The Sun.
London, England, 1857-11-12 00:00:00

THE BANK PANIC AT GLASGO W.

GLASOW, Nov. il.
This morning the City of Glasgow Bank sus-
pended payment, which event created great excite-
ment in the city. There was a run upon the
National Security Savings Bank, and also upon the
British Linen Company ; but while the latter bank
was paying out gold the officials were very busy in
receiving deposits. The run upon the Union Bank
was met with the greatest readiness by the resources
of the establishment and the large arrivals of gold.
The further supplies expected from London seem
to have quieted any feeling of panic, the run having
greatly subsided. The directors of the City of
Glasgow Bank issued a notice that they had sus-
pended payment in the meantime, in consequence
of the great demand made upon them for gold.
During the day, however, the excitement caused
by the event was greatly lessened by the fact that
the other banks in town were accepting Western
and City of Glasgow banknotes in the transaction
of business, a course which the city authorities also
adopted in receiving payment of the city taxes. The
panic seems to be rapidly subsiding.

GLASGOW, TUESDAY EVENING.
To-day the panic has increased to a most alarm-
ing extent. From the hour of opening to the hour
of closing, the Union and City of Glasgow Banks
have been blockaded to such an extent as to require
a large police force at each establishment to pre-
serve order and to admit the public in batches. The
demands at both banks were fully and promptly
met. Although the `number of deposits called up
was verylarge, it is gratifyingto learn that the panic
i s mostly confined to small traders and others, having
but small accounts. Men of business have univer-
sally fell confidence in the different banks. The
cause of the run upon the Union is believed to be
in a great measure owing to rumours that that bank
is largely involved in discounting transactions with
Messrs. Denuistoun and Co. This, we believe, is
quite unfounded, and any advances made to that
firm are well secured. The pressure on the City
of Glasgow Bank is no doubt greatly caused by an
absurd panic which occurred among the depositors
with their savings branch last night. An immense
crowd of depositors gathered at the branch bank
in a very nervous condition, and although their
united deposits would not amount to many thou-
sand pounds, their number caused a serious panic.
At the National Security Savings Bank to-day the
numbers of withdrawing depositors were immense,
and considerable alarm existed. The Lord Provest
addressed them on the groundlessness of their fears,
and seemed to produce a beneficial effect. All the
claims were promptly met, and the bank closed at
the usual hour, with the intimation that it would
open to-morrow at ten o'clock as usual, and explain-
ing the nature of their securities. Western Bank
notes have changed hands at a discount of from
10 to 15 per cent. ; while some shopkeepers are
trying to turn the suspension to advantage by
offering to take these notes in payment of goods
bought. In order to allay the alarm existing, the
Lord Provost and magistrates met to-day, and
ordered the following notice to be issued, and
which is now being posted through the city :--
"Br TEM LORD PROVOST AND MAGISTRATES.—It is
with the utmost regret that the Lord Provost and magi-
strates have observed a very unfounded and uncalled-for
alarm in the city with reference to the stability of the
several banks. They lament to observe the unwarrant-
able distrust on the part of many persons who have been
calling up their deposits with the banks ; and they feel
it to be their public duty to assure their fellow-citizens
in the moat solemn manner that no cause whatever exists
for any distrust of the perfect responsibility of the dif-
ferent banks to meet every shilling of their obligations.
Even with reference to the bank that has found it neces-
sary, temporarily, to suspend payment, no risk whatever
exists as to the ultimate security of the depositors. The
inhabitants may rest satisfied that the magistrates would
not give them this assurance except from the most per-
fect conviction of its correctness ; and they trust that
the good sense of their fellow-citizens will restrain them
from farther disturbing the monetary condition of the
city, which cannot fail, if persisted in, from occasioning
the utmost distress to the commercial and industrial
interests of the town.

" ANDRZW GALBRAITH, Lord Provost•
"Council Chambers, Glasgow, Nov. 10, 1857."

