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MOST RESPECTFULLY DEDICATED.
The present volume is offered as a contribution to
the history of a number of provident schemes, which,
though quietly working in the country for many
years, and affecting to no small extent the social condition
of great masses of the people, can scarcely
be said to have found an annalist. I think I may
fairly consider that the ground covered by this work
has not previously been occupied. In saying so
much, I do not forget the only book which has
hitherto emanated from the British press on Savings
Banks. Mr. Scratchley's Practical Treatise on
Savings Banks deals, however, with the question
technically, and is meant avowedly as a text-book
for actuaries and those employed about Savings
Banks. The present volume, on the contrary, while
it may be supposed to possess some interest even for
this limited circle, is not meant to take the place
of the above, but seeks its public amongst general
readers, and amongst those who, either from inclination
in that direction, or through connexion
with them as employers, take an interest in the
progress of the industrial classes of our country.
Treating as this volume does of useful practical
schemes and matter-of-fact topics, I have sought to
avoid all matters of speculation, to speak in very
plain terms and without waste of words, and, whilst
noticing in their proper order all the different proposals
having to do with the subject, to refrain from
venturing upon any myself. My aim has been to
give a full and accurate account of the early history
of Savings Banks; and as subsequently to their
origin the discussions in Parliament with regard to
them and kindred subjects were no incorrect reflex
of the feeling in the country at different periods, I
have also dealt fully with the parliamentary history
of these institutions. In this way Savings Bank
reformers, both in and out of Parliament, and their
measures of reform—many of them ending in the
establishment of different kinds of supplementary
banks—are made to pass under review; and the
names of those who framed the original schemes, as
well as of those who tried to improve upon them,
are rescued, for a brief space at any rate, from a
state of obscurity, if not of oblivion.
With respect to the latest modification of the
Savings Bank principle, as exhibited in the measures
brought about within the past few years by Mr.
Gladstone, great efforts have been made—as great
efforts have been needed—to treat all the questions
involved fully and impartially, and to accord these
important and far-reaching measures their due place
amongst the other wonderful provident schemes of
the present century.
Great pains have also been taken to ensure perfect
accuracy, both as to facts and figures, and my
acknowledgments are due to many gentlemen who
are acquainted with the subject in all its bearings,
who sent me information, or answered my inquiries,
with great readiness and cordiality. It is less necessary
to mention any of these gentlemen in this place,
inasmuch as reference is frequently made to their
assistance at the proper place in the body of this
work; but it would be wrong to omit to state that,
with regard to Mr. Gladstone's recent measures, I have
had every facility granted me by the Post Office
authorities for obtaining the necessary and the most
recent information respecting these schemes, and that
this assistance has been rendered in a manner which
calls for my heartiest thanks, as the only sufficient
or fitting acknowledgment.
Dealing as I have done with what Mr. Carlyle
will allow to be one of the side sources
of history,
I venture to hope that some of the facts now
gathered together may not be without their interest to
the student of human progress in some of its highest
aspects; while to all those who are directly concerned
in such schemes, and to masters of workmen, to whom
the concluding parts especially are more particularly
addressed, this volume is offered, with some confidence
that they will find much new and original matter
in it, and some old matter put in a new light.
An Appendix is added, giving the Acts, or clear
abstracts of Acts, at present in force for all the different
descriptions of Banks for Savings, together
with some of the latest statistical information which
may be thought of value.
W. L.
London, May 24, 1886.
* * * * *
*** Two questions connected more or less with my
subject have been brought into prominence by the action
of Parliament since the present work was completed,
and to these questions it may not unreasonably be
expected that I should in some way refer. The first,
or the Savings Bank qualification in the new Reform
Bill, concerns Savings Banks and Savings Bank depositors
very intimately; the second question, or the
proposal of Mr. Gladstone to employ a portion of the
money of Savings Banks in reducing the National
Debt, can scarcely be said to have an immediate
bearing upon either.
