Hollow Sword Blade Company

Last updated

The Hollow Sword Blades Company was a British joint-stock company founded in 1691 by a goldsmith, Sir Stephen Evance, for the manufacture of hollow-ground rapiers.

Contents

In 1700 the company was purchased by a syndicate of businessmen who used the corporate identity of the company to operate as a bank. [1] At this time the Bank of England held a monopoly by act of parliament as the only organisation permitted to operate as a bank in England, so anyone wishing to carry out banking operations had to do so by devious means. The company was used as a stepping stone to the foundation of the South Sea Company which set out to supplant the Bank of England as banker to the government.

Founder

Sir Stephen Evance was a goldsmith whose father had been born in New England, but who had set up a business in Lombard Street in London. Evance did not confine his interests simply to metalwork, but had attempted salvage work with a diving machine, lead mining, mineral prospecting in Canada, a fishing enterprise off the coast of Ireland in partnership with Sir James Houblon (one of the founders of the Bank of England) and a draper named Samuel Ongley. [2]

Sir Stephen Evance was Governor of the Hudson's Bay Company during 1692–1696 and 1700–1712. He first acquired stock in the Hudson's Bay Company in February 1684, and he was a good friend of the company who would arrange money and other favours for the company. For this, Evance received a gratuity from the Deputy Governor of 50 "Gunneys" (sic) to buy a couple of horses to pull his coach. Sir Stephen never married or had any children of his own, but he did have a niece named Hester Child who inherited Sir Stephen's estate, which was significant even after his debts were paid. Despite this, before his death, Sir Stephen had large debts and his suicide in 1712 is reputed to be a result of Sir Stephen believing that his situation, at the time of his death, indicated a terminal failure in life. [3] [4] [5]

Company origins

In 1691, war between France and England interrupted the importation of hollow ground swords from France which had become popular weapons in England and a business opportunity presented to manufacture the swords in England. Evance arranged for Huguenot metalworkers to move to Britain to manufacture the swords and obtained a charter of corporation as the 'Governor and Company for Making Hollow Sword Blades in England', granted 13 October 1691. [6] The company obtained premises at Shotley Bridge in Durham. Granting of the charter plus two patents was on condition the applicants loaned the government £50,000, which sum was provided by Evance and Sir Francis Child in August 1692. Evance was appointed the first governor of the company, Peter Reneu the deputy governor, assistants Francis Tissen, Matthew Evans, John Carter, John Holland, Abraham Dashwood, John Samford, Robert Peter, Thomas Evans, Peter Justice, John Reneu, William Reneu, John Baker. The corporation had power to purchase land and issue stock to unlimited value.

The company manufactured swords and by virtue of the charter had power to seize imported foreign hollow swords. Evance became an excise commissioner and succeeded Childs as jeweller to King William III. However, after the king's death in 1702 Evance's involvement in the Hollow Sword Blade Company was minimal. [7] One of the swordsmiths employed by the company, Herman Mohll continued to manufacture swords at Shotley in his own right under the name Herman Mohll and son, founding a company which continued with a change of name to Mole in 1832. The company was purchased by Wilkinson Sword in 1922.

Banking operations

The Hollow Sword Blade Company was sold and moved to Birchin Lane in London, to the premises of its new company secretary, John Blunt, a scrivener (lawyer specialising in business and financial contracts). The sale was probably arranged by Francis Child, whose son was a banker and business associate of Blunt. [8] The new Governor was Elias Turner, a goldsmith with a shop in Lombard street under the sign of the Fleece, who provided both finance and experience. The deputy Governor was Jacob Sawbridge, who came from a business family and who had a small estate in Canterbury. The fourth partner, George Caswall, came from Leominster which his family had represented as MP for generations. His father had been Mayor, and Receiver of the land tax for Monmouthshire. Caswall was a partner with another goldsmith, Brassey, specialising in finance and trading securities. Daniel Defoe described them: "Sawbridge is as cunning as Caswall is bold, and the reserve of the one with the openness of the other makes a complete Exchange Alley man. Turner ... acts in concert ... and makes together a complete triumvirate of thieving". (Exchange Alley was the place where stock trading and other financial transactions took place in London.) The objective of the partnership was to break into the business monopolised by the Bank of England, which was handling and providing loans for the government.

