Saving Scotland's towns

Mairianna Clyde
Banking on the burgh

I would like to raise the issue of municipal banks.
     The year of local government re-organisation was also the year of my grandfather's death – 1975. That is why I remember it so clearly, as the two events coincide in my mind. The passing of my grandfather (born 1899) was for me also the passing of an era of civic spirit, the civic spirit and proud localism and independence I associate with his careful, cheerful, and stoical generation, born before the Great War.
     At that time in Grangemouth we had our own town council and town hall. The councillors could be pointed out in the street. A girl in my class's father was a councillor, and that was no mean status to have – like being a doctor or health chief today. The town hall was a fine old 19th-century yellow sandstone building from the days when the rate payers of the town had decided to first form their own 'police burgh'. This gave them civic status to run their own affairs – mainly to collect the rates and apply them to civic purposes such as sanitation, gas and water supply. 
     Besides a town hall, the town had a coat of arms and a railway station with goods yard, a branch line to Falkirk three miles away which was however axed by Beeching's cuts in 1968. But before Beeching had his day, I remember standing on the platform as a child outside the quaint 'Ladies Waiting Room' (in the days when Ladies were accorded special respect, enough to have their own heated waiting rooms with comfortable seats, a quiet place which rough men and rowdy youths dared not enter) and noting that Grangemouth was important enough to have its own railway station. These thoughts I remember musing on, as I watched the great steam train thundering in, pistons driving, bellowing its rhythmic clouds of steam and smoke to the whistle of railway guards. I remember the flurry of human activity on the platforms that greeted the arrival of this great beast.
     Associated with this era of civicness is the fine old library, also in yellow sandstone, now threatened with closure and demolition. Upstairs there was a small museum which recorded Grangemouth's history, from its origins as a canal town along the Forth and Clyde canal in the early 19th century, and the subsequent development of its port – once a major contact point with Scandinavia and the Baltic. Indeed, in the late 19th century it was possible to board a passenger ship from Grangemouth far up the Firth of Forth and set foot in Bergen or Stavanger. There was a regular service. No longer. This route closed up a long time ago, but worse, there is now no passenger shipping service connecting Scotland with Scandinavia. The car-ferry which long operated from Newcastle to Bergen and which served central Scotland comfortably, was closed in 2008. Remarkable, considering the centuries-long links with Scandinavia and the Baltic that all the east coast burghs had, that we are now more cut off by sea route from our nearest neighbours than we were in the days of Malcolm Canmore.
     But to return to my grandfather. He had angina and knew the end was near. In the week before he died he went to the Town Hall where he had invested his life's savings, and withdrew the lot. It amounted to just over £1,000, and he duly summoned my mother and her siblings to collect their 1/4 shares. I remember mum saying that he 'had gone tae the toon,' to withdraw his savings, and that was the first I was aware that there was such a thing as a municipal bank, and that you could put 'money in the toon'. It was just as well pappy took out the lot, as I have no idea what happened to these funds once Grangemouth Town Council merged with Falkirk District Council a few months later. I would dearly like to know what happened. And why municipal banks have since fallen out of practice.
     This bank evidently took deposits from a very local area, and offered security for deposits in return for moderate rates of interest. I assume 'the toon' also lent as well as received deposits. Perhaps it lent principally to itself, for its own civic purposes, receiving in addition its rates as a constant income stream and guarantor of funds? My grandfather was proud to invest in 'the toon'. It gave him a feeling of pride and belonging, and moreover, of control over his life. And happiness is largely about feeling in control of your life. You could eye-ball the bankers. They were answerable to elected councillors. Their salaries were established by local committee.
     This is very pertinent today, as people no longer trust banks. Commentator after commentator has spoken of the need to separate 'retail banking' (that's the ordinary business of deposits and loans so vital for mortgages and small businesses) from the dangerous business of 'investment banking' (that's casino capitalism and fat-cat salaries). Let the casino capitalists fail, they say. They take the risk – and the profit – so let them take the consequences.
     Municipal banks (or at least, municipal borrowing and lending) have a long pedigree in Scottish burgh life, going back to the establishment of 'royal burghs' with considerable powers of self-government. Burghs established by royal charter had the powers of the Crown in certain delegated areas. In Europe many such medieval chartered towns like Amsterdam became 'city-states'. Alex Salmond has recently discovered when setting up his Scottish Futures Trust that the Scottish Government does not enjoy the right under the Scotland Act to borrow money from abroad as a 'corporation' and issue bonds in the way that, apparently, municipal authorities do – which may reflect their authority having derived from the erstwhile sovereign Scottish crown, pre-1603.
     Municipal banks may restore public confidence, but to work they must be locally autonomous, and never hijacked by the Scottish Government.

Mairianna Clyde is a lecturer and writer