Clement-Jones family - Person Sheet
Clement-Jones family - Person Sheet
Spouses
Marriage1698
Notes for John FREAME
John Freame (1669 - 1745) founded Barclays Bank in 1690.
John Freame was born in Cirencester the son of Robert Freame. In 1683 he was apprenticed to Job Bolton, a quaker goldsmith based in Lombard Street.
In 1713 he published Scripture Instruction: Digested into Several Sections by Way of Questions & Answers in Order to Promote Piety & Virtue, and Discourage Vice & Immorality, with a Preface Relating to Education
John Freame was a Quaker, a banker and a lobbyist ... and architect of the London Lead Company, Gadlys smelting and Barclays Bank.
Technology, the application of science to production, fired the industrial revolution. However, from the very early days of the london lead company in 1704, the capacity and skill to raise investment capital was vital for large scale manufacture. And what was the use of productivity improvements from specialisation without scale?
During the industrial revolution it transpired that technology was far more easily transferred to competitors than the ability to raise capital. In Flintshire and the North West innovative technology was blossoming but it was in London where most of the investment capital was raised. Interestingly it was the 'comparative advantage' in finance which was the driving force which relentlessly moved much of the English economy from manufacturing to financial services during the 20th century. This evolutionary change was exactly the same process which moved the economy from agriculture to manufacturing during the 19th century. But what was this principle of 'comparative advantage'? The history of the decline in the fortunes of crewood hall farm in Cheshire provided an interesting case study. The underpinning insights of Adam Smith's moral sentiments and David Ricardo's comparative advantage have all too often remained shrouded in mystery and strangely absent from curricula and discussion ...
John Freame was well practised in these principles long before they were publicised by Adam Smith and David Ricardo ...
In 1690 John Freame started trading as a goldsmith in Lombard Street, London. At this time London was still a tiny fraction of the modern conurbation, still focused almost entirely around The City, with the West End beginning to be developed. But John was in on the ground floor and seized his chance, just as the great expansion started.
John was a Quaker and at 21, had completed his rigorous seven year apprenticeship and earned his spurs as a 'freeman' of the city of London. He had a trusted partner Thomas Gould, also a Quaker and freeman of the city. This famed partnership predated the 1694 launch of the Bank of England and lasted in various forms until 1896.
As a teenager Freame had left Gloucester where persecution of dissidents was rife to learn his trading & metal working skills in a more tolerant environment in London under the watchful eye of Job Bolton, another Quaker.
The Quakers had a rich tradition in commerce where confidence & trust in dealing was fostered by a close knit 'club' of like minded folk. Life was not easy for innovative folk who were singled out as subversive and persecuted for their beliefs, but out of adversity came strength. John Freame's dad Robert was a textile merchant and John's education was a family priority, Robert insisted John worked hard during his apprenticeship to acquire a trade ... Robert also purchased land in Philadelphia to provide an escape route, should persecution persist ...
One of John's jobs would have been the issuing of receipts for cash deposits which customers were increasingly willing to place with respected goldsmiths for safe keeping. The goldsmith stocks were concentrated value and a persistent target for thieves ... expertise in safes and security became an important part of the apprenticeship. The issued receipts from successful goldsmiths were beginning to be used as bank notes ... a token of a promise to pay ...
The tradition of 'freemen' goes back many centuries ... some citizens of towns & cities were granted rights to trade & other 'privileges' which were conceded by royal charters. The close connection between 'freemen' and London's government can be traced back to the Saxon folkmoot and to the 'Great Concourse' of the early Norman kings. As London grew, its trade & craft industries expanded to such an extent that it became impossible for all 'freemen' to be directly involved in the evolving structure of local government. As a result, the relationship between freemen and the government of London changed to a representation system through the Masters & Wardens of the Livery companies. The Worshipful Company of Goldsmiths was one of the twelve great Livery Companies in the City; these were associations of craftsmen developed to promote the trade by apprenticeship. The Freedom of the City of London became an essential requirement for all who wished to carry on business and trade within the Square Mile. As a result, the privileges of Freedom were eagerly sought after, and the duties & obligations were faithfully observed. It remains necessary to this day for all Liverymen to be 'freemen' of the City, and it is the liverymen who elect the Lord Mayor and the Sheriffs of the Corporation of London. Although it is no longer necessary to be a 'freeman' to work in the City, the proud history of the City of London is such that large numbers of men and women have regarded it a privilege to be admitted to the Freedom of the City. In John Freame's day freemen inherited, earned or purchased such independence from the 'powers that be' through their successful deals of mutual benefit; benefits for both freeman & city ... and Quakers with savings were not excluded!
The goldsmiths, in particular, resolutely guarded their hard earned reputation and discovered that they were able to set up shop as sellers of credit. In the business of credit, satisfying customers was no mean achievement as Archimedes, Shylock and the Jews of history will attest!
Associations of traders in the city and the Livery Companies, like all trade unions, initially emerged to reward investments in hard work, honesty & thrift and to protect the reputations of craftsmen against the infiltrations of conmen and parasites ... more apprenticeships and improvement of standards were in the interests of everyone ... but there were problems ... if associations were controlled by government edicts & licences, such institutions tended to become rent seeking cartels where restrictive practices, particularly restrictions on entry & innovation, inhibited the proliferation of skills, learning and competition. Moral hazard was around in the City of London from the early days.
In 1690, his apprenticeship over, John Freame was 'allowed' set about his new business which inevitably required considerable capital reserves as the Quaker Meeting of 1688 recorded -
'none can launch into trading & worldly business beyond what they can manage honourably and with reputation; so that they may keep their words with all men ...'.
In 1672 yet another Government default was traumatic with reverberations which echoed throughout the banks, the city and the country ... 'Stop the Exchequer' had a direct link to the 1688 revolution and the founding of the Bank of England in 1694 ... and Freame & Gould in 1690 were in the middle of this upheaval. On Tuesday 2nd January 1672 repayments of debt were suspended by decree. The bankers of Lombard Street had been asked for an 'advance' to the king to finance the fleet ... they refused to make the loan. A total 82 ships were to be prepared for sail 'in the cause of national defence' to attack the Dutch Republic in the Third Anglo-Dutch War (a religious war or a mercantilist war?). Due to the pressing need for money the king and his council resolved to find the money for the fleet by cutting other parts of the treasury's budget; monies that had been allocated for the repayment of bonds and securities were to be spent on the fleet. The result was great disruption and damage to the financial markets ... 'I believe it certain that the trade of bankers was totally destroyed by this accident' ...
