The Sun.
London, England, 1826-06-01 00:00:00

PARLIAMENTARY PAPER S.

REPORT FROM THE SELIT cOAkKiI'EEEt.
ri IN' SCOTLAND AND IRELAND.
The Select. Commit tee appointed to inquire i►itti thn state of the
Circulation in Prumisaory Note,. under the valuelif Eire Pounds,
in Scotland nod Ireland, and to report their obiervationa and
opinion thereupon to the House, with referent-a. to. the expe-
diency of making any alteration in the laws now in feree re-
lating thereto, and to whom the several petitions relating to the
Currency of Scotland and Ireland were referred ; have, pursuant
to the Order of the house, inquired accordingly; and have
agreed to the following Report

• As it appears to your Committee to be advisable to consider the
state of circulation in Scotland, separately from that in 'lreland,
they will, in the 'first instance, report the result of the in-
quiries which they have made with reference to the ease of
Scotland.

The first notice of banking in Scotland which occurs in the
statute book, is an act ►►f King William the Third, pais4 in the
year 1605, tinder which the Bank of Scotland was establ►shed.
By this Acton exclusive privilege of banking was enuferred upon
that bank ; it being provided, "-that for the period of twenty-one
years from the I.7th of July, 1695, it should not be lawful for any
other persons to set up a distinct Congo* of Rink within the
'kingdom of Scotland,' besides those peountS in whose favour this
Act is granteil.' ,No renewal of the exclusive privilege took
place after tlie expiration of the twenty,oue'yeam
The Dank of Scotland first issued Notes of 20s. in the year
1704; but the amount of Notes in cireulation'previouily to the
Union was very limited.

The Bank of Scotland continued the 'milk Bank from the data
of its establiihment in 1695 to.the year. 4'727.

In that year a charter of incorporation WAS granted to certain
individuals named therein, for carrying on the l►uainess of bank-
ing, under the name of the Royal Bank; and eubeequent char-
ter& were granted to this establishment, enlarging its capital,
which now amounts to one million and a half. •

An Act, passe4l in the year 1765, is the first and most impor-
tant Act of ,the Legislature, which regulates the issue of. Promis-
rory Notes in Scotland.
- - - -

It appears from its preamble•, that a practice had prevailed in
Scotland of issuing notes-which circulated as specie, and which
were made payable to the bearer on demand, .or payable at the
option of the issuer at the end a six months, with a. rum equal to
the legal interest from the demand to that time. •

The Act of 1765 prohibits the imue of notes., in which such an
option as that before mentioned is swerved to the issuer. , It re-
quires that all notes of the nature of a Hank-note, and eieculatinr
like specie, should be paid on demand; and prohibitor the is me of
any promissory note of a sunless than 20s.
promissory noteti in England, an
With respect to the issue of,
Act .nras passed in 1775, prohibitil the issue of any sm:11 note
under the aunt of 20s. ; and; in the year 1777, restraints Were
imposed by law on the issue of notes between the sum of 20s. and
tire pounds, which were equivalent to the prohibition of such
notes circulating as specie.

the year 1797, when the restriction as to payments in cash
was imposed upon the Bank of England, the provisiow, of the Aet
of 1777, with regard to the it.Stle of notes between r:?Oa. and 51.,
were suspended. By an Aet paesed in the third year of his pre-
sent Majesty, the suspension,wini continued until the stli of Jan.,
1833, but now stands limited by an Act of the present Session to
the Mb April; 1829.
The general result of the. laws regulating the Paper Currency
iu the two countries respectively is this
•

That in Scotland, the iteme of protuissory notes, payable to the
M
bearer on demand, for a sum of not 61 th&l, :S, IliN bix±ri at
all times permitted by t,
law ; nor hag any Act been p 8550,1, limiting
the period for which such issue shall. continue legal in that
country. , In England, the issue of Proodot`rY notes for a less.tatni
than 1)1. was prohibited by law, from 1-1"' Year 1777 to the Period
of the Bank Ittatrietion in 1797. 'lt has been permitted hince
1797, anti-the permission will cease, as the law at Present stands,
in April,- 11329.
-

Your Committee will proceedto give R general view, &lore,'
s
from the examiimtioit of witr,,,, ~,t4, and from the doeutruint4 called
tar by the Committee, of. the law which' regulate the bil,i no of
ellottinidkicto
iir in tg
i. Scotland, and of the mode in which it i : at present
general provisions of the law of Scotland bearing Upon
this subject are calculated to promote the solidity of Banking

