Report by John Slater
(Listen to a recording of Alan’s talk)
Alan began his remarkable talk by explaining that it would be in two parts. The first would be about George William Dumbell and the second about the bank he founded. The calamitous collapse occurred after his death.
George was born in North Wales. His father was a banker in Cheshire, so banking was in the blood. Nonetheless, when they moved to the island in1815 he started to study law and was admitted to the Manx Bar at the early age of 22. He did well, making many wise investments. He certainly did better than his tutor, William Roper, who ran off to Ireland to escape his debts. He became MHK for Castletown in 1840, continuing to practice as an advocate. At the same time, he became interested in mining and despite early setbacks became chairman of the Laxey Mines, installing the iconic giant water wheel to power the pump to keep the mine from flooding. The mine became the most successful in the British Isles enabling him to keep making money and children – 12 in all!
In 1853, a local bank failed and Dumbell, seeing a gap in the market, obtained a banking licence. His first branch was in Douglas soon followed by branches in other towns. He was granted permission to issue his own banknotes. Alan, mentioned that £1 in 1900 was the equivalent of £72 today. We had to remember this when considering financial transactions from this time.
In 1861, Laxey Mines became a public company. Dumbell became chairman and the company banked with him. In 1865, the Companies Act was introduced and his bank was first on the register. In 1878,a rival bank, The Bank of Mona failed and confidence in banking collapsed. To avoid a run on the bank, Dumbell shipped in £20 000 pounds, (x 72!) in a specially chartered steamer. When the public rushed to the bank to withdraw their money, fearing that the bank notes were valueless, they were told not to worry and were offered gold coin. This immediately restored confidence and disaster was averted.
Dumbell’s son became Deemster and Clerk of the Rolls. George retired as MHK for Castletown after 41 years in office and died in 1887 following a fine life of public service.
MHK John Mylrea of Douglas was appointed to the board of the bank. He was dynamic and expanded the business on the back of the burgeoning tourist trade. Charles Lawton of Peel, also got involved setting up major enterprises such as the Palace Hotel and the Gaiety Theatre. In 1893, they bought land for a tramway and got it running as far as Groudle Glen in just one year. In 1894 a separate company was established with investors flooding in. Just one more year and the trams reached Laxey and by 1896 had a branch to the summit of Snaefell and reached Ramsey by 1898. A scheme such as this would still be mired in committees of one sort or another!
Sadly, the company over-reached itself, not just by massive spending on projects but in paying excessive dividends. When the inevitable crash came, even the government was in deep trouble as Dumbells were their bankers. The Home Office was involved with many people bankrupt and some committed suicide. After trials, senior members were prosecuted for false accounting and were sentenced to hard labour. It took 21 years to wind up the company with 63% paid to lenders and nothing to share holders.
Could this happen again? Do you remember the collapse of the Savings and Investment Bank?
Our next meeting is on Wednesday 17th May at 7.30pm in the Centenary Centre featuring Henry Bloom Noble.