The following circular has been issued by the direc-
tors of the Western Bank to the shareholders :
" Glasgow, Nov. 9, 1857.
"Ladies and Gentlemen,—lt is our painful duty to
intimate to you that a concurrence of circumstances of
an adverse nature, both in this country and abroad, affect-
ing our pecuniary resources and credit, has compelled
us to come to the resolution this day of suspending pay-
ment of the company obligations, both at head-quarters
and at the branches.
" We can assure you that this resolution has not been
adopted without anxious and persevering endeavours to
obtain such support, from kindred establishments both
in England and Scotland as, without involving much
risk to them, might have enabled us to tide over our
present difficulties, and avert a catastrophe which, on
public as well as private grounds, we shall never cease
to deplore. This does not appear to us the proper time
to enter into explanations as to the manner in which
our applications for aid were met. All that is necessary
to say is, that the leading Scotch banks, after conceding
assistance to a limited extent, on security, have seen it
right to withhold all further aid.
"In regard to the future, two courses of action seem
open to the bank, and to those who are involved in its
embarrassments, whether as creditors or as shareholdeis.
These two courses, although pointing at different re-
sults, may both be pursued simultaneously, and, we are
advised, ought to be adopted for the interests and safety
of all concerned. To understand this it will be neces-
sary to say a few words as to the position of the affairs
of the bank.
"Although no balance has been made of the books
of the bank since the annual balance in May last, and
although, no doubt, severe losses have been incurred
since that date, yet we have reason to hope, if time be
given for the gradual winding-np of the affairs, that the
company's assets will be more than sufficient to py the
whole debts. This, however, will much depend on the
state of commercial affairs in this country and in Ame-
rica during the next six months. But, at all events,
the undoubted means of the individual partners of the
company, if rendered available by a judicious system of
realisation, are greatly;more than sufficient to guarantee
payment of all its deposits and other liabilities.
"ln these circumstances, the course which it appears
to as 'scold decidedly be most advantageous fur all
parties to pursue, would be an extension of time for pay-
ment of the debts and obligations of the company—.
coupled with a system and management of its affairs
under inspec`don—and eventually, perhaps, an amalga-
mation of its business with that of some other bank. It
belongs, however, to the crelitors of the bank to express
their opinion whether such a plan is the one most de-
sirable to be followed ; and for that purpose we propose,
as soon as possible, to call together district meetings of
the creditors, at the places most convenient for them,
that they may appoint some one to represent them
should they not find it convenient themselves to attend
at a ceutrel meeting to be held in G,asgow. It is quite
obvious that this mode of arrangsmeut assumes great
forbearance, if not hearty co-operation on the part of
individuals ; but, where such extensive and widely.
ramified interests are at stake, it is thought not unrea
sonable to hope that, should there be a diversity of
view among them, the minority will yield to the majo-
ty.
"The other course to be pursued is that of at once
taking the preliminary steps for winding up in a legal
way. Although this plan would entail great sacrifices
in the realisation of the assets both of the company and
of the shareholders, it became neceessary to resort to
it. It is fortunate that an act of Parliament was passed
last session to enable banking companies to place them-
selves under the operation of the Joint-stock Act of
1856, in all respects except as regards limited liability.
The shareholders and their estates must, under all
circumstances, remain liable t 3 the full extent
for the debts of the bank. The adoption of this
act would, in our estimation, be of importance, were the
business to be carried on. ut the act contains, besides,
very valuable and judicious clauses, enabling a company,
placed in circumstances like the present, to be wound
up, and the means of the individual partners to be made
available for the early liquidation of thedebte. To adopt
this act requires only the resolution of a special general
meeting of the shareholders. We have therefore resolved
on immediately calling such a meeting, to provide for
the eventuality of such a course of action being pre-
ferred by the creditors, or forced on the company by ad-
verse circumstances.
"In conclusion, it is hoped you will see that we have
been actuated by the single desire to do our duty to the
creditors as well as the shareholders iu the unfortunate
position in which they have been placed ; and, at the
earliest practicable moment, to take the instructions of
those who are legally entitled to direct us to all further
proceedinge.—l am, ladies and gentlemen, your most
obedient servant (by order of the directors),
"J. S. FLBMING, Mariner pro tern."
The suspension of payments as offici _oily noticed above,
created considerable excitement at the head-office and,
the various branches in Glasgow on Monday. Miller-
street presented Ignite a scene ; in fact, tae entrance
from Argyle-street was literally blocked up, not, we
should say, by men who had any interest in the stoppage
whose curiosity
of the bank, but particularly
led them to create a crowd, and to leoeolf Something
of interest, because of the want of anything
terest themselves. During the afternoon manye:peta)rtiiens.
,who had a few notes of the Western were to
.anxious for change, and no doubt their anxiety s:1
was
somewhat justifiable, for in all likelihood, as the Mar.
tinmas term occurs on the following day, and theV may.
have depended upon paying their rents from their Small
savings, the loss of immediate exchange is more disas-
trous than many people, otherwise circumstanced, can
-well imagine. The crowds that besieged the principal
banking office dispersed themselves about o'clock,s and
there was no attempt at riot.
).About seven o'clock at night there was a large con-
la of people in front of the savings branch of the
• 9- otGlasgow Bank, in Tron[sa.e. The depositors were
-
t:Sliker'fOr Admission to withdraW their savinr, ; but now
fears had been excited we (Daily Mail) have been
. • ,soable to learn. Such was the result of the confusion,
,' however, that hate were knocked off, and an immense
, sainpunt of jostling took place. The police succeeded in
clearing the streets, and we have no doubt that to-day
the C.ty of Glasgow Bank will be equal to the demands

