The Royal British Bank was a British

joint-stock A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders are ...

bank, established under a

Royal Charter A royal charter is a formal grant issued by a monarch under royal prerogative as letters patent. Historically, they have been used to promulgate public laws, the most famous example being the English Magna Carta (great charter) of 1215, bu ...

in 1849, that collapsed in 1856. This caused a scandal. The circumstances were described by ''

The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...

'' as "an extraordinary example of the little trouble the public take to think for themselves".''Economist'', 22 June 2013 p. 29 The bank's main founders were John MacGregor, a

Member of Parliament A member of parliament (MP) is the representative in parliament of the people who live in their electoral district. In many countries with bicameral parliaments, this term refers only to members of the lower house since upper house members of ...

for Glasgow, and Edward Mullins, a solicitor. After difficulties in raising the necessary capital, the bank was launched in 1849. After press articles alleging substantial losses appeared in 1856, the share price dropped and in September 1856 the bank suspended operations after experiencing a run, leaving 6,000 depositors owed money. It then became apparent that various directors and former directors had taken substantial sums from the bank, though most of the directors in post at the time of the collapse had not done so. The eight surviving directors—among them

Henry Dunning Macleod Henry Dunning Macleod (31 March 1821 – 16 July 1902) was a Scottish economist. Life Henry Dunning Macleod was born in Edinburgh, and educated at Eton, Edinburgh University, and Trinity College, Cambridge, where he graduated in 1843. Macleod ...

—were put on trial in February 1858. (The bank's founder, MacGregor, had fled to France and died there in 1857.) They were tried for conspiracy to defraud the bank's customers at the Court of Queen's Bench before the

Lord Chief Justice Lord is an appellation for a person or deity who has authority, control, or power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the peerage in the United Kingdom, or are ...

, Lord Campbell. On the first day of the trial, the

Prince of Wales Prince of Wales ( cy, Tywysog Cymru, ; la, Princeps Cambriae/Walliae) is a title traditionally given to the heir apparent to the English and later British throne. Prior to the conquest by Edward I in the 13th century, it was used by the rulers ...

attended and sat on the bench next to the Lord Chief Justice. The

jury A jury is a sworn body of people (jurors) convened to hear evidence and render an impartiality, impartial verdict (a Question of fact, finding of fact on a question) officially submitted to them by a court, or to set a sentence (law), penalty o ...

found each of the defendants guilty of the charges and they were given sentences ranging from a nominal fine of one shilling to imprisonment for up to one year. By July 1858, however, only one of the convicted, the former manager of the bank, and arguably the least influential person among the convicted, remained in prison; the contrast with the treatment of the directors in the City of Glasgow Bank collapse is perhaps instructive. The collapse gave rise to a new legislation tightening banking regulation, including the publication of

balance sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business ...

s and the

audit An audit is an "independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form when such an examination is conducted with a view to express an opinion thereon.” Auditing ...

ing of accounts.

References

* *''The Times'', Monday, 1 March 1858; p. 9; Issue 22929; col B *''The Times'', Monday, 5 July 1858; p. 5; Issue 22890; col F 1850s in the United Kingdom Defunct banks of the United Kingdom Banks established in 1849 1849 establishments in the United Kingdom 1858 in case law Bank failures Banks disestablished in 1856 1856 disestablishments in the United Kingdom {{UK-bank-stub

See also

References