Speaking generally,. the busineia of Scotch Bank consists
chicily in the receipt and charge
.4 aunts, deposited with the
Bank, on which an interest,is allowed, and in the issue of promie-
gory notes upon the discount of bilk, and upon advances of money
made by the Bank upon what is called a cash credit.
The interest allowed by a Bank upon deposits varies from time
to time, according to the current rate of interest which money
generally bears. At present the interest allowed upon deposits is
four per cent.

it has been calculated that the aggregate amount of the sums
titMitsal with the Scotch Banks amounts; to about
ca to teilihe ostr:-";-to.e.,,avteneme ifitliont)t was
made, thought that the innount of depoaita could not be less thin
sixteen inilliona, nor exceed twenty-five millions, and took an in-
termediate aunt as the probable amount.
Another witness, who bad been connected for many years with
different Banks in fieittland, and has hacl experience of their Con-
cerns at Stirling, Edinburgh, Perth, Aberdeen, and 61aeg0wc
stated, that more than one half of the deposits in the Banks with
which lie had been connected, were in sums fram ten pounds to
two hundred pounds.
Being asked what clans of the community it is that makes the
small deposits, he gave the following answer, from which it ap-
puats that the mode of conducting this Branch of the banking hu.
;limal. in Scotland, has long given to that country many of the be-
nefits derivable from the establishment of Saving Banks,
" Question.—What data of the community is it that makes
the smaller deposits T.'
" Answer.—They are generally the labouring classes in towns
like Glasgow. 14 country places, like Perth and Aberdeen, it
is from servants and fishermen, and just that class of the commu-
nity, who save from their earninga, iu were trifles, small sums,
till they come to be 4 Bank deposit. There is now a facility for
their placing money in the Provident flunks, Which receive
mn-
ney till the deposit amounts to ten pounds. When it comes to
ten pomida it is equal to the minimum of a limik deposit. The
system of banking in Scotland is just an extension of the Provi-
dent Bank system. or'yearly those depouitore come
to the Bank cud add the savings of their labour, with the interest
chat has accrued upon the deposits from the previous half year. or
year, io the principal; and in this way it goes an without being
at all reduced, accumulating till the depositor Is either able to
buy or build a house, when it comes to he one, or two, or three
hundred pounds, or till he is able to commence bushiest; as a nue-
' ter in the line in which he has hitherto been a servant. A great
part of the depositors of the Bank are of that description, and a
great part of the most thriving of our titrmers and manufacturers
have arisen front such beginnings."

On sums advanced
:by
.the Banks on the turnout of bills of ex-
change, and upon cash +credits, an interest of five per cent. is at
present charged.
A cash credit is an undertaking on the part of the Bank to ad-
vance to an individual such sums of money as he may from time
to time require, not exeeetling in the whole a certain definite
amount, the individual to whom the credit is giyen entering into
a bond with securities, generally two in number,. lior the repay-
ment on demand of the sums actually advanced, with interest
upon each issue from the day on which it is ►wade.
Cash credits are rarely given for autos below one hundred
pounds ; they generally range front two to five hundred poends,
sometimes reaching one thousand pounds, mad occasionally a'
larger sum.
The Bank allows the party having -the cash credit to liquidate
any portion of his debt to the Bank, at any time that may suit his
eonv,iii, nee, and reserves to itself the power of cancelling, when-
ever it shall think fit, the credit granted.
With the view of ascertaining the total amount of the paper
currency of Scotland at different periods, nod of estimating the
variations in its nutrient, a letter-Was addressed by the Chairman
of the Committee to each Bank in Scotl:n►d, requesting informa-
tion as to the amount of notes issued below and above fiy6.poutids,
- "
and outstanding at certain given periods.

