How the banking revolution began with Quakers in the Black Country

It's not exactly Wall Street, is it? To most locals, this shabby old building in a back street in the West Midlands is remembered as the old Subway, its peeling green paint a tell-tale sign of its recent use as a sandwich bar.

A photograph of Lloyds Bank in Oldbury, believed to have been taken just after the end of the First World War
A photograph of Lloyds Bank in Oldbury, believed to have been taken just after the end of the First World War

But this scruffy looking building played a hugely important role in shaping the world of modern financial services – it was the first branch of Lloyd's Bank.

While the West Midlands and Shropshire's role as the birthplace of the Industrial Revolution is well known, the area's importance in the banking revolution which took place at the same time gets far less attention.

Britain's biggest high-street bank owes its origins not to the Square Mile, but to a Quaker industrialist whose father had fled persecution in his native Wales to make a living in the quieter climes of the West Midlands.

Today, Lloyds Banking Group employs 65,000 people, and has 30 million customers. But it had already been trading for more than 100 years as a modest family business before it opened its first walk-in branch in a street close to where the M5 now passes by, in Unity Place, Oldbury.

The story began in Welshpool in Mid Wales, where Sampson Lloyd Snr was born in 1664 in difficult circumstances. His parents, Charles and Elizabeth had been detained for refusing to swear an allegiance to King Charles II. It is not certain where Sampson was born – the majority of reports say at Welshpool Gaol, where his parents served eight years, but others suggest they might have been under house arrest – but he would certainly have spent much of his childhood in custody.

The 1672 Declaration of Indulgence saw Quakers freed from prison, but they were still despised and persecuted. Sampson's father, who was a descendant of the Welsh royal family, decided it was time to leave behind the hostility he faced in his native Wales, and sought to make a new life elsewhere. However, the Five-Mile Act, introduced to restrict the influence of the Quakers, prevented any non-conformist clergymen from living within five miles of a corporate borough. That ruled out the major centres of the Black Country, but Birmingham, hitherto a sleepy backwater yet to be granted borough status, was also beginning to emerge as a manufacturing centre in its own right. Just like the Quaker Cadbury family, the Lloyds decided that the future Second City was ideally located to benefit from the Industrial Revolution which was about to explode just up the road, but was still small enough for them to live a peaceful life free from interference. There was also the added incentive that his brother-in-law John Pemberton had made a successful career as an ironmaster in Birmingham.

Details about Sampson Lloyd Snr are somewhat sketchy, but it is believed he moved to Birmingham in 1698, and settled at 56, Edgbaston Street where he kept an iron warehouse, and his son Sampson Lloyd II was born in 1699. With his son, Sampson, he also opened a slitting mill at the end of Bradford Street, powered by water from the River Rea.

Following the death of Sampson Snr in 1725, Sampson II and his older brother Charles went into business together, buying another mill in the town and trading in iron. Sampson also bought a forge in Burton-upon-Trent. The business eventually became the biggest foundry in the British Isles.

Sampson Lloyd II

In 1727, Sampson married Sarah Parkes, the daughter of wealthy industrialist Richard Parkes from Wednesbury. Parkes died in 1728, leaving what would eventually become the Patent Shaft steelworks in Wednesbury to his four daughters, and Sampson naturally became involved in the management of that business too. Sarah died the year after her father, aged just 29, leaving one son Sampson III. Charles also died in 1742, and this inheritance meant Sampson would become a man of considerable means.

In 1742 he paid £1,290 for a 56-acre estate called "Owen's Farm" in what is now Sparkbrook. He retained the Tudor farmhouse and built a Georgian mansion nearby which he called "Farm", and is now a grade II* listed building which is open to the public.

He split his time between Farm and his town-house in Edgbaston, which was close to his business. But while many wealthy people at that time would have chosen to slow down as they reached their seventh decade, Sampson Lloyd II decided in 1765 – at the age of 66 – to start a bank.

His motive for starting the venture is not clear, but it may have been something he wanted to do for his son, Sampson Lloyd III. He entered into a partnership with leading Birmingham button maker John Taylor, and the bank, initially known as Taylor's and Lloyds, began operating from 7 Dale End in Birmingham.

We do know that there was a growing demand for commercial banks during the 18th century, in part due to the new-found wealth from the Industrial Revolution, and a lack of confidence in the established banking system.

Up until 1640 the well-off would have left their deposits under Crown Protection with the Royal Mint, but after King Charles I “borrowed” £150,000 to spend on his army, merchants looked elsewhere to deposit their wealth.

By the 18th Century the modern banking system was beginning to emerge, and Quakers, who had a reputation for honesty, were well-positioned to benefit.