Estate in Ireland of the Company for making Hollow Sword Blades in England Act 1703
Act of Parliament
Coat of Arms of England (1702-1707).svg
Long title An Act to discharge the Governor and Company for making hollow Sword Blades in England, of the Sum of Eighteen Thousand Eight Hundred Sixty-four Pounds, Seven Shillings, One Penny Half-penny, by Mistake overcharged in the Purchase-money for several forfeited and other Estates and Interests in Ireland, purchased by them.
Citation 2 & 3 Ann. c. 21
(Ruffhead: c. 12)
Dates
Royal assent 24 February 1704
Repealed15 July 1867
Other legislation
Repealed by Statute Law Revision Act 1867
Status: Repealed

In 1703 the company purchased some of the Irish estates forfeited under the Williamite settlement in counties Mayo, Sligo, Galway, and Roscommon. They also bought the forfeited estates of the Earl of Clancarty (McCarthy) in counties Cork and Kerry and of Sir Patrick Trant in counties Kerry, Limerick, Kildare, Dublin, King and Queen's counties (Offaly and Laois). Further lands in counties Limerick, Tipperary, Cork and other counties, formerly the estate of James II were also purchased, also part of the estate of Lord Cahir in county Tipperary. In June 1703 the company bought a large estate in county Cork, confiscated from a number of attainted persons and other lands in counties Waterford and Clare. However within about 10 years the company had sold most of its Irish estates. Francis Edwards, a London merchant, was one of the main purchasers. [9]

The recent reconquest of Ireland by forces loyal to William III had resulted in the confiscation of land from Jacobites which had been given to members of the Williamite army. Blunt was amongst others who campaigned that the property should instead have been sold to defer government expenses, and an act of parliament was passed cancelling the grants of land which instead were to be sold. The Sword Blade company now used its charter powers to own property to purchase land to the value of £200,000 with anticipated revenues of £20,000 per year, or 10%. To pay for this, the company used a trick which the Bank of England had employed in its own creation. The Hollow Sword Blades Company issued shares, which it was also entitled to do under its charter. It offered to exchange its own shares at a nominal value of £100 for £100 of government debt issued by the army paymaster. The government was willing to accept its own debt as payment for the land, so no cash money was required for the transactions. The army debt could at that time only be sold on the open market at a rate of £85 per £100 of face value, so this offered a way for holders to realise a better price. The land remained the property of the company, and the company would pay dividends on the shares from its rental income.

The deal was negotiated with the treasury by Blunt and their legal advisor, Lake and agreed on 1 June 1704. Once the debt was cancelled, the government no longer had to pay interest upon it, which it had been doing at 7.5%. However, it also required a 'sweetener' in the form of receiving a new loan of £20,000 at 5% as part of the deal, secured against Royal shares in Cornish tin.

Before announcing the offer, the Sword Blade Syndicate made full advantage of the anticipated rise in value of army debt, by buying as much as it could privately beforehand. This was then sold as the price rose once the general market realised there was an offer available to trade in the debt at its full value. [10]

The Sword Blade company also branched out into providing mortgages for other would be purchasers of Irish land, accepting cash deposits and issuing its own notes. This came to the attention of the Bank of England, who advised the treasury that their own monopoly to act as a bank was being infringed. The treasury took no action. In part, the government recognised that it had a good deal it did not wish to spoil. There was also a legal complication, that the Bank act protected it against any other company being set up by act of parliament to operate as a bank. In the case of the sword company charter, although the steps to enact its charter had been commenced, they had never actually been completed in Parliament. [11]

The Bank of England charter was due to expire in 1710, and they were concerned to arrange its renewal. Others, however, continued to lobby Parliament not to do so, and a new syndicate had formed, offering to take on funding of the latest loan required by government. The Bank responded by dropping its interest rate to underbid the competition, and succeeded in renewing its charter until 1732, with more strictly drawn terms to prevent others operating as banks.

