page_title: Economic history of Scotland
section_title: Banking
hierarchical_section_title: Economic history of Scotland / 19th century / Banking
caption_attribution_description: English: Former Head Office of the British Linen Bank, St. Andrew Square Edinburgh
context_page_description: The economic history of Scotland charts economic development in the history of Scotland from earliest times, through seven centuries as an independent state and following Union with England, three centuries as a country of the United Kingdom. Before 1700 Scotland was a poor rural area, with few natural resources or advantages, remotely located on the periphery of the European world. Outward migration to England, and to North America, was heavy from 1700 well into the 20th century. After 1800 the economy took off, and industrialized rapidly, with textile, coal, iron, railroads, and most famously shipbuilding and banking. Glasgow was the centre of the Scottish economy. After the end of the First World War in 1918, Scotland went into a steady economic decline, shedding thousands of high-paying engineering jobs, and having very high rates of unemployment especially in the 1930s. Wartime demand in the Second World War temporarily reversed the decline, but conditions were difficult in the 1950s and 1960s. The discovery of North Sea oil in the 1970s brought new wealth, and a new cycle of boom and bust, even as the old industrial base had decayed.
context_section_description: The first Scottish banks, Bank of Scotland (Edinburgh, 1695) the Royal Bank of Scotland (Edinburgh, 1727) are still in operation. By the early 19th century Glasgow had strong banks as well and Scotland had a flourishing financial system. There were over 400 branches, amounting to one office per 7000 people, double the level in England. The banks were more lightly regulated than those in England. Historians often emphasize that the flexibility and dynamism of the Scottish banking system contributed significantly to the rapid development of the economy in the 19th century.
  The British Linen Company, established in 1746, was the largest firm in the Scottish linen industry in the 18th century, exporting linen to England and America. As a joint-stock company, it had the right to raise funds through the issue of promissory notes or bonds. With its bonds functioning as bank notes, the company gradually moved into the business of lending and discounting to other linen manufacturers, and in the early 1770s banking became its main activity. Renamed British Linen Bank in 1906, it was one of Scotland's premier banks until it was bought out by the Bank of Scotland in 1969.
caption: The former Head Office of the British Linen Bank in St. Andrew Square, Edinburgh. Now offices of the Bank of Scotland.
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