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Backhouse Sunderland £5 note

Backhouse Sunderland £5 note

Barclays’ roots in the region go back to Jonathan Backhouse and Company (established 1774), one of the principal partners in the 1896 amalgamation which established Barclays as a joint-stock limited company. Other north-eastern banks that joined the Barclays Group soon after 1896 were Woods and Company of Newcastle (founded 1859), Swaledale and Wensleydale Banking Company (founded c.1806), and J and JW Pease of Darlington (founded 1820). In 1969 Martins Bank joined the Barclays Group, bringing its own history in the region through the North Eastern Banking Company (established 1872). In 2000 the former Woolwich Building Society, which also had a presence in the north-east, was acquired by Barclays.

Main constituent banks

Jonathan Backhouse and Company, Darlington

Jonathan Backhouse and Company was founded in Darlington in 1774 by James and Jonathan Backhouse who were linen and worsted manufacturers. As with most country banks at that period, banking began as an extension of the partners’ original business. They were also members of the Society of Friends (Quakers), and Jonathan married into the Pease family who were likewise Quaker bankers. The Backhouses became connected by family and religious ties with two significant Quaker family businesses, the Barclays and the Gurneys: Barclay & Co. (founded 1690) was one of the oldest established City partnerships, and Gurney & Co. (founded 1775) was the dominant country bank in East Anglia, and these two, with Backhouses, were the main players in the 1896 combination that led to Barclays becoming, by 1920, one of the ‘Big Five’ UK clearing banks.

The Backhouses quickly gained a reputation for honesty and by the 1780s the Bank had customers as far afield as Birmingham, Bradford, Hull, Knaresborough, Lancaster, London, Pontefract and Whitby. From the 1790s onwards the Bank embarked on a period of expansion, opening branches throughout the north-east.

At that time banks had to pay out gold for their notes on demand. In 1819 Lord Darlington, who had long been in dispute with the Backhouses, tried to break the Backhouse Bank by collecting as many notes as possible and presenting more than the amount of gold held by the bank. If a bank could not meet its obligations, it would be ruined. Upon hearing of this plot Jonathan Backhouse raced to London to collect extra gold. However, returning home, his carriage lost a front wheel as it crossed a bridge. Time was of the essence so Backhouse piled the gold at the back, "balancing the cash", returning home on three wheels and saving the Bank.

The Backhouses were also pioneers. Jonathan Backhouse II was a great advocate and investor in the pioneering Stockton and Darlington Railway, and was appointed treasurer in 1825. His son Edmund (1824-1906) was the first MP for Darlington when the town gained a seat in parliament under the Second Reform Act, serving between 1867 and 1880.

Backhouses was the third largest bank in the historic 1896 amalgamation, after Barclays itself in the City of London and the Gurney Group of banks in East Anglia. These three private banks were joined by ten smaller ones to form Barclay and Company Limited. Edmund Backhouse and Edward Backhouse Mounsey were appointed directors of the new company, and the two sons of Edmund Backhouse became local directors. The Backhouse family association with Barclays was retained until 1973, when Roger Backhouse retired as a local director. 

Woods and Company, Newcastle

This bank is the origin of Barclays’ earliest direct presence in Newcastle.

Its roots lie in a private bank operated by Robert Spence in conjunction with his business as a draper in North Shields. Like the Backhouses he was a Quaker, a member of a community with the highest reputation for probity in business. In 1818 he formed a partnership with Edward Chapman of Whitby and William Chapman of North Shields. By 1823 they extended to Newcastle by opening a branch at 39 St Nicholas Street at the west end of Mosley Street. On the death of Edward Chapman in 1836 the bank was converted into the Newcastle Shields and Sunderland Union Joint Stock Bank.

The bank prospered and opened branches at Alston, Hartlepool, Hexham, Blyth and Alnwick. However the country suffered a serious financial crisis in 1847, a year in which many banks failed and the Union Bank was forced to close its doors when the managing director decamped leaving the bank with liabilities of £1,741,572. A special general meeting was held under the chairmanship of William Woods [see separate feature], a leading Newcastle merchant with shares in the Union Bank. Some trading continued and in 1849 the offices in Newcastle and Sunderland, which had made most losses, reopened.

After several years of legal proceedings the bank was reconstructed in 1859 as a private partnership under the title of Woods, Parker and Company. Nationally at this time the move was towards forming joint stock banks but their record was so bad in the north-east that Woods and Company bucked the trend and turned the limited company back into a private bank. Private banks were limited to six partners whereas joint stock companies raised their capital through multiple subscribing shareholders.

