The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1902-11-17
THE SCOTTISH SYSTEM.


Based on Assets for 1870 Years and Not
Penny Lost
Mr.. John Johnston OF Milwaukee smoke
Of THE Scottish Banking system He
said in part:
Notwithstanding the fact that there was
no limit TO the issue OF bank notes. and
notes OF small amount were permitted,
scottish currency for 1870 years has never
for one moment varied from par, neither
has penny been lost by single depos-
itor during all these years / need not
remind you that the currency OF Scotland
Is an asset currency.
The question naturally occurs, why did
the Scottish banks stand firm through all
the years which proved so disastrous to
me bnghsh banks! The popular reason Is
round IN the supposed closcness and eau
ton of the average Scot I believe, how
ever, that the high encomlum passed upon
the Scot for his virtue of caution is wholly
cares little for money when 1t Is placed In
the scales against things higher, such as
education and civil and religious freedom.
There can be no question. however, as to
the fact that the Scottish bank maintained
stability unknown In England. No doubt
several circumstances contributed to this
among them the fact that the number of
stockholders is very lnrge. In some OF the
Ddnks tuey are counted by the thousands,
ono of the smallest, ] know, has 5000
stockholders. The banks rest upon the
people, and the people are loyal to the
banks. In Scotland the feeling is univer-
sal that the interests of these banks and
Of the people at large are identical There
is no such sentiment as is to be found in
some places, that whatever favors the
banks must be antagonlstic to the country
at large. Then, In scotland, land, as well
as personal property, can be attached for
debt, and as all the land Is registered, It
is easy for the creditors of the bank to
ascertain from the records what landed
property is possessed by the shareholders
of the banks, which I understand Is not
tho case in England. This tends to create
confidence In the minds Of the depositors
and bill holders.
Another fact is that the Scottish banks
never jeoperdize their safety by too eager
dcslre for great profits, but adopt the plac-
tice, Of retaining a large portion Of their
capital and deposits in government securi-
into money.
10 an american the two most striking
features Of the banks OF Scotland are their
numerous branches, and their system Of
cash credits, or cash accounts To one
who has lived in Scotland the lack of
banking facilities In this country is very
marked. The population of Scotland and
Ohio are about the. same. Few people
will say that Scotland is richer than Ohio,
yet the deposits OF the banks In Scotland
nre much larger than those Of Ohio In
only In the large cities, but at every cross
roads These branches are of immense
value to the rural districts in supplying
facilities for the transaction OF busine,s.
Every spare dollar In the country finds It's
way into the bank | do not believe there
Is pound note hid away In an old stock
branch banks tends to promote saving, for
they pay interest on the smallest deposits
and they are at nearly every mans door.
| know some of my friends who have
I'm fhof bn
capitalists OF New York would invade their
territory were branch banking permitted.
II appears. however, as II the banks Of
New York have all they can attend Ia
without establishing branches In the dis.
tant parts Of the country. 1t may he that
there Is something In the makeup Of the
American people opposed to branch banks,
but | can not believe It. Branches -four
ish In every other business, such as In
surance, and in mercantile and manufac-
turing CT every description. can not see
why there should be any objection to the
establishment Of branch banks In thosa
towns where there are at present no banks
whatever
Another peculiar feature OF the Scottish
banks is their system of cash accounts
or cash credits. One Of the bug-a-boos
conjured up against banch banks In this
would never condescend to make small loans
| to their poorer customers. Now, the
branches OF the Scottish banks are remark
able for the small loans they make. Tha
the Royal Bank IN $780, and now In gen
! eral use by nil the banks Of Scotland
/ has without doubt. done more TO develop
the resources Of that country and promote
! IT'S agricultural and commercial prosperity
/ than any other cause whatever Not
/ few OF the most wealthy men IN Scotland
/ have attributed their rise IN life to having
I received small cash credit through th(
assistance Of friends. We would natural
] " suppose that cash credits, while very
4 advantageous to the borrower, would neces
sarily be Improbable to the bank, but
| understand a higher rate of interest Il
usually paid on cash credits than on ordi
! nary discounts; at any rate. they seem L
/ NJ co both t1tn bontys fho4r 81