The Exchange and Deposit Banks of John Maberly

Peter Symes

First published in the

International Bank Note Society Journal

Volume 37, No.3, 1998

The notes issued by John Maberly through his Exchange and Deposit Banks are of particular interest to collectors of Scottish bank notes for many reasons. Most notably, they were issued by an Englishman, they were (usually) payable in London, and they caused much consternation to the established banks during their issue. John Maberly is himself most widely remembered for the challenges he presented to the Scottish banking establishment.

John Maberly of Shirley House, Surrey, was a businessman, a banker, and a member of parliament. He was initially (1794) in partnership with his father, Stephen Maberly, who was a currier in Lincoln’s Inn Fields in London. In 1798 Maberly’s father-in-law (the Prince of Wales’s coach maker) died, leaving him and his wife some £35,000 in investments. With this financial security he seems to have withdrawn from the partnership with his father and begun business as an army contractor.

His chief interest in supplying the army appears to have been with uniforms. In 1809 he is found communicating with the War Office regarding the pattern of military greatcoats, and in 1810 he was promoting a scheme for cheaper waterproofing of the uniforms and for providing better clothing at cheaper prices. Maberly’s proposals seem to have met with resistance, for in 1813 he approached Lord Liverpool (the Prime Minister) threatening to publicise the existing system of stores purchasing if an enquiry into the current system was not undertaken. An enquiry was undertaken but it is not apparent if there was any benefit to Maberly through its findings, or if any changes were implemented as a result of the enquiry.

Maberly was initially a supporter of the government of Lord Liverpool, and in 1816 he became Member of Parliament for the Tory sponsored seat of Rye. However his relationships with the government and his patrons seem to have taken a turn for the worse, as he appears to have been denied the seat of Rye for a second term. Not to be disappointed in his aspirations, Maberly managed to win the seat of Abingdon in 1818 (holding it until 1832), and began to oppose Lord Liverpool’s government, with all but one of his votes in the parliament of 1818 being recorded against the government.

As part of his contracting activities Maberly was ‘in the habit of purchasing Aberdeen linen’ (Checkland 1975, page 308), and in 1811 he took an opportunity to purchase the Broadford Linen and Sailcloth factory in Aberdeen. (He may also have established, or bought, a soap manufacturing business in Aberdeen at about the same time.)

Kerr (1926, page 164) refers to ‘John Maberly & Co.’ as ‘properly an English linen manufacturing firm, with flax spinning mills in Scotland’, however Kerr is the only authority who refers to flax spinning mills. Certainly the firm of John Maberly and Co. was registered in England and Maberly did establish his bank in Scotland, but evidence is difficult to obtain concerning the suggested enterprises of the flax mills and the soap factory. According to Munn (1981, page 75) the linen factory was managed by Maberly’s nephew, Stephen Maberly, with the business being held in partnership with John Baker Richards, a director of the Bank of England who was later to become the Deputy Governor (1824-26) and then the Governor of the Bank of England (1826-28).

John Maberly’s initial activities as a banker are shrouded in mystery. Graham (1886, page 202) states that Maberly ‘was an instance of an English banker opening in Scotland’, insinuating that he had banking interests in England. This possibility is supported by Maberly having mortgages over properties in Birmingham and elsewhere (Munn 1981, page 77); however it is not known how extensive these interests were, or when they were begun.

The year of the commencement of Maberly’s banking activities in Scotland is generally regarded as 1818, but this is not universally accepted. Graham (1886, page 143) describes Maberly as ‘exchange dealers’ who commenced activities in 1818, Keith (1926, page 5) claims the ‘Broadford Exchange and Deposit’ started in 1818, and Douglas (1975, page 152) and Checkland (1975, page 308) also nominate 1818 as the date the bank was founded. This date is supported by the contemporary reference by a ‘J. Thompson’ who stated before the House of Lords Committee into Promissory Notes in 1826 that Maberly had established his bank ‘About nine years [ago].’, which would make the date around 1817 or 1818. The one dissenting opinion is Malcolm (1945, page 92) who claims that in 1815 Maberly ‘had opened a bank on the North Bridge opposite the site of the present General Post Office’. Where Malcolm obtained his information is a mystery, as a check of the Edinburgh & Leith Post-Office Directories from 1812/13 to 1820/21 first show an entry for Maberly in the 1819/20 directory, with the entry being continued into the following year. The entry reads:

‘Maberly, John & Co., Edinburgh, Glasgow, Aberdeen, Montrose, and Dundee Exchange and Deposit Bank, 63 New Buildings, North Bridge’.

