The survivor from Majorca's nineteenth century banking

This coming Saturday (9 February) marks the 147th anniversary of the founding of a bank. Strictly speaking, the Banco de Crédito Balear only made it as far as 136 years. It was dissolved in 2008 and rolled into the Banco Popular Español, which was in any event the majority shareholder.

Modern banking in Majorca, the Balearics and indeed Spain is said to have had a definitive starting-point in 1856 when two laws were passed: those for issuing banks and for credit societies. However, prior to these laws, 1835 regulation authorised the establishment of savings banks. This regulation didn't prove to be terribly successful, so four years later there was further legislation by which the French model of the savings bank was adopted. In so doing, these savings banks had in their names "Monte de Piedad", the Mount of Piety.

It was originally an Italian idea - "monte di pietà". The first evidence of this was in Perugia in 1462. It was a means of confronting the excesses of money lending, with the church to the fore in offering loans at low interest. There had in fact been a Monte de Piedad in Madrid from the start of the eighteenth century, but it wasn't to be until 1880 that the first real savings bank was founded in Majorca - Caja de Ahorros y Monte de Piedad de Pollença, known as Colonya after the founder, Guillem Cifre de Colonya.

That bank initially served a very specific function. Guillem Cifre had also set up the Institució Lliure d'Ensenyament in Pollensa, which was part of the project for schooling that had started in Madrid in 1876. The Free Institution of Education in Pollensa was linked to the savings bank. This was because Cifre wanted to encourage pupils from the school (and their families) to save; that, apparently, was the original motivation for the bank.

The Pollensa bank was therefore only a modest enterprise. Crédito Balear was an altogether different type of entity. In 1863, as a consequence of the laws which had been passed seven years before, Banco Balear came into being. On 21 September of that year it was officially constituted. It was the first proper bank in Majorca, although there had been some previous attempts. One was Can Canut. Another was Sans i Serra. They didn't survive very long.

In fact, Banco Balear wasn't to have great longevity. Two years after the creation of Crédito Balear in 1872 there were merger talks. These were to come to nothing. Crédito Balear was romping ahead, providing finance for agriculture and industry, absorbing other banks instead, the Banco Mallorquín and Cambio Mallorquín. A new Banco de Baleares, meanwhile, was to crop up in 1882.

The final couple of decades of the nineteenth century were a period of expansion of the banking industry. In 1883 total deposits in the Balearic financial system (in pesetas) were 46,085 in savings banks and 155,636 in other banks. By 1900 these figures had shot up to, respectively, 2.9 million and 981,000.

Behind the increase in savings deposits were Colonya, who did rather broaden their customer base, and another famous name that was constituted in 1882 - La Caja de Ahorros y Monte de Piedad de Baleares, otherwise known as Sa Nostra and which effectively ceased to be in 2014. A further development was the creation of rural savings banks. The motivation for these was in a way similar to that behind the original Mount of Piety in Italy. Despite the founding of legitimate banks like Crédito Balear, there was a considerable amount of informal financing going on, and it was characterised by usury. Unions, Republican parties and the church all became involved in a movement to ensure a system of fair finance for farmers. Banks with a distinctive agricultural flavour emerged, such as the Banco Agrícola de Inca and the Banco Agrario de Baleares.

In the first part of the twentieth century, Crédito Balear was pre-eminent. Almost inevitably Joan March entered the story. Having amassed a fortune through smuggling and gone legit with various industrial interests, March wanted to take control of Majorca's major bank. He didn't succeed, and so in 1926 the Banca March was founded.

For all its apparent solidity, Crédito Balear might never have made it to the twenty-first century. In December 1934 it went bust, the result of high-risk investments. The boss, José María Madico, committed suicide. Many Majorcans were ruined; there was no system of funds to guarantee deposits. The Bank of Spain and a banking consortium stepped in and Crédito Balear was operational again six months later. Only 20% of customers' money was spared.

Crédito Balear proved to be the great banking survivor until its absorption by Banco Popular in 2008. But in 2017 Banco Popular collapsed. The only survivor from Majorca's banking in the nineteenth century is Colonya, which was founded on the philanthropic principles of Guillem Cifre. Never an over-ambitious player, it might be said that Colonya offers a lesson.

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