Capital for young John Freame's new business would have come from reliable family & friends; the established Quaker practice was to invest heavily in education and the human capital of the future, not in mercantilist or religious wars ... John wasn't alone, that's what friends and partnerships were for ... and it seemed 'Freame & Gould' were a much better investment bet than governments ... hard work, honesty & thrift were needed for banking success ... government success seemed to depend on warfare and decrees?
In this way the Lombard Street location acted like a magnet attracting merchants, dealers and nascent bankers, where regular interaction was intense. This close knit cooperation developed into a 'Gold Boy's Network' for inter bank lending and clearing of debts. What a service for customers!
And what better time to start a business than in the atmosphere of confidence following the Glorious Revolution of 1688 ... John Locke had clarified some inspiring principles of government -
first - no government can be justified by any divine, inherited or absolute right to lord it over others
second - all men are created free & equal in a state of nature, but there was a caveat; free to deal but not free to harm others ... no man was free to do whatever he pleased ...
Following this Glorious Revolution evolved the rise of civilization & property ... the only legitimate governments were those that had the consent of all the people ... 51% could not lord it over 49% ... there existed inalienable rights ...
100 years later Thomas Jefferson invented America and wrote, 'Bacon, Locke and Newton are the three greatest men that have ever lived, and laid the foundation of those superstructures which have been raised in the Physical & Moral sciences' ... no wonder folk talked about a special relationship ...
Sure there were still wars being fought in 1690 ... in Scotland, Ireland & France ... but some wars could be profitable for bankers ... and everybody now knew spendthrift kings were a thing of the past ... parliament now ruled over the national purse? ... and these were 'just' wars for the defence of the revolution?
Things were changing - spending on the kings whims was now controlled by Parliament and rent seeking slothful landlords had to compete with new capital accumulations from merchants with the confidence to invest in specialisations, scale & technology ... a social revolution as a middle class emerged intent on mass production ...
At this time, in 1694, the Bank of England was founded to provide £1.2 million at 8% for the wars ... and the Quakers were getting a sizable piece of the cake, maybe 25% of the population around Lombard Street at the time were Quakers ...
Margaret Ackrill in 'Barclays: The Business of Banking, 1690-1996' summarised the scene -
'In the 1690s their new bank competed for customers in a London alive with opportunity during a war induced inflationary boom. Its money markets developed more rapidly than those in the provinces, and in this large urban market, Freame & Gould, had to build a reputation. Quaker businessmen were prominent in city trade at the time, and Freame & Gould would have had special confidence in their co-religionists with whom they were united by spiritual fervour and by shared experience of religious persecution. Equally other Quakers had a confidence in them, a distinct competitive advantage'.
A remarkable business 'machine' had emerged, the John Freame didn't grow things or manufacture widgets, he made money from selling money -
'I promise to pay the bearer, my word is my bond' ... a reputation for honesty enabled the bank to attract deposits for safe keeping ... as long as his reputation remained intact the receipts for the deposits began to be used as money for exchange ... it was all about trust & confidence ...
'those with ideas had no money and those with money had no ideas' ... later it became clear that depositors never wanted their money back at the same time and cash on deposit seemed to increase ... there was an opportunity the bank to risk lending deposit money to trusted customers with investment schemes ... and charge them for it ... but he had to be careful, to maintain trust & confidence there always had to be enough gold in the vaults to pay the bearers of the receipts on demand ...
'natural selection of profitable projects' ... lending was always a risky business but experience & expertise reduced the alarming problem of bad debts ... good loans were not about predicting the future or technology foresight rather they involved confining deals to trusted customers with profitable projects ... chasing profits & cutting losses and a diverse portfolio ...
'deposits made reserves' ... with an income flow from profitable investments the bank now found it could afford to offer inducements to encourage more deposits ... and more deposits made more loans and more reserves ...
'loans made deposits' ... the bankers found that as credit was spent from one account it immediately ended up in another account ... money circulated, it was spent but it was not lost ...
'endogenous money supply' ... the bankers then discovered that the money that came back as new deposits could be relent to someone else, each project picking up profit ... the whole shebang was growing ... the money supply kept pace with economic growth, avoiding 'too much money chasing too few goods & services' ... there was no inflation ... the Balance Sheet balanced ... in this way interest rates were determined in markets for credit as commercial banks balanced their Balance Sheets or went bust ...
'bills of exchange & mortgages' ... as the money always seemed to move from one account to another the bankers realised that it would be cheap & easy to make payments between buyers & sellers simply by adjusting their deposit accounts instead of the risky business of transporting gold, coins or paper around the place ... all bankers knew the difference between a bill of exchange and a mortgage ...
This banking 'machine' was sometimes ridiculed as the 3-6-3 system -
3% interest on deposits
6% return on investments
3 pm on the golf course
... sounds simple but it was not a machine but rather a complex adaptive system of trust & confidence as promises were exchanged, credit was not created out of thin air!
John Freame's partnership prospered and was further cemented when John married Priscilla, Gould's sister in 1698, and Thomas married John's sister Hannah. A spate of issue followed, seven babies for Priscilla and ten for Hannah! As usual, despite the appearances of macho men, it was the girls who took the decisions. 54 Lombard Street although a substantial brick building replacing the ashes that followed the 1666 fire, was now too unhealthy for bringing up children and both families escaped to adjacent country houses in Bush Hill.
But above all John Freame's success was as an entrepreneur with his work financing the london lead company at Gadlys in support of fellow Quaker, Edward Wright. This investment was an outstanding success and transformed the smelting industry in 1704, where scale and innovative technology were required if profits were to be earned.
Confidence & trust in the Freame & Gould operation was confirmed by the discounting of the London Lead Company's bills which were circulating as currency around North Wales at the time.
John Freame was also active outside of his business; he supported the Quaker cause as clerk at the 'Meeting for Sufferings' and in his writings which attempted to make folk 'sensible of the ill consequences of vice & immorality'.
In 1713 John Freame published a book, originally prepared for the education & enlightenment of his own children ... 'Scripture Instruction: Digested into Several Sections by Way of Questions & Answers in Order to Promote Piety & Virtue, and Discourage Vice & Immorality, with a Preface Relating to Education' ... from this it is possible to confirm that Freame's attitude to business was typical of the Quaker tradition ... hard work, honesty & thrift ... and education, education, education for the youngsters ...
