Your Mutual Friend? Don't Bank on It. AS THE GAP BETWEEN BANKS AND THEIR CUSTOMERS GROWS WIDER
Byline: TIM LUCKHURST
SCOTLAND'S part in the nationwide revolt against disproportionate bank charges is a compelling example of democracy in action.
The nation that rebelled against the poll tax has rediscovered its spirit of dissent.
Popular power is striking back against arrogant corporations that have forgotten the golden rule that let capitalism thrive: it must serve people, not enslave them.
But as we demand recompense for overcharging from banks that expect to reap [pounds sterling]40billion in profit this year, Scots should remember a principle that once gave banking a friendly face.
Invented in Dumfriesshire in May 1810, mutual banks did not exist primarily to make profits. They were created to serve their customers and every penny they earned was shared among account holders.
This country's role in the growth of commercial banking is recognised worldwide. Since the early 18th century, when the Royal Bank of Scotland began allowing cash credits to any client of good repute who could find two friends to stand surety for him, Scottish bankers have been respected from Santiago to Shanghai.
Britain' s most famous private bank, Coutts and Co, was founded in Edinburgh at the end of the 17th century. From their earliest days, Scottish banks issued notes - unlike their English counterparts, which, since the Bank Charter Act of 1844, have surrendered that power to the Treasury and the Bank of England.
But nothing did more than the mutual ideal to make banking popular among ordinary people.
'What is robbing a bank compared with founding a bank?' asked German playwright Bertolt Brecht in 1928.
The Rev Dr Henry Duncan, of Ruthwell Parish Church, beat him to it by more than a century. Appalled by the poverty endured by his parishioners, Duncan, an enlightened graduate of St Andrews University, set out to create an institution that could help them save, invest and prosper.
Duncan was a polymath who combined achievements as a geologist, author and publisher with his religious duties. His description of fossil footprints at Corncockle Muir was the first scientific report of its kind.
Examples of his geological work can still be seen in the National Museum of Scotland.
In 1839, he served as Moderator of the General Assembly of the Church of Scotland.
But his greatest achievement was the world's first commercial savings bank, the Ruthwell Savings and Friendly Society. It created the model for the Trustee Savings Banks that spread across Britain and for mutual banks and building societies around the world.
Scotland took to the idea with enthusiasm. The cautious investment policies pursued by mutual banks allowed them to remain stable throughout the Great Depression, when purely commercial competitors failed on both sides of the Atlantic.
By the 1950s, when consumer spending took off, hundreds of millions of pounds were invested in mutual institutions.
The Scottish trustee savings banks, which stood on most high streets in the land, took more than [pounds sterling] 100million in customer deposits between 1960 and 1965 alone.
No institution did more to convert workers accustomed to dealing in cash to the idea of banking. Hoards of banknotes kept under mattresses were invested to earn interest.
As ambitious Scots turned their backs on council housing under the Macmillan government, thousands of deposits on first homes were paid from mutual bank accounts. Mutual building societies provided the mortgages.
Of course, Duncan's original vision was to encourage responsibility and thrift among the members of his philanthropic financial institution. …