Black Wednesday, 1897
The failure of the Weymouth Old Bank sent ripples throughout the town and further afield. Maureen Attwooll tells the sad story.
Published in May ’05
A contemporary engraving of the premises of Weymouth Old Bank
1897 held the promise of being a good year for Weymouth. At the end of April the foundation stone was due to be laid of a new ‘Royal Hotel’ on the Esplanade, where an unsightly gap had existed since the hotel’s predecessor was pulled down in 1891. In June, there were the celebrations commemorating Queen Victoria’s Diamond Jubilee to look forward to. But before these planned events took place, Weymouth, and indeed the whole of the county, was to be shaken by the failure of one of Dorset’s leading financial institutions – the Weymouth Old Bank. The bank, more correctly known as Messrs. Eliot, Pearce and Co., collapsed at the end of March 1897 with liabilities amounting to £500,000.
Bank failures in the 19th century were not uncommon. Gundry’s Bank at Bridport, Oak and Snow’s at Blandford and a small bank at Poole had all come to grief in earlier decades, but on the whole assets had met liabilities and their creditors had not suffered greatly. Those whose money was deposited in the Weymouth Old Bank were not so fortunate.
The bank had been founded in Weymouth in 1792. By 1829, William Eliot, one of its early partners, had become head of the firm and in 1840 he took into partnership his nephew, Edward Pearce. Under them, the bank flourished. Branches were opened in Portland, Dorchester and Bournemouth, but early in 1885 and within weeks of each other, William Eliot and Edward Pearce both died. It would prove to be the turning point in the fortunes of the previously solid and dependable Old Bank. Eliot had already taken his sons, Richard ffolliott Eliot and George Edward Eliot, into partnership and they carried on the business, joined in 1885 by Pearce’s son, Edward Robert Pearce-Edgcumbe. On being granted a knighthood in 1895, he dropped his first Christian name and adopted his mother’s maiden name, becoming Sir Robert Edgcumbe. A barrister by training, he supervised the bank’s Dorchester branch.
On the morning of Wednesday 31 March 1897, anxious depositors gathered outside the doors of the bank’s imposing premises in Weymouth’s St Thomas Street. The morning post had brought a circular informing them that the bank had suspended payment, and word soon spread that the Eliot brothers had filed their petition at Dorchester Bankruptcy Court the previous afternoon. There was an air of total disbelief in the town; savers simply could not comprehend that the money they thought was safe in this long-established and most reputable bank was not there for them. When the doors opened, it was the staff of the Capital and Counties Bank who faced Eliot, Pearce’s customers with the news that although they had taken over the running of the bank, they were unable to cash any notes or cheques issued by the Weymouth Old Bank. The best they could offer was a temporary advance of 5/- in the £ to those whose accounts were in credit.
Although there were other banks in the town, Eliot’s held the accounts of most of Weymouth’s leading businesses and organisations. They included those of the Borough Treasurer’s Department (the Corporation had banked £3044 in the days before the crash, in addition to some £7000 already deposited), the County Court, HM Customs, the Gas and Water Companies, Weymouth College (the boys’ public school), the Board of Guardians and many of the town’s leading firms, including the engineering, ship repair, salvage and paddle steamer company, Cosens and Co., of which George Eliot was the chairman. The real distress and misery was felt by hundreds of individual savers, many of them working people who had entrusted the Old Bank with regular amounts of cash to build up a nest egg for old age, only to find it smashed. At Portland, Eliot’s was the larger of the two banks on the Island, used by both quarry owners and the quarrymen, who feared they would receive no pay. Dorchester’s farmers and small savers gathered outside the bank’s High West Street premises, but the Capital and Counties Bank could only repeat the news they had given out at Weymouth. The story was the same at Bournemouth, where a busy branch had opened in 1878, followed by a sub-office in Boscombe in 1890.
