Heritage: The day the Romford Bank collapsed

The north side of Romford Market in about 1900. Picture: Brian Evans

The north side of Romford Market in about 1900. Picture: Brian Evans - Credit: Brian Evans

A tale of incompetence, selfishness and denial – Prof Ged Martin looks at what happened to the town’s financial institution

What really angered people was that their local bank closed its doors on a Thursday.

For 597 years, Wednesday had been market day in Romford.

As usual, on June 5, 1844, unsuspecting traders and cattle dealers had deposited their cash.

The Romford Bank also issued its own notes. Technically, banknotes are IOUs for real cash: “I promise to pay the bearer on demand”.

Local farmers went home not knowing they had worthless paper in their wallets.

Somebody must have known the Romford Bank wasn’t going to open the next day.

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It wasn’t Romford’s first financial crisis. Surridge and Joyner’s Romford Agricultural Bank had collapsed in 1826.

It wasn’t encouraging that Surridge became manager of the successor institution.

The new boss was Thomas Johnson, senior, but the brains came from his son and namesake.

The elder Johnson was a partner in an Aldgate oil business. Forget Texan millionaires: this was a steady trade selling whale oil for lamps.

It was profitable, but Johnson’s capital was smaller than people thought, because he was buying out a previous owner by instalments.

His smart son married a rich bride in 1831, and withdrew from the bank.

This left the 65-year-old father juggling three businesses.

The third, a white lead mill in Southwark – making paint and putty – was losing money.

Over the years, Johnson senior diverted over £8,000 from the Romford Bank to support his white lead business.

He’d also served as Lord Mayor of London in 1840. Lord Mayors were expected to spend freely. Johnson drew several thousand pounds from the Romford Bank to make a splash.

Nearly eighty in 1844, Johnson was infirm, deaf and nearly blind.

Most of his time was spent in his Aldgate and Southwark ventures.

He visited Romford on Wednesdays, but mainly shook hands with customers, saying: “How do you do? This is a fine day.”

In 1843, he tried to head-hunt a new manager, a clerk in a rival bank called Burness. But Johnson obstructed Burness’s attempts to examine the accounts.

When he finally saw the books, Burness was aghast to discover that the Romford Bank was carrying an impossible £31,000 deficit.

In denial, Johnson disputed the calculation, claiming that his Aldgate business could cushion any loss.

In the bankruptcy hearings that followed, a clerk called Copley gave evidence. He’d worked for the Romford Bank for four years, and claimed he’d realised within three months that it was bust.

But bank clerks were bound to confidentiality. Whistle-blowing was not encouraged.

Amazingly, the Romford Bank had just £23, 5 shillings and sixpence (£23.27p) on deposit with the Bank of England. Central banking did not extend to regulation, and no alarm bells rang.

Sadly, Johnson had persuaded his Aldgate business partner Charles Mann to join him in the Romford Bank, promising him easy profits.

“I was never at the bank; I knew nothing about banking affairs; I never saw an account of any sort,” Mann admitted.

Charles Mann had ignored a basic business rule: avoid any deal that sounds too good to be true. “I now stand before the world a ruined man.” He was 71, and lost everything he’d worked for.

Harvey George, a Romford auctioneer, reckoned he’d lost £3,000 in the disaster. Accusing Johnson of submitting fake accounts, he blocked his release from bankruptcy in 1845.

Johnson complained this prevented him from claiming a City of London pension as a destitute alderman, because bankrupts were ineligible.

He showed no sympathy for the Bank’s victims.

In 1844 Parliament passed a major Banking Act, the work of Prime Minister Sir Robert Peel. It effectively gave the Bank of England the monopoly of issuing banknotes in England. Banks in Scotland and Northern Ireland still issue their own notes.

It’s astonishing that Johnson’s Romford Bank was run in such a reckless, selfish way. That couldn’t happen today, could it?