" A creditor in Scotland is empowered to attach the real and heri table as well as the personal estate of his debtor, for payment of personal debts, among which may be classed debts due by bills and promissory notes ; and recourse may be had, for the purpose of pro curing payment, to each description of property at the same time. Execution is not confined to the real property of a debtor merely during his life, but proceeds with equal effect upon that property after his decease.
"The law relating to the establishment of records gives ready means of procuring information with respect to the real and heri table estate of which any person in Scotland may be possessed. No purchase of an estate in that country is secure until the sasine (that is, the instrument certifying that actual delivery has been given) is put on record, nor is any mortgage effectual until the deed is in like manner recorded.
" In the case of conflicting pecuniary claims upon real property, the preference is not regulated by the date of the transaction, but by the date of its record. These records are accessible to all persons ; and thus the public can with ease ascertain the effective means which a banking company possesses of discharging its obligations ; and the partners in that company are enabled to determine, with tolerable accuracy, the degree of risk and responsibility to which the private property of each is exposed."
But, on the whole, we are inclined to think that the long familiarity of the inhabitants with banks and paper money, and the less risk that has attended the business of banking in Scotland, have been the principal causes of the greater stability of the Scotch banks. This stability was not, however, everywhere exhibited in the crisis of 1857, when two of the principal Scotch banks, the headquarters of which were in Glasgow, were compelled to stop pay ments. They had very large capitals, the Western Bank 1,500 000, and the City of Glasgow Bank 1,000,000, with a great many branches, large amounts of deposits, and very numerous and wealthy proprietary bodies. Had the management of the Western Bank displayed anything like ordinary skill and prudence, it might have gone triumphantly through a far more serious trial. Bat having advanced immense sums to a few firms that never were entitled to any considerable credit, it was so crippled that, for a lengthened period before its stoppage, it was reduced to the expedient of sending up the bills it had discounted in Glasgow to be rediscounted in London ; and when this resource failed it, and the other banks declined to come forward to its assistance, nothing remained for it but to shut its doors.[1] On the affairs of the bank being inves tigated by a committee appointed for the purpose, it was found that they were in a much worse state than any one could have anticipated. The losses exceeded two millions, and were directly attributable to the carelessness and negligence of directors, and the incompetence of the managers appointed by them.
We have already explained the nature of Sir Robert Peel s Act of 1845 (following that of 1844) dealing with Scotch banks. It allowed the Scotch banks then exercising the privilege of issuing notes to continue to exercise it, without limitation of amount, but subject to the condition, that for every note issued by a bank above its average circulation the year preceding the 1st May 1845 an equal amount in coin should be kept in its coffers. No bank established after the passing of the Act was allowed to issue notes. No change was effected by the Act in the denomi nation of notes issued, which remained, therefore, of 1 and upwards. Many theorists have urged that 1 notes should be forbidden in Scotland, just as others have argued in favour of their being again put into circulation in England. This question cannot be settled upon abstract arguments. We have no doubt that the balance of reasoning is in favour of the issue of 1 notes, provided they are issued under regulations securing their convertibility at all times and under all circumstances, but these regulations are wanting in Scotland. Legislation on the subject should not take the form of suppressing 1 notes entirely, but of with drawing the privilege of issuing them from the existing banks, and vesting it in a public institution governed by fixed rules analogous to those of the issue department of the Bank of England. When the convertibility of notes is thus made certain, the single valid objection against the issue of those of 1 denomination disappears. It may be added that more than one-half the total issues of the banks established in the Australian colonies consists of 1 notes.
A complaint has been often raised that the Act of 1845 gave the existing Scotch banks a practical monopoly of the business of banking in North Britain, and it must be admitted to be the fact, that only one new bank has been established in Scotland since the passing of the Act, and that bank carried on business for a short time only. It is, however, true that legislation precisely the same has not pre vented the establishment of new banks in Ireland, and it is doubtful whether the observed fact is rightly attributed to the cause assigned to it. With the exception of London, and some of the larger provincial towns, there have been very few banks established in England since 1836, eight years before the Bank Charter Act; and of the banks established in 1835 and 1836, very many were formed by the conver sion of pre-existing private banks into joint-stock associa tions. The truth appears to be that the natural obstacle s to the establishment of a new bank in a district already occupied by banks and bankers are almost insuperable. A bank cannot be successful unless it commands credit ; and those who want a place of safe keeping for their money select establishments that have been tried and tested through long years. Hence it happens that, though private banks of long standing continue in esteem, the attempts to set up new private banks are most rare ; and, unless the wealth and prosperity of a neighbourhood have rapidly developed, so that capitalists have risen to prominence in it who are not connected as shareholders or directors with existing banks, it is not easy to form joint-stock associations of weight enough to compete with the institutions in pos session of the field. It is not necessary to refer the absence of new banking companies in Scotland or elsewhere to the legislation of Sir Robert Peel. Though he allowed the Scotch banks to increase indefinitely the issue of their notes, it was upon condition of keeping in hand cash to represent every note above fixed limits ; so that the amount of profit derivable from their issues is not capable of increase, and the value of their privileges will have been strictly included in the selling price of shares in these banks since 1845. As far as the privilege of issue goes, capitalists preparing to start a new banking association in Scotland would be in the same position as in buying shares in an established company ; and if they do not start an association of their own, it is from the difficulty of attracting confidence, rather than because they would not enjoy the profits of a privileged circulation for which they would have to pay a full value. It must also be observed that the competition among the existing banks is sufficiently active to have caused them to increase the number of their branches 40 per cent, since 1845.
banks, which was the subject of a keen parliamentary dis cussion during the past session (1875). It has been men tioned (ante, p. 322) that English joint-stock banks of issue are debarred from setting up branches in London, or within sixty-five miles of it, a prohibition originally imposed on them in the interest of the Bank of England as a bank of issue. There is no such prohibition affecting Scotch and Irish banks, which can set up offices in London or elsewhere in
England subject to the single condition affecting all banking- ↑ The management of the City of Glasgow Bank was, as compared with that of the Western Bank, prudent and skilful. It recommenced and continues business.
