The Sun.
London, England, 1857-11-26 00:00:00

THE SCOTCH BANKS.

Since mir last, two large and influential meetings
of the noblemen, merchants, and inhabitants of
Glasgow have been held—one under the swims
of the Dukes of Hamilton and Montrose, for the
purpose of expressing confidence in the system of
Scottish banking—the other. professedly a meeting
of the depositors in the Western Bank of Scotland,
hut apparently open to the public, with the same
objects in view. Hitherto, the dcotch banks, one
and all, were considered paragons of perfection,
and their system of banking has been frequently
referred to, from time to time, by financial his-
torians, as an example worthy of imitation. Re-
csmei
pen
ait,
tto: cd
tc
il)
theirer r
stoppage
tnocpe
high
ps have,age h
of
reputationtho however, ow ee r,
for
st Western
prudentßunfortunatelyankmofa n d
Scot-
ls-
and land and the City of Glasgow Bank having been the
means of disclosing a reckless system of manage-
ment, especially as regards the former, is altogether
inexcusable.

At the meeting of the Western Bank depositors,
?he liabilities of the establishment were stated to;
amount to 7, 670,0001., and the assets to 9,398,0001.,
showing a surplus in favour of the Bank of upwards
of 1,700,0001., bat we do not find that any ex-
planations were vouchsafed as to the validity of
these assets—a very necessary and all important
piece of information, we should imagine, to all the
creditors of the Bank. Not many years since, a
certain gentleman became indebted to one of these
banks to the extent of several hundred thousand
pounds ; when ho was hauled up, it was found that
he had "no assets," and the bank, therefore, " in-
sured his life" to the extent of their debt, upon
which they, of course, pay a very heavy annual
tax. This gentleman, we are told, called on the
bank some time after, and told one of the mana-
gers, " I am offered a lucrative situation in Sierra
Leone, but you know if I go out there, the policy
will be vitiated ; however, I must go, as I cannot
starve." What, then, was to be dose t The
same man is now comfortably living on the Con-
tinent, on an annuity granted him by this bank,
which annuity, added to the premiums of insur-
ance, forms a nice little item in the expenses of the
establishment. Here, then, is a sum, let us say,
of 350,00 W., which is doubtless placed down as
part of the " assets." How much more there may
be of the same description, we cannot say, but we
have disclosed quite enough to show the necessity
for a close investigation into the nature of the
assets, which are held, not only in the Scotch banks,
but in all banks entrusted with public capital.
It may be, and is, said that such investigations
would be injurious to credit ; but it is manifest
that, in the great majority of cases, it could only
be injurious to parties whose circumstances are not
in a wholesome condition. At any rate, the check
that such a system of investigation would give to
improvident management, would be productive of
a much greater amount of good than any harm
likely to result from it.
A. special committee, selected from amongst the
shareholders annually for this purpose, and sworn
to secrecy, should, therefore, form part of the
machinery of all banking establishments.
At the time of the distrust in London,c,onasne
°p and
upon the failure of Strachan, Paul,
Swtoacsk cßasatnkuspoonf thatthe
securities
n andheld
th ebrsy , t
hs
eu s iociinotn
banks
sovlderey pro-
perlycity, wpiulebalictlyhe directorsintimated
to
of then®
th e
ir sbhnare
depositors that the securities they held werellireaadny
for their inspection at any time. Confidence wan
thus immediately restored.
If the directors of the Scotch banks had adopted
a similar course, daring the late excitement, it
would have redounded much to their credit; and
it is not too late even yet to do so.
We wish it to be clearly understood, that in
what we have written we do not cast a shadow of
reproach upon the Scotch and Irish banking sys-
tem, as we have had long
experience of its admi-
rable working, under prudent management. Ours
fi
by
Royal charter,
only object, in the precedingobservationss to
r severe,
the
bank will
be able to shake the
preserve the interests of the publich in such a securei
manner as that "no crisis,''
security oheledveby
depositor.
of whioh the Bank of Scotland alone
fibaanmke nt.
All incorporated
the
share-
holders is established by —c of
In Scotland there
Parliament.
Pviterl i
is these banks (except the Bank of Scot-
land), are liable to the whole extent of their
property: We think it necessary to state this as
an impression prevails in some quarters to the con-
trary. —Beifost Mercy/mei/6 Journal.