of all their depositors. So far as we could learn, saving
the obstruction of the idlers, the nervous people would
have been very satisfactorily arranged with.

With reference to the stoppage, the Glasgow Daily
Mail remarks :

" Such an event has long been unknown in Scotland,
and it would be difficult to describe the feelings which it
excited in this large community. Strong dissatisfaction
was expressed at the refusal of the older Scotch banks to
lend the necessary aid in this severe crisis to the Western,
and this dissatisfaction is likely to be increased the more
the circumstances become known. Tiae bad management
and bad debts of the Western Bank are now notorious.
The diminished resources arising from these self-in-
flicted calamities was the evil to begin with. But the
greath wealth of the proprietary, and the healthy field
of busiaess that remained to the bank, were amply ed.
ficient to have surmounted this difficulty. There was no
run upon the bank for gold, no discredit attached to its
notes, no suspicion in any quarter of the solvency of the
institution. Bat there began against the bank a process
of what we may call 'sap and mine,' by the withdrawal
of deposit accounts in the city, and of interest deposits
in the country branches. Persons not receiving the
accommodation to which they were accustomed, or fear.
ful of not receiving it, withdrew their accounts ; and
carrying out the notes of the Western Bank de-
posited them in other banking establishments. A
heavy balance was thus formed against the West-
/ ern in the weekly exchanges of notes, and
these balances, according to custom, had to be met by
Exchequer Billi. It was to enable it to clear off this
bi-weekly liability that the aid of the older and
chartered banks was invoked, and in the first instance
granted. But these concerns soon pulled up. It was
really but a reasonable demaed after all that was made
upon them. They were daily receiving from the public
the deposits the withdrawal of which was thus crippling
the Western ; and what was asked was that they would
not employ the advantage thus obtained against a sister
institution in a manner fatal to its existence. For any
risk they ran they had the unlimited liability of a pro-
prietary as numerous and wealthy as any of their own,
and on a credit precisely similar to which they them-
selves hold 30 or 40 millions of deposits from the public.
Every effort was made last week by deputations to
Edinburgh, even of parties not connected with
i the Wes-
tern, and by proposals of various kinds, to induce the
directors of these banks to extend the requisite assist-
ance in averting what could not fail to be a public catas-
trophe. A plan was even arranged for the amalgama-
tion of the Western and Clydesdale, by which the aitaing
banks would have had the security of two great un-
limited proprietaries instead of one. But this, too, was
rejected, and it was evident that the co-operation which
had been expected, and the first promise of which had
sent a thrill of joy and pride through all Scotland, was
not to be obtained. Such is the feeling excited in this
city by these circumstances, that we should not be sur-
prised to toe the most effectual measures adopted to pat
an end to the petty and ruinous jealousy of banks that
hail from Edinburgh against Glasgow banks, and banks
that have charters against banks that have none. In
the meantime, the suspension of the Western is a blow
to the whole community, and cannot fad to have some
most unfavourable consequences. The first resolution of
every man who kaa the well-being of Glasgow and of
Scotland at heart should be to prevent by all possible
mears any movement on the part of depositors against
other banks. Every bank in Scotland affords perfect
security to depositors. On the other hand no bank what-
ever can stand against a run for deposits. The money
lodged in our banks yields an interest to its owners. It has
consequently all to be employed and invested in some
profitable way, and while every bank keeps as much cash
in its till as is sufficient to meet the ordinary demands
of depositors, it is impossible that all can be served on
the same day. We trust that every effort will be made
to discourage withdrawals of accounts and deposits in
the meantime from one bank to another. We understand
that there has been a run this evening on one of the
savings banks. This was to be feared, as the Western
had departments for savings in its various branches
throughout the town ; and the disappointment of its
savings depositors was apt to be communicated to others
of the same class. In order to check this movement, we
would suggest to the directors of the Western Bank the
propriety of paying off its small savings depositors at
once."

