In 1852, a group of men met at the Old Cock Inn, Halifax, to form the Halifax Permanent Benefit Building Society. This eventually overtook the Leeds as the world's largest building society.
Among the founding fathers was Jonas Dearnley Taylor, a solicitor's clerk. He became the Society's first Secretary, a position he retained for nearly 50 years.
The Halifax enjoyed a hugely successful first year, far exceeding the expectations of its founders. By March 1854, it had 584 members and a further 144 ad hoc depositors. More than ￡9,000 had been lent, and branches had been opened at Sowerby bridge, Thornton and Queenshead.
1853 BANK OF SCOTLAND
BANK GETS CONNECTED
In 1853, Bank of Scotland became one of the first Scottish banks to use the new electric telegraph service. To ensure confidentiality, a secret telegraphic code was devised.
Introduced in the 1840s, the telegraph was the 19th century equivalent of e-mail - it allowed instant communication for the first time.
In the early days, telegraphs were sent from public offices. Wary of compromising customer confidentiality, banks developed codes that reduced messages to a few unintelligible words. The Bank of Scotland code included words such as ‘Blossom’, ‘Absinth’ and ‘Bagpipe’. ‘Achilles’ stood for Bank of Scotland’s Head Office.
FIRST HALIFAX MORTGAGE
On 26th May 1853, Esau Hanson became the first person to get a mortgage from the Halifax Permanent Benefit Building Society.
The mortgage was for the princely sum of ￡121 – about ￡7,000 today. Hanson, a local textile manufacturer, used the money to buy land for a house. The loan was repaid over 13 years, at a rate of 5% interest.
Coincidentally, the ground on which his house once stood was repurchased by the Halifax, many years later. It was used for an extension to the Society's head office, in 1988.
LLOYDS LOSES TAYLOR
With the death of James Taylor, grandson of one of the founders, the association between the families ended. The bank was renamed Lloyds & Company.
James Taylor’s health had broken down as a result of worries about his business affairs. These were, in fact, largely imaginary. But in 1853 he took his own life. James' son, also called James, declined the offer of a partnership, partly due to his mother’s concerns about him going into commerce. The Taylor family name was removed from the bank’s title.
MODEL HOUSING IN HALIFAX
In 1861, Edward Akroyd, a wealthy mill owner, started a model housing scheme for workers. He called it 'Akroydon'. The Halifax Permanent Benefit Building Society advanced three quarters of the money.
Akroyd had observed that working class housing in Halifax was 'generally… of an inferior class'. He engaged architect George Gilbert Scott, who produced designs of a very high standard. All homes had two or more bedrooms, gas and running water. Prospective purchasers had only to provide a small deposit; the remainder was lent by the Halifax. Akroydon was one of a number of such schemes in which the Society assisted.
TSBs FACE COMPETITION
William Gladstone’s Post Office Savings Bank Act was passed in 1861. Within a year, more than 2,500 Post Office savings banks had been established.
Many of these were in direct competition with existing trustee savings banks. Within ten years, more than 200 TSBs had been forced to close.
However, the remainder survived because of the additional benefits they offered depositors. TSBs paid more interest on savings, and it was easier to make withdrawals. Moreover, their staff were specialists, whereas Post Office officials had many other duties to perform.
LLOYDS GETS SHAREHOLDERS
After 100 years in business, Lloyds & Co. converted from a private partnership to a joint-stock bank. It became Lloyds Banking Company Ltd.
Lloyds had only opened its first branch the previous year. However, serious expansion was just around the corner. With 148 shareholders now investing in the company, its capital base was much stronger. This resulted in a period of unprecedented expansion. Over the next 50 years, Lloyds took over more than 50 competitors.
1867 BANK OF SCOTLAND
BANK OF SCOTLAND IN LONDON
London was fast becoming an international financial centre, and in the 1860s, Scottish banks began to open offices there. Bank of Scotland established a permanent office in 1867.
The Bank had originally opened a London office in 1696, a year after its foundation. Its 36 London-based shareholders met there. But the office had closed by 1703, and it was another 164 years before Bank of Scotland re-established its presence.
Initially located in Old Broad Street, the Bank moved in the 1890s to extremely grand, purpose-built premises in Bishopsgate. These were designed by architect W. W. Gwyther.
WOMEN KEEP THEIR SAVINGS
In 1870, the Married Women’s Property Act was passed. For the first time, married women were allowed to keep their own savings.
Prior to this, any money that a woman held on marriage automatically became the property of her husband. The new Act allowed women to keep their savings, up to the value of ￡200 – about ￡9,000 today. Unlike the commercial banks, savings banks had always attracted female savers in large numbers. With the passing of the Act, the demand for savings accounts was even greater.
1881 BANK OF SCOTLAND
Alexander Graham Bell patented his design for the telephone in 1876. In 1881, Bank of Scotland became the first Scottish bank to utilise this new-fangled technology.
Telephone exchanges were opened in both Edinburgh and Glasgow in 1879. Three years later, Bank of Scotland instructed the National Telephone Company to install a 'wire' in its head office in Edinburgh. The cost was ￡15 a year – about ￡700 today.
Within months, the branch manager at Glasgow requested a telephone too. The directors agreed, on condition that the instrument was not used for the 'management of money transactions'.
INHERITING THE BLACK HORSE
Lloyds Bank inherited the famous black horse symbol in 1884. This sign dates back to the 17th century, when it was used by a goldsmith in the City of London.
Lloyds adopted the black horse with the take-over of Lombard Street bankers Barnetts, Hoares & Co. The sign of the black horse had originally hung above the shop of Lombard Street goldsmith Humphrey Stokes, from as early as 1677.
The Bank's first symbol, the beehive, continued to be used alongside the black horse until the early 20th century. It still appears on some bank buildings.
1885 BANK OF SCOTLAND
In 1885, a chemistry professor at Edinburgh University produced a series of Bank of Scotland notes which were 'protected against photographic forgery'. But three years later, forgeries appeared.
Professor Crum Brown had found the perfect combination of colour, ink and design to prevent photographic forgery: but it couldn’t stop forgery by more traditional methods.
The 1888 forgeries were traced to 74 year-old John Hamilton Gray Mitchell, a talented artist and engraver. His fakes were excellent, flawed only by the quality of the paper. Mitchell was sentenced to seven years, but only served one because of failing health.
The savings bank movement was rocked in 1886 by the discovery of a major fraud. The actuary at Cardiff Savings Bank had embezzled £30,000 - 15% of the total deposits.
The fraud was only discovered on the actuary’s death. The Bank’s trustees handled the investigation poorly, enraging depositors by refusing to repay the money in full. The crisis escalated, and the whole savings banks movement came under scrutiny, from the press and public alike. In the wake of the scandal, the TSB Association was set up, partly to ensure any future crises were properly managed.
TSB ASSOCIATION ESTABLISHED
In 1887, the Trustee Savings Banks Association was established. This was partly a response to the Cardiff Savings Bank fraud the previous year.
The Association had two aims: to protect the interests of depositors, and to increase co-operation among savings banks. Initially, only 26 banks signed up. But the Association's role steadily grew as more banks joined. By the late 1920s, it had become a registered limited company. It also published the 'Gazette', a magazine for staff working in the savings banks.
The Twining family, famous for its tea business, also established a bank. This was eventually acquired by Lloyds in 1892.
In 1706, Thomas Twining opened the UK’s very first tea shop on the Strand, in London. The firm later diversified into banking, offering services mainly to family and friends. This side of the business grew, and in 1824, the bank was established as a separate entity. The Twining family was still heavily involved some 70 years later, when the bank was acquired by Lloyds.