Maberly himself says before the House of Lords Committee into Promissory Notes that ‘I think I established them in the year 1818’ – ‘them’ being the principal office of the ‘Exchange and Deposit Banks’ in Edinburgh and the four agencies in Glasgow, Aberdeen, Montrose, and Dundee. It is peculiar that Maberly was able to establish five branches of his bank at roughly the same time, hardly the beginning for a new bank owned by one man, suggesting that Maberly had a strong base before their founding.

Because Maberly is known for issuing his own notes, this is sometimes regarded as the reason for his establishing his ‘Exchange and Deposit Banks’, however, this appears not to have been the case. The principal reason for the establishment of his bank seems to have been because he sought to exploit the rates of exchange on bills between Edinburgh and London. How early Maberly had noticed this opportunity is not clear, but it seems that his business in Aberdeen was forced to pay 50 days interest for bills drawn on London. He was not alone in having this burden to pay, as most businesses were paying 40 to 50 days, depending on their distance from Edinburgh and with which bank they conducted business. Maberly saw that if he were able to drop the rate, he could attract a great deal of business, which he did.

By establishing his Exchange and Deposit Bank and by offering a reduced rate of only 20 days interest for bills drawn on London, Maberly caused a great deal of consternation amongst the other banks which were ultimately forced to follow his lead. Later he reduced his par to 10 days, and Checkland (1975, page 309) claims that this reduction (by 1826) resulted in Maberly over-reaching himself, leading to his failure. However it is unlikely that this single action led to the bank’s failure some six years later.

The reduction in the rate of exchange on bills resulted in a loss of profits to the established banks, both by direct loss of business and by loss on the interest paid on the bills. The damage visited upon the banks by Maberly’s activities explain their concern at his actions, and offer a motive for their later harassment. Not only had the Edinburgh banks been remitting private funds to London at 40 to 50 days interest, but they were also remitting government revenue at 50 to 60 days. Maberly saw a legitimate business opportunity in this discrepancy and approached the Chancellor of the Exchequer with a proposal to remit all the government revenue in Scotland at 20 days. While Maberly’s activities with the rate on bills for private businesses in Scotland caused some consternation amongst the established bankers, notification of this new proposal sent them into a frenzy.

Maberly was led to believe by the Chancellor of the Exchequer that his proposal was to be accepted, however a deputation of Scottish bankers led by Lord Melville (Governor of the Bank of Scotland) met with the Chancellor and arranged to overturn the decision that Maberly had assumed was made. Maberly was understandably upset at this change, especially since the standing arrangements whereby a number of Scottish banks remitted government revenue remained in place for some time after his proposal was declined. Maberly used his position in Parliament to question this decision and said before a committee of the House of Lords that ‘if it had not been my own case, I would certainly have taken very strong measures to have had an inquiry in the House of Commons upon this subject’. Ultimately the various banks in Scotland were offered the opportunity to tender for the privilege of remitting the government revenue, but Maberly, having felt slighted by the Chancellor of the Exchequer and the Scottish banking fraternity, did not deign to submit a tender.

The opposition faced by Maberly from the established banks (particularly the Edinburgh banks) was not new, indeed his relationships with the Scottish banks had been quite difficult for many years. When he had purchased the business of the Broadford Linen Factory he had initially banked with the Aberdeen agent of the Bank of Scotland, but when the business was asked to provide additional security to cover some bills drawn by the manager on John Maberly in London, Maberly took umbrage at the request and the account was transferred to the Aberdeen Banking Co.

