Abstract The article focuses on the failure of the city of the Glasgow bank. Recent bank closings recall the history of the City of Glasgow Bank, which closed its doors a little over half a century ago. The last balance sheet published before the closing was dated June 5, 1878, and indicated capital reserves and undistributed profits totaling £1,600,000. The accountants' examination, made immediately after the closing of the bank, three months later, revealed that the capital and reserves were entirely wiped out, and that there was a deficiency of capital estimated at the astounding figure of £5,190,000. The immediate arrest of the bank's directors was ordered. During the five years preceding the dosing of the bank, between fifty and sixty percent of the total of advances on credits, discounts and overdrafts represented the debt of eight firms and the bank's directors. The City Bank failure once more brought up the question of the desirability of the acceptance by the Scotch bank of the principle of limited liability to stockholders as a measure of protection against disastrous situations comparable to that resulting from the City Bank failure.
Leo Rosenblum (Fri,) studied this question.