New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1878-10-21


neopls are directly interested in the stability of
the banks. Each one of the great institutions
has branch in every considerable town and
village north of the Tweed. and as they receive
deposits of fifty pounds sterling and pay In
terest uDOn them, every class OF people is repre-
scented among their creditors. Small farmers
mechanics, operatives, servants even, deposit
Their savings when they reach the sum OF
$3.50, in the great banks, as people OF the
same class in this country intrust their small
accumu,atiOns to the savings banks. The Clty
of Glasgow Bank has l25 of these branches,
aud its failure must lock mp, for while at
least, large amount of capital III every I'M
portant town in the country. Add t0 this the
certain suspension of many business enter
prises which employ great numbers of work
men and the general reduction Of wages That
mas already been determined upon, and some
idea can, perhaps, be formed of the amount OF
suffering which his great failure will cause.
one of the most startling features Of the case
is the illegal over-is6ue of circulating notes,
and the false returns of the amount of bullion
Oh hand that have been made to the Govern
ment from the beginning of the present year.
Pcers bill, passed in 1S45, for the regulation
of Scotch banking, allowed institutions already
established to issue notes without limitation
+ amount on condition that for every note
issued by a bank, above its average for
the year ending May 1, 1945, an
equal amount Of coin should be held
in reserve. This provision and the require
mcnt that frequent reports should be made 10
the Government Of the amount OF circulation
outstanding and of bullion on hand, would,
it was supposed, remove the possibility OF loss
by the public who held the notes, and pre-
vent the depreciation of bank paper below
par in cold coin. For third of n century tins
system he's operated admirably, and the cir
culating notes of Scotch banks have been he'd
in almost as high esteem rs those OF the Bank
OF England itself. When the Western Bank
of Glasgow failed in 1857 its bullion reserve
VIVA found intact, and every note was paid as
il was presented. What. then, must have
been the shock in Scotland end throughout
tho United Kingdom. on Friday. when II was
discovered from the report of the lnycstlga-
tors that tho directors Of the City OF Glasgow
Bank had reported 81 100000 more bullion
on hand than they actually had, and that even
the notes of the bank could not be paid until
an assessment was made upon the stock
noldcrsR
Whatever may be said of the National
Banking system Of the United States-and 1t
ia the fashion just now, among large class
OF poll cians, to attack it without rhyme or
reason-the security OF our bank paper is sec
ond to that of no other issued anywhere in the
world. A National bank, by misfortune or
mlsmanagement, may become as rotten rs the
City of Glasgow Bank it may sink its capital
six times over it may make false returns to
the Comptroller at Washington and deceive
the sharpc.t bank examiner; it may do all
,hIs and violate every rule of sound or honest
banking without impairing in the least the ST.
curiy of its circulating notes. Instead of
being hurried into the bank when the first
whisper Of suspicion of its solvency is heard,
they continue TO pass from hand to hand like
the notes of the strongest institutions in the
land, and no man entertans a doubt of their
redemption, even though he may never have
heard of the bank by which they were issued.
Security of this kind Is worth something to the
people Of the United States, and they will
hesitate long before they consent to go back
TO the old State banking system or accept In
It's place any new or mtried one.