21 April 2015

Five great disasters caused by Scottish over-confidence


When I was researching a book on the financial crisis and the collapse of RBS, I became obsessed (again) by Scottish history and the way in which developments north of the border impact on the rest of the UK.

I’m British and Scottish. Scotland is a great country, although in celebrating the achievements of Adam Smith and numerous inventors and writers, one must be wary of falling too much for the myth ‎of Scottish exceptionalism. This is the approach that can be summed up as “wha’s like us” aren’t we terrific, what an achievement for a small country, will you take another drink?

‎Equally, one should not get too carried away with the idea that the Scottish are somehow uniquely prone to glorious defeat or disaster. Initially, I thought of making something in that RBS book about the Presbyterian impulse. I asked the advice of one of Scotland’s three remaining Conservatives and he cautioned against reading too much into Scotland’s tendency to be involved in avoidable disasters. England had the South Sea Bubble, didn’t it? The English (or about half the English population) went completely mad over Princess Diana’s death. The English invented the Big Brother fly on the wall, TV eats itself, format. Or was that the Dutch? Don’t know.

Still, it nags away at me, especially since at various book festivals, when I was promoting my RBS book, readers in England and Scotland asked me if Scottish Presbyterianism played a part in the rise and fall of the Royal Bank and in Gordon Brown’s epic mistakes. Whether it is latent Calvinism, or the failure of the Scottish football and rugby teams in recent decades, many Scots do seem especially keen to remind the world (or England) that they/we exist and should be paid attention to. As ever, the Scots risk underestimating the English, their bigger neighbours. The English have cards left to play  before the current constitutional mess is resolved.

Whatever the reason, Scotland is certainly going through another moment of madness. The rise of Nicola Sturgeon is, as one senior Tory described it to me, the Scottish political equivalent of the death of Diana. It is mass political hysteria‎.‎ And for now it is unstoppable. What could possibly go wrong?

As a reminder of what can go awry when my fellow Scots get over-excited, and become convinced they are marvellous and morally superior, here (as a warning from history) are five great disasters ‎produced by Scottish over-confidence.

‎I should say that down the years I’ve been called many things by humourless Scottish nationalists – who want to make jokes about Scotland ‎illegal and to crack down on the faintest sign of criticism on the Blessed Nicola (she who must be obeyed). I learn from furious Nats on Twitter in the last 24 hours that I must be publicly shamed for making an “anti-Scottish comment”, which was actually a joke about the Nuremberg rally and the fondness of the SNP for Albert Speer-style gigantic sets. But even though Thatcher and Blair put up with much worse being said about them, by satirists and journalists, one cannot joke about the SNP. Its strongest supporters tend to be demented zealots with no sense of humour, a Scottish nationalist type perfectly captured and mocked by the genius Billy Connolly thirty years ago.

So, I’m publishing this list of Scottish disasters anyway, because for the moment the UK is still a free country. After independence, socialist Scotland certainly won’t be. Here goes.

1) The Darien Scheme. St‎ill the defining Scottish disaster, the biggie. Annoyed that the Union of the Crowns had failed to deliver access to English trading routes, the independent Scottish parliament decided to establish the Company of Scotland to increase foreign trade. When the English parliament attempted to disrupt this enterprise, a shyster called William Paterson from Dumfries (who had founded the bank of England in 1694) suggested that Scotland should colonise Panama. In a wave of patriotic fervour, Scottish society signed up to invest. Alas, they and Paterson had not done their research. Darien in Panama was a mosquito-afflicted mess. The Spanish saw off the Scots, several thousand settlers lost their lives and Scotland lost perhaps as much as a quarter of its cash wealth. In the aftermath, many Scots blamed the English for refusing to help. A broke Scottish Establishment signed the Act of Union a few years later, from which Scotland profited greatly in the next few centuries.

2) John Law, the invention of paper money and the ruination of France in the early 18th century. Another Scottish belter. Law was a terrible scoundrel and card-sharp, who ‎escaped from prison in London after he killed a rival in a duel. The Scot found his way to France, where he somehow conned the French into making him finance minister. He is sometimes credited as the pioneer of paper money. Nascent banking relied mainly on coin before this. But his great innovation was a share scheme to invest in America. Everyone piled in. France went mad and then virtually bankrupt before Law fled to Venice (where he died of the pox). Arguably, this disaster produced by a Scot played a role in the French Revolution much later in the century. The growth of capitalism in France was impeded because the French had had such  a bad experience with joint stock companies, speculation and investment in the industrial revolution. Whereas Britain became a financial powerhouse, with the Scottish banks, such as the Royal Bank at the forefront. The bad news about RBS comes later.

3) The Argentina World Cup 1978. My personal favourite. As a 7 year-old Scotland fan I was convinced my country was going to win. How could I have believed otherwise? The Scottish media and population seemed convinced it would happen and a popular song – “We’re on the march with Ally’s Army” – said that it would be so. Tragically, the manager Ally McLeod was a football boss who thought, in the famous words of Graeme Souness, that tactics were a brand of mint. Scotland scored first against Peru and I can still remember my father cracking open a beer when Joe Jordan scored. Sadly, Peru then scored three. We drew with Iran – yes, Iran! And then, in the most Scottish twist of all, we triumphed against Holland with a goal that Scots still regard as the greatest in football history. It was insufficient. Glorious failure. On goal difference, Scotland got knocked out and the team came home in disgrace.

4) Scottish devolution. This was supposed to kill off the SNP and there was massive over-confidence about the prospects of home rule saving the Union. I was a sceptic and along with a derided quarter of the population voted No. But all of Labour’s giants north of the border in the 1990s said that once Scotland had its own parliament within the Union, there would be no need for the SNP. This does not seem to have worked out particularly well.

‎5) The Royal Bank of Scotland‎, Fred Goodwin and Gordon Brown. On RBS, my book on how a small Scottish bank became the biggest bank in the world and then blew up, is available from all good bookshops. It is called Making it Happen. Arrogance and over-confidence was a key factor in the disaster. Gordon Brown and the end of the end of boom and bust, also gets a mention. It is often said by Brown’s defenders that his over-spending did not cause the financial crisis. That is a straw man argument. No-one ever said it did. But him predicating policy – spending, poor regulation and banks at 450% of UK GDP – meant that the UK was particularly badly exposed when the boom went bang, as it always does eventually. Brown has a lot to answer for. A man who was by nature inherently cautious, gradually got carried away and became convinced that he was right and that he had solved economic problems that mere mortals had failed to deal with for centuries. After witnessing the combined work of the RBS management and Gordon Brown, it is a miracle that the English did not demand English independence.

Iain Martin is Editor of CapX.