 
properly mercantile speculation, in consequence of overgreat 
advances to private traffickers. But of this vice, which we have 
lately seen productive of such wide-spread ruin, there was little or 
no appearance during a long middle period embraced by this 
Memoir. And here lies, as the editor apprehends, one of the 
chief points of interest Involved In the present volume. It depicts 
a banking-house limiting its transactions to its own proper sphere 
of business — ^yielding once or twice to temptations to do otherwise, 
and suffering from It, till at length It put on the fixed resolution 
to he a banking-house only, and neither directly nor indirectly a mer- 
cantile speculator, and thriving accordingly. The Memoir is, how- 
ever, something more than this, for it exhibits a fine example of 
what prudence, care, and diligence may achieve with small means 
in one of the most exalted branches of commerce. None of the 
men concerned in raising up this bank were rich, and we have 
details shewing us that their transactions and profits were at first 
upon a very limited scale. But the business was conducted on an 
appropriate scale of frugality ; the simple tradesman-virtues of 
probity, civility, and attention to business were sedulously culti- 
vated. All extravagance and needless risk were avoided. The 
firm was accommodated In a floor of the President's Stairs in the 
Parliament Close, and one of the partners seems to have dwelt on 
' the premises.' The whole affair thus reminding us not a little of 



INTRODUCTORY NOTICE. iii 

those modest out-of-the-way banking-houses on the continent, 
which we have sometimes such difficulty in iinding when we 
are in search of change for a circuhir note. These unostentatious 
merits, which we see every day raising humble traffickers to 
wealth and eminence, had precisely the same cfToct in the case of 
this banking-house. The well-descended Sir William tells the 
lesson Avith great simplicity and candour, and it is one which can 
never be repeated too often. 

The Avriter of this Memoii* was bom in 1739, heir to a Nova 
Scotia baronetcy, Avhich his father held without any means of sup- 
porting it, beyond his exertions as a member of the Scottish bar. 
Left fatherless at four years of age, he owed much in his early 
days to an amiable and intelligent mother, who contrived to 
maintain the style and manners of a lady on what would now be 
poverty in a much humbler grade of life. His career as a banker, 
from an apprenticeship entered upon at fifteen, till he became the 
head of an important house, and recovered all the fortunes lost or 
squandered by former generations of his famil}', is detailed in the 
work now laid before the public, along with much of the analogous 
progress made by the country during the same period. It remains 
to be mentioned that Sir William, in 1770, married a daughter of 
Dr James Hay of Hayston in Peeblesshire, and became the ftither 
of four sons, the eldest of whom, William, who succeeded him in the 
baronetcy, and died in 1828, is addressed in this Memoir; the second, 
John Hay Forbes, became a judge in the Court of Session, under 
the designation of Lord I^Iedwyn ; the third, Mr George Forbes, 
spent his life as a member of the banking-house ; the youngest, 
Charles, was an officer in the navy. Sir William, in 1 805, presented 
to the world a life of his friend Dr Bcattie, which met a favourable 
reception, not merely as an elegant narration of the biography of 
an eminent man, but as preserving a great amount of the general 
literary history of the country which must have otherwise perished. 
He did not long outlive this effi)rt, dying of water in the chest in 
November 1806, at the age of sixty-seven. 

These are but the dry bones of a life distinguished in an 
extraordinary degi-ee, not merely by energy and ability in 
professional affairs, but by ceaseless efforts of an enlightened 
character for the public good, by inexhaustible private charity, by 



ir INTBODUCTORY NOTICE. 

high taste and refinement, and the practice of all the active virtues. 
One would need to have lived through the last fifty years in Scot- 
land, to be fully aware of the excellences of various kinds which 
made people speak with such veneration of Sir "William Forbes, 
and maintain a faith in his modest private bank such as is now 
scarcely given to the joint-stock of large copartneries. It was but 
participation in a universal feeling which caused Scott to thus 
refer to Sir William, in addressing one of the cantos of Marmion 
to the amiable banker's son-in-law and the poet's friend, Mr Skene 
of Rubislaw : 

* Scarce had lamented Forbes paid 

The tribute to his Minstrel's shade, 

The tale of friendship scarce was told, 

Ere the narrator's heart was cold — 

Far may we search before we find 

A heart so manly and so kind ! 

But not around his honoured iu"n 

Shall friends alone and kindred moiu'n ; 

The thousand eyes his care had dried, 

Pour at his name a bitter tide ; 

And frequent falls the gratefiU dew, 

For benefits the world ne'er knew. 

If mortal charity dare claim 

The Almighty's attributed name. 

Inscribe above his mouldering clay, 

" The widow's shield, the orphan's stay." 

Nor, though it wake thy sorrow, deem 

My verse intinides on this sad theme ; 

For sacred was the pen that wi-ote, 

" Thy father's friend forget thou not." 

And grateful title may I plead 

For many a kindly word and deed, 

To bring my tribute to his grave : — 

'Tis httle— but 'tis aU I have.' 

And perhaps even a more expressive testimony is given to the 
character of Sir William by James Boswell, when he makes the 
following statement in his Tour to the Hebrides: * Mr Scott came 
to breakfast, at which I introduced to Dr Johnson and him my 
friend Sir William Forbes, now of Pitsligo, a man of whom too 
much good cannot be said ; who, with distinguished abilities and 
application in his profession of a banker, is at once a good com- 



INTRODUCTORY NOTICE. V 

panion aiul a good Christian, which, I think, is saying enough. 
Yet it is but justice to record that once, when he was in a danger- 
ous illness, he was watched with the anxious apprehension of a 
general calamity ; day and night his house was beset with affec- 
tionate inquiries, and upon his recovery, Te Deim was the universal 

chorus from the hearts of his countrymen.' 

R. C. 



[ADDRESS OF THE AUTHOR TO HIS SON.] 



Edinburgh, 1st January 1S03. 
My DEAiiEST William, — 

You have often heard me express an intention of writing 
some account of our house of business in Edinburgh, from its first 
establishment by the Messrs Coutts. 

The history of a society in which I have passed the whole of 
my time, from my boyish days to this present hour, during the 
long period of almost half a century, cannot but be very interesting 
to me, especially since by means of my connection with it, I have 
arrived, through the blessing of Providence, to a degree of opulence 
and respectability of position, which I had very little reason to look 
for on my first entrance into the world. I have often thought 
that such a narrative might not be without its advantage to you, 
as calculated to teach you the necessity of prudence and caution in 
business of every kind, but most particularly in that of a banker, 
in Avhose possession not only his own property, but that of 
hundreds of others, is at stake ; and as shewing you how, by a 
steady, well-concerted plan, with a strict adherence to integrity 
in all youi- transactions, aided by civility, yet without meanness, 
you can scarcely fail, by the blessing of Heaven, to arrive at 
success. 

From such a history, too, some general knowledge may be 
gained of the progressive improvement of Scotland. For, although 
it is no doubt true that, even where things remain in a good 
measure stationary in a country, the business of a banking-house, 
the longer it exists, has a natural tendency to increase, when it 
has been conducted with prudence and ability, yet it is certainly 
to the rapid progress of the prosperity of this country, that the 



via ADDRESS OF THE AUTHOR TO HIS SOX. 

very great extension of the business of our house during the last 
twenty years must, in a great measure, be attributed. To illus- 
trate this part of my proposed sul)ject, I have subjoined to my 
narrative a short and, I must acknowledge, a very imperfect 
sketch, collected from the best authorities I could meet ivith ; to 
some of which, my situation as a man of business has given me 
peculiar access. The subject is curious, and to me extremely 
interesting ; as I have lived in the very period when this improve- 
ment of our native country has assumed some form, and seems 
still to be making daily advances to yet greater prosperity — a 
reflection highly grateful to me as a Scotsman. 

To ray own memory this narrative will recall many scenes on 
which I cannot look back without the most heartfelt gratitude to 
that Almighty Being, who has been graciously pleased to shower 
down upon me so large a share of prosperity. Nor can I contem- 
plate the many years I have spent in business, and the number of 
friends of whom death has in that interval deprived me, without 
the most serious reflections on the rapidity with which this life is 
wearing away, and the propriety of my bending my thoughts 
towards another — a subject of meditation at all times proper for 
a rational being ; but peculiarly so for one who has lived so long 
as I have done in the hurry and tumult of a constant intercourse 
with the busy world — a state extremely unfavourable to sober 
thought and reflection. • 

I cannot conclude this address to you, my dearest AVilliam, in a 
better manner than by expressing my hope that this narrative will 
confii-m you in a love for that profession which you probably 
adopted at first on my suggestion. My wish certainly was to 
insure your succession to the fruits of my labours, as far as I have 
had any merit in helping to raise the house to its present flourish- 
ing state. If you continue to pay the same attention to business 
that I have done (I trust I may speak it in this place without 
vanity), I have no doubt that, by the blessing of Heaven on your 
endeavours, you may preserve the house in credit and respect- 
ability long after I shall have paid my debt to nature. But I 
never can too often nor too earnestly inculcate that the continu- 
ance of that credit and prosperity, under Providence, must entirely 
depend on yourself If you prove yourself Avorthy of the notice of 
your father's friends (of which I must do you the justice to say, I 
have at this moment the fairest hope), you may expect their most 
cordial support, as well as a continuance of that favour and pre- 
ference with which they have so long and so steadily honoured 
me. But if your own endeavours be wanting — if negligence take 



ADDRESS OF THE AUTHOR TO HIS SON. ix 

the place of attention to business, and economy be abandoned for 
profusion of expense — you may be assured that the concerns of the 
house will go speedily into decay, until at last that decline shall 
terminate in absolute ruin. For, in the course of a long experience, 
I can safely say that I have never known a single instance in 
which relaxed management and unbounded expense did not end 
in total bankruptcy. 

That the providence of the Almighty may ever watch over you 
to shield you from harm, is the earnest and daily prayer of. 

My dearest William, 

Your fond and affectionate father, 

William Forbes. 



MEMOIRS 



BANKING-HOUSE. 



The founder of the Edinburgh house of business of which I am 
now to give some account, was Patrick Cmitts, the fourth son of 
Alexander Coutts, provost of Montrose, whase grandfather is said 
to have been a son of the family of Auchintowl, and to have 
settled in Montrose in the end of the sixteenth century.* 

At Avhat period Mr Patrick Coutts removed from Montrose to 
Edinburgh I have not learned But it appears by his books of 
accounts, still in our possession, that he carried on business in 

* The pedigree of Mr Coutts has been thiis stated to me by a letter from 
Mr Cliarles Thomson of Montrose, who had it from Mrs Patison, a relative of 

the family. 

' The first of the family came to Montrose towards the end of the sixteenth 
ccnturj'. He is said to have been a son of Coutts of Auchintowl, a vassal 
of the family of Macdonald. This gentleman had a son, WiUiam, who 
was provost of Montrose. "William was succeeded by liis son, Alexander, 
who lived to a great age, and left six sons and three daughters : of the 
sons, William, the eldest, was also provost of Montrose, as was likewise 
John, the second son ; Hercules, the tliird, settled in London ; Peter, the 
fourth, settled in Edinburgh; Robert, the fifth, went to America, and died 
there ; James, the youngest, Jilso went to America, but returned after some time, 
and purchased the lands of Hallgrecn, in the shire of Kincardine, and was also 
provost of Montrose. This gentleman was the father of the late Mr Coutts of 
Hallgreen ; and Provost Coutts of Edinhuryh was the son of Peter, the fourth 
son of Alexander Coutts. I shall only add that I have had opportunity to learn 
that the family have been long and universally respected in Montrose as people 
of very great benevolence, honour, and integrity.' Of the truth of tliis last 
assertion there can be no better proof than that in three generations four of the 
family were elected chief magistrate of their native town. 



2 MEMOIRS OP A BANKING-HOUSE. 

Edinburgh as a merchant at least as early as the year 1696.* 
The books are kept in Scots money, and very neatly and distinctly 
written. He appears to have been a general merchant, whose 
transactions were considerably extended, for in his books there are 
accounts of mercantile adventures to New York and Pennsylvania, 
to Amsterdam, to France, and to the Canaries. He died in the 
autumn of 1704 ; his will being dated 25th July in that year, and 
an inventory of his effects registered in the books of the sheriff of 
Edinburgh on the 27th October thereafter. By the latter he 
appears to have left of personal estate somewhat better than 
.£30,000 Scots, or £2500 sterhng, a considerable sum for those 
days. Mr Patrick Coutts was twice married. He left three 
children — John, James, and Christian — by his first wife, a daughter 
of the family of Dunlop of Garnkirk, in the county of Lanark. 
This relationship gave rise to the intimate correspondence which 
always subsisted between the Messrs Coutts and the Messrs 
Dunlop and their connections in Glasgow. His second wife was 
Rachel Balfour, as appears from the record of the baptism of a 
daughter named Janet. After the death of Mr Patrick Coutts, 
his children of the first marriage were sent to Montrose, where 
they lived with an uncle from the year 1705 to 1719, when the 
eldest son, John, returned to Edinburgh. Mr John Coutts — who 
was born 2Sth July 1G99 — being a minor when his father died, I 
presume the business of the latter had been in a great degree dis- 
continued by himself before his death, and wound up by the tutors 

* [In the record of the Privy Council of Scotland, under date July 3, 1694, 
occurs a petition from Patrick Coutts, merchant in Montrose, who, acting for 
himself and partners, had bought a parcel of serges and worsted stuffs at Leeds, 
and had them shipped on board a Swedish vessel bound for Riga. The vessel 
was taken by a French privateer, and carried, with all its cargo, into Dunkirk. 
Coutts and his partners then represented to the Privy Council that it Avas cus- 
tomary in such cases to send a person to Dunkirk, who 'might recover the 
goods for a small price, as being English goods prohibited to be imported into 
the French dominions ; ' and they craved permission to send ' ane honest and 
weel-affected person ' for that purpose, due security being given ' that he shall 
behave weel and honestly, without acting any thing against their majesties' 
government.' 

The Council gave pemiission to Patrick himself ' to repair to Dunkirk, for 
recovering the goods mentioned, and fi-om thence to undertake and perfect a 
voyage with the goods to any port within the kingdom of Scotland or England,' 
he having first taken the oath of allegiance, and given security to the extent of 
a thousand pounds sterling, that he should not consult or contrive anything 
against the government, ' nor carry any message by word or write in his going 
to or coming from France.' 

These precautions bore reference to the exiled royal family residing at St Ger- 
mains, and to the constant traffic carried on with it by Jacobite gentlemen of 
Scotland.] 




y.cm/> J'fiovosT >f f/» C/Trofi:DL\m7?Gif. 1742. 






/ 



MEMOIRS OF A BANKING-HOUSE, 3 

he left to his children, for it does not appear that he had any 
partner by whom it might have been carried on. 

With whom or where Mr John Coutts served an apprenticeship, 
or in what year he first commenced business as a merchant, I do 
not know. From some letters still existing, I find him engaged 
in mercantile concerns in Edinburgh in the year 1723. But most 
of his earliest books of accounts are lost, and his papers in much 
confusion. On the 23d of September 1730, he entered the town- 
council of Edinburgh as first merchant councillor. He married 
a sister of the late Sir John Stuart of AUanbank, by whom he had 
four sons — Patrick, John, James, and Thomas. At one period he 
was connected in partnership with Mr Haliburton of Newmains, 
in Roxburghshire,* but of the commencement or termination of 
that connection I can find no trace. In the year 1740, 1 find him 
in partnership with Mr Kobert Ramsay, brother of Sir Alexander 
Ramsay of Balmain; from whom he separated on the oth of Decem- 
ber 1744, as appears by an entry in his journal, declaring that 
their partnership had terminated that day, and that he was thence- 
forward to caiTy on business alone. Afterwards, however, he 
assumed as a partner Mr Archibald Trotter, who was Mrs Coutts's 
first cousin,-|- and had been in the house of Charles and Hugh 
Smith of Boulogne. Both the first mentioned partnerships were 
under the firm of John Coutts & Co. ; but this had the title of 
Coutts and Trotter. Their business was dealing in corn, buying 
and selling goods on commission, and the negotiation of bills of 
exchange on London, Holland, France, Italy, Spain, and Portugal. 
The negotiation of bills of exchange formed at that period 
a considerable part of the business of Edinburgh ; for there 
were then no country banks, and consequently the bills for the 
exports and imports of Perth, Dundee, Montrose, Aberdeen, and 
other trading towns in Scotland, with Holland, France, and other 
countries, were negotiated at Edinburgh. J I see many notices of 

* [Thomas Haliburton, of Newmains, living about that time, was, through a 
daughter, great-grandfather to Sir Walter Scott.] 

f [Jlr Archibald Trotter was the second son of Alexander Trotter of Castle- 
sliiel, by Jean, daughter of Sir Robert Stuart of AUanbank.] 

X [In both sections of this island, for a long period after public banks were 
established, the negotiating of bills of exchange was in the hands of private 
merchants or bankers. ' The Bank [of Scotland], at its first erection, did deal 
in exchange, but found it very troublesome, unsafe, and improper. . . . There 
is no place in the trading world but there are to be found in it many that deal 
in exchange, even in those cities where a bank is. In London there are a gi-eat 
many, and those who have the management of tlie Bank of England never, that 
I have heard of, wished to rival them in their Ijusiness. On the contrary, I am 
told that they help and accommodate them by discoimting of biUs, &c.' — 
Account of the Bank of Scotland, lyi'intcd about 1727.] 



4 MEMOIRS OF A BANKING-HOUSE. 

the difficulty, at tliat tiiTie, of effecting money transactions of any 
considerable extent in the country towns of Scotland ; a sure 
proof of the utility of provincial banks, which, when properly 
formed and judiciously conducted, are of the utmost benefit to the 
trade of the kingdom, and have been one great means, among 
others, of the opulence at which the country has arrived in the 
course of the last century,* as I have more particularly shewn in 
another place. 

By the death of his brother, James Coutts, a merchant in Lon- 
don, he succeeded to about £20,000, which was deemed a large 
fortune in those days ; and being a man of high character as a 
merchant, as well as of very popular and agreeable manners, he 
lived with a degree of hospitality and expense not usual in the 
family of a merchant at that period. He is reported to have been 
the first lord provost of Edinburgh who did the honours of 
the city, by entertaining strangers in his own house ; it having 
generally been the custom that all such entertainments were 
given in a tavern at the city's expense. Unfortunately, he was 
thus led into excesses of the table, and other indulgences, which 
at length hurt his constitution ; so that, falling into bad health, 
he left the charge of the business of his house and of his two 
youngest sons — the second being in Holland — to his partner, Mr 
Trotter, and, taking his eldest son Patrick along with him as a 
companion, he set out for Italy on the 8th August 1749. A few 
days before his departure, he executed a new contract of copart- 
nery with Mr Trotter, in which the partners were himself, his 
eldest son Patrick, and Mr Trotter, under the firm of Coutts, 
Son, and Trotter. The stock of this company was £4000 sterling. 
He died at Nola, near Naples, on the 23d March 1750, at the 
age of fifty-one, beloved and regretted by all his acquaintance, 
who overlooked the imperfections of his character when they 
thought of him as the upright citizen and useful magistrate, ever 
zealous in the service of his friends, and a most agreeable member 
of society. I give this character of Provost Coutts from what I 
have been told by those who were of his personal acquaintance, for 
I had not myself the opportunity of knowing him, as he was dead 
before I came to Edinburgh. By the death of Provost Coutts, his 
sons being all under age, the executive part of the business devolved 

* [In 1803, the three public banks of Edinburgh had thirty-nine branches 
tiiroughout the country, and it is believed there were very few other provincial 
banking establishments then in existence. The Edinburgh Almanac for 1858 
gives a list of three hundred and sixty-six branches from tlie Edinburgh banks, 
besides two banks in Glasgow and six in the other towns, liaving a hundred 
and ninety-five branches.] 



MEMOIRS OP A BANKING-HOUSE, 5 

on Mr Trotter. After a few )-ears, however, the 3'oung gentlemen 
and lie not agreeing together, Mr Trotter resigned his share in the 
company. He, I have understood, differed widely in his cliaracter 
from Provost Coutts, not possessing that liberality of thinking and 
acting in business for which the latter was so greatly distinguished. 
The young gentlemen seem to have considered him more in the 
light of a governor than a partner ; and as neither his person nor 
manners were at all calculated to command their respect, his young 
friends were constantly teasing him Avith little boyish, roguish 
tricks. One that I remember hearing of, Avhen I entered the 
office, consisted in their putting a live mouse under the cover of 
his inkstand, and watching with glee for the start he was to give, 
when, on his lifting the lid, the animal jumped out, to the no 
small amusement, as might be expected, of the whole counting- 
house.* 

* After Mr Trotter left the copartnery, he tried to establish himself in business 
as an accountant, for which he was ill qualified, and as an arbitrator in mer- 
cantile disputes. He afterwards accepted the rather ungracious office of agent 
for cei-tain Edinburgh banks in theii* warfare with those of Glasgow, to wliich 
place he occasionally repaired to make demands for gold. At times he was 
subject to a species of religious melancholy, which he inherited from his mother, 
the Lady Castleshiels of the Allanbank family — by whom he was related to the 
Messrs Coutts. Slie had composed a most extraordinary Book of Meditations, 
whicli her son published some little time before his death. He at last retired 
from all business, and resided at an estate in the neighbourhood of Edinburgli, 
which he obtained by his wife. 

[The warfare hei-e alluded to by Sir 'William was of a peculiar character. The 
Royal Bank of Scotland, from its commencement, in 1727, had been favoured 
and supported by the merchants of Glasgow. There was a great deal of angry 
rivali-y between that establishment and its senior, the Bank of Scotland, whicli 
had considered itself extremely ill-used by the government of George I., when 
the Royal Bank obtained its charter. The bad blood found expression in pro- 
ceedings which no Scottish bank would now dream of condescending to, but 
which were then considered quite legitimate ; at least they were very common. 
The banks would hoard up a quantity of each other's notes, and endeavour, by 
presenting them suddenly, to create embarrassment. To counteract the bias of 
the Glasgow merchants for the Royal Bank, the Bank of Scotland took part, in 
1749, in establishing what was afterwards kno-wn as the Old Bank in the western 
city. As a protective or retaliatory measure, the Royal Bank helped next j'car 
in setting up the New Banking Company at Glasgow. From the papers connected 
with the case ' Aixhibald Trotter v. Andrew Cochrane, John Murdoch & Co.,' 
it appears that, some years afterwards, the Edinburgh banks became sensible of 
a common injury fi'oni these western establishments, and laid aside tlieir old 
animosities in order to get them, if possible, put down. Tlicy concurred in 
calling upon the Glasgow merchants to give up the trade of banking, under tlie 
pain of having their credits withdrawn. This was refused, and then it was tliat 
Mr Trotter, in order to further the objects of the Edinburgh banks and distress 
the west country bankers, took up his residence in Glasgow. 

' Mr Trotter certainly made a practice of receiving, or rather of collecting the 
notes, of Murdoch & Co., and demanding payment of large smns in cash; and 



6 MEMOIKS OF A BANKING-HOUSE. 

On Mr Trotter's leaving them, as they were too young to con- 
duct a house of business by themselves, their friends formed a new 
copartnery for them with Mr John Stej)hen, who had been married 
to a sister of their father, and was at that time a wine-merchant 
in Leith, in company with the Honourable Alexander Stuart, 
afterwards Lord Blantp-e, and a Mr Walter Scott. On this occa- 
sion the firm of the house was changed to Coutts Brothers & Co. 

A mercantile establishment was likewise formed about this time 
in London, by the Messrs Coutts, under the firm of Coutts, 

Mui-docli & Co. resorted to the practice of telling out payment very deliberately 
indeed, in sixpences. In a protest wliicli he took upon 23d Januaiy 1759, he 
gives a detail of the payments which were thus obtained by hun from 14tli 
December to 22d January (tliii-ty-four business days), amomiting altogether only 
to the sum of £2893. One of the forenoon payments in sixpences amounted 
only to £7 ; and the highest, either of a forenoon or afternoon (for business was 
then done after dumer), is £20. The largest payment made, which was in 
Edinbui-gh notes, was one of £100. 

'Mr Trotter, in his action before the Court of Session, sought decree for 
£3447, to which extent he held notes of Murdoch & Co., -svith interest on the 
amount of notes held by him at the date of his protest, with £600 damages. He 
also sought to have it declared that Murdoch & Co. had no right to regulate 
their own hours of doing business, and that they should be bound to pay their 
notes when presented at any time from seven morning to ten at night. 

' The defences stated were, that Mr Trotter had acted in mala fide, and with 
the design of distressmg the defendants ; that his conduct might be strictly legal ; 
but so was that of the defendants strictly legal in paying in sixpences, a practice 
which, on occasions, had been resorted to by the Edinburgh banks themselves ; 
that payment had nevertheless been offered, but refused, unless damages were 
also paid ; and that the declarator as to hours was not competent at the instance 
of a private party. A great many dilatory proceedings took place before the 
Lord Ordinary (Woodhall), who ultimately ordered informations. In June 
1760, a petition and complaint was presented by Mr Trotter, complaining of his 
adversaries for trifling with justice. The information for the defendants having 
been lodged, the Comt, on advising, remitted to the Lord Ordmary to adjust the 
facts — and especially the fact of Mr Trotter's being a mere hand for the banks, 
and his intention to distress, which several of the jiidgcs thought obvious. 
Lord Kames observed, that Mr Trotter should not have taken the notes. Lord 
Affleck thought the case of Mr Trotter's like that of a man's buying up another's 
debts in malitia. The Lord President and Lord Coalston dreaded paper credit, 
and thought banks dangerous. A great variety of proceedings again took place 
before the Lord Ordinary, who again ordered pleadings to the whole Coui-t. In 
December 1761, the libel was held relevant to infer the conclusions for payment 
of principal, interest, and expenses, but not as to declaratory conclusions. 
Kames, Nisbet, and Affleck were against the interlocutor. Coalston and 
Edgefield declined as directors of the bank. There was then a petition for Mr 
Trotter, with answers and replies. Then two petitions for Murdoch & Co., witli 
answers, &c. ; and in April 1763, the case was taken out of Court by the defend- 
ants paying £600 — to which, we have no doubt, the pursuer's expenses had by 
that time amounted, and by wliich time also, we have no doubt, Murdoch & Co. 
had accomplished their object in defending the action.' — Scotsman newspaper, 
April 5, 1826.] 



MEMOIRS OF A BANKING-IIOUSR. 7 

Stephen, Coutts, & Co., in which Mr Thomas Stephen, their 
cousin-german, (he son of the partner at Edinl)urgh, was con- 
cerned. That company acted as the correspondents of the house 
at Edinburgli, and transacted any otlier business with which they 
were intrusted, either in money or in the buying and selHng of 
goods on commission. 

Mr Patrick and Mr Thomas Coutts resided witli Mr Thomas 
Stephen, in the liouse occupied by the London firm, in Jeffrey's 
Scjuare, St Mary Axe, and conducted the business there, while the 
other two brothers, John (who not long after his father's death 
withdrew from his mercantile concern in Rotterdam* and returned 
to Scotland) and James, resided at Edinl)urgh, conducting the 
business of tlie house there, in conjunction with the eUier Mr 
Stephen. They lived in the same house which their father had 
inhabited, being the second floor of the President's Stairs in the 
Parliament Close ; and they continued in the same line of business 
of banking and exchange which tlieir father had carried on. Like 
him, too, they dealt very largely in corn; and it is not without 
some degree of wonder that I look back on the extent of their 
correspondence and operations in that article. They had a settled 
agent in Northumberland, William Watson, residing at Fenwick, 
who was employed to make purchases of corn for the house (and 
for none else) in that count}''. Messrs Fairholme, Mr Chalmers, 
and other corn-dealers in Edinburgh, had established agents in the 
same fertile district — employing Fenwick, moreover, to make pur- 
chases for them in Berwickshire. George Garioch at Aberdeen, 
James Robertson at Portsoy, and Andrew Laird at Dundee, made 
purchases (in which these gentlemen were themselves concerned) 
for the house in the fertile corn counties of Perth, Forfar, Kincar- 
dine, Aberdeen, Banff, and Moray ; and James Budge of Toftingall 
in Caithness, and William Baillie of Rosehall in Ross-shire, both of 
them gentlemen of landed property, but also men of business, tliough 
not strictly speaking merchants, made purchases for the house on 
their joint account in those northern counties. In England the 
house had large quantities of corn shipped for them at Yarne and 
at Stockton, in Yorkshire ; at Lynn Regis, Fakenham, and 
Yarmouth, all in the rich corn county of Norfolk ; at Haverford- 
west, in South Wales ; and by the noted Cooper Thornhill, who 

* The firm of the Rotterdam house was E,ohertson, Coutts, and Strachan. 
Their chief trade was the shipping of tea, spirits, and other articles of contra- 
band goods, for the smugglers on the east and north coasts of Scotland. His 
friends at Edmburgh, disliking this trade, procured a separation Ijctween him 
and his partners in Holland, very fortunately for Mr Coutts, as that house 
became bankrupt a very few years afterwards. 