With regard to the Savings Bank qualification, I
may, perhaps, be permitted to say that, though received
with hostility in some quarters and indifference
in others, the balance appears to me to be in favour
of the proposal. In most respects, if not in all, the
qualification may be defended on the same grounds
as the Forty Shilling Freeholds; the investment is
about the same; the one is open to much the same
objections as the other, and there are similar merits
in each. Votes may be manufactured under the one
equally as under the other, and it is not easy to
understand why those who support the one Bye
Franchise
should oppose the other. Little trouble
will accrue to Savings Banks under the Act;
and the money forming the qualification may oftentimes
be allowed to remain in the bank, whereas
under other circumstances it might be squandered
in unnecessary or unprofitable expenditure. The distinction
may be hard on others quite as worthy of the
franchise, but who may be in some way unfortunately
circumstanced; and it may seem arbitrary to those
who have an equal amount invested in some other
shape: but these are the sort of arguments which
may be brought against Fancy Franchises of any
kind with quite as much reason as against this particular
one. Working men who may claim the Franchise
on the Savings Bank qualification will not be
able to keep the fact secret that they are depositors,
and that up to a certain amount; and they must
submit, on misfortune overtaking them, to be deprived
of a privilege which they may have learnt to prize:
but, notwithstanding all these and some other minor
considerations, I cannot help regarding the Clause
as, on the whole, a fair and reasonable acknowledgment
of the merits and claims of many of the best
portions of the community, who were not influenced
by the consideration of this electoral qualification
when they originally commenced the practice of provident
habits, and also of the claims of others who
may not be unduly influenced by the prospect of
citizenship which the Clause may henceforth hold out
to them.
Mr. Gladstone's recent proposal to convert the
24,000,000l. of Consols, invested by the nation in
Savings Banks, into Terminable Annuities concerns
the Nation itself much more than Savings Banks.
So far, indeed, as the matter affects the trustees of
Savings Banks, or depositors in them, it was settled
some years ago when the money was made a book
debt, and the Government became the banker, as it
were, for the sum in question. What the Government
now does with the money is no concern of
Savings Banks. This is put so plainly by Mr. Gladstone
in his Budget speech, and is at the same time
so indubitable, that to quote his words is to say all
that can be said on this point. They (the trustees)
have nothing to do with the money; that is a mere
question of investing it with which we are alone
concerned. If we lost every farthing of it, we should
have to pay it to them; and if we made a profitable
investment of it, it would be entirely our own affair.
In one respect only is Mr. Gladstone's proposal
specially satisfactory to Savings Bank officials and
all who take an interest in Savings Banks. Under
the operations described by the Chancellor of the
Exchequer in his Financial Statement, and now
familiar to every reader, the Balance estimated to be
deficient, of over three millions sterling—a deficiency
which has long been a bugbear in all considerations
of the subject—will disappear as a separate item in
the National Accounts in the process of redemption
proposed. The entire scheme shows, especially and
prominently, Mr. Gladstone's anxiety to reduce our
enormous burden of debt. He here voluntarily proposes
to cripple himself in no small degree in the
matter of his resources. Should his proposals become
law—and it is sincerely to be hoped they will—the
process must go on, even when he or his successors
may require to raise money at an obvious disadvantage;
but if he be satisfied to throw the burden
equally on years of prosperity and adversity, surely
this is a matter on which the public generally should
feel no fear.
PAGE
CHAPTER I.
INTRODUCTORY CHAPTER 1
CHAPTER II.
ON THE ORIGIN OF SAVINGS BANKS 18
CHAPTER III.
EARLY LEGISLATION OF SAVINGS BANKS—1817 TO 1844 45
CHAPTER IV.
ON THE PROGRESS OF SAVINGS BANKS UP TO THE YEAR 1844 80
CHAPTER V.
LEGISLATION ON SAVINGS BANKS FROM 1844 TO THE PRESENT TIME 122
CHAPTER VI.
