The Sun.
London, England, 1841-06-14 00:00:00

THE SCOTCH BANKS.

The Deputation of Scotch bankers, who were lately in Lon-
don, hale published a Report of their proceedings. From this
Report we learn that—

Immediately on their arrival the Deputation had an inter-
view with the Chairman of the Committee, and, notwithstand-
ing that the Committee had resolved to examine only two wit-
nesses on the Scottish banking system, 11r. Blair, of the Bank
of Scotland, having been previously examined, the Deputation
prevailed on them to extend the number to three. Mr. An-
derson, of the Glasgow Union Bank, and Mr. Kennedy, of the
Ayrshire Bank, were appointed by the Deputation to give their
testimony. Our space enables us to give only a short extract
from the Report :
" • The Deputation found that very dangerous and errone-
ous opinions as to the nature and practice of banking in Scot-
land prevailed in the metropolis, which they are anxious to
believe arise from ignorance of the working of the system,
rather than from prejudice or hostility. The paper currency
of Scotland is stigmatised as being irregular in its action and
redundant in its quantity, but the published returns prove that
it is regular, invariable and limited to the daily wants of the
community. It is also charged with pressing upon the eircula-
tiol of London, though it is unquestionable that it cannot reach
London or travel out of Scotland, being payable only in the
latter country. The ordinary demands of the- Scottish banks
upon their supplies in London are excepted to as acting unfa-
vourably on the foreign exchanges, when itis quite clear that
these demands are the natural calls which every bank makes
on its own stores of capital kept in London for the express
purpose of being ready for contingent demands, and which
would bo so kept even were tho currency purely metallic. It
is also equally clear that in times of pressure there is a ten-
dency of capital to flow from Scotland to London, rather than
the reverse, such capital being attracted by the higher rate of
interest which in such times invariably prevails in the London
market.

" The establishment of one bank of issue, to supply cur •
rensy for the United Kingdom, is at present a favourite
project. This is the grand remedy for the imaginary evils
.alleged to be attendant on the Scottish system of bank-
mg, a remedy which would sweep away the whole pre-
sent paper currency of Scotland, and entail upon that
country an expenditure of about' six or seven mil-
sn purchasing k adequate supply of currency
fromi ine
thisi
the means of the Scottish
countrhylacill- would to that extent cripple
which
eibn
eg
xi %pienrgi e
ell t expansionbas
proved
bt he e
e industrysuchf
the
eimportance to its -prosperity. Knowing
vitalo f t
it,heeeieaxilyistetnbcee
ti.sofeszehritioepmine
opinions, the
were to be examined, e deputation, and more es-
pecially
theo
recommendation
greatne n
dlbt
re-
solved that, in giving their
combat dnd refute errors and fallacies of
rous. The Report concludes Nvittbhea object
wtoasthteo
a nature so dange-
bankers of Scotland t• keep up connection they have at
this time farmed for their mutual interest and protection in
ffuture.The deputation flatter themselves that the bank-
ing system of Scotland, combining with the utmostf degree of
safety and economy to the public, a
ganised control against excessive issues, throughpetrbectly or-
e free col-
lisions of individual interest, has been proved
to the Com-
mittee, and to the empire at large, to possess within
itself more intrinsic value than any other which is at
present known or proposed to be substituted in its
pace. In
proportion to its excellence is the duty, and ought to laa the
anxiety of those entrusted with its administration, to preserve
those characteristics which so honourably distinguish it, unim-
paired by any im;Tudence through which there could be just
cause of reproach incurred, reflecting indirectly on the system
itself."
The complaint in London is, not that the paper currency of
Scotland, strictl.t and abstractedly so to speak, presses upon
the circulation of London, but that, by reason of the exemp.
lion of the Scotch banks to retain gold in their coffers against
their issues, and from the circulation of one-pound notes in
that part of the kingdom, the Scotch banks are enabled to
maintain an influence on the London Market beyond the legi-
timate extent of their actual means and capital. It is a mere
quibble to say that the paper currency of Scotland cannot
affect the London Market, because it is only payable in Scot-
land. The report sap, to be sure, that the' Scotch hanks
would exercise the same control on the London Market, if the
"currency were purely metallic." This is a bold assertion,
and, in our estimation, a very false one; and, to give it the
outward show of truth, the report erroneously represents the
operations of the Scotch banks on the Scotch Exchange as re.
suiting from their ordinary demands upon their supplies in
London, as the "natural calls which every bank makes on its
own stores of capital kept in London for the express purpose of
being ready for contingent demands." The authors of the re-
port forget that every bank in England must keep on hand a
considerable amount of gold to rceet the ordinary purposes of
trade, and to supply the buying and selling :or sums under five
pounds ; whereas the Scotch banks have no such burden on
their shoulders, but enjoy the most profitable part of their
business by being exempt from it. The Scotch banks have
neither to keep Bank of England paper or sovereigns in their
strong boxes, which "every bank" in Eriglend must do,

against their ismes ; and thus the Secteh banks are enabled to
carry en extensive operations is the public funds, whereby the
London market is subjectd to improper influences, and raised
or depressed to suit the views of these parties. We are no ad-
vocates for a perely metallic curitticy, because it is incom-
patible with the highly civilised state of the country and
its multifarious and gigantic commercial transactions;
but we are advocates for a purely convertible and an
uniform currency. The system of banking in Scot-
land has worked well and prosperously in that part of the coun-
try, and, with some exceptions, has been introduced beneficially
into England. But we always look upon the system of bank-
ing and the system of private issues as two distinct and sepa-
rate things. The banking interests throughout the provinces
seek to merge the difference, and to maintain the two as one
and indissoluble. They maintain that as Scotland has pros-
pered uneer its present system of banking, any attempt to in-
terfere with the system of paper issues there would he
ruinous to the comforts and interests of the people. Our
opinion is very different from this, and we believe
that although the profits of the banks would be less if the sys-
tem of private issues were reformed, yet the interests and pro-
perty of the people would be placed upon a far more solid basis,
and they would then enjoy the real advantages of the Scotch
system of banking, without the danger attending its abuse.
We have frequently shown that the weekly exchanges are no
sufficient check against over-issues, and that the comparative
amount of notes in circulation by the banks in Scotland at dif-
ferent periods is accounted for by the contraction ox the
genoral currency of the kingdom.