James Alexander Stewart Mackenzie

Portrait of a private note issuer

Peter Symes

First published in the

International Bank Note Society Journal

Volume 37, No.1, 1998

This is the portrait of a Scotsman who issued his own one pound notes. His issue is quite well known to collectors of Scottish notes as it failed to gain acceptance, and there are now many remainders of his note available. Indeed had his issue succeeded we may have known less of him; but because of its failure we are given an opportunity to look at the man, his life and times, and the note issue. In addition we gain an insight into the reasons a man might issue his own notes at a time (1823) when private issues were rarely considered.

            James Alexander Stewart (23 September 1784 – 24 September 1843) was born into the Scottish nobility, being the grandson of the 6th Earl of Galloway, the nephew of the 7th Earl, and the son of Vice-Admiral Keith Stewart. On 21 May 1817 Stewart married Lady Hood, who was the widow of Admiral Sir Samuel Hood, and (more importantly) the eldest daughter of Francis Humberton Mackenzie – Lord Seaforth. When Stewart married Lady Hood he took his wife’s family name, thus becoming James Alexander Stewart Mackenzie.

            The Mackenzie family had owned the Seaforth estate, which included the island of Lewis in the Outer Hebrides, since 1610. However Lord Seaforth’s four sons all preceded him to the grave, and on his death in 1815 the estate passed to his eldest daughter Mary Frederica Elizabeth Mackenzie (Lady Hood). Unfortunately the estate had fallen into financial difficulties prior to Lord Seaforth’s death and Lewis was more a liability than a revenue generating proposition.

            Stewart Mackenzie and his wife struggled unsuccessfully to keep the estate viable, and in 1824 the Island of Lewis (except for the burgh of Stornaway) was auctioned in Parliament House, Edinburgh, an action taken to clear the debts of the Seaforth estate. Surprisingly the successful bid at the auction, £160,000 (£22,000 above the reserve price), was entered by none other than J. A. Stewart Mackenzie, who had gone further into debt to finance the acquisition. (How this affected the ownership of the Island, and how the debts of the estate were seen to be cleared if Stewart Mackenzie had to borrow money for the purchase is a bit of a mystery.)

            Stewart Mackenzie and his wife then spent a number of years attempting to improve the Island of Lewis, but with little success. Although how much time was spent in attention to the Island is open to question, as they spent much of their time in London and at Braham Castle (Dingwall), as well as Seaforth Lodge on Lewis.

            Ultimately Stewart Mackenzie entered public life, becoming a Member of Parliament (Ross-shire 1831-32, Ross and Cromarty 1833-37), a Privy Councillor, Commissioner of the India Board (1832-34), Governor and Commander-in-chief of Ceylon (1837-41), and Lord High Commissioner of the Ionian Islands (1841-43). He died in 1843, and in 1844 his widow was forced to sell Lewis, realising a price of £190,000.

            Prior to Lord Seaforth’s administration of Lewis, the Island and its people had been exploited by the Earls of Seaforth for nearly two hundred years. For years the islanders had been sent to their death under the banner of the Seaforth Highlanders in the British army, and money was forever being taken from the island without improvements being made. Lord Seaforth and his wife (Mrs. Stewart Mackenzie’s parents) had commenced a number of improvements, and the Stewart Mackenzies sincerely tried to continue these improvements, for the good of their estate and the well-being of the islanders. However while J. A. Stewart Mackenzie seems to have been a man who had many ideas, and a great desire to do good, it also seems that he was largely incapable of executing his fine plans.

            Much of the wealth of the Seaforth estate in the first two decades of the nineteenth century had come from the harvesting of kelp. The kelp was dried and burnt to produce barilla, an alkali substance used in the making of soda, soap, and glass. When the duty on barilla was lifted, the bottom fell out of the local kelp market, and the principal source of the Island’s revenue dried up. In an effort to improve the financial viability of the island (and supposedly the lot of the islanders) there were two actions taken by Stewart Mackenzie which were anything but improvements, the establishment of a fishing industry and (later) sheep farming.

            Any tenanted spot on the Island that was considered suitable for a fishing station was cleared of tenants, and any islander that was relocated due to the establishment of a fishing station was told to become a fisherman. The introduction of sheep meant the clearing of land for pasture and many of the cleared tenants were relocated to other parts of the Island. The establishment of fishing and of sheep husbandry on the island were not great successes, and on top of their negligible benefit there was great discomfit and misery visited on the islanders, they having to give up their farms and crofts to relocate.

            The Stewart Mackenzies did make limited improvements but these are lost against the larger damage caused by the clearances. Some of their achievements were the granting of a Charter to the Burgh of Stornoway, the building of a distillery in Stornoway (built in an effort to combat the proliferation of illicit stills), and the sponsorship of a number of schools on the island.

