In 1660, the English parliament invited the exiled royal family to return. Charles II was allowed to rule, ending over a decade of republican administration that began with Parliament’s victory in the English Civil War. The restored king Charles II was, like Charles I, strapped for cash. Temporary relief would periodically come from the considerable sums he received from abroad, either by marriage, sales, or peace settlements. In all instances, he required a financial intermediary to affect the payment. This role was filled by Edward Backwell, one of the most successful bankers of the Restoration era in English history.
Edward Backwell was born sometime around 1618 and apprenticed under Thomas Vyner for sixteen years starting from the age of sixteen. He was trained in both financial services and goldsmithing. Thomas was another successful banker in 17th century England and one of the first goldsmiths in London to diversify into finance. Vyner’s nephew and another prominent future banker, Robert Vyner, was also an apprentice under Thomas at about the same time as Backwell. Edward Backwell would only strike out on his own at the age of thirty-two, in 1651.
Goldsmith financiers were not a novelty. Goldsmiths became bankers in the 17th century in large part because they already possessed vaults in London. In 1640, on the eve of the English Civil War, King Charles I raided the Royal Mint of gold deposited there by London’s merchants. This event, along with the war itself, solidified the goldsmiths’ place in London’s primitive financial system. They had become the country’s most trusted depository.
On account of this trust, goldsmiths’ receipts given in exchange for deposited metal became a paper money circulating in London. The goldsmith-bankers did not only accept deposits but also lent them out at interest, either to fellow goldsmiths or to other borrowers. The profession was becoming a financial one and many bankers in the mid-16th century would have been raised thinking they were preparing for a career in metalworking and not in banking.
In any case, the goldsmiths found themselves in the business of making loans and advancing money against bills issued by the Treasury or private firms. They were converting monies and trading in raw bullion. They carried out these services in London but in the context of an international financial system. The goldsmiths hired agents abroad, typically on a fee-for-service basis, to extend their reach internationally.
The English Civil War broke out in 1642. The eventual victory of the Parliamentarians led to the English Commonwealth, a period of republican rule in Britain. Backwell’s financial career began in this period; state records show his purchasing large amounts of precious metals brought from abroad. When he and Thomas Vyner purchased metal captured from the Spanish, just the preliminary advance paid to the government in order to secure the opportunity came to £50,000.
Edward Backwell also purchased former royal land at Hampton Court which he later flipped back to the restored monarchy at a profit. He did not merely engage in a few purchases of seized assets, Backwell also counted the English state among his clients in a more official capacity. Starting in 1657, he lent money to the government for the purpose of maintaining an English garrison across the channel at Dunkirk, which England had recently obtained from Spain.
In 1660, the English Commonwealth came to an end when Parliament invited the executed king’s son, Charles II, to return home. Backwell’s business with the preceding regime did not stop him from serving as the new king’s banker; indeed, it likely enhanced his chances. He was hired to receive payment and convert the dowry of Charles II’s wife, Catherine of Braganza, into pounds sterling from Portuguese cruzados, delivered in a combination of coins and bills payable by various Portuguese merchants in London.
Backwell also extended his service as a banker to the state, receiving payments on its behalf. For example, when Charles II sold Dunkirk to the French for five million livres in 1662, Backwell was hired to inspect, transfer, and convert into English money forty-six carts full of French silver coins. He had of course previously lent money to support the maintenance of an English garrison in the city; the cost of maintaining the garrison and Charles II’s need for money signals the most likely reason for its sale.
Regardless, if he wasn’t already before these transactions, Edward Backwell became very well-connected with merchants and financiers in continental Europe. He was therefore hired to handle payment of a subsidy to the German state of Munster in exchange for their entry into the Second Anglo-Dutch War on the English side. In his more day-to-day work, he provided payment services to purchasing agents for the Royal Navy, which needed a business partner with reach abroad. Despite this strong official business, his metalworking continued until 1666, when the Great Fire of London destroyed the Backwell workshop.
The goldsmith-banker’s depositors included the most famous of Restoration England. Besides the king himself, Charles II’s mother Henrietta Maria, his brother, the future King James II, and at least one of his sons, the Duke of Monmouth, were all among his clients. The Earl of Sandwich was also a customer; it was he who captured the Spanish treasure that Backwell purchased from the government back in 1656-57. The diarist Samuel Pepys was a client, mentioning Backwell nearly sixty times in his diary. Backwell worked with Pepys in an official capacity as well when the latter served as Treasurer of Tangier, briefly an English colonial possession.