A CHAPTER ON SAVINGS BANK FRAUDS 183
CHAPTER VII.
ON THE DEFICIENCIES OF THE EXISTING SYSTEM, AND THE ESTABLISHMENT
OF SUPPLEMENTARY SAVINGS BANKS 226
CHAPTER VIII.
ON PROPOSALS FOR GOVERNMENT SAVINGS BANKS 269
CHAPTER IX.
ON THE DEVELOPMENT OF THE POST OFFICE SAVINGS BANK SYSTEM 311
CHAPTER X.
ON GOVERNMENT INSURANCE AND GOVERNMENT LIFE ANNUITIES 345
CHAPTER XI.
CONCLUDING CHAPTER 377
APPENDIX 395
INDEX 437
INTRODUCTORY CHAPTER.
Archimedes was wont to say that he would remove the world out of its
place, if he had elsewhere to set his foot, and truly I believe so far that
otherwise he could not do it. I am sure that so much is evident in the
architecture of fortunes, in the raising of which the best art or endeavour is
able to do nothing, if it have not where to lay the first stone.
—Sir Henry
Wotton.
The habit of laying something by in a prosperous season for
the wants of an adverse one is one of the very oldest customs
in the world. All our laws, Divine and human, enjoin the
exercise of providence and frugality as a social, and as a
personal duty. These habits which are inculcated in Scripture
as positive duties, and which find ample illustrations in
many of the arrangements of nature and Providence, have
been common in one form or other to all people in every
country and in every age. In England, in almost everything
relating to the social advancement of the industrial population,
there has been a great and manifest improvement since
the commencement of the present century. In nothing is this
more true than in the incentives and appliances provided for
the growth of provident habits amongst them. An old stocking,
a hole in the floor, or a crevice in the wall, was formerly
a sufficient bank for such of the poor as cared to save anything;
but were that mode of investment unsatisfactory to
some few, it was not possible to obtain better. The change
which fifty years have wrought in the means for saving and
investing small sums of money is remarkable. Not only have
these savings assumed in consequence a variety of different
forms, but they represent a sum which in the aggregate must
be well calculated to astonish anyone who can remember
anything of the last century. Before dealing, however, with
this as our special subject, a few words may not be spent in
vain in endeavouring to trace the gradual advancement made
among the poorer classes, the causes that have led to the
improvement in their condition, and the means by which the
difficulties in their position have been encountered. After
this it will not be inappropriate to refer to what still remains
to be done.
The nineteenth century,
as Mr. Gladstone, in addressing
the working men of Glasgow, has just said, whatever else it
is, is undoubtedly in a new and peculiar sense the century of
the working man.
It is the century which has seen his
position raised, his circumstances improved, new means
organised for his benefit, new prospects opened for the
future, and he has before him—I mean not the individual
but the class—a prospect which, I trust, nothing can mar—of
increased weight, increased consideration, increased usefulness,
increased happiness in the generations to come.
The
Chancellor of the Exchequer might with justice have said
that the second quarter of the present century has seen this
great improvement inaugurated and carried on. Beginning
with 1830, and letting the period of the removal of political
and fiscal burdens mark the commencement of the better
order of things, the progress of political economy, of social
knowledge, and the favouring circumstances of the times
achieved the rest. In the first quarter of the century the
working population, left pretty much to themselves, or given
over to the tender mercies of political demagogues, were
either stolidly indifferent to any improvement, or were kept
in a constant turmoil of excitement and confusion. The
Reform Bill bringing political power to the better class of
artisans, gave a decided stimulus to the intelligence of the
people, and an impulse to the then existing means of education.
