Through the Ages: The Munster Banking Crisis – Published Limerick Life Newspaper, October 2017

The Napoleonic Wars of 1803 to 1815 saw almost all of Europe go to battle as General Bonaparte led his French Empire against an array of European coalitions.  The twelve-year conflict required enormous supplies, especially of food.  Then, as now, war brings profit as well as devastation.

Ireland, commonly referred to as the ‘breadbasket of Europe’, provided Europe with vast amounts of cereals such as grain and corn.  This period has been identified by academics as Ireland’s agricultural revolution, in which farming transformed from being predominantly pastoral (breeding and keeping livestock) to arable (growing and harvesting crops).

From a law and order perspective, it was also relatively quiet: after the 1798 Rebellion and Robert Emmet’s abortive rising in 1803, a period of calm had descended on the country.  The Act of Union had absorbed Ireland into Great Britain in 1800, yoking our economy to theirs.

From 1730 to 1815, the size of the Irish economy increased fivefold.  As one of Ireland’s busiest ports, Limerick featured prominently during this boom. According to Matthew Potter and Sharon Slater, the city’s shipping tonnage doubled between 1776 and 1800.  The number of ship-owners registered locally increased from eight to 40.  The population was growing faster than that of any other Irish city (except Belfast) and new neighbourhoods such as Newton Pery were built to accommodate this expansion.  Describing Limerick in the early years of the 19th century, historians Fitzgerald and McGregor wrote of a bustling port, teeming with “seamen of different nations, and merchants engaged in the important business of import or export”.

These men often provided ad-hoc banking and insurance services in the course of their general trade, but as commercial activity increased, the need for a more formal banking system arose.

The first Irish bank had been opened in 1680 by the Cork-based Hoare family and in 1709 the Bank of England Act introduced the concept of bills of exchange – payable to the bearer instead of a named recipient – to the public.

It was not until 1789, however, that Limerick had its own ‘Bank of Limerick’, founded at 6 Bank Place by the Maunsell brothers, with their brother-in-law, Matthew Blakeston, whose father was a mayor of London. Both Maunsell brothers – Thomas and Robert – had served in the East Indies, achieving high offices in the civil service in Madras.  Upon his return to Ireland, Thomas built Plassey House (familiar now to any visitors to University of Limerick), where he lived in 1814.

Despite being members of the Protestant Ascendancy – and their father’s support for the move – both brothers registered their opposition to the Act of Union in the Limerick Chronicle in January 1800.  They were the sons of Dr Thomas Plassey, MP, and grandsons of Richard, former mayor, high sheriff and MP of the city. A descendant of theirs, George Maunsell, also built Milford House, now the much-respected hospice.  Many of the family are buried in St. Mary’s Cathedral.

By 1804, there were some forty private banks in existence, and each functioned with very little government oversight or regulatory restrictions. Many of these operations were poorly managed, often failing to ensure that they had sufficient receipts to honour the notes they issued in abundance.  They weren’t even required to have sufficient capital upon opening: some simply raised the funds by flooding the streets with their own currency.  As a result, a number of banks failed in 1809, and again in 1814.

Furnell & Co. was also established in the city around 1803, and Bruce Evan’s Bank opened its doors at number 6 Rutland Street in 1805, as an offshoot of a Charleville bank of the same name.  Eoin O’Kelly wrote in his book in his book The Old Private Banks and Bankers of Munster that they paid stamp duty on note circulation approaching £1 million, demonstrating the vast sums of money swirling in the city and county.