William Woods, senior partner in the formation of the new bank, was also one of the founders of the Alnwick and County Bank and the Newcastle Savings Bank. The other partners in 1859 were Samuel Parker, lead merchant of Newcastle, William Ord, ship owner of Sunderland, Thomas Barker, ship owner of North Shields, Robert Pow, merchant of North Shields, and John Dryden, ship owner of North Shields.

By the time Woods and Company decided to join the new Barclays combination of banks in August 1897, they had branches in Newcastle, Sunderland, North and South Shields, Berwick, Seaham Harbour, Alnwick, Morpeth, Blyth, Houghton le Spring, Whitley and Jarrow.

A Newcastle Local Head Office was formed by Barclays in 1897, with the partners in Woods and Company as local directors and one partner, Richard Clayton, appointed to the main Barclays board. 

North Eastern Banking Company, Newcastle

The failure of the Northumberland and Durham District Bank in 1857, and the continuing legal wrangle affecting the future of the Union Bank (see above), left a vacuum for a modern joint stock bank in Newcastle. Eventually the North Eastern Banking Company was established in 1872, to provide finance for the heavy industries: “The development of the North-Eastern District within the last few years has been almost without example, and the various staple trades - Iron, Coal, Machinery, Chemical, Shipbuilding, &c. - have increased many fold without a corresponding increase in banking accommodation...." [quote from original NEBC prospectus]

Scotsman Benjamin Noble was recruited to run the new bank ‘along Scottish banking lines’, and under his capable and disciplined leadership, the North Eastern began to restore regional confidence in joint stock banking. It expanded by acquiring Alnwick and County Bank in 1875, and then Dale, Young & Co. of South Shields in 1892. It also appointed the Bank of Liverpool to recruit agents where it lacked branches.

A banker of outstanding ability, Benjamin Noble was described by a contemporary as "a mathematician of note, and his relaxation was astronomy. Like all masters of the Victorian era he was a strict disciplinarian and, if at times he seemed too severe, when any young entrants evinced capacity he took pains to develop them into good bankers......I recall an incident when he stormed at a junior and said he was not fit to take guts to a bear. The storm had been heard by an assistant general manager who called the junior to his room and told him not to worry; his bark was worse than his bite. This is a fair indication of the atmosphere in offices early in this century."

Letter to a branch manager:
“My Dear Sir,
The discretion which a Manager is always expected to exercise, cannot possibly cover his adopting a security which his Head Office had decided to be unsatisfactory. I am sure a little reflection will show you that there is no occasion for soreness in the fact that my opinion on some business questions differs from your own."

Letter to a female customer:
"Madam,
I should be obliged to tell [my Directors] that you are not entitled to any sort of consideration because of your having put us most unwarrantably to much needless trouble and expense in the recovery of our claim upon you."

The North Eastern Bank successfully negotiated periodic local trade depressions. The importance of industry to the bank is reflected in the surviving collections of balance sheets and correspondence relating to shipping and shipbuilding, brewing and glass-making firms with which the bank had links. One such, James Hartley & Co Ltd, Wear Glass Works, Sunderland, names Benjamin Noble as a director. The bank’s foreign and domestic customers also included railway companies and government departments.

The North Eastern might well have become part of Barclays Group in 1896, as letters show that Noble was in negotiations for a merger with Backhouses in the 1890s, but in the end terms could not be agreed.

By 1914 the North Eastern needed more capital to finance its large shipbuilding, engineering and shipping customers based throughout the region. To meet this demand, amalgamation with a bigger bank was a necessity and on 7th August 1914, as World War One was about to burst upon the industrial world, the North Eastern Bank merged with the Bank of Liverpool after a unanimous vote by its board. The Bank of Liverpool thus became the largest English Bank outside London, with a strong presence across the North. In 1918 it merged again with Martins of Lombard Street, London (which traced its origins back to Sir Thomas Gresham in the late 16th century), and by the 1950s Martins Bank (the word ‘Liverpool’ having been dropped from the company name), was the sixth largest UK clearing bank. But as the need for automation became imperative with the rapid growth of mass banking, and needing fresh capital to expand further, in 1968 Martins accepted an offer by Barclays, the businesses being merged by the end of 1969.

Incidentally, while the 1914 merger negotiations were going on and war was being declared across Europe, the general manager issued a laconic telegram to branch managers: "Fear holidays must be deferred….” The outbreak of war caused a financial crisis. Fears of a German invasion from the sea gave rise to emergency plans for evacuation of bank records. In the event a German naval bombardment of West Hartlepool caused no damage to premises.

Find out more about Barclays' historyFind out more about Barclays' history

Barclays at 325

As part of Barclays' 325th anniversary celebrations in 2015, business historian Professor Leslie Hannah talks about Barclays' long history and its role in society during this time.

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