However the Aberdeen Banking Co. soon sought some cover against bills drawn on Maberly and the account was moved to the Commercial Bank. When the Commercial Bank also sought collateral, the business was returned to the Bank of Scotland who allowed the bills to be discounted, as long as they were endorsed by a third person (Munn 1981, page 75).

Maberly also had another conflict with the established banks, this being with the issue of notes by his factory for the payment of wages. In 1817 Stephen Maberly, the manager of Maberly’s linen factory, began to issue notes as payment to the factory’s employees, and while little is known of these notes, it would seem that these were not notes issued by Maberly’s bank, but wages tickets of some form. These notes were not accepted by the banks in Aberdeen, so in an effort to obtain a wider acceptance of the notes Stephen Maberly asked for admission to the note exchange, but was refused (Munn 1981, page 75). According to Munn it seems that until 1818 many of the Scottish banks were unaware of John Maberly’s interest in the Linen Factory, and it was only in that year when he began to offer his rate of 20 days for bills drawn on London that he was also discovered to be the principal of the business. The ire of the banks, due to his activities in discounting bills as previously described, was immediately raised and henceforth all measures were sought to frustrate Maberly’s enterprises.

One of the battles fought by the Edinburgh banks concerned a test case in the courts. It seems that some of the agencies of Maberly’s Exchange and Deposit Banks were sending notes of the Edinburgh banks to their head office on the North Bridge in Edinburgh, so they could be presented to the respective banks. In doing so they adopted an English practice of cutting the notes in half and sending two bundles by different mail-coaches, in an effort to lower the risk of loss through robbery. When the notes (both bundles) had been delivered to Edinburgh they were joined together and presented to the banks for payment.

According to Malcolm this practice had worked well for some time, but during 1818 a box containing a bundle of ‘half-notes’ was stolen. The bundle consisted of note halves of the Commercial Bank to the value of £220, and of the Bank of Scotland to £270. Maberly sent the halved notes in his possession to the respective banks for payment, offering to indemnify the banks against any future claims through the presentation of the missing halved notes, as well as offering to pay the costs incurred in having replacement notes manufactured.

‘Both banks refused to pay and Maberly raised an action in the Court of Session for payment. The Judges, regarding the cutting of the notes as illegal, decided in favour of the banks. Mr. Maberly then appealed to the House of Lords and was successful. The noble Lords expressed surprise that the Judges in Scotland should be ignorant of so common an English practice as cutting bank notes before sending them on a journey and directed the Scots tribunal to take proof on the averments. When the case was again called in the Parliament House, the banks, probably anticipating defeat, led no proof. Judgement was accordingly given in favour of Maberly, with costs. The Scottish Judges, evidently annoyed by the pointed remarks of the Judges in the House of Lords, said that Counsel for the banks had misrepresented the facts.’ (Malcolm 1945, page 93.)

The course of justice is often slow, and this victory was not claimed by Maberly until 1824, the course of the action spanning six of the most troublesome years that Maberly faced with the Edinburgh banks. Because Maberly had challenged the banking establishment by changing the rates on bills, some of the Edinburgh banks – notably the Bank of Scotland – tried to destabilise Maberly’s bank.

Undoubtedly the protracted case of the missing bundle of ‘halved’ notes was part of this strategy, but there were a number of other destabilising tactics employed, as the following description relates:

‘In the summer of 1821 a formal and specific proposition was made to the whole of the chartered banks in Edinburgh to exchange with me [Maberly] as with others; this proposition was entertained and supposed to be acquiesced in by several of the bankers, but when the question came to be discussed by them generally and collectively, the proposition was rejected. It therefore became necessary for me, when I had any demands upon the Scotch bankers, to require payment for that which I held in notes against them. As a metallic circulation is not that of Scotland, I demanded payment, leaving the bankers their option of paying me in gold, in Bank of England notes, or in bills at sight on London. In many instances they made an attempt to detain my people all day, by giving them silver; that I rejected in the first instance, because I had no right to take more than 40 s.; they then set up a right of holding every single note as a separate demand, and therefore that they had a right to pay each in silver, because each note was a separate demand; however they shortly waived that and paid in gold. The whole of this, before the new sovereigns came out, had to be weighed, and my people were kept whole days in some of their shops from the quantity of light gold offered them. The payment in gold was always their own choice and not my demand; they imported gold from London for the purpose of annoying me, that I might have that gold to send back again.’ (John Maberly in evidence before the House of Lords Select Committee on Promissory Notes, 1826.)

