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The Commerce and Trade of Dundee
Robert Fleming and the Dundee Merchants
Professor George Stout gave a talk to the April 1998 meeting on the early life in Dundee of the financier Robert Fleming. This excerpt was taken from a larger study on the subject to be published as "Robert Fleming and the Dundee Merchants".
Robert Fleming spent the first 40 years of his life in Dundee, before departing for London where he established his own offices and merchant bank in 1900 and an international reputation in finance.
Although widely acknowledged as a pioneer in the development of investment trusts, little has been written about Fleming's early years in Dundee. His natural modesty and reluctance to take a prominent role in town affairs may have contributed to the little public information that exists about him. As a fellow Dundonian who spent a career in Dundee's investment trusts, I have had an urge for many years to unlock the mystery of Robert Fleming's early days in Dundee. In some ways I have been uniquely privileged to be able to do so, having been simultaneously manager and director at my own company, The Alliance Trust, and a director of one of the Fleming group of investment trusts, Fleming Claverhouse Investment Trust.
Families of Flemings have lived in Glenshee for several hundred years, the descendants of weavers from the Low Countries who came to Scotland to instruct the Scots in the art of weaving higher quality textiles. Robert Fleming came from farming stock, his grandfather Robert farming 20 acres at Middleton of Dalrulzion, Glenshee. It was a refuge that young Robert and his brother John regularly sought at weekends during their formative years in bleak industrial Dundee. Robert's father, John, showed no inclination towards farming and trained as a textile engineer in Perth. On his marriage, in 1840, John Fleming built a small lint mill to process flax at Berryhillock, near Coupar Angus. The timing was unfortunate as flax prices went into decline and small operators suffered as the textile industry became heavily mechanised. The family's personal circumstances were also devastated by the death of three young children in a diphtheria epidemic in 1843.
They moved to Dundee where John Fleming found work as an overseer in the James Donald & Son linen factory in Liff Road, Lochee. It was at their house, opposite the factory, that their fourth child, Robert, was born in 1845.
Three years later the family moved to Ramsay Street, Upper Pleasance, close by the Tay Works where John found employment as an overseer mill warper with the new owners of the works, the Gilroys. At Ramsay Street Robert's brother, John, was born in 1847. He, too, was to have a distinguished career as a timber merchant in Aberdeen, Lord Provost and MP for the city and to earn a Knighthood.
In 1852, the Flemings moved again, this time to Brown Street. This property had a small grocery shop attached, with entry from the West Port, and it made a welcome addition to the family income.
Here, another two children were bom, but both died in another epidemic in 1859. Mrs Fleming died the next year, aged 52, leaving a husband and two teenage sons, Robert at fifteen and John thirteen.
Robert and John attended the Brown Street School from which they won bursaries to the High School. For Robert it was a bursary of £4 per annum for two years in the Mathematical Department.
In 1858, at the age of 13, Robert Fleming was "launched on a business career" - as he later described it. He received £5 for his first year's work as an office boy with James Ramsay Jnr, a Cowgate merchant. Subsequently he moved the short distance to the merchanting office of Cox Brothers in Meadow Place, Bell Street; then, at 21, an even shorter move to Baltic Street, where he joined Edward Baxter & Son as a bookkeeper.
Edward Baxter was the senior member of Dundee's premier textile family. He was born in 1791 and had been involved in the family's exporting activities since 1813. In 1826 he had established his own merchanting business. He was also the financial "brains" of the Baxter family.
When Robert Fleming joined the firm, Edward Baxter was already 75 and was to remain active in business until his death five years later. In that short period, Fleming's future life was to be completely changed, as he was introduced to the mysteries of investment in stock market securities and to the opportunities offered by the United States following the Civil War of 1861-65. Edward Baxter thought so highly of Fleming that he provided in his Will that the latter should continue as clerk to his Estate to assist Baxter's solicitor, David Small of Shieil & Small.
It was from this position of trust in the service of a major Dundee family, that Fleming was able to launch his financial career. Dundee's merchants and manufacturers had made fortunes on the back of the American Civil War. They knew American conditions well but had had only indifferent success in investing their money in America, due mainly to the lack of regular information, compared with operators in the leading American financial centres. They were therefore "ripe" to listen to suggestions for a fund that would spread risk over a number of securities and, at the same time, give higher returns than were available in British securities.
The concept that Fleming brought to their attention was not an original one. His model was the Foreign and Colonial Investment Trust which had been formed in London in 1808. However, instead of investing in colonial and other foreign stocks, Fleming conceived the idea of investing solely in American stocks, primarily in the bonds of railroads and public utilities.
Prospective Trustees would be drawn from the top names of Dundee's business community and included John Guild, Thomas Cox, John Sharp and Thomas Smith. Fleming would act as full time Secretary to the Trust, obtaining information on existing and new investments, providing for the collection of dividends and other aspects of administration. For his services Fleming was paid a salary of £400 per annum, out of which he had to pay for any clerk or assistance required.
The Council of the First Scottish American Trust in February 1873 proved an outstanding success. The proposed issue of £150,000 of stock met such a response that the Prospectus had to be withdrawn and a new one issued for £300,000. A Second Issue for £400,000 followed in September 1873 and a Third Issue for a similar amount in January 1875. Within two years, Robert Fleming had £1,100,000 under management and was earning a substantial £1,100 per annum.
The Trusts were successful from their beginning, riding out various industrial recessions in the USA. Fleming travelled extensively in America and was away from Dundee for several months each year. Increasingly, he made investment decisions for the Trusts and, on more than one occasion, his services were sought by American investment bankers.
In Dundee, he joined the Boards of the Dundee Mortgage and Trust and the Dundee Investment Company, both companies to become constituents of the Alliance Trust in 1888.
His master stroke, however, was to arrange for the buy-out of the Matador Land & Cattle Company from US investors in 1882 and to refloat it in Dundee with Scottish investors.. Of the many investments which British investors made in American cattle companies, this was outstandingly the most successful. By the mid-1880's, Fleming was becoming too large a fish for Dundee's small financial pond. He spent even more time in the United States and in London where he joined the board of the Investment Trust Corporation.
In 1890 he resigned as Secretary of the three Scottish American Trusts and made his headquarters in London. In 1900 he opened his own offices in London and founded his own merchant bank. The Dundee link continued, however, for Flemings maintained an advisory position with the Dundee Trusts and the Cox family.
Robert Fleming's life in Dundee had not been without its lighter side, In his youth, Robert enjoyed outdoor pursuits and was a member of the Wormit Rowing Club. Indoors, he and John had minor successes as violinists, participating in local concerts in Dundee. While a member of the Congregational Church in Lindsay Street, as was his mentor Edward Baxter, he met his future wife, Kate Hindmarsh, whose social ambitions were eventually realised amid the glitter of London and Home Counties society.
Avoiding the limelight, Robert Fleming was nevertheless a generous contributor to the well being of Dundee. He contributed, both in time and money, to the affairs of the University College, Dundee and funded the Gymnasium. In 1929 he provided £155,000 for the Fleming Garden housing scheme, for which gesture he was made a Freeman of the city.
Almost 100 years on, Flemings continues to support Dundee University and contributes generously to Dundee's artistic events.
By the Late Professor George Stout