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

by Various

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 ruin, but to offer a firm and most determined resistance. The struggle was felt throughout the length and breadth of the land to be one, which, if it did not actually involve existence, involved a greater commercial interest than had been at stake for more than a century before. The combination which took place in consequence was so extraordinary, that we may be pardoned if we express our wonder how any minister who witnessed it, can at this hour have the temerity to return to the charge. Party-spirit, always higher and keener in Scotland than elsewhere, was at once forgotten in the common cause. All ranks, from the peer to the peasant, rose up in wrath at the proposed innovation; and from every county, city, town, village, and corporation in the kingdom, indignant remonstrances were forwarded to the foot of the Throne, and to the Imperial Parliament of Great Britain. It was assuredly a dangerous experiment to make with a proud and jealous people. Old watchwords and old recollections, buried spells which it were safer to leave alone, began to revive amongst us; and many a lighter act of aggression, which had been passed over at the moment in silence, was then recalled and canvassed, and magnified into a serious grievance. In short, Scotland, from the bottom of her heart, felt herself most deeply insulted.

It was at this time that the celebrated letters of Malachi Malagrowther appeared. To the general sentiments contained in that work, we subscribe without the slightest hesitation. Strong language is usually to be deprecated, but there are seasons when no language can be too strong. We think meanly of the man who can sit down to round his periods, and prune his language, and reduce his feelings to the level of cold mediocrity, when he knows that the best interests of his country are at stake, and that he is her chosen champion. And such, most assuredly, and beyond all comparison, was Sir Walter Scott. He went into that conflict like a giant, in a manner that disdained conventionalisms; he neither begged, nor prayed, nor conceded, but took his firm ground on the chartered liberties of his country, and spoke out in such manly and patriotic accents as Scotland has rarely heard since the days of Fletcher and Belhaven. All honour be to his memory! Were it for that good work alone, his name ought for ever to be immortal.

In consequence, ministry were condescending enough to allow a Parliamentary enquiry. Even that was not granted readily, as the prevailing impression in the cabinet seemed to be, that Scottish affairs were of too slight importance to occupy the time of the Imperial Parliament. The old country might be dealt with summarily, and left to remonstrate at its leisure. But the spirited resistance of our representatives, and it is no less incumbent upon us to add, that innate sense of justice in Englishmen, which will not suffer any one to be condemned unheard, procured us the investigation, upon the issue of which we were willing to rest our cause. The Scottish banking system underwent the severest of all scrutinies before committees of the Houses of Peers and of the Commons; and the following was the nature of the reports.

The committee of the House of Commons, after recapitulating the leading points which were brought out in evidence before them, came to the following conclusions—which it is very important to bring before the public now, as they refer not only to the deductions which the committee had formed from the history of the past, but to the special reasons which were to influence the legislature in future and prospective change.

"Upon a review of the evidence tendered to your committee, and forming their judgment upon that evidence, your committee cannot advise that a law should now be passed, prohibiting, from a period to be therein determined, the future issue in Scotland of notes below five pounds:—

"There are, in the opinion of your committee, sufficient grounds in the experience of the past for permitting another trial to be made of the compatibility of a paper circulation in Scotland with a circulation of specie in this country.

"Looking at the amount of notes current in Scotland, below the value of five pounds, and comparing it with the total amount of the paper currency of that country, it is very difficult to foresee the consequences of a law which should prohibit the future issue of notes constituting so large a proportion of the whole circulation.