What then put it over the edge? Quite simply it was lending money it didn't have and some very large loans were outstanding. It had been treating bad debts as available assets and didn't have sufficient reserves to cover its notes in circulation. Operations on a large scale had been entered into for produce in India, for wool in Australia and to support a railroad company in America. It had made large advances to firms in the iron trade and reports of the time refer to reckless support given to builders. For some time the bank had been secretly purchasing its own shares as a device to maintain the market price and disarm suspicion. But the specific cause of the failure is reported to have been the bank's inability to get bills sold against the shipment of produce from India discounted on the London market. This is what finally led the bank's directors to appeal to the other Scottish banks for help.
     A meeting of the General Managers of nine of the principal banks took place in the premises of the Bank of Scotland in Edinburgh on the evening of Monday 30 September 1878. According to Robert Rait in his History of the Union Bank of Scotland they 'met to receive a communication from the City of Glasgow Bank'. In this communication, the directors confessed that they had understated the outstanding loans in the annual report of the preceding July, admitted the existence of heavy losses and asked for assistance to meet their obligations. The managers decided to appoint an accountant, one George Jamieson, to examine the books and report back the following evening. This must have been a considerable challenge for him. However, when they gathered again on the Tuesday evening they learned from Mr Jamieson that losses were probably approaching £3 million, that £6 million had been lent to four firms and it appeared to him that accounts had been falsified over a period of some years. Faced with this information and the need to protect the integrity of the banking system the appeal for help was declined. It was after midnight before the decision was conveyed to the deputation from Glasgow. It was clear then that the bank was finished. So it was on the morning of Wednesday 2nd October 1878 that the directors took the decision to close the doors and cease operating. Meanwhile back in Edinburgh the general managers took an immediate decision to act in the public interest and gave notice that they would accept City of Glasgow Bank notes in the ordinary course of business. This at least served to alleviate some of the initial panic. It is interesting who these banks were and how few of them remain today: the Bank of Scotland, the British Linen Company, the Commercial Bank of Scotland, the National Bank of Scotland, the Union Bank of Scotland, the Royal Bank of Scotland, the Clydesdale Banking Company, Aberdeen Town and County Bank, and the North of Scotland Bank.
     All that morning there was a crowd at the closed doors of the City of Glasgow Bank's main office in Virginia Street. The Chief Constable had instructed policemen in the area to advise that bank notes remained safe in the belief that depositors would ultimately be settled. But the fundamental problem was that depositors did not have access to their money. Newspapers of the time contain graphic accounts of personal distress. The general hardship was compounded by businesses folding, unable to pay their workers or pay bills. The Glasgow correspondent of The Times reported that 'in place of the normal stir and bustle a funereal solemnity prevails...everyone going about on tiptoe and conversations barely above a whisper'.

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