8 MEMOIRS OF A BANKING-HOUSE. 

at that time kept the Bell Inn at Hilton, and was one of the most 
considerable corn-factors in England.* 

They had also large dealings in corn with Edmund and George 
Schoales of Drogheda, and with Daniel Mussenden of Belfast ;t 
and I have known them import cargoes of wheat from Dantzic 
and Konigsberg. "When I reflect on the extent of all this cor- 
respondence, and the combination of such a variety of intelligence 
respecting the prices of corn at all those different places, compared 
with the prices in the different parts of Scotland, I cannot but 
w^onder at the boldness of enterprise which led them to embark in 
such a perilous traffic. Some years they made large profits, which 
they as often lost in others, owing to the fluctuation of markets 
and the bankruptcy of many of those with whom they dealt. 
Indeed, I have often thought it not a little singular that a banking- 
house, Avhich, of all branches of business, seems peculiarly to 
require caution, and which ought, as much as possible, to be kept 
clear of every undertaking of hazard or speculation, should have 
chosen to embark so largely in the corn-trade, which is perhaps 
that most liable to sudden fluctuation, and in which no human 
prudence or insurance can guard the adventurers from frequent 
loss. Yet in this the Messrs Coutts were not singular. Messrs 
Fairholme, whose banking-house had been long eminent, and in 
the enjoyment of unsullied credit, were also large dealers in corn. 
George Chalmers, whose principal employment was that of a corn- 
dealer, also did business as a banker and exchange-dealer. 

* It was he who perfonned the extraordinary ride from Hilton to London, 
back to Hilton, and thence to London again, being 225 miles, in 12 hours 17 
minutes. He set out at four o'clock in the morning of 29th April 1745, and 
came to the Queen's Arms, opposite Shoreditch Church, in 3 hours and 52 
minutes ; returned again to Hilton in 4 hours and 12 minutes ; and came back 
to London in 4 hours and 13 minutes. He was allowed 15 hoiirs for the task 
and as many horses as he pleased, which he had ready waiting him at various 
places on the road. He was so little fatigued by this exploit, that he rode next 
day as if nothing had happened. The road was lined with spectators to see him 
pass and repass, and many thousands, besides his own wager of five hundred 
guineas, were depending on the performance. Mr Thornhill, thoiigh he kept 
an inn, was much respected for his gentleman-like mamiers, and generally 
brought to table by his guests. There is a mezzotinto print of this exploit still 
preserved at the Bell Lm at Hilton. 

't' I recollect a singular circumstance respecting Daniel Mussenden, who was 
one of the most eminent corn-dealers in the north of Ireland. His business 
had been long conducted, under his inspection, by a confidential clerk, who 
wrote all his letters, excepting only the signature. At length his faculties 
became so impaired, that this clerk not only managed the business and wrote 
the letters, but imitated his master's subscription at the bottom of the letters, 
and in all his biUs, so exactly, that no difference could be detected, although, 
as I well recollect, Mr Mussenden's subscription was a veiy pecvdiar one. 



MEMOIRS OF A BANKING-HOUSE. 9 

Fordyce, Malcolm, &, Co., Arbuthnot and Guthrie, Gibson and 
Hogg, and some others, were allestablished afterwards on the same 
footing. 

The other principal banking-houses in Edinburgh at that time 
were Messrs Mansfield <k Co., William Cuming, William Hogg 
and Son, and William Alexander and Sous. The two first con- 
fined themselves strictly to the banking business, in which they 
rose to great eminence from a very obscure origin. From a slender 
outsettiiig as a draper, old Mr James Mansfield began to deal a 
little in bills of exchange, and by degrees founded a banking-house 
of the first celebrity in Scotland.* In the same manner William 
Cuming succeeded to his father, old Patrick Cuming's cloth shop 
in the Parliament Close, which he afterwards converted into a 
counting-house, where he confined himself entirely to the transact- 
ing of money business, and after a long life, left a very large 
fortune. William Hogg and Son were not in very extensive busi- 
ness, and they managed it very confusedly. William Alexander 
and Sons were very considerable money- dealers, though their 
chief emplo}Tnent was the purchasing tobacco for the farmers- 
general of France. A few years afterwards, a number of other 
inconsiderable houses started up, who transacted money business 
— such as Samuel Foggo, Johnstone and Smith, Scott Moncreiffe 
and Ferguson, John Fyffe, and W. Sinclair &. Co. — most of whom, 
along with several of those formerly mentioned, became bankrupt 
in the famous year 1772.f Thomas Kinnear was originally an 
insurance-broker, but laid the foundation of a banking-house of 
eminence, afterwards carried on by his sons. Seton and Houstoun 
sprang out of a society who dealt in the manufacturing of woollen 
goods. 

It was somewhat uncommon to see a whole family, consisting of 
four sons, all carrying on the succession of their father's house in a 
joint partnership of business with success. Those brothers, how- 
ever, were not all of the same temper and disposition. Patrick, 
the eldest son of Provost Coutts, was a man of elegant and agree- 
able manners, but more inclined to the study of books than to 

* [Mansfield, Ramsay, & Co., continued to be an eminent banking fimi in 
Edinburgh till 1807, after which the house appears under the aiipellative of 
Ramsays, Bonars, & Co.] 

■j- John Fj'ffe, from a principle of high honour, suspended liis pajnnents in 
1772, because he was fearful of the eflcct of those numerous bankruptcies which 
he saw daQy happening around him. But, on a more narrow inspection of his 
affairs, he found no reason for apprehension, and very soon went on again. lie 
was a worthy honest man, of great respectability, and lived long retired from 
busmess. He died after 1790, leaving an ample fortune to his family. 



10 MEMOIRS OF A BANKING-HOUSR. 

application to business. He continued, however, to take a part 
in the management of the London estabhshment for some few 
years, in the course of which IMr Thomas Stephen died, and the 
active charge of the counting-house chiefly rested with the youngest 
brother Thomas. Patrick Coutts then spent some time in travel- 
ling on the continent, where a very unpleasant accident befell him. 
Being at Lisle, as he was walking in a careless manner on the 
ramparts, he was observed to be employed in taking notes in short- 
hand in his pocket-book, and Avas immediately arrested as a spy. 
It was in vain that he urged his having merely been engaged in 
making a few memoranda for his own amusement, without any 
criminal intention. He was thrown into prison, where he remained 
for several months, and it cost his friends considerable trouble to 
procure his release. He afterwards came home, and paid a visit 
to Scotland, when I had the opportunity of becoming in a slight 
degree acquainted with him, and he is a party to the first contract 
I entered into with him and his brothers and Mr Stephen, by 
which I became entitled to a small interest in the house of Coutts 
Brothers & Co. Afterwards returning to London, he was attacked 
by a direful malady, which he inherited from his mother's family. 
He is still (1803) alive, above seventy years of age. 

John Coutts, the second son, under whose eye chiefly I served 
my apprenticeship, Avas one of the most agreeable men I ever 
knew. Lively and weU-bred, and of very engaging manners, he 
had the happy talent of uniting a love of society and public amuse- 
ments with a strict attention to business. While resembUng his 
father in his general manners more than did any of his brothers, he 
was more correct in his conduct ; nor do I recollect to have ever 
seen him but once in the counting-house disguised Avith liquor and 
incapable of transacting business.* Having received his mercantile 
education in Holland, he had all the accuracy and all the strictness 
of a Dutchman ; and to his lessons it is that I owe any knowledge 
I possess of the principles of business, as well as an attachment to 
form, which I shall probably carry AAdth me to the grave. Although 
he was of the most gentle manners in common life, he Avas easily 
heated Avith passion Avhen he thought himself ill-used, and I have 
seen his eyes, Avhich Avere black and piercing, flash as Avith light- 
ning, if any attempt Avas made to overreach him in a bargain. 
But his passion Avas of short continuance, and easily appeased. 

* ["We Tnust accept this fact, and the evident simplicity and good feeling 
under which the author mentions it, as illustrations of the manners of past 
times. It clearly appears that in Sir William's time, while invariable sobriety 
might be esteemed, an occasional occurrence of the reverse was not deemed 
fatal to a man of business.] 



MEMOIRS OF A BANKING-HOUSE. H 

He was seized, in London, with the severe disorder called iliac 
passion, and, going to Bath for the recovery of his health, he died 
there on the 4th of August 1761 — I beUeve, in the thirtieth year 
of his age. I shall ever retain the most grateful respect for his 
memory, on account of the very great attention he bestowed on me 
during the five years of my apprenticeship. 

Mr James Coutts gave as close application to business as his 
immediate elder brother ; but he was by no means of so amiable 
a character ; and, never having been out of Edinburgh, he had not 
those polished manners which his two elder brothers had acquired 
by living abroad and mixing in the world. He was nearly as 
passionate as Mr John Coutts ; but he dift'ered from him in retain- 
ing a longer resentment. As he went to London, and by his 
marriage became established there in business after I came into 
the counting-house, I was but a few months under his care ; so 
that it was not till I grew up to be a man that I enjoyed much of 
his acquaintance. The unhappy difference which took place be- 
tween him and my partners on the subject of Mr William Coch- 
rane, in which I was unfortunately involved, occasioned a coolness 
between him and them. But I must do Mr James Coutts the 
justice to say, that, even after that period, he always behaved to 
me with kindness and attention. At last an unhappy difference 
arose between him and his youngest brother Thomas, whom he 
had assumed as a partner, which ended in their final separation. 
In consequence of that event, Mr James Coutts went abroad with 
his daughter, an only child, accompanied by a female relative as 
her companion. At Turin he was seized with the same malady 
as his eldest brother, of which he had previously shewn symp- 
toms, but which attacked him in a different manner. It was 
thought expedient that he should go home by sea, and the 
vessel having touched at Gibraltar, he died there, early in the 
year 1778. 

Of Mr Thomas Coutts, the youngest son of Provost Coutts, as 
he is still (1803) alive and in business, it is not proper to say much. 
I may just remark that, by a careful attention to the business of 
a banker, he has raised the reputation and business of his house 
to a high degree of eminence, and has acquired a very great 
fortune.* 

Mr [Francis] Farquharson [of Haughton] had been my father's 
most intimate friend and companion from a very early period, and 

* [The well-known Thomas Coutts, after attaining to be the head of bis distin- 
guished profession in London, and acquu'iug enormous wealth, died in February 
1822, about the age of ninety.] 



12 MEMOIRS OF A BANKING-HOUSE. 

although not in the nomination of my guardians, his high regard 
for my father had attached him strongly to my mother and her 
infant chikh-en, to whom he proved himself a steady and most 
useful friend to his dying hour. The slender provision -which my 
father had left me — although he had hy great attention to business 
and frugality been enabled in the course of his short life to double 
the pittance which originally fell to him out of the wreck of our 
family estate, Avhen sold by his grandfather — having rendered it 
absolutely necessary that I should attach myself to some profession 
for my future support, Mr Farquharson suggested to my mother 
the propriety of breeding me to commercial business, in preference 
to any of the learned professions, as a surer road to independence. 
In prosecution of this plan, after my education in the usual 
branches of school learning was completed, he prevailed on his 
young friends, the Messrs Coutts, to receive me as an apprentice 
into their counting-house, the circumstance to Avliich, by the 
blessing of Heaven, I owe that respectable situation in life to 
Avhich I have attained. 

At this period, as I have already said, Messrs Coutts carried on 
business both at Edinburgh and London — at Edinburgh, under 
the firm of Coutts Brothers & Co., conducted by John and James 
Coutts and Mr Stephen ; at London, under the firm of Coutts, 
Stephen, Coutts, & Co., conducted by Patrick and Thomas Coutts. 
The business at Edinburgh* comprised extensive transactions 
in com on their own account. They also did business on com- 
mission, in the sale of wines and other consignments, and in 
shipping lead, salmon, and other articles ; and, lastly, they acted 
as exchange dealers and bankers by receiving deposits of money, 
for Avhich they allowed interest. The house in London was the 
correspondent of the house in Edinburgh, \vhich conducted through 
them all their exchange opei-ations, and they also transacted 
business both in buying and selling goods on commission. 

In the month of August 1754, Mr James Coutts, Avho had 
never been out of Scotland, went to London on a visit to his 
brothers. There he very soon afterwards married Miss Polly 
Peagrim, the niece of George Campbell, an eminent banker in the 

* The whole office staff, besides the pai-tncrs, then comprised only four clerks 
and two apprentices including myself. I cannot omit mentioning, that, the 
year after myself, we were joined by Mr Lewis Hay, and the year following by 
Mr Hunter, afterwards Sir James Hunter Blair, who both became partners and 
my most intimate friends. In the same manner Mr Bartlet came into the 
house as a clerk in 177-, and my brother-in-law, Mr John Hay, in 1778, and you, 
my dear William, became an ajiprentice in 1788, and have since all been ])artner3 
in the house. 



MEMOIRS OF A CANKIXG-HOCSE. 13 

Strand,* by ^Yhom he was immediately received into partnership, 
under the firm of Campbell artd Coutts, and he in consequence 
withdrew from the partnerships with his brothers in London and 
Edinburgh. 

Some short time afterwards, Mr "William Dalrymple, merchant 
in Cadiz — brother of Sir Hew Dalrymple of North Berwick — was 
assumed as an acting partner in the house at London, the firm of 
which was then changed to Coutts Brothers and Dalrymple. In a 
very short time, however, Messrs Coutts disliking Mr Dalrymple's 
too great love of speculation, the partnership between them was 
dissolved by mutual conscnt,t and the firm was again changed to 
Coutts Brothers & Co., being the same with that of the Edinburgh 
house. 

About the year 17 GO, Mr George Campbell, the banker, dying, 
Mr James Coutts assumed his youngest brother, Thomas, as a 
partner in that banking-house, the firm of which then became 
James and Thomas Coutts. In consequence, Thomas also with- 
drew from the two houses of Edinburgh and London, the last of 
■which was thereafter managed by Mr Patrick Coutts, with the 
assistance of Mr Thomas Walker, their principal and confidential 
clerk, who had been originally bred in the counting-house at 
Edinburgh. Some difference having arisen between Mr Walker 
and them, he quitted their service ; and a procuration was then 
given to Mr George Keith, who had been bred with ]\[r A. 
Gregory of Dunkirk, and had been recommended to Messrs Coutts 
as a clerk in their London establishment. Mr John Coutts and 
Mr Stephen continued to conduct the business of the house at 
Edinburgh. 

W^hile those changes were so rapidly succeeding each other, my 
apprenticeship of five years was completed on the 14th May 1759. 
Mr Francis Farquharson, my much esteemed friend, having 

* At that period tliei'e were only two banking-houses on the west side 
of Temple Bar. One was the well-known establishment of Mr Andrew 
Drummond, a son of Lord StrathaUan.i who, after having been engaged in the 
affair of 1715 on the side of the Stuart family, established himself as a banker 
in London, where he was patronised by many of the Tory families of the 
English aristocracy. George Campbell, the proprietor of the other establish- 
ment, was originally a goldsmith in London — as most of the bankers had been 
originally — and was patronised by the Duke of Argj'le and the Whig interest. 

"t* Mr Dalrjanple, after his separation from Messrs Coutts, commenced 
business in London by himself, cliiefiy as an underwriter, but faUed in a 
few months. 



1 [Mr Andrew Drummond, the banker, was only the son of Sir John Drummond 
of Machany ; but his elder brother, William, succeeded as fourth Viscount Strathallan, 
nnd was killed fightins on the Prince's side at CuUodeii.] 



14 MEMOIES OF A BANKING-HOUSE. 

it greatly at heart to procure for me an interest in the house 
at Edinburgh, advised me to continue to serve the company in the 
capacity of a clerk after my apprenticeship ^vas finished, which I 
did for very nearly two years, without receiving any emolument, 
in the expectation of being at some convenient opportunit}-, through 
bis means, admitted a partner.* On the 6th of August 1760, I 
was intrusted with a power of attorney, by which I was enabled 
to take an active part in the conducting of the business of the 
house ; and Mr John Coutts with much kindness took every 
opportunity of bringing me into notice, by inviting me to dinner 
occasionally when he had parties of friends at his house. I take 
pleasure in mentioning this circumstance, though trivial in 
itself, as a grateful testimony of his goodness to me on every 
occasion. At length, a new contract for ten years having been 
executed by Mr Patrick Coutts, Mr John Coutts, and Mr 
Stephen, commencing 1st January 1761, an agreement was 
entered into between them and me on the 13th March 1761, by 
which I was to be concerned to the extent of one-eighth share of 
the house at Edinburgh. But so jealous were they of the effects 
of this concession in my favour, that the agreement was only to 
last for three years, with a power to any of them to put an end to 
it at the end of one year, if they should judge it expedient, and 
without permitting me to appear to the world in the character of 
a partner ; so that I still continued to act by virtue of the power 
of attorney. These prudential restrictions on the part of Messrs 
Coutts might perhaps be deemed a little hard, as they had had a 
seven years' experience of my close application to business and zeal 
for their interest ; yet they were cheerfully submitted to by me, 
with the hope of one day becoming an ostensible partner. 

A few months after the execution of this agreement, Mr 
Patrick Coutts was laid aside from business by bad health, which 
ended in a depriA'ation of reason ; and in the course of that 
summer, Mr John Coutts was seized at London with a painful 
disease, which brought him to the gates of death, and so broke 
his constitution, that, being ordered by his physicians to drink the 
waters of Bath, he died there in August 1761, deeply lamented by 
all who knew him, but by none more than by myself, who lost in 
him an able guide and a steady friend. By this unlooked-for 
stroke, the two houses of London and Edinburgh Avere left in a 

* So strict was Mr John Coutts in the discipline of the counting-house, that 
I slept but one night out of Edinburgh from the commencement of my 
apprenticeship in May 1754 till the monSi of September 1700, when I obtained 
leave to go to Aberdcenshii-e with my mother, to pay a visit to our relations. 



MEMOIRS OP A BANKING-HOUSE. 15 

most destitute situation. The business of tlic house at London 
was of itself noway considerable ; but it became of importance to 
the general interest by their being the correspondents of the house 
at Edinburgh, who drew their bills on them, and transacted through 
them their exchange business. The London house had not a person 
in it who was entitled to sign the firm, and although the business 
was very well attended to by Mr Keith, who held the company's 
power of attorney, it was impossible that he could have the weight 
of a partner, and it is Avonderful that things went on so well as they 
did. At Edinburgh, matters were, if possible, still worse ; as there 
Avas no ostensible partner but Mr Stephen, whose slender abilities 
were altogether inadequate to the task of conducting the houses, and 
for which my youth and inexperience rendered me extremely ill 
qualified. It was therefore a singular instance of the goodness of 
Pro^ddence to us, that, under such feeble management, the houses 
still supported their credit and reputation. Indeed, I must chiefly 
attribute it, under Heaven, to the popularity of Provost Coutts and 
his family in Edinburgh, and the established reputation of their 
firm, by Avhich the friends and correspondents of the house were 
induced to continue their business there as formerly. Yet even 
that advantage would not have been sufficient, had I not been 
strongly supported and assisted by my intimate friend and com- 
panion, Mr Hunter, whom I have mentioned as my fellow- 
apprentice in the house. Although he was nearly two years younger 
than me, yet such were his superior abilities, that, through him 
alone, I may say, it was owing that Mr Stephen and I did not 
sink under the load of conducting a banking-house such as ours, 
inconsiderable as the business then was compared with what it has 
since become. Even tlien, however, the house was one of the first 
reputation in Edinburgh, for, of course, everything must be 
estimated by comparison. The first resolution which Mr Hunter 
and I formed, on finding ourselves practically the sole conductors 
of the house, was to Avind up the corn-speculations then existing, 
and to relinquish that trade entirely, so as in future to confine the 
house to its proper and natural business of exchange and banking, 
by which prudent resolution, and by unremitting assiduity and 
attention, Ave Avere enabled to go on without any apparent 
diminution of business. 

But to return from this digression, as Messrs James and 
Thomas Coutts, the only tAVO brothers remaining capable of doing 
business, Avere bankers in London, and their eldest brother having 
fortune sufficient for his requirements in his retired mode of life, 
they Avould probably have given themselves little trouble about 



16 MEMOIRS OF A BANKING-HOUSE, 

the future continuance of the houses, had they not been desirous 
of preserving them for the sake of their uncle-in-law, Mr Stephen, 
as well as for rendering them subservient as a provision for 
another uncle-in-law, Mr William Cochrane, married to their 
mother's sister,* who was still alive, and to whom they were much 
attached. They were besides, indeed, not without a personal 
pecuniary interest in the question, what was to become of the 
houses. For, as Messrs James and Thomas Coutts were the 
representatives of their two elder brothers, Patrick and John, 
they were, in fact, responsible for the current engagements of the 
houses, and they also had at stake a large sum of outstanding 
debts, which could noway be so effectually recovered as by con- 
tinuing the houses under a new set of partners. Among these 
outstanding debts was one of considerable amount owing by Mr 
Stephen himself, who, never having had any capital stock of his 
own, and having been occasionally forced to draw money from the 
house for the payment of debts he had contracted in his mercantile 
concerns before he was connected with it, was now its debtor 
for a considerable balance. Mr Cochrane had been originally a 
woollen-draper in the Luckenbooths, Edinburgh, in partnership 
with Mr "Walter Hamilton, but had been some time retired from 
business, living on a small estate in the neighbourhood of 
North Berwick. He was a man of honourable character and 
agreeable manners, but altogether unacquainted with any 
species of business beyond that of the retail shop in which 
he had acted. Mr Stephen, as I have said, was a man of 
the most slender abilities ; and Mr Hunter and I were both 
of us too young and too little known in the world to be solely 
trusted to for conducting the house at Edinburgh, while that of 
London stood still more in need of an able head. It naturally 
occurred, therefore, to Messrs Coutts, that, if they meant at all to 
preserve the two houses from, sinking into insignificance, and 
render them of any value as a provision for JNIr Stephen and Mr 
Cochrane, it was absolutely necessary that some new arrangement 
should be formed, and some persons of established reputation and 
abilities be found who might be associated with the others, and 
might conduct the business on a plan that should promise success. 
Some occasional correspondence with this view had taken place 
with Messrs Coutts, but without anything decisive being resolved 
on. Finding little progress made, therefore, towards such a 
consummation, and having as a separate inducement a violent 
desire to visit London, I obtained Messrs Coutts's permission to 
* [Lillias, daughter of Sir John Stuart of Allanbank, Bart.] 



MEMOIRS OF A BANKING-HOUSE. 17 

repair thither in the end of October 1762, it having been pre- 
viously agreed between Mr Hunter and me, that I should use 
the influence I had with Messrs Coutts to procure for him, if 
possible, an interest in any new arrangement tliat might be 
thought of — a measure on which I was of myself most anxiously 
bent, not only from my partiaUty to Mr Hunter, with whom I 
had lived six years in the strictest and most endearing intimacy, 
but from my consciousness of his superior abiHties, and how very 
necessary it was that he should have an active and ethcient share 
in tlie management, Avhich, however, I could not look for on any 
other footing than as a partner ; because, having inherited from 
his father a patrimony of £5000, he would naturally look out for 
some other establishment if he should see no prospect of being 
received into ours. 

On my arrival in London, Messrs Coutts received me with 
much cordiality, and I remained there nearly two months, during 
which time I repeatedly urged the necessity of making some 
speedy arrangement. At length they informed me that, after 
mature deliberation, the person they had fixed on to be assumed 
as an active partner was Mr Robert Herries, merchant in 
Barcelona, at that time in London. Mr Herries was the eldest 
son of John Herries of Halldykes, a gentleman of a small landed 
property in Dumfriesshire, Avhose affairs becoming embarrassed, 
his son went at an early age to Rotterdam, where two brothers of 
his father, Robert and Charles Herries, were established as 
merchants, and with whom he served an apprenticeship. His 
eldest uncle, Robert, of whom I shall have afterwards much 
occasion to speak, having acquired what was considered in 
those days a competent fortune, Avithdrew from business, and 
returned to his own country, where he purchased from his eldest 
brother the family estate of Halldykes. Charles, the other brother, 
having fallen into habits of dissipation, his nephew Robert, not- 
withstanding the tempting offers made to him by his uncle, 
resolved to leave him ; and having by his prudence and good con- 
duct acquired many useful friends, particularly Messrs Hope & Co. 
of Amsterdam, he had been encouraged by them, and under 
their protection, though then not above three-and-twenty years of 
age, to establish himself as a merchant at Barcelona. One of the 
chief branches of the trade there consisted in shipping brandies 
made from the wines of the country ; and as that trade was 
carried on to a very considerable extent in the Isle of Man, then 
the property of the Duke of AthoU, and where Mr Herries had 
the opportunity of forming many connections, Barcelona was for 



18 MEMOIRS OF A BANKING-HOUSE. 

him a most eligible situation. He accordingly established himself 
there in the year 1754, and by his skilful management, under 
such powerful patronage, his house quickly rose to distinguished 
eminence. Having assumed into partnership a Prussian gentle- 
man of the name of Tillebien, >vhom he had carried with him from 
Rotterdam as a clerk, and having brought his two younger 
brothers, Charles and William, to Barcelona, where he had 
educated them in business, he had come to Britain to pay a visit 
to his friends, and increase the number of his employers. His 
reputation as a man of abilities and credit not only stood high in 
the mercantile world, but his private character was distinguished 
as a son and a brother, who was in fact the support of his family ; so 
that he seemed well qualified to preside over the two houses of 
London and Edinburgh. If anything w^as to be objected to him, 
it was his having too great a love for a variety of partnerships, as, 
in fact, besides his house at Barcelona, he had joined in establish- 
ing another at Montpellier, under the firm of Herries, Roy, and 
Burnet ; and he had also a concern in the house of Honorius 
Dallio & Co. of Valencia. From all these, however, he declared 
himself resolved to withdraw, except from that of Barcelona, and 
he stipulated for a permission occasionally to visit Spain. 

Mr Herries having lived at Rotterdam at the same period v/ith 
Mr John Coutts, they had been intimate friends and companions ; 
and it was while on a visit to Mr Coutts at Edinburgh, in the 
year 1761, that I had first the pleasure of making his acquaint- 
ance, which I renewed on my going to London at this time, when 
I had frequent opportunities of being in his company at the 
house of Messrs Coutts. His character and manners being there- 
fore well known to me, I most readily assented for myself and Mr 
Hunter (who was now to have a share in the business) to assume 
Mr Herries a partner into the two houses, as Messrs Coutts did for 
Mr Stephen; and in consequence, articles of copartnery were drawn 
up in London, and signed by Mr Herries, Mr Cochrane (who was 
at that time in London on a visit to Messrs Coutts), and me, in 
Mr James Coutts's house in the Strand, on the evening of 
Christmas Day 1762. By those articles, the firm at Edinburgh 
was to be John Coutts & Co., out of respect to the memory of 
Provost Coutts ; and the firm at London was to be Herries, 
Cochrane, & Co., Mr Herries and Mr Cochi-ane being the resident 
partners. Messrs Coutts were to give a loan of £7000, for seven 
years, of their eldest brother's money, in consideration of an 
allowance of 10 per cent., to be paid to him by the partners ; and 
the contracts were to endure for twelve years, with a break at the 



MEMOinS OF A BANKINO-IIOUSE. 1 9 

ciul of every third j'car. The only unusual clause was a power 
which Messrs Coutts reserved to themselves, in the event of a 
vacancy happening, to bring in a new partner, in which event, 
however, any of the partners, if he disliked the new associate, was 
to he at liberty to withdraw from the society. To this privilege 
reserved to themselves by Messrs Coutts, Mr Herries strongly 
objected at the time, assigning as a reason that, as he would not 
allow any man to choose a wife for him, he had an equal dislike 
to a partner being chosen for him by anybody but himself 
The article, however, was unfortunately sufl'ered to stand a part 
of the agreement ; and it was afterwards the cause of much 
dispute and altercation between Messrs Coutts and us. On 
the morning after signing the contract in London, Mr James 
Coutts, Mr Herries, and I set out for Scotland, in order to 
complete the contracts, and make the necessary preparations for 
the commencement of the new copartneries ; and the new firms 
began to be used on the 1st February 17G3. The counting-house 
at Edinburgh was continued in Provost Coutts's house in the 
President's Stairs, Parliament Close, in which Mr Stephen's 
family had resided since the death of Mr John Coutts. In 
London, the counting-house was also continued in the house 
where it had been first established, in JeflFrcy's Square, St Mary 
Axe, in which Mr Patrick and Mr Thomas Coutts had resided, 
and which was now occupied by Mr and JMrs Cochrane. 

The declared patronage of Messrs Coutts, who were bankers of 
eminence in London, the circumstance of James being member of 
parliament for the city of Edinburgh, the popularity of the name 
of John Coutts, and the established reputation of Mr Herries, all 
combined to give an additional degree of credit and respectability 
to the two houses, which it was the study of Mr Hunter and 
myself to increase by our unremitting attention to the executive 
part of the business. It was resolved by all concerned that the 
house at Edinburgh should totally abstain from dealing in corn or 
any other species of merchandise ; confining themselves solely to 
their regular business of receiving money on deposit, granting 
cash-accounts, discounting bills, and dealing in exchanges on 
London, Holland, and France — a resolution to the adherence 
to which the great prosperity of the house may, under Heaven, be 
mainly attributed. It Avas also resolved that the house in London 
should chiefly confine itself to the sale and purchase of goods on 
commission and the business of exchanges. 

