It happened again over the weekend, the Scottish government’s finance secretary telling a collection of business leaders that sidestepping the worst of the banking crisis that engulfed the world in 2008 was down to their policy and regulation. Its true policy and regulation were a major factor in the shallowness of our recession, but it wasn’t their policy and it wasn’t their regulation.
No government in the modern history of Scotland has admitted it, but their dirty little secret is that the Sutherland Bank has dictated finance policy, from taxation to regulation, for more than a quarter of a millennium. Every major finance policy that has passed through parliament, from every major party, has been written to fit the austere philosophy of the Challaid-based bank that has dominated the Scottish financial sector since its inception in the seventeenth century.
We don’t, in the south, think of Sutherland Bank that way, because we don’t think of Challaid that way. It’s the remote city, hidden on the north coast, barely accessible and culturally separate. They speak Gaelic, they keep themselves to themselves and the tentacles of their local businesses tend not to reach into our lives. Except for one, the bank that’s always been there, that’s always presented itself in the way we see the city it sprang from, distant. Talk to people who work in Challaid and they tell you a different story about the power that pulses out of the grand building by the park, not coincidentally next door to the equally grand council headquarters in the city.
Things went bad fast in 2008, but Scotland’s recession was shorter and shallower than many. It was not, contrary to the PR nonsense of the politicians at the time, good planning and rigorous regulation that saved the day, it was a fluke born out of a different kind of corruption. Sutherland gets to decide how every other financial institution in the country operates, because they’ve been the lender of last resort to the Scottish government since the mid-eighteenth century. They’re a company with a long history, a patient and conservative bank that sees gambling as beneath them, so they drew up a set of rules that forced every other bank to operate the same way.
It means that nobody else can ever grow enough to challenge them in their domestic market, and allows their influence to smother Scotland and reach out beyond. That legally enforced financial conservatism meant we didn’t get as high a boom as they had in London and elsewhere, and didn’t get the crushing bust either. Sure, our economy took a big hit, but not as bad as it could have been. It’s often reported that Sutherland actually profited from the wreckage of its rivals. One or two scallywags have even suggested they played a small part in making the crash happen, so they could look strong and pick over the carcasses of their former challengers.
The real shame of it, though, is not a large bank controlling financial policy, that’s simply a more crystallized version of what happens in many countries. The shame is that this distant bank has had undue sway over social policy to boot. They have believed, throughout their history, that progress is made slowly, that risks are for the graceless and that a decent society is always tightly controlled. The progressive agenda in the south has been resisted, and the amount spent fighting poverty has been reduced, because of a banking corporation that won’t allow money to be spent on something as frivolous as tackling poverty and social injustice.
At some point in the next few months a politician will address business leaders in Challaid or Edinburgh or Glasgow and they’ll call the Sutherland Bank one of the greatest success stories in Scottish history. One or more of the bank’s board, all members of the founding family, will be in attendance, and they’ll nod politely, trying to look humble. They should. They have more to be humble about than the people they so powerfully influence would ever admit.