Paul Johnson

And another thing | 25 October 2008

Jane Austen knew all about a banking crisis

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In times of anxiety, I always turn to Jane Austen’s novels for tranquil distraction. Not that Jane was unfamiliar with financial crises and banking failures. On the contrary: she knew all about them from personal experience. As a young girl she seems to have regarded bankers as rather glamorous figures. In Lady Susan, written when she was 22, she observed: ‘When a man has once got his name in a banking house, he rolls in money.’ So when her favourite brother, Henry, decided to become a banker, and set up his own bank, she was delighted.

Henry was four years older than Jane. He was clever and self-assured, with beautiful manners, and a man of the world. His outstanding characteristic was optimism, and he could be relied on to spread cheer when others were sad. He was closer to her novel-writing than any other member of the family. He took upon himself the business of getting her published, and succeeded. He also acted as her agent and made her a bit of money. Henry had been a fellow of his Oxford college, St John’s, which then meant he could not marry unless he became a clergyman and took a college benefice. But he threw over academic life and became an officer in the military, thus providing copy for Jane’s Pride and Prejudice. In 1798 he married a widow ten years older. Elizabeth Hancock was a fussy, talkative, flirtatious lady, very fond of parties and gossip. She was actually the daughter of Warren Hastings, the great Indian nabob, persecuted by Edmund Burke, Richard Brinsley Sheridan and other Whigs, and subjected to a ten-year trial for alleged irregularities in India, at the end of which he was triumphantly acquitted. He did not publicly acknowledge Eliza’s paternity, but he set up a trust fund for her. She married a French aristocrat, Count Jean de Feuillide, and had one son by him, significantly called Hastings (the boy died aged 15 in 1801). The Count was guillotined at the height of the Paris Terror in 1794, and Eliza came to England, her husband’s property having been confiscated.

Henry obviously married for love of this merry widow. So far as we know, Jane never expressed approval or disapproval of the match, though we have to remember her letters were heavily edited after her death by her sister Cassandra, who destroyed some and cut others. Jane took the view, however, that conventional verdicts on the suitability of marriages were often disproved by events, and it may be that this was a case in point. But Henry obviously had to increase his income to support his wife, who had quite exalted ideas about her status, and continued to use the title ‘Countess’. So he became a banker. There were lots of little banks in those days, and the business of setting one up does not seem to have been difficult. Nor was much capital required. What was necessary was confidence in you and your family — most banks were local.

It is a curious fact, as we have recently discovered, that bankers love to make things which should be simple very complicated indeed. Henry set up his bank in Alton, the nearest sizable town to where the family lived. His partner was a Mr Gray, an Alton grocer, who operated on a large scale, and had capital to invest. The bank was called Austen, Gray & Vincent (who Mr Vincent was I don’t know). Not content with this, Henry set up a second, connected bank in Petersfield, with other partners, and this was called Austen, Blunt & Louch. Finally he created a third bank, in London, which had premises in Henrietta Street. This was called Austen, Maude & Tilson. Cash in strong-boxes was trundled about by coach between the three banks, and paper money whizzed about by post.

The Austen family traditionally banked at Hoare’s in Fleet Street (which still exists) and continued to do so. But Henry’s rich brother Edward, who had been adopted by the childless Knight family (like Frank Churchill in Emma) and inherited their estates, provided £20,000 in surety, and another member of the family, Mr Leigh-Perrot, provided £10,000. This backing was needed because Henry took on the job of Receiver-General for Oxfordshire, thus circulating government tax money through his banks. One of Henry’s naval brothers, Frank, put his savings (from prize money) in the bank in Henrietta Street and so did the younger naval brother Charles, though his deposit was much smaller. Henry’s woman servant also entrusted him with her savings. Jane had an account in Henrietta Street, too, but the bulk of her money, chiefly profits from Mansfield Park, was invested (on Henry’s advice) in safe 5 per cent Navy stock. No doubt many locals in Hampshire, who had liked and respected Henry’s father, the Rev’d George Austen, Rector of Steventon, put their money in the Alton bank too.

So long as the great war against Napoleonic France lasted, Henry’s bank flourished, and he kept house in considerable style in London, at 24 Upper Berkeley Street. Eliza insisted they employed a French chef, Monsieur Halavant, and there were plenty of other servants, and a carriage too. Even after Eliza died in 1813, Henry continued to live well. He had comfortable offices in Cleveland Court, which he shared with his London partner, Henry Maude, though he moved to a smaller terraced house in Brompton. However, all was well until, in 1815, as the great wars ended, Henry fell ill, with prolonged bouts of coughing. Many thought he had TB, which was virtually a pandemic at the time. His illness lasted for months, and he inevitably neglected his business.

Alas, Henry’s personal problem coincided with the universal economic downturn which followed the end of the afflatus of wartime finance. Businesses slumped, especially those heavily involved in supplying the expanded armies and navies of wartime. With the peace, contracts and orders were cancelled and goods piled up in the warehouses. Henry’s Alton partner, Gray, had done a roaring trade supplying not only food but clothes to the armed forces. Towards the end of 1815, his trade having collapsed, he went bankrupt, and his funds in the bank were swallowed up in the ruin. So the Alton branch fell, and all those who held Henry’s banknotes found themselves with worthless paper. The knock-on effect spread to Petersfield, where Henry’s bank had to shut its doors. In turn, the Henrietta Street bank, un-able to redeem its notes in gold, collapsed, and on 6 March went bankrupt, carrying with it £13. 7s. of Jane Austen’s money. Henry’s brother Edward and the Leigh-Perrots lost their sureties. The bank also had an army agency for which Henry’s brothers James and Frank provided hundreds of pounds as surety. All these sums were lost, so the family as a whole was badly hit by Henry’s failure. It is a testimony to the common sense and solidarity of the Austens that there were no recriminations.

However, 1816 was a year of worry for Jane Austen, for her brother Frank lost his ship about this time in a hurricane sweeping the Greek islands, where HMS Phoenix was hunting down pirates. He was exonerated at the court of inquiry but despaired of getting another command. Every second naval officer was on half-pay for, as Admiral Croft says in Persuasion, the peace was hard on career officers: ‘These are bad times for getting on.’ The censoring of Jane’s letters has deprived us of her true feelings about it all. But it is significant that the back pains, a symptom of the illness which caused her death a year later (Addison’s disease) appeared about this time. Poor Jane must have shared to the full Henry’s troubles, guilt and remorse. She is often thought of as leading a life of exceptional freedom from stress and dramatic incident. Not so. She certainly went through as severe a banking crisis as anyone is experiencing today.