The bank was headed by George Evans Bruce, a colourful character who became embroiled in a famous libel case against his Castleconnell neighbour, Thomas ‘Spectacles’ O Grady.  Both were men of means and education: Mr Bruce, a banker and Commissioner of the Peace, Mr O’Grady a military officer, barrister, poet and satirist.   At some point, Mr O’Grady – who had spoken most vociferously in favour of the Act of Union – borrowed £1,300 from the banker, who then called in the debt, rather suddenly.  The two men fell out, and embarked on a campaign of highly creative mud-slinging.  It would appear that Bruce fired the first shot, distributing a pamphlet through the post office which accused O’Grady of embezzlement (of the Post Office) and murder (of his nephew).  Mr O’Grady, the better literary wit, responded in turn with an accomplished satirical poem, ‘The Nosegay’, printing 1,000 copies in Dublin in 1815.

The piece consisted of a series of rhyming couplets, in which the author thoroughly assassinated the character of George Evans Bruce.  In case there should be any doubt about the intended victim, O’Grady commissioned a caricature of Bruce, which is replicated on these pages.

Bruce – no stranger to libel actions, having already won (albeit paltry) damages against another Limerick man, who called him a ‘white-boy’ and a ‘swindler’ – launched an action against the satirist, seeking £20,000 for loss of reputation.  The case was heard in the Summer Assizes in Limerick in 1816, and was documented in great detail in local, national and even international press.

George Evans Bruce learned, like many others before and since, that a public hearing can give oxygen to an otherwise short-lived scandal.  He was accused in court of usury (for which he was convicted in 1802), seduction and even incest.  It was alleged that his fortune had been amassed with gambling profits, and that he had left London in disgrace, having cheated a politician at cards (a most ungentlemanly of offences at the time).

Despite a spirited defence of O’Grady by Daniel O’Connell, the Limerick jury found in favour of Bruce.  That said, the actual damages awarded might have reflected their opinion of the plaintiff: he was granted £500, with costs of 6d.  Rather than pay, O’Grady fled to France, where he lived out the remainder of his days in obscurity.   Bruce, now roundly disgraced, sold his mansion ‘The Hermitage’ at Castleconnell and settled down in Duntrileague, Co. Limerick.

The best-known of the Limerick bankers were the Roche brothers, Thomas and William.  They were from a family of very wealthy Catholic merchants who were based in Cork, Limerick and Dublin. They ran the Limerick operations from Dominick Street, and in 1787, their uncle, Philip Roche built an enormous warehouse to assist the family in their trade; it is now known as The Granary.

The family were well-respected as prudent businessmen, and enjoyed a high level of trust from the business community in Munster.  This led, in time, to a natural progression into banking; William and Stephen founded a bank in Cork City in 1800 and a year later, their two other brothers set up ‘The Bank of Thomas and William Roche’ in Limerick, first on Charlotte’s Quay, and later at 99 O’Connell Street.

They were immediately successful in their change of focus: Eoin O’Kelly reports that receipts for the first three years of banking activity were “considerably larger” than both the Maunsell’s Bank of Limerick and indeed their brothers’ Cork Bank.  Their bank notes depicted the family emblem of three roaches on a shielf, with the mottle “Mon Dieu est ma Roche.”

Business flourished, as loan books grew and printing presses groaned under the weight of freshly-minted notes.  Until, all of a sudden, everything stopped.

There is no single cause behind the banking crisis that unfolded in the spring of 1820.  It was brought about by a combination of factors, ranging from the end of the Napoleonic Wars to the poor legislative framework surrounding private banks.   The few rules that were in place were, in some instances, counter-productive, leading to many weak private bodies instead of a few strong institutions. Some experts (for example, Barrow) have also pointed to the behaviour of some of the banking trustees, which was, on occasion, reckless.  In his book, 1820: Disorder and Stability in the United KingdomMalcolm Chase writes that “Irish banks beyond Ulster and Dublin City existed for little purpose other than oiling the wheels of commercial agriculture,” which made them especially vulnerable to “over-dependence on victualling during the French wars.”

Historians have since agreed that the events of 1820 signalled the worst financial crisis Ireland had seen prior to the events of 2008 – 2013.  It took down half of Ireland’s banks, in Limerick, Cork, Dublin, Kilkenny, Carrick-on-Suir and Waterford.