Besides the more famous customers, Backwell also served hundreds of English and foreign merchants and large trading firms like the East India Company. Even relatively humble doctors, lawyers, and military officers were among his depositors. Backwell’s ledgers show that a typical deposit placed with him may be either ‘sight payable’ or payable at something like ‘a weekes warning’ and customers were not only Londoners but provincial residents as well. He was frequently involved in facilitating payments abroad via bills of exchange settled through agents in cities like Amsterdam and Hamburg.
Clearly, Backwell was particularly well suited to handling international payments, as any large and successful banker would have been in those days. It is no surprise then that, in 1674, he was made the king’s financial agent to the Low Countries. There, he would be responsible for transferring 800,000 patacoons which Charles II obtained in the peace settlement after the Third Anglo-Dutch War.
Stop of the Exchequer
Backwell faced many crises during the reign of Charles II. First was a bank run during the Great Plague of 1665 when merchants fled the city; the plague coincided with his work to bring Munster into the Anglo-Dutch War, meaning he was abroad while his business was gravely threatened. The plague also cost the life of his bank’s cashier, Robert Shaw.
Then, in anticipation of yet another war with the Netherlands, the crown defaulted in 1672 in an event known as ‘the Stop of the Exchequer’. Backwell had previously lent a lot of money to the state, usually as advances against certain tax revenues, more than any other banker but one. By 1677, Edward Backwell was owed £295,944 in principal and accrued interest and this was accruing further interest at 6%, so Backwell was short £17,759 annually.
The sovereign default didn’t seem to immediately ruin Backwell and he continued to provide financial services to the king. Indeed, his appointment as financial agent to the Low Countries came after the Stop of the Exchequer. It did however contribute to his eventual bankruptcy. Though he continued to act in an official capacity with the crown, his banking business was likely a mess.
Bankruptcy was delayed for only so long as amounts kept with him were not withdrawn. The Treasurer of the Navy Sir George Carteret’s death in 1680 meant that a demand was now placed on Backwell to pay £61,871 that he had pledged to the Navy over a decade earlier but was unable to pay. Backwell was a known bankrupt by 1682 and left England for the Netherlands, perhaps in an official capacity but the exact reasons are unknown. In any case, he died there the following year.
An Act of Parliament was only passed in 1698 to manage his bankruptcy estate which took two decades to unwind. In all, some five bankruptcies occurred among the bankers who financed the government. This included Robert Vyner, who was also definitively ruined only many years after the event itself. Nonetheless, several of Backwell’s ledgers survived to paint a picture of English finance before the country’s ‘Financial Revolution’ at the end of the 17th century.
Backwell’s career spans the height of the period in which the goldsmith-bankers ran English finance. The default of the king in 1672 along with the creation of the Bank of England and other banks in the late 17th and 18th centuries would ultimately spell the end of the metalworking bankers. Edward Backwell, or perhaps more precisely his surviving ledgers, reveal not just the extent of the services offered by a large goldsmith-banker but also their end users. Backwell served the king to be sure, but he also served the middle classes and merchants. Financial firms had a lot to offer to, and a lot of demand from, many in an urban and commercial center like London.
More from the Tontine Coffee-House
1. Clark, Dorothy K. “Edward Backwell as a Royal Agent.” The Economic History Review, vol. 9, no. 1, Nov. 1938, pp. 45–55.
2. “Edward Backwell.” NatWest Group Heritage Hub, NatWest Group.
3. Milevsky, Moshe Arye. “Chapter 3: The Goldsmith-Bankers.” The Day the King Defaulted Financial Lessons from the Stop of the Exchequer in 1672, Palgrave Macmillan, 2017.
4. Neal, Larry, and Stephen Quinn. “Networks of Information, Markets, and Institutions in the Rise of London as a Financial Centre, 1660–1720.” Financial History Review, vol. 8, no. 01, Apr. 2001, pp. 7–26.
5. Richards, R. D. “A Pre-Bank of England English Banker—Edward Backwell.” The Economic Journal, vol. 38, no. Issue Supplement_1, Jan. 1928, pp. 335–355.
6. Richards, R. D. “The Exchequer in Cromwellian Times.” The Economic Journal, vol. 41, no. Supplement_1, 1 Jan. 1931, pp. 213–233.