On this footing, our new copartnery commenced, and the success 
was fully equal to our most sanguine expectations. The Seven 



20 MEMOIRS OF A BANKING-HOUSE. 

Years' War had just been terminated : it was to be reasonably 
expected that that event woukl prove favourable for the commerce 
and prosperity of the kingdom. The follo^ving year exhibited a 
new and unlooked-for event in Edinburgh — the failure of one of its 
established banking-houses. The family of Fairholme had for 
some generations been considered as of distinguished credit and 
reputation. They dealt largely in corn like their neighbours, 
in receiving money on deposit, and in exchanges. The partners 
at that time were Adam and Thomas Fairholme, brothers, which 
was also the firm of the house. In the course of the year 1761, 
in the prospect of peace, Adam Fairholme had gone to London 
and had speculated largely in the public funds, which, on an 
expectation of the peace taking place sooner than actually hap- 
pened, had risen considerably, so that Messrs Fairholme thought 
they had acquired great wealth by their speculation, and indeed 
the general belief among Scotch people in London was that Adam 
Fairholme might have realised not less than £70,000 at one 
period. By his continuing his operations, they lost their imaginary 
profits ; and being tempted like losing gamesters to enter still more 
deeply into the Alley, the whole affair ended most unhappily. 
Adam Fairholme remained in London, carrying on this scheme of 
stock-jobbing, probably with various success, till he was able to go 
on no longer, and in the month of March 1764, he declared him- 
self bankrupt and left the kingdom.* The necessary effect of 
this was the bankruptcy of their house at Edinburgh, which 
stopped payment the same month. 

As the misfortune of the Messrs Fairholme was kno'S'VTi to have 
been occasioned by their speculations in the Alley, it produced no 
injurious effect on the credit of the other established banking- 
houses in Edinburgh. Nevertheless, the situation of money trans- 
actions there was extremely unpleasant. The rate of exchange 
for bills on London was as high as three, four, and even five per 
cent, against Scotland. This of necessity occasioned demands on 
the banks at Edinburgh for specie, which they were unable or 
unwilling to answer ; and for that reason they avoided advancing 
money for the accommodation of the trade of the country, lest 
their notes, as would have infallibly happened, should instantly 
return on them for specie. In London the character and credit of 
Scottish paper was at the lowest ebb, and the Bank of England 

* His fate at last was a tragical one. "Wlicn in the vessel in wliich he had 
embarked for France, a Bow Street officer came alongside in search of a culprit 
who had made liis escape from justice, and poor Mr Fairholme, having unhappily 
conceived the idea that the officer was in search of him, threw himself over- 
board and was drowned. 



MEMOIRS OP A BANKING-HOUSE. 21 

was extremely sliy of discounting bills d^a^^^l on London from 
Edinburgh. It was therefore a task of no ordinary difficulty 
to conduct the affairs of our two houses with safety. For the 
house at London, being a mercantile concern, was almost entii-cly 
dependent on discounts, whose credit therefore the house at 
Edinburgh was bound, for their own sakcs, to support, as the 
slightest suspicion against that establishment must have proved 
fatal to the other. Through this troubled state of things, however, 
the partners l)y prudent management were fortunately able to 
steer without damage. The utmost harmony prevailed among 
themselves, and Messrs Coutts behaved to us with kindness and 
cordiality, evincing themselves on every occasion the patrons and 
protectors of our establishment. 

In the month of September 17G3, 1 went to Holland, ostensibly 
for the purpose of settling an outstanding account with William 
Strachan of Rotterdam, the former partner of Mr John Coutts ; 
but in truth, at the same time, from a strong desire on my part 
of visiting the continent. After remaining some time at Rotter- 
dam, where I received the greatest civilities from Mr Crawford, 
Mr Davidson, Mr Livingston, Mr Manson, and others, Scotch 
merchants, and making the tour of Holland, I proceeded by 
Antwerp and Brussels, through Flanders, to Paris, whence, after a 
stay of a month, I returned to Rotterdam, in order to finish my 
business, in which, however — although from no fault of mine — I 
made but little progress. Thence I came back to London, and, 
after a stay of a few weeks, returned to Edinburgh, having been 
absent four months. In February 17G4, Mr Hunter went up to 
London, where he remained till June ; and Mr Herries having 
resolved on a visit to Spain, Mr Hunter returned to London in 
September, and remained till the month of May 17G5. On his 
return to Edinburgh, it was with extreme concern I learned from 
him that matters were by no means right with regard to Mr 
Cochrane. It had been always understood that he was not a man 
of much property ; but it happened that he owed some money, 
although not to a great extent, to persons in Scotland, of which he 
had not acquainted his new partners. His creditors, seeing him 
now established in a respectable concern, called for payment ; and 
his partners, for the sake of the credit of the house, found them- 
selves obliged to advance the means. This, however, was no very 
serious matter, as the debts were not considerable ; but it was 
discovered in no long time that his residence in London was in no 
respect expedient. Mr and Mrs Cochrane, as I have said, lived 
in the house in Jeffrey's Square, where the counting-house Avas 



22 MEMOIRS OP A BANKING-HOUSE. 

kept, and it soon appeared that tlielr expenses were beyond what 
they could afford. Mr Cochrane, too, being totally unacquainted 
with the business of such a house, was not only unable to give any 
assistance — a circumstance which might have been put up with, 
because it had been partly foreseen — but was in hazard of 
doing harm in the capacity of an acting partner. All these cir- 
cumstances together, seemed to Mr Herries to render it very 
desirable that Mr and Mrs Cochrane should withdraw from 
London ; and Mr Herries determined, when the expiration of the 
first term of three years of the contract should afford an oppor- 
tunity to make such an alteration, with regard to Mr Cochrane, 
as seemed to be absolutely necessary for the preservation of the 
houses, as well as for Mr and Mrs Cochrane's own personal 
advantage. In this opinion, Mr Hunter cordially concurred with 
Mr Herries, and Mr Stephen and I were most reluctantly com- 
pelled to give our assent also to the measure : otherwise a breach 
among the partners must have inevitably taken place, which 
might have been productive of the most injurious consequences to 
us all. For Mr Herries and Mr Hunter were resolved, at 
all events, to separate themselves from Mr Cochrane, and I well 
knew that Mr Stephen and I were utterly incapable of carrying on 
the house by ourselves, even with all the patronage which Messrs 
Coutts could have given us. Notice was accordingly given to Mr 
Cochrane in terms of the contract, that the partnership with him 
was to be dissolved at the end of the first three years. This 
measure was highly resented by Messrs Coutts, as an affront offered 
to them in the person of their relation. Much correspondence, as 
well as personal application, ensued on the part of Messrs Coutts, 
with the view of getting Mr Cochrane continued in his former 
situation. But Mr Herries and JMr Hunter, Avho had repaired to 
London in the month of January 17GG, remained immovable in 
their resolution. In order, if possible, to preserve friendship 
among us, it was at first proposed by some of the partners that 
Messrs Coutts should hold Mr Cochrane's share in trust for his 
use. But this Messrs Coutts refused, and would not hear of any- 
thing short of his remaining in his original situation. They also 
urged, as a reason for declining it, that it might hurt themselves as 
bankers by their being supposed to be partners in a mercantile 
company. Afterwards they seemed disposed to accede to the 
proposition, provided it could be kept secret ; but so many difficul- 
ties occurred about carrying it into execution, that Mr Herries 
and Mr Hunter declined it in their turn, and instead of a share of 
the house, made offer of an annuity to Mr and Mrs Cochrane, 



MEMOIRS OF A BANKING-HOUSE. 23 

which was at last assented to by Messrs Coutts, when they found 
they could not make a better of it, and the annuity Avas fixed at 
£200 per annum during the joint lives of Mr and Mrs Cochrane, 
and £100 to the survivor, Avhich continued to be paid to their 
dying hour. The separation from Mr Cochrane took place in 
January 1766, and a new contract was signed by Mr Stephen, Mr 
Herries, Mr Hunter, and me. This unhappy quarrel with Messrs 
Coutts put a period to all friendly intercourse between them and 
us, and I may safely say that no incident of my life has ever given 
me half so much uneasiness ; for I considered myself under 
strong ties of gratitude to Messrs Coutts, by whom I had been at 
first received into the house — a very singular favour — at a time 
Avhen they stood in no need of a partner. I therefore considered 
myself as standing in a very different point of vieAv from Mr 
Herries and Mr Hunter, who had come into the house on fair and 
equitable agreement, at a period when new partners v.'ere necessary, 
and who had been selected by Messrs Coutts as the most proper 
for the purpose. It Avas indeed true, as they said, that they merely 
exercised a power which the contract left them, of dissolving 
partnership for the general good. But they certainly departed 
from the agreement they had entered into of allowing Messrs 
Coutts to fill up the vacancy, for which they urged the absurdity 
of such a clause, and the provision they were willing to make for 
Mr and Mrs Cochrane. I was compelled, however, to go along 
with Mr Herries and Mr Hunter, from a consciousness of my not 
having it in my power to do anything else. 

Notwithstanding, however, this separation from Mr Cochrane 
causing a breach of former cordiality between Messrs Coutts and 
the partners — Mr Stephen excepted, who was not considered as 
having taken any part in the matter — no other apparent conse- 
quence took place, except the omitting Mr Cochrane's name in the 
firm of the house at London, which was changed to that of Herries 
& Co. But all friendly intercourse in business instantly ceased : 
with Mr Herries — whom they considered, perhaps not without 
reason, as the prime mover — I believe it was never resumed, and 
I shall have occasion to mention some events which afterwards 
tended to widen the breach between him and them. With Mr 
Hunter, Mr James Coutts had much intercourse respecting the 
politics of Edinburgh, when he came down in autumn 1767 to 
renew -his canvass for the representation of the city in parliament, 
in which Mr Huntei", being a member of the town-council and a 
most active canvasser, was a useful partisan. To me both the 
brothers expressed more cordiality, being sensible, I believe, that 



24 MEMOIRS OF A BANKING-HOUSE. 

although I had joined with Mr Herries and Mr Hunter from a 
conviction of necessity as to Mr Cochrane's retiring from London, 
yet that I was disposed to have brought about that measure, if 
possible, in such a manner as might have preserved friendship 
between them and us. When I afterwards went to London in 
1768 — where I remained a twelvemonth on Mr Herries going again 
to Spain, and, indeed, as long as he lived — Mr James Coutts 
behaved to me with much civility, as Mr Thomas Coutts has also 
done ever since, although he shewed a marked proof of there being 
no cordiality between his house and ours, by his employing Messrs 
Mansfield & Co. as his correspondents in Edinburgh. He and I 
still occasionally exchange letters, however, when anything occurs 
in which I can be useful to him here ; and even that slender 
degree of intercourse I feel some satisfaction in keeping up, from a 
grateful recollection of my original obligation to his family. But to 
return from this digression. 

After the execution of the new contract in 1766, the two houses 
were carried on, as before, with harmony, at least among the part- 
ners themselves. Little new or extraordinary, as far as I recollect, 
occurred in the way of business in Edinburgh until the month of 
August 1769, when the banking-house of William Hogg and Son 
stopped payment. Old Mr Hogg had carried on business in Edin- 
burgh for many years with some reputation. He was a man very 
strict in the observance of all the external forms of religion, and 
he had been justly commended for having made a voluntary sus- 
pension of his payments from an apprehension that his affairs were 
in disorder. Having somehow got these arranged, he had gone on 
again with increased reputation and credit. But being extremely 
confused in keeping his accounts, as well as inattentive to the 
credit of those whom he trusted, and having allowed himself to be 
Avheedled into a connection with a projector to whom he advanced 
considerable sums of money for working a lead-mine which totally 
failed of success, his affairs had again become embarrassed. His 
character for integrity, however, enabled him to continue to do 
business as if he were a man of solid property, and in this he 
probably deceived himself as well as the world, from the confusion 
in which he kept his books. On the death of Mr Hogg, his son, Mr 
Thomas Hogg, continued to carry on the house under its original 
firm, until, being able to go on no longer, he came to a stoppage as 
stated above. He had some turn for literature and belles lettres, 
and I entertained the best opinion of his honour and integrity. 
The engagements of his house Avere not very extensive ; yet a 
number of people, who had deposited cash in their hands, lost 



MEMOIRS OF A DANKING-IIOUSE. 25 

money by the failure, particularly a great many mercantile people 
in Shetland. They owed a few hundreds to our house, on which 
we received a dividend, but which was not paid, nor were the 
affairs of the bankruptcy finally wound up for more than twenty 
years after. 

No general bad consequences followed this bankruptcy, and 
the concerns of our houses went on without interruption both at 
Edinburgh and London. At this last place Mr Herries — who had 
removed the counting-house from the original situation in Jeffrey's 
Square, in which Mr Cochrane resided, on the differences taking 
place between him and us, to a house in Oxford Court, Cannon 
Street — continued to be the chief acting partner. Mr Stephen 
almost always resided at Edinburgh, and either Mr Hunter or I 
was constantly present to give him our assistance, or rather indeed 
to take upon ourselves the sole direction ; in which we were by no 
means free from difficulties, not with regard to the carrying on the 
business itself, for nothing could stand higher than the credit of the 
house and the character of the partners, but by reason of the state 
of health of our partner, Mr Stephen, and the situation of his 
private aflPairs. I have mentioned that Mr Stephen had been 
originally a tradesman on a rather limited scale. He had been 
afterwards a partner in the house of Stuart, Stephen, and Scott, 
wine-merchants, from which he was brought to be a partner with 
Messrs Coutts, Having had no stock at his outsetting in business, 
I suppose when he joined Messrs Coutts he was not worth any- 
thing. His share in the house was not great, and the corn-tradg 
in which they dealt was subject to much fluctuation. When, 
therefore, our new copartnery commenced in 1763, Mr Stephen 
owed a considerable debt to the old partnership, which was 
included in the list of those debts left for account of Messrs Coutts. 
But as he had an allowance of £200 for keeping a table for enter- 
taining the friends and correspondents of the house, as his wife 
was an admirable economist, and he himself a man of no personal 
expenses, his share of the profits of our house had enabled him to 
make a considerable reduction of this debt. Still, however, we 
could not but feel some uneasiness for the appearance it would 
have to the world if, after having separated from Mr Cochrane 
because he was living beyond his income, Mr Stephen, who was 
now advanced in years, should be found at his death to have 
been in a state of insolvency. 

Another unpleasant circumstance had occurred. Sir Robert 
Herries and Mr Hunter had conceived an idea that, the business 
of underwriting being considered a profitable one in London, the 



26 MEMOIRS OF A BANKING-HOUSE. 

credit of the house there gave us a right to embark in it with a 
prospect of advantage, a measure in which my unwilUngness to 
oppose any scheme of theirs induced me to acquiesce, contrary, in 
some degree, to my owa sentiments, which rendered me averse 
from any hazardous kind of business. Conscious as we were, 
however, that Mr Stephen was not possessed of any property, we 
conceived it to be folly to share the gains which we looked for 
from this underwriting business with one who was incapable of 
bearing his share of the loss, if such should be the ultimate issue 
of the concern. We therefore entered into a mutual agreement to 
carry on the underwriting business for our own separate account, 
without Mr Stephen's knowledge or participation ; a measure 
extremely reprehensible among partners, and, indeed, in direct 
violation of one of the articles of our contract, by which all of us 
were debarred from engaging in any trade or concern separate 
from the general business of the house : an exception in the con- 
tract had been made in favour of Mr Herries, but merely as far as 
related to the concerns of his house in Spain. This led also to a 
concealment from Mr Stephen of the private correspondence 
between Mr Herries, Mr Hunter, and me, which, till then, we had 
always mutually communicated to each other. As his bodily 
strength decayed with increasing years, he began also to exhibit 
symptoms of mental debility, and, like all weak men, felt not only 
a jealousy of his being deemed a cipher in the counting-house, but 
a desire to exhibit himself as a man of business. In those days it 
was the custom for the merchants and bankers in Edinburgh, to 
assemble regularly every day at one o'clock at the Cross, where they 
transacted business with each other, and talked over the news of 
the day ; and as there were among the merchants at that time — I 
speak of the period before 1772 — several gentlemen of a literary 
turn, and possessed of considerable powers of conversation, we were 
joined by many who had no concern in the mercantile world, such 
as physicians and lawyers, who frequented the Cross nearly with as 
much regularity as the others for the sake of gossiping and amuse- 
ment merely. Amidst this motley group did poor Mr Stephen 
insist on exhibiting himself daily, a Avalking spectre of mortality, 
hanging on his servant's arm, in a manner extremely distressing 
to us his partners; and to every friend who wished him well. All 
these circumstances combined to make it desirable for Mr Herries, 
Mr Hunter, and me, to arrange for his withdrawing from the 
copartnery, which Ave were fortunate enough to accomplish by 
means of his tAvo sons-in-laAV, Mr Fall of Dunbar, and Mr Blair 
of Balthoyock, Avith Avhom avc agreed that we should make hiui 



MEMOIRS OF A BANKING-HOUSE. 27 

an allowance of £2400, one-half to be paid in money, and the 
other half by an annuity of £300 per annum during his life. The 
money did somewhat more than extinguish the debt he owed ; and 
the annuity, with Mrs Stephen's turn for economy,* was pex"fectly 
sufficient in those days for their comfortable subsistence. The 
agreement was signed in August 1771. Mr Stephen died in 
September 1774. 

By this arrangement the sole property of the two houses of 
Edinburgh and London became vested in Mr Herries, Mr Hunter, 
and me, and thus the last link was broken of the original connec- 
tion between Messrs Coutts and us. But we still continued to 
retain the firm of John Coutts & Co., which Messrs Coutts had 
not desired to see relinquished. 

According to the new contract for Edinburgh, each partner had 
one-third. But a fourth of the London house Avas ceded to Mr 
Herries's two brothers, Charles and William, who, after being bred 
to business in his house at Barcelona and admitted partners there, 
had come to reside with him in London, and to George Henderson, 
Mrs Herries's brother, who had been originally bred a writer at Edin- 
burgh, but on his sister's marriage had become a protege of Mr 
Herries, and had also been sent to Barcelona. These gentlemen 
were announced to the world as acting partners in the house at 
London ; but it was understood among ourselves that they were 
to be relieved by us of any bad debts that might arise beyond the 
amount of their profits. Charles and William Herries were both 
of them very able men of business, perfectly acquainted with the 
commerce of Europe, and therefore extremely useful assistants in 
the business of the London house, in which they remained till the 
separation of the two houses. 

Very soon after this arrangement with Mr Stephen, two impor- 
tant events took place, extremely memorable in the history of the 
house. I mean the commission from the Farmers-general of 
France for the purchase of tobacco in Scotland ; and the erecting 
of the Banking Company in St James' Street, London. The great 
company in France, kno^vn by the name of the Farmers-general, 
from their having farmed the public taxes of that kingdom under 
the old government, enjoyed by consequence the exclusive privilege 
of importing tobacco into France, with which they were chiefly 
supplied from Scotland, the article being originally procured by 
the merchants of Glasgow from North America. At this time 

* She was his second wife. Provost Coxitfcs's sister, the mother of his chiklren, 
had been long dead. Mrs Stei^hen was a vci-y worthy woman, and micounnonly 
attentive to her husband and all his connections. 



28 MEMOIRS OF A BANKIXG-HOUSE. 

Messrs William Alexander and Sons, mercliants in Edinburgh, 
were the correspondents of the Farmers-general, and enjoyed the 
lucrative commission of making their purchases of tobacco ; but 
they had become dissatisfied with the manner in which Messrs 
Alexander transacted their business, so that they were not indis- 
posed to make a change of their correspondents in this country. 
Mr Herries, in one of his journeys through France into Spain, 
had travelled in company with a gentleman somehow connected 
with the Farmers-general, and had continued to cultivate his 
acquaintance as he occasionally visited France ; so that when the 
conduct of the Messrs Alexander in the execution of the orders of 
the Farmers-general had been disapproved of by them, Mr Herries 
procured an order from them for the purchase of two thousand 
hogsheads of tobacco at Glasgow, a commission which he executed 
so much to their satisfaction that he was appointed their sole 
agent in Scotland. As this lucrative commission had been pro- 
cured solely by Herries's personal influence at Paris, it was thought 
no more than reasonable that, instead of his third share with 
Mr Hunter and me of the ordinary profits of the house at Edin- 
burgh, he should have one-half of the commission on the purchases 
of tobacco. In consideration of which, however, he was to be at 
all the expense of his journeys to Paris, as well as of any presents 
or other outlay which he might be put to in preserving his influence 
with the Farmers-general.* The other half was thrown into the 
ordinary profits of the house. 

I shall very soon have occasion to mention the manner in which 
the house was deprived of this valuable branch of business. 

The other event I have alluded to Avas our forming a new esta- 
blishment in London. In the year 1768 — almost the whole of 
which year and a part of the next, I spent as a guest -vvith Mr 
Herries in London, attending the counting-house — Mr Herries con- 
trived a plan for supplying travellers with money on the continent, 
which, for its ingenuity, deserves special mention, and of which 
the success fully rewarded the merit of the invention during many 
years, until the present war in a manner put a stop to all conti- 
nental travelling. As Mr Herries communicated to me not only 
the first idea, but every subsequent step of his plan till he brought 
it to a state of maturity, it is with pleasure I look back to the 
many pleasant evenings he and I spent together at his fireside 
discussing this plan. In the course of his own journeys on the 

* I recollect to have heard him say, that, the daughter of a leading man of the 
number being married while lie was at Paris, he made her a present of a set of 
dressing-plate. 



MEMOIRS OF A BANKING-HOUSE. 29 

continent, and in the transacting of business, he had remarked 
that travellers were not unfrequcntly exposed to inconvenience 
and disappointment while abroad, by having tlicir letters of credit 
limited to particular places, while they might wish, perhaps, to 
change their route, but from Avhich they wore prevented until they 
wrote home to have their credits altered, and, perhaps, before those 
new credits reached them, they had again changed their plans and 
wished to follow a still different route. Mr Herries bethought 
him, therefore, of issuing what should serve as an universal letter 
of credit in the forna of promissory-notes, which should be payable 
at all the principal places in Europe where travellers were likely 
to be. For this purpose it became necessary to establish corres- 
pondents in all those various places who would give money to 
the travellers for these promissory-notes, at the current exchange 
of the place on London, without any charge or deduction whatso- 
ever. The convenience to the traveller of this device was obvious ; 
and Mr Herries was to find his profit from the use of the money, 
which of course was to be paid to him on his issuing the notes, 
till they again came round to London, after having been paid by 
his agents abroad. Such was the plan, which, after a variety of 
changes and modifications, he ultimately fixed on, and of the 
success of which he Avas very confident. As he saw the propriety, 
indeed the necessity, of its being undertaken by men of greater 
credit and capital than the partners of the house by themselves 
could pretend to, he j^roposed that a few gentlemen of opulence 
should join with them and form themselves into a separate society 
for the purpose. In the prosecution of this idea, he resolved to 
submit the plan, in the first place, to Messrs Coutts, with whom 
he still maintained intercourse, although there was no cordiality 
between them. Messrs Coutts, however, returned the papers, 
saying the proposal did not suit them. He also made it knoAvn to 
several other respectable men of business, who all gave due praise 
to the ingenuity of the contrivance, but all, like Messrs Coutts, 
declined taking any concern in it except Mr (now Sir William) 
Pultney, Avho was Mr Herries's intimate friend. Not discouraged 
by these disappointments, and still very fond of his project, Mr 
Herries resolved to set it agoing by the house in London, in con- 
nection with one or two private friends ; for it was attended with 
no risk to those concerned, should it not succeed, beyond the loss 
of their labour in establishing the necessary correspondence in the 
principal towns on the continent, which he Avas enabled to do by 
means of his friends, Messrs Hope of Amsterdam, whose commer- 
cial concerns were more extensively spread over Europe than those 



30 MEMOIRS OF A BAIJKING-HOUSE. 

of any other mercantile house whatsoever. As it was deemed 
necessary, however, that the promissory-notes should be issued to 
travellers from a banker's house at the west end of the town, as 
being more convenient than the city for those men of rank and 
fortune who were most likely to make use of them, Messrs Coutts 
were asked whether they would choose to act as bankers to the 
concern, and give out the notes at their house, although they 
declined to be concerned as partners. To this they agreed, and the 
plan Avas set agoing accordingly', and an account opened Avith 
them, on which some money was deposited in common form. 
This was about the year 1770. 

When Mr Herries came to Scotland, in summer 1771, he 
informed Mr Hunter and me that he had good reason to believe 
that, although Messrs Coutts had agreed to be the bankers of the 
concern, and said nothing, as indeed they could say nothing, 
against the credit of the partners, they spoke of the plan of the 
travelling notes in so indifferent a manner to those who called 
on them for information, as rather discouraged inquirers from 
availino: themselves of the notes than otherwise. He also said he 
had reason to know that they had been making inquiry in Paris, 
in order to establish a similar scheme of their own. Whether he 
was correctly informed, I cannot tell ; but he declared his firm 
opinion to be, that either the plan must be altogether abandoned, 
or we must open a house of our own, Avhence these notes might be 
issued. With the latter view, he proposed that his uncle, Mr 
Robert Herries, senior, should be requested to join in the scheme, 
and become the acting partner, for which he was deemed extremely 
well qualified, by having been formerly a merchant in Rotterdam, 
although he had retired from business and then lived on his 
estate in the country. He also stated that in contemplation of this 
plan, he had, before he left London, been looking about for a suit- 
able house, and had seen one for sale in St James's Street, which 
would exactly answer the purpose. 

On his stating this idea to Mr Hunter and me, we readily went 
into the measure, from our deference for Mr Herries's opinion. His 
uncle was sent for to Edinburgh, and a contract of copartnery 
was executed, whereby Mr Robert Herries, senior, Mr Herries 
himself, his brothers Charles and William, and George Henderson, 
Mr Hunter and I, Mr Pultney, and Sir William Maxwell of Spring- 
kell, became partners in a society to be called the London Exchange 
Banking Company, for the purpose of issuing promissory-notes to 
travellers, payable on the continent, to commence on the 1st 
January 1772, at the house in St James's Street, which, on his 



MEMOIRS OF A BANKING-HOUSE. 31 

return to London, Mr Ilcrrics immediately iicquircd for the 
purpose. 

As tlie first offer of a concern in the scheme had been made to 
Messrs Coutts, and they had declined it, and as it was thought 
impossible to continue to issue the notes from their house, because 
it seemed not altogether a business to their liking, I confess it did 
not occur to mc that I was doing anything improper towards 
Messrs Coutts by engaging in this new copartnery, and it was not 
till a few weeks after the house in St James's Street was opened, 
that it struck me that this new establishment, although primarily 
for the issuing of notes to travellers, was to be, to all intents and 
purposes, a banking-house — by consequence a rival to Messrs Coutts 
in their OAvn line of business. Mr Herries, in his correspondence 
with us, urged the propriety of our soliciting our friends to 
patronise this new establishment. My answer was, that when we 
knew of persons meaning to go abroad, -we should certainly ask 
them to take travelling notes ; but that I Avas scrupulous of 
soliciting general business to the house, lest it might appear an 
attempt at interference in Messrs Coutts's business. This produced 
an answer from Mr Herries, avowing that he had no intention to 
decline any banking business which might accompany the trans- 
acting of the travellers' notes, and then it was that I became fully 
sensible of the real nature of the plan. The effect it produced on 
the mind of Messrs Coutts was very soon fully explained to me by 
our friend Mr Seton of Touch,* to whom I had written, requesting 
him to procure me an answer from Mr James Coutts to a pro- 
position I had made for becoming tenant of his house in the 
President's Stairs, Parliament Close, where the counting-house was 
kept, which was occupied at that time by Mr Stephen, now about 
to remove from it. Mr Seton wrote to me that Mr Coutts seemed 
not altogether disposed to give me the use'of this house, probably 
on account of our new establishment, Avhich he considered as a 
direct invasion of his own, which Ave Avere bound by every principle 
of honour to keep clear of, from our establishment haA'ing been 
originally of Messrs Coutts's own formation. This led to a corres- 
pondence on the subject AA'ith Mr Seton, Avho Avas the friend of 
both parties, and Avhich goes at considerable length into the history 
of our original comiection Avith Messrs Coutts : the tAVO foUoAvine: 
letters betAveen Mr Herries and me Avill still more clearly shew 
our sentiments on the question. On the 17th January 1772, I 

* [Hugh Smith, son of an eminent merchant in London, had married the 
heiress of Touch, and now bore the name and arms of that old family.] 



32 MEMOIRS OF A BANKING-HOUSE. 

■wrote, in name of our firm, to Mr Herries. 'We observe what 
you say of our writing letters to our friends in favour of the office 
in St James's Street. We have constantly recommended their 
notes to travellers, as they came in our way, and it does not occur 
to us that there are at present any friends who could be useful 
with whom we have much influence. But if we had, we are not 
very clear how far Ave ought with propriety to carry our solici- 
tations, lest we should be thought to set out on the footing of 
rivals to Messrs Coutts in their own branch of business. We 
think, after what has passed between us and Messrs Coutts about 
the issuing of exchange notes, we are fairly acquitted to the Avorld 
and ourselves for endeavouring, by means of an office in St James's 
Street, to obtain a more extensive circulation to those notes, and 
we can likewise see no harm in accepting any common banking 
business which may come to that office in a secondary way in 
consequence of issuing exchange notes : but Ave submit it to you 
hoAv far it Avould be thought ungenerous in us, during the con- 
tinuance of our original contract, of which there remain three 
years, and after Ave have risen to a state of independence on the 
foundation of the two houses Avhich they transferred to us — 
although Ave pay them a valuable alloAvance for that transfer — 
that Ave should employ the influence Ave have acquired to 
establish ourselves in their OAvn branch of business, especially 
as they Avould, no doubt, have made it a restriction in our agree- 
ment Avith them at first, had they supposed Ave Avould embark in 
such an undertaking. If Messrs Coutts take offence at our having an 
office in St James's Street on any footing, they may very probably 
recall the firm, and, in that case, it will be yielded up to them. 
But Ave are not quite certain hoAv far it Avould be proper to relin- 
quish the firm of ourselves. Perhaps the Avorld Avould consider 
such a step as a declaration of hostilities on our part, and they 
might accuse us of ingratitude for thus affi^cting to throAv off" all 
manner of correspondence or connection Avith Messrs Coutts, after 
Ave had answered our OAvn purposes by the original agreement we 
made Avith them.' 