Frustrated by the tactics of the Bank of Scotland, who appear to have been the principal establishment determined to thwart Maberly (although they were probably supported by The Royal Bank of Scotland), Maberly sought to establish private arrangements with the banks outside the mechanism of the Note Exchange. By February 1826 Maberly had arranged to exchange notes with the British Linen Company, the National Banking Company, the Commercial Banking Company, and the Leith Bank in Edinburgh, nine banks in Glasgow, all the local banks in Aberdeen and those in Montrose. Thus was he able to circumvent the frustrating tactics visited upon him by the Edinburgh establishment.

There were several peculiarities about Maberly’s business that didn’t match other Scottish banking enterprises which arose before and after the establishment of the Exchange and Deposit Banks. The most notable of these peculiarities were: that there was only one partner (Maberly) in the bank, Maberly was English, and the bank did not run ‘cash credit’ accounts (the staple business of banks at that time). Because the most notable activity of Maberly was the lowering of the par for bills on London, and because he did not run ‘cash credit’ accounts, it is the opinion of many that Maberly’s Exchange and Deposit Bank was not a bank in the true sense. It is therefore worth looking at what activities the bank did undertake, and try to determine to what extent it was a bank similar to its competitors.

Maberly stated before the House of Lords Committee into Promissory notes that he operated ‘cash accounts’ and ‘deposit accounts’, but not ‘cash credits’. Cash accounts allowed the customer to deposit and withdraw money at any time, while attracting an interest rate of four per cent. The deposit account allowed the customer to do much the same, but the interest was not standard (the rate being agreed by the customer and the bank at the time of deposit), and the customer received a bill at ten days on London, instead of cash, when they withdrew their money. (In Maberly’s bank the customer could get a higher rate of interest if they agreed to give thirty days notice of intention to withdraw.) ‘Cash credits’ or credit accounts, which Maberly did not operate, were simply a line of credit, allowing a customer to draw up to an agreed limit. The customer could pay money into his account at any time and only ever paid interest on the balance he owed, very similar to the modern overdraft.

As well as cash and deposit accounts, there were several other activities undertaken by Maberly, he acted as an investment agent (Munn 1981, page 76) charging one eighth per cent commission, he lent money on mortgages (Munn 1981, page 77), and he issued notes. There was also the celebrated remittance of bills to London (as described above), which Maberly revolutionised by reducing the par to 20 days. It seems that the only major activity that the Exchange and Deposit Bank did not undertake was that of the ‘cash credit’ account; suggesting that, although a minor player, the Exchange and Deposit Banks was as much a bank as any of the established banking houses.

The notes issued by Maberly remain somewhat of an enigma in Scottish note issues because some of them were payable in London. James Douglas (1975, pages 152/3) describes four issues, with the first being issued in 1818, however it is certain that this was preceded by an earlier issue. Munn (1975, page 75) states that Stephen Maberly issued notes as payment for workers at the Broadford linen factory in 1817; and it is also apparent from Maberly’s evidence before the House of Lords Select Committee on Promissory Notes that he had been paying wages in Aberdeen for many years before 1826, and probably before 1818, although these notes may have been more in the form of wages tickets rather than bank notes.

According to evidence given by Maberly before the House of Lords Select Committee, his notes issued through the Exchange & Deposit Banks were initially payable in Edinburgh, but regarding the great hostility shown to him by the Scotch banks, and fearing a run on his bank, he altered the conditions on the notes to make them payable in London. Since the first note described by Douglas is payable in London, there must necessarily be at least one earlier issue which was payable in Edinburgh and not described by Douglas.

