"If the bank was in an industrial community," says Edward Besley, assistant keeper and numismatist at the National Museum of Wales, "then it dealt with mine owners and shop keepers, local businessmen like that. If it was in a rural area its customers were farmers and small landowners. That was fine until you had a bad harvest. Then things really began to go wrong."
Government legislation decreed that, until the mid 1820s, banks were allowed no more than six investors or backers. That meant that many of these small banks were desperately short of capital investment. That was fine when everything was going well but when times were hard or even when rumour - often maliciously put around by competitors - caused people to fear for their deposits there would be a "run" on the bank. Without the capital to weather the storm many of them found themselves in serious difficulty.
As a result, many Welsh banks collapsed, particularly in the 1820s and 30s, in the wake of national events like the South Sea Bubble. Others survived, limping on for a while before being taken over by larger institutions so that by the middle years of the 20th century there were virtually no freestanding Welsh banks.
Wherever they were situated, all of the Welsh banks issued their own notes, redeemable only at the premises of the bank itself or at any other bank with which it had a reciprocal arrangement.
"The notes are quite beautiful pieces of art," says Edward Besley, "and they're usually related to the area where the bank was situated or to its name. So the Bank of the Black Ox, for example, had oxen drawn and printed on the front of its notes. Others had views of the town where it was based or other significant landmarks."View a slideshow
of Welsh bank notes.
The National Museum of Wales has a collection of these notes, many of them with endorsements on the back relating to the liquidation meetings called when the bank had run into difficulty.
There has never been a National Bank of Wales although there have been numerous calls for such a thing. So far it has never happened - maybe in the future?
The story of the Welsh banks is told on Past Master
, which is broadcast on Sunday 7 March, 4.30pm, BBC Radio Wales.