            Macdonald (1978 page 37) sums up Stewart Mackenzie by stating that Mrs Stewart Mackenzie “was a most outstanding person and probably the ablest of the Mackenzies”, but had a “husband whose imaginative ideas for increasing his rapidly diminishing income were not matched by his power of accomplishment.” This view is echoed by Knighton (1845 page 368) in a piece of understatement on Stewart Mackenzie’s time in Ceylon: “The Right Honourable Stewart Mackenzie was as valuable in an intellectual ... point of view, and the schemes which he planned, for the improvement of the country, (so far as he had time to carry them out,) were important and valuable.”

            Another criticism of Stewart Mackenzie can be found in his administration of the Ionian Islands where the Colonial Secretary of the time expressed doubts as to his ability. Ultimately, “In 1843 Mackenzie, who had proved ineffective, was recalled for ‘disobeying orders’.” (Pratt, 1978 page 130), although in Mackenzie’s recall there may have been political complications, as well as doubts as to his abilities.

            Without actually criticising his abilities, Mendis (1984 page 130) makes the following comments on his time in Ceylon: “It is difficult to think of him by any stretch of the imagination as one of the great among the Governors”, and “His unpopularity among planters and his own kind is not a surprise for his sanctimonious pretensions were belied by his conduct”.

            While in Ceylon, Stewart Mackenzie and many of the colony’s officials – Judges, Civil Servants, the Clergy, the Military, etc. – took the opportunity to invest in plantations of coffee at a time when there was a mania for plantations of that commodity. However only ten per cent of the pioneer coffee planters made any money and many lost everything in their speculations. It is not known whether Stewart Mackenzie was one of the successful ten per cent, but considering his lack of success in other ventures, one must believe that he lost on his investments.

            An interesting insight into his character also occurs in Ceylon where he objected to being responsible for the administration of the Buddhist establishment, a duty the Governor was bound to accept under the Kandayan Convention. It seems that he held a Christian intolerance to other religions, and his intolerance rose above his official position leading to his objection of the custodial role. His disregard for the Buddhist establishment later caused many problems on the island.

            So far we have seen that not only was the financial situation of the Seaforth estate (and Stewart Mackenzie) precarious, but we also have a picture of a man who was not extremely able in his efforts to improve his own situation. From our point of view we are interested in why Stewart Mackenzie issued his private notes, and to examine the possible reasons we must take a closer look at his financial position leading up to 1823.

            As mentioned above, at the time of Stewart Mackenzie’s marriage, the Seaforth estate was in a bad way. In 1820 Stewart Mackenzie wrote to the Bank of Scotland seeking the establishment of a branch of that bank in Stornoway, and he says in that correspondence that the kelp crop for the Seaforth estate was worth “5 to £7000 annually”, as well as stating that the rents from tenanted land totalled “between 11 & £12000". From that amount of income, one can only guess at how the estates were in debt ... but they were!

            Complications to the debt probably lie in the fortunes of the kelp harvests. The kelp industry had been a great source of income for a number of years, but the following excerpt from A Century of Banking in Dundee by Boase regarding a loss sustained by the Dundee Banking Company illustrates the decline of revenue from this product:

“The loss by Heritable Bonds &c. was chiefly (£22,000) by a loan on the estate of Harris that proved worthless, owing to the depreciation in the value of kelp, ... In the years 1807-9 when kelp was worth £10 a-ton, the produce of the kelp reefs was worth £6000 per annum. Even in 1825 it was worth £2000 per annum, but in 1829 £300 only.”

(The estate of Harris is on the southern end of the Island of Lewis and the island is referred to as the “Island of Lewis and Harris”.)

            Stewart Mackenzie no doubt believed that he could solve his situation with careful management and some help from the banks in the form of finance, however there was no bank at hand to provide the necessary loan. There had been a branch of the Aberdeen Commercial Bank on Lewis some time prior to 1820 with the Factor of the island as the agent, but at the death of the Factor the branch was “given up”. The Greenock Bank sent an agent to attend the herring fleet when the season came, but it seems that their agent (and probably the bank) was not willing to provide a loan. The lack of a bank branch in Stornoway was the reason Stewart Mackenzie wrote the letter mentioned above to the Bank of Scotland in 1820.

            His desire to attract the Bank of Scotland to Stornoway was almost certainly to use the branch facility as a convenient source of loans to himself, and in his letter he offers the services of his own employees to run the branch:

“If the Branch were placed under the management of the Chamberlain & Factor of the Island with a confidential clerk sent from the Bank I should have no doubt of its success”.

It was common knowledge that many of the Scottish banks provided a greater percentage of their loans to stockholders of the banks and to the banks’ agents, rather than to the public. Undoubtedly Stewart Mackenzie felt that a branch under the tutelage of the Seaforth estate should be able to provide loans to the estate.

