Banking and Insurance
By F. S. TAYLOR THE Scots are alleged to possess a gift for financial management and although today the scope of their operations is dwarfed by the • mammoth institutions whose headquarters are in London, the Scottish banks and insurance companies can still provide evidence that this reputa- The banks, of which there are now seven (shortly to be educed to six as the result of an amalgamation) have a long story. The oldest was established by an Act of the Scottish arliament in 1695 and the youngest was formed in 1838. The i' Scottish banking system never included large numbers of local banks or private banking companies, and the process of con- ' solidation and the establishment of branches began much earlier in Scotland than in England. The most distinctive feature of the system is the note issues. The right to issue notes, formerly possessed by all banks, was lost to the English banks as a result of the Bank Charter Act of 1844, but the Scottish Act of 1845 enabled the Scottish banks to continue their issues. Whether or not the note issues are profitable to the banks is debatable, but the country has benefited because this cheap form of till money enabled the banks to maintain branches in places where it would be uneconomic to do so if they had to he supplied with gold or even, in later times, with Bank of England notes.
Within the past few years there have been two amalgama- tions between banks and some changes in practice 'which have strengthened the system as a whole. Today the combined deposits of the banks amount to £785 million and the total of the note issues is now £92 million. The banks thus control resources which. should be capable of meeting any demands which Scottish industry may make upon them, if and when the present Treasury restrictions on bank lending are eased.
A few years ago the ,former Governor of the Bank of England, Lord Catto, remarked that today "even a Scotsman cannot save." Saving is still difficult but the hardy flower of thrift still continues to find some nourishment in Scottish soil. Total deposits in the Trustee Savings Banks rose by £600,000 in 1953 to a total of £267 million and life assurance businesS written by Scottish insurance companies also rose. BusinesS done by Scottish insurance companies is not, of course, necessarily, or even mainly, Scottish business, for the names of some companies are household words and their connectionS spread throughout most of the world. That applies mainly to the composite companies, which undertake all forms of insurance business, but it is true also of one or two of the con1. panies which specialise in life assurance. The latter are in the majority in Scotland and over half of them are mutual companies.
Like the banks, almost all the companies have been in exist- ence for over a century and they came through the trials of the nineteenth century with remarkably few casualties. Today their size and strength are impressive. Figures for 1953 are not yet available, but in 1952 their combined premium income was as follows: Life Assurance £42,900,000, Fire Insurano £39,542,000, Accident Insurance £46,851,000, Marine Insurance £11,000,000. The limitations on the ability of insurance com- panies to provide capital for industry are as well known as aro the restrictions on the banks, and it would be wrong to look to institutional investment alone for a solution to the capital problems associated with the expansion of Scottish industry. Nevertheless, there can be little doubt that it is of advantage to Scotland that borrowing and investment proposals can be sub- mitted to boards of directors who live and work in Scotland.
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