The British Linen Bank was a
commercial bank
A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit.
It can also refer to a bank or a division of a larger bank that deals with whol ...
based in the United Kingdom.
It was acquired by the
Bank of Scotland
The Bank of Scotland plc (Scottish Gaelic: ''Banca na h-Alba'') is a commercial bank, commercial and clearing (finance), clearing bank based in Edinburgh, Scotland, and is part of the Lloyds Banking Group. The bank was established by the Par ...
in 1969 and served as the establishment's
merchant bank
A merchant bank is historically a bank dealing in commercial loans and investment. In modern British usage, it is the same as an investment bank. Merchant banks were the first modern banks and evolved from medieval merchants who traded in comm ...
arm from 1977 until 1999.
History
Foundation
The Edinburgh-based British Linen was "the only British bank to be formed on the basis of an industrial charter" and, as the name suggests, its roots lay in the Scottish
linen
Linen () is a textile made from the fibers of the flax plant.
Linen is very strong and absorbent, and it dries faster than cotton. Because of these properties, linen is comfortable to wear in hot weather and is valued for use in garments. Lin ...
industry. The original driving force behind the formation of the British Linen Company (as it was first named) was
Andrew Fletcher, Lord Milton. He was a lawyer landowner, had been active in the promotion of the
Royal Bank of Scotland
The Royal Bank of Scotland Public Limited Company () is a major retail banking, retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest and Ulster Bank. The Royal Bank of Sco ...
and, according to Checkland, "from 1735 to 1766 he was the most important man in the politics of Scotland." He had helped establish the
Board of Trustees for Fisheries and Manufactures in Scotland and was the chairman of the board's Linen Committee. In 1727 he had been instrumental in the formation of the Edinburgh Linen Co-Partnery and in the early 1740s Milton wanted to expand it, make it national and capable of marketing in England.
The men who were to see this concept to fruition were "two young and enterprising Edinburgh linen manufacturers", Ebenezer McCulloch and William Tod. They became the managers of the new enterprise (and substantial shareholders), Milton himself later becoming deputy manager. Their scheme was for "a company on a much bigger scale than hitherto seen in Scotland" and at the height of its operations in the 1750s "it was probably not just the largest single firm in the Scottish linen industry but in the Scottish economy as a whole". It handled every stage in the manufacture of linen cloth and employed thousands of spinners and weavers.
In 1745 a prospectus was duly issued for "The Company for Improving the Linen Manufactury in Scotland". However, the lack of limited liability proved an obstacle to fundraising, and the alternative route of a
royal charter
A royal charter is a formal grant issued by a monarch under royal prerogative as letters patent. Historically, they have been used to promulgate public laws, the most famous example being the English Magna Carta (great charter) of 1215, but ...
was sought. Progress of the petition was slow due to the
Jacobite rebellion and it made no mention of Scotland: "the Scots were looked on with open suspicion as open supporters of the exiled House of Stewart." The charter was eventually granted by George II on 6 July 1746 in the name of the British Linen Company.
Their first premises, purchased from the Tweeddale family, was the family mansionhouse on Tweeddale Court off the
Royal Mile
The Royal Mile () is the nickname of a series of streets forming the main thoroughfare of the Old Town, Edinburgh, Old Town of Edinburgh, Scotland. The term originated in the early 20th century and has since entered popular usage.
The Royal ...
in Edinburgh. The first Governors were
Charles Douglas, 3rd Duke of Queensberry
Charles Douglas, 3rd Duke of Queensberry, 2nd Duke of Dover, (24 November 169822 October 1778) was a Scottish nobleman, extensive landowner, Privy Council of Great Britain, Privy Counsellor and Vice Admiral of Scotland.
Life
Charles was born ...
and the
Archibald Campbell, 3rd Duke of Argyll with
Andrew Fletcher, Lord Milton as Deputy Governor.
Move into banking
In what appeared incidental at the time, the charter included the right to bank unless this was specifically prohibited; in years to come, there was to be some uncertainty as to how definitive these rights were.