THE MONEY CRISIS.

(From the Times' City Article.)
This has been the most anxious day in the city
since the height of the panic in 1847.
The first disaster announced was the stoppage of
another Scotch establishment--the City of Glas-
gow Bank, with a capital of 1,000,0001., a reserved
fund of 90,5951., and 96 branches.
This was followed by the suspension of the Lon-
don discount-house of Messrs. Sanderson, Sande-
man, and Co., with liabilities for three or three and
a half millions, believed, however, to be amply
secured by commercial bills and the property of the
fixa.

The telegraphic accounts from Glasgow during
the morning described a continuance of the run
which commenced yesterday on the various banks,
and nearly 800,000 sovereigns in addition to the
300,000 despatched last evening have been sent
from the Bank of England to meet the demand. It
was stated also that a military force had been found
necessary at Ulasgow to preserve order.
When the Western Bank of Scotland, which
stopped on Monday, was applying for assistance to the
other Scotch banks, its expectations were alleged
to be based upon the fears to be entertained of the
universal panic that would result if it were to clo?e
its doors. The courage of the various institutions,
however, was not to be shaken, and their stability
is now being tried to the utmost. That the
City of Glasgow Bank would be in danger seems
to have been generally contemplated, but strong
hopes are entertained that the remainder will stand
their ground. The amount of its deposits is not
known. They are supposed to be considerably be-
low those of the Western of Scotland, although still
of great magnitude and widely diffused, owing to
the number of branches, and the fact of the con-
cern having been established 19 years. It has an
authorised note issue of 72,9311., and the extinctien
of this will be equivalent to a contraction of 46,6141.
in the circulation, in addition to the suppression of
225,2921. from the failure of the Western Bank.
Its shares are distributed among a larger number
of persons than those of the Western Bank, the
total in that case being 1,280, while in this it is
1.309. Of the prospects of a resumption of course no
conjecture can yet be formed, but from the circum-
stance that the bank had agencies empowered to
draw not merely in New York but California, it is
to be apprehended a close investigation may show
it has. net bean conducted with great prudence.
The drain of geld to Scotland at the rate of more
than a million in two days constitutes, of course, a
most serious addition to the pressure in London.
It must have its limits, however, and these can be
clearly traced. The authorised note issues of Scot-
land amount to 3,087,239/. Beyond that total not
a note can be put out, except against gold. At the
last return the circulation was 4,051,2391., beirg
964,0001. in excess of the fixsd sum, but specie was
held to the amount of 1,573,5461. The uncovered
paper currency was therefore 2,477,6931., and the
gold sent hence to-day and yesterday is, conse-
quently, nearly equal to 50 par cent. of the whole.
Considerable quantities, it must be remem-
bered, had been seat previously, and further
parcels, it is said, will be forwarded to-morrow,
although it seems rearcely possible that more will
be required. If the run consisted simply of note-
holders it would be altogether improbable that
the existing supply would prove inadequate, but
depositors are contributing to the panic, and a large
number of these also claim specie. evertheless,
whatever may be the demand on the Scotch banks,
it is plain that their power of drawing upon us must
be simply to the extent of the credits they have
open, the Bank of England notes they may be able
to collect, or the funds they can realise by sales on
the Stock-Exchange. Of the entire deposits which
they hold and which are estimated at more than 30
millions, only a very moderate proportion is avail-
able in this way. As far as Loudon is concerned,
therefore, the movement now taking place has no
vague terrors. For the moment it creates a most
annoying aggravation of our troubles, but as it
cannot go beyond a certain point, and even at the
worst is not a withdrawal of gold from thecountry,
the Bank of England can meet it in a bolder
manner and with more indifference as to the tem-
porary effect it may have upon their reserve than
would otherwise be the case. Unfortunately the
differences between Scotch and English law which
have so long been permitted to embarrass the in-
tercourse between the two countries are moat pro-
minent on all financial matters. Bank of England
notes are not a legal tender in Scotland, and thus
it is impossible even to lessen partially the incon-
veniences of the case by sending the required
remittances in that form. The fact of about two-
thirds of the Scotch circulation being in notes under
51., coupled with the known habits of the people,
especially of the operative classes in Glasgow, in
using the banks as places of deposit for their
savings, will account for any popular disturbances
that may now have been threatened. Such move-
ments, however, are more evanescent and more
easily met than those of larger capitalists, and, if
these should not take fright, the whole affair will
probably be of short duration. It appears that the
rate of allowance of the Scotch tanks for deposits
throughout all the recent advance in the money-
marketalthough the changes in has not been raised above 4per
kept pace with those cent.,
theof
of
the
Bank rates
of
England. discount
deed, they were race tl charging 8-4- per cent.
for keeping down the allowance
wasli 8. The reason% assigned
when the London rat n
that the banks are consideredaowance for deposits are
means of investment approftee to offer the only
gages or Consols, andthat as thaegfeotiirnir safetylerean to m
scarcelyort
obtainei, ana Consols pay
irer interest,
4 per cent. is a sufficient temptatatio
Annexed is the circular issued by Messrs. Sa-
nderson, Sandeman, and Co., announcing the necee-
say for their suspension. The liabilities of the
house to depositors, by whom bills are held as se.

