Southern Argus. [volume] (Columbus, Miss.) 1834-1842, 1837-09-05
SCOTCH BANKING.

/ SCOICH bANhlNO.
That the Banking system IN the u
nltod States is liable to many and great
objections, few will doubt. What is
the essence of t2 Nothing more than
chartering as accompany, number Of
individuals who contribute to the Cap
ital Stock a certain amount of money
onwhich, ifthe company succeeds IN its
business they receive per centage &C
cording to its gain; or, should the com
pany fail, they lose altogether; and III
the event of the Company being una
Bile to pay the full amount of its debts
they lose nomore, and none Of their in
tdividual property is liable, and the hol'
ders of claims against the company
lose them, because the capital stock Of
the institution is exhausted, although
the individual members of the same
may be wealthy and able to pay. The
Scotch are, proverbially, an honest ma
ton; and hence they have instituted a
plan Of Banking, which far outstrips in
honesty and uprightness, any other sys-
tenn of which we have ever heard. In
the Scotch system very little or ne spe-
Gle is needed their capital is the
wealth Of the Stakeholder: his lands
his tenements, his all-Of a value far
greater than the mines Of Peru. The
situation of the BanGs in Scotland, in
the best Of times, nearly amounts to a
suspension Of specie payments, there
being no need of a metallic basis, because
the holders of notes on the Banks are
aware ofthe security they have in the
whole wealth of the Stockholders.
Gold and silver hardly circulates in
Scotland, for the reasons above stated,
and we would be happy to see such a
system instituted in our own country.
In concluding this article, we offer no
apology in quoting from theFredericks-
burg way Arena, whose views coin
eide entirely with our own.
"Scotch BGnks.-The remarkable
fact, that the financial crises, which
have so often convulsed England and
America, have never extented to Scot
land, is beginning to arrest public atten-
ito. About the fact, we believe, there
is no dispute. Not to speak of other
periods, when IN 1886, the Bank of
England, according to its own admis-
sions, was within ten hours Of bank.
ruptcy, and when, as Mr.. Huskisson de-
clared in his place in Parliament, the
country was reduced to within forty
eight hours of state barter, Scotland
remained firm and erect. Then, as
other epochs, hundreds Of banking firms
in England went by the board, while |
the Scotch banks continued to pursue
their prosperous career, mistaken, or
at least unsubdued, by the tempest.
Our country is agitated by one of those
commissions which has Frustrated her
commerce and paraIyzed her enter
prize. Hundreds have been hurled
from opulence to ruin, and the fear Of
what is still to come is, if any thing,
more dreadful than the destruction
which has already Uvertaken us. At
such moment, when the public mind
is alive to the dangers of the established
financial system, any thing calculated to
elucldate the subject must be received
with interest, and we, therefore propose
to offer to our readers few remarks in
explanation Of the Scotch system of
Banking.
/ Banking in America is monopoly
OF legislative creation, according to the
provisions of which, the stockholders
are only liable for the engagements of
the bank, in the value of their respec.
tive shares. 1t is based upon the
prompt convertibility of the notes Of
the bank into specie, of which an a.
mount, supposed to be adequate for that
purpose, is, or ought to be, kept on
hand. The privilege ofllm.ted respon-
Sibility is intended as an encourage.
ment to the shareholders by diminish
ling the risk of their adventure the
injunction of convertibility into specie
on demand, is meant to give security to
holders Of notes and depositors, and to
protect the currency from the conse-
quences of excessive issues. In these
two essential characteristics, the
Scotch system is entirely different +:
the banks of Scotland being formed un.
on the principles of an ordinary copart.
merry, and not purporting to issue a pa.
per representation of certain amount of
specie within their vaults. The Scotch
Joint Stock Banks differ from COM
mon mercantile partnership, only in the
greater numbers of their partners, who
are severally liable, to the whole extent
Of their resources, for the engagements
| Of the firm. Their notes represent,
not certain amount Of dead capital in
the form ofthe precious metals. but 4
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