Scottish Banking
Finance
Br A SCOTTISH CORRESPONDENT -.
Tiff: Annual Reports issued by:the Banks. in Scotland' throughout the course,- of .1985 did-not, in their main aspects, differ ...very materially." frOrn thijse bearing thefl date of the previous year, the principal features being increased Deposits 'and, in Most cases, a contraction in general lending ,busincss., ,.The _aggregate total shown as regards Deposits was 1293,093,000----an increase Of over. 1.9,000,000 ; the -highest total-Wass that of the Royal Bank of Scotland; £64,009,174 In the lending Department; the aggregate total shown by _the eight Banks for loans ., and . -aeceptances ; anfoUnted to ; £115,450,000, a decrease of about 1:870;000, as compared • with the previous year. Since the present year . opened, the Reports issued by the Banks Who make up Accounts as at December 31st, and during the months of January, February and April, reflect a continuance of former experience. In the case of the Bank of Scotland ; —Whose balance-sheet from the point of view of resources coittituted an easy record in its long history—Advances showed an expansion of no less than 11,666,000 but, as the Governor explained at the Annual General Meeting - held on April 7th last, this . increase was due to exceptional businesS of a more or less temporary nature. . So far as general lending is concerned the senior 'Bank reports experiences common to its contemporaries, a . general disposition on the part of borrowers to take advantage of the higher prices ruling for Stock Exchange Securities' to realise' their holdingk and to liquidate in. 'whole or in part their Bank indebtedness.
THE TRADE SITUATION.
The indications of iniproveinent in trade generally, ; referred to at most of the Bank meetings a year ago, , have continued, and certainly, during the past twelve months, the progress in home trade has assumed a definitely wider scope, and many branches of industry have benefited in consequence. The -iron and- steel trade upon which so much.; depends has been...excep- tionally active. The shipyards on the Clyde have. had a good share of the business available, and the coal trade has been marked by an appreciable revival, but-with increased Mechanisation in practically every department of industry, it inevitably-' follows that large numbers -of craftsmen have to seek employment elsewhere. The absorption of surplus labour, due tá reduction in employ- ment following upon improved machinery, is now the problem of every industrial area. , Unfortunately the increased productive capacity in Scottish industry is barred legitimate outlet through the chronic state of the export market. Many barriers are politically imposed, and these prevent the normal purchase and sale of goods and services. So long as the great producing countries pursue a policy of extreme nationalism, and impose regulations which interfere with a free exchange of commodities, the .vast resources of the Banks cannot be utilised to anything like the extent possible under a more normal regime.
AGRICULTURAL CREDITS.
Apart from the Forth and Clyde area where the heavy industries are centred, Scotland is in the main an agri- cultural country, and last year it was computed that over four and a half million acres were under grass 'and crops. The industry has a heavy leeway to make .up, but there is good reason to hope that better times are in prospect. As a matter of fact, confidence is more pro- nounced today than at any time over the past few years. The banks in Scotland have done everything in their power towards the assistance of the industry, and seasonal advances absorb a good many millions, but in many instances farmers require long-term loans, and in 1933 the Scottish Agricultural- Securities Corfiotation was formed to meet what had been a long-felt want. Con- siderable interest attached to the third annual general meeting Of the COrporation which-was held in Edinburgh on April 24th last, as the period covered by the accounts was really the first year in which the Corporation had completed a normal year's working.. The total anioult advanced:on jordinary lon_g-term loans as at March 31st last showed a substantial increase over last year's figure, and, in addition, several advances were made under the provisions of the Land Improvement Acts. The result has been that the whole of the proceeds Of the Corporation's.' iSsne of 31 per cent, debenture stock, 1500,000, is now fully 'employed, and it is expected that in the near futUre the balance of cash at present on bank deposit may be required for the ordinary business of the Corporation. Although only four of the eight joint stock. banks in Scotland are directly_ interested in the Corporation; all the banks_ are open to. receive applications for facilities . under . the scheme. Quite recently an attractive brochure, setting forth the advantages available, was ..posted to some 10,000 agriculturists' throughout 'Scotland, and this' publicity campaign will no doubt lead to fresh enquiries being forthcom ing.
