The New York herald., 1878-10-04
SCOTLANUS FINANCIAL CRASH.
THE CAUSES OF THE FAILURE OF THE CITY
OF oL ,sGow BANK AND THE RESULTS
WHAT HAS BERN ANTICIPATED AND DIS
COUNTED.
icy CABLE TO THE HSR,Lp,1

[BY CABLE TO THE HsR,LD,1
LONDON, Oct 8. 1878.
The Tiuses In its financial article yesterday
Ing, says:-'Tha City Of Glasgow Bank had 133
branches. II has paid progressively increasing
dividend for several years past until u reached twelve
per cent It would be incorrect say that the dts
aster was unexpected. On the contrary, IN banking
circles It created surprise, for the bank had been
losing credit gradually for ten years past. Yet tho
Scotch banks IN London were not In possession OF
information which showed that tho end was
actually near until Tuesday morning. Rumors
or the bank being in difficulties had been
20 often circulstcd before within striosly bank
Ing orcIes that tho repetition OF them d,d nos
excite particular interest this occasion. The
business OF the bank had been ucted Tor years
upon worry unsound principles and, from tho fact OF
tho other Scotch banks having decided 10 let the
bank stop, II 10 inferred that u 10 very bad Case
Operations upon enormous scale had been In.
directly entered into IN Indian produce and
Australian wool. $14 200. 900 OF bills having
besn accepted for the account OF three Arms Very
largo advances had been m ,ds to firms In tho iron
trade the North ana utterly reckless support ap-
pears to have becn given to builders.
DIRECT CAUSE.
s.The immediate cause OF the failure was tho i'm.
possibility OF any longer getting bills drawn from
India The bank In Glasgow discounted In the Lon.
don market, circumstance which explains, to somo
extent tho isver,sh oscillations for months past
in the rates demanded for loans These bills had
becn sold India TO Indian banks siby against
the Shipment OF produce, and ultimately camc upon
the discount market The terms demanded for nego-
tiatinR thom having steadily advanced Instructions
were Of length ,csgraphed TO the Indian branch TO
take more bills, and, as soon ss Is was lopaer
possible to keep tho open credit sys.em going and
naner anoai bank clOsed doora.
TREMENDOUS LABILIrixs.
ssTbe liabilities OF tho bank estimated at
$50, ,0o0, 900; tho acccptances slightly below
SIS 600 600; tho deposits $40 00o0 0o0 The Unlimited
liability or Tho shareholders may, perhaps secure tno
.dcpositors. The authorized circulation was ouy
f72 GOO 1880 000l but according TO last accounts
she oo.woen E6)o ooo ooo and E7o0 600
t$3 0O0l against nearly all Of which tho com.
pels sSs bank to havo gold. We believe are cor.
root In saying that this depiorable catastrophe is
with reference Scotch banks a whole, entirely
an exception, and that other banking institution
in Scotland Is In any way mixed up with tho City OF
glasgow Bank or has boon engaged. IN bust
ness OF tho KIND which led TO this faiIure.
Attempts nave boen made In thc city to oomplicato
matters by saying that therc was panic, but there
has been panic. The Bank OF England Is in m cx
ceptionaby strong position relatively to the extent OF
the business going on and the state OF sTurs very
different 10 what would have been had tho disaster
happened 10 bank whose soundness had been above
suspicion"
NO PURIFIER RUIN.
The Findnctcr anticipates no additionsl bank fail
ures; but u says that mercantile failures can
hardly DO avoided, which may extend into tho iron
districts OF the North Of England.
now THIS CITY IS AFFECTED BY THE FAIL
URE-vTEws or BANKERS
The fs,luro OF tho City OF Glasgow Bank, with la
bilties Of $50. 100000, viii, In tho opinion Of promi-
mont bankers IN this city have very imtic effect on
tho market here. Tho only possible way u may
reach u.s. II Is said-nnd even this Will ,akc somo
timc--is through panic at Glasgow, Liverpool aud
London, which may DO caused by tho failure. In
that houses here doing largo foreign business
may become embarrassed, anu English firms having
agencies In New York may DO crippled, bat nss 10
iuch extent as 70 seriously injuro our market
Tho iaiurc has had the effect make tho money
market tieh; but the glasgow bank had no rsa.
tlons with Amer,cau houses tho news has created
very little excitement among the financial commonly
Kuhn, Loeb x To. said that the failure had been IL.
peced Tor several days. and was csused by the great
depreciation In reai estate and other securities held
by that institutions. The bank funds were loaned 10
the iron trade OF Eaeand aud Scotland, and no doubt
many OF those large English corporations would not
be able 10 respond on call, anu their suspension
would follow This would result In q pane, winch
would In all probability extend over London, L,ver.
pool and the principal cities OF scotland. In case .,
panic In these places many large manufactures, en-
ploying hundreds Of thousands OF people, would 10
forced 10 close their DOORS thereby great suffer-
ing would be caused among tho laboring classea
Mr.. J. ". Eius OF wipsiow, Lanier Co., New York,
agents Of tho Guy Of Glasgow Bank, said that they
had no account wnh that Institution. simply making