John was particularly concerned with teaching his own children, just listen to his message in the Preface of this remarkable book -
Although I write for my own children & family, some friends believe, if published, this would benefit others. Most experts differ in their controversial debates about education which are beyond the understanding of children. But children are quickly capable of distinguishing between right & wrong and these notions should be reinforced with by teaching how the world works and why good will always be rewarded and evil always punished. Not empty notions, mere speculation or disputable points but simple back to basics. Don't take my word for it, children should read the ancient scriptures and see that all questions can be answered by interpreting for themselves what is good and what is evil. It is not rocket science.
The future is our children and we have a duty to educate them, which is far more important than giving them riches. Success will only come when parental guidance reinforces the innate difference between good and evil by example. Children have sharp eyes & ears and they imitate, above all Mum & Dad should not disagree, and endeavour to choose peers and friends with shared values. Censorship for youngsters is sensible. From the earliest of years draw reasonable lines in the sand and insist on consistency. Tough love must not involve cherishing faults nor satisfying every desire. At the table children are not served what they crave but learn to take contentedly whatever is offered. Children humoured in the cradle and indulged as they grow up will thereafter always insist on getting their own way. Always note temper and fault but always demonstrate approval of what is good. Demonstrate love and children will become fearful of offending, much more effective than fear of the stick. Nevertheless gross error, obstinacy, disobedience or lies, must be corrected but without anger and with explanation of the evil. Avoid chiding for every little offence, making it cheap and familiar, lessening authority and respect. Rational argument should convince by reason.
School is not a house of correction but a place of delight and recreation, reinforcing parental values.
Indulging children in their humours is comforting for parents but it lays the foundations of greater evils later ... idleness, dishonesty and extravagance. The work ethic ensures the enterprising generate an ongoing income stream ... the rich soon squander capital ... 'as soon as they have gotten their portions of riches into their own hands, they live so much in pride, idleness & extravagance that they quickly run out of all their estates and reduced themselves to poverty and so much in debt. But those that had been diligent and industrious in their business, live well by their trades and been a comfort to themselves and their relations, not through some desperate project they neither understood nor were capable to manage and which brought ruin on themselves and their families and others but by the industrious business they were bred to ...
In 1728, the Freame & Gould bank moved to 54 Lombard Street, and was identified by the 'Sign of the Black Spread Eagle' ... over the years this has become a core part of the bank's identity.
Interestingly in 1729 as John's son Joseph took a more active role in the bank, John himself became a Director of the London Lead Company and a large shareholder. He was responsible for orchestrating the exposure of skulduggery within the company following the South Sea Bubble of 1720 ... skullduggery which had been hidden by Edward Wright and a group of fraudulent Quakers. The resuscitated company re-established its reputation and profits. John Freame had an eye for honest business.
Thomas Gould senior died in 1730 and the company continued as Joseph Freame & Co. Thomas' son Thomas junior started a separate banking business which went bankrupt in 1732. Quakers were harsh on bankrupts, seeing inability to pay as a betrayal of trust ... very embarrassing and it destroyed reputations!
The name 'Barclays' became associated with the Joseph Freame business in 1733, when James Barclay, John Freame's son-in-law, became a partner. Like many Quaker business men the Barclays followed a strategy of extensive networks of trusted connections and the occasional judicious marriage. They made their original fortune from linen drapery ...
The dynasty of Quaker bankers sired by Robert Freame, merchant of Cirencester and Robert Barclay, the Apologist of Urie, was reinforced by remarkable interbreeding and several alliances with other banking families. Banking was built on trust and who do you trust if not the family especially if they were all Quakers ... the Bevans were Welsh Quakers, Swansea merchants; the Trittons were Yeomans from Kent; the Gurneys, originally in linen & wool, were in Norwich; Jonathan Blackhouse, linen & worsted in Darlington; ... on it went remarkable extended networks of trust & reputation creating a distinct Quaker competitive advantage ... Margaret Ackrill suggested that Quaker wealth from hard work, honesty & thrift plausibly combined with individual self discipline and Religious sanction to produce the capital accumulations necessary for the scale of the industrial revolution ... but there were many other entrepreneurial streams ... however one generalisation was clear, the Quakers contributed quite disproportionally to 18th century entrepreneurial propensity and business success ... perhaps a result of social exclusion ... (akin to the Jews, Huguenots & Asian trading minorities?) ... or perhaps a result of the stigma of bankruptcy as an immoral broken promise, rather than any direct effect of religious belief ...
England first accumulated 'new' capital out of international trade which followed the voyages of discovery and typically the industrial revolution in Cheshire was financed by the merchants of Liverpool.
Freame, Barclay and the new capitalists organised hitherto unimaginable amounts of capital. Gathering in capital first from trusted friends for investment in fixed plant & equipment for risky ventures, but that was only the first problem to be solved. Such capital was locked up but the entrepreneur also required working capital for wages, materials, transport, energy and the inevitable tax long before a return was secured from customers. The demand for investment funds and credit was immense ...
Middle class entrepreneurs now had access to capital and credit which previously had been monopolised by the landowners.
John Freame died in 1745 but what a band wagon had started to roll ... John Freame built up an investment and credit business which powered the industrial revolution, wealth creation & endogenous economic growth. Deals between those with ideas but no capital and those with capital but no ideas. An extensive network of trust based on legal rights & obligations enabling the exploitation of the 3-6-3 rule. Borrow at 3%, lend at 6% and be on the golf course by 3pm!
But Margaret Ackrill hit the nail on the head -
'the fundamental impetus to develop as financial intermediaries, especially strong for Quakers, was that their reputation for probity & trustworthiness meant that they could borrow more cheaply than they could lend' ...
Many Quaker business homilies helped to explain their success -
management of excessive risk - 'some perceiving their trades were not sufficient to answer their expenses, have run upon desperate projects' ...
accumulation over time and the magic of compound interest - 'business with a little profit and entire regularity is happiness to the true merchant' ...
balanced Balance Sheets - 'we feel it desirable & important in principle that the amount of Bills drawn should be covered by a similar amount of Bills in hand unless the deficiency were made up by a deposit of Exchequer Bills, if however you should want an occasional advance as far as £15,000 we should be happy to meet your wishes' ...
banking rule, a bill of exchange or a mortgage - 'the cousinhood rule had always been that measured relief might come to banks that were illiquid, but never - except in post bankruptcy charity - to the insolvent' ...
