Collection consists of one bundle of documents relating to the failure of the bank, which includes a State of the Affairs of Messrs Kinnears, Smiths & Co., Bankers in Edinburgh.
Kinnears, Smiths and Company, Bankers
Scope and Content
Administrative / Biographical History
Kinnears, Smiths and Company was formed in 1831 through the amalgamation of two private banks, Thomas Kinnear and Son (1748) and Donald Smith and Son (1773). Thomas Kinnear's original private banking firm was one of only 5 private banks to survive the crisis of 1772. Kinnear was also a director of Bank of Scotland.
Donald Smith was originally a partner of Johnston & Smith, a small private discounting firm established in c.1760 and which failed in 1772. Smith recommenced business as a private discounter and was very successful. He was Lord Provost of Edinburgh in 1807-08. His firm, Donald Smith and Son, was small, but by 1831, as a result of unrecoverable debts and bills due, it had amassed trading losses of over £35,500. Adding to their woes, part of Kinnears, Smiths and Co.'s assets were held in Bank of Scotland and British Linen Company shares, the value of which had declined by 30% between 1825 and 1834.
The chief cause of the failure of Kinnears, Smiths and Company, however, was the misconduct of James Smith, who incurred heavy losses. A brother of Donald Smith, one of the partners, James was the firm's stockbroker in London. He was employed to draw dividends on stocks belonging to Kinnears, Smiths and Company's customers. In order to do this, customers were obliged to grant to him their powers of attorney - including the power to sell. James Smith proceeded to speculate on his own account in 1833, largely on French rentes, and sold stocks of some customers in order to finance his investments. The political crisis in France caused rentes to fall enormously and ruined James Smith. As Kinnears, Smiths and Company were liable for him, they failed also.
Kinnears, Smiths and Company was ultimately forced to close in 1834 with liabilities in excess of £320,000. Of this, £175,000 were liquidated, leaving a shortfall of some £145,000. The partners at the time of failure were: George Kinnear, John Gardner Kinnear, Alexander Kinnear, Donald Smith, William Smith, George Smith and Robert Smith.
George Kinnear was later manager of one of the earliest banks in Sydney. He returned to Britain to become manager of the Huddersfield Bank, and finally manager of the Commercial Exchange Company in Glasgow which failed in the 1840s.
GB1830 KSC/1 - Papers re failure of Messrs Kinnears, Smiths & Co., Bankers in Edinburgh, 1834.
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S. G. Checkland, Scottish Banking: A History, 1695-1973 (1975)
Andrew William Kerr, History of Banking in Scotland (London, 1926)
Richard Saville, Bank of Scotland, A History, 1695-1995 (Edinburgh, 1996)