To this letter, Mr Herries Avrote the following ansAver in the 
name of the house at London : 

' 2lst January 1772. 
' We have yours of the 17th, and are sorry to observe that you 
seemed to have misunderstood the intention of the hint Ave gave 
you to take an opportunity of mentioning to any of your acquaint- 
ance that you are concerned in the new establishment in St James's 



MEMOIRS OF A BANKING-HOUSE. 33 

Street. You might be sure we could not mean to desire you to 
solicit [business], either by the partners or their friends. But 
there could be no harm, in our opinion, in making the thing known 
by this means either to friends or others, and this was all we 
aimed at, leaving it to speak for itself, and everybody to do as they 
please. It is in this way that we have mentioned it by cards not 
only to our friends, whom we thought most likely to be of service, 
but also to several of the nobility ; and it is very indifferent to us 
into whose hands those cards may fall, as no fault will probably 
be found with them, unless by those who are disposed to find 
fault at all rates. We neither in those cards nor in the course of 
conversation busily publish our intentions, but endeavour, as 
modestly as possible, to shew what they really are, without attempt- 
ing either to conceal them or cloak our money-banking business 
under the former plan of exchange notes. If we were so disposed, 
nobody would believe us, and think meanly of us for making use 
of any covered language, when the truth speaks for itself without 
our telling it. Sir Charles Asgill and some others, before there 
was any appearance of a counter, or anything of that kind, in St 
James's Street, and before we had let anything drop of our second- 
ary views in that establishment, plainly asked us if such was not 
the intention of that house, and you may be sure we were above 
denying it. We thought at first that Messrs Coutts and the other 
bankers in general would have favoured our plan, while we steered 
clear of any connection in their business. But the reverse has 
been the case with them all ; and we believe none of them have 
applied for our notes, but when expressly ordered by their custo- 
mers so to do, and in this way we have issued more in proportion to 
indiiferent banking-houses than to those appointed to receive our 
lodgments in the Strand, who did wrong to accept of our business 
unless they had been disposed to do our plan common justice. It is 
plain from what one of them mentioned, on our first telling them of 
the formation of the present Exchange Banking Company, that they 
either considered that company already on the footing of rivalship, 
or suspected what has since happened, although at that time far 
from our intention. It is above a twelvemonth since we Avere 
informed that, in order to be on a footing with our plan, they had 
agreed with a house at Paris to pay their letters of credit in the 
same way as our notes, charging a commission of one per cent. ; and 
we have been since informed, from pretty good authority, that they 
liad written to Paris for a clerk, as was supposed to assist them 
in furnishing credit to travellers. Whether they mean to adopt 
our plan altogether or not, we cannot say ; but we have heard 



34 MEMOIRS OP A BANKING-HOUSE. 

that two banking-houses have this in contemplation. But we shall 
be noways sorry if they both put it in practice, since we think 
such an attempt will do us more good than harm. As to what 
restriction they might have proposed to us nine years ago, had 
they then foreseen the present establishment in St James's Street, 
or as to our agreeing to such restriction, it is impossible now, at 
this distance of time, to say what our feelings might then have 
been. But certain it is, that none of us were taken into the suc- 
cession of their houses merely for GocVs sake, and Mr Herries, in 
particular, is conscious to himself that his fortune and principles 
were at that time so independent as to have prevented him from 
submitting to any restrictions not to do business — even had he 
been ever so dependent — in a lawful and honest way in any part 
of the world. All they had a right in such a case to require of 
us was, not to solicit their customers ; and for this no restriction 
was necessary, as none of us were disposed so to do (or to take 
them), unless they come of themselves, in which case we are under 
no obligation to refuse them. It is also our opinion, and has been 
so for some time past, that we ought to change the firm ; for we 
have no doubt that they will, however unjustly, accuse us of 
making use of their own name to draw their London connections 
from them, should any of those connections perchance leave them 
and come to St James's Street.' 

In consequence of my letter, Mr Herries also wrote to Mr Seton 
as follows : 

* I have received a letter from Sir W. Forbes, in which he tells 
me that you had written him that we had been soliciting Messrs 
Coutts's best friends in the banking way, and that you had seen 
one of our letters to this purpose to Lord Strathmore. You must 
give me leave to say that there must be some mistake in this 
matter. For I am as certain as I can be of anything, that I never 
either wrote or signed such a letter to any person whatever, and I 
am equally sure that neither my uncle nor any of my brothers 
would do it without my knowledge. What I imagine has given 
rise to this mistake must have been the card Sir William points 
at in his answer to you. I cannot at this distance charge my 
memory with the precise contents of the card; but I desire my 
brothers to send you a copy of it along with the present letter, and 
on a second reading, I daresay, you will be satisfied, as I fully am, 
that it by no means bears the construction you had given it. At 
least, I am sure that everything bordering on solicitation was 
meant to be avoided in these cards, which, in justice to the others 
concerned in the Exchange Banking Company, as well as to 



MEMOIRS OF A BAXKIXO-IIOUSE. 35 

ourselves, we thought ourselves bound to write, not only to make 
our intentions honestly and opehly known as to the money bankinf 
business, but also to prevent those who may be possessed of plans 
^vith the first address* from going to the wrong place, from whence 
some had returned unsatisfied. But on further inquiry,t 

had afterwards come to the city for notice, and generously 
Avamed us of what happened. Several of those cards were written 
at the desire of some friend or other of those to whom they were 
addressed, and I confess to you that we availed ourselves of the 
opportunity to send some to others, perhaps to many, without being 
desired, purely to make the thing the more known. When Lord 
Bute was last abroad, we were informed of his having expressed 
great approbation of the plan, and after his return, he desired a 
friend of mine to tell me to call on him to explain it fully to him. 
I never did call, but thought the least I could do was to send him a 
corrected plan on one of the cards in question, and had you been 
in London at the time, I very probably would have addressed one 
to you also, without meaning harm to anybody. I feel that I have 
been ill-treated by certain gentlemen, but I am not singular in 
this ; and as we are all above being hurt by it, any sort of resent- 
ment ought to be beneath us. I know how much you are our 
real friend, and that it will give you pleasure to learn that 
everything here is just as we ourselves could wish, for I am 
thanked and caressed at all hands by those to whom our grati- 
tude is due. I can also add that the necessary measures are 
pursuing to render the office as permanent as it is lucrative and 
creditable.' 

Whether Mr Seton ever made any reply to this letter, I know 
not. My correspondence with Mr Herri es, however, will shew 
what my sentiments were from the beginning with regard to 
Messrs Coutts, although, unfortunately, I had not foreseen what 
the consequences might be of establishing the office in St James's 
Street. At the same time I confess that, on mature deliberation, I 
felt very sincere regret that any such thing should have happened ; 
and had I foreseen all the consequences, when the plan of the 
Exchange Banking Company was first arranged, I should probably 
have declined to be concerned in it, though I have no room to believe 
that any opposition on my part could have had the smallest effect 
in preventing the plan fi'om being carried into execution, especially 
by Mr Herries, whose favourite object it was. Indeed, as his 

* Meaning to Messrs Coiitts's bank. 

t Unintelligible in the original manuscript. 



36 MEMOIRS OF A BANKING-HOUSE. 

letters shew, he considered himself at perfect liberty to establish 
any fair and open branch of business in any part of London, -where 
he thought it might be attended with profit, and that he had not 
otherwise attempted to rival Messrs Coutts than merely by making 
his plan known, and leaving it to speak for itself. In these senti- 
ments Mr Hunter most cordially concurred. But still I, for my 
part, could not help feeling on this occasion, as I did on our sepa- 
ration from Mr Cochrane, that I stood on very different ground 
Avith regard to Messrs Coutts from the other tAvo ; but I must do 
Mr Herries the justice to say that, on my expressing this senti- 
ment pretty strongly to him, he very readily offered to allow me 
still to Avithdraw from the concern, if I chose. The offence AA-as, 
hoAvever, by that time given to Messrs Coutts, and my then Avith- 
draAving, Avhile it Avould not have put a stop to the neAV concern as 
to them, could scarcely have failed of producing some disagreeable 
results among ourselves. I therefore deemed it expedient to let 
things go on as they Avere begun. 

In this manner the establishment in St James's Street had its 
origin, and I shall by and bye have occasion to speak of the 
manner in Avhicli Mr Hunter and I Avithdrew from that concern. 

If there had been but little cordiality betAveen Messrs Coutts 
and us since our separation from Mr Cochrane, it may easily 
be supposed that this ncAv occurrence put an end to every 
prospect of a reconciliation. Finding Mr James Coutts not likely 
to give me possession of the house in the Parliament Close, 
Mr Hunter and I resolved to hire that on the first floor of the 
same stair belonging to Mr Hope, Avhich, though too small to 
accommodate my family, Avas sufficiently large for the pur- 
pose of the counting-house, and our principal clerk, Mr 
Bartlet (afterAvards our partner), resided in it, to take care of 
the premises. To this ncAv counting-house Ave removed at 
Whitsunday 1772. 

About this time the partners engaged in tAvo speculations, both 
of Avhich turned out unfortunately — Avliich, hoAvever, I am glad to 
record, because they strongly illustrate a principle Avhich I hold 
to be of the first importance, that a person Avho is in possession 
of a natural and valuable branch of business should never 
allow his time or his attention to be diverted to the prosecution 
of objects Avhich he does not understand, and Avhich are foreign 
from his proper line, for such speculations rarely come to any 
good. 

I do not exactly recollect hoAV the first of the adventures took 
place, because I Avas residing in London at the time Avhen the 



MEMOIRS OF A BANKING-HOUSE. 37 

project was undertaken ;* but either Mr Hunter, or Mr Guthrie the 
partner of Mr Arbutlinot — Avith both of whom Mr Hunter and I 
lived in the most intimate habits of friendship and society — had 
become acquainted with a Mr Eraser Avho had been manager of 
a small paper-mill belonging to Mr Adrian Watkins, who held the 
patents of king's printer and stationer. On Mr Watkins's death, 
and the patents passing into other hands, Mr Fraser had repre- 
sented so strongly to Mr Guthrie and Mr Hunter the advantageous 
nature of the trade of making paper, that he persuaded them to 
embark in a scheme of building a paper-mill and establishing a 
manufacture of that article. He argued that Scotland never sup- 
plied itself with paper, either for writing or printing, but every 
year imported to a very considerable amount, all of which would 
be saved to the country, and at the same time a considerable 
profit accrue to the undertakers, as labour was much cheaper in 
Scotland than in England. Over-persuaded by Mr Eraser's argu- 
ments, they accordingly feued some acres of ground from the pro- 
prietor of Polton, on the river Esk, near Lasswade, seven miles from 
Edinburgh, on which they erected a very extensive paper-mill, con- 
sisting of five vats and everything to correspond, all on the most 
enlarged scale, at a great expense — indeed, much beyond the 
original idea formed by the partners, who were misled by Mr 
Eraser ; and he perhaps erred from ignorance merely, for, having 
been employed in a small work only in Mr Watkins's time, he had 
no conception of the expense of one formed on such an enlarged 
scale as that at Polton. When the buildings were comjdeted, an 
overseer was engaged in England to conduct the manufixcture, and, 
he dying, a second was brought from England, who also died. Mr 
Eraser then stated that he considered himself to be so perfectly 
master of the business as to be able to conduct the manufacture 
alone, and to him was accordingly committed the sole charge of 
the business, of which the partners themselves were totally ignoi-- 
ant ; nor had they either time or skill sufficiently to control his 
management. The consequence was, that the manufacture was con- 
ducted probably at too much expense, and the paper made proved 
to be of an inferior quality. At first it had been agreed that the 
mill should be erected by Mr Guthrie and Mr Hunter at their 
own expense, and that our house and Arbuthnot and Guthrie as a 

* When I say that I was absent when Mr Hunter engaged in and set agoin<' 
this ill-fated adventure, I am far from meaning to cliarge him with having 
embarked the house in it without my knowledge or consent. I have no doubt 
that he had both ; but I had such implicit confidence in his judgment, tliat I 
allowed him to proceed with tlie undertaking without interruption. 

D 



38 MEMOIRS OF A BANKING-HOUSE. 

copartnery should jointly carry on the manufacture of paper. But 
afterwards, the whole expense of buildings and manufacture were 
taken on themselves by the two companies. The business was 
carried on for about three years without doing any good, till at 
length the bankruptcy of Arbuthnot and Guthrie in the famous 
year 1772 put an end to the concern, and left the whole loss on 
our shoulders. Mr Hunter had by that time also become fully 
sensible of the folly of the speculation, and we gladly availed our- 
selves of the above event as a reason for bringing it to a close. 
There was a large stock of paper on hand, which it became neces- 
sary to dispose of, and with this view a variety of methods was 
resorted to. Mr Fraser's incapacity for such a situation being but 
too fully proved, he was discharged, and his clerk, named Duffus, 
was employed to dispose of the stock on hand. DufFus entered 
into a traffic with booksellers, giving them paper for the purpose 
of printing books, of which he took a quantity in payment for the 
paper, and selling or exchanging these books with the trade as he 
best could. Part of the paper, which lay on hand till the American 
war, Avas consigned to New York, whence I recollect we received 
account-sales, accompanied with an expression sufficiently descrip- 
tive of the quality of the paper — ' that the printers of the news- 
papers had bought some of it because they could not find any of a 
tetter quaUty, and the apothecaries had bought the rest, because 
they could not find any that was worse.* 

Tired at length of such a traffic, we made an agreement with Mr 
John Hutton, the lessee of the Melville paper-mill, to take over 
the remaining paper, printed books, and outstanding debts, for a 
stipulated sum, which enabled us to close the account, and ascer- 
tain the loss. The buildings and machinery had been sold some 
time previously for less than a third of their original cost. Thus 
ended the concern of the Polton paper-mill company. 

The other speculation I alluded to, as entered upon by Mr 
Hunter and me, was, if possible, still more indefensible, because 
more of a precarious nature ; but fortunately it happened that the 
loss did not prove to be very extensive. It took place thus. When 
Mr Hunter was married to a niece of the Earl of Cassillis, he became, 
of course, much connected in friendship with that nobleman, on 
whose estate there was believed to be a lead-mine, Avhich had been 
wrought, though with no success, a good many years before. Mr 
Hunter, wishing to oblige Lord Cassillis, who was anxious that a 
further trial of his mine should be made, mentioned the matter to 
Mr Alexander Sheriff, merchant in Leith, who had a concern in 
the lease of the Earl of Hopetoun's mines at Leadhills, and was 



MEMOIKS OF A BANKING-HOUSE. 39 

supposed to be master of the subject. Mr Sheriff, a man of a 
speculative genius and sanguine temper, grasped at the idea of 
undertaking to work Lord Cassillis's mine, and it was agreed that 
the earl himself, Mr Hunter, Mr Herries, Mr Sheriff, and I, should 
enter into a copartnery for the purpose, but limiting the concern 
so strictly, that we were each of us to contribute only £30 to a 
joint-stock, for the purpose of making the trial, and an overseer, 
named Barker, was engaged to carry it on so far as to ascertain 
whether we might reasonably expect to hit upon a productive 
vein of lead-ore or not. After working about a twelvemonth, Mr 
Sheriff became bankrupt in the disastrous year 1772, and this 
event, fortunately, put a stop to the undertaking, before any more 
than the original subscribed sum was expended, which, therefore, 
was all the loss that each of us sustained. I say fortunately, not 
in allusion to the bankruptcy of poor Mr Sheriff, who was a very 
industrious, honest man, but for us, as there is no saying to what 
lengths we might have been led, for I regard mining as a very 
deep species of gambling, whereby there has probably been more 
lost upon the whole than gained. 

The year 1772 will long be remembered in Scotland for the 
numerous bankruptcies which took place at Edinburgh in the 
month of June, and which may be said to have entirely changed 
the current of the business in our northern capital. I have 
formerly noticed the extensive speculations which were entered 
into by some Scotchmen for the purchase and cultivation of lands 
in the newly acquired West India Islands ; as well as the spirit 
which took place about this time for improvements in agriculture 
at home.* Some of the houses which carried on the banking busi- 
ness in Edinburgh, having embarked in these speculations, required 
a larger capital than their o^vn resources could command. To this 
must be added, the rage which then began to take place for build- 
ing larger and more expensive houses, than had been customary 
in Edinburgh before the plan of the New Town was set on 
foot ; and larger houses necessarily led to more extensive estab- 
lishments, as to furniture, servants, and equipages. At the same 
time those projectors and improvers, flattering themselves with the 
prospect of the immense advantage to be derived from their specu- 
lations, launched out into a style of living up to their expected 
profits, as if they had already realised them. Such causes com- 
bined had induced those gentlemen to have recourse to the ruinous 
mode of raising money by a chain of bills on London ; and when 

* [This is an oversight of the author. No such notice occurs in the earlier 
pai-t of his manuscript.] 



40 MEMOIRS OF A BANKING-HOUSE. 

the established banks declined to continue a system of which they 
began to be suspicious, the bank of Douglas, Heron, & Co., com- 
monly knoAvn as the ' Ayr Bank,' was erected. But, instead of 
proving a cure to the evil, they, by their improvident and injudi- 
cious management, found themselves compelled to plunge into this 
kind of circulation still deeper than the others, although with a 
more solid foundation. The fictitious paper in the circle between 
Edinburgh and London had thus arisen to an astonishing height, 
and was falling into great and general disrepute in London, when 
the first check was given to it by the failure of the London 
banking-house of Neale, James, Fordyce, and Downe, which 
had been but recently established. Alexander Fordyce,* a native 
of Aberdeen, had gone to London, and become a clerk in a bank- 
ing-house. Having acquired some knowledge of that business, he 
persuaded Mr Roffey, a brewer, and a man of some property, as 
well as Mr James and Mr Neale, to establish a banking-house, of 
which he was to be the principal acting partner. Not contented, 
however, with the regular profits of their trade, he indulged in 
speculative tendencies, by embarking deeply in the public funds, 
in which he was at first successful, and was believed to have 
acquired a large fortune. In consequence, he assumed a splendid 
style of living ; had an elegant country-house at Roehampton, in 
the neighbourhood of London ; went into parliament ; and affected 
a profuse generosity in presents to his relations and connections 
in Scotland. To croAvn his good-fortune, he had the address 
to marry Lady Margaret Lindsay, a daughter of the Earl of 
Balcarras, a lady of great beauty and accomplishments, doubtless 
captivated by the splendour of his appearance and the reputation 
of his wealth. His speculations in Change Alley, however, were 
not always equally fortunate; and having large differences to pay, 
he unwarrantably employed for that purpose, without the know- 
ledge of his partners, the funds deposited in the house by their 
customers. The moment that this became known to the other 
partners, they very honourably stopped payment, in order that 
they might do such justice to their creditors as was still in their 
power ; but this bankruptcy set fire to the mine, which at once 

* His father was Fordyce, a merchant in Aberdeen, who had acquired 

some money as lessee of the York Buildings Company's estate of Belhelvie. 
This gentleman had five sons, three of whom were literary characters of 
eminence. One of them, a professor in Marischal College, Aberdeen, was 
unfortunately lost in a vessel on the coast of Holland ; Sir William was a 
celebrated physician in London ; James was equally celebrated as a preacher ; 
Alexander, the fourth, was he of whom I am now speaking; and Robert, the 
youngest, was a merchant in Aberdeen. 



MEMOIRS OF A BAXKING-HOUSE. 41 

blew up the whole traffic of circulation that had been carrying on 
for a number of years. All those houses in London who had 
largely accepted bills dra^\^l on them from Scotland — of which 
the sum total was to an astonishing amount* — finding it no longer 
possible to discount the remittances that had been made to them 
for their reimbursement, were instantly compelled to stop pajTuent, 
and, by unavoidable consequence, the drawers in Edinburgh Avere 

compelled to do the same. It was on Monday the of June 

— emphatically called the Black Monday \ — that Fordyce's house 
stopped payment Another banking-house in London, of older 
standing and greater eminence, which, induced by the idea of 
perfect safety, and the temptation of a lucrative commission, had 
become the correspondent of the Ayr Bank, and had been drawn 
in to go under acceptance for that company to a very great extent, 
also found themselves under the necessity of suspending their pay- 
ments for a time ; but they soon resumed, and are still a banking- 
house of eminence. So great was the alarm in London that day,| 
and such the discredit into which every Scotch house was thrown, 
that there was a violent run even on Mr Drummond's and IMr 
Coutts's banking-houses, although they were no way engaged in 
or connected with the chain of circulation from Scotland. The 
resources of these two capital houses, however, were so great, and 
they answered all demands with such readiness, that the run on 
them lasted only during that single day. On Thursday afternoon 
an express brought to Edinburgh the account of the failure of 

* Douglas, Heron, & Co. alone had £400,000 of bills in circulation when they 
stopped payment, and the whole circulation was computed at £800,000. 

•f- [According to a contemporary recoi'd, tlie failure of Neale, James, Fordycc, 
and Downe, took place on "Wednesday the 10th of June 1772. The author ought 
probably to have -written Black Wednesday.l 

J [' Every day was ushered in with the disagreeable accounts of new failures, 
and by the 19th no fewer than ten capital houses had stopped. "Words cannot 
describe the general consternation of the metropolis on the 22d. A imiversal 
bankruptcy was expected. The whole city was in an uproar, and many of the 
first families in tears. Every couiitenance appeared clouded, occasioned either 
by real distress, or by what they feared for their friends. * * Tlie Messrs Adam, 
of the Adelplii Buildings in the Strand, being mifortunately involved by the 
failure of some capital houses, upwards of two thousand valuable artificers and 
workmen, supported by tlieir undertakings in different parts of the kingdom, 
were thrown out of employment, and their families deprived of subsistence. 
The poor men had begun their work in the morning, before the melancholy news 
of their masters' misfortunes was communicated to them : when informed of it, 
they came doAvn from the walls in silence, and stood for some time in the street 
in a body ; and at last went off one by one, with every mark of regret for the 
fate of their masters, whose business had supported them and their families for 
several years. However, to the great joy of every good man, the Messrs Adam 
resxuned their works on the 26th.' — Scots Magazine, June 1772.] 



42 MEMOIRS OP A B.VNKING-HOUSK 

Alexander Fordycc,* and of all the confusion that had ensued 
among the Scotch merchants connected Avith the circulation of 
bills, whose fate was easily foreseen, as well as the effect of it on 
the houses in Edinburgh engaged in the same ruinous mode of 
supporting their credit. As expected, the bank of Douglas, 
Heron, & C!o.,t and the houses of Fordyce, Malcolm, & Co., 
Andrew Sinclair & Co., Arbuthnot and Guthrie, William Alexander 
and Sons, Johnstone and Smith, Gibson and Balfour, Anthony 
Ferguson, and William Hogg, junior, all stopped payment in the 



* [' The accounts of the failure of Noale, James, Forclyce, and Downc, arrived 
at Edinburgh on Friday afternoon, June 12th, by a gentleman who jDOsted from 
London in forty-three lionrs.' — Scots Magazirve, June 1772.] 

f [The editor has elsewhere given the following account of this bank : 
' The personage in Marryat's novel of Peter Simple who believed that every- 
thing now happening had happened before, would have had a support to his 
notion in the history of Scotch banking. The "Western Bank was prefigured 
eio'hty-five years ago by the bank of Douglas, Heron, & Co., of which the head- 
office was placed at Ayr. It had been set up in 1769 with £96,000, subscribed 
by about a hundred and forty individuals, mostly unacquainted -with banking 
business. It made notes without limit, and to get them into circulation, was 
unusually liberal in discovmting bills. No poor struggling tradesman or farmer 
was refused credit to help him on. Men who applied to get their difficulties 
resolved by credit with Douglas, Heron, & Co., came away astoimded by the 
unwonted facility they had met v/ith, and laughingly declaring that such 
a concern could not go on long. It was thought to be at once a good business 
for the bank and a useful tiling for the comitry. Of course an artificial stimu- 
lus was given to trade and to expenditure, and for a tune aU seemed going on 
well. But in June 1772, the great banking failure of Mr Fordyce created a 
general panic. A iim on Douglas, Heron, & Co. commenced, and in a few days 
they found it necessary to suspend payments in specie, and to propose instead 
making their notes carry interest. Then there were meetmgs of well-meaning 
but ignorant gentlemen to express confidence in the bank, and ofi'er to contmue 
taking its notes, exactly as there were in the case of the Western. Leading 
shareholders, including the Duke of Queensberry and the Duke of Buccleuch, 
went to the Bank of England to ask assistance, precisely as the 'Western direc- 
tors went to the Edinburgh banks ; but the Bank of England, having already 
Douglas, Heron, & Co.'s notes to the extent of £150,000, was indisposed to trust 
them any further. There was next — exactly as we have seen in the recent 
case — a burst of indignation from the embarrassed bank and its friends against 
the Bank of England, without a word of acknowledgment of the great sins of 
the embarrassed bank itself, or of the justice of the punishment it was now 
suffering. This lasted till, in the course of a few months, it was discovered that 
there was a hopeless gulf to be filled up ; and Douglas, Heron, & Co. closed 
business a little after the end of their third year, leaving an amount of destruc- 
tion in their wake such as Scotland had not experienced since the wreck of the 
Darien Expedition. It is said that a large proportion of the land of the county 
of Ayr changed hands in consequence. For the remainder of their lives, its share- 
holders were never done with paying ; and we have been told that their families, 
in some instances, did not get their accounts satisfactorily closed till some time 
after the passing of the Reform Act, at the distance of upwards of sixty years 
from the calamity ! '] 



MEMOIRS or A EAXKING-nOUSE. 43 

course of a few days,* and the alarm in Edinburgh and the neigh- 
bourhood became very generttl. 

Besides the Bank of Scotland, Royal Bank, and British Linen 
Company, which were established l)y public authority, the only 
private companies that continued solvent %vere Mansfield, Hunter, 
& Co., William Cuming and Sons, and our own. On Monday a 
very smart demand for money took place on us all, just as had 
happened the preceding week in London. This was a new and an 
unexpected circumstance, for nothing of the kind had occurred in 
consequence of the failure. of Messrs Fairholme in 17G4, or of 
Messrs Hogg and Son in 1769. But as neither our house nor any 
of those others had been engaged in the circulation carried on 
fi'om Scotland, and were sufficiently provided with funds to answer 
promptly all the demands that Avere made on them, the panic 
abated after two o'clock on Monday, and the public confidence 
in their solidity was restored, and even increased by this proof of 
their having conducted their business on a rational and provident 
plan, and avoided those speculations and that mismanagement 
which had proved so fatal to their neighbours. Mr Herrics, how- 
ever, Avho conducted the business of our house in London, being 

* It was much taken notice of at the tunc that, only a few daj's previous to 
these extensive bankruptcies, a total alteration had been made by an act of par- 
liament on the bankrupt laws of Scotland. As the law stood previously, any 
creditor, laying an arrestment on the effects of his debtor, secured to himself the 
value of the property thus attached, to the exclusion of all the rest of the credi- 
tors, even althoiigh arrestments should immediately afterwards be laid on the 
same effects by any other creditor. By this means a debtor had it in his power 
to give a preference to any creditor whom he chose to favoui", by informing him 
privately of the situation of liis affairs, which enabled that creditor to secure 
himself by arrestment to the prejudice of all the rest. And, even without sup- 
posing anything unfair of that sort, whenever a person declared liimself bank- 
rupt, those creditors who were on the spot had it in their power to gain a 
preference before those creditors who lived at a distance. The Court of Session 
had attempted to remedy this abuse by an order of court in the year 1754, 
declaring that all arrestments laid withm thirty days after the bankruptcy should 
be of equal force ; but this order was only made for seven years, and at the end 
of that period was not renev/ed by the Court of Session, probably because they 
did not think they had the power to make so great an alteration on the common 
law by their own authority merely. The abolishing of this miquitous system, 
and the procuring an act of parliament to be passed for an equal distribution 
of the effects of debtors among their creditors, was the work of Mr (now Sir) 
James Montgomery, at that time Lord Advocate for Scotland, and after- 
wards Lord Chief Baron of Exchequer. After consiiltmg v/itli the principal 
merchants of Edinburgh and Glasgow, an act of parliament was framed which 
received the royal assent in June 1772, and the salutary effects of it were very 
speedily proved, on occasion of the numerous bankruptcies which now took 
place. Had the old system been still in force, the expense and confusion arising 
from the multiphcity of arrestments and law jjroceedings must have been 
altogether inconceivable. 



