Regency era country banks
- Heather Moll
- 1 day ago
- 6 min read
In Without Undue Pride, recently widowed Elizabeth Fitzwilliam learns her husband’s life savings is gone because the country bank he used failed. As a result, she is left nearly penniless. Could such a thing have really happened?
During the Regency, Bank of England notes didn't circulate outside London and the Bank had no branches in the provinces. But the increase in industrialization and commerce demanded a greater extension of credit. Country banks met this need.
Before 1750, there were few banking options outside of London, but by 1795 they were in almost every market town, and by 1800 it is estimated there were 400 provincial banks.
A few of these banks survive, but most, in their enthusiasm for profit, made the mistake of keeping inadequate reserves to support their issues, so they collapsed under the first significant demand for cash. In the economic crash after Waterloo, the ensuing depression brought down many banks.
Most of these banks were privately owned and small. The partners could make fortunes, but they also had unlimited liability, so the risks were high. Bank failure notices in the newspapers were common. If holders hurried to the bank to withdraw their funds and the bank didn’t have adequate levels of liquid assets, they would stop payments and ultimately default.
From 1814-1816, 89 country banks failed, with many others stopping payment temporarily. And from 1791 to 1818, there were no less than 273 failures.
Jane Austen’s brother Henry was an army agent and a banker. In 1806, Henry established the bank of Austen, Maunde, & Austen in Henrietta Street. Country banks provided a connection to the London market for their customers through a London-based corresponding bank, and this is what Henry did. The third partner was his brother Frank, home from the navy and enjoying prize money.
They thrived until Napoleon’s defeat with the demobilization of regiments of militia. The regimental payroll handled by Austen & Co. declined from £112,000 in 1813 to £34,000 in 1815. The price of provisions fell, no longer buoyed up by the large military market, and discharged soldiers flooded the job market. In the eighteen months since Napoleon first abdicated, the economy turned from boom conditions to recession, especially in rural areas, where country banks had to cope with farmers’ bad debts.
Henry’s bank failed in November 1815 after stopping its London payments. Henry’s brother Edward had guaranteed him for £20,000. His other brothers, Frank and James, both lost smaller amounts and Jane lost the profit she had made from Mansfield Park. Henry and James had to stop supplementing Mrs. Austen, Cassandra, and Jane’s income and Henry was declared bankrupt in March 1816. He ended up a curate at Chawton earning about £50 a year.
In the years after Waterloo, there was a push for reform of the banking system that led to the 1826 Bank Act. This created the first joint stock retail banks in England. They could issue shares, which gave them wider access to capital from more diverse sources. The new banks were also run by professional managers, and their directors were usually members of the local business community with a vested interest in their success.
In Without Undue Pride, Elizabeth’s now-deceased husband invested their money in a country bank popular with several militia regiments. When many of them returned home after a battle and withdrew their funds, the bank collapsed, leaving her destitute.
Mrs Fitzwilliam’s laughter caught his attention. She was not beautiful, but her face was full of character, and her eyes were striking. Darcy wondered if laughter came as easily to her as it once did. He presumed not, so he returned to his paper, not wanting to take her out of the moment by asking what was so amusing.
An announcement in The Times grabbed his notice as he was about to turn the page. He read to himself, “Yesterday, the banking house of Messrs Cattell and March in Peacock Lane, Portsmouth, we regret to state, stopped payments.”
A painful anxiety intruded, and he wished he could ignore it, turn the newspaper’s page, and keep reading. But that would only delay what he was rapidly coming to fear was a terrible certainty.
“Mrs Fitzwilliam,” he said, interrupting her smiles with her sister, “am I right in remembering that your husband put all of his money in a bank in Portsmouth?”
“Yes, I think the entire battalion opened accounts at Cattell and March. Why?”
Her question was only one of curiosity, not concern. He handed her the newspaper across the table. “I am afraid they stopped payments yesterday.”
She took the paper, but there was no distress in her face. “What does that mean?”
Bingley brought a hand to his mouth and looked away when Darcy tried to meet his eye. Would the news be easier to bear if it came from her friendly brother-in-law rather than from him? “It means that this country bank lent too much money and held too few liquid assets. The Bank of England will refuse their paper notes soon, if not already.”
Comprehension, and then fear, moved across her features. “But that just means they will not pay dividends, yes? They will eventually repay depositors?”
“When a bank stops payments,” he explained patiently, “a failure is almost always inevitable. I think in an eagerness for profit, Cattell and March did not keep adequate reserve of coin to support their issues, and it collapsed under the first unusual demand for cash.”
“Like a regiment returning home?” she whispered.
Mrs Fitzwilliam was a smart woman, and he felt for her in that moment of shock.
“How much did your husband have invested?” Bingley asked while Mrs Bingley took Mrs Fitzwilliam’s hand.
“Before we married, he had five thousand pounds in the three per cents in the Bank of England moved into Cattell and March.”
That money would have left Mrs Fitzwilliam with a hundred and fifty pounds a year. Not much, but with a widow’s pension, she would have over two hundred pounds a year to live on. Now, all she had was that narrow pension, hardly enough to support her and not enough to invest and grow.
“Wait until my parents learn about this,” she said into her hands as Mrs Bingley ran circles over her back. “How soon before my mother insists I find a husband?”
“Can the money be recovered?” Bingley asked him quietly.
Darcy shook his head and thought back to Fitzwilliam’s wedding day. How was it only four months ago when everything was so different now? “Do you have his will that said you would inherit all of his property?”
“A will?” she repeated. “It was not with his papers, although he may have written one before the battle. I heard some soldiers did.”
“But if he wrote one, you do not have it?” He realised that the matter was more urgent now.
She shook her head. “I have my marriage lines, and a certificate signed by the regiment’s colonel saying Fitzwilliam was killed in service and that I am his lawful wife. I need that to receive a pension after I settle in a parish. But there was no will in his papers.” She covered her face with her hands again, leaning her elbows on the table. “I do not even have his pay. It was all in arrears. His investments are gone, and I cannot even secure my pension until I settle somewhere, but how can I afford that now?”
Darcy watched Mrs Bingley look at her husband. Some silent exchange passed between them, something he could not understand, but it seemed like an entire conversation passed.
“Lizzy, you can stay with us for as long as you need. I know Longbourn is… Well, staying there would not be conducive to your peace as you recover from your loss.”
“I will not intrude,” she muttered into her hands. “You just married. No one wants a widowed woman about.”
“But you must stay here,” Bingley insisted. “I like you more than my own sisters, you know.”
She gave a little sound between a sob and a laugh.
Not to worry, though: Elizabeth Fitzwilliam is going to have a happier ending than many country bank depositors did in the early nineteenth century. Without Undue Pride is out now.
https://socialsciences.mcmaster.ca/econ/ugcm/3ll3/andreades/HistoryBankEngland.pdf HISTORY OF THE BANK OF ENGLAND 1640-1903 A. Andréadès. Translated by Christabel Meredith.
TURNER, GARETH,DAVID(2015) English Banking in the Eighteenth Century: Bankers, merchants and the creation of the English financial system. Master’s thesis, Durham University.
https://archive.org/details/austencollreport_1996_2000_202004 Jane Austen Collected Reports 1996-2000. Jane Austen Society. 1997 Jane Austen and her brother Henry’s bank failure 1815-16. T.A.B. Corley.