THE LOYDS 8 14 LLO pam Lf . - *».at «' THE BUSINESS A N oley Street London I c.i. 01 -407 6110 THE STORY OF LLOYDS BANK _H- A mural in our branch at Victoria Avenue, Southend-on-Sea, of a medieval banking scene painted by Alan Sorrell. T is sometimes claimed that the was often possible merely to transfer came about that the total amount of earliest bankers in Great Britain the goldsmiths' receipts. This proved bank notes issued by the banks far I were the medieval Italian to be a great economy in time and exceeded the stock of gold. The banks moneylenders who accompanied the effort, as well as being a much safer had "created" credit money. European merchants to England. These operation than having the gold with- With the rapid and widespread ex- Lombards, who during the 13th and drawn from the vaults, transferred to pansion of industry and commerce in 14th centuries settled in the street somebody else, and again lodged with the 18th century many of the merchants which still bears their name, did indeed the same or another goldsmith. Gold- themselves found it profitable to act in finance much of the foreign trade of smiths' receipts were the forerunners a banking capacity, accepting deposits that time. But they were money- of what we now call bank notes. from their lesser brethren and lending lenders rather than bankers; they did In the second half of the 17th out where needed. The fame and not accept deposits from the public. century the practice of transferring standing of these merchant bankers, The antecedents of modern British goldsmiths' receipts became a normal both in London and in the provinces, banking were the London goldsmiths. way of making payments. It soon together with their intimate know- In the Tudor and Stuart periods the became realised that the gold itself lay ledge of the businesses of the smaller practice grew up for merchants to unused for a long time in the vaults of merchants in their localities, often leave their valuables and surplus gold the goldsmiths. Cash withdrawals each made it possible for them to facilitate coin with their goldsmiths for safe- day were but a small fraction of total local trade by backing bills of exchange. keeping. Receipts would be issued for holdings, and were usually equalled by The larger of these merchant houses these lodgments and by the middle of new deposits. The goldsmiths found soon supplanted the goldsmiths in their the 17th century merchants had dis- they could profitably lend out a large function as bankers. Among them was covered that when it became necessary proportion of this money at interest to a partnership formed in 1765 in Birming- to pay money over to other people it credit-worthy merchants and they thus ham between Sampson Lloyd and John became the first "bankers". What is Taylor. It was from this partnership A modern scene in the Dealers' Boom at more, the borrowing customers would that the great modern business of our Overseas Department where millions not usually want gold: they would just Lloyds Bank has sprung. Although the of pounds worth of foreign exchange are as readily take their loans in the form connections of some of the firms sub- bought and sold daily. of gold receipts or bank notes. Thus it sequently acquired by this Bank can be traced back to the 17th century, the at the end of the 17th century. His real parents of the business were migration was a direct result of the Taylors and Lloyds. religious intolerance of the times. Charles Lloyd of Dolobran, grand- FOUNDATION OF LLOYDS father of the founder of the bank, The four original partners were Samp- whose forbears had been kings in the son Lloyd (II) an ironfounder, John Principality, had embraced the faith of Taylor a button and metal box manu- George Fox the Quaker, and with many facturer, and their respective sons of his friends had been thrown into Sampson Lloyd (III) and John Taylor gaol for refusing to take the Oath of junior. Each partner provided one Allegiance and Supremacy to his new quarter of the original banking capital Majesty, King Charles II. In 16G4, of £6,000. In the hundred years of the whilst Charles Lloyd was imprisoned in existence of this firm no deed of Dolobran near Welshpool, his second partnership was ever drawn up, a son Sampson (I) was born. Charles was private ledger in which the entries were released in 1672 by the Act of Indul- made being signed annually by each gence but he and his friends continued partner instead. to be persecuted as Quakers. John Taylor's name took precedence On the death of his father in 1698, in the title of the firm, presumably by