44 MEMOIRS OF A BANKING-HOUSE, 

uncertain of what situation things might be in at Edinburgh, or 
what support and assistance we might stand in need of, thought 
it a prudent measure to hasten a visit which he had at any rate 
resolved to pay to Scotland about this time, and to bring down 
with him a sum of specie. He accordingly arrived in Edinburgh 
about the middle of the week, by which time the run on our house 
was over. The amount of specie which he brought was but 
inconsiderable — only between £2000 and £3000 — yet this, being, 
as usual, magnified by common report into a mighty sum, was not 
without its use in fortifying the credit and increasing the confi- 
dence of the public in the stability of our house. 

On this occasion Glasgow suffered less, and experienced fewer 
difficulties, than Edinburgh. For although many of the consider- 
able merchants were put to inconvenience by the shock which 
commercial credit in general sustained, only one house, that of 
Simson, Baird, & Co., stopped payment. Previous to this event 
of the bankruptcies of June 1772, a sort of contest had taken 
place between the merchants of Glasgow and Mr Herries, as agent 
for the Farmers-general, about the price of tobacco. The merchants, 
believing that the Farmers-general could be nowhere else supplied, 
and must give the price they demanded, would not accept of what 
the French offered, which was somewhat less. When the scarcity 
of money, however, in consequence of these bankruptcies, came to 
be felt at Glasgow, the merchants began to relax a little, and Mr 
Herries, on the other hand, prevailed on the Farmers-general 
to make a small advance in their price, to increase the quantity of 
their order for purchase, and somewhat to shorten their date of 
payment. All three circumstances were very convenient for, and 
agreeable to, the merchants, so that at once Mr Herries and they 
came to an understanding, and he went from Edinburgh to Glas- 
gow to regulate his purchases, in which journey I accompanied 
him. As we thus went on a very agreeable errand, we were 
received with open arms, and entertained in the most sumptuous 
manner by the merchants during the time that we remained 
there. 

Although our house had always been on the most friendly foot- 
ing with the unfortunate houses which had noAV failed ; yet, having 
never been engaged with them in the business of their circulation 
on London, we had no other connection Avith their affiiirs than by 
being accidentally holders of a few of the drafts on London of 
Arbuthnot and Guthrie, and of Fordyce, Malcolm, & Co., so that 
our whole loss by the bankruptcies of the year 1772 was but a 
trifle. 



MEMOIRS OF A BANKING-HOUSE. 45 

Hitherto, notwithstanding our quarrel with Messrs Coutts, the 
firm of John Coutts & Co., by which the house was designated 
in 1763, had still continued to be used ; but as Messrs Coutts had 
it in their power to require us to relinquish it when they pleased, 
it was thought better that we should do so of our own accord. 
"We therefore changed it, at the 1st January 1773, to that of Sir 
W. Forbes, J. Hunter, & Co., by Avhich name the house has ever 
since been carried on. 

The cordiality which Ave had recently experienced from the 
Glasgow gentlemen did not . long continue, and differences soon 
arose between them and us, originating from the following circum- 
stance : — There were certain advantages in the unpacking, weigh- 
ing, repacking, and delivery of their tobacco, which the merchants 
had been accustomed to enjoy, and which they insisted were per- 
fectly fair, but which Mr Herries affirmed, on the other hand, 
were improper, and in consequence would not allow to be practised, 
demanding that the mode practised in the port of London, which 
Avas more favourable for the buyer, should be the rule followed at 
Glasgow. This occasioned much altercation between them and 
us, and Mr Hunter, who managed the department of the tobacco 
purchases, did not always take the best method of smoothing 
matters. In this Mr Herries and Mr Hunter, I am perfectly 
satisfied, thought themselves in the right, believing that they were 
merely protecting the interests of our constituents, the Farmers- 
general. But, nevertheless, it produced the disagreeable conse- 
quence of making us unpopular at Glasgow, and rendered the 
transaction of our business there more difficult than it otherwise* 
w^ould have been. It was not long before the whole business took 
a new and an unexpected turn. Early in the year 1774, a new 
struggle took place between Mr Herries and the merchants of 
Glasgow, who held at that time considerable quantities of tobacco 
on hand, about a small difference in the price between what he 
offered and what they demanded. Things continued in this 
situation till the beginning of the year 1775, when, instead of 
improving, they grew worse, owing to the disputes which had by 
that time begun to take place between Great Britain and the 
colonies of America, and which threatened to put a stop to all 
commercial intercourse between the two countries. The merchants 
instantly took the alarm, and began to rise in their demands. Mr 
(now Sir Robert) Herries,* who thought, as many others did at that 

* In the month of February 1774, Mr Herries had procured the honour of 
knighthood, thinking it might give him additional consequence in the eyes of 
the Farmers-general. 



46 MEMOIRS OF A BANKING-HOUSE. 

time, tliat the dispute between the mother country and the colonies 
■would be amicably adjusted, and that the prices of tobacco would 
ere long return to their former level, advised the Farmers-general 
to wait a little rather than yield to the increase demanded. All 
this while the Farmers-general continued by their correspondence 
to express themselves perfectly satisfied with Sir Robert's conduct, 
and seemed to repose in him the most impUcit confidence. They 
had intrusted to him alone their whole commissions to a great 
amount for purchasing in Scotland ; and they seemed determined 
to employ no other agent there. While he was carrying on the 
most friendly and confidential correspondence, not only AA-ith them 
but individually with Mr Paulze, their president, who was sup- 
posed to have the greatest weight at their board, INIr Samuel 
Martin of "Whitehaven, who had formerly been employed in pur- 
chasing for the French, made his appearance at Glasgow in the 
end of February 1775, and shewed an ostensible commission from 
the Farmers-general for a large purchase, in consequence of which 
he concluded a bargain for six thousand hogsheads. 

When Sir Robert was informed of this transaction, he rephed 
that he was certain Mr Martin had no commission from France ; 
that the purchase, therefore, had been made on speculation, and 
that not an ounce of that tobacco Avould go to France. On his 
being again assured that Mr Martin had actually shewn at Glasgow 
a commission to purchase, signed by Mr Paulze, the president, 
and seven of the Farmers-general, Sir Robert communicated to us 
the following very curious anecdote as the ground of his so confi- 
"dently believing that Mr Martin had no authority for what he had 
done. It seems that a very short time before, on opening one of 
Mr Paulze's private letters. Sir Robert had found enclosed in it a 
letter from Paulze to Mr Martin, consisting of a few lines, in which 
the president informed Mr ]\Iartin that he had received his letter, 
ofiering his services to purchase tobacco for France, but which he 
must decline accepting, as the Farmers-general v/ere determined 
not to employ any other agent than Sir Robert Herries. By the 
following post Paulze wrote to Sir Robert that he suspected he 
had folded up in the packet to him by mistake the letter to Mr 
Martin, but which Sir Robert might put in the fire without for- 
warding it, as Mr Paulze said he had written and despatched 
another letter to Mr Martin. No wonder, therefore, that Sir 
Robert was so very positive that Mr Martin was acting Avithout 
authority. But, on its being stated to him that Mr Martin had 
actually shewn his commission, the date of which was specified, 
Sir Robert resolved to send his brother Charles over to Paris to 



MEMOIRS OF A BAXKING-IIOU.SE. 47 

leani the real truth of the matter. On the return of the latter, 
after remaining but a single day' at Paris, Sir Robert was thunder- 
struck to learn that he had been completely deceived by Mr 
Paulze and the Farmers-general ; that the commission to Mr 
Martin Avas real ; and that his purchase of the six thousand hogs- 
heads had been approved of At their interview, Mr Paulze 
informed Mr Herries that, for some time past, he had become 
suspicious with regard to Sir Pobert's management, who, he acknow- 
ledged, had ably served them during the first three years. But 
since that period they had entertained the belief that Sir Robert 
was engaged in speculations in tobacco on his own account — for 
which, to be sure, some transactions of Sir Robert's had given a 
colour — and that he had all the while been amusing the Farmers- 
general when advising them to be in no hurry to purchase, expect- 
ing that prices would go lower, but in fact with a view of dispos- 
ing of his own purchases to them at an advanced price. That he 
had purposely redoubled his marks of confidence in Sir Robert by 
seeming to approve of his conduct, in order that he might not 
interfere with Mr Martin, to wdiose proposals they had listened, in 
order to obtain that tobacco which Sir Robert did not seem dis- 
posed to procure for them. He concluded by saying that Sir 
Robert's only chance of retaining the business of the Farmers- 
general, was by executing the orders of which he was still in pos- 
session on suitable tei'ms.* 

On hearing this detail from his brother, Sir Robert found him- 
self most awkwardly situated. He saw that he had trusted too 
much to the strength of his influence with Mr Paulze, with whom 
he had carried on a close and confidential private coiTCspondence, 
and Avhom he wished to interest in some private speculations for 
their joint account, by purchasing tobacco in America to be after- 
wards sold to France, whicli, however, never took effect. By this 
correspondence, I am well persuaded. Sir Robert did not thinlc he 
was guilty of any breach of his duty as acting under a commission 
from the Farmers-general ; but he certainly acted in that respect 

* One of these marks of confidence was the fictitious letter to Mr Martin 
above mentioned, which Sir Robert had found as if it had slipped by accident 
into Paulze's private dispatch, and it was no wonder if he was the dupe of such 
a refined artifice. This circumstance of Mr Martin's commission from the 
Farmers-general, the reality of which Mr Hmiter, on Sir Robert's confident 
assertions, had too warmly denied in conversation with Mr Ronald Crawfurd of 
Glasgow, had nearly occasioned a duel, Mr Cra^vfurd having sent Mr Hunter a 
challenge, whicli he accepted, and a meeting was appointed to take place 
between them in London. As the affair took air, oiu- friend Mr Colin Duidop 
of Glasgow wrote to me of it, on which I went to Glasgow and was fortunato 
enough to get the matter amicably acconimodated. 



48 MEMOIRS OF A BANKING-HOUSE. 

not with his usual prudence and discretion. On the other hand, 
he had rendered himself extremely unpopular with the merchants 
of Glasgow, who accused him of acting towards them with more 
rigour, and endeavouring to lower their prices more than his duty 
to his constituents, as their factor, required. They also plainly 
accused him of wishing to deceive them by holding himself forth 
as solely possessed of the orders of the Farmers-general, with a view 
of beating do^^Ti their market, at the very time that Mr Martin 
had actually a commission from them for a large purchase. Sir 
Robert, therefore, felt himself ill off at all hands, and it is scarcely 
possible to suppose any person's situation in trade, with upright 
intentions, more irksome and unpleasant than his was at that 
period. 

By this time the news from America of the inflammatory dispo- 
sition of the colonists, and the prospect of a rupture between the 
two countries, had made the holders of tobacco raise their prices, 
not only at Glasgow, but at London and the outports of England ; 
so that Sir Eobert, who was now anxious to make a still further 
purchase beyond what he had already secured, although without 
any explicit order from the Farmers-general, was obliged to give so 
very high terras for what he got, that the Farmers-general seemed 
not inclined to take the goods off his hands. Had they persisted 
in this resolution — which, however, they did not do — it would have 
been rather for the benefit of the house than otherwise, because 
tobaccos still continued to rise in price, and those which we held 
would have ultimately jdelded a considerable profit. 

Sir Robert soon after went over to Paris, and from conversation 
with Mr Paulze was induced to believe that he had succeeded 
completely in explaining his past conduct, so as to be reinstated in 
the favourable opinion of the Farmers-general ; and, in fact, he still 
occasionally made purchases on their account for a couple of years 
after this fracas from the merchants in Britain, who were still 
possessed of considerable quantities of tobacco, which they had 
imported before the disputes with America had come to a crisis. 
At length the rencounter between the British troops and the 
Americans at Lexington, on 19th April 1775, which was the first 
bloodshed in the quarrel, and afterwards the battle of Bunker's 
Hill on the 17th June of that year, gave a commencement to the 
war, which terminated in the independency of America, since 
which time France has been supplied with tobacco from that 
country, without the intervention of Great Britain. 

This dispute between Sir Robert and the Farmers-general may be 
said to have produced another and yet more important effect with 



MEMOIRS OF A BANKING-HOUSE. 49 

regard to him and his partners, for it ultimately led to the separa- 
tion of the two houses. In order to explain this, it is necessary to 
mention that it was the practice of the Farmers-general to make 
anticipated remittances to the house in London, which, therefore, 
had always a very considerable sum of their money in hand. This 
had induced Sir Robert, trusting to the permanency of the com- 
mission, to engage, for the sake of greater profit, in mercantile 
adventures of various sorts — brandies, hops, rice, tobacco, &c. — 
to an extent beyond Avhat he would otherwise have done, instead of 
emplopng the money in discounts of bills, or India bonds, or navy 
or exchequer bills, which, while they bore a moderate interest in 
the meantime, could always be commanded on a short notice on an 
emergency. 

When the displeasure of the Farmers-general took place, and it 
seemed by no means improbable that they would close the account 
entirely, it became a serious consideration how funds would be pro- 
vided for the repayment of the balance to them, and how the 
depending speculations in trade could be supported >vithout the 
facility which their remittances afforded. This consideration gave 
no small alarm to the partners at London, as well as to us at 
Edinburgh, although Sir Robert himself professed to be noway 
uneasy on that score, and as the Farmers-general continued to carry 
on their correspondence much as formerly, no actual inconvenience 
did happen. 

So very disagreeable, however, had it been to Mr Hunter 
and me, to see the house at London in this manner departing 
from their original plan of commission business, and engaging 
in extensive mercantile speculations, that Ave thought it abso- 
lutely necessary to establish some rules for its future conduct ; 
and for that purpose the present time seemed the most proper of 
any, when the contract of copartnery was about to be renewed. 
It had been fixed for twelve years from its commencement, on the 
1st February 17G3, and therefore it expired on the same day in 
1775 ; but it had been agreed among the parties that the com- 
mencement of the new copartnery should be postponed for another 
year, at which time Sir Robert's brothers, Charles and William 
Herries, and his brother-in-law, George Henderson, who had 
hitherto only enjoyed a certain share of the profits of the house 
by virtue of the agreement of the year 1771, were to be declared 
partners to the world, and sign the new contract as such. In 
order to arrange the terms of the new contract with Sir Robert, Mr 
Hunter had gone to London, and in consequence of what he and 
I had previously agreed on, it was proposed that certain regulations 



50 JIEMOIRS OF A BANKING-HOUSE. 

should be inserted in it, or in b3--la'vvs, for tlie future conduct of 
tlie business of the London house. Tliis produced a very unplea- 
sant correspondence between Mr Hunter and me on the one hand, 
and Sir Kobert on the other, whose pride was hurt by the idea of 
having rules prescribed to him by his junior partners, while he 
had hitherto been accustomed to have the principal, indeed I may 
say the sole, direction without control. The uneasiness, however, 
which we had suffered from the extensive engagements the London 
house had embarked in, on the expectation that the funds of the 
Farmers-general would be continued, and the chance that those 
funds might be speedily withdraAvn, had made so deep an impres- 
sion on our minds, that we steadily adhered to our purpose. Sir 
Robert, on the other hand, insisted that his past conduct had not 
been so devoid of prudence or deserving of censure as to require 
stricter stipulations than formerly. At length, when neither side 
seemed disposed to give up their opinion, Mr Hunter and I 
received a letter signed by Sir Robert, his brothers Charles and 
William, and Mr Henderson, the purport of which was that, as 
mutual confidence seemed to be withdraA\Ti, and a contrariety of 
sentiments to have taken place, it would be best to separate our 
respective interests, with which view Sir Robert's brothers pro- 
posed to relinquish entirely to Mr Hunter and me the house at 
Edinburgh, while we, on the other hand, should relinquish to 
them the house at London. To this proposition we most readily 
acceded, and at the same time, wishing to make the house at 
Edinburgh our sole object thenceforward, we also relinquished to 
the other partners the share which we held in the banking-house 
in St James's Street, London. 

In our reply to Sir Robert's letter, accepting of his proposal of a 
separation of the two houses of London and Edinburgh, and 
informing him of our intention to resign also our shares in the 
establishment in St James's Street, we requested him to communi- 
cate this to INIr Herries, senior, and Mr Hammersley, the two act- 
ing partners in the latter company ; thinking it most delicate to 
leave Sir Robert to explain to these gentlemen the causes which 
had produced this resolution on our parts. Sir Robert, however, 
had merely informed them of the fact, without any explanation. 
This produced a letter to Mr Hunter and me from Mr Herries, 
senior, written in the most friendly style, expressing his surprise 
and regret at our resolution of Avithdrawing from the Exchange 
Banking Company, of the cause of which he seemed perfectly 
ignorant. 

To this letter I wrote at considerable length, explaining our 



MEMOIRS OP A BANKING-HOUSE. 51 

reasons for the measure ; and as it gives a detail of our situation 
with Sir Robert Herries, written at the time it happened, I think 
a few excerpts from it may not be without interest. 

' 20t7i Sejitemher 1775. 

'Dear Sir — Your very obliging letter of the 11th was for- 
warded to me to Al)erdeenshire, whither I came lately for a little 
relaxation at this dead season of the j-ear. This has occasioned 
some delay in replying to it, which I hope you will be kind 
enough to overlook. 

'In a letter whichMrHunter and I>vrote to Sir Robert Herries the 
10th ult, on receiving his ultimate resolution in regard to the two 
houses, we asked the favour of him to explain to you and Mr 
Hammersley the causes which had brought about a separation. 
But, as you say Sir Robert has been silent in regard to the 
reasons of disuniting the two houses at London and Edinburgh, I 
shall beg leave to recapitulate them to you and Mr Hammersley 
in as few words as possible. 

* You are no strangers, I believe, to what passed in regard to 
the tobacco-commission in January and February last. The 
hazard there seemed to be of Sir Robert's losing the friendship 
and orders of the Farmers-general at that time, first led us to con- 
sider seriously what might be the consequences, in the way of 
business, should that event take place. On a careful retrospec- 
tion, we were vexed to find that, by reposing too implicit a con- 
fidence in the permanency of the friendship of that great company, 
and allured by the temptation of a very large deposit from them, 
of which there was no reason before that time to doubt the con- 
tinuance, the house at London had been tempted to go greater 
lengths in the way of commerce and speculation than the natural 
powers of the house could prudently admit of, or than we can now 
approve. Very fortunately for us, the Farmers-general made no 
change in their system of remittances — although it seems it was 
only carried by a single vote that they did not then at once shut 
up accoiuits with us — and the most of the engagements entered 
into have since been brought to a successful period. But the 
embarrassment we had been in, and the anxiety of mind we had 
all suffered, for fear of any disgrace on the credit of the house, led 
Mr Hunter and me earnestly to wish that such a system might be 
formed and adhered to, as should effectually save us from any 
such disagreeable contingency for the future. We considered that 
the two houses had yielded most comfortable profits for many 
years before we enjoyed the French commission, and avc saw no 



52 MEMOIRS OF A BANKING-HOUSE. 

reason to despair of a like success by a continuance of the same 
prudent management. We could not but regard the natural 
business of the two houses as more permanent, and therefore more 
worth attending to, though, perhaps, less lucrative in the mean- 
time than the orders or the cash of the Farmers-general, which 
last we therefore proposed should never be employed in trade, or 
in any shape where it could not readily be commanded, if the 
French gentlemen should withdraw their friendship. But, above 
all, we had in view the nature of your establishment in St James's 
Street and of ours at Edinburgh. These, as banking-houses 
dependent on the good opinion of the public, could not but be 
greatly affected by appearances at Jeffrey's Square of dipping too 
deep in extensive engagements, to which the private fortunes of 
the partners could not be supposed in any degree equal. We 
were even assured, in the most friendly manner, by those who 
wished us well, that we were already in the mouths of the world 
on account of what had passed, and that the utmost caution was 
necessary for the future to preserve the credit which we had 
hitherto enjoyed. All these reasons moved us, when we were 
framing our new contract, to propose to Sir Robert a plan of 
operations for the future, founded on that part of past experience 
which had proved the basis of our present valuable natural busi- 
ness, as well as guided by what we could not but think had been 
in many respects a too extensive though profitable class of transac- 
tions. Sir Robert thought it improper that rules should be 
imposed on him by partners inferior in years, experience, and for- 
tune. We most readily admit we are by no means his equals in 
any of these particulars. But where men are independent, I 
humbly conceive it to be the very essence of a copartnery, that 
each member may suggest whatever he thinks will be most con- 
ducive to the general good, provided he do it with temper and 
good breeding. As to the opinion of the others, the world might, 
no doubt, form ideas unfavourable to us without any just grounds. 
But as, from the nature of our business of bankers, we are almost 
entirely dependent on the regard and confidence of the public, it 
ought to be our duty to study and comply with the prejudices, 
whether well or ill founded, of those who are pleased to employ 
us. In the whole of the business Ave can safely say that we had 
his interest at heart along with our own, and we think we are 
warranted in the assertion when it is considered that the credit of 
the house at Edinburgh was at stake, in which he is equally 
interested with us. If the reputation of caution should be lost, 
which the partners had gained by a prudent attention to their 



MEMOIRS or A BANKING-nOUSK. 53 

staple business, the house at Edinhurgh couUl not suffer in that 
respect >vithout the house at London being at the same time most 
essentially injured by it, as the two were so intimately connected 
together. 

' In regard to the house in St James's Street, I have ever con- 
sidered that establishment as wisely planned, and give me leave to 
add, without any flattery to you and the other acting partners, as 
conducted with a degree of assiduity and attention that have 
already surmounted the great obstacles Avhich were always fore- 
seen and must constantly attend every plan of that kind. "We 
had, therefore, every reason to be satisfied with our situation in 
regard to it. But Avhen Ave found that our original connection in 
London was to come to a period, we naturally thought of confining 
our views solely to the business of Edinburgh, To that considera- 
tion we were contented to sacrifice the prospects of increasing 
advantage which on the best ground you may hope to reap from 
the Banking Company. I have endeavoured to give you a detail 
of what has passed with truth and sincerity. Through the whole 
of our correspondence with Sir Robert on this occasion, I have 
acted according to the best of my judgment ; and on looking back 
on all that I have Avritten or proposed to him, I am happy in not 
finding anything that I could wish to alter.' 

Thus ended all connection of partnership between Sir Robert 
and us — a measure the wisdom of which, with regard to the house 
at Edinburgh, the event has fully justified. But, although a sepa- 
ration of interests had thus been resolved on, as we had hitherto 
lived in the utmost degree of friendship and intimacy, we were all 
equally desirous that the separation should take place with good 
humour and cordiality, which our mutual endeavours were suc- 
cessfully exerted to preserve throughout the Avhole of the trans- 
action. The fundamental principles, indeed, whence the separa- 
tion took its rise, prevented us from committing to the house in 
London our exchange correspondence, which Ave judged it expedi- 
ent to confide to some banking-house of distinguished eminence ; 
yet we resolved to throAV every advantage Avhich Ave properly 
could in the Avay of the house in the city, as Avell as of the bank- 
ing-house in St James's Street, by such parts of our correspondence 
as Ave could Avith propriety put under their charge, and to which 
rule of conduct Ave have ever since adhered. 

Mr Hunter and I, being thus left sole proprietors of the house 
at Edinburgh, judged it expedient to assume an associate to aid 
us in conducting the business, as Avell as to guard against the 



64 MEMOIRS OF A BANKING-HOUSE. 

inconvenience that might arise in the event of either his or my 
death. And we were most fortunate in having at that time in the 
counting-house a person of great merit, Mr James Bartlet, a native 
of Aherdeen, who had heen originally hred to business with Mr 
David Gregorie of Dunkirk. Mr Hunter and I had received him 
as a clerk, at tlie solicitation of our particular friend, and his 
relation, the late Dr Gregory. 

In that situation he had been with us several years, during 
which period we had had the strongest proofs of his abilities 
and steadiness as a man of business, as well as of his good temper 
and agreeable manners as a gentleman. We had, therefore, no 
hesitation in assuming him as a partner, and the event fully justi- 
fied our choice, for he proved himself not only an able associate in 
business, but an approved friend and most pleasant companion to 
the last hour of his life. 

By our contract of copartnery, which was to commence the 1st 
January 1776, and to last nine years, the shares were fixed as 
follow : Sir William Forbes, 11 ; Mr Hunter, 11 j Mr Bartlet, 2 
— in all, 24 shares. 

The partners, having now no object of business but that of the 
house at Edinburgh, devoted to it their whole time and attention. 
And the world seemed to give their approbation of the change 
that had taken place, and of the system we had adopted, by the 
increase of our business and the high degree of credit and estima- 
tion at which we arrived. These circumstances were the more 
flattering to us, because the nation was far from being in a state of 
tranquillity, either in a political or commercial point of view. 
Hostilities with America had actually taken place, with various 
success on the part of tliis country, until General Burgoyne's 
vmprosperous campaign of 1777, and the fatal event of his army 
being oliliged to lay down their arms, induced the French to engage 
in the war as allies of America, with a view of humbling the pride 
and diminishing the power of Great Britain. That event pro- 
duced an almost instantaneous effect on the money transactions of 
Scotland. The French rescript, announcing their alliance with 
America, was delivered at St James's on the 24th April 1778 ; and 
from that day we began to experience a drain of the money lodged 
with us on deposit, week after week, and month after month, until 
November of that year. 

By prudent management we had been able to collect our funds 
about us, so as always to be fully prepared for the continued 
demand, and from the month of November our deposits began 
again to swell until they were as high as ever. Convinced, 



MEMOIRS OP A BANKING-HOUSE. 55 

Lowcver, of the necessity of having our funds as much as possible 
under our command and within our reach, in case of any emer- 
gency, we kept a considerable sum always invested in Navy bills, 
Exchequer bills, and Ordnance debentures, which, while they 
yielded better than common interest, were not subject to much 
fluctuation of value, and could always be converted into money on 
the shortest notice. We even went a step further, and ventured 
to invest some money in the public funds. We did this, however, 
very gradually, and merely when we found a larger sum in our 
hands than we could properly employ in discounting bills, or 
making advances to our correspondents at home. And in making 
this investment we were always scrupulously attentive to keep so 
considerable a sum emplo3'ed in those floating securities I have 
mentioned, as we judged amply suflicient to answer for every 
occasion Ave might have for money, even on an emergency. The 
public funds were at this time at a low price,* and there was every 
probability, as had happened at the conclusion of former wars, 
that they would rise considerably in value on the return of peace. 
The fund which we considered the most desirable, was the stock 
of the Bank of England ; because, by holding a considerable sum 
of it, we derived a certain degree of respectability at the bank, and 
we had the chance of some advance in the price of that stock from 
an increase of dividend, beyond its comparative value with other 
government securities. Such an investment, by merely afibrding 
employment for our surplus funds, we considered as by no means 
coming under the denomination of stock-jobbing, as we never pur- 
chased a single shilling's worth but for money actually paid down, 
nor even that, when we could otherwise employ the money Avith 
safety and prudence, in the AA'ay of our natural business at home. 
The CA'ent fully justified the Avisdom of the system, the merit of 
which is justly due to Mr Hunter ; for, soon after the close of the 
war,f Ave disposed of as much of the stock as replaced the money 
originally invested, and divided the rest among the partners, by 
AA'hich means each of us added considerably to our priA'ate 
fortunes. 

Mr Hunter, too, by the successive deaths of four brothers of his 
Avife, had succeeded to her paternal estate of considerable value 
in GalloAvay, on Avhich occasion he assumed the name of Blair in 
addition to his OAvn. 

* [The three per cent, consols, which had been ahout 90 at the close of the year 
1774, were in November 1778 so low as 6o|. Bank-stock, which at the former 
period was 144, had now sunk to 110.] 

f [In January 1783, immediately after the peace, bank-stock had recovered 
to 122.] 



56 MEJIOinS OF A BANKING-HOUSE. 

On the death of Sir Lawrence Dundas in the year 1781, Mr 
Hunter Blair was elected member of parliament for the city of 
Edinburgh, for which he was re-elected in 1784 ; and on account 
of his spirited exertions for the improvement of the cit}^, by the 
plan of the South Bridge, while he filled the office of Lord Provost, 
he was, in the year 1786, created a baronet of Great Britain. As 
an addition, also, to the respectability of our house, I had suc- 
ceeded to the estate of Pitsligo by the death of the Honourable Mr 
Forbes, on the 30th August 1781.* 

In 1778 an event happened in the counting-house which is 
worth recording on account of some circumstances attending it. 
We had, some time before, taken as an apprentice a lad of the 
name of Watt, son of a decent honest man, a merchant tailor. 
He went through the usual routine of the counting-house, and 
among other parts of his duty, he had been employed as one of the 
clerks who exchange the notes of the country banks. It is our 
practice, after the notes are brought from the banks, that two or 
three of the clerks are employed to arrange and pack them up, to 
be sent to the country ; and as the lads are all together in one room 
when employed in this business, they are considered to be thus a 
check upon one another. Watt had gone on tolerably well in the 
general discharge of his duty, except that he Avas sometimes idle 
and absent, for which I had more than once reproved him ; but 
we had no reason to suspect anything essentially Avrong in his 
conduct. It afterwards appeared, however, that he had fallen 
into bad company, both male and female, which had led him into 
expenses, to which the slender pittance he received either from his 
father or from us was very inadequate, and to support these 
expenses he was tempted into dishonesty. At first he contrived 
merely to secrete a bank-note or two, which passed as a mistake 
in the hurry of making such large exchanges at the banks, Avhich 
must sometimes happen even with the most careful. At length 
he was tempted to commit a theft of extraordinary magnitude. 
He had been employed as usual in this exchange business on a 
Monday, and next morning he did not make his appearance at the 
counting-house. On sending to his lodgings, we were told he had 
not been at home all night, and neither that day nor the next 
could we learn any tidings of him ; still we had no suspicion of 
anything wrong until Thursday morning, Avhen a clerk of Messrs 

* [Sir William succeeded to this estate as grandson of the Honourable Mary 
Forbes, sister of Alexander Lord Forbes of Pitsligo, a venerable nobleman who 
had befriended the Prince in the affair of 1745, and after whose forfeiture his 
son, the Honourable John Forbes, had bought back part of the family property, 
being that which Sir "William now inherited.] 



