Northumberland and Durham District Bank
[1] The Act also allowed the Bank of England to open branches in major provincial cities, enabling better distribution for its notes.
The avidity with which the shares in Banking Companies are now sought after by the public in general after an experience of their results in England of several years, at once shows the high estimation in which they are held, and requires no arguments to point out the great advantages derived from them not only to the shareholders themselves (who have almost in every instance acquired large premiums and heavy dividends), but also to the districts in which they are established.
So generally has this been the case that when it is not so, either bad management or the grossest culpability can be traced, and in fact, it is admitted on all hands that the only requisite for the success of a new Joint Stock Banking Company is a proper field for its operations, well conducted, and therefore the projectors of this establishment only ask the Public after looking round them to judge for themselves whether or no the field here selected, offers to them every probability of success.18,000 shares were subscribed for in the first week following publication, rising to 26,000 by the end of the second week.
The terms of the amalgamation did not please some would-be shareholders, who therefore launched a rival scheme for the Newcastle Commercial Joint Stock Bank.
The directors announced a first call for the payment of shareholder capital of £2 10s 0d on 10 June, and a second of the same amount on 10 August 1836,[4] a demand made less onerous by a prospectus condition allowing shareholders a cash credit to the extent of two-thirds of their paid-up capital.
Figures presented, after 18 months of trading, at its second General Meeting on 23 January 1838 show paid-up capital of £139,787 10s., gross profits for the last half-year of £10,879 8s.
The amalgamation thus formed, made the "District" undoubtedly the strongest bank in the North of England, introducing considerable new capital and extending its operations to Ridley branches in Alnwick, Durham, North Shields, South Shields and Sunderland.
[10] (Though raised in Parliament by Thomas Emerson Headlam in 1849, it was not until 1862 that limited liability was extended to bank shares.
[11] Despite its history, The Northumberland and Durham District Bank collapsed, closing its doors on Wednesday 25 November 1857.
The bank was known to be the creditor of a large firm of Newcastle merchants which had failed in August 1857 with £720,000 of debt; much of its capital was locked up in iron works and collieries.
[12] Rumour emanated from the London Stock Exchange in a telegraphic communication on Saturday 22 November, that a North of England Joint Stock Bank had been mentioned as in embarrassed circumstances, although on enquiry that bank's London agent disclaimed all knowledge of such being the fact.
[14] His report, submitted on 13 April 1858, identified that the bank was carrying a loss of £1,835,150 even after the £5 per share call of 14 December 1857.
Commenting on this call, Maberly Phillips says "The amount that would, therefore, be due from various shareholders was positively appalling, and meant ruin and desolation to hundreds of families.
By contrast, Jonathan Hughes in his 1960 Fluctuations in trade, industry and finance: A study of British economic development, 1850-1860 is scathing.
Were that not remarkable enough, the iron company itself was found to have been "extremely badly run; that it had never made any profits at all, even in the finest years for ironmasters, and it had gone on absorbing the money of the bank unchecked by its directors".
