EDINBURGH BANKERS AND THE WESTERN BANK OF SCOTLAND
| Author | R. H. Campbell |
| Published date | 01 February 1955 |
| Date | 01 February 1955 |
| DOI | http://doi.org/10.1111/j.1467-9485.1955.tb00724.x |
EDINBURGH
BANKERS
AND.
THE
WESTERN
BANK
OF
SCOTLAND
HE HE
theory and practice of Scottish banking have acquired
a
high
reputation among economic theorists and historians on the ground
that the Scots were able to strike a balance between two possibly
contradictory objectives, stability of banking structure and easy lending
Pacilities. The black spots in Scottish banking history are taken to have
occurred where this balance was not maintained.
Of
these major black
spots one that
is
often ignored
is
the failure
in
1857
of
the Western
Bank
of
Scotland, which
has
tended to be overshadowed by the failure
in
1878
of
the City
of
Glasgow Bank. This neglect
of
the Western
Bank is regrettable, as in some ways the episode is a most interesting
one. It was the
first
major banking failure
in
Scotland since that
of
Douglas, Heron and
Co.
(the Ayr Bank) in
1772,
and the first. there-
fore, since Scotland changed from
a
primarily agricultural into
an
industrial economy.
It
shows, moreover, the divergence
of
opinion on
the functions and methods of banking which existed
in
that new
economic structure. a divergence especially marked between the older
Edinburgh bankers,' led by the Bank of Scotland. and the new
industrialists
of
the west. While the former emphasised the need for
stability of the banking system, the latter emphasised the need
for
liberal lending. Unfortunately, it has been too often assumed that
the policy
of
the Edinburgh banks towards the Western was blameless.
This article seeks to examine the validity of this belief.?
*
The term
'
Edinburgh bankers
'
in
this article refers primarily to the five
chartered banks
of
Scotland: the Bank of Scotland. the Royal, the British
Linen, the Commercial and the National.
All
had their head offices in
Edinburgh and were able
to
exercise
a
general power
of
surveillance over the
other banks. See
1.
W.
Gilbart,
Practical Treatise
on
Banking
(London, 5th
edition.
1849),
Vol.
11,
pp.
554-5
and pp.
561-2.
Much
of
the information
for
this article has come from the Scottish press
of
the period,
The Rankers' Magazine,
and the
Re
ort
of
the Select
Committee
on
the Bat& Acts
axd
Causes
of
the
¢ Commercial
Distress,
Accounts and Papers,
1857-8.
(381),
VI.
Since the failure
of
the
Western Bank was one
of
the
most
important in this crisis it received consider-
able attention in the arliamcntar investigation. Other useful works are
:
R.
Somers.
The
Scofch
la,ika.and
&stem
of
Issue
(Edinburgh,
1873).
How
to
Mismanage
a
Batik
(Edinburgh.
1859)
and
a
collection
of
papers and
documents relaling
to
the Western Bank (including relevant evidence before the
Select Committee).
The Weef~m
Bank
Failure
and
the
Scotfish Bonking
Svctetn
(Glasrow.
1858).
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