In May 1820, Roche’s Bank in Cork failed.   Poor property loans are often cited as the primary reason for the failure of a heretofore strong, well-managed institution.  In keeping with the reputation of the family, the bank’s trustees worked diligently to liquidate the assets, but Eoin O’Kelly’s research suggests that creditors received what might now be described as 20c in the euro.

Leslie’s Bank, also in Cork, soon folded too.  Malcolm Chase writes that at this time, over 80% of the notes circulating in Cork and Kerry belonged to both of these Cork-based banks.  One can imagine the devastation in these counties, upon learning that the notes that were so preciously amassed and protected were now worth a fraction of their value.  Indeed, it was reported that when news of the collapse of Roche’s Bank in Cork reached a lively agricultural fair in Molahiffe in Kerry, all trade ceased and the market was abandoned.

Much like in modern times, politicians met to discuss the halting of the financial contagion. Malcolm Chase suggests a possible sectarian bias in the authorities’ handling of the situation: the Bank of Ireland stepped in to assist the six Dublin banks, but didn’t venture past the Liffey.  A correspondent from the time wrote that the wealthy Roman Catholics of Munster “had so much confidence in their Popish friends the Roches that many of them had the whole of their properties, or nearly so, either in their notes, or lodged with them.”  In any event, government intervention was slow, piece-meal, and largely confined to the Leinster and Ulster environs.

In Limerick, Maunsell’s Bank suspended payments before collapsing, and Furnell & Co also closed its doors.  Bruce’s Bank ceased trading at midday on 29th May, but was wound up in an orderly fashion.  This was achieved through the sale of assets by the owners of the bank.

Only the Bank of Thomas and William Roche survived.  In an inspired move, the canny brothers published a notice in the local papers the weekend following the suspension of payments by Maunsell’s Bank of Limerick.  The statement proclaimed that the public should have every confidence in the bank of Thomas and William Roche, and was signed by ninety-seven prominent and influential leaders in Limerick society.

It didn’t prevent a run on their bank, but it did alleviate some pressure at a crucial time.  They appear to have acted prudently, in ensuring sufficient funds were available to withstand the run, as well as honourably – on the 3rd June they issued a notice saying that they would endeavour to honour other banks’ cheques.

This extraordinary gesture was, according to Eoin O’Kelly, both generous and courageous.  Their strong position and local support meant that their bank “was one of the very few to survive the calamitous year of 1820.”

Despite their triumph over adversity, the Roche Brothers slowly withdrew from banking, and their small remaining book was taken over by Provincial Bank of Ireland in 1825.

The ordered operation of banks during the crisis became a matter of intense pride, wherein the owners and managers were expected to behave as ‘gentlemen’ in their dealings; manning their sinking ships with honour.  Some bankers felt this pressure keenly, resulting in a number of tragic deaths.  The Director of Waterford’s Bank, for example, killed himself when the collapse of his bank left many of the city’s inhabitants ‘destitute’.  Dublin’s Newcomen’s Bank catered for the well-to-do of the city; having suffered major losses, its owner shot himself in 1825.   Many others departed Ireland’s shores, never to return.

The economic turbulence was not confined to Munster, or even Ireland: by 1825, debt from changing economic circumstances hit Britain’s banks and by Christmas of that year, there was a run on the banks.  The Bank of England had to provide bail-outs in order to stem the flow, setting in place a model which would since be replicated regularly, including in 2008.

The banking crisis had a devastating effect on Limerick and in June of that year, the Chamber of Commerce wrote to the Chief Secretary of Ireland, requesting relief for the workers of the city:  ‘The Trades people of this City are in great distress for want of Employment’.  Producers – from farmers to manufacturers – were struggling with a sharp decline in the value of their commodities, and a sudden withdrawal of credit.  For Limerick, the boom was well and truly over.

 

Rachael Kealy

October 28, 2017

Leave a Comment

Your email address will not be published. Required fields are marked *