Year: 1878

Glasgow and Edinburgh looks like vigor-
Gus attempt to put the machinery of justice
in motion against foul nest Of conspirators
what statute these arrests have been made.
nor to what penalties the culprits are ex-
posed in case of conviction. There is
nothing in the act of Parliament relating
to the Scotch banks which subjects
them or their officers to any other
than pecuniary penalties. If they are
liable to other punishment it is proba-
bly, under some general statute against.
frauds or breaches oftrust. Our dispatches
have repeatedly stated that there are heavy
penalties in Scotland for the overissue OF
bank notes. As we have the law relating to
Scotch banks before us we can tell pre-
cisely what those penalties are. They con-
sist merely in a forfeiture by the bank OF
sum equal the excess of its issues above
what is permitted by law. 1t is only fine
imposed not upon particular officers but
on the bank in it's corporate capacity. By
the act of 1S45 the circulation of every
Scotch bank was restricted to its average
amount during the year 1874, and was to re-
main stationary at that limit in all future
years, except that the Scotch banks could
issue their notes beyond the fixed limit at
pleasure by having an equal amount of coin
in its possession. The authorized circula-
ton of the Glasgow bank since 1845 has
been 1891, plus the amount of coin in
its vaults At the time of its failure it had
e293, ,545 in coin, and was therefore entitled
to circulation of s366, ,466. But its
actual circulation at the time of the
collapse was s6O4, ,196, or s237, 730 more
than the low permitted. If the bank had
have been forfeited to the government as a
penalty for the overissue of notes, and
this is the only penalty prescribed in the
act for that offence. It would have proved
quite sufficient if the officers of the govern
ment had exercised due vigilance and had
not been deceived by false accounts The
law makes it the right of the stamp officers
to examine the books and count the coin OF
the Scotch banks ''at all reasonable times"
and had this duty been faithfully dis
charged it is difficult to imagine how
the issues of the Glasgow bank
could have become so excessive except by
false records of it's circulating notes. The
imprisonment is probably for this falsifca-
ton, and not for the excessive issues Of
notes, which are punishable only by pc
cuniary forfeiture of the same amount as
the illegal excess.


The violation of law practised by the
Glasgow bank in its enormous issues of its
own notes is the most trivial part of its
offences. The note holders will suffer no
loss nor even any temporary inconven-
ience. Immediately after the failure of the
Glasgow bank the other banks of Scotland
agreed to assume and redeem its notes,
relieving the note holders at once from oil
anxiety. 1t is curious that one of the most
eminent American statesmen, in a political
speech delivered few evenings since, asked
his hearers to observe what great advan-
tage it would have been to the people OF
Scotland if they had possessed our system
of q guaranteed circulation at the time of
ceeds from total msconception. The
note holders of the Glasgow bank do not
suffer at all any more than those
of one of our national banks would
suffer in consequence of its failure.
But when we pass from the note
advantage is on the side of the Scotch sys-
TEN. When one of our national banks fails
its depositors and all its other creditors, with
the exception of its note holders, are always
victimized, whereas no creditor of this
broken Scotch bank will suffer any loss ex-
cept by the necessary legal delay in recov-
ering what is due him. Under our national
bank system. too, the depositors must sub
NIT to the dilatory course of the law, and
they recover at last only their pro-
portion of the insufficient assets.
But in Scotland the stockholders are
compelled to make up all deficiencies in
the assets. They are all liable, not merely
to the amount of their shares, but to the full
extent of their property. No note holder
or depositor or other creditor of the Gas-
gov bank will suffer any ultimate loss.
The eminent statesman to whom we have
alluded was preposterously wide of the
mark in insisting on the superiority Of our
own banking system to that of Scotland, so
far, at least, as bank creditors are con-
cerned.


The whole burden Of this stupendous
failure in Glasgow will fall upon the share
holders of the bank. Unlimited liability
in such case seems hard and oppressive,
but such is the law in Scotland. Pur-
chasers invested in the shares with their
eyes open, but they are, nevertheless, to be
pitied as victims of rascality which they
had no reason to suspect. 1t is to be hoped
that the offending directors and managers
have been arrested under some law which
is strong enough to hold them and
bring them to condign punishment No
ordinary thief or highway robber is half rs