This political power brought its responsibilities, and it
may be fairly assumed that increased political knowledge was
the result. Whether so much will be granted or no, it is
certain that schools and educational establishments now
began to multiply in a manner unknown to any previous
decade. It was now that there came demands for knowledge,
and that the demand brought forth supplies of the most practical
kind. The story of the popular literary ventures of
1832—the very first of their kind—need not be repeated
here, though a volume might well be written on the subject,
and showing the influence which they, and other ventures to
which they gave rise, have had on the intellectual progress
of the people. On the demand for knowledge there followed
in quick succession the removal of many barriers that stood
in the way; and more important still, the remissions of, to
the poor man, enormous fiscal burdens which pressed with
great weight upon his energies.[1] It would scarcely be too
much to say that every year for the last thirty years the
working man has found himself better able to cope with the
disadvantages of his position, and, if he should so choose, to
place himself to a very great extent beyond the reach of
absolute want.
We have alluded to the necessity which began to be felt for
the mental improvement of the adult population; still more
important were the steps taken from time to time to educate
the children who are the old people and the adults of the
present day. The present century, among many wonderful
changes which it has witnessed, has seen a complete revolution
in the means of education for the masses. Many generations
since, Milton, with that clear mental vision which was
in him like a kind of second sight, foretold that a time would
come when the bulk of the people would get a better education
in extent and comprehension far more large, and yet
of time far shorter, and of attainment far more certain, than
hath yet been in practice;
and although we may not have
exactly reached the point prefigured by the poet-seer, some
marvellous strides have been taken during the present century.
A dramatist of Milton's own period makes a man
of substance reply, in answer to the query, Can you read
and write then?
As most of you gentlemen do, my bond
has been taken with my mark at it.
[2] At the beginning
of the present century little had been done for the education
of the masses. Grammar schools for the children of the
middle classes, and Free schools, as they were called, for an
infinitesimal fraction of the poor of our towns had been long
established, and, so far as they went, with certain enough
results; but, if we except the establishment of Sunday
schools by Mr. Raikes of Gloucester in 1783, nothing had
been done for the educational wants of the general poor.
Malthus in his Essay on Population,
published twenty
years after this date, says, It is surely a great national disgrace
that the education of the lower classes should be left
merely to a few Sunday schools supported by subscriptions
from individuals,
adding at the same time, that the country
lavished immense sums on the poor which we have every
reason to think have constantly tended to aggravate their
misery.
In their education,
he goes on to say, and in
the circulation of those important political truths that most
nearly concern them, which are perhaps the only means in our
power of really raising their condition, and of making them
happier men and more peaceable subjects, we have been
miserably deficient.
What the state neglected, private
enterprise took up; earnest men like Raikes and Pounds, the
working shoemaker, not only set an admirable example in
their own spheres of labour, but roused to action other men
who applied to the work greater powers of mind and the
benefits of greater system. Dr. Bell and Mr. Lancaster were
two of these, who nearly at the same time expounded their
views of a general scheme for educating the people; and who
were strengthened in their opinion, as one of them tells us,
of its necessity, by the clamour of many who held that the
stability of our institutions was only sure so long as the
people were kept in ignorance. Mr. Whitbread, a statesman
whose name was very prominent about this time for efforts
to promote the interests of the bulk of the people, tried to
induce Parliament at this stage to take the subject into its
consideration, by proposing a plan for the establishment of
parochial schools for the exaltation of the character of
the labourer,
and it would have been well if he had
met with more success. As it was, the sage legislators
of the day, led on by Mr. Windham, considered that such
a plan would be very liable to give an education to these
classes much above their condition, and Mr. Whitbread's
scheme, like many other of his wise proposals to which we
shall have subsequently to allude, was set aside. The work,
however, had begun and could not be stopped by the attitude
of the government. Dr. Bell commenced his system by the
establishment of National schools; Mr. Lancaster, supported
by Nonconformists principally, set up Lancasterian schools.
Although there was for some time much hostility displayed
between the rival factions, both organizations struck deep
into the dense masses of ignorance in our towns and villages.
Then came Government assistance, and gradually that system
of Government education and supervision which, in spite
of many objections to it, has been an untold blessing to the
land.
