Glasgow's Tobacco Trade
The origins of banking in Glasgow are inextricably linked with the lucrative American tobacco trade. From the 1720s onwards, vast fortunes were made by a number of Glasgow merchants. These imported tobacco from Virginia and the mid-southern states, through Greenock (Glasgow's port) and on to Europe. The 'Tobacco Lords', as they became known, established several partnership banks in the city. This was a response to the failure of the Edinburgh chartered banks, such as Bank of Scotland to provide adequate banking facilities in Glasgow.
The Ship Bank, established in 1749, was the first of these provincial Glasgow banks.
It was officially known as Dunlop, Houston & Company, after its principal partners. But it derived its more commonly-used name from the motif on its banknotes - a ship in full sail.
The six founding partners were from wealthy Glasgow merchant families. They had all made their fortunes from the tobacco and West Indian trades.
The founders were William Macdowall of Castle Semple; Andrew Buchanan of Drumpellier; Allan Dreghorn of Ruchill (a former bailie of Glasgow); Colin Dunlop (son of James Dunlop of Garnkirk, a former bailie and future Lord Provost of Glasgow); Robert Dunlop (brother of Colin); and Alexander Houston.
The Ship Bank was initially supported by Bank of Scotland, through a £10,000 cash account credit. No doubt the Edinburgh bank hoped to increase its note circulation in the west of Scotland, having failed to establish a branch in Glasgow. The Royal Bank, in its turn, supported the Glasgow Arms Bank, which was formed the following year.
However, the intentions of the new banks soon became clear: not only did they issue notes of their own, but they opened agencies in Edinburgh too!
The tables were turned: the Edinburgh chartered banks put aside their differences and joined forces against the Glasgow upstarts.
They jointly employed an agent, Archibald Trotter, to harass the Glasgow banks. He collected in large quantities of their notes and then demanded coin in exchange. Inevitably, the Glasgow banks responded in similar vein, and a banknote war ensued.
A New Partnership
Despite these early troubles, the Ship Bank managed to establish itself on a sound financial footing. By 1752, a net profit of £2,163 : 3s : 5d had been made. Nine years later, this had risen to £12,900.
The original partnership contract came to an end in 1775. By this date, Andrew Buchanan, Robert Dunlop and Allan Dreghorn were dead, and two new partners had been appointed. These were James Dennistoun of Colgrain and George Oswald of Scotstoun (later of Auchincruive). There seems to have been a lapse in the partnership around this time, possibly due to the devastating impact of the American Wars of Independence on Glasgow's tobacco trade.
The following year, however, the Ship Bank was revived under the new firm of Moores, Carrick & Company (Carrick, Brown & Company from 1789). It had a working capital of £12,000, and eight partners. These were Robert (or Robin) Carrick; John Brown of Lanfine; George Moore; James Moore, merchant in Glasgow; Thomas Brown, formerly surgeon in London; Andrew Thomson of Faskin; Thomas Buchanan of Ardoch; and William Craig, merchant in Glasgow.
Robin Carrick's Era
From 1775 to 1821, the history of the Ship Bank was dominated by the personality of its managing partner, Robert Carrick, or 'Auld Robin'. He was renowned for his eccentric business methods. These included sending secret signals to his cashier, to indicate whether or not bills should be accepted for discount. Carrick was also a notorious miser. When he died, 'a grim old bachelor', he had a personal fortune of around £1 million - £49 million today. He went 'without leaving one plack or penny to any of the charitable institutions in the city…'
Under Carrick, the Bank steadily prospered, despite numerous economic crises.
The American Wars dealt a severe blow to Glasgow's tobacco trade. However, this was mitigated by increased trade with the West Indies, in sugar and rum.
This recovery is reflected in the Ship Bank's accounts. In 1777, the balance sheet total stood at £120,352. By 1792, this had risen to nearly £347,000, and by Carrick's death in 1821, it was well over a million.
The Formation of the Glasgow and Ship Bank
In the 19th century, partnership banks were facing increased competition from the newer and larger joint-stock companies. Recognising this threat, the Ship Bank partners agreed to merge with another private partnership, the Glasgow Banking Company. In 1836, the Glasgow and Ship Bank was created. Seven years later, this bank was acquired by one of the joint-stock companies, the Union Bank of Scotland.
Return to the Bank of Scotland family tree.
- The History of the Union Bank of Scotland by Robert Rait (John Smith & Son Ltd., Glasgow, 1930), chapter 2.
- A small number of archives relating to the Ship Bank are held by Lloyds Banking Group Archives in Edinburgh - for further information see our archive collections.
- Some records and artefacts relating to the Ship Bank are also on display in the Museum on the Mound.