Short term prospects and gain through participation in the ancient universities, the legal profession, parliament, the army or the church was not on ... but Voltaire spotted that there were unintended consequences of such exclusions -
'Quakers are therefore reduced to the necessity of subsisting on trade' ...
Successful in trade generally these early banks started to specialise in taking deposits, arranging loans, discounting bills and clearing debts ... there were only 24 banks in London in 1725 ... this profitable business specialisation was possible only after trust & confidence had been painfully established over time ... initially within a network Friends and then extended, with care, to other reliable socially inclusive counterparties ... quality of the client base was fundamental, 'would you but a second hand car from this man'? ... risk was reduced by diversified portfolios ... and quality improved with a keen ear for gossip in the local coffee houses and broadsheets ... all these activities were undertaken by general merchants, but specialisation & scale enabled the new banks to offer a better service ... crucially the marginal productivity of capital increased and the supply of money was matched by the flow of goods and services!
In this way English capital eventually deserted agriculture and powered the industrial revolution.
Capital also eventually deserted North Wales as mines became exhausted & water logged, and steam engines replaced waterpower. Capital went into innovation ... new ventures which the old landlords had missed, some didn't bother to search ... why should they ... they were rich? ... others did invest in their pet projects but the effect of the new capital was to open up a plethora of new opportunities as everyone and anyone with a good idea could have a go and try to attract some capital. Those with the ideas didn't have the capital and those with the capital didn't have the ideas, John Freame and the bankers solved the problem ... they were 'coining their credit' ... perhaps the rise of the 'dissenters' and the repeal of the Corn Laws were the final nails in the coffin of feudalism?
Of course there were failures, a bill broking business of the Gurneys nearly finished off the whole cousinhood on 'Black Friday' in 1867 ... but failure was the only way that evolution could work, as innovations proliferated the unsuccessful were weeded out ... how else could the successful thrive? ... think about it ..
In 1858 limited liability was extended to joint stock banks and new competition was around. Eventually by 1896 the businesses scale was just too big for partnerships to support and Barclay & Co was incorporated ... to strengthen links and expand resources ... some were reluctant to lose their independence and the pride of their own note issues ... however in 1896 Barclay & Co, a limited company based on the prestigious Lombard Street address, was formed from an array of successful firms -
Barclay, Bevan, Tritton, Ransom, Bouverie & Co, Lombard Street, 1888-1896
Barclay, Bevan, Tritton & Co,1690-1888
Spooner, Attwood & Co, Lombard Street, 1801-1863
Ransom, Bouverie & Co, Pall Mall, 1786-1888
Lockhart & Co, 1787-1798
Bouverie, Murdoch, Bouverie & James, Haymarket, 1813-1856
Hall, Bevan, West & Bevans [Brighton Union Bank], 1805-1894
Wigney & Co, [Brighthelmstone Bank], 1787-1842
Backhouse, Jonathan & Co, Darlington, 1774-1896
Gurneys & Co, Norwich, 1775-1896
Tompson, Barclay & Ives, Norwich, 1792-1832
Copeman & Co, Aylsham, 1809-1855
Harvey & Hudson & Co, [Crown Bank], 1792-1870
Allday & Kerrison, 1768-1808
Taylor & Dyson, [Norfolk & Suffolk Bank], 1802-51
Ipswich Bank, Alexanders, 1744-1878, & Gurneys to 1896
Wallis Miles, Ipswich ?-1776
Bridges & Co, Manningtree, 1790-1816?
Riches & Collet, [Woodbridge Bank], 1797-1805, Alexanders & Collet 1805-1826
Cooper & Co, [Woodbridge & Suffolk Bank], 1797-1805
Huddlestone & Co, Bury St Edmunds, 1776–1880
Round, Green, Hoare & Co, Colchester, 1774-1891, & Gurneys to 1896
Mills, Bawtree & Co, Colchester & Essex, 1774?-1891
Gurneys, Birkbeck, Barclay & Buxton, Wisbech, 1782 - 1896
Gurneys, Birkbeck, Barclay, Buxton & Orde, Yarmouth, 1781-1896
Gurneys, Birkbeck, Barclay, Buxton & Cresswell, Kings Lynn, 1782-1896
Everards & Co, Kings Lynn, 1764-1861
Jarvis & Jarvis, Kings Lynn, 1808-1888
Gurney, Birkbeck, Barclay, Buxton & Orde, Halesworth, 1782-1896
Gurney, Birkbeck, Barclay & Buxton, Fakenham, 1792-1896
Goslings & Sharpe, Fleet Street, 1650-1896
Sparrow, Tufnell & Co, Chelmsford & Braintree, 1803-1896
Giles James, Rochford, 1828-1853
Bassett Son & Harris, Leighton Buzzard, 1812-1896
Sharples, Tuke, Lucas & Seebhom, Hitchin 1820-1896
Gibson, Tuke & Gibson, Saffron Walden 1824-1896
Searle, Sons & Co, Saffron Walden, 1797-1826
Fordham, Gibson & Co, Royston, 1808-1896
J Mortlock & Sons, Cambridge, 1780-1896
Veasey, Desborough & Co, Huntingdon, 1804-1896
Molineux, Whitfeld & Co, Lewes, 1789-1896
Woodall, Hebden & Co, Scarborough, 1788-1896
What an astonishing amalgamation ... apart from Goslings, all had a Quaker background and although most had quietly abandoned their roots by this time there remained an enduring value in traditional Quakerism ... an intensive, interconnected network of alliances & support ... a financial revolution to match the industrial revolution ... scale, diversity, spread and growth ... confirming the essential co-evolution of industry & finance ... of technology & capital ...
The personal bonds of confidence & trust were explicitly emphasised and protected in the merger announcement -
'the local management will remain in the same hands as heretofore, the private character of the Banks being thus preserved' ...
John Freame was born in Cirencester the son of Robert Freame. In 1683 he was apprenticed to Job Bolton, a quaker goldsmith based in Lombard Street.
