SCOTTISH BANKNOTES (Hansard, 18 February 1976)

§ Mr. Douglas Henderson (Aberdeenshire, East)

I beg to move, That leave be given to bring in a Bill to make Scottish banknotes legal tender throughout the United Kingdom. I wish first to assure the House that there is no truth in the rumour that I was making available samples of Scottish banknotes to those hon. Members who decided to come along to hear my application. I have two samples in my hand, however, which are available for inspection by all interested inquirers at the appropriate time.

The background to this motion is the fact that, under current banking legislation, Scottish banknotes are not even legal tender within Scotland, whereas English notes are. Three Scottish banks issue these banknotes and their total circulation is about 5 per cent. of the total Bank of England circulation. Within Scotland, one Scottish note probably circulates for every Bank of England note.

The banks concerned are old institutions. The Bank of Scotland, the oldest, was founded in 1695, the year after the Bank of England, by the same man, William Paterson, who had cannily tried it out in England first, discovered that it worked and then set up the Bank of Scotland, having taken account of the lessons that he had learned.

The first purpose of the Bill is a practical one, to put Scottish notes on the same level as English notes. So long as English notes circulate in Scotland, I see no reason why Scottish notes should not enjoy the same status as English notes.

I make no apology for saying that the second reason for the Bill is the pride and confidence that we Scots have in our banking institutions. They were allowed to issue notes because of their great strength and their ability in the past to meet their obligations. They are pioneers of services like branch banks, mobile banks and—something which will be of benefit to many hon. Members—overdrafts. Without the Scottish banks, some hon. Members might not be here.

We are looking to the future. We regard the establishment of our currency as legal tender as the first stage in its 1295 international recognition and in its becoming the currency of an independent Scotland. At present, there are difficulties in using these notes at various places, even in Scotland itself. British Petroleum, for instance, allows only Bank of England notes to be used for the purchase of petrol at its self-service stations.

In England, there used to be a tradition in benighted days and places of allowing only 19s. 6d. for a Scottish pound. I am glad to say that the missionary efforts of my hon. Friends and myself seem to be going some way to correct that situation, altough of course the Patronage Secretary will never succumb to those efforts. The Scottish note is now more widely accepted than it used to be.

Abroad, there are also some difficulties. A letter in The Guardian this week from a Scottish reader pointed out that, at the Gare du Nord in Paris, the rate of exchange for the Scottish pound was shown as lower than that for the English—[HON. MEMBERS: "Hear, hear."] Those shouts will be noted in Scotland. Would any other hon. Members like to join in the chorus?

The reader wrote: I was so intrigued that I walked into the exchange office, queued for quite a while, only to be told that 'London' was so reluctant to take back Scottish pounds…that they had to treat it as a different and of course inferior currency. The final purpose of the Bill is, in the generous spirit of the Scottish National 1296 Party, to allow our friends in England access to an important asset. The Scottish banknote today is one of the most outstanding investments that any Englishman can lay his hands on. Today, he can get it at par with the pound sterling. In a few years, when we are an independent country, as the English pound sinks slowly over the horizon and the robust and secure Scottish pound rises, there will be a considerable premium on the latter.

In 1826, this House discussed an attempt to abolish Scottish banknotes. Among others, Sir Walter Scott defended them. Today, we are proud of our notes and of the institutions which issue them and we wish to set them a stage further on the road to a better future.