ABSTRACT
IN THE SECOND HALF of the nineteenth century Scotland was a considerable exporter of capital.(2) 'She welcomes any financial proposal to relieve her of her bank deposits and the contents of her old stockings by irrigating with them some undeveloped Goshen at the furthest ends of the earth.'(3) The Scottish banks appear to have played little part in the movement of capital. Nevertheless, two of them, the Western and the City of Glasgow, did invest overseas, particularly the latter, as was revealed when it failed in October, 1878. Among the holdings of this ill-fated bank were shares of the New Zealand and Australian Land Company, the Grand Trunk and Erie railroads, and considerable property in the Antipodes. But of particular interest was the bank's ownership of stocks and bonds of the Western Union Railroad, whose line ran from Lake Michigan to the Mississippi, and of the Racine Warehouse and Dock Company, with which the railroad was associated .(4) These were not merely speculative purchases, for most of the railroad's construction was financed by the bank, which at one period held the majority of stock and bonds. Lord Shand, a prominent Scottish judge, hearing a case involving the story of this connection, remarked: 'It strikes me that a Scotch Bank buying and working a railroad in America is about as startling a thing as one can well conceive.'(5) But if not typical of Scottish banking, the story of the City of Glasgow Bank's involvement with the Western Union does indicate some of the problems faced by British investors, particularly merchant bankers, in such concerns.