In 1713 he published Scripture Instruction: Digested into Several Sections by Way of Questions & Answers in Order to Promote Piety & Virtue, and Discourage Vice & Immorality, with a Preface Relating to Education
John Freame was a Quaker, a banker and a lobbyist ... and architect of the London Lead Company, Gadlys smelting and Barclays Bank.
Technology, the application of science to production, fired the industrial revolution. However, from the very early days of the london lead company in 1704, the capacity and skill to raise investment capital was vital for large scale manufacture. And what was the use of productivity improvements from specialisation without scale?
During the industrial revolution it transpired that technology was far more easily transferred to competitors than the ability to raise capital. In Flintshire and the North West innovative technology was blossoming but it was in London where most of the investment capital was raised. Interestingly it was the 'comparative advantage' in finance which was the driving force which relentlessly moved much of the English economy from manufacturing to financial services during the 20th century. This evolutionary change was exactly the same process which moved the economy from agriculture to manufacturing during the 19th century. But what was this principle of 'comparative advantage'? The history of the decline in the fortunes of crewood hall farm in Cheshire provided an interesting case study. The underpinning insights of Adam Smith's moral sentiments and David Ricardo's comparative advantage have all too often remained shrouded in mystery and strangely absent from curricula and discussion ...
John Freame was well practised in these principles long before they were publicised by Adam Smith and David Ricardo ...
In 1690 John Freame started trading as a goldsmith in Lombard Street, London. At this time London was still a tiny fraction of the modern conurbation, still focused almost entirely around The City, with the West End beginning to be developed. But John was in on the ground floor and seized his chance, just as the great expansion started.
John was a Quaker and at 21, had completed his rigorous seven year apprenticeship and earned his spurs as a 'freeman' of the city of London. He had a trusted partner Thomas Gould, also a Quaker and freeman of the city. This famed partnership predated the 1694 launch of the Bank of England and lasted in various forms until 1896.
As a teenager Freame had left Gloucester where persecution of dissidents was rife to learn his trading & metal working skills in a more tolerant environment in London under the watchful eye of Job Bolton, another Quaker.
The Quakers had a rich tradition in commerce where confidence & trust in dealing was fostered by a close knit 'club' of like minded folk. Life was not easy for innovative folk who were singled out as subversive and persecuted for their beliefs, but out of adversity came strength. John Freame's dad Robert was a textile merchant and John's education was a family priority, Robert insisted John worked hard during his apprenticeship to acquire a trade ... Robert also purchased land in Philadelphia to provide an escape route, should persecution persist ...
One of John's jobs would have been the issuing of receipts for cash deposits which customers were increasingly willing to place with respected goldsmiths for safe keeping. The goldsmith stocks were concentrated value and a persistent target for thieves ... expertise in safes and security became an important part of the apprenticeship. The issued receipts from successful goldsmiths were beginning to be used as bank notes ... a token of a promise to pay ...
The tradition of 'freemen' goes back many centuries ... some citizens of towns & cities were granted rights to trade & other 'privileges' which were conceded by royal charters. The close connection between 'freemen' and London's government can be traced back to the Saxon folkmoot and to the 'Great Concourse' of the early Norman kings. As London grew, its trade & craft industries expanded to such an extent that it became impossible for all 'freemen' to be directly involved in the evolving structure of local government. As a result, the relationship between freemen and the government of London changed to a representation system through the Masters & Wardens of the Livery companies. The Worshipful Company of Goldsmiths was one of the twelve great Livery Companies in the City; these were associations of craftsmen developed to promote the trade by apprenticeship. The Freedom of the City of London became an essential requirement for all who wished to carry on business and trade within the Square Mile. As a result, the privileges of Freedom were eagerly sought after, and the duties & obligations were faithfully observed. It remains necessary to this day for all Liverymen to be 'freemen' of the City, and it is the liverymen who elect the Lord Mayor and the Sheriffs of the Corporation of London. Although it is no longer necessary to be a 'freeman' to work in the City, the proud history of the City of London is such that large numbers of men and women have regarded it a privilege to be admitted to the Freedom of the City. In John Freame's day freemen inherited, earned or purchased such independence from the 'powers that be' through their successful deals of mutual benefit; benefits for both freeman & city ... and Quakers with savings were not excluded!
The goldsmiths, in particular, resolutely guarded their hard earned reputation and discovered that they were able to set up shop as sellers of credit. In the business of credit, satisfying customers was no mean achievement as Archimedes, Shylock and the Jews of history will attest!
Associations of traders in the city and the Livery Companies, like all trade unions, initially emerged to reward investments in hard work, honesty & thrift and to protect the reputations of craftsmen against the infiltrations of conmen and parasites ... more apprenticeships and improvement of standards were in the interests of everyone ... but there were problems ... if associations were controlled by government edicts & licences, such institutions tended to become rent seeking cartels where restrictive practices, particularly restrictions on entry & innovation, inhibited the proliferation of skills, learning and competition. Moral hazard was around in the City of London from the early days.
In 1690, his apprenticeship over, John Freame was 'allowed' set about his new business which inevitably required considerable capital reserves as the Quaker Meeting of 1688 recorded -
'none can launch into trading & worldly business beyond what they can manage honourably and with reputation; so that they may keep their words with all men ...'.
In 1672 yet another Government default was traumatic with reverberations which echoed throughout the banks, the city and the country ... 'Stop the Exchequer' had a direct link to the 1688 revolution and the founding of the Bank of England in 1694 ... and Freame & Gould in 1690 were in the middle of this upheaval. On Tuesday 2nd January 1672 repayments of debt were suspended by decree. The bankers of Lombard Street had been asked for an 'advance' to the king to finance the fleet ... they refused to make the loan. A total 82 ships were to be prepared for sail 'in the cause of national defence' to attack the Dutch Republic in the Third Anglo-Dutch War (a religious war or a mercantilist war?). Due to the pressing need for money the king and his council resolved to find the money for the fleet by cutting other parts of the treasury's budget; monies that had been allocated for the repayment of bonds and securities were to be spent on the fleet. The result was great disruption and damage to the financial markets ... 'I believe it certain that the trade of bankers was totally destroyed by this accident' ...
Capital for young John Freame's new business would have come from reliable family & friends; the established Quaker practice was to invest heavily in education and the human capital of the future, not in mercantilist or religious wars ... John wasn't alone, that's what friends and partnerships were for ... and it seemed 'Freame & Gould' were a much better investment bet than governments ... hard work, honesty & thrift were needed for banking success ... government success seemed to depend on warfare and decrees?
