To:                 Wm. Sheppard, 107 George Street, Edinburgh.

From:            Wm. Drummond, Cupar.

Dated:            19th September 1840.

My Dear Sir,

              I have received your letter of yesterday enclosing one from Mr Smith to Mr Traquair which I return.  Mr T. must I suspect return him an answer but he ought I should think to insist for 4 per cent interest, the usual rate paid at present.  I believe all the Glasgow Banks offer 3 1/2, and I have no doubt the Clydesdale in Edinburgh allows the same rate to all customers where funds are likely to be in their hands for a few months - and there can be no temptation to lend on heritable security at 3 1/2 so long as the same rate can be got without any trouble or expense from a Bank.

            I have no doubt Smith's object in pushing for the reduced rate for the first year is that he may pocket the 1/2 per cent for his commission and thereafter the party may make any bargain he chooses.

           Yours sincerely

                   Wm. Drummond.

This letter appears to be suggesting that the Client of Sheppard should not lend his money out - no matter how secure the loan will be - if he can obtain the same, or a similar rate of interest simply by placing the monies on deposit with a Bank.  This appears as common sense to the modern reader although the question being raised is perhaps reflective of a period when it was not standard practice for banks to pay interest on deposits.  In the very early days of banking the banks made money out of lending their Capital (shareholder funds) and it was not until the significant development of Scottish commerce - and the realisation by the banks that more profit could be made - that deposit monies were sought and lent out to borrowers.

Unfortunately I can find no trace of Wm. Sheppard although 107 George Street remains an Edinburgh address and the site now appears to be used by Management Consultants and a Jewellers outlet.  Tracing Mr Smith and Mr Traquair is an almost impossible task without further information.  William Drummond is however easier to trace.

William Drummond was a Writer in Cupar and the 1861 Cupar Directory lists Drummond and Nicholson (or Mitchell) as being Writers in Cupar, operating from 11 Crossgate, Cupar.  The same Directory has the National Bank of Scotland, William Drummond, Agent, James Cowan, Assistant Agent) operating from the same address. 

William Drummond also held the post of Cashier of the Fife Banking Company although I suspect that this was in the capacity as "caretaker Cashier" when the affairs of the Fife Banking Company were being wound up.  He is named as Cashier in the case of Drummond v Russell (29th July 1834).

The Fife Banking Company  failed in 1825 and the assets were assumed by the National Bank of Scotland as a consequence of a rescue plan.

This is a very early reference to the Clydesdale Bank which was only recently founded on 7th May 1838.  Reid's "The History of the Clydesdale Bank" (Page 67) advises that a branch of the Clydesdale Bank was established in 1840 where "an influential lawyer in the town, William Drummond, of Drummond and Mitchell, writers, who had been an agent there for the Commercial Bank, proposed that the Clydesdale should establish a branch under his care".  Drummond appears to have built up a considerable business including "many dangerous accounts" and accordingly a "responsible accountant" was appointed to assist.  This was resented by Drummond and in 1845 Drummond was removed from his post.  It transpired that Drummond was later employed by the Western Bank of Scotland who he induced to open a branch.

Drummond appears very much to have been a "charmer".  To have been noted as holding posts with the Commercial Bank (pre 1838); the Clydesdale Bank (1840 - 1845); the Western Bank Bank of Scotland (post 1845) and then the National Bank of Scotland (1861) is a bit of an achievement - particularly when he was removed from his post (1845) due to his "many dangerous accounts" .