Despite the wretchedness of the situation, there was a surprising calm in the days following the news of the crash, based on a belief that the partners, worthy and respected townsmen, could not be involved in any mismanagement of the bank’s affairs. Richard ffolliott Eliot, the senior partner, was a JP and held various local positions including that of Treasurer of the local Board of Guardians. George Eliot was a JP and had twice been Mayor of Weymouth. When he tendered his resignation as chairman at a special meeting of the directors of Cosens and Co., the board initially expressed its ‘unabated confidence’ in him and he withdrew it, but it was not long before a new chairman replaced him. Sir Robert Edgcumbe was a social reformer – he had set up a pioneering agricultural smallholdings scheme at Rew – a Liberal parliamentary candidate (although unsuccessful), a Dorset County Councillor and Mayor of Dorchester in 1891.
Yet there had actually been warning signs of the impending crash. Sir Robert left the partnership in December 1896. Negotiations regarding his withdrawal had begun in 1895 – shortly after Sir Robert was knighted. There was no ‘golden handshake’ for the retiring partner – instead Sir Robert had taken the unusual step of agreeing to pay the Eliots £10,000 to buy himself out. Even more unusual was the fact that as he did not have the funds to pay this sum; the brothers agreed to accept it in two instalments of £5000, due in October 1897 and October 1898. No intimation of this was given to the bank’s customers. There was some comment in the local newspapers when it was discovered that Sir Robert Edgcumbe had left; rumours circulated for a few weeks and one or two people transferred their accounts to other banks, but such was the Weymouth Old Bank’s standing, it was soon ‘business as usual’ at Eliot, Pearce and Co.
A week after the crash, anger began to surface in the press. In the early days the Southern Times had felt ‘…that there was more room for sympathy and pity than blame’ for those who ran the bank, but it was becoming increasingly obvious that the partners had continued trading long after becoming aware of their precarious position and had continued to accept deposits of large sums of money. The bankruptcy examination which followed the crash was long and thorough. In essence, it proved that the bank’s downhill slide had begun in 1885, when sound gilt-edged securities had been sold off and the money invested in risky speculative ventures overseas, which failed. An estate at Plush acquired by the bank and soon afterwards valued at almost £50,000 had not brought any rewards from money spent on it. Coupled with a fall in the price of agricultural property, this had reduced its value to £17,000, although its worth in the bank’s books was much inflated. The bank had also lent large sums to individuals and firms, on which no repayments had been made. Most surprising of all was the fact that none of the partners had any capital in the bank. The £10,000 that Sir Robert Edgcumbe had agreed to pay the other two partners was one-third of an estimated shortfall of £30,000 (far below the actual figure) which the bankers were well aware of months before the crash – and, of course, the two promised £5000 instalments were not paid in the months which followed it.
Sir Robert stood with the Eliots when their financial affairs were examined. His beautiful Dorchester home, Somerleigh Court, was occupied by the bailiffs as they assessed the value of the house, its furniture and its fine wine cellar. Sir Robert and his family cut all ties with Dorset and eventually went to live in Cornwall, where he died in 1929. Richard ffolliott Eliot’s house, ‘Westmead’ (now known as Radipole Manor), was sold by auction in 1897. He moved to Devon, where he died in 1906. George Eliot’s mansion ‘Bincleaves’, which overlooked Portland Harbour and has since been demolished, was also sold. He died, aged 91, in Oxfordshire in 1937.
The realisation of these and the bank’s other assets brought little comfort to its creditors, who had initially been led to believe that they might achieve 10/- or even 15/- in the £. The first dividend of 6s 8d was followed by one of 10d and eventually in 1903, six years after the crash, by a final and tiny 5¼ d – a total payment of only 7s 11¼ d in the £.
At Weymouth, the Old Bank’s business premises have been converted to a café and bar, but the upper floors shown in the engraving are still recognisable. The adjacent Old Bank House, once surrounded by a large garden, occupied a prime corner site at the junction of St Thomas Street and St Alban Street. Sold along with all the other property, it was bought by the local brewery firm of John Groves and Sons, which was planning a major expansion in the town around the turn of the century. On the former garden the brewers built a handsome block of buildings containing offices, wine and spirit stores and bonded warehouses. These, together with the former bank building, were demolished in 1966 to make way for a Tesco store.