In this way the Lombard Street location acted like a magnet attracting merchants, dealers and nascent bankers, where regular interaction was intense. This close knit cooperation developed into a 'Gold Boy's Network' for inter bank lending and clearing of debts. What a service for customers!
And what better time to start a business than in the atmosphere of confidence following the Glorious Revolution of 1688 ... John Locke had clarified some inspiring principles of government -
first - no government can be justified by any divine, inherited or absolute right to lord it over others
second - all men are created free & equal in a state of nature, but there was a caveat; free to deal but not free to harm others ... no man was free to do whatever he pleased ...
Following this Glorious Revolution evolved the rise of civilization & property ... the only legitimate governments were those that had the consent of all the people ... 51% could not lord it over 49% ... there existed inalienable rights ...
100 years later Thomas Jefferson invented America and wrote, 'Bacon, Locke and Newton are the three greatest men that have ever lived, and laid the foundation of those superstructures which have been raised in the Physical & Moral sciences' ... no wonder folk talked about a special relationship ...
Sure there were still wars being fought in 1690 ... in Scotland, Ireland & France ... but some wars could be profitable for bankers ... and everybody now knew spendthrift kings were a thing of the past ... parliament now ruled over the national purse? ... and these were 'just' wars for the defence of the revolution?
Things were changing - spending on the kings whims was now controlled by Parliament and rent seeking slothful landlords had to compete with new capital accumulations from merchants with the confidence to invest in specialisations, scale & technology ... a social revolution as a middle class emerged intent on mass production ...
At this time, in 1694, the Bank of England was founded to provide £1.2 million at 8% for the wars ... and the Quakers were getting a sizable piece of the cake, maybe 25% of the population around Lombard Street at the time were Quakers ...
Margaret Ackrill in 'Barclays: The Business of Banking, 1690-1996' summarised the scene -
'In the 1690s their new bank competed for customers in a London alive with opportunity during a war induced inflationary boom. Its money markets developed more rapidly than those in the provinces, and in this large urban market, Freame & Gould, had to build a reputation. Quaker businessmen were prominent in city trade at the time, and Freame & Gould would have had special confidence in their co-religionists with whom they were united by spiritual fervour and by shared experience of religious persecution. Equally other Quakers had a confidence in them, a distinct competitive advantage'.
A remarkable business 'machine' had emerged, the John Freame didn't grow things or manufacture widgets, he made money from selling money -
'I promise to pay the bearer, my word is my bond' ... a reputation for honesty enabled the bank to attract deposits for safe keeping ... as long as his reputation remained intact the receipts for the deposits began to be used as money for exchange ... it was all about trust & confidence ...
'those with ideas had no money and those with money had no ideas' ... later it became clear that depositors never wanted their money back at the same time and cash on deposit seemed to increase ... there was an opportunity the bank to risk lending deposit money to trusted customers with investment schemes ... and charge them for it ... but he had to be careful, to maintain trust & confidence there always had to be enough gold in the vaults to pay the bearers of the receipts on demand ...
'natural selection of profitable projects' ... lending was always a risky business but experience & expertise reduced the alarming problem of bad debts ... good loans were not about predicting the future or technology foresight rather they involved confining deals to trusted customers with profitable projects ... chasing profits & cutting losses and a diverse portfolio ...
'deposits made reserves' ... with an income flow from profitable investments the bank now found it could afford to offer inducements to encourage more deposits ... and more deposits made more loans and more reserves ...
'loans made deposits' ... the bankers found that as credit was spent from one account it immediately ended up in another account ... money circulated, it was spent but it was not lost ...
'endogenous money supply' ... the bankers then discovered that the money that came back as new deposits could be relent to someone else, each project picking up profit ... the whole shebang was growing ... the money supply kept pace with economic growth, avoiding 'too much money chasing too few goods & services' ... there was no inflation ... the Balance Sheet balanced ... in this way interest rates were determined in markets for credit as commercial banks balanced their Balance Sheets or went bust ...
'bills of exchange & mortgages' ... as the money always seemed to move from one account to another the bankers realised that it would be cheap & easy to make payments between buyers & sellers simply by adjusting their deposit accounts instead of the risky business of transporting gold, coins or paper around the place ... all bankers knew the difference between a bill of exchange and a mortgage ...
This banking 'machine' was sometimes ridiculed as the 3-6-3 system -
3% interest on deposits
6% return on investments
3 pm on the golf course
... sounds simple but it was not a machine but rather a complex adaptive system of trust & confidence as promises were exchanged, credit was not created out of thin air!
John Freame's partnership prospered and was further cemented when John married Priscilla, Gould's sister in 1698, and Thomas married John's sister Hannah. A spate of issue followed, seven babies for Priscilla and ten for Hannah! As usual, despite the appearances of macho men, it was the girls who took the decisions. 54 Lombard Street although a substantial brick building replacing the ashes that followed the 1666 fire, was now too unhealthy for bringing up children and both families escaped to adjacent country houses in Bush Hill.
But above all John Freame's success was as an entrepreneur with his work financing the london lead company at Gadlys in support of fellow Quaker, Edward Wright. This investment was an outstanding success and transformed the smelting industry in 1704, where scale and innovative technology were required if profits were to be earned.
Confidence & trust in the Freame & Gould operation was confirmed by the discounting of the London Lead Company's bills which were circulating as currency around North Wales at the time.
John Freame was also active outside of his business; he supported the Quaker cause as clerk at the 'Meeting for Sufferings' and in his writings which attempted to make folk 'sensible of the ill consequences of vice & immorality'.
In 1713 John Freame published a book, originally prepared for the education & enlightenment of his own children ... 'Scripture Instruction: Digested into Several Sections by Way of Questions & Answers in Order to Promote Piety & Virtue, and Discourage Vice & Immorality, with a Preface Relating to Education' ... from this it is possible to confirm that Freame's attitude to business was typical of the Quaker tradition ... hard work, honesty & thrift ... and education, education, education for the youngsters ...
John was particularly concerned with teaching his own children, just listen to his message in the Preface of this remarkable book -
Although I write for my own children & family, some friends believe, if published, this would benefit others. Most experts differ in their controversial debates about education which are beyond the understanding of children. But children are quickly capable of distinguishing between right & wrong and these notions should be reinforced with by teaching how the world works and why good will always be rewarded and evil always punished. Not empty notions, mere speculation or disputable points but simple back to basics. Don't take my word for it, children should read the ancient scriptures and see that all questions can be answered by interpreting for themselves what is good and what is evil. It is not rocket science.
