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Mar. Inconvenience arose, though convulsions in the money market in I do not think that any other evil England, and amid all the distresses took place than such inconvenience, to which the manufacturing and and Parliament put an end to the agricultural interests in Scotland, as issue of them in 1765. Since that well as in England, have occasionally time, the current notes in circulation been subject. Banks of this descripin Scotland have been Guinea and tion must necessarily be conducted Pound Notes-issued, not only by upon the general understood and ap, the public banks, but even private proved principles of banking." Aud bankers, of great credit ; and every Mr William Dundas, our counthing has gone on well with them. tryman, in a late debate in the
Sir, two circumstances in Scotch House of Commous, admitted, that banking cannot but attract the atten. “ he looks with attachment to a systion, and excite the admiration of all tem which has prevailed for upwards who advert to it. The first of them of 100 years, and under which the is what I have styled the safety appa- country has greatly prospered.”. ratus, for discovering and preventing I come now to my third head, over-issues, consisting in the weekly the ahuses of Banking, and the exchanges of notes. Of this I need evil thence arising to the different say no more in addition to my re- parties connected with it. Now, marks on it in my last letter. The the abuses of Banking affect three second important circumstance con- different descriptions of persons, sists in that well-constituted, tacit —the merchants, by its inducing agreement (referred to in E. Brade them to over-trade, through the too wardine's letter) among the Scotch great facility of accommodation with banks, whereby, in the days of trou- money,--the bankers, who never ble, they stand firm by one another fail to suffer severely for their overwith their notes and credit. This issues, -and the poor, who, on occahas been compared to a republic, sion of failure of bankers, are sufbut it is liker the ancient Achean ferers, by having their notes in their league, wherein a number of free hands instead of specie. towns associated for mutual safety ; My fourth head has relation to or, as similes appear to be the order the proposed cure of those evils, in of the day, I add another one, and the intended ABOLITion, not of papersay, that it resembles that valuable currency, but of SMALL NOTES; and let bundle of rods given by the virtuous us see how that would operate in any father as a bequest to his family, endeavour towards accomplishing the when he admonished them to adhere different parts of its object. Now, as to one another, for their mutual wel- to the first part of these, would the fare.
abolition of small notes put an end to Such; Sir, is Scotch banking ; but over-trading among merchants? I do the valuable qualities of it have not perceive that it would have any been acknowledged from authorities such effect. Dr Smith justly remarks, which cannot fail to meet with the that whatever consumers may do, highest respect. In the late written " dealers” carry on their operations communication by the First Lord by notes generally above ten pounds; of the Treasury, and the Chancellor but over-trading is the operation of of the Exchequer, to the Bank of merchants or dealers in their sales to England, they say, (to use their own one another, whether at home or words) :
abroad, and the consumers have “The failures which have occurred nothing to do with it. But in truth, in England, unaccompanied as they even the larger bank-notes have but have been by the same occurrences a small share in it, for great comin Scotland, tend to prove that there mercial transactions are generally must have been an unsolid and de- carried on by another kind of paper, \usive system of banking in one part namely, bills; and these in London, of Great Britain, and a solid and among the greater merchants, and substantial one in the other.". banking-houses, are negotiated and Again—" In Scotland there are not paid in very many instances, it is bemore than thirty banks, and these lieved, without the aid of either gold banks have stood firm amidst all the or bank-notes, by the exchange of acceptances, which takes place daily, chants, bankers, the people, and parin a particular room, where clerks ticularly the poor of this our native from the respective houses attend country. Now, as to merchants, for the purpose ; so that while the a- the general remarks already made bolition of the small notes, and pro- apply to them in this as well as the bably even that of the large ones, other end of the island; and as would be of no avail to cure that evil no over-trading takes place in small of over-trading, every thing, with re- notes any where, so the aboligard to it, which can be stated a- tion of them in Scot nd would be of gainst the small notes, may be urged no avail as to this matter. Further, with equal propriety against the it seems quite clear, that in Scotland large ones, and even more forcibly merchants run less risk of being against Bills of Exchange.
