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

by Various

"Your committee are certainly not convinced that it would affect the cash-credits to the extent apprehended by some of the witnesses; but they are unwilling, without stronger proof of necessity, to incur the risk of deranging, from any cause whatever, a system admirably calculated, in their opinion, to economize the use of capital, to excite and cherish a spirit of useful enterprise, and even to promote the moral habits of the people, by the direct inducements which it holds out to the maintenance of a character for industry, integrity, and prudence.

"At the same time that your committee recommend that the system of currency which has for so long a period prevailed in Scotland, should not, under existing circumstances, be disturbed, they feel it to be their duty to add, that they have formed their judgment upon a reference to the past, and upon the review of a state of things which may hereafter be considerably varied by the increasing wealth and commerce of Scotland, by the rapid extension of her commercial intercourse with England, and by the new circumstances that may affect that intercourse after the re-establishment of a metallic currency in this country.

"Apart from these general observations, bearing upon the conclusions at which they have arrived, there are two circumstances to which your committee must more particularly advert.

"It is evident that if the small notes issued in Scotland should be current beyond the Border, they would have the effect, in proportion as their circulation should extend itself, of displacing the specie, and even in some degree the local currency of England. Such an interference with the system established for England would be a manifest and gross injustice to the bankers of this part of the empire. If it should take place, and it should be found impossible to frame a law consistent with sound and just principles of legislation, effectually restricting the circulation of Scotch notes within the limits of Scotland, there will be, in the opinion of your committee, no alternative but the extension to Scotland of the principle which the legislature has determined to apply to this country.

"The other circumstances to which your committee meant to refer, as bearing materially upon their present decision, will arise in the event of a considerable increase in the crime of forgery. Your committee called for returns of the number of prosecutions and convictions for forgery, and the offence of passing forged notes, during the last twenty years in Scotland, which returns will be found in the appendix. There appears to have been, during that period, no prosecutions for the crime of forgery; to have been eighty-six prosecutions for the offence of issuing forged promissory notes—fifty-two convictions; and eight instances in which the capital sentence of the law has been carried into effect."

This may, on the whole, be considered as an impartial report; and, as it is as well in every case to disencumber a question from specialties, we shall state here that experience has since shown that there has been no tendency whatever to the introduction of Scottish notes into England. With regard to the other special point referred to by the committee—that of forgery—such a thing as a forged bank-note is now unknown in Scotland. The evidence taken before the last committee on banks of issue in 1841, established the fact, that since the improved steel plates were brought into general use, there has never been a forgery of a note. Such being the case, it is unnecessary here to dispute the wisdom of that policy which would leave a great national institution at the mercy of a single forger. The experience of this last month alone might show how wretchedly that test would operate if applied even to the Bank of England.

Setting these specialties aside, the only possibly grounds which this committee saw for any future legislative interference were, "the increasing wealth and commerce of Scotland, the rapid extension of her commercial intercourse with England, and the circumstances which may affect that intercourse after the re-establishment of an English metallic currency." To us the first part of this reservation sounds somewhat like a threat of future bleeding when Scotland shall have become more pursy and plethoric. Nevertheless we are ready to join issue with our opponents on any of these grounds.

The report of the Lords was even more favourable; and, at the risk of being thought tedious, we cannot refrain from inserting their admirable digest of the evidence, which, for candour and clearness, might be taken as a universal model.

"With respect to Scotland, it is to be remarked, that during the period from 1766 to 1797, when no small notes were by law issuable in England, the portion of the currency in Scotland in which payments under five pounds were made, continued to consist almost entirely of notes of £1 and £1, 1s.; and that no inconvenience is known to have resulted from this difference in the currency of the two countries. This circumstance, amongst others, tends to prove that uniformity, however desirable, is not indispensably necessary. It is also proved, by the evidence and by the documents, that the banks of Scotland, whether chartered or joint-stock companies or private establishments, have for more than a century exhibited a stability which the committee believe to be unexampled in the history of banking; that they supported themselves from 1797 to 1812 without any protection from the restriction by which the Bank of England and that of Ireland were relieved from cash payments; that there was little demand for gold during the late embarrassments in the circulation; and that, in the whole period of their establishment, there are not more than two or three instances of bankruptcy. As, during the whole of this period, a large portion of their issues consisted almost entirely of notes not exceeding £1 or £1, 1s., there is the strongest reason for concluding, that, as far as respects the banks of Scotland, the issue of paper of that description has been found compatible with the highest degree of solidity; and that there is not, therefore, while they are conducted upon their present system, sufficient ground for proposing any alteration, with the view of adding to a solidity which has been so long sufficiently established.

"This solidity appears to derive a great support from the constant exchange of notes between the different banks, by which they become checks upon each other, and by which any over-issue is subject to immediate observation and correction.