The early part of the 18th century saw the beginning of the modern brewing industry, especially in London. Beer production took place in larger breweries using the forerunners of modern industrial methods. Aside from centralised orders by government for the military, sales were more and more linked to inns, pubs and taverns “tied” to the brewers by direct ownership or loans that would require the borrower to sell only that brewer’s product.
This new approach to brewing could generate enormous profits in good years, and equally significant losses at other times. It also demanded abundant capital resources. To get the capital needed, brewers looked for investment by wealthy individuals with spare cash. These people might ether deposit their money with the brewery in return for interest payments (the usual rate was five percent), or become partners in the firm. In either case, they were investors, not men interested in getting directly involved. Since brewing was seen as a stable industry and money invested there produced good, long-term returns, many family members of the original investors deposited their spare capital in the same way. Finally, many pubs ran “savings clubs” for their customers, either to finance major significant expenses, or to provide money for medical bills or to cover periods of unemployment. This money too was deposited with the brewers.
Short-term Surpluses
A brewer’s income was regular. In contrast, the outgoings for raw materials, such as malt and hops, bought in bulk, fell due at set times of the year. This meant that, in the periods before paying the accounts of the maltsters and the hop growers, there could be significant accumulations of spare cash in brewing businesses. Rather than allow this to languish unused, the brewers got into the habit of investing it in government bonds, or making short-term loans to entrepreneurs.
You can see how easily this would turn into regular banking. The brewers received deposits, on which they paid interest, and used some of these deposits, together with their own resources, to invest in the open market, make loans or arrange mortgages. Brewing was also highly profitable, but offered limited options for direct investment of surplus funds. Brewers were also likely to be the wealthiest people in a locality, save where there happened to be another, more dominant industry, such as cloth in Norwich. Where better to deposit your spare funds and savings than in whatever was the most stable and flourishing local enterprise? It was a very short step from there to providing a range of other banking services, such as honouring bills of exchange. In time, some dropped the brewing business altogether and became full-time bankers.
Major merchant dynasties, like the Gurneys, became involved in a wide range of activities, in part because of the need for ‘surplus’ younger sons to make their own way in the world. When the family was close-knit, especially those bound by a shared religious tradition like Quakerism, the obvious way to raise capital for new entrepreneurial activities was from your relatives. The Gurneys began with dealing in wool, before branching into investments in brewing and, from there, banking. Part of their strength lay in the large number of family members who invested their personal wealth in the dynasty’s enterprises, and could be relied on to stay loyal generation by generation. Part lay in the influence of family members, who filled score of positions in local and national government . The term ‘Beer Baron’ was no empty title. Brewing families wielded enormous wealth and influence and were prominent in philanthropy. They were the Warren Buffets and Bill Gates of their time.
The Quaker Bankers
Amongst these early brewers, you find once well-known names, such as Whitbread and Truman, Greenall, Cobbold and Worthington. You also find families who had more or less left brewing behind by the century’s end. The route from brewer to banker became a familiar one.
Two families of leading Quakers followed that path: the London Barclays and the Norwich Gurneys. Both were partners in The Anchor Brewery in Southwark, London, as well as bankers in London and Norfolk. Both had large, extended families, many of them wealthy enough to need a safe place to deposit their spare capital. As Quakers, the men were barred from the universities and the professions. Instead, like many of their denomination, they used their reputation for honest dealing to pursue successful business careers. Brewing was not considered an improper trade for a Quaker, unlike distilling or making weapons. Where some families like the Cadburys and Frys turned to chocolate, others turned to beer.
Members of the Society of Friends had a culture of mutual reliance and established strong networks of mutual support. From the start, the Barclays and Gurneys were closely linked. There was so much intermarriage between them that their family trees must have resembled knitting! It was almost inevitable that they should merge their banks in the next century to form the basis of the global financial behemoth we know today as Barclays Bank. The Baring family — one of Britain’s largest and most famous firms of merchant bankers until one rogue trader caused it to collapse — also had strong links with Norfolk, intermarrying with local gentry families like the Windhams of Felbrigg. One branch of the Baring family became Earls of Cromer.
It’s common knowledge that much of the wealth of Scotland, in commerce and land, lies in the hands of some half dozen grand families. I wonder if anyone has ever tried to work out how much of the wealth of eighteenth-century Norfolk was also held by a few, interlinked families — and whether the same is true today?