The New York herald., 1878-12-18
Suspension Of a Highland
Bank.
ONE LITTL E 81 l P
Honorable Career OF Forty
Years Forfeited.
DISASTROUS RESULTS EVERYWHERE

Another bank gone Before we have had time TO
recover from blow dealt to our national credit by
the suspension OF the City of Glasgow Bank and be-
fore the liquidators have been able to reap any
results from their first call OF $500 per
share. we are startled with the announcement
that another bank has closed its doors
This time the disaster has occurred in the Highlands;
but whilst the news will carry CONSERVATION to the
hearts OF the North country lairds and pru-
dent farmers, who have entrusted their all
to the keeping of the directors OF the
Caledonan Bank. it cannot fail to have
most disastrous effect anon the country
generally The only consoling feature Of the new
suspension the stoppage is clearly traceabe to
the effects Of the Glasgow Bank failure, and is not
due to any internal unsoundness on the part of the
Calcdonian Bank itself.
THE BANKS HISTORY.
The history Of the bank is Of the most honora-
bic character The Caledonian Bank was established
in 1888, with its headquarters at Inverness,
the capital OF the Highlands, and several
branches which were year by year added.
in some OF the principal towns in the
North. Though at first 10th TO trust their money
out Of their sight beyond the keeping Of the old
stocking. which had so long formed their sole
cash box the Highland lairds' soon began
to appreciate the advantages of en- establish
mcnt where one could have money when he
wanted it, and where interest was accommodating
on what did not at the moment require. The
shares taken up business flowed III
rapidly. and the Caetonian became prosperous
concern. OF the authorized capital of 100000 in
s10 shares it, was never found necessary to
call mp more than 81 los. per share, or
f15oOo0-a capital which remains intact to the
present day. For many years the bank has paid
handsome dividends. ranging from twelve TO four
teen per cent and besides that tho directors have ac
cumulatcd a reserve fund of f75,000 and building
fund of fo50,OoD
TEMPTATION.
In an evil hour the directors accepted security
for an advance made to distilier in the famous
neighborhood Of Tillochrie four shares of the
City Of Glasgow Rank. then believed to be q
most prosperous concern The Caledonian directors
agreed to retain these shares. The bank was
entered holder the register Of the City OF
Glasgow Bank and the seeds thus sown OF which the
Caledonian shareholders are now reaping the bitter
fruit Four shares OF fl00 each may seem very
small amount to ruin prosperous undertaking, and
until within the last few days no one supposed that
know the force Of the under currents which have been
a. work since the smash OF the Glasgow
Bank it is evident that this fate has been
slowly but surely impending on the north
country establishment Prom the first mo-
ment when it became known that the Caledonian
directors held some shares Of the City of
Glssgow Bank and were thus liable. to the fun ex
tent OF their feeling of uueasiness has pre-
vailed among the Caledonan shareholders and depoe
Hors. The former began TO sell their shares the
latter TO withdraw their money. natural result of
rms feeling was that the 81 los. stock OF the
at f7 los-bcgan steadily to decline, until about the
middle OF November the shares were selling in the
stsnces the manager OF the bank believed that the
tisre had come when circular shond be issued ex-
planning the position Of affairs. In this manifesto
the manager made several points.
THREE FONTS.
First-That the entire capital surplus fund and the
yum at the credit Of the building fund account are
intact.
-.Secosd-That the business Of the bank confined
70 the northern counties: that its advances
were spread the head office and the twenty
three branches almost entirely in sums OF moderate
amounts: and that the directors had no reason to
anticipate any loss other than that which had already
been amply provided for ont Of the which have
7hird-That the shareholders Of the bank about
thousand in number. The whole OF the capital il
held by the shareholder. not share being held
tors OF this bank. while by the con
tract only required to hold fifty shares each.
inan an eighteenth Of the eo.coo shares into which
the capital is divided. With reference TO the liability
Of the bank for the four shares of the city
lie had estimates made by competent
persons. according to which 1t calculated that
the total calls will not exceed f2ooo per share thus
making the maximum loss 70 ttc Csedonian fs,g1.
amount which could be paid without in the slight
est degree affecting either i.s stability usefulness.
For the moment this circular had the effect of
restoring confidence. The Caletlonan shares MP
n tribe in the market, and the run on the bank
grew less trying
a srsErIraG INTERVIEW
Eut while affairs appeared TO the public 70 be
were being rudely opened to the danger
Gus nature Of their position. request
an interview with the directors OF the caedonian Al
that conference the ludators used some vory plain
Language. They stated that the position OF the Gale
donan Bank had been engaging their serious consid-
Grafton tr.imors had reached them that
shares were being transferred from persons OF
means g persons of no means. and that
they might have day or other TO come down
npon these shareholders, they had decided 70 stop
this process Of transfer How was this 10 be
he liuu had oftiy
propose ami that liquidation
Al this proposal the caletonian directors stood
aghast "Liquidate prosperous banking concern
FOR the sake OF paying calls four shares ~ another
bank Impossible Our manager estimates the calls
wantf' But the guiiat,rs have estimates
as well as the manager. They have de-
get 1t somewhere. Their irst call may exhaust
fwothrds Of their shareholders and only
produce couple Of millions. Where is the rest to
come from II not from wealthy shareholders. snch
tho Caledonian Bank still the directors said
ANYTHING short Of liqusiation Here IL
entire capital Of fi50.fn viii that satisfy youg
the liqudators obdurate They would take the
capital TO oblipe tho directors, hut could not con
there nc no Other resource % but but iquidnsian % yes
there alternative. 'Tf.' said the liqui-
dators, you will call up the whole unpsid
capital OF the bsnk-that Is. make a call Of fT los per
share on the shsreholders--we will not proceed to
liquidation" In this painful dilcmms-with quida-
tion on the one hand and Distress perhaps ruin 70
many Of their share holders. the othcrtne direct
ors chose what appeared 70 be the lesser evil and
occlued Tor uIudntion IN announcing this deter.
nna.ion TO their shareholders the directors point
ont that has not been brought about by insolvency.
They say.
Is has been eanscd by the uneasy feeling which the
indcineness of the claims of tho Civ Of Glasgow Bank
.p.n th. bank created ne cpos'tos princi
pally and mmenfeiy the panic the
having led action on the part Of the oudaos Of the
City ~ Gasgos Bank.
The directors also administer q sharp rcbuke 10
those stockholders who have deserted them In the
hour Of trial. Had all the shareholders stood
Loyalty by this bank. tho business might
have been continued until the liquidation
of tho City Of Glasgow Bank had so far
proceeded that the claim against this hank might
have been estimated and compromised. The tiniid
shareholders who impeled by panic, have cndeavored
10 themselves at the expense Of Others thus
In great measure, responsible for the result
EXCITEMENT HIGHLANDS.
When the news of the stoppsge of the bank became
known in the North uf scotland there was for n time
the utmost excitement which was the more intense