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The Royal Bank of Scotland and the Wonders of Overdraft Protection

The Scotland Company is a merchant company that has become a lender. It is taking a long time to develop its markets in Africa and the Indies, so they have a lot of money sitting around doing nothing. In Scotland, banking is wide open. (It is a freakin' Libertarian dream.) They set up "The Equivalent Company" to lend out their idle money. When the Bank of Scotland is suspected of harboring disloyal thoughts about King George, the Scottish Parliament will grant a charter to the Equivalent Company in 1727 as a public bank (that is, a limited liability bank with implied government guarantees). They rename the company "The Royal Bank of Scotland," to emphasize their support for the Protestant King George the 1st. Their mission will be to attract more depositors and do better business than the Old Bank of Scotland. By 1728, the Royal Bank of Scotland will introduce a banking innovation: the overdraft... an instant loan. William Hog, a merchant, will immediately withdraw the equivalent of over $100,000 more than he will have on deposit in the bank. (And the crowd roars.) [1] [2] [3] [4] [5] [6]

My Take by Alex Shrugged
Scottish chartered banks, such as the Bank of Scotland, the Royal Bank of Scotland and the British Linen Company, were more successful than non-chartered banks... success being measured as: remaining in business. The limited liability of the chartered banks allowed you, as a depositor, not to lose everything you owned if the bank made a bad investment. Your risk was limited to your deposit. With non-chartered banks, if your bank made a bad investment, you, as a depositor, were at risk of losing your deposit, your house and the clothes on your back. Thus non-chartered banks took fewer risks and had fewer depositors. Limited liability banks took more risks because of risk-tolerant depositors and they were supported with government deposits or privileges, thus implying a sort of government guarantee. When the Subprime Lending bubble burst in 2008, a major cause of the problem was the implied promise that the government would protect certain financial institutions such as Fannie Mae and Freddie Mac and save their investors no matter how badly those financial institutions did. They were too big to fail. In my opinion, if an institution is too big to fail, it is too big to exist. [7] [8] [9]

The Escape Artist and the Invention of Scandal Journalism

Jack Sheppard, otherwise known as "Gentleman Jack", has escaped from prison 4 times this year alone. The fifth time is the charm, but not for Jack. After several years of a successful apprenticeship to a carpenter, he was led to drink, and debauchery under the ministrations of the prostitute, Edgewood Bess. He was also taught pickpocketing and highway robbery by his partner in crime, Joseph "Blueskin" Blake. "Gentleman Jack" has been on a two year crime spree, and it is all coming to an end. Sheppard has been caught dead drunk after spending time with two women of negotiable virtue. It is such a scandal that before Jack Sheppard is executed he publishes his autobiography entitled "The History of the Remarkable Life of John Sheppard". It is probably ghostwritten by Daniel Defoe, the author of "Robinson Caruso". It sells like hotcakes.... especially at the hanging. Government officials are dismayed by Sheppard's popularity even after his death, so they ban all plays with the name "Jack Sheppard" in the title. The ban will remain in effect for the next 40 years. [10] [11] [12] [13]

My Take by Alex Shrugged
Regarding scandals making the news, this is all about ratings, so if a pretty girl is kidnapped, it is wall-to-wall coverage. If an ugly guy is kidnapped, no coverage. Why the difference? It has to do with the attitude of the people consuming news entertainment. We say that news has become entertainment, but when has it ever NOT been entertainment? News is an on-going reality show. The first newspapers began as gossip pages. By the time of the American Revolution, news had become political as well. Eric Burns called it "... the gutter age of American Journalism." What exactly was the inalienable right of the press that the Bill of Rights was protecting? "Free speech" was already listed. Was it free speech in written form, especially political speech? [14] [15]
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances. -- Amendment 1, The Bill of Rights.

Don't Tread on My Birthday

* Christopher Gadsden - The designer of the Don't Tread on Me flag is born in Charleston, South Carolina. [16]
* Immanuel Kant - Born in Prussia, he is one of the greatest of philosophers of all time. [17]

This Year in Wikipedia

Year 1724, Wikipedia.

