The banker

1852: Back to the family bank


In 1852, Bagehot abandoned his nascent legal career in London to return to Langport to work in the family bank.  At Herd’s Hill, he had discussed his future with his father, and when back in London, had written to him on 31 August:


 “My dearest Father, I have been considering carefully the question which we almost decided upon when I was at home. I mean my abandoning the law at the present crisis—and in accordance with what we very nearly resolved upon when I was with you—I have decided to do so at this juncture—utterly and for ever.”


They both knew that his mother, Edith, wanted Bagehot to return home, allegedly because of Walter’s health, but really because of her own poor mental state.  The idea of being a writer was also growing in young Bagehot’s mind at this time, and he felt that he could not easily pursue this path if he was practising law as a serious career.


Bagehot wrote to his friends in somewhat wry terms about his new life.  In a letter of 3 January 1853 to an old school-friend, Killigrew Wait, he described the life of a novice country banker:


“Here am I in my father’s counting-house trying (and failing) to do sums, and being rowed ninety-nine times a day for some horrid sin against the conventions of mercantile existence. My family perhaps you know are merchants, shipowners, and bankers, etc. etc., here and elsewhere. Out of their multifarious occupations I hope to be able to find, though I cannot precisely say that I have yet found, some one to which I am not contemptibly unequal. … The only thing I ever really knew was Special Pleading, and the moment I had learned that, the law reformers botched and abolished it ... I suppose you like business by this time. I think I might if I knew anything about it, and if my relations would admit that sums are matters of opinion.”


Similarly, in a letter to his friend, Richard Holt Hutton:


 “I have devoted my time for the last four months nearly exclusively to the art of book-keeping by double entry, the theory of which is agreeable and pretty but the practice perhaps as horrible as anything ever was. .... In other respects I approve of mercantile life. There is some excitement in it, if this does not wear off; always a little to do and no wearing labour, which is something towards perfection.”


Bagehot was, as Hutton remembered in his Memoir of his friend, “always absentminded about minutiæ.” Hardly an ideal trait for a banker.  Clearly Bagehot was not entirely happy with his new career, as can be seen from this extract from a letter to Hutton: “I write this in my father’s counting-house. It is a queer life and takes much will doing the sums, but not more than I looked for. It must do anyhow.”


Nevertheless, the contrast of rural Somerset with metropolitan life was congenial and gave him the opportunities he wanted to write, and the practical business experience in various capacities and in several offices of the expanding Stuckey’s Bank over 9 years in Langport, Bristol and London helped him develop his views on economic and commercial matters. 


And it was as “a young banker in the West of England” that, on 24 January 1857, Bagehot visited James Wilson MP, then Financial Secretary to the Treasury, at his home, Claverton Manor near Bristol.  This was a momentous meeting in Bagehot’s life, for two reasons – professionally, as Wilson was founder and editor of The Economist, and personally, because he had a daughter, Eliza, whom Walter married the following year.


Bagehot even managed to squeeze out some humour into his life as a country banker.  When a solicitor – a distant relative of his - appeared before the Bank’s committee at Langport to speak on behalf of a financially pressed manufacturer, for whom he had arranged a string of insurance policies, there was a long silence, broken by a sharp question from Bagehot: “Henry, will your client undertake to expire as part of the arrangement?”


Banker to Clarks Shoe Company


When the famous Somerset shoe company, C & J Clarks of Street, were in great financial difficulty in the mid-19th century, they turned to Stuckey’s Bank for assistance.  Stuckey’s had been helping out Clarks and its family directors since 1836, and from 1855, the Bank had granted large loans to the company to finance further expansion.  Unfortunately, this was just before a period of economic recession which rapidly undermined Clarks’ finances.  At the Bank, the situation was being dealt with by Walter Bagehot himself, who displayed all his practical banking sense in handling the crisis.


In a letter of 30 May 1860, Bagehot sympathised with Clarks’ plight and gently but firmly reminded the company that the necessary action in holding a reserve of capital to meet such contingencies was one “I have frequently taken the liberty of pointing out to you when we have been discussing freely the position of your concern.” 


Several times, later in 1860, Bagehot gave the company further warnings while assisting them in the short-term.  Matters grew worse in 1861, and in March Bagehot had to remind them of the Bank’s strict conditions attached to its advances.  Again, in a letter of 28 May, Bagehot had to warn them again of the limits to the Bank’s assistance, while assuring Clarks, perhaps rather ambiguously, of “the same confidence in you and the same disposition towards you as we have had hitherto.”


Despite continued help from the Bank, even when the company had breached its loan conditions, Clarks’ finances remained desperate.  In a letter of 3 March 1863, Bagehot again adopts a strict warning tone but agreed to further assistance to the company.  This was a practical example of Bagehot’s belief that businesses could only develop through new capital and the maintenance of adequate reserves.  The Bank’s carrot-and-stick policy ultimately provided the necessary breathing space, within which Clarks managed, painfully, to restructure itself out of potential bankruptcy with the aid of additional finance from friends of the Clark family.


[This section on Clarks and the Bank is based largely on the excellent account of the episode in George Barry Sutton’s C&J Clark 1833-1903: a history of shoemaking in Street, Wm Sessions Ltd, York, 1979]