EDINBURGH BANKERS AND THE WESTERN BANK OF SCOTLAND
| Published date | 01 February 1955 |
| DOI | http://doi.org/10.1111/j.1467-9485.1955.tb00723.x |
| Date | 01 February 1955 |
EDINBURGH
BANKERS
AND'
THE
WESTERN
BANK
OF
SCOTLAND
H 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
facilities. 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 eniphasised 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
Batrkiny
(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
Bankers
hiagazine,
and the
Re
ort
o/
the Select
Committee
on
the
Batik
Acts
and Causes
o/
the
[ecfnt Commercial
fJLlreus.
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 arlianientar investigation. Other useful works are
:
R.
Somers.
The Seufch
&,tk*
ad
&sLern
o/
Issue
(Edinburgh.
1873).
How
to
hiismanage
a
Bank
(Edinburgh.
1859)
and
a
collcciion
of
papers and
documents relating
lo
the Western Bank (including relevant evidence before the
Select Committee),
The
Westem Bank Failure and
the
Scotfish
Bonking
System
(Glasgow,
1858).
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