See Also


  1. "The history of payments in the UK", BBC News, 16 February 2009. Retrieved on 4 February 2016. “The bank allowed William Hog, a merchant, to take £1,000 - the equivalent of £63,664 today - more out of his account than he had in it.” 
  2. History of Scottish Banks and Bank Notes. Rampant Scotland Directory (2016). Retrieved on 4 February 2016. “The financial arrangements were complicated and to protect their interests the investors set up a society, the Equivalent Society which became the Equivalent company in 1724. The new company sought to move into banking and this request was received sympathetically by the government. The 'Old Bank', the Bank of Scotland, was suspected of Jacobite sympathies and, with 1715 still a recent memory, a Royal Charter was granted in 1727 to the 'New Bank' with the title of Royal Bank of Scotland.”
  3. Company of Scotland - Wikipedia (2015). Retrieved on 4 February 2016. “The Act granted the Company a monopoly of Scottish trade to India, Africa and the Americas, similar to English charter companies' monopolies, and also extraordinary sovereign rights and temporary exemptions from taxation.”
  4. The Royal Bank of Scotland - Wikipedia (2015). Retrieved on 28 August 2015. “The bank traces its origin to the Society of the Subscribed Equivalent Debt, which was set up by investors in the failed Company of Scotland to protect the compensation they received as part of the arrangements of the 1707 Acts of Union. The 'Equivalent Society' became the 'Equivalent Company' in 1724, and the new company wished to move into banking. The British government received the request favourably as the 'Old Bank', the Bank of Scotland, was suspected of having Jacobite sympathies. Accordingly, the 'New Bank' was chartered in 1727 as the Royal Bank of Scotland, with Archibald Campbell, Lord Ilay, appointed its first governor. On 31 May 1728, the Royal Bank of Scotland invented the overdraft, which was later considered an innovation in modern banking.”
  5. Carr, Jack; Glied, Sherry; Mathewson, Frank (December 1989). "Unlimited Liability and Free Banking in Scotland: A Note". Journal of Economic History, The (Cambridge University Press on behalf of the Economic History Association) 49 (4): 974-978. http://www.jstor.org/stable/2122748. Retrieved December 16, 2015. "Open entry with note-issuing privileges was subordinated to the entrant's shareholders' acceptance of unlimited liability.2 The institutional facts are these: three banks (Bank of Scotland, Royal Bank of Scotland, British Linen Company) enjoyed limited liability privileges through explicit charters granted by the Scottish Parliament; all others faced unlimited liability". 
  6. Cowen, Tyler; Kroszner, Randall (May 1989). "Scottish Banking before 1845: A Model for Laissez-Faire?". Journal of Money, Credit and Banking (Ohio State University Press) 21 (2): 221-231. http://www.jstor.org/stable/1992370. Retrieved December 16, 2015. "Beyond this special limited liability status, the public banks enjoyed three other advantages. First, [...] only they were authorized to "hold and remit" government revenues [...] Second, the Royal charter conferred the appearance of official sanction on these banks [...] Third, the uncertain legal identity of unincorporated entities caused difficulties for the nonchartered banks in court actions. Until their standing was clarified in a statute of 1826, for example, the right of nonchartered banks to bring legal action for fraud and default was in question.". 
  7. Subprime mortgage crisis - Wikipedia (2016). Retrieved on 4 February 2016. “The U.S. Federal Bureau of Investigation probed the possibility of fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer American International Group, among others.[410] New York Attorney General Andrew Cuomo sued Long Island based Amerimod, one of the nation's largest loan modification corporations for fraud, and issued numerous subpoenas to other similar companies.[411] The FBI assigned more agents to mortgage-related crimes and its caseload dramatically increased.[412][413] The FBI began a probe of Countrywide Financial in March 2008 for possible fraudulent lending practices and securities fraud.”
  8. Staff writer (May 9, 2013). Frank: Abolish Fannie Mae & Freddie Mac. Washington Free Beacon. Retrieved on 4 February 2016. “Frank’s support in recent years for shuttering Fannie and Freddie has been a complete reversal for the former congressman who spent a large portion of his tenure in Congress relentlessly defending the quasi government entities.”
  9. Top 10 Barney Frank Offenses - Human Events. Human Events (OPINION) (Dec 3, 2011). Retrieved on 4 February 2016. “As ranking member of the House Financial Services Committee, Frank blocked tightened oversight over Fannie Mae and Freddie Mac, saying in 2003, 'These two entities … are not facing any kind of financial crisis,' and, 'I want to roll the dice a little bit more in this situation towards subsidized housing.' More than any other factor, the 2008 financial meltdown was caused by pushing these government-sponsored enterprises to encourage housing loans to risky borrowers.”
  10. Jack Sheppard - Wikipedia (2016). Retrieved on 4 January 2016. “Sheppard was as renowned for his attempts to escape from prison as he was for his crimes. An autobiographical 'Narrative', thought to have been ghostwritten by Daniel Defoe, was sold at his execution, quickly followed by popular plays. The character of Macheath in John Gay's The Beggar's Opera (1728) was based on Sheppard, keeping him in the limelight for over 100 years. He returned to the public consciousness around 1840, when William Harrison Ainsworth wrote a novel entitled Jack Sheppard, with illustrations by George Cruikshank. The popularity of his tale, and the fear that others would be drawn to emulate his behaviour, led the authorities to refuse to license any plays in London with 'Jack Sheppard' in the title for forty years.”
  11. Debauchery - definition of debauchery (2016). Retrieved on 4 February 2016. “excessive indulgence in sensual pleasures; intemperance”
  12. Effect - definition of effect (2016). Retrieved on 4 February 2016. “to cause to occur; bring about; accomplish”
  13. Alex Shrugged notes: The so-called "crime-stopper" who caught Sheppard was Jonathan Wild, a crime lord! He had been building a reputation as bringing order to the crime-ridden streets, while he was building up his own criminal network. He would "catch" his criminal competitors! That just makes me laugh.
  14. The Thief-Taker Hangings: How Daniel Defoe, Jonathan Wild, and Jack Sheppard Captivated London and Created the Celebrity Criminal. Aaron Skirboll (AUTHOR WEBSITE) (2016). Retrieved on 4 February 2016. “Daniel Defoe invented scandal journalism and the true crime genre by covering the sordid lives and hanging deaths of two of London’s most notorious outlaws.”
  15. The Infamous Scribblers of the Founding Father Generation. History News Network (May 14, 2006). Retrieved on 4 February 2016. “It does not seem to make sense. It is almost incomprehensible. Yet the golden age of America's founding was the gutter age of American journalism. The era that produced such works as the Declaration of Independence, the Constitution and the Federalist Papers also produced newspapers that lied, slandered and incited violence.”
  16. Christopher Gadsden - Wikipedia (2016). Retrieved on 4 February 2016. “He was a delegate to the Continental Congress and a brigadier general in the Continental Army during the War of Independence. He was also the designer of the famous Gadsden flag.”
  17. TIMELINE OF WORLD HISTORY. everyhistory.org (2014). Retrieved on 4 February 2016. “Kant was the foremost thinker of the Enlightenment and one of the greatest philosophers of all time.”

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