Blackwood's Edinburgh Magazine, Volume 56, Number 350, December 1844. Various

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СКАЧАТЬ considerations of circumstance, time, and national characteristics aside, as prejudices too low for even the momentary regard of a philosopher; in short, they wished to introduce the standard of an untried rule as the ne plus ultra of human sagacity, and remorselessly to overturn every existing institution – no matter at what sacrifice or risk – if it only seemed to stand in the way of the operation of their darling theories.

      It was easy for men so tutored and trained, to overlook the necessary effect which fluctuation of the seasons at home and abroad must have upon the prices of either produce, of the effect of these prices upon manufactures, and the manifest and established fact that there is a point when production will exceed consumption. This state of things it is totally beyond the power of man to remedy. The facts of nature will always be found too strong for the theories of the political economist; but our rulers in the plenitude of their wisdom thought otherwise; and began to search within the social system for a cause of that disorder, which was neither more nor less than an epidemic, as totally beyond the reach of their prevention as if the College of Physicians were to issue their solemn fiat – "This year there shall be neither cholera nor fever." In searching for the cause, however, they stumbled upon an effect which they at once adroitly magnified into a cause. In England there had been a marked increase during the rise in the issue of the country banks. Here was an opportune discovery for the champions of metallic currency! and, accordingly, the paper system was prostrated in England to make way for its more glittering, often more slippery, and always more expensive rival.

      Scotland, in the mean time, was going on in her old and steady footing. One and all of the banks – chartered, joint-stock, and private – were as firm as if each had been backed by the whole weight and responsibility of the state. Between them and the public the most perfect confidence subsisted; and very nobly indeed, in that time of trial and distress, did the banks behave, in maintaining credits grievously depressed for the moment, but certain to revive with the return of general prosperity. This mutual confidence is the great secret of the success of the Scottish system. The banker is to the trader as a commercial physician – sometimes restrictive, sometimes liberal, but always a judicious friend. It is impossible to separate the interests of the two; and as they have risen together, so, in the event of a change, must they both equally decline. But we will not anticipate our defence, before we have adduced the facts upon which that defence is founded.

      All at once, and without sounding any note of preparation, the ministry announced, that after the expiry of a given season, the whole Scottish banking system was to be changed, all paper currency under the five-pound note abolished, and a metallic circulation introduced and enforced. If Ben Nevis had burst forth at once in the full thunder of volcanic eruption, we could not have been more astonished. What! without complaint or enquiry – without the shadow of a cause shown, or a reason assigned, except it might be that reason – to a Scotsman the most unpalatable of all – the propriety of assimilating the institutions of both countries; in other words, of coercing Scotland to adopt the habit of her neighbours – to excavate the foundation-stone of our whole prosperity, and make us the victims of a theory which, even if sound, could not profess to give us one tittle more advantage than the course which we had so long pursued! We believe that if the annals of legislation were searched through, we could not find a parallel case of such wanton and unprovoked temerity!

      We said then, and we say now, with even more emphatic earnestness, it is the curse of the age that every thing is to be managed by political economy and philosophy, and that local knowledge is to be utterly disregarded in the management of local interests. Centralize and assimilate – these were the watchwords of the ministers of that day; and for aught that we can see, Sir Robert Peel is determined to persevere in the theory. What excuse was there, then, for the attempt of any assimilation between the banking systems of the two countries? If it had been alleged that the Scotch paper currency was surreptitiously carried into England – that it was there supplanting the legal currency, and absorbing the gold in exchange, there might have been some show of reason for a slight modification of the system – at all events for a more stringent preventive check. But no such allegation was made. The most determined hater of the Scottish banks knew well that their paper never crossed the Border; for the very best of all possible reasons, that the notes were not a legal tender, and that five persons out of six to whom they might happen to be offered, would unhesitatingly reject them. Again, to absorb the gold would have been neither more nor less than partially to carry out the views entertained by the supporters of a metallic currency, and therefore surely, in their eyes, a venal, if not a meritorious, offence. But such was not the fact. In Scotland there was no such a thing known as a gold circulation. The fishermen, the cattle dealers, and the small traders, would not so much as take it; and the stranger who, through ignorance, had provided himself with a stock of the precious metal, was forced to have recourse to a Scottish bank in order to have it exchanged for notes. Beyond what lay in the bank reserves, there was literally none in the country; and therefore any idea of the interference of the currencies was too preposterous to be maintained.

      But it is not here, or at this point, that we intend to discuss the propriety of the measure which was then proposed. Unfortunately, we are called upon to do so with reference to our own times, as well as to those which are now matter of history; and the remarks which we shall have occasion to offer are equally applicable to the one as to the other. In the mean time, let us see how the mere alarm engendered by that unlucky proposition affected Scotland, and what steps were taken to resist the threatened change.

      First of all, we have it in evidence that the open threat of the ministerial scheme produced within the country more actual distress and bankruptcies than had previously occurred during the period of the previous depression. This may seem a paradox to a stranger; but the reason will be readily understood, and the fact candidly admitted by every one who is conversant with the Scottish system of banking. A short explanation may be necessary. One large department of the business of every bank was the granting of cash-credits; a method of accommodation to the public which the experience of ninety-four years (cash-credits were granted by the Royal Bank of Scotland so early as 1729) had shown not only to be the safest to the bank, but by far the most advantageous to the public. Indeed it is not too much to say, that were those credits prohibited, and no other alteration made in the existing system, the mainspring of the machinery of Scottish banking would be broken, and its general utility impaired. With that point we shall deal more fully when we come to the consideration of the system in detail; at present it is only necessary to remark, that these credits had been maintained unimpaired during the period of depression, and were the fortunate means of averting ruin from many.

      But the attitude which the ministry assumed was so formidable, and the prospect of a sweeping change so alarming, that the bankers were forced in self-defence, though sorely against their will, to make preparation for the worst contingencies. They were, so to speak, compelled to follow the example of England in 1745 – to recall all their outlying forces from abroad, concentrate them at home, and leave their allies to fight their own battles as they best could, and to conquer or fall according to their ability or weakness. Their first step was rigidly to refuse the granting of any new cash-credits; their second, to withdraw – with as much tenderness as might be, but still to withdraw – those which were already in existence. It was then that the country at large began to feel how terribly their interests were compromised. The trader, who was driving an active business on the strength of his cash-credit, and turning over the amount of his bank-account it may be thirty times in the course of the year, found himself suddenly brought to a stand-still. The country gentleman, in the midst of his agricultural improvements, and at the very moment when their cessation would undo all that he had hitherto accomplished, was compelled either to desist for want of ready money, and throw his labourers on the parish, or to have recourse to the pernicious system of discounting bills at a ruinous rate of interest. The manufacturer, in despair, was reduced to close his works, and the operatives went forth to combine, or starve, or burn; for the hand of the ministry was upon them likewise, and their burden was sorer than their masters'.

      These were the first fruits of the proposed metallic currency; and it soon became evident to all, that nothing was left for Scotland, if she wished to escape from universal СКАЧАТЬ