Banking in Heaven: Credit and Trust in the Trial of the Directors of the City of Glasgow Bank (1879)

The collapse of the City of Glasgow Bank in 1878 was one of the largest in UK history and caused massive social and economic hardship throughout Scotland. It quickly appeared that the directors of the Bank had run up numerous bad debts – investing money in speculative railway and land ventures in North America, Australia, and New Zealand – and had sought to conceal the losses in the published accounts, as well as buying shares in the bank to keep the share price artificially high. As public unrest about the consequences of the collapse grew the Scottish authorities responded swiftly, arresting the directors of the bank a mere two weeks after it closed its doors, and charging them with theft, embezzlement and fraud. Three months later, after a trial lasting twelve days, the directors and secretary were found guilty of fraud and all sentenced to short terms of imprisonment. The quick response was widely praised, and regarded as demonstrating the effectiveness of the Scottish system of public prosecution, something which was then an important factor in the establishment of the office of Director of Public Prosecutions in England in 1879. However, as I shall show in this article, concerns about the legality of the response were raised (and dismissed) at the time, and many of these questions about the way the criminal law was used have never been adequately explored.