All four issues described by Douglas are similar in design. The words ‘Aberdeen, Montrose, Dundee, Edinburgh & Glasgow’ appear across the top of the notes, a vignette of Arms (presumably those of Maberly) is enclosed by an incomplete circle formed by ‘Exchange and Deposit Banks’, there is panel of thistles, roses, and shamrocks to the left of the notes, and the denomination (£one) appears in the top right and bottom left of the note. The place of issue is inserted by hand, as are the date and number of the note.

The first issue described by Douglas (D.1) is engraved by E. & I. Thorowgood of Cheapside in London, and has the following text on the notes below the title of the bank:

‘We Promise to pay the Bearer on Demand One Pound Sterling at Messrs Masterman & Co Bankers London.’

In the lower left corner of the note are seven lines of small print which instruct the method of presenting the note. The text reads:

‘NB Any person presenting Notes on this House at the above Stations to the amount of £10 and upwards may receive (paying for the Stamps) Bills on London for the same at twenty days after date or Bills at one days sight deducting twenty day’s Int^t

It is hoped that these accommodations will be found extremely beneficial to persons taking this paper’

Maberly observed in his interview before the House of Lords Select Committee that the inclusion of these lines was done so as to prevent a run on his bank which he suspected might have been organized by his Scottish rivals. The caution shown by Maberly in protecting himself from a run on his bank was also displayed in his care to avoid over-issue, and he went to great lengths to ensure that he controlled the number of notes released by his company. From 1823 (which would appear to include all notes identified by Douglas), the notes were signed in London by John Stephens as ‘Accountant’ and Edmund Bartley as the person ‘entering’ the notes, before being sent to Scotland. Stephens was Maberly’s ‘first clerk’, and Bartley his ‘general accountant’. Once at their destination and at the time of issue they were signed by the agent. Known agents were Mr. Stephen Pellatt (Glasgow and Aberdeen), Mr. Jameson (Montrose), and Mr. James Blyth (Edinburgh).

The second issue (D.2) has the instructions for presentation of the note removed and the signature of Edwin Bartley is moved from the central left area of the note to the lower left. The third issue (D.3) is very similar to its predecessor, except that it has a blue patterned border on the reverse which surrounds the revenue stamp and is printed by Perkins & Heath of London by ‘Patent Hardened Steel Plate’ .

All three of these issues were payable at the offices of ‘Masterman & Co. Bankers London’, but the fourth and final issue described by Douglas (D.4) was payable in Edinburgh. It is likely that the fourth issue circulated along with the earlier issues, allowing the clients of the Exchange and Deposit Banks the choice of having their notes payable in London or Edinburgh. While acknowledging that his notes were made payable in London as a caution against a run on his bank, Maberly observed before the House of Lords Select Committee that this had the pleasant advantage of enabling Scotsmen travelling to London to have money in their pockets which could be cashed immediately, rather than relying on the use of bills.

It seems that Maberly only ever issued one pound notes, but before the House of Lords Select Committee, Maberly says ‘I am not certain that I have not a few 5 l.; but I believe I have none but 1 l. in circulation’. It is possible that Maberly had some £5 notes prepared but never issued, and perhaps never printed.

In Aberdeen, Maberly had initially had difficulty in having his notes accepted, as the local tradesmen and shopkeepers who did accept the notes were forced to take them to Maberly’s banking-houses, because the banks refused to recognize them. To counter the opposition to his issue, Maberly seems to have presented an ultimatum to the mercantile community of Aberdeen, either accept his notes or he would establish stores throughout the country where his notes would be accepted. It is unclear whether he actually proceeded to carry out his threat, but by 1826 he was living in harmony with the merchants and bankers of Aberdeen. However Maberly appears to have borrowed heavily to finance his Scottish enterprises, and the Town and County Bank of Aberdeen is known to have lost heavily because of his failure, which may not have endeared him to the community in later life.

It appears that while Maberly’s Scottish investments continued to be sound, his speculations on the London Stock Exchange and some dubious foreign loans led him into difficulties. Consequently Maberly was forced to sell the Broadford Linen Factory to Messrs Richards and Co., who were still operating the business in 1886 (Graham 1886, page 144), and shortly after, in January 1832, the Exchange and Deposit Banks stopped payment.

