While, unluckily, we do not know the name of the Scottish gentleman who propounded the scheme to Mr Holland, we are enabled, by the recital of the act, to ascertain who were the first patrons and nurses of the project generally. Of merchants in London, besides the English name of Mr Holland, we find those of Mr James Foulis,[[153]] Mr David Nairn, Mr Walter Stuart, Mr Hugh Frazer, Mr Thomas Coutts, and Mr Thomas Deans, who were all of them probably Scotsmen. Of Edinburgh merchants, there were Mr William Erskine, Sir John Swinton, Sir Robert Dickson, Mr George Clark, junior, and Mr John Watson. Glasgow was wholly unrepresented. These individuals were empowered by the act to receive subscriptions between the ensuing 1st of November and 1st of January. The whole scheme was modest, frugal, and prudential in a high degree. |1695.| It was contemplated that the Bank of Scotland should start with a subscribed capital of £1,200,000 Scots—that is, £100,000 sterling, in shares of £1000 Scots each; two-thirds to be subscribed by individuals residing in Scotland, and one-third by individuals residing in England, no person to hold more than two shares. The company was to be under the rule of a governor, deputy-governor, and twenty-four directors, of the last of whom twelve should be English, these being ‘thought better acquainted with the nature and management of a bank than those of Scotland.’ As a further encouragement to English assistance, the act ordained that any person subscribing for a part of the stock, should be considered as ipso facto naturalised.
The subscription of the £66,666, 13s. 4d. allowed to Scotland began at the appointed time, the Marquis of Tweeddale, his majesty’s commissioner to parliament, and his son, Lord Yester, being the first who put down their names. The subscription of the remaining £33,333, 6s. 8d. was effected in London in one day, the chief adventurers being Scotsmen resident there. The heads of the concern in Edinburgh felt themselves sadly ignorant of the arrangements required for a public bank, and deemed it absolutely necessary that Mr Holland should come down to advise and superintend their proceedings. He very generously agreed to do so, reside for some time in Edinburgh, and return upon his own charges; while they, as liberally, took care, by a rich present to his wife, that he should be no loser by the journey. He relates[[154]] that his proposals were all at first objected to and controverted by the Scotch managers, in consequence of their utter ignorance of banking, yet all in perfect good-humour, and manifestly from a pure desire to get at the expedients which were best; and all were ultimately agreed to. This occasioned a difficulty at starting, and to this was added no small amount of jealous opposition and distrust; nevertheless, Mr Holland remarks that, within two months, and even while the Bank of England was notoriously unable to pay its bills, those of the Scottish establishment had attained to a surprising degree of credit. It may here be remarked, that, ere long, by consent of the English proprietors, the whole twenty-four directors were elected from the Scottish shareholders, leaving thirteen English ones to act as trustees, ‘to manage what affairs the company |1695.| should have at London;’ and in time, when there were no longer so many as thirteen proprietors in England, even this arrangement was abandoned.
Several of the prominent Scottish shareholders were members of the African Company; but it appears that there was anything but a concert or good agreement between the two sets of projectors. Paterson regarded the Bank of Scotland as in some degree a rival to his scheme, and talked of the act appointing it as having been ‘surreptitiously gained.’ While so sanguine about the African Company, he thought the bank unlikely to prove a good thing to those concerned in it, little foreseeing that it would flourish for centuries after the Indian Company had sunk in its first calamitous venture.
The Bank of Scotland set up in a floor in the Parliament Close, with a moderate band of officials, and ten thousand pounds sterling of paid-up capital. It had scarcely started, when the African Company added a banking business to its other concerns, meaning thus to overpower the project of Mr Holland. That gentleman was in Edinburgh at the time. He saw that the African Company was in the highest vogue with the public, while few took any notice of his modest establishment. As governor, he prudently counselled that they should make no attempt to enforce the exclusive privilege which the statute had conferred upon them for twenty-one years, but to limit themselves to standing on their guard against ‘that mighty Company,’ lest it should try to injure or ‘affront’ them by a run upon their cash. For this reason, by his advice, twenty thousand pounds of the capital was called up, in addition to the ten thousand lodged at first. The smallness of these sums is amusing to men who know what banking in Scotland now is; yet it appears that from the first the Bank of Scotland had five, ten, twenty, fifty, and hundred pound notes. After a little while, it was found that banking did not succeed with the African Company, chiefly because they lent money in too large sums to their own shareholders, and the Bank of Scotland was then allowed to go on without any competition. The capital lately called up was then paid back, leaving the original sum of £10,000 alone in the hands of the bank.