            The application for a branch of the Bank of Scotland in Stornoway failed, as did a straightforward loan application in 1823, which was probably made after his note issue. It is quite possible that further applications for the establishment of branches were made to other banks during the period leading up to his note issue, but there is no correspondence to suggest this.

            Having failed in his attempt to establish a branch of the Bank of Scotland in Stornoway, it would seem that around 1822 Stewart Mackenzie hit on the idea of issuing his own notes in an effort to provide some relief from the estate’s creditors. One assumes that he planned to pay his workers and various creditors with his own notes instead of bank notes or specie. It was perfectly legal, as it was a common law right in Scotland at that time, for any person to issue their own notes, as long as the value of the notes was one pound or greater, the issuer had a license to issue notes, and stamp duty was paid on the notes.

            What Stewart Mackenzie may not have understood was that the issuing of money did not make you wealthy, as the notes had to be paid in specie on demand. The misconception amongst many people of the time (including several bankers) that you could have more notes in circulation than money to cover the demands (should the notes be presented) lead to the failure of several banks. If you had the money to cover the demands then the notes in circulation could earn the bank (or individual) about one penny a month, but you had to be able to meet the demands – it would seem Stewart Mackenzie could not.

            There is also the possibility that Stewart Mackenzie was issuing his notes in response to the shortage of specie in Scotland during the first few decades of the century. (A shortage that lasted longer and was more pronounced in the remoter parts of Scotland such as the Hebrides.) The shortage usually resulted in five shilling notes being produced, and not one pound notes, as the shortage was in specie. However one can not completely discount the possibility of a temporary shortage of one pound notes on Lewis, particularly as there was no bank agent on the island for a number of years.

            Stewart Mackenzie’s note issuing exercise must have ended quite quickly as notes dated February 1823 and with prefix “b” are quite common as remainders, while the illustrated note dated January 1823 with prefix “a” was issued. Douglas (1975 page 154) quotes William Graham as saying that the notes were retired in Inverness by the Commercial Bank of Scotland should they have travelled east, and then throws doubt on the validity of the statement. The illustrated note has “Seaforth £100" hand-written on the reverse, suggesting that the notes were collected by a bank to be paid by the Seaforth estate.

            It is uncertain how many notes were issued by Stewart Mackenzie, but it would seem to be less than a thousand. There are many remainders with the “b” prefix, but very few issued notes remain to determine the total that entered circulation. (The number following the prefix seems only ever to have been a three figure number.)

            The notes were printed by “Rowe, ‘Change Alley, London” on watermarked paper (the watermark being scrollwork around the border of the note), and carry a five pence revenue stamp on the reverse. They are of a typical copper-plate design, with a vignette, an ornate panel adjacent to the counterfoil, and the necessary text written in several different scripts.

            The vignette shows a sailing ship without sails, but with a flag carrying “Flourish Commerce” flying from the jack mast. The ship, and an anchor lying on its side, sit above a panel containing the name of the main town on Lewis – “STORNAWAY”. The spelling of the town is now “Stornoway” and surprise has often been shown at such an obvious “misspelling”. However many words of the 18th & 19th century are today spelled differently, indeed the Island of Lewis was sometimes spelled “Lews” or “Lewes”.

            The design on the panel adjacent to the counterfoil includes the letters “JASM” (for James Alexander Stewart Mackenzie) in the centre, with two groups of four letters placed either side. To the left of “JASM” is “SSSS” (in different styles of the letter “S”), and to the right “MMMS”, with the groupings possibly referring to the “Stewarts” and the “Mackenzies” (although this is not certain). The text of the note reads:

“I Promise to pay on Demand to the chamberlain of the Lewis or Bearer One Pound Sterling at the Counting Room here.”

(The italics is handwritten.) The note is signed “J A Stewart Mackenzie”, with the date and numbers being entered by hand.

            The short life of the issue leads to the conclusion that his foray into note issuing was not a success, and the auction of the island of Lewis the following year also suggests that this “money-saving” idea failed. It would seem that either Stewart Mackenzie created a folly in the issue of his notes, or that he had sufficient knowledge to issue his own notes, as well as the foresight to stop his issue before it created a greater embarrassment once its failure was apparent.

            How Stewart Mackenzie managed to finance his bid for the purchase of the island of Lewis in 1824 is a mystery, but by 1829 he was again making an application for the opening of a branch of a bank in Stornoway, this time to the National Bank of Scotland. This application was successful and an auxiliary branch of the National Bank was opened in June 1830.