In 1832 a petition for bankruptcy was filed against Maberly in an English court, leading to the failure of John Maberly & Co. The firm had debts of £149,082 and assets of £76,669, and could have paid just under 10 shillings in the pound to the creditors. However the ‘sharks’ of the day gathered around, resulting in high liquidation expenses, and ultimately only 4s 5d in the pound was paid. It is uncertain as to when the ‘Exchange & Deposit Banks’ was wound up, as some commentators say it was in 1832 and others say 1833.

Two contemporary comments on Maberly following his failure give some insight to the man, Edward Ellice being quite derogatory:

‘Maberly’s fall was no surprise upon me. I could have told you two years ago, that he was living from week to week, upon the chance of such speculations as his shattered credit enabled him to make upon the exchanges of London and Paris. He falls without pity, or regret. He was a vain, proud, and overbearing money dealer, hard headed and hard hearted, and such people fare ill with society, when fortune plays them a trick.’ (Thorne, 1986)

Lord Teignmouth was less severe:

‘He was in his way a thorough Buonaparte. His grasp of mind was as comprehensive as his attention to details was minute ... he was said to be the only man in England who could sleep over a million of omnium ... Like some other self-made men, he was pre-eminently self-confident ... Our civic hero became like Buonaparte the sport as well as the child of fortune; but in one respect he rose superior to his prototype by the equanimity with which he endured unavoidable expatriation.’ (Thorne, 1986)

Maberly’s ‘expatriation’ led him to the Continent, and in 1834 he was reported to be the correspondent for the Morning Chronicle in Madrid. It is believed that he remained on the Continent until his death, the date of which is uncertain, but which had occurred by 1840.

During his ascendancy, Maberly seems to have been well respected, being given the freedom of the city of Aberdeen (Checkland 1975, page 308), and having the name of the street in which his linen factory was situated named after him – Maberly Street (Graham 1886, page 144). He was also called before the House of Lords Committee on Promissory Notes in 1826, where he defended the Scotch system of banking as well as supporting the issue of the one pound note.

When a motion was bought before parliament to halt the circulation of Scottish notes in England, John Maberly was one who spoke fruitlessly against the motion. Perhaps having his own interests in mind, he nevertheless spoke out on ‘the inconvenience that would arise to numerous people just over the border who freely used the Scotch notes’ (Phillips 1894, page 101). In fact most of his notable contributions to parliamentary debate revolved around monetary matters, defending a plan to raise a loan from three and a half per cent stock, supporting a motion for enquiry into Bank restriction, and attacking ministerial monetary policy which he threatened would lead to bankruptcy in the event of war with France.

Although regarded as a fringe player in the history of Scottish banking, Maberly’s activities led the established banks to reconsider some of their practices. Unlike any other banking business in Scotland, the Exchange and Deposit Banks of John Maberly & Company reflected the ambition and vision of one man (and an Englishman at that), and simply for the single-mindedness of the venture, this chapter of history deserves to be remembered.

Bibliography

- Checkland, S. G. (1975) Scottish Banking - A history, 1695-1973 Collins, Glasgow & London

- Graham, W. (1886) The One Pound Note in the rise and progress of banking in Scotland James Thin, Edinburgh

- Keith, A. (1936) The North of Scotland Bank Limited 1836-1936 Aberdeen Journals Limited, Aberdeen

- Kerr, A. W. (1926) History of Banking in Scotland A. & C. Black Ltd, London

- Malcolm, C. A. (c.1945) The Bank of Scotland 1695-1945 (printed) R. & R. Clark, Edinburgh

- Munn, C. W. (1981) The Scottish Provincial Banking Companies 1747-1864 John Donald Publisher Ltd, Edinburgh

- Phillips, Maberly (1894) A history of Banks, Bankers, & Banking, in Northumberland, Durham, and North Yorkshire Effingham Wilson & Co., London

- Thorne, R. G. (1986) The House of Commons 1790 - 1820, Vol IV Members G-P published for History of Parliament Trust by Secker and Warburg

UK Parliamentary Reports

- Promissory Notes in Scotland and Ireland. Lords 1826-27 (245) VI

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