Bank Notes (Scotland) Act 1765

The Bank Notes (Scotland) Act 1765[1] (5 Geo. 3. c. 49) was an Act of the Parliament of Great Britain that introduced restrictions on the use of banknotes by the Scottish banks. The act was from the Fourth Session of the Twelfth Parliament of Great Britain at Westminster; beginning May 19, 1761 and lasting until January 10, 1765.[2]

Bank Notes (Scotland) Act 1765[1]
Act of Parliament
Parliament of Great Britain
Long titleAn Act to prevent the Inconveniencies arising from the present Method of issuing Notes and Bills by the Banks, Banking Companies, and Bankers, in that Part of Great Britain called Scotland.
Citation5 Geo. 3. c. 49
Territorial extent Scotland
Dates
Repealed5 November 1993
Other legislation
Repealed byStatute Law (Repeals) Act 1993
Status: Repealed
Text of the Bank Notes (Scotland) Act 1765 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk.

The Bank of Scotland had introduced an "optional clause" on their banknotes in 1730 whereby its conversion into gold on demand could be delayed for up to 6 months,[3] at which point the face value plus 5% should be payable.[4]: 24  By the 1760s similar clauses were being adopted by the competitor banks in Scotland.[4]: 26  An observed consequence was that in 1762–4 the banknotes had been trading at 4% below the gold coin value.[5] Use of such clauses was prohibited by the 1765 Act.[6]

The Act also stipulated that banknotes should not be issued for sums under £1.[7][8] Prior to the Act, some banks had been issuing notes for amounts as low as one shilling or even one penny.[3]

The Act was repealed in 1993.[2]

References
  1. The citation of this Act by this short title was authorised by the Short Titles Act 1896, section 1 and the first schedule. Due to the repeal of those provisions it is now authorised by section 19(2) of the Interpretation Act 1978.
  2. "Bank Notes (Scotland) Act 1765 (repealed 5.11.1993)". Legislation gov uk. Retrieved 18 November 2016.
  3. Macleod, H D (1896). "II: Banking in Scotland". In William Dodsworth (ed.). A History of Banking in all the Leading Nations. Vol. 2.
  4. White, Lawrence (1995). Free Banking in Britain (2nd ed.). Institute of Economic Affairs. ISBN 0255363753.
  5. Smith, Adam. The Wealth of Nations. Vol. 2. Penguin. p. 425. ISBN 9780140432084.
  6. Rutherford, Donald (2012). In the Shadow of Adam Smith: Founders of Scottish Economics 1700–1900. Palgrave Macmillan. p. 100.
  7. "Banknote History: Early Scottish banknotes". cscb. Committee of Scottish Bankers. Retrieved 18 November 2016.
  8. White, Lawrence (November 1990). "Scottish Banking and the Legal Restrictions Theory: A Closer Look". Journal of Money, Credit and Banking. 22 (4): 527. doi:10.2307/1992435. JSTOR 1992435.

Further reading
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