When Taylor’s and Lloyds was formed, four shares were issued, with both men bringing their sons into the business, and between them the four men invested £6,000 – well over £1 million each at today's prices. Two clerks were also employed, at a cost of £80 a year.

The original Lloyds Bank branch was later used as a Subway sandwich shop

It seems incredible given the huge sums of money involved, but such was the trust between the four men that no legal deed was ever brought into place during the first 100 years of operation. The Lloyd were soon established as the dominant figures in the partnership, with the day-to-day running of the bank was left to Sampson Lloyd III.

And Sampson Lloyd Snr's hunch that Birmingham could be a good place to do business would pay dividends. By 1765 Birmingham's population had grown to 25,000, and within 15 years this had doubled to 50,000. The sleepy backwater was emerging as an industrial powerhouse, and Taylor's and Lloyd's was the only bank in town.

In 1777, the philosopher and economist Edmund Burke described Birmingham as "the toy-shop of Europe", producing in vast quantities all manner of steel ornaments, toys and trinkets. But it was not just a toyshop, it was also a huge arsenal with a prodigious output of guns and swords. It has been estimated that in the last quarter of the 18th century the city made more than 750,000 consignments of arms – there does seem a certain irony that a major beneficiary of this burgeoning industry would be a family of pacifist Quakers.

At one time in its early years it was said that half of Birmingham was indebted to Taylor's & Lloyd's.

But one obstacle to Birmingham's growth as a centre of commerce was the state of the roads leading to it. And how the Lloyd family dealt with his problem gives an interesting insight into what made them such a force in the world of business.

The first Lloyds Bank branch in Oldbury, believed to have been taken in the 1930s

A coach service to London had been running since 1731, but passengers making this treacherous journey not only had to resign themselves to two-and-a-half days on the road, but also with the likelihood that they would be relieved of their valuables by highwaymen along the way.

The long procession of wagons carrying coal from the Black Country collieries also floundered along the rutted roads, making the going still harder for other traffic.

And if Sampson Lloyd II and his son did not have enough to keep themselves busy at this time, their next project was to overhaul the region's transport links. Having successfully rallied a group of leading businessmen to the cause, including the engineer Matthew Boulton and other members of the Lunar Society, a meeting was held at the White Swan inn in Birmingham High Street on January 25, 1767. They discussed how the Black Country and Wolverhampton had benefited from the construction of the Staffordshire & Worcestershire Canal, but that Birmingham was still at a disadvantage. They commissioned the engineer James Brindley to draw up a route linking Birmingham to the canal at Wolverhampton, and Brindley came back with a largely level but meandering route through Smethwick, Oldbury, Tipton, Bilston and Wolverhampton.

On February 24, 1768, an Act of Parliament was passed, the Lloyds appointed commissioners to make the proposals a reality. This they did at break-neck speed, and by September 21, 1772, the 22-mile Birmingham Canal Navigation had been established. The waterway, known as the 'Silent Highway' would transform Birmingham's fortunes, halving the price of coal in the city overnight. It also proved a shrewd investment, paying a dividend of 20 per cent.

Sampson Lloyd II died in 1779 at the age of 80, but the bank continued to see rapid growth under Sampson Lloyd III and his half-brother Charles.

Sampson Lloyd III

Interestingly, Charles had learned his trade at the rival Freame, Barclay, Freame and Co – now Barclays Bank – after his sister married Charles Barclay.

In its early days, the bank's emblem was a beehive, representing industry and hard work. The famous black horse was originally used by was originally displayed outside Humphrey Stokes' goldsmiths shop in London from 1677, and was adopted by Lloyds in 1884 when it took over the London-based Barnett, Hoares & Co bank, which had absorbed Humphrey Stokes.

The industrial expansion which took place during the Victorian era meant the nature of banking was changing, and in 1864 Taylor's and Lloyd's opened its first retail branch in Oldbury. And while the informal agreement between two Quaker families might have been appropriate for the time, it was now considered expedient to put the bank on a more formal footing. In 1865 the Lloyds Banking Co – the association with the Taylor family had ended in 1852 – was registered, with a capital value of £2 million.

The Oldbury branch would prove to be the first of many Lloyds acquired the status of a London bank, changing its name again to Lloyds Bank Ltd, and a network of branches sprang up across the West Midlands, including one in Great Bridge which opened in 1876, and another in Darlaston which opened in April, 1886.

It was not until 1912 that the bank moved its headquarters to Lombard Street in London, and it was at this time, through a number of mergers and acquisitions, that the bank established branches across the country.

The original branch in Oldbury closed about 17 years ago.

The Lloyd family lived in Birmingham until the 1930s, occupying a house in Hagley Road which has since been demolished to make way for an office block.

The family’s last surviving daughter, Mary Eliot Walker, died in 2003.

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