NOTE CIRCULATION.
An increase in Note Circulation is a satisfactory reflec- tion of improved spending capacity. Reports issued throughout 1935 showed a massed circulation amounting to close on 122,000,000, an increase of £609,000 as com- pared with 1934. The note circulation of the banks is, of course, as regards authorised circulation, still controlled by the Act of 1845, modified to a slight extent by the Currency and Bank Notes Act (1928), under which Coin may now be held at two approved offices of each bank in Scotland, and Bank of England Notes for the surplus required specially deposited under Section 9 (1) of the later Act. As the authorised circulation for the eight banks only amounts to 12,676,350, the excess to be safe- guarded by coin and legal tender paper averages over 119,000,000. The highest circulation is that of the Commercial Bank of Scotland, and the second largest • (Continued on page 1014.) , • -(Con‘.tintiedfr-om'page 1012.) that of the Bank of Seotlatici, both-maintaining a steady average_ .well. over 48,900000. As Abe. Aet of 8 prohibits notes of a lesser denomination than twenty shillings, the public are dependent upon the Bank of England issue for currency of -a .ten-shilling denomination.
BANKING CENTENARIES.
In Scotland, as elsewhere, the current year includes some interesting anniversaries. The North of Scotland Bank—itself an affiliation of the Midland Bank, which has also now one hundred years to its credit—pill cele- brate its centenary later in the year, in which connexion it is gratifying to note that the Report for 1936 was based upon a balance-sheet which took reckoning of 'almost. £34,000,000, the highest figure yet shown in its history. Under its present energetic administration the North of Scotland Bank has made rapid progress. For many years its sphere of operations was confined exclusively to the northern counties, Dundee .being its Most southerly outpost, but now it has important extensions in both Edinburgh and Glasgow, with branches in many other districts Of Scotland. In 1924 the bank 'established An office in London, and in October, 1934, the success of the enterprise led the directors to open a second office at 31-32 St. James' Street," S.W..1. A centenary bonus to members of the existing staff, and also to those on the Pension list, is a tangible recognition of the team-Work which has supported the enterprise of the Executive.
It is interesting to note in this connexion that the Trustee Savings. Banks in both Glasgow and Edinburgh have also this year each 100 years of history to their credit. The Glasgow -Savings Bank with assets totalling almost £34,000,000 is the largest 'institution of its kind in the United Kingdom, while Edinburgh - ranks second in Scotland in administering, funds amounting to cloE-e on £17,000,000. " -
THE BANKING OUTLOOK.
Despite many diseouragements—largely political . in character----4he Banks look to the future .confident that the industrial horizon is clearing, and that the progress shown in many directions over the past 12 months bids fair to 'be maintained. This, at any rate, so far as the Home Trade is concerned. Housing, road improvement and reconstruction generally are each in their way indi- cative of faith in the future of the country, but ..very. keen disappointment has been expressed that nothing; is- being done to lessen the enormous burden of taxation which cripples enterprise at every turn. The Chancellor's Budget in April last, with another upward curve in Income Tax—when the hope was that a' reduction might have, been effected—caused great disappointment. No critic of sound judgement disputes the necessity for adequate defence, but the civil estimates have 'long passed the safety mark and it is here that the real danger lies of a repetition, of conditions in 1981. The psychological .effect of penalising effort by mounting taxation is detrimental in the extreme. The widespread reverence for cheap money and the easy borrowing of our day fosters the hasty Conclusion that money may be had for the asking. The question is, can it be profitably employed ? The business .of thc Banks—as it-should be that of the politicians—is to sec that resources are wisely administered, and that outlay presupposes production.
Previous page