The Banks were informed that this communication would be
eonsidered by the Chairman es one entirely of a confidential na-
ture; that be would Make no disclosure of the amount of the
issues of any single Dank ; but collect from the returns the general
result, and present that result to the Committee.
Au answer has been received to this communication fron► all
the Banks in Scotland, with one exception. Some of the Baas
that have made returns have not been able to distinguish the notes
under and above five pounds; where that distinction Lai not bcw►
made, the Proportions • have hem estimated, by a co►nputation
framed upon the-proportions that appear in the returns of those
thinks which were 'enabled to distinguish their not below
five pounds from those above that mita, mid the result is stated
in red ink.
Three of the Banks from•which returns have been received,
have omitted to state the amount of their prese►►t circulation :
that circulation JIM been taken, ii► the subjoinul general eeti-.
mate, on 'an average between the highest ►tnd the lowest amount
of the aggregate circulation of elinee Banks respectively dur-
ing 180.
subject to the foregoing explanation, the following is the

, I isl 6
1,.
-presi ;....t ' Air
—, ~... • Si

1:2 421 I
'
+I

c~ r-
-~
~~

3.•

61,
ANA gib
,•—•
+4. .5
114 • • C g E,

2
sr; • t
tit
ti
.^"
,
ft 7::

IL—The Banks have not all returned their Circulation, distin-
.gwishing the !Votes under and Move 51. , Where that distinc,
tion has nut been made, the proportions have been eatimutd by
a computation framed upon those whirlthave been returned by
the lianks,who did make the distinction, and the mutt id iqtatod
in Red ink.......[Wl!qe the red ink occurs, we have prefixed an
asterism 1.1

It will be seen from the above return, that .the present,amount
of the paper currency of Scotland, being in fact (with- the excep-
tion of silver) pearly the whole eurrencyuf,that.country, is cum-
'pitied to be three million three Lundred,and nine thousand pountly
of which two -million and seventy-nine thousand pounds are in
notes below live pounds. •
It has been calculated by Dr. Adam Smith, that tlt amount
of gold and silver coin current in Scotland before the Video, and
then constituting nearly the whole circulation of the country,
was -about one million sterling. Ile obseayes, that the -amount
of silver coin brought into the Bank of Scotland for thepurposte
of being recalled immediately.after the 'Union, was four hundred
and eleven thousand pounds sterling ; and that it appears from
the ancient records of the Mint in Scotland, that the value of
the gold annually coined somewhat exceeded the annual .coinagti
of the silver. He calculates, therefore, tho total amount of
gold and silver in circulation about the year 1707, ;at ono

The name authority, speaking of the year 1775, eatimittes the
whole cireuldtion of Scotland at that time to be taint two
"of which," he observes, that part which 'consists
in gold and Aver most probably dotal not amount W half u mil-
lion."

Your Ontonittee trust that they have not improperly nur,stePrM4
the limita of their duty, in submitting to the House this brio re,.
view of the laws by which the business of Banking in Se band
regulated, And of the mods in which it is at pment eonducted it
is it subject not adverted to in the Reports of previous (".ounnittetts,
tad it appeared therefore to your Committee, that it might be con-
venient to prefix a general account of the Winking Letabliahmenti
and Currency of Scotland to their observations on that important
question, which wax the more immediate object of the reference
made to )our Committee.

They consider that question in substance to be, whether Sear
land Shall be permitted to retain.the privilege which she hatibitherto
had, of nutintaining.a papa circulation for sums between twenty
shillings and five pounds; or whether she shall be toothed at
some period, to be now asmrtained by law, to providei kthesArtq
mariner in which England has been called upon to provide, a tootalhc,
currency 1_

Although the promissory notes issued in Scotland ate cot/Yet:ti-
lde into gold at the will of the holder, yet it appears to Your Oe be proved by experience, that the permission to issue motes Of
an amount sufficiently low to perform the office of eMii, trill
practically exclude that coin from circulation, notwithstanding
itillitaisttshouchwinsoutesmeiziatyhbeat,payable at the will of the bolder; and it
. ,
plicabla to the two countirlinetskrie‘stlipece tliv*crly4t,l°ElVignlaf unitleZlvl,' lalf; lira
year 1E29, have a metallic circulation for the payment ofali.su
below 51. and Bcotland a circulation of paper alone, fur ou ]ay
menta of not leas than.2os.
ly, with a~vhethrr the shltiasbij snit:
tttyieccooftfottiht'
Scotland can be ensured if coin be neit',.l f metallic currency u atl its :
--wheth'er that system can CO.4"XittrWil:e";
of this country, are
England, without deranging the „. ,uu,t be maturely weighed
w
the important considerat.ens
jiatcrordy pronounced.
before a lioal dedsi°u cols i>,• principles, appears to your Coin-
The Inel"l"Pti"' "ill qrteneion to other -parts of the United
mitts* to be in favour,ufe"

where
the
red is), wurs we have prefixed and uoterivut (" )