By these it is alledged, that in the beginning of the year 1762, when the Edinburgh banks withdrew ¼ of all their cash accompts, and opened a subscription for borrowing-in their own notes, at an interest of 4, and even 5 per cent. the demand for money, to send to England, was not occasioned by the great balance owing by Scotland, but to the high premium money then bore at London; because, says the author of a letter to J... F...... Esq; published at that time,
“This demand arises from a profit on carrying money to London, as a commodity, and not as a balance of trade.”
It is not easy to comprehend how there could be much profit in carrying money to London at 3 per cent. loss by exchange, from Scotland, where it bore 5 per cent. interest.
It is true, that at certain times, there were considerable profits made upon stock-jobbing; by which some won, and others were ruined. I agree, that the country was greatly hurt by the folly of those who played away their own property, and by the roguery of others, who borrowed that of their neighbours, with an intention of gaming at their risk. But is this a vice which any bank can correct, while it has a note in circulation?
If, therefore, it was a sentiment of patriotism which moved the banks to such a plan of conduct, I say they thereby did more hurt to industry, by contracting circulation, than good to Scotland, by attempting a thing which was beyond their power to accomplish.
If they were moved to it by a principle of self preservation, I say they lost their aim, by cutting off their own profits, which would have done much more than indemnify them for the loss of borrowing at London, at the time when money there was hardest to be got: for whatever exorbitant expence of exchange gamesters may incur, to procure ready money to play with, the rate of the stocks at that time never was so low, as to afford a profit upon money remitted at 3 per cent. loss by exchange, while that money was bearing 5 per cent. interest at home.
The lowest rate of stocks was in January 1762. Towards the end of that month 3 per cents. fell to 63¼: this makes the value of money to be about 4l. 12s. per cent. In these funds, certainly, no body could invest, with profit, money sent from Scotland.
After the new subscription had been open for some time, scrip indeed, or 4 per cent. fell in this month so low as 74½, that is, money rose to 5.4 per cent. whereas had scrip stood at the proportion of the 3 per cents. it should have been worth about 84: but at the beginning of a war with Spain, when the minds of men were depressed, and filled with apprehensions, and when a new loan was perhaps expected at a higher interest than ever government had given, was it natural for people to be fond of investing in a 4 per cent. stock, which was to fall to 3 per cent. in a few years?
Besides, let us examine the profit to be made by investing even in that fund. 100l. produced in Scotland 5l. interest, that capital remitted to London at 3 per cent. exchange, was reduced to 97l.: now if 74.5l. produced 4l. the produce of 97l. would be about 5l. 4s. Would any man for the sake of ⅕ per cent. advance of interest on money remitted, ever think of sending large sums to London to be invested in a falling stock?
I allow that, upon opening subscriptions, great profit was sometimes made by those who contracted with government, and who received the subscriptions at prime cost. But this profit depended entirely upon the subsequent rise of the subscription, when the original subscribers brought it first to market; as also from the small sums they had advanced: this operation was over before the end of January 1762. The smalness of the sum advanced, upon which the profit was made, and the ministerial interest which was necessary to obtain a share in those subscriptions, rendred it extremely difficult for people in Scotland to share in the profit by remitting large sums in the proper point of time.