curity, are stated to be between three millions and
three millions and a half, while those to other
parties may be about 200,0001. The great majority
of the bills held being perfectly good, and such as
would be discounted by the Bank of England, the
depositors will not in these cases suffer any incon-
venience, and the effects of the stoppage will there-
fore be very limited when compared with the mag-
nitude of its appearance. Ten years ago the house
suspended during the crisis which then raged, and
in less than five months resumed business, Mr.
Sandeman being admitted as a partner. An equally
favourable result is confidently hoped for on the
present occasion. The principal difficulties of the
firm have arisen from the failure of the Liverpool
Borough Bank and Dennistoun and Co., but from
neither of these sources can any ultimate deficiency
be much apprehended :
" King William-street, Nov. 11.
" It is with extreme pain we have to announce to you
that our house is under the necessity of suspending its
business,—an event which was wholly unforeseen and
unexpected by us.
" The pressure of the times and the recent lamented
death of our senior partner, Mr. Sanderson, have left
us no alternative but to take this step, which we trust
will be but temporary. The accounts are being made
up with all despatch, and in a few days they will be
in a state to be submitted to those interested.
" We are, &c.,
" SANDERSON, SANDE HAN, AND CO."

The applications at the Bank to-day for discount
were again extraordinarily numerous, but this
feature loses much of its importance from the cir-
cumstance that it is chiefly from parties over-supply-
ing themselves. These persons, when they get the
money pay it into their bankers', by whom at
the end of the day it is again paid into the Bank of
England. Many merchants, in order to gratify an
ignorant impulse of caution, have now at their
bankers' two or three times ie amount they ordi-
narily keep. The reason they give is they "do not
know what may happen." They might know, if
they would take the trouble to reason, that the
foreign drain having been almost wholly checked,
there can be no increased demand for money, ex-
cept such as may be occasioned by their own fears
and by any temporary contingency like the Scotch
panic ; that under such ciroumstances, whatever
is taken from the Bank must always within a few
days return to it ; and that under any circum-
stances the Bank will continue to afford at the fair
market price every accommodation it would ever
have granted even in the calmest times.