The Doric Columns
James VI Mark
As children we called half pennies 'Mecks' and Thrupenny bits were 'Tickies', Farthings, Florins, Half Crowns (Half a Dollar) were also in circulation with a range of Scottish Notes from obscure local Banks.
Aberdeen had its share in the troubles and misfortunes of the succeeding reigns, and in 1272, according to Boece, it was reduced to ashes by the fires caused by a tempest which devastated a great part of Scotland, and which is mentioned also by Fordun, though he does not speak of the destruction of Aberdeen by it. Subsequent to this time Aberdeen was repeatedly honoured by the visits or the prolonged residence of the Scottish King, and a Mint was established in the town, Exchequer Row from which coinages were issued both by David and Robert III.
During its time of free banking Scotland's economy grew much quicker than England's, which had a more regulated and failure-prone system. Even though England was in the midst of its 1st industrial revolution during this period, Scotland's approximate per capita income went from half of England's in 1750 to being virtually equal to it in 1845. Supported by a banking system marked by innovation, reliability, and stability, Scotland transformed from a poor agricultural and household economy to an advanced industrial economy specializing in iron production, shipbuilding, and engineering.
The New Inn, built by the Freemasons in 1755, visited by James Boswell and Dr Johnson in 1773; the Freemasons had their Lodge on the top floor, hence the adjacent Lodge Walk. The New Inn was replaced by the North of Scotland Bank, later the Clydesdale Bank, built in 1839-42 as the corner piece of Castle St./King St., now a pub named after its illustrious architect, Archibald Simpson
In the course of 1766, a number of the gentlemen of the town and county formed themselves into a co-partnership, for the purpose of establishing a native Banking Company, under the title of "The Banking Company in Aberdeen," and a capital stock of £72,000 was subscribed for, in shares of £500. On the 1st January, 1767, the Bank was opened for business. This Company is still in existence, and is one of the most flourishing and stable companies in Scotland. Its original paid up capital of £150 per share now sells for upwards of £3000. Two other native Banks (viz. the Town and County and the North of Scotland, both flourishing establishments), and 4 branches of Edinburgh Banks, now divide the business of the city with the Aberdeen Bank. On establishment its shares were issued in denominations of £1,500 and by 1810 the bank had become so profitable that each share was worth £6,880
The Banking Company of Aberdeen entered the market in 1747 and promptly issued too many notes for its specie holdings.
They were readily made illiquid by the return of notes from Edinburgh and went under in 1753. Perhaps the most important aspect of this occurrence was a ruling that summary diligence did not hold for bank notes except those issued by the Bank of Scotland. A Banking Company of Aberdeen note holder filed the lawsuit. It was not until over 10 years later, in 1765, that this ruling was reversed.
The Bank had to struggle to survive during the 1st 18 months of its existence as a result of a bank note war waged on it by agents of the Thistle Bank and the British Linen Bank. This difficulty was exacerbated by the chronic shortage of coin being experienced throughout the country at this time. These initial problems were overcome however and by 1770 the company had 7 agencies (branches) in Inverness, Huntly, Forres, Peterhead, Banff, Montrose and Fraserburgh. Nevertheless, it was not until 1771 that a substantial profit was made, and the first dividend was not paid until March 1772.
As well as providing local banking services, the bank was also established in response to the problem of the proliferation of small banknotes of doubtful value in Scotland during the 1760s. The original contract of co-partnership made reference to this, warning of "the imminent danger that all ranks of people are exposed to from the extensive and industrious circulation of a variety of Bank Notes from distant and remote parts of this Kingdom, issued and signed by people for the most part totally unknown in this Part of the Country". In 1833, when the co-partnership was dissolved, the bank had £20,000 notes in circulation and £90,000 on deposit. The business and premises were taken over by National Bank of Scotland.
National Banking Company of Scotland was established in 1825 as a co-partnership, with an authorised capital of £5 million, and attracted more shareholders than any other bank in Britain. Its 1st Governor was Duke of Roxburghe and its 1st Chairman was Alexander Henderson. It opened 13 branches in its 1st year, began to circulate notes through the offices of its provincial shareholders (£133,000 was in circulation by 1826), and acquired head office premises in St Andrew Square, Edinburgh.
In July 1746, the British Linen Company was chartered. It followed the same path into banking as some of the smaller merchants had in Aberdeen during the 1730s, but with success on a much larger scale. In 1747, the British Linen Company started issuing interest-bearing notes to pay "agents, weavers, manufactures, and other customers." (Malcolm, p. 26) It had become a necessity for its agents, who were spread out all over the country, to have these funds at hand in order to facilitate the company's linen trade. In 1750, they moved further into the banking business by issuing non-interest bearing notes. By 1760, the British Linen Company had completely stopped the linen trade and was devoted fully to banking. Using their agents throughout Scotland, they instituted the world's first successful branch banking arrangement (12 branches by 1793) and by 1845 had the largest note circulation in Scotland.
Banking and Finance
North of Scotland Bank (based in
Aberdeen). North of Scotland had become the major bank in that area of Scotland
The estimated total loss to the public up to 1841 from all Scottish bank failures was only £32,000. The public had lost twice that amount in London in the previous year alone. The formation of the Commercial Bank of Scotland in 1810 and the start of its extensive branching signalled the end of small private bankers in Scotland. Founded as the "bank of the citizens," the Commercial Bank allowed no private bankers to sit on its board and was founded on the joint stock of over 650 shareholders. This particular part of its constitution was not lost on the general population, and bolstered by their policy of heavy branching, the Bank quickly became a success. By 1819, they had 14 branches and by 1830 it had surpassed all competitors with 30 branches.
The Scottish system of free banking had resulted in a successful banking industry that consisted of many competitive banks with well-distributed market share. Most of the banks throughout the experience had been well capitalized, and those that were not were quickly weeded out with little repercussions for the general public and depositors. Bank services were available to most of the public, counterfeiting was insignificant, and many important banking innovations still in use today resulted out of the competitive pressures to attract customers. Despite all these benefits, Peel's Act of 1844 and the Scottish Banking Act of 1845 effectively closed down Scottish free banking by ending free entry into the market and instituting additional regulations.
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