permitted to over-trade than in EngBut, next again, how would the land, since they depend here on wellabolition of the small notes operate informed bankers, and not on Cheese on the Bankers themselves? It would monger dealers in cash *,-more parhave but a very partial effect in sav. ticularly, when we remember, that ing them from runs. It is true, it our Scotch banks form a species of might prevent some poor men, or general council, for watching over frail old women, who had a few the money-market, and keeping all pound or guinea-notes in their chest- safe, as I have already explained. nooks, from hanging about the bank. And here I cannot but advert to the ing-house doors; but it would not unreasonableness of some persons, keep out the holders of large notes, who blame the bankers, in the day of because there is no abolition proposed trouble, for having so much encourof them: it would not exclude cla- aged such trading, by their readiness morous people coming with receipts to accommodate with funds in better for deposits, in whatever description times. For what ought they to have of money those may have been made; done? They gave out their money nor would it shut out the anxious, only on good security, and they left ghastly faces, of men calling aloud special prudential considerations for settlements, and the balances due chiefly to their customers whom them.
these concerned, and who would Let us next see what effect the have probably taken their remonabolition of small notes would have on strances as ill as a company should the poor. It is true, when a banker do those of a landlord in a tavern, fails, it is better for a poor man that were he, instead of sending them he has a sovereign or a golden more wine, when called for, to come guinea, than his pound or guinea- in and favour them with a lecture note. That is admitted, but this on temperance. view is a limited one ; for failures of
As to the bankers themselves in banks happen but seldom, and would Scotland, the remarks generally aldo so more rarely, were they well ready made occur also here, with regulated; while the facility of pay. this most important addition, that ments for all descriptions of labour, the safety-machinery in the exchange by the use of small notes, encourages of notes, already so frequently allumanufactures and agriculture, but ded to, saves from runs, because for which the poor man would never every banker, knowing well that the have been brought into existence at day of reckoning must come within all, and without which he has not a week at farthest, is, in the general the means of continuing it, as will case, cautious what he does as to ad. appear more distinctly, when I come
But should there be a tento consider this matter as having re- dency to runs, it is 'well known that lation to our own country of Scot- the members of what I have called land, which I shall immediately do. the Achean league, also already ex
And this leads me, in the fifth plained, will support and protect place, to advert to the banking of one another, for the good of the Scotland, and the proposed abolition whole-a device for the public weal, of small notes, in reference to mer- which, as to banking, it is believed,
I think it right to say, that I on no occasion mean any want of respect to English bankers in general, but only to those who merit the withholding it.
exists no where but in Scotland, and My only objection is to the time and to which I shall advert further in a place of introducing his complaint. little.
To resort to professional language And with regard, in the last place, well known to him, when he brings to the people and the poor in Scot- his action in proper form, he shall land, every argument already stated have my best'aid on the occasion ; in a general manner applies here ; and I need not remind him, that with others, also, which will come guineas, and guinea-notes, form vo out more distinctly when I shall sift part of the sinews of war, Mr Bradwardine's reasonings, which wherever the field of battle may I shall speedily do.
Having, as I trust, thus establish, But it is not merely to the tone of ed sufficient premises, I come now our champion, in point of temper, directly down on the contest, Waver- that I object, for I was a little disly, against Malagrowther; my ob- appointed in the kind of warfare servations on which I am to preface which he practised at first. As poor with a simile. Sir, these parties put Queen Mary stood and saw the batme in remembrance of two country tle of Langside from an adjoining lairds of my acquaintance, who, en eminence, and as Napoleon, from tering on an amicable suit in a the summit of a wooden elevation, Sheriff-court, about the straighting surveyed the bloody field of Waterof their marches, one of the parties loo through his spy-glass, so I bare proceeded in it inadvertently with witnessed all this struggle ; and, Sir
, too much warmth, and that brought believe me, that during the two first on a great quarrel between them; assaults, I was not a little dissatisleading them to sundry hotly-con- fied with Mr Malachi's kind of ontested litigations, about mills and set; for I thought that squibs were multures, water-runs, pašturages, but a feeble defence of us; and it trespasses, mosses, muirs, meadows, was not until the third and last fight, parts, pendicles, and hail pertinents, when he charged Old Christal with &c. &c. &c., so that, ere long, there bayonet, that he met my approbawere no fewer than twenty-sevention ; though I was aware, that that vell-going processes between them; petty dealer in “ broken tea-spoons,