Forfeited Estates Act 1707
Act of Parliament
Coat of Arms of Great Britain (1707-1714).svg
Long title An Act for limiting a Time to Persons to come in, and make their Claims to any of the forfeited Estates, and other Interests in Ireland, sold by the Trustees for Sale of those Estates to the Governor and Company for Making Hollow Sword-Blades in England, and divers other Purchasers.
Citation 6 Ann. c. 61
Ruffhead c. 34
Dates
Royal assent 1 April 1708
Repealed15 July 1867
Other legislation
Repealed by Statute Law Revision Act 1867
Status: Repealed

Further complications faced the Sword Blade company, as title to land in Ireland began to be disputed by relatives of dispossessed Jacobites and others claiming to have bought from the initial beneficiaries of the first cancelled land distribution. The matter was settled by an act of parliament in 1708 (Forfeited Estates Act 1707, 6 Ann. c. 61) setting a time limit on further claims, but by then the company stock had fallen to £55 per nominal £100 issued. As some consolation, pressure was also mounting on the Bank of England from an increasingly distressed government seeking new ways to raise money. [12]


Notes

    Related Research Articles

    <span class="mw-page-title-main">Bank of England</span> Central bank of the United Kingdom

    The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker and debt manager, and still one of the bankers for the Government of the United Kingdom, it is the world's eighth-oldest bank.

    <span class="mw-page-title-main">South Sea Company</span> 18th-century economic speculation bubble

    The South Sea Company was a British joint-stock company founded in January 1711, created as a public-private partnership to consolidate and reduce the cost of the national debt. To generate income, in 1713 the company was granted a monopoly to supply African slaves to the islands in the "South Seas" and South America. When the company was created, Britain was involved in the War of the Spanish Succession and Spain and Portugal controlled most of South America. There was thus no realistic prospect that trade would take place, and as it turned out, the Company never realised any significant profit from its monopoly. However, Company stock rose greatly in value as it expanded its operations dealing in government debt, and peaked in 1720 before suddenly collapsing to little above its original flotation price. The notorious economic bubble thus created, which ruined thousands of investors, became known as the South Sea Bubble.

    <span class="mw-page-title-main">John Law (economist)</span> Scottish economist

    John Law was a Scottish-French economist who distinguished money, a means of exchange, from national wealth dependent on trade. He served as Controller General of Finances under the Duke of Orleans, who was regent for the juvenile Louis XV of France. In 1716, Law set up a private Banque Générale in France. A year later it was nationalised at his request and renamed as Banque Royale. The private bank had been funded mainly by John Law and Louis XV; three-quarters of its capital consisted of government bills and government-accepted notes, effectively making it the nation's first central bank. Backed only partially by silver, it was a fractional reserve bank. Law also set up and directed the Mississippi Company, funded by the Banque Royale. Its chaotic collapse has been compared to the 17th-century tulip mania parable in Holland. The Mississippi bubble coincided with the South Sea bubble in England, which allegedly took ideas from it. Law was a gambler who would win card games by mentally calculating odds. He propounded ideas such as the scarcity theory of value and the real bills doctrine. He held that money creation stimulated an economy, paper money was preferable to metal, and dividend-paying shares a superior form of money. The term "millionaire" was coined for beneficiaries of Law's scheme.

    <span class="mw-page-title-main">HM Treasury</span> Ministerial department of the UK Government

    His Majesty's Treasury, occasionally referred to as the Exchequer, or more informally the Treasury, is a ministerial department of the Government of the United Kingdom. It is responsible for developing and executing the government's public finance policy and economic policy. The Treasury maintains the Online System for Central Accounting and Reporting, the replacement for the Combined Online Information System, which itemises departmental spending under thousands of category headings, and from which the Whole of Government Accounts annual financial statements are produced.

    <span class="mw-page-title-main">Shotley Bridge</span> Village in England

    Shotley Bridge is a village, adjoining the town of Consett to the south in County Durham, England, 15 miles northwest of Durham.

    <span class="mw-page-title-main">Mississippi Company</span> Monopoly in French colonies in North America and the West Indies

    The Mississippi Company was a corporation holding a business monopoly in French colonies in North America and the West Indies. In 1717, the Mississippi Company received a royal grant with exclusive trading rights for 25 years. The rise and fall of the company is connected with the activities of the Scottish financier and economist John Law who was then the Controller General of Finances of France. Though the company itself started to become profitable and remained solvent until the collapse of the bubble, when speculation in French financial circles and land development in the region became frenzied and detached from economic reality, the Mississippi bubble became one of the earliest examples of an economic bubble.

    <span class="mw-page-title-main">Rensselaerswyck</span> Colonial estate in New York

    Rensselaerswyck was a Dutch colonial patroonship and later an English manor owned by the van Rensselaer family located in the present-day Capital District of New York in the United States.

    A chartered company is an association with investors or shareholders that is incorporated and granted rights by royal charter for the purpose of trade, exploration, or colonization, or a combination of these.