MliMOIKS OF A BANKING-HOUSE, 57 

Hunter & Co. anived from Ayr, and informed us that the parcel 
of notes which had heen taken up at the bank on Monday, and 
sent to Ayr the day following, on being opened, was found short of 
the sum it was said to contain by upwards of £1200, while the 
external bulk was made to appear adequate by the inside being 
filled up with waste paper. It instantly occurred to Messrs 
Hunter & Co. that we had been robbed by the clerk intrusted to 
make up the parcels, and in consequence they despatched one of 
their clerks to give us notice of the state in which the parcel bad 
been found. Watt having disappeared immediately after the 
notes had been packed up, there seemed no room to doubt that it 
was he who had made off with the money. The first thing we 
did was to send round to the principal banking-houses to inquire 
whether he had been calling for gold, and we learned that he had 
gone to Messrs Mansfield & Co. on Monday evening and got a 
bill at sight for £1000 on their correspondents, Messrs Farquhar, 
Kinloch, and Son, which he had taken payable to an assumed 
name. We further learned that a young man, who answered to 
his description, had gone in the coach which set out for London 
early on Tuesday morning, and it thus seemed clear that he had 
gone to London and carried the property along Avith him. It 
was therefore resolved that our partner, Mr Bartlet, should go in 
search of him, and he accordingly set out at one o'clock on 
Thursday; and as the w^eather was fine, and the roads excellent 
at that season, he made such great despatch, notwithstanding his 
stopping at Newcastle for two hom"S to make inquiries, and again 
some time at York, that he performed the whole journey in little 
more than forty hours. He learned at York that the person who 
had come in the stage-coach from Edinburgh had stopped theje all 
night on Wednesday, and had even gone to the play. This, to be 
sure, did not look very like one who was flying the country ; but 
his person so well answered the description, that Mr Bartlet 
pushed on and arrived in London between six and seven o'clock 
on Saturday morning. He went directly to Sir John Fielding's 
office in Bow Street, where, on telling his errand, a couple of 
officers were appointed to assist him in his search. Their first 
movement was to Messrs Kinloch and Sons, before breakfast, to 
inquire regarding the bill of £1000, when they had the satisfac- 
tion of finding that it had not been presented for pajTuent. As it 
was concluded that Watt would be there as soon as the usual 
hours of business arrived, the Bow Street officers took their 
station near the banking-house, and accordingly it so happened. 
For, immediately after breakfast, they perceived a stranger with 



58 MEMOIRS OF A BANKING-HOUSE. 

a Scotch accent inquiring for Mr Kinlocli's, wliom they followed 
into the counting-house ; and on his presenting the draft for pay- 
ment, they instantly laid hold on him. On Mr Bartlet making 
his appearance, the lad, without hesitation, confessed the whole 
matter, and readily went along with Mr Bartlet and the officers to 
the inn at which the coach had stopped, and where he had slept 
the preceding night, where he shewed them his trunk in which 
was the remainder of the money, except some which he had spent 
by the way. 

Having thus successfully executed his commission, Mr Bartlet 
thought of nothing but to set out on his return home, after paying 
the officers for their services,* which he did that afternoon, bring- 
ing the lad along with him, who seemed to consider the business 
as at an end, now that the property had been taken from him. 
He therefore shewed no reluctance at the thought of accompanying 
Mr Bartlet to Edinburgh, just as if nothing had happened. And, 
indeed, it is not possible to conceive a greater trait of Mr Bartlet's 
own simplicity of character than his performing the journey to 
Scotland with the lad, as he would have done with any ordinary 
fellow-traveller, except that he made him sleep in the same room 
with him during three nights that they were on the road ; and Mr 
Bartlet confessed it never once entered his head that the lad might 
have robbed him of the money a second time, or at least might 
have made his escape, had he been so disposed. No such thought, 
however, appears to have entered the mind of either, for they 
arrived at Edinburgh together on Tuesday before dinner, Mr 
Bartlet bringing Avith him the first account of his own expedi- 
tion, for he had outrun the common post. On Mr Bartlet's 
arrival, a warrant Avas procured, and Watt Avas committed to jail. 
It Avas at first our intention to have had him tried capitally for the 
robbery; but on consulting laAvyers of eminence, Ave Avere informed 
that it Avas extremely doubtful AA'hether it might not be deemed 
merely a breach of trust, for Avhich a capital punishment could not 
be inflicted, and indeed, perhaps, no punishment at all. As a 
trial AAath such a result might have done more harm than good, 
after his lying some months in jail, Ave assented to a proposition 
of his father's for his liberation, he engaging to send him privately 
out of the kingdom, Avhich AA'as done accordingly. He AA^ent to 
Carolina, Avliere he got into a counting-house as a clerk, and 
seemed to be doing very Avell, until happening to go to a billiard- 

* ]VIr Bartlet gave a very lively description of these officers, who, he said, were 
a couple of such blackguard-looking fellows, and their conversation such, that 
he felt himself relieved when he got out of their company. 



MEMOIRS OF A BAXKIXG-IIOUSS. 59 

tal)le, where he lost a large sum of money of his master's with 
which he had been intrusted, he finished his career with a 
pistol, when little more than twenty years of age. A sad memento 
to all young people to avoid dissipation and improper company.* 

A little before the period I am speaking of, being fully sensible 
of the great merit of Mr Bartlet, Mr Hunter and I, of our own 
accord, entered into a supplementary contract with him, by which 
his interest in the house was increased, and from the 1st January 
1779 the shares of the partners were declared to be : Sir William 
Forbes, 21 ; Mr Hunter, 21 ; Mr Bartlet, 6— in all, 48 shares. 

Three years afterwards, we made a further change by the admis- 
sion of my brother-in-law, Mr John Hay, as a partner.f In the 
year 1774, at my request, Sir Eobert Herries had agreed that he 
should go to Spain, and serve an apprenticeship in his house at 
Barcelona, where he continued till spring 177G, when he returned 
to London, and was received by Sir Robert into his house in the 
city — from which by that time our separation had taken place — 
and where, as well as in the banking-house in St James's Street, 
he acted as a clerk till summer 1778, when he came to Edinburgh, 
and entered our counting-house also oji the footing of a confidential 
clerk during three years. Having thus had ample experience of 
his abilities and merit as a man of business on whom Ave might 
repose the most implicit confidence, a new contract of copartnery 
was formed, to commence from 1st January 1782, in which Mr 
Hay was assumed a partner, and the shares stood as follow : Sir 
William Forbes, 19; Mr Hunter, Blair, 19; Mr Bartlet, G; Mr 
Hay, 4 — in all, 48 shares. 

Mr Hay proved himself in every respect worthy of the situation 
in which he was placed ; but I owe it in justice to Mr Hxinter 
Blair's memory to say that the first suggestion was his, out of 
compliment to me, to bring my brother-in-law into our counting- 
house, with a private understanding between us that he should be 
in due time received as a partner if, after experience, we should 
find him suitable to our purpose. 

At the same period a new and very remarkable event took 
place in the business of the house, which has been productive of 
the most beneficial consequences. I mean our beginning, at the 
1st January 1782, to issue circulating notes in the same manner 

* After it was discovered that he had ran away from us, liis desk in the 
counting-house was opened, when we found evidence of other acts of dishonesty 
and misconduct on his part. 

t [Mr John Hay was eldest son of Sir James Hay, of Sraithfield, Bart., and 
succeeded to the title in 1810. He died in 1830, aged seventy-five.] 



60 MEMOIRS OF A BANKING-HOUSK. 

as the public banks of Edinburgh. To explain this, it is necessary 
to go back to a period even more remote than my coming into the 
counting-house, many years previous to which the house of 
Provost Coutts had transacted their business with the Iloyal Bank 
of Scotland, and the house had continued to do all their business 
with that bank down to the time I am now speaking of, during 
which, long period the utmost cordiality had always prevailed 
between them and us. At one time, indeed, when the Royal Bank 
was engaged in a system of warfare with the banks of Glasgow,* 
during the Seven Years' War, the directors had suspended a cash 
account we had of £4000, because they supposed our house to be 
in too intimate correspondence with the Ship Bank of Glasgov/, 
of which Mr Coutts's relation Mr Colin Dunlop had been one of 
the founders, and was still a principal acting partner. The Royal 
Bank, supposing that our house had a hand in draining gold from 
them for the use of the Bank of Glasgow, withdrew this cash 
credit, as they also did the cash accounts of Messrs Cuming and 
Messrs Kinnear, Avho were the correspondents of the other two 
banks at Glasgow. When, however, the Royal Bank became 
sensible that this species of hostility which they carried on with the 
Glasgow banks, tended to no good pui-pose, they gave it up ; our 
house's cash account was restored ; and Mr John Coutts, who was 
then alive, became a director of the Royal Bank. Of course, 
while the house continued to transact their business with the 
Royal Bank, all their payments were made in the paper of that 
bank ; and as our business increased, and larger sums of money 
were lodged with us at interest, instead of our requiring the cash 
credit of £4000, we opened a deposit accoimt at the Royal Bank, 
Avhere we lodged a sum of £20,000, for which the bank allowed 
us an interest of four per cent. Besides this, we had also a 
separate account for our daily operations, on which there seldom 
or never was a less balance due to us than £20,000 more, for 
which we got no interest at all. So that, in fact, we might be 
said to receive an interest from the bank of not more than two 
per cent. Besides the advantage which the Royal Bank made 
of these deposits during the American war, when government 
securities of the least fluctuating nature yielded a very high 
interest, they had all the benefit arising from our making payments 
exclusively in their paper, so that I am sure we did not exaggerate 
when we estimated that our business of one sort and another Avas 
worth to them not less than £3000 per annum. The bank direc- 
tors, however, with a jealous policy, began to consider us and the 

* [For an account of this warfare, see p. 5, note] 



MEMOIRS OF A BANKINQ-IIOUSE, 61 

other private bankers ki Edinburgh as a sort of rivals, whose 
operations they conceived to be facilitated by those accounts of 
deposit which they allowed us, and concluding that we should be 
under the necessity, for our own credit and comfort, to leave the 
money with them whether they allowed us any interest for it or 
no, they wrote to us on the 2Gth April 1781, that after the 1st 
July following, instead of allowing us interest at four per cent, ou 
the account to be operated on daily, they would only allow three 
per cent., on the condition that it should lie twelve months certain; 
and they gave a similar notice to the other private bankers who 
kept accounts of deposit with them. This measure, which we 
could not but regard as ungenerous on their part, led us to con- 
sider in what manner Ave might contrive to render ourselves inde- 
pendent of them altogether. Looking, therefore, at the extent of our 
business and number of our connections, and feeling the consequence 
which we naturally derived from these circumstances, after consult- 
ing with a friend or two on whose judgment in difficult cases we were 
most accustomed to rely, Ave formed the bold resolution of issuing a 
fcAV notes ourselves, of the nature of bank-notes, by Avay of experi- 
ment, for Avhich we thought our ci*edit and character in the Avorld 
sufficiently established. In order that Ave might act on solid grounds 
and in conformity Avith Avhat Ave conceived to be the true princijiles 
of the banking business, Ave resolved that Ave should not employ any 
agent either in Edinburgh or elsewhere for the purpose of pushing 
our notes into circulation ; but would merely offer them instead 
of those of the Royal Bank as formerly, in all payments Avhich we 
might have to make for our ordinary transactions in the counting- 
house, and, should any persons shcAv hesitation to take them, or 
express a desire rather to have the notes of the established banks, 
Ave AA'ere instantly to comply Avith their Avishes in that respect. For 
this purpose we had provided an ample store, not only of gold and 
silver, but of the notes of these established banks, until Ave should 
see in Avhat manner our ncAV plan Avas likely to be viewed by the 
public. Finally, Ave resolved that we should not enter into hos- 
tility with any bank, but, as far as depended on us, Avould live on 
friendly terms Avith all the Avorld, being ready, hoAvever, to defend 
ourseh'cs if occasion so required. It Avas likewise a consideration 
of some Aveight with us, that, finding ourselves very ill accommo- 
dated in the house Ave occupied as a counting-house in the Presi- 
dent's Stairs in the Parliament Close, Ave had purchased a Avaste 
area on the south side of the Parliament Close, in Avhich Ave 
had erected a most commodious counting-house, Avell secured 
against the danger of thieves or housebreakers, and of most 



62 MEMOIRS OP A BANKING-HOUSE. 

easy access for tliose who might be pleased to transact business 
with us. 

Having fully weighed this important matter, we set to work to 
prepare those notes which we proposed to issue ; an operation of 
more labour, and requiring more time, than any one not practi- 
cally acquainted with the business could suppose, resolving to 
begin to send them abroad into the world on the 1st January 1782, 
at which period our new contract was to commence.* Previous 
to our doing so, however, we wrote on the 5th December to the 
Bank of Scotland, Royal Bank, and British Linen Company, to 
inform them of our intention of issuing notes of a guinea and £5 
on the 1st January ensuing, expressing it to be our earnest wish 
to live on the most friendly terms with them, and proposing to 
take up such of our notes as might come into their hands in the 
course of business, once a week, as the country banks did, or oftener 
if they pleased. On the 7th December we received an ansAver 
from the Bank of Scotland and Royal Bank, informing us that 
they meant to receive our notes in payment, but that as the British 
Linen Company took up their notes every day, the two banks 
expected we would do the same, a rule to which we conformed 
without hesitation. In this manner was our plan set agoing 
without difficulty. Every person to whom the notes were pre- 
sented, either by ourselves or others, received them in pajTuent 
without the smallest hesitation, and, as we have invariably adhered 
to those principles which we originally laid down, their circulation 
has continued gradually, but steadily, to extend, till the amount 
of our notes has not only far exceeded our most sanguine expec- 
tations, but has been one cause of the great increase which has 
taken place in the original and fundamental branches of our busi- 
ness — the deposit of money with us at interest, and the negotiation 
of bills of exchange between Edinburgh and London, both of 

* A whimsical circumstance took place in regard to the date we affixed to our 
notes, which deserves to be mentioned, because it had some temporary effect 
in regard to their circulation. "VYlien adjusting the form of the notes to be 
engraved, w^e fixed on the 1st July 1781 as the date which they were to bear, 
without particular reason for preferring that date, except that it was the day 
Epecified by the Koyal Bank on which they were to shut our accoimt, in case we 
did not agi-ee to the conditions they had prescribed. As ill-luck would have it, 
the 1st July happened that year to fall on a Sunday, which did not occur to us 
at the time, nor indeed till some weeks after we had begun to issue tlie notes, 
when we were informed that many people scrupled to receive them in money 
transactions, as supposing them not to be valid because dated on a Sunday. Tlie 
objection, whether legal or not, was worth attending to, and, as soon as it was 
pointed out to us, we caused a new plate to be engraved and had the notes dated 
1st March 1782. 



MEMOIRS OF A BANKING-HOUSE. 63 

which branches have been enlarged to a most astonishing degree, 
while, on the other hand, those branches of our business have been 
the means of facilitating and extending the circulation of our 
notes ; so that they have mutually acted and reacted on each 
other. 

In this comfortable train of business we went on till the year 
1787, when, a break in our contract being about to take place at 
the 1st January ensuing, Sir James Hunter Blair and I resolved 
to reward the long and faithful services of an old associate, Mr 
Lewis Hay, who had been in our counting-house for no less a 
period than one-and-thirty years, by advancing him to the rank of 
a partner.* His father had commanded a revenue cutter on the 
western coast of Scotland, and his family had been resident at 
Ayr, where Sir James and Lewis became acquainted at school. 
His father haWng been laid aside from the command of his cutter, 
on some malicious information as I have heard, brought his family 
to Leith, where he engaged in the wine-trade with Mr Robert 
Grant, nephew to our Mr Stephen. But Captain Hay being quite 
unacquainted with mercantile business, his partner and he could 
not agree, and of course separated. His eldest son, Lewis, became 
a clerk in the Custom-house of Leith, where he first acquired the 
habit of that correct and never-ceasing application to business 
which stuck by him to the latest period of his life. At the request 
of Mr Bell, wine-merchant in Leith, Lewis was received into our 
counting-house as a clerk, about a year after me. He had a 
brother, George, who engaged in the trade of making shoes for 
wholesale exportation, on the joint account of his brother and 
himself In this business they were not successful, and, his 
brother dying soon after, the creditors, sensible that Lewis had 
made a fair surrender of the effects which belonged to the concern, 
accepted of such dividend as could be afforded, and left him undis- 
turbed in the possession of the moderate salary which he earned 
in our house, and out of which he supported his father and mother. 
He was indeed a most meritorious character, connect in the dis- 
charge of all the relative duties of a man and a Christian, and 
he had proved himself most useful to us in the general superin- 
tendence of the business of the counting-house, from which he 
never was absent, almost for a moment. He was therefore well 
entitled to this mark of our favour ; but, previous to such a con- 

* I had been in the house about a year before Sir James and Mr Hay came to 
it. We were now what miglit be justly called the only original members of 
the counting-house ; every other person whom we found there when we entered 
— master, clerk, and apprentice — having been long dead. 



64 MEMOIRS OP A BANKING-HOUSE. 

nection taking place, it became necessary that he should receive a 
regular discharge from his and his brother's creditors, for although 
they had given him no disturbance while he remained in the 
station of a clerk, they might not have been so indulgent when 
they should see him a partner in our house. As some part of 
what he had owed was to ourselves, this we discharged without 
hesitation, and a proposal was submitted to the rest of the credi- 
tors to make them a payment on giving him a discharge in full, to 
which they all most readily agreed.* 

Before the contemplated break in our contract arrived, a most 
unexpected event took place, which overwhelmed us all Avith the 
deepest sorrow. It Avas the death of our worthy partner and 
most intimate friend. Sir James Hunter Blair. He had set out 
with Lady Blair in the end of April for Harrogate, Avhere he pro- 
posed to drink the waters for a scorbutic complaint, which was 
sometimes troublesome to him. A few days after his arrival there, 
he went on some business to London, Avhere he remained only 
four days, after Avhich he returned to Harrogate. Their children 
at home having been seized with the hooping-cough, Lady Blair 
came down to Edinburgh by herself to attend them, leaving Sir 
James to drink the Avaters. I continued frequently to receiA^e 
letters from him doAvn to the 20th June, on Avliich day he Avrote 
to me that he proposed to leave Harrogate on the 27th, to be at 
NcAvcastle the 28th, and at Dunbar the 29th. But how vain 
are all our projects! and so true is the observation of the poet, 
that 

' On oivc firmest resolutions 

The silent and inaudible foot of death 

Steals like a thief ; ' 

for while I Avas in the full expectation of seeing him return as he 
proposed, Mr Hamilton of Wishaw arrived from Harrogate on the 
morning of the 30th June, and told me that Sir James had been 
seized a few days before Avith a fever, Avhich had made such rapid 
progress, that on the 28th, Avhen he (Mr Hamilton) had left Harro- 
gate, his life Avas despaired of. On communicating this intelligence 
to Lady Blair, but Avithout saying hoAv dangerously ill he Avas, she 
set out in a couple of hours, attended by a maid-servant and 
Dr Gregory ; Mr Wood, the family surgeon, followed them next 
morning. It Avas, however, all in vain ; for by the time Lady 

* [Mr Lewis Hay, subsequently to this period, married Miss Margaret 
Chalmers, daughter of Mr James Chabners of Fingland, and noted in oiu- literary 
history as the friend and correspondent of Robert Burns, over whose mind her 
vii-tucs and intelligence enabled her to exercise a considerable influence.] 



MEMOIRS OP A BANKING-HOUSE. C5 

Blair reached Northallerton, she was met hy an express with the 
news of her dear husband's death, which happened on the 1st of 
July 1787, in the forty-sixth year of his age.* 

The loss of Sir James Hunter Blair was a most severe misfor- 
tune to his family, to his partners, and to the city of Edinburgh. 
His family, consisting of three sons and three daughters, were all 
young, his eldest sou being only fifteen years of age; a fourth son 
was added after his death. Wc, his partners, were deprived of a 
most able associate in business. Edinburgh lost by his death a 
most active magistrate, who had projected and carried on public 
works equally conducive to the ornament and advantage of the 
city. I, in particulai*, was deprived by his death of a friend whom 
I can never replace, Avith whom I had lived in a degree of 
intimacy which few brothers can boast of during one-and- thirty 
years, in which long period we never had a difference nor a sepa- 
ration of interest. It has been stated how we went on together 
from the time of our apprenticeship, till we gradually arrived, 
after a variety of changes, to be at the head of the house. But I 
should do great injustice to his superior talents, did I not declare 
that to him it was chiefly owing that the house rose to such a 
pitch of unlooked-for prosperity and reputation. He possessed a 
sound and manly understanding and an excellent heart. In his 
friendships he was warm, steady, and sincere, and ever ready to 
promote the interest of those to whom he formed an attachment. 
In his disposition he Avas cheerful and fond of society, and his 
house was at all times distinguished for hospitality. As a magis- 
trate, he Avas active and zealous in the discharge of his duty; 
as a senator, he was honestly independent, supporting the measures 
of the ministers of the crown when he thought them consistent 
with the principles of the constitution and the good of the people. 
Too early and too deeply immersed in business, he had little or no 
leisure for study, and was therefore but little acquainted Avith 
books or literature ; but he possessed, in an eminent degree, a 
species of knoAvledge of the utmost importance to him as a man of 
business — great knoAA'ledge of the Avorld, and an almost intuitive 
discernment of the characters of men. In business, both of 'a 
public and private nature, he Avas skilful and active, and capable 
of the most unAvearied application, and his plans in general AA-ere 
contrived Avith prudence and executed Avith steadiness. Of this 
a memorable proof Avas afforded by the magnificent idea, Avhich he 

' [Burns, who, partly on account of his Ayr nativity, had been treated with 
much kindness by Sir James, gave vent to his feelings on this occasion by an 
elegy, which will be found in his works.] 



C6 MEMOIRS OF A BANKING-HOUSE. 

formed on his being elected Lord Provost of Edinburgli, of a com- 
munication between tbe High Street and the south side of the 
city, by a bridge over the Cowgate. In the prosecution of which 
extensive and important improvement, notwithstanding he met 
with no inconsiderable degree of opposition from ignorant and 
interested individuals, he was not to be discouraged, but kept on 
the even tenor of his way, combating the prejudices of some and 
the influence of others, till at last he accomplished his purpose. 
In his temper there Avas a degree of warmth, which, in the pui'suit 
of a favourite object, or in the heat of an argument, occasionally 
bordered on vehemence and impetuosity, and which sometimes, in 
the intercourse of society, led him to forget or overlook what Lord 
Chesterfield calls the graces. In his notions of right and wrong, 
he was rigid and even stern, and he had no allowance to make 
where he perceived in others any departure from the standard he 
had formed of propriety of conduct. But his virtues will be 
remembered and the utility of his public conduct felt and 
applauded long after those slight imperfections are consigned to 
oblivion. 

A few days before I received the account of Sir James's illness, 
and when, God knows ! I had little notion which of us Avas first 
to pay the debt of nature, I had written to him about a plan that 
had occurred to me for continuing an interest in our house to the 
eldest son of any of the partners Avho should happen to die. It 
had often been a subject of conversation between him and me, how 
hard it would be, Avere either of us to die, that our family should 
entirely lose the benefit of their father's exertions in having brought 
the house into such a respectable position, and aa'c had several 
years before entered into a mutual agreement, that Avhichever of 
us should survive the other, should pay to the son of the deceased 
an annuity of £500 a-year during eight years. But even this I did 
not think enough, and therefore proposed that the son should be 
entitled, if he chose, to an interest in the house of one-third of his 
father's share, AAdiich the surviving partners Avere to hold for his 
account until the termination of the contract, but without the son 
being permitted to interfere in the management of the business. 
This letter Sir James had received, but had not had time to ansAver 
before he Avas seized Avith his last illness. It Avas found among 
his papers after his death, and as it contained the strongest proof I 
could give of my belief in the utility of the proposal, I Avas anxious 
that it should still be acted on ; and therefore, Avith the concurrence 
of the other partners, I proposed to the tutors to whom Sir James 
had left the care of his family, that a neAV contract should be 



MEMOIRS OP A BANKING-HOUSE. 67 

entered into on that footing. Of this plan the tutors gave their 
most cordial approbation ; but a difficulty occurred which seemed 
to present an insuperable bar to its taking effect. Had Sir James 
lived to execute our new contract, he could of course have bound 
his son and successor to any conditions he pleased. But his 
eldest son, being left a minor, could not engage in any contract or 
become bound to the world for his proportional share of the 
engagements of the house. In order to get the better of this 
difficulty, the tutors,* being impressed with the importance of pre- 
serving an interest in the house to their young ward, were pleased 
to carry their approbation so far as, with an unexampled confi- 
dence in us, the other partners, to take upon themselves the 
responsibility, and to become personally bound for young Sir John 
Blair until he should come of age and confirm the contract him- 
self — a measure which reflected the highest honour as well on 
them who conferred, as on us who received, such a proof of their 
confidence. In conformity with this arrangement, a new contract 
was executed for twelve years from 1st January 1788, the shares 
being thus divided — Sir WiUiam Forbes, 16; James Bartlet, 7 ; 
John Hay, 7 ; Lewis Hay, 2 ; Sir John Blair, 5^ ; the remaining 
of Sir James's shares, lOf , being kept unappropriated, in case any 
desirable partner should come in our way. In the meantime, the 
profit belonging to those shares undisposed of went to the other 
partners in proportion to their respective interests in the house. 
Scarcely had this contract commenced, when we experienced another 
severe domestic misfortune by the death of our worthy partner and 
friend Mr Bartlet, whose talents as a man of business, and his appli- 
cation to the management of our affairs, had rendered him highly 
useful to us. For some time Mr Bartlet had been afflicted with a 
violent pain in the elbow-joint of his right arm, which had disabled 
him from writing or attending the counting-house since November 
1786. At last the complaint had increased to such a degree that 
the surgeons who attended him, and who were of course the most 
skilful in Edinburgh, declared that amputation of his arm Avas the 
only chance left for saving his life ; an operation to which he sub- 
mitted with great fortitude in May 1787, and his recovery had 
proceeded so well as to give us the greatest hopes, that although 
he might not be able to take the same laborious share in the 
executive business as formerl}', he would still continue a most 
valuable associate on whose knowledge of business and sound 



* They were Lady Blair, the Earl of Cassillis, Mr Kennedy of Dunure, Dr 
Gregory, Mr John Buchan, writer to the Signet, and myself. 



68 MEMOIRS OF A BANKING-HOUSE. 

judgment we miglit Avith confidence rely. His constitution, how- 
ever, was now so mucli shattered by his long confinement and 
suffering, that he was advised to pass the winter in a warm climate, 
in order to perfect his recovery. In this expedition he was to he 
accompanied by Dr Cairnie, an intimate friend of ours, and who 
had made a sort of employment of attending invalids abroad, for 
which he was eminently qualified by his medical skill and humane 
disposition, as well as by his acquaintance with foreign countries. 
They accordingly set out in September 1787 for Marseilles, where 
Mr Bartlet proposed to fix his residence for the winter. 

Finding, however, after passing some weeks there, that, instead 
of making any progress in recovery, his strength was daily decay- 
ing, he was seized with an anxiety to return home. For which 
purpose he hired a vessel at Marseilles, on which, in the end of 
November, he embarked for Scotland, leaving Dr Cairnie, Avho had 
an insuperable aversion to the sea, to return by land. The 
passage was exceedingly stormy, and it was long before we 
received any tidings of his voyage. Our first and indeed only 
letter was from Gibraltar, where the vessel had touched. After 
leaving which, and just Avhen he had got within sight of land on 
the north-west coast of Ireland, he sunk under his indisposition 
on the 9th February 1788, sincerely lamented by his partners 
and a numerous circle of acquaintance. 

Mr Bartlet was characterised by a most excellent disposition, a 
warm and friendly heart, a sound judgment, and the most gentle 
and obliging manners. These qualifications he had improved by 
reading and intercourse with the world. He was a cheerful and 
most agreeable companion, and at the same time indefatigable 
in business, of which he was perfectly master. His death, there- 
fore, we could not but regard as a heavy misfortune, not only as 
the loss of an able assistant in the counting-house, but of a friend 
for whom we entertained the most sincere regard and esteem. 