            Typically we find that the establishment of this branch characterised all that was bad in Scottish branch banking – narrow lending and nepotism. Stewart Mackenzie was granted a number of bills by the bank, and the minutes of the National Bank show that in 1833 a proposal for discounting bills to the value of £800 was being considered. In 1835 Alexander Stewart the retiring Factor of Lewis, in a letter to Stewart Mackenzie, bemoans the bank agency being in the hands of Roderick Morison and L. McIver, who monopolised the fishing industry and the distilleries on Lewis. (Roderick Morison also acted for the Seaforth estate.) In his letter Alexander Stewart proposed to seek the establishment of a branch of the Commercial Bank of Scotland in Stornaway with himself as agent, in an effort to right the wrongs he illustrated. However minutes of the Commercial Bank show that the application was considered, but rejected.

            From 1831 Stewart Mackenzie’s public life began in earnest and he probably concentrated more in this area than on his estate. Certainly, his overseas posts between 1837 and 1843 kept him and his wife away from the island. With the withdrawal of his commission to the Ionian Islands in 1843 he returned to Scotland where he died in the same year. Despite the revenue received from his public office his financial situation had not improved, and so after Stewart Mackenzie’s death Mrs. Stewart Mackenzie was forced to sell Lewis to pay their debts.

            This almost brings us to the end of our portrait, but there is one interesting sidelight to Stewart Mackenzie’s period of Governorship in Ceylon worth mentioning. This was his effort to reform the paper currency issues of the colony.

            Because of problems associated with the over-issue of notes in England around 1825, the Treasury in London determined that the circulation of paper money in Ceylon (and presumably other colonies) was also a liability. Consequently they sent coin to the colony and ordered the withdrawal of all paper money, these being the ‘Rix dollars’ and Treasury notes (although many Treasury notes were kept in service to cover the required circulation above the value of the coin).

            Stewart Mackenzie’s predecessors had objected to the actions of the Treasury, but had been firmly instructed as to their duties. In 1839 Stewart Mackenzie wrote to the Treasury asking for an increase in the circulation of currency, specifically paper money. His request, like that of his predecessors, was refused. However there was an even more ridiculous situation than that of insufficient money in circulation, that being a disastrous selection of monetary units. Stewart Mackenzie declared to the Treasury that there was no coin “of an intermediate value between the sovereign or one pound note and the half-crown or rupee” (Gunasekera, 1962 page 17) and requested that small notes of five and ten shillings be introduced.

            Perhaps because of their bureaucratic attitude, or because they were English, the Treasury refused to see that the problem with the monetary circulation in Ceylon was not just the amount of money in circulation but also the units of money. It seems that the Treasury did not care that the month’s wages for a plantation worker were below one pound, thus creating a great deal of difficulty in shipping coin around the island to pay workers.

            Stewart Mackenzie being a Scot knew all too well the benefits of paper money and the possible success of paper money in small units. The Scots used five shilling notes from 1797 to address a shortage of coin, and although the crisis of 1825 had distressed the Scottish Banks there was not the general disaster in Scotland that was visited on the English banks at that time. Much of the credit for the strength of the Scottish banks during the crisis was attributed to the acceptance of paper money, particularly the one pound note.

            Stewart Mackenzie was very familiar with these points, and was obviously familiar enough with the workings of note issues to issue his own, despite its apparent failure. Consequently he addressed the problem with Treasury, arguing

“that no inconvenience could possibly arise from suiting the issue to the wants of the community, so long as the holder was entitled to exchange his paper for silver upon demand” (Gunasekera, 1962 page 17).

However his pleas fell on deaf ears, and his brief attempt to reform the currency of Ceylon was no more successful than his own issue; and his time in Ceylon became quite forgettable.

            This is the end of our portrait. It is the portrait of a peculiar man, and not necessarily the portrait of a typical note issuer. But then again, not every person issues their own notes, not even in Scotland!


- Boase, C. W. (1864) A Century of Banking in Dundee James P. Mathew & Co., Dundee

- Douglas, James (1975) Scottish Banknotes Stanley Gibbons Publications Ltd., London

- Gunasekera, H. A. de S. (c.1962) From Dependent Currency to Central Banking in Ceylon G. Bell and Sons Ltd., London

- Knighton, William (1845) The History of Ceylon Longman, Brown, Green & Longmans, London

- Macdonald, Donald (1978) Lewis - A history of the Island Gordon Wright Publishing, Edinburgh

- Mendis, Vernon L. B. (1984) British Governors and Colonial Policy in Sri Lanka Tisara Prakasakayo Ltd., Dehiwala

- Mills, Lennox A. (1933) Ceylon Under British Rule 1795-1932 Oxford University Press: London

- Pratt, Michael (1978) Britain’s Greek Empire Rex Collins, London

- Seaforth Muniments - GD46/1/530/31; GD/46/1/526 (pp36-40): Scottish Record Office, Edinburgh

- Correspondence from the Assistant Manager - Archives, The Royal Bank of Scotland: Vicki Wilkinson

- Correspondence from the Archivist, Bank of Scotland: Alan Cameron

This article was completed in April 1997
© Peter Symes