Caledonian Banking Company, Inverness Scotland

Discussion in 'Paper Money' started by scottishmoney, Aug 7, 2020.

  1. scottishmoney

    scottishmoney Bamned

    At the dawn of the 20th century Scotland had ten commercial banks that were still issuing banknotes, this down from about three dozen in the 1830’s. Unlike England which had a significant number of banknote issuers, many private banks etc., Scotland’s banks were examples of soundly managed joint stock banks. Whilst bank failures in England were quite common, leaving banknote holders with worthless paper money Scotland had remarkably few bank failures. In times of crisis Scottish bankers would support even competitive institutions for the good of the industry. Bank failures in England resulted in the British parliament passing legislation in 1844 – the Peel Banking Act of 1844 which limited bank’s note issuing, lending practices and instituted new safeguards to prevent failure.

    Banking in Scotland tended to gravitate to the larger environs, Edinburgh, Glasgow and Aberdeen. Commercial banks outside of those cities were rather few and far betwixt. One such institution was founded in 1838 in Inverness, in the Highlands of Scotland – The Caledonian Banking Company. Serving a region of Scotland that had largely been ignored by the Edinburgh and Glasgow banks, this company brought a much-needed resource to financial growth in the north of the country.


    Collecting Scottish banknotes, particularly those from the early part of the 20th century and prior can be rather challenging as redemption rates for Scottish banks was very high – given that the joint stock system failures being very rare, so few banknotes remain as holders redeemed them and the bank destroyed the notes when they were no longer good enough to circulate. Often, particularly going into the 19th century the only items for collectors to aspire to owning are unissued remainders, and printer’s proofs. This note from May of 1891 is an example that was cut from a remainder sheet that somehow managed to have never been circulated – there are 8 known examples of this note, it was a fortunate purchase from a British diplomat about 20 years ago. It is a wonderful example of a late 19th century note printed by G. Waterston and Son’s in Edinburgh.

    The printing technique utilizes two printing passes, the goldenrod background first in lithograph and then the foreground in black in intaglio. Background colours were added to Scottish banknotes beginning in the 1870’s as an additional security measure. Curiously, English banks largely continued using designs dating to the early part of the 19th century on up until Bank of England finally replaced the White Fiver with the Britannia note beginning in 1956. Scotland was rather unique amongst the British nations with the colourful and steel plate engravings on their banknotes.

    Early in the new century the continuing growth of Scottish banking saw the larger institutions such as Bank of Scotland and Royal Bank absorb their smaller competitors. In 1908 the two smallest banks were Town and County in Aberdeen and Caledonian Banking in Inverness. After some 70 years in business the Caledonian Company saw stable growth, not exponential though. Even with conservative practice in lending they barely managed to continue in business. That year, as noted in Andrew Kerr’s “History of Banking in Scotland” the Caledonian Company had £141.000 in outstanding note issue, the next smallest bank, Town and County had note issue of £315.000. By means of comparison, the larger institutions had notes outstanding of at least £1.000.000.

    It was painfully obvious that business as usual could not sustain a viable banking firm, a series of near misses with disaster saw the officers of the Caledonian Banking Company seek partners, particularly those of a larger institution seeking to expand their branch system into the north of Scotland. Beginning in 1906 and into 1907 negotiations with the Bank of Scotland saw the boards of the respective companies agree to a merger. This merger was not fully realised whence Andrew Kerr’s book was written but did come to fruition after it was published.


    The prospect of owning an issued note from Caledonian Banking Company was an aspiration of mine since I seriously started collecting Scottish over 20 years ago. Patience was indeed necessary in the pursuit of an acquisition of such a note. In the few times they come up for auction in Britain the bids are stratospheric. Whilst there are not many collectors specialising in early British banknotes they are a competitive lot. Indeed, this note was the culmination of patience and sheer luck – it was placed in a USA auction house auction earlier this year. With trepidation I followed and watched the lot. I put in a bid, but with the expectation that if this note was observed by the collectors in Europe that my chances of success were rather unlikely. I watch the online auction with my pulse racing as the lot came up for the live auction. My bid was placed, and I waited, held breath. Watching the auctioneer describe the note, seeking additional live bids. And no other action. Onto the next lot!

    So the now I own my new prized British banknote. A note from a very small company that barely made it into the 20th century, but whose legacy lasts on as part of Bank of Scotland – a lovely collectable example of a circulated note that was most probably saved by a souvenir hunter or a collector early in it’s existence or perhaps was saved as a rare and unusually pricey bookmark as indeed some notes have been found.
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  3. Inspector43

    Inspector43 72 Year Collector

    Why does the top one say Copyright 2008?
    yakpoo likes this.
  4. daveydempsey

    daveydempsey Well-Known Member

    I think that is the OPs Scottishmoney picture watermark.
    Inspector43 likes this.
  5. Inspector43

    Inspector43 72 Year Collector

    OK, could be.
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