Perth United Banking Company
Numerous provincial banking companies were established in Scotland from the 1750s on. They were set up in response to regional demand: local merchants and businesses needed banking facilities, such as cash credit accounts and the ability to get bills discounted. But the chartered Edinburgh banks were not sufficiently active in the provinces, so other companies filled the void.
In Perth, no fewer than six banks were founded. The first of these was the Perth Banking Company, established in 1763.
Over the course of just three months in the following year, its five rivals were formed. These comprised the Tannerie Banking Company; Wedderspoon & Co.; McKeith Rintoul & Co.; the Craigie Banking Company; and John Bruce.
They were all small-scale operations, but each set up its own office, and competed for business against the others. Each issued its own banknotes too, with motifs as varied as the King's head, a sheaf of grain, a thistle and crown, and an oak tree. But with the exception of the Perth Banking Co., the notes were for trivial sums. Moreover, they also contained the 'option clause'. This meant that instead of paying the notes 'on demand', the banks could opt to defer payment for six months.
1765 Bank Act
The prevalence of 'small notes' in Scotland, (often for sums as little as 5/-, or even a shilling), caused serious concern in the mid-18th century. The notes were frequently issued by persons or bodies with only slender resources, and questionable grounds for calling themselves bankers. The pernicious practice of using the option clause was also rife, due to the chronic shortage of silver coin. Its use compounded the problem by stoking inflation. Moreover, it meant that Scotland now had a system of potentially inconvertible paper money.
These problems were largely resolved by the 1765 'Act to prevent the inconveniences arising from the present method of issuing notes and bills by banks, banking companies and bankers, in that part of Great Britain called Scotland'. It killed the option clause, and outlawed the issue of notes smaller than £1.
A direct consequence of the Act in Perth was that the small banks joined forces, merging together to form the Perth United Banking Company. This began business on 6th May 1766, with a working capital of £8,000. Banknotes were issued in denominations of £5 and £1, and correspondents were established in London, Edinburgh, Glasgow, Dundee and Montrose. The Company also employed agents at Stirling, Dunkeld, Dunfermline, Auchtermuchty and Crieff.
Although continuously profitable, the bank went into voluntary liquidation after 21 years. This was in compliance with its partnership agreement, and the custom of the time.
Please refer to the Perth Banking Company for the subsequent history of the bank.
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- The History of the Union Bank of Scotland by Robert Rait (John Smith & Son Ltd., Glasgow, 1930), chapter 6.
- A small number of archives relating to the Perth United Banking Company are held by Lloyds Banking Group Archives in Edinburgh - for further information see our archive collections.