Sir James Blair had intended to send his eldest son to France 
for a twelvemonth for his education, and he had even engaged a 
lodging for him in Paris. Sir James's death, however, made some 
change in that respect absolutely necessary ; for the guardians 
of young Sir John did not think it expedient to send him to 
live at Paris by himself, now that his father was dead, and when, 
of course, he would soon be possessed of high notions of his own 
fortune and consequence. We therefore resolved that he should 
be accompanied by some proper person for directing his studies 
and superintending his conduct, and Mr Arbuthnot, junior, was 
engaged for this purpose. In like manner I had formed the plan 



MEMOIRS OP A BANKING-HOUSE. C9 

of sending to France my eldest son, William, who was a year older 
than Sir John Blair, and I had determined, on the recommen- 
dation of Sir Robert Herrics, to fix his residence at Lyons, in the 
Louse of a Swiss Protestant clergyman, who proposed to under- 
take the tuition of half-a-dozen young gentlemen. Mr Bartlet's 
going abroad seemed a good opportunity for their all going together, 
and they set out accordingly for Paris, where Sir John and Mr 
Arbuthnot left them. My son continued the journey to Lyons, 
where Dr Cairnio and Mr Bartlet put him into Mr Trossart's 
hands. I soon found, however, that his house was by no means 
an eligible situation ; for Sir Pobert Herries, in his zeal to serve 
Mr Trossart, had recommended his house to several others of his 
friends, so that almost all his pupils were English : by consequence 
my principal object of sending William to France to acquire the 
language, was entirely defeated, as it was scarcely to be expected 
that half-a-dozen lads living together in the same house could 
avoid almost constantly speaking their own language. 

I therefore resolved, after William had remained there about 
six months, to send him to Paris, where, by means of my friend 
Mr Livingston, who happened to be there, I got him placed in 
the College de Montagu, in the house of a Professor Bouily, where 
he had not only the benefit of general study under the direction of 
the professor, but also the best opportunity of acquiring French, 
as neither the professor himself, nor any one within the walls of 
the college, spoke anything else. There he remained six months 
more, till I thought he had sufficiently accomplished the purpose 
of my sending him abroad. 

Almost immediately on the commencement of our new contract, 
and before we received accounts of Mr Bartlet's death, two events 
took place, which rendered that year not a little remarkable in the 
history of our house — I mean the bankruptcy, first of Charles and 
Robert Fall of Dunbar, and, a few weeks afterwards, of James 
Stein and John Stein, with all of Avhom we were in the course of 
extensive transactions. 

Charles and Robert Fall carried on business in corn on a very 
large scale, among the largest indeed in Scotland. James Fall, the 
father of Robert, and founder of the house, was a merchant of 
considerable eminence; so much so, that he had been member of 
2?arliament for the district of burghs, of which his native town 
of Dunbar was one, and in which he had always retained the 
chief political influence. Charles was his nephew, but Robert was 
the principal acting partner in the house after his fiither's death, 
and between him and Messrs Coutts there had not only been a 



70 MEMOIRS OF A BANKIKG-HOUBE. 

great deal of commercial correspondence in reference to the corn 
trade,* but also mucli intercourse of personal friendship, -which 
had been strongly cemented by the marriage of Mr Robert Fall 
with our partner Mr Stephen's eldest daughter. Charles Fall 
died, and although the firm was still continued, the business was 
thenceforth solely in the person of Robert. This correspondence 
between Mr Fall's house and ours had subsisted for upwards of 
forty years, during which their operations had been considerable, 
and the advances of money made to them were proportionately 
large, but always on the footing of being covered by deposits of 
bills and other securities. For a considerable time, however-, Mr 
Fall had begun to shew an appearance of being in want of mone3\ 
He was less punctual in his remittances, and these Avere frequently 
short of what they ought to have been. This naturally created 
some suspicion in our minds that he was not in a prosperous situ- 
ation ; for it may be laid down as an infallible axiom in business, 
that although any man may at a particular time be in want of 
money from some unforeseen disappointment or other, which it 
will be his endeaA^our as soon as possible to remedy, yet the mer- 
chant Avho appears to be constantly in a state of difficulty, is either 
unsound at bottom, or he is carrying on business more extensive 
than his own capital is equal to. And in either of these cases his 
correspondence is carefully to be avoided. This seemed evidently 
to be the case with Mr Fall. As Ave kncAv, hoAvever, that he 
possessed property both in land and houses at Dunbar, part of 
Avhich he retained for political purposes in connection Avith that 
burgh, Ave considered that property as a sort of guarantee for 
the safety of his operations Avith our house. Still, Ave endeavoured 
to be as guarded Avith him as possible, frequently remonstrating 
a"-ainst the irregularity of his remittances, and endeavouring to 
keep ourselves Avell covered. Yet, being somcAvhat suspicious that 
he Avas not in a prosperous state before Sir James Hunter Blair 
Avent to Harrogate, he and I had Avritten a strenuous remon- 
strance to him in our joint names, as private friends, insisting, for 
his OAvn sake as Avell as ours, that he Avould lay before us a state of 
his affairs. In ansAver to this earnest application, Mr Fall sent 
us u statement of his landed property, and a balance sheet of 
his books, from Avhich Ave Avere led to believe that, although 
he did not seem to be opulent, yet upon the Avhole he might 
be reckoned more than equal Avith the world. After Sir James's 

* jMr Fall had also introduced into Scotland the curing of red herrinss, and 
lie had chiefly brought about the formation of the East Lothian and Merse 
whale-fishing company stationed at Dunl)ar. 



JIEMOIRS OF A BAXKIXG -HOUSE. 71 

death, however, we became still more anxious to have his account 
brought into regukvr order, yet were very unwilling to take 
any strong steps for that purpose, Avith a house who had been so 
many years in close correspondence with our predecessors. In this 
manner things went on during the remainder of the year 1787, 
till at last Mr Fall, being disappointed of assistance which he 
expected from some of his friends, found he could go on no longer, 
and in January 1788 was compelled to stop payment. The balance 
which he owed us on account was no less than £17,000; 
but as Ave held a number of. bills remitted to us in the course of 
our correspondence, we did not apprehend that Ave should be any 
considerable losers in the long-run. Trusting to that circumstance, 
we, very incautiously as Avell as needlessly, alloAved our names to 
be used for a sequestration of his effects under the bankrupt laAA-, 
and proved our debt to its full extent. It being thus published to 
the Avorld that Mr Fall Avas so deeply indebted to us, some alarm 
arose, particularly among the farmers of East Lothian and Ber- 
Avickshire, Avho had money lodged Avith us, and among Avhom Mr 
Fall's bankruptcy made much noise, and for a fcAV days it occa- 
sioned some run on our house for money. But it Avas confined to 
the loAver ranks, and soon ceased. Our ultimate loss by this bank- 
ruptcy, although more than Ave had laid our account Avith at the 
time Avhen it happened, AAas but inconsiderable. 

Scarcely had this alarm subsided, Avhcn other bankruptcies took 
place, Avhich at first threatened the most serious consequences. 
James Stein at Kilbagie, and John Stein at Kennetpans, both in 
the neighbourhood of Alloa, tAVO brothers, had carried on the 
business of distilling of malt spirits to an extent hitherto unknoAA-n 
in Scotland. They Avere correspondents of our house, and their 
transactions, particularly James's, Avere to a very large amount. 
Not content Avitli the sale of spirits in Scotland, they resolved to 
rival the distillers of London by manuf;icturing spirits for the 
English market, AA'hich they conceived themselves enabled to do 
by some advantages in their situation in Scotland, Avhere fuel and 
labour Avere cheaper than in London. They therefore hired Avare- 
houses in London, and sent A'ery large quantities of spirits to that 
market, consigned to a house under the firm of Sandeman and 
Graham, Avhose sole occupation Avas the acting as their agents. 
As they Avere knoAvn to have made money at one period, and as 
they preserved the utmost punctuality and regularity in all their 
transactions, they arrived at a considerable degree of credit. In 
this opinion of their solidity. Sir James Hunter Blair had been 
much confirmed by what he had heard and seen in the House of 



72 MEMOIRS OF A BAXKIXG-HOUSi:. 

Commons Avhile he was in parliament, at the time when the laws 
respecting distilleries were under the consideration of the legis- 
lature, and when James Stein got considerable praise for the open 
and candid manner in which he answered the questions put to 
him during the investigation of that business. Both James and 
John Stein, therefore, had been indulged, particularly James, 
whose business was by far the most extensive, with a degree of 
credit much beyond the bounds of prudence. 

Their transactions, however, ^vere to so large an amount, and 
our engagement by their drafts running on London, had become 
so extensive, that, towards the close of the year 1787, I could not 
help beginning to feel uneasiness at finding ourselves so deejjly 
engaged, that, supposing what was at least possible, they were 
supporting themselves by a circulation of bills, Ave were completely 
in their power ; a situation which nothing should ever induce any 
man of business to allow himself to be brought into by another. 
The other partners, however, did not view matters in the same 
alarming light, and appealed to the correctness of Messrs Stein's 
whole transactions, which, to be sure, was true in every respect, 
except as to the excessive amount of their London paper, which 
they had induced us to negotiate for them. Notwithstanding all 
this, I was resolved to endeavour gradually to reduce the extent 
of our engagement within more moderate bounds, and we began 
to take measures to bring this about, although it was a work by 
no means easy, considering the facilities to which we had accus- 
tomed them. 

Things were in this situation, when the whole fabric of their 
credit suddenly fell to the ground by the stoppage of their agents 
in London, Sandeman and Graham, one of Avhose acceptances was 
received with protest by the post of Saturday morning, the 
February 1788. The necessary consequence was the stoppage also 
of James Stein and John Stein, and of James and John Haig, 
distillers at Canonmills near Edinburgh, with whom the Steins 
had been much connected, and who were embarked in a trade of 
similar nature. 

Besides ourselves, the largest creditors of James Stein were 
Messrs Allan and Stuart of Edinburgh, who, being extensive 
dealers in corn, had been induced by their confidence in Messrs 
Stein's credit to engage in correspondence with them only a very 
few months preceding, for the purpose of sujiplying barley for their 
distillery. As soon as the intelligence arrived from London of 
Sandeman and Graham's failure, Mr Stuart Avent over to Kilbagie 
and made an investigation of their affairs, whence it appeared that 



MEMOIRS OF A UAXKIXG-HOUSR. 73 

their engagements were most extensive, particularly those of 
James Stein, and that there must be a very great loss to their 
creditors. It appeared also that, for a considerable time, they had 
been carrying on a losing trade in a foolish and fruitless contest 
■with the London distillers, who, being a great and opulent body 
of men, had kept down the price of spirits in order to drive their 
Scotch competitors out of that market — a proof of which Avas their 
largely raising the price immediately on those bankruptcies taking 
place. This contest Avith the London distillers they had been 
enabled only to support by. their circulation of bills in London, 
the expenses of which, and the numerous other drawbacks attend- 
ant on carrying on a losing trade, had greatly enhanced the 
mischief 

As there had been a run on our house, by reason of the report 
that we were largely concerned in the failure of Messrs Fall, 
although it was well known that we ran the risk of very little 
ultimate loss by their failure, we had now solid grounds for appre- 
hending a more serious shock to pur credit, when it should be 
known that we were so deeply involved with the Steins, and that 
they would pay but a very small dividend. Rumour, no doubt, 
gi-eatly magnifies every circumstance of that nature. Knowing that 
we had large resources at our command, we had nothing left for 
us but to face the storm, which we had every reason to expect 
would take place. As the support of the credit of a banking 
company, where there is a conviction of safety, is in fact a matter 
of general concern, the Roj^al Bank sent us a message by a particu- 
lar friend at that time in the direction, to let us know that they 
would receive any bills on London we might have to negotiate, or 
any paper we might wish to convert into money ; and of this 
friendly offer we so far availed ourselves as to draw for a consider- 
able sum on our bankers in London by way of precaution, in case 
the demands on us should run higher than we might otherwise 
conveniently provide for. We also ordered our bankers in London 
to dispose of as much Bank of England stock and other govern- 
ment securities as would replace the large sum of bills drawn by 
James and John Stein, and James and John Haig on their agents 
in London, which had become useless by their failure. 

But if the run on the house at the time of the failure of Messrs 
Fall had been altogether unlooked for, and much more severe 
than could have been expected, the demands on the house, which 
took place on the present occasion, were by a great deal more 
inconsiderable than I had laid my account with. As in the fonner 
instance, too, it was chiefly confined, with not above two or three 



74 MEMOIRS OF A DANKIXG-HOITSE, 

exceptions, to the lower class of depositors, and in three or four 
days it entirely ceased. This was, no doubt, very much owing to 
the promptitude with which we satisfied every call that was made 
on us, and the funds with which we were seen to be prepared 
to meet' the demands that from time to time appeared. On the 
other hand, we received the most flattering instances of attach- 
ment from a numerous body of friends, who, overlooking the 
imprudence we had been guilty of in going such unwarrantable 
lengths with those merchants, sought only to know how they 
could be serviceable to us at such a crisis. Nor did our general 
business suffer any diminution, so that we had the utmost reason 
to be thankful to Providence that this misfortune, which at first 
seemed to threaten our very existence, was finally productive of no 
other bad consequence to us than the loss of so much money — a 
loss which I hope will be amply compensated by the lesson of 
caution it has taught us. 

Just before this event took place, the Messrs Hay and I, 
considering how our numbers, as well as our executive power;?, 
were diminished by the loss of two such valuable and active 
associates as Sir James Blair and Mr Bartlet, had resolved on the 
assumption of a new partner ; but the difficulty was where to find 
one endowed with the qualities necessary for our purpose ; one 
possessing knowledge of business, with judgment, application, 
and good temper, whose character should be so well established in 
the world as to give us the prospect of going on comfortably and 
harmoniously together hereafter, as we had been fortunate enough 
to do hitherto. 

After revolving for a considerable time in my mind a subject to 
us so momentous, and consulting with my friend Mr Farquharson, 
the accountant, to whose counsel I had been long accustomed to 
resort on every emergency, I fixed on Mr Samuel Anderson, mer- 
chant in Edinburgh, as a gentleman who appeared to be well suited 
for us. My personal knowledge of Mr Anderson was but slight, 
and was chiefly founded on the general good character he bore in 
the world. But Mr John Hay Avas perfectly well acquainted with 
his temper and disposition, from having been his school-fellow, and 
ever since his intimate friend and companion. He therefore gave 
his warmest approbation of the measure, and a treaty was actually 
begun with ]Mr Anderson before Stein's failure, which that event 
naturally suspended for a little ; but as soon as the storm had 
blown over, and the tranquillity of the house was restored, we 
resumed the negotiation ; and Ave found no difficulty in satisfying 
Mr Anderson, by laying before him a statement, shewing both the 



MEMOIRS OK A DANKIXG-IIOUSE. 7.) 

solidity of our house and tlie profitalde nature of the concern in 
which we invited him to take a share, lie felt no reluctance to 
join us, and a contract Avas accordingly drawn up, and executed on 
the 14th of April 1788, by which Mr Anderson was assumed a 
partner for the same share which Mr Bartlct had held— a measure 
with which we have all had much reason to be satisfied, by the 
harmony that has so uniformly subsisted among us, and the very 
great assistance we have derived from him in the management of 
the business.* By his marriage a few years thereafter, he became 
brother-in-law both to Mr Hay and me, so that we are now linked 
together by aflinity, as well as friendshii* and mutual interest, in a 
manner the most comfortable that can be possibly imagined ; and 
our aftairs have continued to prosper, by the blessing of Provi- 
dence on our honest endeavours to discharge our duty to all, 
greatly beyond our most sanguine expectations. 

In the end of this year, 1788, my eldest son, William, returned 
home ; and as I had always destined him for a man of business, 
with the hope of his one day proving himself worthy of being 
admitted a partner, he instantly came into the counting-house, 
and commenced his appi-enticeship for tlic usual period of five 
years. 

Meanwhile everything continued to go on to our utmost wish. 
Our business gradually increased, as will be seen by the statement 
in the Appendix, and our sole care was to cultivate the good-will 
of our employers, not by servility or meanness, but by attention, 
and a careful and exact discharge of our duty. The arrangement 
by which Sir John Hunter Blair had, though under age, been 
admitted a partner, in conformity with my letter to his father, 
related solely to him; but we now agreed that it should be applied 

* As, by the terms of the previous contract, it was stipulated that the share 
of a partner deceasing was to continue till the 31st Deccmljcr subseqiicnt to his 
death, whereby Mr Bartlet's heirs were entitled to a share of the profits of that 
year, Mr Anderson would not accept of any share or profit till the year follow- 
ing; yet he instantly began, notwithstanding, to take his share of trouble and 
responsibility with the rest— a niark of disinterestedness which I feel a pleasure 
in recording. 

[Another instance of the disinterestedness of Mr Anderson may be stated on 
the authority of an esteemed citizen of Edinburgh, many years deceased. He 
had been a school-fellow of Hemy Dundas, Lord Melville, who, as is well 
known, had for many years nearly the whole government patronage of Scotland 
in his hands. His lordship, on a visit to Edinburgh, renewed acquaintance with 
Mr Anderson, came to dine with him, was introduced to a noble series of sons 
just entered on manhood, and spent a most cordial and happy evening. Ho 
aftei-wards stated to a friend — and the set of sons makes the remark the more 
important — that this was the only similar occasion he could recollect when he 
had not been asked a favour.] 



76 MEMOIRS OF A BAXKIXG-UOUSE. 

equally to us all, and we therefore entered into an agreement on 
the 11th March 1789, by which we bound ourselves that, in the 
event of the death of any of the partners, his eldest son should 
retain the right to one-third of his father's share, to be held on his 
account by the surviving partners, but without his having any title 
to interfere in the management of the business, and with a liberty, 
at the same time, to him or his guardians, to retire from the con- 
cern if he pleased. 

In the autumn of this year, 1789, Sir John Hunter Blair 
returned from Paris, as it was the earnest wish of his mother and 
all his friends that he should apply heartily to business, not only 
for his own sake, but that of his numerous younger brothers. 
Immediately on his arrival, he came into the counting-house for 
the purpose of mastering details, so as to be fitted for becoming an 
active partner ; and he shewed at first every inclination to fulfil the 
wishes of his friends ; but it was not long before it became obvious 
that he was by no means qualified for business. He continued, 
however, to attend the counting-house with more or less interrup- 
tion till the year 1792, when he left it entirely. By this time the 
memorable French Revolution had taken place, and hostilities had 
commenced on the continent, by the irruption into France of the 
army of Prussians and emigrants under the command of the Duke 
of Brunswick, in autumn 1 792. Still, however. Great Britain had 
remained quiet, shewing every disposition to continue in peace, 
and at no period did the prosperity of the country appear to be at 
a higher pitch. Merchants and manufiicturers of every sort had 
greatly extended their trade, and the public funds had not been so 
high for many years ; but the famous retreat of the Duke of 
Brunswick's army, and the subsequent successes of the French in 
Flanders, had so elated the then ruling powers of France, that they 
meditated the overthrow of every old established government in 
Europe, and in particular that of Great Britain. 

In the prosecution of this design, it Avas not difficult to find in 
every state factious and discontented spirits ready to hatch any 
mischief that might spread confusion, and, if possible, bring about 
a change of government. Such were by no means wanting either 
in England or Scotland, and the consequences are well known, that, 
in order to provide for the safety of the state, government judged 
it expedient to call out the militia and to summon parliament to 
meet in the month of December 1792. These proceedings, which 
obviously foreboded a risk of hostilities, were the signal for a check 
on mercantile credit all over the kingdom ; and that check led, by 
consequence, to a demand on bankers for the money deposited 



MEMOIRS OP A BANKING-HOUSE, 77 

with them, in ortler to supply the wants of mercantile men, who, 
finding an almost total stagnation of trade, were unable to dispose 
of the goods with which their warehouses were full, or to raise 
money on them for the payment of running engagements. Numerous 
bankruptcies in London, and the other great mercantile towns of 
England, among men who had embarked too deeply in trade and 
manufactures, were the consequence. 

To all this was added another cause of the great and increasing 
demands on banks — namely, the machinations of the seditious and 
the apprehensions of the timid. The first wishing to give a blow to 
the existing government by ruining the credit of the nation, and of 
all monied people, thereby worked on the fears of the others, so 
as to create a general alarm and apprehension. This check to 
circulation, and the consequent demands for money, began to be 
felt by us, as well as by our neighbours, veiy early in the year 
1793, and rose to such an alarming height as put the demands on 
the house, that took place in the year 1788, totally out of remem- 
brance. The demand for money at Glasgow, in particular, was 
uncommonly great, and besides obliging many of the most opulent 
houses there, in the mercantile and manufacturing line, fairly to 
acknowledge that they could not fulfil their engagements, it pro- 
duced the failure of the bank of Murdoch, Robertson, & Co., 
knoAvn by the name of the ' Glasgow Arms Bank,' from the orna- 
ment on the top of their circulating notes, and which Avas one of 
the three old established banks of that city, although their business 
had much declined. This happened on the 14:th March 1793; 
and on the 21st of that month, to the very great surprise of every- 
body, James Dunlop of Glasgow, who was supposed to be one of 
the most opulent and cautious men of business in the west, was 
compelled to declare himself bankrupt.* On the 23d April the 
house of Bertram, Gardner, & Co. of Edinburgh also stopped 

* Mr Dunlop had embarked deeply in two branches which, had peace con- 
tinued and money been plenty, must have made his fortune. Lnpressed with 
an idea of the increasing value of land, he had purchased several extensive 
estates ; and having largely engaged in the working of coal-mines, in which ho 
was supposed to be uncommonly skilful, he had reduced these two branches of 
trade, if so they may be called, to a system by which he proposed every year to 
accumulate such a smking fund as should enable him soon to pay off the great 
debt he was obliged to contract for them, and then leave hun in possession of a 
clear solid landed property ; but the war and the consequent scarcity of money 
disconcerted all his measures, and compelled him to stop payment ; the conse- 
quence of which was, that his large landed estates being brought to sale at a 
period when the value had fallen by reason of the pressure of the times, they 
■went at a great depreciation, and his creditors were liea'N-y losers. The same 
estates, if to be now sold, would fetch far greater prices. 



78 MEMOIRS OF A BANKING-HOUSE. 

payment, and, to complete the confusion, the four hanks of New- 
castle, which Avere known to he opulent, were forced to shut up 
on the 12 th April, owing to their not having had the precaution 
to keep in readiness sufficient funds to meet the demands that 
were made upon them. Their stoppage was accompanied by that 
of a great many coimtry banks in various parts of England, where 
the trade of banking had been carried to an unwaiTantable extent 
by persons Avho had not a sufficient foundation, and who, by con- 
sequence, were unable to stand the run that the scarcity of money 
brought upon them. During the whole of this irksome period, I 
was in Italy, altogether unconscious of what was going on at home, 
and my partners had been unwilling to alarm me, or to say any- 
thing that might induce me to return before the object of our 
journey — which was the re-establishment of Lady Forbes's health 
— should be effected. At last, however, things became so serious, 
and assumed so very alarming an aspect, that they wrote, earnestly 
requesting me to come home. So little notion had I of anything 
having happened to require my presence in Scotland, that we were 
even thinking of spending the summer in Switzerland, and of 
returning to pass the ensuing winter at Naples. All my letters 
had brought us accounts that everything was going on smoothly 
in the counting-house. An interval of a fortnight had taken place, 
hoAvever, Avithout the arrival of any mails from Britain, till the 
2Cth April, Avhen I received a letter from Mr Hay, Avhich aston- 
ished me more, I believe, than any I ever received in all my life. It 
was dated the 30th March, and referred me to one Avritten the 
preceding post by Mr Anderson, but Avhich I had not then received, 
as the arrival of the malls Avas rather irregular. Mr Hay, in his 
letter, lamented the numerous failures that had taken place, and 
the consequent run on CA^ery bank and banking company, of all 
which he spoke as supposing me to be perfectly Avell acquainted, 
from Mr Anderson's letter, Avith everything that Avas passing; and 
he concluded by saying that, since Mr Anderson had Avritten, there 
had been a meeting of James Dunlop's creditors, Avhen it appeared 
there AA'ould be a very great deficiency, although he still hoped our 
loss Avould not be more than Mr Anderson had called it in his 
letter, but Avithout specifying Avhat that Avas. Finally, he con- 
cluded by requesting me most earnestly to let no consideration, 
except Lady Forbes's health, prevent me from coming home Avith- 
out delay. It is scarcely possible to conceive greater astonishment 
than mine on the perusal of this letter. Numerous bankruptcies I 
could suppose to have happened in times such as Mr Hay described 
them to be ; but had I been desired to specify the man Avho, in my 



MEMOIRS OF A BANKING-HOUSE. 79 

Opinion, was least likely to become bankrupt, I verily believe I 
should have named Mr Dunlop, whom I had always considered to 
be one of the most thriving men in Scotland, as well as one of the 
most intelligent and active, besides being sober, and economical in 
his family, and addicted to no unusual personal expense.* 

Immediately on receiving ]\Ir Hay's letter — Mr Anderson's did 
not reach me till the mail following — I at once abandoned all 
thoughts of remaining longer in Italy. My only consideration was 
in what manner I could get soonest and best home ; but as Lady 
Forbes was still in a poor state of health, I very much wished her 
to remain, with our daughter, at Rome, where we had several English 
friends. She was extremely averse to the idea of being left behind, 
and wished at least to try how she could boar the journey as far 
as Florence ; that, if when there she found it too much for her, 
she might remain with an Irish family of our acquaintance, and I 
could proceed to Scotland by myself 

It was, however, the 8th of May before we wore able to begin 
our journey from Rome. As we were stepping into the carriage, 
I received a few linos from Mr Ha}', dated 13th April, informing 
me that they had just received information of the four Newcastle 
banks having been obliged to shut their doors and suspend pay- 
ments. Knowing the opulence of the partners of those banks, I 
could not but dread that if the panic had continued- to extend 
itself as far as Edinburgh, our own house might perhaps be at 
that moment in the same predicament. I had the satisfaction of 
knowing by the English newspapers that an association had 
been formed in London, of Northumberland gentlemen, for the 
purpose of supporting the credit of the Newcastle banks, in 
consequence of which they had again begun to do business : 
and next morning I received letters from my partners to let 
me know that they were going on with credit and respectability, 
notwithstanding that the demand on thorn for money still con- 
tinued exceedingly great. What the final issue might be, however, 
I could not possibly divine, and I knew that I could not again 
hear from home for at least three weeks — namely, till we should 
arrive at Brussels. With all expedition, therefore, we continued 
our journey, and arrived at Brussels on the 4th of June. On 

* Mr Dunlop detailed to me all his plans and projects in a verj' well written 
letter, which I received from him on my way home, and in wliich he apologised 
for having drawn some bills on us just the day before he stopped payment. Ho 
said he had done so in an agony of mind not to be dcsci'ibed, but that in the 
uncertainty of his situation, he still flattered liimself that, on seeing his friend 
Mr Gammell from Greenock next day, he might have found it possible to 
go on. 



80 MEMOIKS OF A BANKING-HOUSE. 

going to the banker's, I found a packet of letters from Mr Hay, 
As my former letter from him, Avhich I had received at Florence, 
Avas dated 20th April, there was a terrible interval, the events of 
which I had now to leai-n, and, considering the gloomy strain of 
the former, it will not be surprising that I felt a few moments' 
hesitation before I could break the seal of that which I now 
received, lest it shoidd have brought tidings of a disastrous nature. 
To my unspeakable relief, the accounts were highly favourable. 
Mr Hay informed me that, after his last letter, things had become 
still worse by the failure of Bertram, Gardner, & Co., which was 
the signal for a more general and extensive alarm, and the demand 
for money had been immense, not only on our house, but on 
Messrs Mansfield & Co. and the Eoyal Bank, of which he gave 
me the most convincing proof by enclosing a slip of paper contain- 
ing the sums we had paid away in the course of one week,* to an 
amount I should scarcely have thought possible. But he told me 
likewise not only of the promptitude with which they had been 
able to make their own payments, but of the help they had been able 
to afford to other houses who had been put to a nonplus, and who, 
■without our aid, there was great reason to fear, would have been 
forced to stop, Avhereby the evil Avould have been still further 
increased. Thus Ave had been able to weather the storm, not only 
with safety, but with a considerable increase of credit and reputa- 
tion. And it is impossible for me to do justice to the ability and 
firmness which my partners had displayed while thus surrounded 
by the most alarming danger. The exertions they had made to 
collect our funds and provide against every emergency, were 
beyond all praise. By the time Ave arrived in Edinburgh, Avhich 
Avas on the 16th June, tranquillity Avas completely restored, and 

* The number of interest-receipts paid from 23d April to 30th April 
inclusive was ....... 608 

The number granted was ..... 60 

More paid than granted, ..... 548 

In ordinary times the numbers paid and granted are pretty much the same : 

Amount paid above granted in December 1792, . . £10,670 

Januaiy 179.3, . . 16,016 

t) " " Fcbruaiy " . . 11,561 

» • „ March - . . 52,901 

,, <• ' April » . . 105,075 

tt » to 23d May » . . 66,541 



Total paid more than granted from Dec. 1792 to 23d May 1793, £263,724 

The diminution on accoimt-current balances was in proportion ; that is, nearly 
as much more. 



