The British Linen Bank (1746-1971)
Banknotes
A Royal Charter of 1746 from
George II, established the British Linen Company, which took
over the business of the pre-existing Edinburgh Linen Co-partner
(c.1727). The new company (not known as the British Linen Bank
until 1906) was empowered to 'carry on the Linen Manufactory in
all its branches' and was granted limited liability. The name
'British' in its title (as opposed to 'Scottish') was a
reflection of the suspicion aroused by all things Scottish after
the Jacobite Rebellion of 1745, and there was not a mention of
Scotland in the Petition which led to the granting of the
charter.
The new company' s first premises were in
Halkerston's Wynd in Edinburgh. The key promoters of the British
Linen Company were the third Duke of Argyll, Lord Milton, the
Earl of Panmure and George Middleton, a London banker.
Its
initial capital was a nominal £100,000 which was not increased
until 1806, when it was raised to £200,000. Its great strength was its spread of agents
throughout the country, a network developed as a result of the
company's involvement in the linen trade. Many of the linen
connections became the early agents of British Linen Company
branches, of which there were nine by 1780.
The British Linen Company again raised its
capital in 1813, to £600,000, despite the objections of both
Bank of Scotland and the
Royal Bank that the company was
overstepping its original aim of promoting the linen industry.
This was rather a mischievous argument, as the British Linen
Company had in practice been a bank, rather than a trading
company, since the late 1760s.
The British Linen Company moved to a new Head
Office at the turn of the nineteenth century. In 1808, the
company had acquired the Dalhousie mansion at No. 38 St. Andrew
Square and in 1825 Nos. 39 and 40 were also purchased,
reflecting the increase in business and number of staff.
The
depression of 1837 brought a temporary halt to prosperity, but
the British Linen Company did not suffer in this as much as
other banks.
The growth of the bank continued and by 1845
the British Linen Company's sanctioned note circulation was
£438,024. In fact, other than a temporary paralysis in trade in
the late 1850s following the collapse of the Western Bank (along
with the suspension of the City of Glasgow Bank), the British
Linen Company survived most economic depressions relatively
unscathed. On 11th June 1906 the company formally changed its
name to the British Linen Bank. By the early twentieth century, banking in
Scotland had become too concentrated: eight banks served only
4.8 million people. A series of amalgamations between English
and Scottish banks took place between 1917 and 1926 and in 1919
the British Linen Bank became a wholly-owned subsidiary of
Barclays Bank.
The connection gave the bank increased foreign
connections and total assets leapt from £29 million in 1918 to
£36 million two years later. As with all the Scottish-English
banking 'affiliations' (as they were known), the British Linen
Bank retained a board of directors in Edinburgh, its separate
structure and its note-issue.
The 1950s and '60s saw another wave of
Scottish bank mergers and on 9th May, 1969 Bank of Scotland
finalised a deal with Barclays Bank resulting in the takeover of
the British Linen Bank by Bank of Scotland. As a result, 35% of
Bank of Scotland stock was issued to Barclays Bank.
On 23rd July 1970, Royal Assent was given to
the Bank of Scotland Order Confirmation Act and the last hurdle
for merger was removed, with full official amalgamation going
ahead on the appointed day of 1st March, 1971. The amalgamation
document had secured the legal continuance of the British Linen
Bank as a separate Scottish company, and in 1977 permission was
granted for the resumption of the British Linen Bank as the
merchant banking arm of Bank of Scotland, a role which it
continues to play.