-their procurators over their toddý strayed sugar-tongs,” and other such declaring, that their clients were two spreichry, was but poor game for so as guid mille kye as ever writers had great a hero as Malachi; for it is in their byres. It was, however, no said, I think, that the king of the joking with the gentlemen them forest deigns not to meddle with selves; for such contests had their humble prey. usual effect, of destroying for ever But I must now attend to my own the intimacy, which should always duty, and answer, in their order
, the subsist between neighbour families. statements of Mr Bradwardine, which To apply my illustration,--the sub. bear distinctly on our subject; and ject here was the currency question, those, on examination, you will find as applicable to Scotland, and might to be but very few. The whole of have been amicably discussed ; but his first letter (for there are two of instead of that, we must admit, that them,) is occupied in that squib, or our friend, Mr Malachi, from the rocket-fighting, for which I have very beginning, lost temper ; and in blamed Malachi; and, in a few senplace of confining himself to it alone, tences, I shall extract all that he has he sent his trumpets of defiance, or said in the second that is relevant to rather his bagpipes, with their tuttie the present question ; or to which, taities, before him; and proceeded to holding close to the matter at issue, tear up every half-healed wound, I consider it necessary to reply. and rake up every old grudge be- He finds fault with Mr Malachi tween the two countries, -acting in having said that, (as he conceived,) a manner very different from what the present interference with the we were led to expect from the Scottish currency was 'unprecedente known good sense and moderation of ed; and he refers triumphantly to that person. While I say this, how the act 1765, which put down the ever, I do not mean to deny that issues of five and ten-shilling notes there much truth in all he said, at that time. But surely, that was
of no consequence; and I believe banks hold together ; that, conscious the enactment proceeded from a de- that not one of them could stand sire to clear Scotland of Cheese-mon- what is called in England a run, ger bankers, a few of whom then exist- they help one another for the sake ed here also, as it has been admitted of what is a common cause. When they have all along done in Eng, a run takes place on a bank in Scotland. Be that, however, as it might, land, how is it met? By paying certainly, since the act 1765, sixty their notes in specie ? If that were years ago, there has been no in- the case, you might well boast of terference on the part of Parliament the stability of the Scotch banks--with our Scotch currency. Neither have there been any failures of
" Which, having substance for its ground, bankers, except in two instances,
Could not but be more firm and sound which, it is admitted, proceeded Than that which has the slighter basis. from causes altogether unconnected “ But I fancy that no such thing with the medium ; and every thing as a payment in coin was ever heard has gone sweetly and smoothly on, of. The threatened bank glorifies - the bankers and their customers itself if it is able to pay its notes all prospering in an eminent degree. by the notes of one of its neighbours;
. On the most careful examination and thus, by a mutual interchange of Mr Bradwardine's letters, the of courtesy and kindness, two banks, following sentences, in the last of which were objects of suspicion, each them, seem to be all that bears on in their own districts, might weather the subject. I state them in his the panic by the help of the notes own words, because I mean particu- of each other; and if their proximilarly to reply to the exact proposi- ty should happen to throw any distions contained in them :-He says, favour on this operation, they need " I begin by admitting and that is only have recourse to some more as much as I suppose can be asked distant correspondent, whose paper of me--that the banks, and the in- should happen to be in full credit. dividuals which compose them, are “This, as I conclude from facts abundantly opulent, and possessed, in supplied by yourself, is the real cause the aggregate, of property sufficient that there has been no loss by the to answer all the engagements they failure of any Scottish Banks.” The can make. I further admit, that very facts on which you rest your such a foundation is quite solid and opinion of the stability of your syssufficient for the general business of tem convince me that there is trade, and for all the higher transac- “ something rotten in the state of tions of commercial intercourse; but, Scotland." on the other hand, I would ask, what Now, the propositions which these defence do they afford against an paragraphs embrace, are, first, an unreasonable panic, which, in mat- acknowledgment of great property ters of paper currency, is the evil on the part of our bankers; and next most likely to occur, and most necese' this question, "What defence does sary to be guarded against ?