The chief business of the bank at first was the lending of money on heritable bonds and other securities. The giving of bills of exchange—the great business of the private bankers—was, after deliberation at a general meeting of the ‘adventurers,’ tried, with a view to extending the usefulness of the concern as far as |1695.| possible. In pursuance of the same object, and ‘for carrying the circulation of their notes through the greatest part of the kingdom,’ branch-offices were erected at Glasgow, Dundee, Montrose, and Aberdeen, ‘with cashiers and overseers at each place, for receiving and paying money, in the form of inland exchange, by notes and bills made for that purpose.’ But, after what appeared a fair trial, the directors ‘found that the exchange trade was not proper for a banking company.’ A bank they conceived to be ‘chiefly designed as a common repository of the nation’s cash—a ready fund for affording credit and loans, and for making receipts and payments of money easy by the company’s notes.’ To deal in exchange was ‘to interfere with the trade and business of private merchants.’ The Bank of Scotland found it ‘very troublesome, unsafe, and improper.’ One reason cited some years afterwards, by a person connected with the bank, was—‘There is so much to be done in that business without doors, at all hours by day and night, with such variety of circumstances and conditions, as are inconsistent with the precise hours of a public office, and the rules and regulations of a well-governed company; and no company like the bank can be managed without fixing stated office-hours for business, and establishing rules and regulations which will never answer the management of the exchange trade.’ As for the branch-offices, the inland exchange contemplated there failed from another cause, strikingly significant of the small amount of commercial intercourse then existing between the capital and the provinces of Scotland. The bank, we are told, found it impracticable to support the four sub-offices ‘but at an expense far exceeding the advantage and conveniency rising therefrom; for, though the company would willingly have been at some moderate charge to keep them up, if they could thereby have effectuated an answerable circulation of bank-notes about these places, for accommodating the lieges in their affairs, yet they found that those offices did contribute to neither of those ends; for the money that was once lodged at any of those places by the cashiers issuing bills payable at Edinburgh, could not be redrawn thence by bills from Edinburgh‘—of course, because of there being so little owing in Edinburgh to persons residing in the provinces. So, after a considerable outlay in trying the branch-offices, the directors were obliged to give them up, and ‘bring back their money to Edinburgh by horse-carriage.’[[155]]
1695.
The company’s business was thenceforward for many years ‘wholly restricted to lending money, which seems to be the only proper business of a bank, and all to be transacted at Edinburgh.’[[156]]
July 17.
The estates of Duncan Forbes of Culloden, in sundry parishes near Inverness, having been much wasted in 1689 and 1690, both by the ravages of the king’s enemies and the necessary sustentation of his troops, he now gave in a petition shewing that his damages had in all amounted to the sum of £47,400, 6s. 8d. Scots. The parliament recommended his case to the gracious consideration of his majesty,[[157]] and the result was a requital, not in money, but in the form of a perpetual privilege to the Laird of Culloden of distilling from the grain raised on his estate of Ferintosh, upon paying of only a small composition in lieu of excise.
The estate of Ferintosh consisted of about eighteen hundred arable acres,[[158]] and the produce of barley was so considerable that a very large quantity of whisky came to be produced within its bounds; Hugo Arnot says nearly as much as in all the rest of Scotland together—but Hugo, it must be admitted, is a remarkably unstatistical author. Whatever might be the exact truth, there was certainly a surprising quantity of usquebaugh issued forth from the domains of Forbes, insomuch that Ferintosh came to be that quasi synonym for whisky which ‘Kilbagie’ and ‘Glenlivet’ afterwards were in succession. The privilege of course yielded a large revenue to the family, and in time made ample compensation for all their patriotic sufferings past and potential. In 1784, when at length the government was inclined to purchase it back, there was such a demonstration made of its lucrativeness, that the capital sum of £21,500 assigned for it was thought to be but a poor equivalent.