McCulloch and Tod were keen from the outset to provide banking services to their trading partners: "they had set their minds on having, 'like banks',
promissory note
A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the ''maker'' or ''issuer'') promises in writing to pay a determinate sum of ...
s to pay to agents, weavers, manufacturers and other customers"; these were duly issued in 1747.
However, "three years later the Company issued true bank notes, payable on demand, and non-interest bearing."
Despite the increasing provision of banking services, the company remained primarily an industrial concern through the 1750s but with limited financial success. There were arguments between the founders over withdrawing from manufacture to just financing and marketing other producers; Tod succeeded in this but left in 1759. Nevertheless, in the 1760s British Linen "began to make the transition from manufacturing to finance, and steadily reduced its commitment to the linen industry." McCulloch resigned in 1763 and agreed to take over all the company's manufacturing leaving British Linen to confine itself to financing. However, new management discovered that the financial position was worse than expected and the subsequent failure of McCulloch's business meant British Linen got some of its old manufacturing back again. The transition from linen to banking was not complete until the mid 1770s".
It was not just the difficulty in withdrawing from the linen industry that made the transition drawn out – there remained uncertainty over the legality of their banking. In 1759 the company refused a loan to a linen manufacturer because it was "not consistent with the rules". In 1762 the company actually took counsel's opinion on the legality of banking and it was only on receiving reassurance that it agreed to open deposit accounts for "friends". A formal "Plan of Trade" was prepared in 1764 to develop banking business but even then the directors were clear that they were not trying to rival the Royal Bank or Bank of Scotland and it was not until 1767 that the first credits were given to non-linen people. For years there remained a fear that legitimacy of the company's banking activities could be challenged by other banks and there were repeated attempts to obtain a new charter. Despite objections from the Royal and Bank of Scotland, the company succeeded in 1813 but it was still refused permission to call itself British Linen Bank – a status not achieved until 1906.
Expansion
As British Linen began to develop its banking business, it found it had a ready-made structure in the form of the old linen agencies and these were used to varying degrees. Around 1760 some of the company's agents "were direct to circulate the Company's notes and to 'open accounts with such friends as could be depended on Branches opened after 1760 were designed to carry out banking transactions.
However, it was not until 1785 that "the time had come for the Company to set up a permanent branch system, with agents related to the Company by proper agreements."
The unsystematic progression (or otherwise) from linen agency to bank branch makes it difficult to be certain about the number of branches the company had in the late eighteenth century. Malcolm's list of branch openings suggests that there were 18 bank branches by 1800 and a further 25 added in the first half of the nineteenth century. The pace of activity accelerated in the second half of the century with over 70 branch openings. The one thing that British Linen did not do was to acquire other banks. The one exception was in 1837 when it bought the Paisley Banking Company with its three branches.
On 19 March 1849
Queen Victoria
Victoria (Alexandrina Victoria; 24 May 1819 – 22 January 1901) was Queen of the United Kingdom of Great Britain and Ireland from 20 June 1837 until Death and state funeral of Queen Victoria, her death in January 1901. Her reign of 63 year ...
granted a fourth charter of expansion increasing funds to £1,500,000.
By 1901, British Linen's branch network was given as joint third to the Royal Bank and the
Commercial Bank of Scotland
The Commercial Bank of Scotland Ltd. was a Scotland, Scottish commercial bank. It was founded in Edinburgh in 1810, and obtained a royal charter in 1831. It grew substantially through the 19th and early 20th centuries, until 1958, when it merge ...
.
Amalgamations
British Linen, now formally a bank, had distanced itself from the amalgamations in Scottish banking and by 1914 it had "declined from a position somewhere in the middle of the scale to the bottom".
By the end of the First World War British Linen realised it needed an association with a larger bank with good overseas connections and agreement was reached for
Barclays
Barclays PLC (, occasionally ) is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services ...
to buy the bank in 1919.
