“During the 17th century, Scottish investors had noticed with envy the gigantic profits being made in trade with Asia and Africa by the English charter companies, especially the East India Company. They decided that they wanted a piece of the action and in 1694 set up the Company of Scotland, which in 1695 was granted a monopoly of Scottish trade with Africa, Asia and the Americas. The Company then bet its shirt on a new colony in Darien – that’s Panama to us – and lost. The resulting crash is estimated to have wiped out a quarter of the liquid assets in the country, and was a powerful force in impelling Scotland towards the 1707 Act of Union with its larger and better capitalised neighbour to the south. The Act of Union offered compensation to shareholders who had been cleaned out by the collapse of the Company; a body called the Equivalent Society was set up to look after their interests. It was the Equivalent Society, renamed the Equivalent Company, which a couple of decades later decided to move into banking, and was incorporated as the Royal Bank of Scotland. In other words, RBS had its origins in a failed speculation, a bail-out, and a financial crash so big it helped destroy Scotland’s status as a separate nation.”

- John Lanchester, ‘It’s finished’, in the London Review of Books.

 

“It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine.”

- P.G. Wodehouse, from ‘The custody of a pumpkin’ in ‘Blandings Castle and Elsewhere’.

 

Given the financial crash that gave rise to RBS 1.0, or the financial crash that gave us all RBS 1.1 (the gift that just keeps on giving), quite why the Scots have a reputation for prudent money management is unclear. We think it has something to do with that one-line headline from ‘Not the nine o’clock news’: “Scotsman found dead on pay-as-you-leave bus.” Nevertheless, Alex Salmond seems determined to exorcise the ghost of past Scottish financial crises by instigating a real doozy this time around. Some of us would object less to the demands for independence for the Scots if the English Parliament wasn’t already overrun with them. (Even the name ‘Cameron’ doesn’t exactly sound very English, does it ?) And the pursuit of local, rather than larger, community does seem to be part of the spirit of the age, even if developments in the Crimea are taking a somewhat darker turn..

David Fuller's view

Here is Tim Price's full letter.

I commend it to you for its history and perspective.