all such opulence afford against an • You say, that only two or three. unreasonable panic ?” Secondly, an Scottish banks have failed in a long admission that all the Scotch Banks series of years. I admit the fact, have hitherto stood firm, except two, and might say something of the apo- the failures of which are justly aslogue of the pitcher and the well, cribed to other weighty causes ; but I think I can, without the aid of And, thirdly, an explanation of the an allegory, explain the causes, and, reason of the uninterrupted credit of consequently the precariousness, of the Scotch Banks, (for these are the their exemption from accidents of writer's own words,)—that great and that nature.
proud credit being ascribed by him “ The first cause of their uninter- to the two real grounds of it: rupted credit is, no doubt, their posi- first-to the positive wealth of the Live wealth, and the great stake bankers, and the great stake which which the partners visibly have in the partners visibly have in the the country
country—and, next, to this cir.". The second, I take to be, that the cumstance, that the banks hold together, and support one another in the is, in fact, no such word at all days of adversity;“ for being all,” he used in Scotland, seeing that there says, “ concious that not one of them has never existed such a thing in this could stand what is culled in Enge country to bear the name ; Mr Bradland a run, he adds, that they help wardine himself admitting, in the one another for the sake of what is passage quoted, that it is peculiar to a common cause."
England; and his expression, in the Now, to begin with the first of description of it, being, " what is in these, wherein this writer asks, if all England called a Run." If an Edinthe admitted great property of the burgh trades-lad were to hear of a Scotch Bankers would prove any de- “run," he would immediately think fence against an unreasonable panic, of the race of the pedestrian, who I answer his question, by admit- went to Glasgow, as fast as the mail. ting that the great landed estates coach, for a wager. He never would of any one of our Scotch bankers imagine that any running was to be would prove no such defence; as either to my master, Sir William no magician among the partners Forbes's, or any other bank of this could, with a wave of his wand, con- country whatever. vert houses and lands into cash to The remaining two propositions meet such disaster ; and it would be, of the writer quoted admit the stain fact, impossible ever literally tó bility of our bankers, and ascribe it meet it, without each bank having to the very natural causes of all stacoffers full of gold, like Cræsus, or bility, namely, the wealth and proHenry VII.: but I have already perty which they actually, possess, shown satisfactorily, from Dr Smith, and the excellent credit which all of that such hoarding of great quanti- them enjoy. But it is really difficult ties of the precious metals is quite to argue with a man who has adinconsistent with the first principles mitted so much as this gentleman of banking ; and, moreover, as I has done, and where every thing is have said, and as Mr Bradwardine, so clear on one side as it is here. at the bottom of his heart, must ads If, therefore, Mr Bradwardine shall mit, neither the rod of the necro- still adhere to his extraordinary docmancer's wand, nor that of the ac- trine, that such a situation of af. cumulated golden stores of the King fairs as that which I have detailed, of Lydia, or of the English monarch, and he has acknowledged, demona are, in truth, necessary in Scotland. strates that “there is something The safety of the bankers here has rotten in the state of Scotland," he a better basis than any such things must, to use the language of the can afford. It consists of that firm, phrenologists, be either deficient in compacted support, which the whole the organ of conscientiousness, in conof them give to one another; so that, tending against his own conviction, if demands come, which any of them or in that of causality, which conmay not find it easy to answer, the ceals from him the truth,-or he must others supply them with their notes, be far more crazy than was his poor with which all parties have ever friend Hamlet, from whom, as I bebeen better satisfied than they would lieve, this his expression is borrowed. have been with the most solid gold. Mr Bradwardine says, our Scotch But what, it may be asked, would notes go far beyond York into Engbe the consequences, if all the Scotch land ; and he seems thence to say, banks together should fail ? and, no that they may too much increase the doubt, the distress would be great; circulating medium of that country. but the question would be just about But really this seems to be all quite as wise a que as that of the timid old frivolous; for if they do proceed so far, woman, who, with not a little anxiety, it is, in the first place, the best mark said, Oh, what if the lift shou'd fa' of the good credit of our bankers, for and smoor a' the lavrocks!" You will none of the cheesemonger-notes go so observe, Sir, that, in these remarks, far from home; and, secondly, as when speaking of pressing demands small notes are our only topic now, on Scotch banks, I have abstained it must be admitted, that, except a from the use of the term run, be- few to bear the expense of journeying, cause, as applicable to banks, there none else of that description go into