The future is our children and we have a duty to educate them, which is far more important than giving them riches. Success will only come when parental guidance reinforces the innate difference between good and evil by example. Children have sharp eyes & ears and they imitate, above all Mum & Dad should not disagree, and endeavour to choose peers and friends with shared values. Censorship for youngsters is sensible. From the earliest of years draw reasonable lines in the sand and insist on consistency. Tough love must not involve cherishing faults nor satisfying every desire. At the table children are not served what they crave but learn to take contentedly whatever is offered. Children humoured in the cradle and indulged as they grow up will thereafter always insist on getting their own way. Always note temper and fault but always demonstrate approval of what is good. Demonstrate love and children will become fearful of offending, much more effective than fear of the stick. Nevertheless gross error, obstinacy, disobedience or lies, must be corrected but without anger and with explanation of the evil. Avoid chiding for every little offence, making it cheap and familiar, lessening authority and respect. Rational argument should convince by reason.
School is not a house of correction but a place of delight and recreation, reinforcing parental values.
Indulging children in their humours is comforting for parents but it lays the foundations of greater evils later ... idleness, dishonesty and extravagance. The work ethic ensures the enterprising generate an ongoing income stream ... the rich soon squander capital ... 'as soon as they have gotten their portions of riches into their own hands, they live so much in pride, idleness & extravagance that they quickly run out of all their estates and reduced themselves to poverty and so much in debt. But those that had been diligent and industrious in their business, live well by their trades and been a comfort to themselves and their relations, not through some desperate project they neither understood nor were capable to manage and which brought ruin on themselves and their families and others but by the industrious business they were bred to ...
In 1728, the Freame & Gould bank moved to 54 Lombard Street, and was identified by the 'Sign of the Black Spread Eagle' ... over the years this has become a core part of the bank's identity.
Interestingly in 1729 as John's son Joseph took a more active role in the bank, John himself became a Director of the London Lead Company and a large shareholder. He was responsible for orchestrating the exposure of skulduggery within the company following the South Sea Bubble of 1720 ... skullduggery which had been hidden by Edward Wright and a group of fraudulent Quakers. The resuscitated company re-established its reputation and profits. John Freame had an eye for honest business.
Thomas Gould senior died in 1730 and the company continued as Joseph Freame & Co. Thomas' son Thomas junior started a separate banking business which went bankrupt in 1732. Quakers were harsh on bankrupts, seeing inability to pay as a betrayal of trust ... very embarrassing and it destroyed reputations!
The name 'Barclays' became associated with the Joseph Freame business in 1733, when James Barclay, John Freame's son-in-law, became a partner. Like many Quaker business men the Barclays followed a strategy of extensive networks of trusted connections and the occasional judicious marriage. They made their original fortune from linen drapery ...
The dynasty of Quaker bankers sired by Robert Freame, merchant of Cirencester and Robert Barclay, the Apologist of Urie, was reinforced by remarkable interbreeding and several alliances with other banking families. Banking was built on trust and who do you trust if not the family especially if they were all Quakers ... the Bevans were Welsh Quakers, Swansea merchants; the Trittons were Yeomans from Kent; the Gurneys, originally in linen & wool, were in Norwich; Jonathan Blackhouse, linen & worsted in Darlington; ... on it went remarkable extended networks of trust & reputation creating a distinct Quaker competitive advantage ... Margaret Ackrill suggested that Quaker wealth from hard work, honesty & thrift plausibly combined with individual self discipline and Religious sanction to produce the capital accumulations necessary for the scale of the industrial revolution ... but there were many other entrepreneurial streams ... however one generalisation was clear, the Quakers contributed quite disproportionally to 18th century entrepreneurial propensity and business success ... perhaps a result of social exclusion ... (akin to the Jews, Huguenots & Asian trading minorities?) ... or perhaps a result of the stigma of bankruptcy as an immoral broken promise, rather than any direct effect of religious belief ...
England first accumulated 'new' capital out of international trade which followed the voyages of discovery and typically the industrial revolution in Cheshire was financed by the merchants of Liverpool.
Freame, Barclay and the new capitalists organised hitherto unimaginable amounts of capital. Gathering in capital first from trusted friends for investment in fixed plant & equipment for risky ventures, but that was only the first problem to be solved. Such capital was locked up but the entrepreneur also required working capital for wages, materials, transport, energy and the inevitable tax long before a return was secured from customers. The demand for investment funds and credit was immense ...
Middle class entrepreneurs now had access to capital and credit which previously had been monopolised by the landowners.
John Freame died in 1745 but what a band wagon had started to roll ... John Freame built up an investment and credit business which powered the industrial revolution, wealth creation & endogenous economic growth. Deals between those with ideas but no capital and those with capital but no ideas. An extensive network of trust based on legal rights & obligations enabling the exploitation of the 3-6-3 rule. Borrow at 3%, lend at 6% and be on the golf course by 3pm!
But Margaret Ackrill hit the nail on the head -
'the fundamental impetus to develop as financial intermediaries, especially strong for Quakers, was that their reputation for probity & trustworthiness meant that they could borrow more cheaply than they could lend' ...
Many Quaker business homilies helped to explain their success -
management of excessive risk - 'some perceiving their trades were not sufficient to answer their expenses, have run upon desperate projects' ...
accumulation over time and the magic of compound interest - 'business with a little profit and entire regularity is happiness to the true merchant' ...
balanced Balance Sheets - 'we feel it desirable & important in principle that the amount of Bills drawn should be covered by a similar amount of Bills in hand unless the deficiency were made up by a deposit of Exchequer Bills, if however you should want an occasional advance as far as £15,000 we should be happy to meet your wishes' ...
banking rule, a bill of exchange or a mortgage - 'the cousinhood rule had always been that measured relief might come to banks that were illiquid, but never - except in post bankruptcy charity - to the insolvent' ...
Short term prospects and gain through participation in the ancient universities, the legal profession, parliament, the army or the church was not on ... but Voltaire spotted that there were unintended consequences of such exclusions -
'Quakers are therefore reduced to the necessity of subsisting on trade' ...
