Such a parcel o’ rogues 1

Bank of Scotland note of 1723

Part 1

By Russell Bruce

With the state of the Union in a unholy mess and England and Scotland at odds over the future and with different objectives for relations with the EU, it seemed timely to republish this article, first published in Border Voices on Scottish Borders and Beyond. An extract was read at the Borders Book festival at the time of publication in 2012.

These familiar words from Burns’ ballad Fareweel to a’ our Scottish fame are much quoted and a perennial favourite in collections of Scottish folk music.

There must be few nations, if any, without its rogues so there is no merit in this being a Scottish distinction. The context for Burns was the Union and the enabling siller that got the resolution passed to adjourn the old Scottish Parliament in 1707. Wherever there is money, power sits in its shadow and the commonweal at risk from rogues attracted to the honeypot.

The last two lines of Burns’ poem:
“We’re bought and sold for English gold :
Such a parcel of rogues in a nation !”

is an internalised expression of angst that masks in some ways the difficulties of the period and the influence of a powerful neighbour after Jamie the Saxt had moved south for a better job where the wishes of monarchs were less contested by a troublesome and querulous population.

Foreign policy moved south with Jamie as Burns dryly notes in another song – There’ll never be peace till Jamie comes hame. Markets and trading relations with Scotland’s pre-Union of the Crowns allies were closing for Scotland as they differed from those of England for historical reasons not unconnected to the strife of previous centuries between the two countries. Yet trade with English colonies remained a closed door. Jamie coming hame was a forlorn expectation.

The rogues in today’s society whether Scots or of any another nation involved in the international banking meltdown has interesting parallels with Scottish and English affairs in the years before and after the Union of the Parliaments. Locked out of trade with English colonies had ensured closer economic collaboration between the nations did not progress, the Scots looked to establish a colony of their own on the unclaimed coast of the Isthmus of Panama.

William Paterson a wealthy merchant and banker from Dumfriesshire was involved in the founding of The Bank of England in 1694. In 1695 he returned to Scotland and succeeded in persuading the Scottish Parliament to pass an Act for the creation of The Company of Scotland, granting the company a monopoly to trade to India, Africa and the Americas. Another Act of the Scottish Parliament in that year facilitated the setting up of The Bank of Scotland with a monopoly for a period of 21 years.

The general outcome of the ill-fated Darien Scheme is well known but the machinations contributing to its failure less so. It did not suit English foreign policy to upset the Spanish who had colonies in adjacent territories to the Isthmus: “Despite the ships docking at Montserrat for supplies, they were refused both water and food by the Governor acting under instructions received from England to the effect that the Darien Colony was illegal.” (Ms, 1685). Relations with Scotland were not improved by the Aliens Act of 1705 which would result in all Scots, except those resident in England, being treated as aliens and exports from Scotland of coal, linen and cattle would be suspended.

Intended to force negotiations for a Union of the Parliaments it was a clumsy threat aimed at limiting Scots ambitions to open up independent trading routes. William III’s war with France had in the 1690’s severely disrupted Scottish mercantile trade and illegal English naval policing of Scottish waters had resulted in the Scottish Parliament commissioning three warships to counteract this interference. Opposition to a Parliamentary Union was also evident in English politics. As Tom Devine records, in 1700 the Tory leader in the Commons claimed Scotland was a beggar and ‘whoever married a beggar could only expect a louse for her portion’ (2004)

Patterson’s dream of a Free Port in Darien to open up a new trading route to benefit from growing trade with the East was over. With the last of the Stuart’s, Queen Anne, now the monarch of both countries and whose unwise support of the Aliens Act implemented by the Tories but repealed later that year (1705) by the new Whig government, the Union of the Crowns was in a perilous position. The matter had already come to a head in 1703 when the Scottish Parliament passed an Act of Security establishing the power to approve a separate Scottish monarch to succeed Anne unless trade with English colonies was opened up to Scotland.

A critical stage had been reached and Queen Anne’s determination and that of her government to effect a Union of the Parliaments looked unpromising. For the Scots there were other considerations not least England’s high level of debt that would become a joint liability. The Scottish Government had no debt but Scottish investors in The Company of Scotland had lost their investment. At the time subscriptions were being raised there was a great deal of interest in London where investors saw opportunity in a new trading company to break the monopoly of the English East India Company.

London financiers helped raise over £300,000 in 1685. This free movement of capital would establish Scotland as a serious competitor to England’s trading interests. The London Parliament threatened legal sanctions against London merchants who invested in the Scottish enterprise. The funds melted away and the London book was closed. Despite both The Company of Scotland and The Bank of Scotland competing for subscriptions at the same time, having both been established by Acts of the Scottish Parliament in 1685, Scotland raised the capital. In February 1686 a new subscription to raise £400,000 sterling for The Company of Scotland was opened and subscribed within six months. As Professor Devine says ‘it was a remarkable achievement’. The competition with the fledgling Bank of Scotland to raise capital in Scotland would have been expected to raise interest rates but in fact interest rates fell (2004).

The Articles of the Act of Union of 1707 set out the financial settlement to Scotland amounting to £398,085 and ten shillings which apart from a small proportion to settle arrears of salary due to office-holders, effectively swapped private debt to the tune of nearly £400,000 as represented by the capital of The Company of Scotland on which 5% interest was to be paid as compensation for assuming liability for a share of England’s debt:
‘which, according to the Agreements aforesaid, may become payable to Scotland, by way of Equivalent, for what that Kingdom shall hereafter become liable, towards Payment of the Debts of England:’ (Article XV).