MEMOIRS OP A BANKING-HOUSE. 81 

business again flo\ving in its accustomed channel ; also the money 
Avhich had been drawn out of our hands in the course of the sprinf 
soon began again to return, till at last the sum of our deposits far 
exceeded that of any former period, partly no doubt from the 
increasing -wealth of the country, and partly — perhaps we may be 
allowed to say without the imputation of vanity — from the regu- 
larity and attention Avith which we have conducted our business, 
and the desire we liave always shewn to accommodate our corres- 
pondents as far as prudence warranted. 

At the commencement of the following year, 1794, my son 
William having finished his apprenticeship, and evinced a disposi- 
tion to become an active man of business, Mr Hay and Mr 
Anderson were pleased to gratify my wishes by admitting him a 
partner from that date. In order to do this, we made the follow- 
ing distribution of the 10|- shares which had remained undivided 
of Sir James Blair's stock, and over which we had retained the 
power of disposal : Sir W. Forbes, 4 ; Mr J. Play, 2 ; Mr Ander- 
son, 2 ; Mr Forbes, 2 ; Mr L. Hay, -j ; and the deed of agreement 
was signed 1st April 1795. In this distribution we omitted Sir 
John Blair altogether, as he had now withdrawn from the count- 
ing-house, and given up all thouglits of being a man of business, 
although he continued to retain his 5^ shares until the termination 
of the contract. 

During all this while, the war in which the nation was engaged 
with France, continued to rage with unabated fury in different 
parts of Europe, and Avith various success. At the same time, in 
contradiction to the experience of all former wars Great Britain 
had been engaged in, which had always checked and diminished 
the trade of the country, such was now the superior power of the 
British navy, as evinced by our success at sea, that, while the navy 
and the trade of France had both been greatly reduced, the com- 
merce of the whole world seemed to centre in this country. 
France, therefore, strained every nerve to cripple us, and she par- 
ticularly directed her attention to Ireland, as the most vulnerable 
part of the British dominions in Europe. 

In prosecution of this plan, a formidable squadron with troops 
on board sailed in a fog from Brest, having thus escaped the 
vigilance of the British fleet by which that harbour was blockaded, 
and arrived in Bantry Bay, on the south-west coast of Ireland, 
in the end of December 179G. Being, however, providentially 
hindered from landing by tempestuous weather, and not suc- 
ceeding in their attempt to raise an immediate insurrection in 
the country, they were obliged to turn and make the best of their 



82 MEMOIRS OF A BANKING-HOUSE. 

way home. Formidable threatenings were also spread abroad on 
the part of France, of their intention to make a descent on England, 
which had the effect of creating such an alarm in London, and, 
indeed, over the country, that the demand for gold on the Bank of 
England was beyond all former example. Nor was the alarm con- 
fined to England. It very soon reached Scotland, and a run on 
the banks and banking-houses in Edinburgh, similar to that of 
the year 1793, took place, although fortunately it was but of short 
dui'ation. It apparently had its commencement from a public 
meeting of the county of Mid-Lothian, called by the Duke of 
Buccleuch, the lord-lieutenant, on Friday the 17th February 1797, 
to concert measures for the defence of the country in case an enemy 
should attempt to land. The resolutions adopted by that meeting 
being advertised in the Edinburgh newspapers of Saturday, were 
perused and commented on next day by the farmers and lower 
classes of people in the villages throughout the country, who, in 
consequence, became alarmed, and on Monday the 20th they came 
to our counting-house in considerable numbers, evidently under 
the impression of terror, calling for payment of their notes that 
had been lodged at interest. This lasted the whole of that week, 
and the two first days of the following. Nor was it confined to 
us alone, for the public banks experienced it in a still greater 
degree, and we were beginning to think there v.as to be a similar, 
perhaps a still severer, demand on us than what had taken 
place in 1793 ; when, early in the morning of Wednesday the 1st 
March, an express arrived from London to the directors of the 
Bank of Scotland from Thomas Coutts & Co., their correspondents 
there, informing them that the demand for gold on the Bank of 
England had risen to such an alarming height, that the directors 
had thought it proper to state the circumstance to the Chancellor 
of the Exchequer, who immediately procured an order of the 
Privy Council to be issued, prohibiting that bank from making 
any more issues of specie in exchange for their notes. Mr Mans- 
field, who was a director of the Bank of Scotland, informed our 
Mr Anderson of this interesting event, and he immediately 
brought the intelligence to me, a little before the usual hour of 
commencing business. My ideas, at various times during the 
course of the war, had been often not a little gloomy when I 
thought of the state of things in the kingdom, and indeed in 
Europe ; but now it was that I certainly did think the nation 
was ruined beyond redemption, when so novel and alarming a 
circumstance had taken place at the Bank of England, which had 
ever been considered as the bulwark of public and private credit. 



MEMOIRS OF A DANKING-IIOUSE. 83 

Mr Ilay, Mi" Anderson, my son, and I, all repaired as fast as 
possible to the counting-house, ■which at ten o'clock was crowded 
as usual with people demanding gold. We were soon joined by 
Mr Simpson, cashier, by Mr James, deputy-governor of the 
Royal Bank, and by Mr Fraser, the treasurer of the Bank of Scot- 
land, and we sent for Mr Hog, manager of the British Linen 
Compaii}', for all ceremony or etiquette of public or private banks 
was now out of the question, when it had become necessary to 
think of what was to be done for our joint preservation on such 
an emergency. Thence we repaired to the Bank of Scotland, 
where their directors were assembled, and after some time spent 
in consultation with them, it was agreed that there was no choice 
left but to follow the example of the Bank of England, and sus- 
pend all further payments in specie. The Lord Provost instantly 
gave orders for calling a meeting of the principal inhabitants 
that day at two o'clock, which was very numerously attended, 
considering the shortness of the notice, and amongst others by the 
Lord President of the Court of Session, the Lord Chief Baron of 
Exchequer, the Lord Advocate, and the Sheriff of Edinburgh. 
After stating the order of Council for suspending the payments in 
specie bj' the Bank of England, and the similar resolution taken 
by the banks of Edinburgh, a resolution Avas instantly and unani- 
mously entered into by those present to give every countenance 
and support to the Edinburgh banks — including our firm — by 
receiving their notes in payment with the same readiness as 
heretofore, and a handbill to that effect was instantly circulated 
over Edinburgh, and inserted in all the newspapers. Expresses 
Avere likewise despatched to Glasgow, Greenock, Paisley, Ayr, 
Perth, Dundee, and Aberdeen — at all which places there were 
banks — to inform them of Avhat was passing. The instant 
this resolution of paying no more specie Avas known in the 
street, a scene of confusion and uproar took place, of which 
it is utterly impossible for those Avho did not witness it to 
form an idea. 

Our counting-house, and indeed the offices of all the banks, were 
instantly crowded to the door with people clamorously demanding 
payment in gold of their interest-receipts, and vociferating for silver 
in change of our circulating paper. It was in vain that we urged 
the order of Council — which, however, applied merely to the Bank 
of England — and the general resolution adopted by all other 
banks in Edinburgh. They AA'ere deaf to every argument, and 
although no symptom, nor indeed threatening of violence 
appeared, their noise, and the bustle they made, Avas intolerable; 



84 MEMOIRS OF A BANKING-HOUSE. 

■\vhicli may be readily believed when it is considered tliat they 
■were mostly of the lowest and most ignorant classes, such as 
fishwomen, carmen, street-porters, and butchers' men, all bawl- 
ing out at once for change, and jostling one another in their 
endeavours who should get nearest to the table, behind which were 
the cashier and ourselves endeavouring to pacify them as well as 
we could. 

Of our interest-receipts we were prompt in payment ; but 
instead of giving our own circulating notes, as heretofore, we paid 
the value in notes of the public banks, of which we had an ample 
supply, and by doing this we were in our own minds satisfied 
that we fulfilled every obligation, for the sums had been deposited 
with us, not in specie, but in such notes as we now gave back to 
the holders. With regard to our circulating notes the case was 
different. And we felt the hardship on the holders, who were 
deprived of the means of purchasing with ready money the neces- 
saries of life, as there were no notes of less value than twenty 
shillings, and it was with the utmost difficulty they could get 
change anywhere else ; for the instant it was known that pay- 
ments in specie were suspended, not a person would part with a 
single shilling that they could keep, and the consequence was 
that both gold and silver specie was hoarded up and instantly 
disappeared. It was not the want of specie, therefore, that occa- 
sioned the distress, but Avant of confidence, the same as had 
occasioned the demands on the Bank of England and every other 
banking society in the kingdom. Saturday was the day on which 
we had the severest outcry to encounter ; for on that day we had 
always been accustomed to the largest demands for silver to pay 
Avages, and our situation was then really distressing, as many 
master tradesmen requested in the most earnest manner to have a 
little silver for enabling them to pay their work-people. All Ave 
could do, Avhen sensible that their demand proceeded from real 
necessity, Avas priA^ately to change a note or two by taking them 
into a separate room, for Ave durst not do it openly in the counting- 
house for fear of raising a riot. In this manner Ave contrived to 
keep the people quiet for the first Aveek or so ; in the course 
of Avhich many expedients Avere thought of ; among others, that of 
issuing tallies of half a croAvn or five shillings value, Avhich there 
Avas every reason to believe Avould have been highly useful, and 
most thankfully received by the public. But it Avas discovered 
that the doing so Avas contrary to laAV, as the act of parliament 
passed in the year 1764 for correcting the evil of notes for trifling 
sums, Avith Avhich the country had been deluged, prohibited the 



MEMOIRS OF A BANKING-HOUSE. 85 

issuing of any substitute for money of less value than twenty 
sliillings.* 

At length a partial remedy was found. There chanced to be in 
London at that time a great quantity of Spanish dollars, worth 
about four shillings and sixpence each. On these a stamp was 
affixed at the Mint, by government, which gave them a currency ; 
and as every person issuing notes took care to obtain a supply of 
these, they answered tolerably well the purpose of change. 
Quarter guineas, too, were coined at the Mint ; and in a short time 
an act of parliament was passed to permit such banking-companies 
as had been in the practice of issuing circulating paper, to issue 
notes of five shillings value during a limited time. Of this per- 
mission, the Royal Bank and several country banks availed them- 
i Ives ; and I have no doubt they were considerable profiters by 
the measure. For as these notes mostly passed into places of the 
lowest traffic, they soon became so torn and ragged that they 
would scarcely hang together ; and many of them must doubtless 
have been entirely destroyed, so as never to return for payment on 
the issuers. We did not issue any notes of that description ; 
being convinced that there was no real scarcity of specie in the 
country, and that it would again make its appearance when the 
panic should wear off, as actually proved to be the case. 

In two or three months, when confidence seemed to be toler- 
ably well restored, ^ve began again to issue our notes of one 
pound and upwards as formerly, and they were just as well 
received as ever ; so that our circulation, which had diminished 
greatly while we ceased to issue, again swelled to its former 
amoimt. And it was matter of agreeable surprise to see in how 
short a time, after the suspension of paying in specie, the run on 
us ceased. Indeed, when the holders found they could not 
succeed in obtaining payment in gold, they desisted from demand- 
ing the value ; appearing to be equally well satisfied to retain our 
promissory-notes bearing interest, instead of receiving the value in 
circulating notes of the other banks, which bore no interest, and 
for which they could no more get specie from them than from us. 
It was remarkable, also, after the first surprise and alarm was over, 
how quietly the country submitted, as they still do, to transact all 
business by means of bank-notes, for which the issuers give no 
specie as formerly. The wonder was the greater, because the act 

* Some people adopted the ingenious method of tearing a twenty-shilling 
note into halves or quarters, and paying them away accordingly ; and when such 
were presented to us, we always paid the value of the fragment without 
hesitation. q. 



86 MEMOIRS OF A BANKING-HOUSE. 

of tlie Privy Council first, and afterwards the act of parliament, 
applied merely, as I have already said, to the Bank of England, 
while all other banks, hoth in England and Scotland, were left to 
carry on their business without any protection from parliament, 
and without any means of ol)taining specie beyond what the 
natural course of business brought into their hands from the gold 
circulating in the country. That source, however, has hitherto 
proved amply sufficient for all needful purposes.* 

From this time forward the business of our house went on, not 
only with the utmost smoothness, but increased, along Avith that 
wonderful extension of the commerce and manufactures of the 
country of which I have already taken notice, and Avhich, con- 
trary to all former example, continued to swell as the war was 
protracted. In this situation we continued steadily to adhere 
to the genuine and salutary principles of banking business, by 
employing our funds on cash-accounts and in discounting bills 
which we deemed safe, as far as the trade of this part of the 
country required. Besides the sum employed on these purposes, 
we made a large deposit in the two senior public banks of Edin- 
burgh, which, although it yielded but a low interest, we yet judged 
to be a necessary precaution, in order to guard against the effects 
of any unforeseen emergency. Still further, we invested for the 
same purpose at London a part of the money deposited with us in 
Exchequer and Navy Bills, which, yielding an excellent interest, 
were always an available resource against any unexpected demand, 
while they were not subject to such accidental depreciations as the 
other public funds. 

It has been a rule with us, from which we have never departed, 
to avoid everything that might be termed stock-jobbing, and for 
that reason we never held any share in the loan raised annually 
by government during the war. There was one species of govern- 



* Tlie forbearance of the Scottish people, and their confidence in the solidity 
of their hanks, has been such that no attempt has ever been made to enforce 
payment in specie by legal process. Nor in England did I ever hear of its 
being tried, except at Bury St Edmiuid's, where a Mr Grigby, holder of some 
notes of the bank there of Messrs Oakes and Son, brought an action against 
them in July 1801 for refusing to pay in specie. But as the bank of Bury St 
Edmund's had offered to pay him in notes of the Bank of England, which proved 
that they were suflBciently provided with funds for the purpose, and as it 
evidently appeared on the trial that the demand for gold was unnecessary, and 
the action itself proceeded from malevolence, Mr Baron Hotham, the judge 
before whom the action was brought, severely reprobated the plaintiff's conduct. 
The point of law was left to be tried by the Court of King's Bench; but I 
never heard more of it, and probably the question was dropped, on being found 
to be so unpopular. 



MEMOIRS OF A CANIUNG-IIUUSE. 87 

ment securities, however, in Avhieh we invested some money 
without scruple, from time to time, and that was in the fund 
denominated Short Annuities. These had been granted for a term 
of ycai's for money borrowed by government in the year [1778], 
and they expire on the r'ith January 1808, till which period they 
are paid regulai-ly every half-year, and this price was so low 
during the war, that he who purchased them had an absolute 
certainty of realising a very handsome profit at their termination. 

Therefore, finding our money swell upon our hands beyond all 
that we could employ in the ordinary purposes of our business, 
and it being absolutely necessary to place the surplus so as to 
yield us a fair return, as we were paying to our customers a con- 
siderable interest, we purchased some of these short annuities 
from time to time. Another public fund also presented itself, 
which we considered might be held with safety and advantage. 
The Chancellor of the Exchequer having resolved to convert a 
portion of the Navy Bills into stock bearing interest at five per cent., 
under the stipulation of redeeming it at par, if the holders should 
demand their money, at the end of two years after the termination 
of the war ; and, as we happened to hold a large sura of Navy Bills, 
we of course became possessed of a considerable amount of tliis five 
per cent, stock. Besides that stock, the holders of Navy Bills received 
another portion of their value in four per cent, stock irredeemable, 
but on such low terms, that, seeing no prospect of having occasion 
to sell it till the return of peace, when, in all probability, it would 
rise considerably in value, w^e resolved to take it also, and to keep 
the whole, as well as some three per cents, which we ventured to 
purchase at a very low rate. These purchases we did not consider 
as any departure from our resolution of avoiding speculation in 
government securities, because we never bought to the value of a 
shilling without paying for it in money, nor even that, except when 
we did not know how otherwise to employ our funds, after having 
discounted every good bill that was offered to us. And we had 
solid ground for deeming these investments as a source of consider- 
able future profit, when it should please God to send us again the 
blessing of peace — a profit of the certainty of which nothing could 
disappoint us, except our being forced to part with the stock in the 
interval, and of that there was very little probability, so well 
fortified were we against any demands likely to happen by the 
amount of our other resources to meet them, without being com- 
pelled to break in upon our investment in the funds. 

But there was another circumstance relating to these invest- 
ments which now engaged our attention, and that was the con- 



88 MEMOIRS OF A BANKING-HOUSE. 

sicleration tliat if any of the partners should die before the return 
of peace, there would be a degree of hardship if his family were 
deprived of a share in the expected advantages to arise from them 
on the war ceasing. 

This consideration induced the partners, on the 17th May 
1798, to enter into an agreement whereby they prolonged the 
contract, which would otherwise have expired on the 31st 
December 1799, to one year after the termination of the war, 
during which prolonged period, if any of us should die, our interest 
in the house should continue to our children to the same extent 
as their father had enjoyed, but with a deduction of tAventy per 
cent, from the share of the net profit, as some compensation to the 
surviving partners for the additional trouble they would be 
subjected to by being deprived of their colleague's assistance. 

On the 31st December 1799, the contract which we had 
entered into with Sir John Hunter Blair temiinated, when, of 
course, his interest in the house came to an end, and we divided 
the shares held by him, with the addition of two of mine, which 
I ceded to my son, in the following manner : namely. Sir W. 
Forbes, 18; Mr John Hay, 11 ; Mr Samuel Anderson, 11 ; Mr 
Lewis Hay, 4 ; Mr William Forbes, 4 — in all, 48 parts. 

In no long time after this arrangement, we had the misfortune 
to lose our worthy friend and partner, Mr Lewis Hay, who, I 
have strong reason to suspect, fell a martyr to his intense and per- 
severing application to business. He had contracted a severe cold 
towards the end of February 1800, which, however, did not 
prevent him from coming up stairs — for his dwelling-house was 
under the same roof with the counting-house — to transact business 
as usual, until Friday the 21st, when he did not come up in the 
afternoon, a thing very uncommon with him. From this time his 
illness increased, ending in inflammation of the lungs, and he died 
on Friday the 28th February, leaving a widow and six young 
children. He had married rather late in life, prevented, doubtless, 
from thinking of it sooner from the peculiar situation of his afi'airs. 

I have already expressed the high opinion I entertained of Mr 
Hay's merits. In the whole of his conduct in life he was 
methodical to a singular degree ; he was most exemplary in his 
morals, and strict in the discharge of all the duties of external 
religion, possessed of a high sense of honour, and the most 
inflexible integrity. He was fond of reading, and was by no 
means unacquainted with books, particularly those of a serious 
cast ; and I remember my mother — who was very fond of Mr 
Hay — used to interchange with him old-fashioned books of divinity, 



MEMOIRS OF A BANKING-HOUSE. 89 

to which they hoth seemed partial. Although naturally grave in 
his deportment, yet no man more delighted to unbend his mind 
at table in the midst of a circle of select friends. But his 
prevailing feature was application to business, from which he 
never allowed any object whatever to withdraw his attention.* His 
death, therefore, was a very great misfortune to us ; for, although 
he very much left to his partners the general management of the 
business of the house, yet we reaped much advantage from his 
being constantly over the clerks, as well as from the exactness 
with which he filled an essential department. Yet with all this 
precision and method in the business of the house, he did not leave 
behind him either a statement or a settlement of his own affairs, 
nor any nomination of guardians to his young family, so that an 
application to the Court of Session became necessary. The court 
appointed Mrs Hay, an excellent woman, and one of her relations, 
along with three of us, to take care of them and their concerns. 
Although he had not been many years in business, yet by the 
prosperous state of our house, and his own and Mrs Hay's atten- 
tion to economy, he left his children sufficiently well provided for. 
The death of Sir John Hunter Blair happened in May 1800 ; he 
had always something peculiar and eccentric in his manner, which 
gradually increased as he grew older, until at last he became totally 
deprived of his reason, from which melancholy state he never 
recovered. My partners and I continued desirous that some one 
of our late worthy friend. Sir James Blair's sons, should become 
interested in our house, of which he had been so conspicuous a 
member ; and when we perceived that his eldest son would not 
apply himself to business, the third son James — for the second son, 
David, had by that time succeeded to his mother's estate of 
Dunskey — was sent to Hamburgh, and having remained there a 
considerable time, he returned to Edinburgh and entered our 
counting-house, in order to qualify himself for being admitted a 

* I recollect an incident which strongly marked this. When his mother 
died, he sent over the key of his desk to tlie counting-house, along with a 
message, to tell us what had happened, and to say that he should be detained 
an hour or so later than usual. I went over immediately, and called on him, 
and requested that he would not think of coining out imtil the funeral should 
be over ; but I found him preparing to come to tlie counting-house. He was 
conscious, he said, of having discharged his duty to his mother while she 
lived. He had given the necessary orders in preparation for the funeral, and 
therefore he could not think of being absent from his duty to us. To thoso 
who did not know him, this might have appeared a degree of heartless unconcern 
on such an occasion ; but we, who knew him, considered it in its true light — as 
a part of liis uniform attention to the discharge of his duty in every station of 
life. 



90 MEMOIRS OF A BANKING-HOUSE. 

partner. The death of his eklest brother, however, having put 
him in possession of Dunskey — in place of the next brother David 
(now become Sir David), on the latter succeeding to the family 
estate — he also gave over thoughts of being a man of business, and 
withdrew from the counting-house. Still preserving our original 
wish of having one of the family, if possible, as an associate, Sir 
James's fifth son, Forbes Hunter Blair — Robert, the fourth, having 
gone into the army — was sent for from Liverpool, where he had 
been placed for the purpose of mercantile education, and entered 
our counting-house, with the view of being one day assumed a 
partner.* 

Feeling, as we did, the loss of Mr Lewis Hay, it became desir- 
able for us to have a steady, useful partner in his place, who 
should also occupy the residence attached to the counting-house ; 
and we had no hesitation in making choice of Mr Patrick Maxton, 
who had long been with us, and at that time filled the important 
ofiice of our first cashier. Mr Maxton had reached the middle 
period of life, and had given ample proof of his fitness for the 
trust. On the' 11 til August 1800, we admitted him as a partner 
into the house during the continuance of our present contract, and 
allotted to him the twenty per cent, received on the share of profits 
belonging to Mr Hay's family, in terms of our agreement of 1798, 
together with a further allowance, which should secure his having 
not less than £300 per annum. 

At length, on the 1st October 1801, preliminaries of peace were 
signed, and on the 27th March 1802, a definitive treaty of peace 
was entered into between Great Britain and France, which ended 
for a time the most bloody and destructive war that ever was waged 
in Europe. The period was thus ascertained — namely, the 30th 
June 1803 — at which our contract of copartnery was to terminate, 
and the interest in it of Mr Lewis Hay's family to cease. On the 
cessation of the war, the expected rise in the public funds having 
taken place, Ave were able to dispose of a considerable part of our 
stock investments to great advantage. But we retained the short 
annuities and five per cent, stock, conformably to our original inten- 
tion, until the one shall expire, and the other come to the period 
when it is to be paid off" at par, two years after the conclusion of 
the war. 

Nothing further occuiTcd in our house of any importance until 
the year 1803, when our contract being about to terminate, we 

* [Mr Forbes Hunter Blair contested the representation of Edinburgh, unsuc- 
cessfully, with Mr Jeffrey and Mr Abercrombie, at the first election after the 
passing of the Reform Act in 1832. He died in 1833.] 



MEMOIRS OP A BANKING-HOUSE. 



91 



liave tills day — 17th May 1803 — signed a new one, to commence 
from the 30th June ensuing, and to hist for ten and a half years, 
namely, until the 31st Dccemher 1813, hy which the shares of the 
house are now hold as follow. Sir William Forhos, 17; Mr John 
Hay, 11; Mr Samuel Anderson, 1 1 ; Mr William Forbes, 5 ; Mr 
Patrick Maxton, 2 ; Mr Forbes Hunter Blair, 2 — in all, 48 shares. 
The stock of the company, which in the former contract had been 
stated at £9000, is by the new contract augmented to £24,000, as 
a security to the public, along with the separate and aggregate 
property of the partners, which is to no inconsiderable amount. 

On this occasion I cannot help remarking the singular vicissi- 
tudes of the present times. After the concluding of the Treaty of 
Amiens, we certainly thought that we should have had an interval 
of peace for some years ; yet in very little more than a twelve- 
month, we find the nation again involved in a war with France, 
of which no human being can foresee the event or the probable 
termination. Yet let us not despond, but trust that the Almighty 
Being, who has on many occasions so wonderfully preserved this 
country, will still continue his protection, and in no long period 
restore to us the blessings of peace. In the meantime, may we, 
who are associated together in an important business, continue, by 
the same harmony among ourselves, and the same unremitting 
attention and prudence as heretofore, so to conduct the affairs of 
our house, that, by the blessing of Divine Providence, it may still 
prosper as it has hitherto done. 




92 



MEMOIRS OF A BANKING-HOUSE. 



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MEMOIUS OF A BANKINO-IIOUSE. 93 

*»* Since the publication of the first edition, a letter written .Vjy Sir 
William Forbes to his partners, Mr (afterwards Sir) Jolm Hay and Mr 
Samuel Anderson, has been j)ut into the hands of the Ivlitor, wlio finds 
it to involve so exemplary an instance of commercial justice and 
magnanimity, that lie sought permission to place it before the puljlic. 



To John Hay uml Sami kl Anderson, Esyrs. 

• Bantaskine, Jidij 'Jl, 1790. 

' Dear Sirs — 1 wrote to Mr Hay the 20th, since which I have 
not liad tlio pleasure of hearing. Knowing liow extremely 
occupied you both are, it is exactly my wish that you should not 
take the trouble of writing, or bestow the time on it, uselessly, 
except when there is anything of moment to say. 

'Since I came to the country, a thought has occurred to me, 
which I have been turning in my mind, and Mhich I now wish to 
state for your consideration. It is, in regard to the prolongation 
of our contract. The very peculiar circumstances of the times, 
particularly with respect to our investment in the funds, made it 
an expedient measure that, in the event of the death of any of 
the partners, his interest should still continue in the bouse, not- 
withstanding the clause in the contract which says it should cease 
in such an event ; as it appeared to be a hardship that the family 
of a deceasing partner should be subjected to the loss which 
possibly might ensue, if the price of that investment should be 
considerably under what the funds were bought at ; while, on the 
other hand, there was reason to hope the price would rise in the 
event of a peace. To continue the contract, therefore, seemed a 
wise measure for us all ; but it was particularly so to me, who am 
considerably the oldest of our number. But although it did then, 
and still does appear to have been pro})er to do so, with regard to 
our investment, there seems to be no reason why such an 
alteration in the respective interests of the partners, with regard 
to the general profits of the house, should not be made at the 
1st January next, as would, in all probability, have taken place if 
our present contract had been left to expire at that period. For, 
surely, in framing a new contract, it would have been but equit- 
able that the shares of the house should be more equally divided 
than they are at present. Twelve years since the contract was 
last made, have brought us much nearer to an equality than we 
Avere at that period ; and as the whole load of the business, which 
you manage with so much care, attention, and ability, may be 
said to press entirely upon you two, it is no more than common 
justice that your shares should be augmented, in order that you 
may have a decent recompense for such uncommon labour. For 
my own part, for a long time past I have been able to free you of 
very little of the burthen ; and my health renders me now still more 
incapable to take what used to be my ordinary share of the fatigue 
and attendance. What I would propose, therefore, would be to 
fix the shares of each partner, from the 1st January next, in such 



94 MEMOIRS OF A BANKING-HOUSE. 

a manner as they would have been divided had we been framing 
a new contract to commence at that period. With regard to our 
investment in the funds, indeed, I shall be extremely glad that 
our respective interests in it with regard to the ultimate profit or 
loss, at the period to which we have prolonged the contract, shall 
continue the same as they are at present. We have borne the 
brunt of the battle together, and I hope we shall in due time reap 
the fruits of the victory. But, with regard to the ordinary profits 
arising from the established and regular business of the house, 
we may throw these into such a division of shares at the 1st 
January next, as would have been the case had we lieen framing 
a new contract. What that division should be, we can talk of at 
meeting. I merely state the principle to you at present, in order 
that you may be reflecting on it, and considering in what way 
the shares should be distributed. Those held at present by Sir 
J. Blair Avill, of course, fall in to us when the contract expires ; 
and such a proportion may be left undisposed of, as was done on 
a former occasion, as it may be thought right to reserve for his 
brother, if, on a sufficient trial, we shall judge him proper to be 
assumed as a partner at some future period. I once thought, and 
indeed it was what seemed to occur to us all, at the time of 
prolonging the present contract, that the respective shares might 
continue as they are at present till the end of the war ; but, as 
that is yet a distant and still A^ery uncertain period, although it is 
the best possible for winding up our investment, if it please God 
to continue to prosper us so as that we can hold it till then ; yet 
there is no reason why the ordinary profits which, in so great 
a degree, arise from your labour and exertions, should not be more 
equally divided in the meantime than they are at present. I am 
most grateful to Heaven that we have been so fortunate hitherto 
in the prosecution of our business, and the uninterrupted harmony 
that has subsisted among us, I consider as one of the greatest 
blessings of my life ; and, therefore, I feel the stronger call on me 
to propose to do you the justice to which you are so fairly 
entitled. That the same good-fortune, and the same harmony 
may ever attend us, is the sincere prayer of, my dear friends, 

Your most affectionate Bro"", and very humble Serv*^, 

William Forbes. 

John Hay and Samukl Anderson, Esqrs.' 



Edinburgh : 
Printed by W, and R. Chambers. 



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