25 MAY 1934, Page 41


Scottish Banking and Agriculture I SUPPOSE that if one were asked to define the outstanding characteristic of British banking at the present day, one would say that it was an adherence to conservative principles of banking, with first and foremost consideral tion given to the safety of the depositor. And while I would not like to say that this characteristic is even more conspicuously present in the case of the Scottish bankers, I think that there will be general agreement that the conservatism displayed by English bankers is fully equalled by their confiires North of the Tweed.


A good deal is said from time to time with regard to the extent of bankers' inner reserves, a feature which has undoubtedly proved serviceable in the past in enabling the banks even in the most difficult years to keep dividend distributions at a good level and at the same time to present liquid balance-sheets. In glancing at the profits of the Scottish banks for the past com- pleted year it is difficult not to believe that this matter of hidden reserves may have something to do with the wonderful steadiness of profits. Thus, it will be seen from the following table, giving the net profit of eight Scottish banks' for the past year, that not only are the dividends the same as a year ago but the movement in net profits is an extraordinarily small one. And while I am certainly speaking without the book, I cannot help thinking that in some instances it may have been a case of some of the profits of the past year having been quietly put aside into inner reserves.


1933 1932 % Net profits.

1933 1932 - Bank of Scotland 18 18 307,000 313,000 British Linen 16 16 273,000 292,000 Clydesdale 16 16 301,000 310,000 Cennnercial of Scotland 16 16 387,000 377,000 National of Scotland 16 16 268,000 265,000 North of Scotland .. 16 16 254,000 - 251,000 Royal of Scotland .. .. 17 17 612,000 605,000 Union of Scotland 18 18 311,000 320,000 RISE IN DEPOSITS.

With few exceptions it will be seen that there was only a slight variation in profits for the past year, while, in common with the English banks, there has been a general decline in Discounts-and Advances and a rise in the Investments. As compared with the pre- vious year the Scottish banks show an aggregate increase in their Investments of nearly £21,000,000, but if com- parison is made with 1929 the increase is over £70,000,000, while during that same period Discounts and Advances have fallen by 246,000,000. Deposits have shown an upward tendency during recent years, but the increase for the past year for the whole of the banks is a little under £5,000,000, though compared with 1929 there is an increase of nearly 231,000,000.


No small part of the lending activities of the Scottish banks is associated with agriculture, and quite an outstanding feature of the past year has been the estab- lishment of the Scottish Agricultural Securities Corpora- tion. It is some years ago now since an Act was passed known as the Agricultural Credits Act, but it was only in January of last year that the Scottish Agricultural Securities Corporation was actually inaugurated. The share capital was provided by four of the Scottish banks, namely, the Royal, the British Linen, the Commercial and the National, and the General Managers of those banks, together with a nominee of the Treasury, formed the directorate, and Mr. William Whyte, of the Royal Bank of Scotland, was appointed Chairman. Last month the first meeting of this important institution took place, and, although the Corporation only com- menced its activities last October, Mr. Whyte was able to report that a real need for the organization had been revealed. ..Up to the close of the financial year applies- (Continued on page 838.) - -Finance r (Continued from page-8'37-4 tions for loanS from the farming industry to an amount of no less than £462,000 were received. ' At this meeting Mr. Whyte brought out very' Clearly the Valtie'of this scheme' tb ' prepilietOta of agricultural lands in Scotland. Two Main adVantages, he •said,'Were' offered to farmers who had to borrow the greater paitathe purchase price of their farms, namely, an opportunity at-very reasonable terms of providing for the ultimate. repayment of loans out of income, and also the sense of security that the loan, once arranged, will not be called up for repayment or readjustment. At this same 'meeting Mr. Whyte took a cheerful vier in regard to the general outlook in -Scotland,. expressing the hopetthat the co-operation and co-ordination made possible by the Scottish Agri- cultural Marketing Acts may have the effect ,of speeding up a recovery which; he said, is so necessary to this important section of the country's economic life." Indeed, I venture to prophesy for this latest develop- ment of, Scottish banking a success fully equal -to that which has been achieved by its:English counterpart, the Agricultural Mortgage Corporation. . .

I began this short article by referring to the extreme conservatism of banking, both North and South of the Tweed, but I do not -forget that in addition to this important development for giving additional financial aid to the agricultural industry in Scotland much enterprise has been shown in recent Years by the Scottish banks in extending their offices in London. On previous occasions I have referred to the movements in this direction taken by various banks, -and the latest instance has been 'afforded by the opening last month by the British Linen Bank of a fine building in Piccadilly.