    The Somers Isles Company was formed in 1615 to operate the English colony of the Somers Isles, also known as Bermuda, as a commercial venture. It held a royal charter for Bermuda until 1684, when it was dissolved, and the Crown assumed responsibility for the administration of Bermuda as a royal colony.

    <span class="mw-page-title-main">Florida land boom of the 1920s</span> Floridas first real estate bubble

    The first real estate bubble in Florida was primarily caused by the economic prosperity of the 1920s coupled with a lack of knowledge about storm frequency and the poor building standards.

    <span class="mw-page-title-main">Blunt baronets</span> Title in the Baronetage of Great Britain

    The Blunt Baronetcy, of the City of London, is a title in the Baronetage of Great Britain. It was created on 17 June 1720 for John Blunt, the famous perpetrator of the South Sea Bubble, for his good work for the nation of Great Britain. From 1703 he was the secretary of the Hollow Sword Blade Company, a joint-stock company effectively operating as a bank. He was a director of the South Sea Company from 1711. He was the main architect of the ambitious scheme for the company to assume the National Debt, and when the bribery and fraud were revealed, Parliament confiscated all his assets except £5,000, while most directors were allowed to retain £10,000.

    <span class="mw-page-title-main">Tahlee</span> Historic site in New South Wales, Australia

    Tahlee is a heritage-listed former pastoral property of 68.8 hectares in the suburb of Tahlee situated on the north side of Port Stephens near Karuah in New South Wales, Australia. It is the original site of the Australian Agricultural Company and more recently the location of the former Tahlee Bible College. It was added to the New South Wales State Heritage Register on 2 April 1999.

    Sir George Caswall of Muddiford Court, Fenchurch Street, London was a British banker and politician who sat in the House of Commons between 1717 and 1741.

    Sir John Meres FRS of Kirby Bellars, Leicestershire was an English knight and the director of a number of companies in the early 18th century, including the Charitable Corporation, the York Buildings Company, and Company of Mineral and Battery Works. He was also one of the Six Clerks in Chancery.

    <span class="mw-page-title-main">History of the British national debt</span>

    The history of the British national debt can be traced back to the reign of William III, who engaged a syndicate of City traders and merchants to offer for sale an issue of government debt, which evolved into the Bank of England. In 1815, at the end of the Napoleonic Wars, British government debt reached a peak of £1 billion.

    Shotley Grove is a small settlement on the river Derwent, about 1 mile upstream of Shotley Bridge in County Durham, England.

    John Hanger was a merchant of Trinity Minories who was Governor of the Bank of England from 1719 to 1721 when the Bank of England was closely involved in the financing of the South Sea Company. His family were closely associated with the hundred of Bray in Berkshire and a memorial to the family exists in St Michael's Church there.

    Jacob Sawbridge was a banker and the member of Parliament for Cricklade in England from 1715 to 23 January 1721.

    Nathaniel Brassey of Roxford, Hertingfordbury, Hertfordshire and Lombard St., London was a British banker and politician who sat in the House of Commons from 1734 to 1761.

    London Assurance was an English insurance company founded in 1720, in the midst of the South Sea Bubble speculation. It was acquired by Sun Alliance in 1965 to form the Sun Alliance and London.

    References

    1. Chown, John (1994). A History of Money: From AD 800. Psychology Press. p. 139. ISBN   0415102790.
    2. Carswell p. 30
    3. "Archived copy" (PDF). Archived from the original (PDF) on 2018-09-28. Retrieved 2018-09-28.{{cite web}}: CS1 maint: archived copy as title (link)
    4. HBCAA.40/1,fo.27;A/1/13,fo.21; Pedigrees of the Knights made by Charles 11, ARCHIVES WINNIPEG James 11, William 111 and Queen Anne, George W. Marshall (ed.), Harleian Society, Volume V111, London, 1873.
    5. Lancaster, Henry (2004). "Evance, Sir Stephen (1654/5–1712), goldsmith and entrepreneur" . Oxford Dictionary of National Biography (online ed.). Oxford University Press. doi:10.1093/ref:odnb/49172 . Retrieved 2020-03-04.(Subscription or UK public library membership required.)
    6. Patent rolls, 3 William and Mary, pt Vii
    7. Richardson, David. The Swordmakers of Shotley Bridge.
    8. Carswell p.31
    9. "Hollow Sword Blades Company".
    10. Carswell p. 36
    11. Carswell p.36
    12. Carswell p.39

    Sources