As with other Scottish banks, geographic sensitivities led to British Linen being referred to as an affiliate rather than a subsidiary and except for the presence of a Barclays' director "the affiliation made no difference in the conduct of the Bank's business". During the inter-war period, more than 40 new branches were opened giving British Linen a Scottish network of over 170 branches by 1939.
In 1969 Barclays sold British Linen to Bank of Scotland in exchange for a 35 per cent holding in the latter bank.
Merchant bank
The merger with the Bank of Scotland was finalised with the Bank of Scotland Order Confirmation Act 1970, confirming the transfer of the assets and liabilities of the British Linen Bank to the Bank of Scotland, and the two were quickly integrated – for example, the British Linen Bank's
Glasgow
Glasgow is the Cities of Scotland, most populous city in Scotland, located on the banks of the River Clyde in Strathclyde, west central Scotland. It is the List of cities in the United Kingdom, third-most-populous city in the United Kingdom ...
headquarters building on Queen Street was demolished by the Bank of Scotland to make way for a concrete office building which was built in 1971.
The Act however allowed British Linen Bank to continue as a separate company, and in 1977 the bank resumed as the merchant bank arm of the Bank of Scotland.
However, in 1999, the Bank of Scotland decided to stop using the British Linen Bank name, renaming its merchant bank activities as Bank of Scotland Treasury Services, later
HBOS Treasury Services following the bank's merger with
Halifax plc to form
HBOS
HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group, having been taken over in January 2009. It was the holding company for Bank of Scotland, Bank of Scotland plc, which ...
. It is now under Lloyd's Commercial Banking arm.
In April 2000 the British Linen Bank finally closed its headquarters doors at 4 Melville Street, Edinburgh.
British Linen Advisers
In 2000, the British Linen Advisers was formed by the acquisition of the corporate finance operations from the Bank of Scotland by an independent group of businessmen and women. British Linen Advisers closed in Edinburgh in 2008.
In popular culture
Robert Louis Stevenson
Robert Louis Stevenson (born Robert Lewis Balfour Stevenson; 13 November 1850 – 3 December 1894) was a Scottish novelist, essayist, poet and travel writer. He is best known for works such as ''Treasure Island'', ''Strange Case of Dr Jekyll ...
's classic
historical
History is the systematic study of the past, focusing primarily on the human past. As an academic discipline, it analyses and interprets evidence to construct narratives about what happened and explain why it happened. Some theorists categ ...
adventure novel
Adventure fiction is a type of fiction that usually presents danger, or gives the reader a sense of excitement. Some adventure fiction also satisfies the literary definition of romance fiction.
History
In the introduction to the ''Encycloped ...
, ''
Kidnapped'' (1886), ends at 2 PM on 25 August 1751, outside the British Linen Company in
Edinburgh
Edinburgh is the capital city of Scotland and one of its 32 Council areas of Scotland, council areas. The city is located in southeast Scotland and is bounded to the north by the Firth of Forth and to the south by the Pentland Hills. Edinburgh ...
, Scotland, where its protagonist, David Balfour, plans to manage his inherited income. This is precisely where the book's sequel, ''
Catriona
Catriona is a feminine given name in the English language. It is an Anglicisation of the Irish Caitríona or Scottish Gaelic Catrìona, which are forms of the English Katherine
Katherine (), also spelled Catherine and Catherina, other var ...
'' (1893), begins.
Gallery
External links
Lloyds Banking Group Bank of Scotland 'family tree'Barclays Group Archives: British Linen BankShut down of British Linen Advisers in Edinburgh*
References
{{Authority control
Lloyds Banking Group
Defunct banks of Scotland
British Linen
Defunct companies of Scotland
1746 establishments in Great Britain
1746 establishments in Scotland
Companies based in Edinburgh
2000 disestablishments in the United Kingdom
Banknote issuers of Scotland
History of Edinburgh
Banks established in 1746
Banks disestablished in 2000
British companies established in 1746
British companies disestablished in 2000
1969 mergers and acquisitions