Successful in trade generally these early banks started to specialise in taking deposits, arranging loans, discounting bills and clearing debts ... there were only 24 banks in London in 1725 ... this profitable business specialisation was possible only after trust & confidence had been painfully established over time ... initially within a network Friends and then extended, with care, to other reliable socially inclusive counterparties ... quality of the client base was fundamental, 'would you but a second hand car from this man'? ... risk was reduced by diversified portfolios ... and quality improved with a keen ear for gossip in the local coffee houses and broadsheets ... all these activities were undertaken by general merchants, but specialisation & scale enabled the new banks to offer a better service ... crucially the marginal productivity of capital increased and the supply of money was matched by the flow of goods and services!
In this way English capital eventually deserted agriculture and powered the industrial revolution.
Capital also eventually deserted North Wales as mines became exhausted & water logged, and steam engines replaced waterpower. Capital went into innovation ... new ventures which the old landlords had missed, some didn't bother to search ... why should they ... they were rich? ... others did invest in their pet projects but the effect of the new capital was to open up a plethora of new opportunities as everyone and anyone with a good idea could have a go and try to attract some capital. Those with the ideas didn't have the capital and those with the capital didn't have the ideas, John Freame and the bankers solved the problem ... they were 'coining their credit' ... perhaps the rise of the 'dissenters' and the repeal of the Corn Laws were the final nails in the coffin of feudalism?
Of course there were failures, a bill broking business of the Gurneys nearly finished off the whole cousinhood on 'Black Friday' in 1867 ... but failure was the only way that evolution could work, as innovations proliferated the unsuccessful were weeded out ... how else could the successful thrive? ... think about it ..
In 1858 limited liability was extended to joint stock banks and new competition was around. Eventually by 1896 the businesses scale was just too big for partnerships to support and Barclay & Co was incorporated ... to strengthen links and expand resources ... some were reluctant to lose their independence and the pride of their own note issues ... however in 1896 Barclay & Co, a limited company based on the prestigious Lombard Street address, was formed from an array of successful firms -
Barclay, Bevan, Tritton, Ransom, Bouverie & Co, Lombard Street, 1888-1896
Barclay, Bevan, Tritton & Co,1690-1888
Spooner, Attwood & Co, Lombard Street, 1801-1863
Ransom, Bouverie & Co, Pall Mall, 1786-1888
Lockhart & Co, 1787-1798
Bouverie, Murdoch, Bouverie & James, Haymarket, 1813-1856
Hall, Bevan, West & Bevans [Brighton Union Bank], 1805-1894
Wigney & Co, [Brighthelmstone Bank], 1787-1842
Backhouse, Jonathan & Co, Darlington, 1774-1896
Gurneys & Co, Norwich, 1775-1896
Tompson, Barclay & Ives, Norwich, 1792-1832
Copeman & Co, Aylsham, 1809-1855
Harvey & Hudson & Co, [Crown Bank], 1792-1870
Allday & Kerrison, 1768-1808
Taylor & Dyson, [Norfolk & Suffolk Bank], 1802-51
Ipswich Bank, Alexanders, 1744-1878, & Gurneys to 1896
Wallis Miles, Ipswich ?-1776
Bridges & Co, Manningtree, 1790-1816?
Riches & Collet, [Woodbridge Bank], 1797-1805, Alexanders & Collet 1805-1826
Cooper & Co, [Woodbridge & Suffolk Bank], 1797-1805
Huddlestone & Co, Bury St Edmunds, 1776–1880
Round, Green, Hoare & Co, Colchester, 1774-1891, & Gurneys to 1896
Mills, Bawtree & Co, Colchester & Essex, 1774?-1891
Gurneys, Birkbeck, Barclay & Buxton, Wisbech, 1782 - 1896
Gurneys, Birkbeck, Barclay, Buxton & Orde, Yarmouth, 1781-1896
Gurneys, Birkbeck, Barclay, Buxton & Cresswell, Kings Lynn, 1782-1896
Everards & Co, Kings Lynn, 1764-1861
Jarvis & Jarvis, Kings Lynn, 1808-1888
Gurney, Birkbeck, Barclay, Buxton & Orde, Halesworth, 1782-1896
Gurney, Birkbeck, Barclay & Buxton, Fakenham, 1792-1896
Goslings & Sharpe, Fleet Street, 1650-1896
Sparrow, Tufnell & Co, Chelmsford & Braintree, 1803-1896
Giles James, Rochford, 1828-1853
Bassett Son & Harris, Leighton Buzzard, 1812-1896
Sharples, Tuke, Lucas & Seebhom, Hitchin 1820-1896
Gibson, Tuke & Gibson, Saffron Walden 1824-1896
Searle, Sons & Co, Saffron Walden, 1797-1826
Fordham, Gibson & Co, Royston, 1808-1896
J Mortlock & Sons, Cambridge, 1780-1896
Veasey, Desborough & Co, Huntingdon, 1804-1896
Molineux, Whitfeld & Co, Lewes, 1789-1896
Woodall, Hebden & Co, Scarborough, 1788-1896
What an astonishing amalgamation ... apart from Goslings, all had a Quaker background and although most had quietly abandoned their roots by this time there remained an enduring value in traditional Quakerism ... an intensive, interconnected network of alliances & support ... a financial revolution to match the industrial revolution ... scale, diversity, spread and growth ... confirming the essential co-evolution of industry & finance ... of technology & capital ...
The personal bonds of confidence & trust were explicitly emphasised and protected in the merger announcement -
'the local management will remain in the same hands as heretofore, the private character of the Banks being thus preserved' ...
Notes for John FREAME
John Freame (1669 - 1745) founded Barclays Bank in 1690.
John Freame was born in Cirencester the son of Robert Freame. In 1683 he was apprenticed to Job Bolton, a quaker goldsmith based in Lombard Street.[1]
In 1713 he published Scripture Instruction: Digested into Several Sections by Way of Questions & Answers in Order to Promote Piety & Virtue, and Discourage Vice & Immorality, with a Preface Relating to Education[2]
John Freame was born in Cirencester the son of Robert Freame. In 1683 he was apprenticed to Job Bolton, a quaker goldsmith based in Lombard Street.[1]
In 1713 he published Scripture Instruction: Digested into Several Sections by Way of Questions & Answers in Order to Promote Piety & Virtue, and Discourage Vice & Immorality, with a Preface Relating to Education[2]