The Articles of Union also dealt at some length with the harmonization of customs and excise duties with some respite period before some English taxes were to be introduced in Scotland. The introduction of the English Salt Tax and later the Malt Tax, introduced in 1725 aroused great anger in Scotland. Smuggling was endemic, although by no means confined to Scotland, but the House of Commons was incensed at the lack of taxes contributed from Scotland and the ineffectiveness of Customs and Excise north of the Border. Scots for their part argued that they had never had such an onerous tax regime and that they were being forced to pay for England’s ever rising levels of national debt.

In 1700 English nation debt amounted £60.58 million, by the time of the Union it had risen to £62.13 million and UK debt quadrupled to £242.36 million by the end of the eighteenth century. Over 300 years UK national debt rose year on year and millions became billions.

An account of the enormous difference in the cost of basic products as a result of taxes introduced following the Union is amply demonstrated by the displays in the smuggler’s mansion, Gunsgreen House in Eyemouth, designed by Robert Adam and now run by a local charitable trust. At the time of the Union taxes in England and Wales were 10 times the rate of taxes in Scotland.

In the meantime the shareholders of The Company of Scotland had decided to leave the Equivalent settlement of £389,000 with the English government in return for an annuity of £10,000 and were quietly salting away these funds. By 1727 the Equivalent Proprietors were operating as bankers and obtained a charter in the name of the Scottish Banking Company, later to become the Royal Bank of Scotland. This helped rescue the reputation of William Patterson who was a brilliant financial innovator but badly miscalculated the supporting forces required and the political obstacles stacked against his dream of Port St. Andrew on the Isthmus of Panama. It is an irony of history that this strategically important part of Central America might have had massively beneficial outcomes for the trade of both nations and a ‘better together’ precedent had William III responded to the Scots request for the support of The King of England.

Another Scot with a colourful history was also a pioneer in the development of banking. John Law, born in Edinburgh was the son of a family of bankers and goldsmiths. A banker and economist, he promoted the theory that paper money could be backed by the value of land.

Law had moved to London in the late seventeenth century. Challenged to a duel in 1694, it is said, over the affections of Elizabeth Villiers, Countess of Orkney, Law ran the hapless Edward ‘Beau’ Wilson though with a single thrust of his sword. Law was arrested, tried for murder and sentenced to death, later commuted to a fine for manslaughter. Wilson’s relatives appealed but Law escaped and thought it prudent to move to the continent. Elizabeth Villiers is otherwise remembered as the acknowledged mistress of William III.

Law was in Scotland in 1705 advocating to the Scottish Parliament the establishment of a land bank in which notes would be payable in land instead of bullion. Law had set out his theories on money supply, value and return on trade in his treatise Money and Trade Consider’d with a Proposal for Supplying the Nation with Money. Referring to the Bank of Scotland’s issue of notes to four or five times the value of cash held, Law said that was a clear addition to the money of the nation. It was more national than either the Bank of England or that of Amsterdam, because “its Notes passing in most payments, and through the whole country: The Bank of Amsterdam being only for that Town, and that of England is of little use but in London.”

His national land bank plan was rejected in Scotland and his ideas for expanding credit when bullion was in short supply were not to come to fruition until he established the Banque Génèrale in France in 1715. Appointed as Controller General of Finances, Law set about a series of reforms in the wake of the economic damage caused by Louis XIV’s wars. He broke up large land-holdings to give the peasants land, abolished tolls on roads and canals, encouraged the building of new roads and started new industries. Within two years output increased 60% and France’s merchant navy grew from 16 ships to over 300.

He may have become a hero, had not his consolidation of the trading companies in Louisiana into The Mississippi Company, not resulted in the ‘Mississippi Bubble’ bringing about the collapse of Banque Génèrale. Law fled France disguised as a woman and died in Venice. Law was a brilliant mathematician and his reputation has been reassessed for his contribution to the development of modern commercial banking and national economic management. What our society has yet to master is to spot the gambler in bankers like John Law. Law was known to win card games by mentally calculating the odds.

In Scotland the rivalry between the Bank of Scotland and The Royal Bank of Scotland, often viscous in the seventeenth century, continued into the twenty-first. In 2000 The Royal Bank beat the rival bid from Bank of Scotland for Nat West. For both banks, that was to lead to subsequent events that brought them both to the brink of collapse within a space of just eight years as the international meltdown in the banking system ripped its way across the globe.

Burns might have said ‘such a parcel o’ rogues in the warld !’

Some minor additions have been added to this article first published in Border Voices in 2012. This is part 1 of a 3 part series.

Articles of Union 1707
Devine, T.M. (2004) Scotland’s Empire 1600 -1851, London, Penguin
Ferguson, W (1968) Scotland: 1689 to the Present, Edinburgh, Oliver & Boyd
Graham, W. (1886) The One Pound Note in the rise and progress of banking in Scotland and its Adaptability to England, Edinburgh, James Thin
Law, J. (1705) Money and Trade Consider’d with a Proposal for Supplying the Nation with Money. Edinburgh, Andrew Anderson
Robertson J.L. (1923) The Poetical Works of Robert Burns, Oxford, OUP
Spenser Collection, Ms Gen 1685, Special Collections, University of Glasgow
Scotland and the British Fiscal State, 1707 – 1800