ABSTRACT
One effect of the upsurge of bank advances since 1958 has been to place the banks back in the traditional position where a substantial fraction of their resources is lent to the private sector of the economy. The depressed conditions of the interwar years had carried the Scottish banks to a point where more than two-thirds of their resources were invested, in one form or another, in obligations of the State, and the financial upheaval of the Second World War increased this proportion still further. Today, their resources are divided more or less equally between the public and private sectors, and the balance will probably swing still further yet in favour of the latter. As a group the commercial banks are probably still the most important of the financial intermediaries, although in terms of aggregate resources other groups, notably the insurance companies, are overhauling them rapidly. The banks however have always occupied a unique place as providers of finance. In the words of the Radcliffe Report (para. 138), ‘from the point of view of most borrowers [they] are much the most accessible institutional source of credit’. Through their branch systems and their willingness to lend to all who meet their requirements of creditworthiness, the banks have played an all-important role in the financial structure and the chances are that they will go on doing so for some time yet. This is as true of the Scottish banks as of any other British banks, and it is important therefore to review their activities as providers of finance to private borrowers.