Sampson Lloyd (I) therefore left Wales reason of his greater wealth and in- and started up in business in Birming- fluence in Birmingham, but it was ham as an iron merchant. Not being a Sampson Lloyd (II) who was the corporate borough, Birmingham was inspirer of the bank and it was he who outside the operation of "the Five Sampson Lloyd (II), one of the founding was mainly responsible for founding Mile Act" and consequently it was partners of the Bank. the business. permissible for non-conformists to en- The father of Sampson Lloyd (II) joy the open observation of their had moved to Birmingham from Wales special forms of worship. Sampson Lloyd (I) made a sub- partners, joined forces with his brother- stantial career for himself in Birming- in-law Osgood Hanbury in opening a ham as an ironfounder. When he died bank in Lombard Street under the in 1724 he had become a man of very style of Hanbury, Taylor, Lloyd and considerable property. The business Bowman. The original premises were was carried on by his son Sampson those that are now numbered 14, but Lloyd (II) and for forty years it eight years later the firm moved across prospered with the tremendous growth the street to No. 60 Lombard Street. of the iron trade. But the trade was This was next door to Messrs. Bland and entering a recession at the end of the Barnett, who exhibited over their door Seven Years War, and it was largely to the sign of The Black Horse which provide alternative employment for his they had brought with them when they family that Sampson Lloyd (II) con- moved from No. 53 some years earlier. ceived the plan of founding a bank. Sampson Lloyd (III) died in 1807 The accounts of Taylors and Lloyds, and thereafter the connection of the bankers at Dale End, Birmingham, Birmingham firm of Taylors and Lloyds were opened on 3rd June, 1765. The with the Lombard Street business was The premises in the High Street, Birming- site of the original premises is marked severed. The separation was to prove ham, which became the Head Office of by a commemorative plaque. to be only temporary, however. In 18G4 the Bank from 1815 to 1871, had formerly the business of Hanbury, Taylor, Lloyd been the residence of John Taylor, one of the original partners. BANK EXPANSION and Bowman amalgamated with its The firm flourished, reflecting not neighbour to form Barnetts, Hoares, only the acumen of the partners but Hanbury and Lloyd and, as we shall successive members of the Lloyd family also the growing wealth and prosperity presently sec, the connection between had gone from strength to strength, of Birmingham and its surroundings. It this firm and Taylors and Lloyds came and although rival banks, encouraged was not long before the firm turned its to be restored twenty years later. by the success of Taylors and Lloyds, eyes Londonwards. In 1771 Sampson Meanwhile, the Birmingham banking had sprung up in the town, there were Lloyd (III), one of the two junior business under the wise guidance of times, it was said, when half of Birmingham was indebted to the firm. became Lloyds Banking Company In accordance with the general practice Limited with a paid-up capital of of the country banks, Taj'lors and £143,415. The first Chairman was Lloyds issued their own notes, and one Timothy Kcnrick and one of the curious denomination was that of seven directors was Joseph Chamberlain, who shillings, an issue designed to cope with was then twenty-nine years of age. the small-change shortage. Three of The business of the new company these notes had to be surrendered, if included that of an old rival of Lloyds gold was required, against one guinea —Coale's Bank—which at the time piece. was represented by the firm of John In the very year of the Lombard Moillict and Sons. The reputation of Street amalgamation, Taylors and both firms stood so high that, although Lloyds opened their first branch office in Birmingham had been recently shocked Oldbury. In the following year a major by the failure of Attwood and Com- landmark was reached. pany, the shares were eagerly sought The crises and failures of the banking and almost immediately stood at a world in the early part of the 19th premium of £3. The first annual report Seven, century, the growing popularity of the appeared on the 31st December, 1865, Payable there new joint-stock banks, and the passing and showed that the profits on eight JVot left t&an Three /<? of the Limited Liability Act of 1862, months' working in Birmingham and 77* determined the partners of Lloyds and Oldbury and five in Wednesbury (where Company in 1865 (the Taylor family P. and H.