Within the last thirty years the wise legislation of the
Government has had a direct influence on the progress of
the people in education, and in their social well-being. No
more powerful aid, for example, was given towards the
triumph of enlightenment than the passing, in 1839, of the
penny postage measure, when thousands of the poorer classes
became emulous of each other in learning the rudiments of
education, so as to be enabled to possess themselves of the
untold advantages of this wonderfully successful scheme.
Mr. Laing, the celebrated traveller, after visiting the Continent,
declared that the system of penny postage was far
more likely to cause the spread of education among the
masses than the Prussian system of education, if it came
to be adopted in this country. Only second to the repeal
of the taxes on correspondence was that of the reduction
of the newspaper stamp duty, and, still more recently, the
abolition of the paper duty. The relinquishment of these
taxes redounds to the honour of those who took part in the
agitation for their abolition, and who held that no artificial
impediment, such as a paltry consideration of revenue, ought
to stand between the people and the free circulation of
thought. Lord Brougham said on one occasion that, if
newspapers, instead of being sold for sixpence, could be
sold for a penny, there would immediately follow the greatest
possible improvement in the tone and temper of the political
information of the people.
Lord Campbell once expressed a
hope that newspapers would be sold for a halfpenny. Much
of this has been realized, and the result has been powerful for
good. On this point no one can speak with anything like
the authority of Mr. Gladstone. Speaking of the repeal of
the paper duty, this eloquent statesman has said within the
present year, I did to the best of my ability fight a hard
battle for its repeal. And I find now that not only in its
repeal was there involved the liberation of a great branch of
trade, but there was involved a seed of social and moral good
that has sprung up with rapidity, producing a harvest such as,
I confess, I had hardly been sanguine enough to anticipate.
[3]
The cheap press now finds its way into the homes of the
poorest, keeps them informed of the current public events,
and makes them interested and anxious in all that concerns
their country and its institutions; and, inasmuch as the
press of the present day is, under proper conduct, well
qualified to enlarge the minds of those whom it must instruct,
it is a seed of social and moral good
from which a
constantly-increasing harvest of good fruit may be obtained.
In view of such facts it cannot be said that, during the last
quarter of a century, the industrial classes have been entirely
thrown on their own resources for the means of their enjoyment
and improvement. Over and above the tendency of
the legislation of the past thirty years, the upper classes
have felt it their duty, as it is unquestionably their interest,
to attend to the wants and requirements of those at the
bottom of the social scale. They are the safest when the
vast mass of our working population are the happiest.
Dr. Chalmers must have felt this when he wrote, I would
like to see a king upon the throne, not like an unsupported
may-pole among a level population, but a king surrounded
by a noble aristocracy and gradations below them, shelving
downwards to the lowest basis of the people.
Society has
been very often and very truly likened to a pyramid, at the
apex of which is the throne; gradually descending, we have
substantial strata of the ruling, the upper, and the middle
classes, the rough and strong material at the base not
inappropriately said to represent the unpolished millions
of our industrial population. How far it may be considered
true that the foundations of English society are laid in this
great class, and how much of the social superstructure they
bear on their broad shoulders, we will not attempt to decide.
We will content ourselves with saying that the well or ill-being
of every man forming this great social pyramid must
have a direct or reflex influence on every other man. Homo
sum, humani nihil a me alienum.
Of the hundreds of charitable and benevolent agencies set
on foot to improve the condition of the English artisan we
can only speak in the aggregate. We have the clearest
evidence of our senses, that many of them have not been
established in vain. Some of them, indeed, have been born
and carried on under serious misapprehensions, fatal to their
existence, and so have perished without doing half the good
which the expenditure of money and time would have
warranted. But this is the exception and not the rule.
Under the influence of properly organised and properly
conducted societies of this nature, which have been quietly
working for years, there is a sensible improvement in public
morals among the masses of the people. Within the memory
of the present generation lewdness, profanity, and vulgarity
polluted the atmosphere of most large workshops, and the
effect of all this on the minds of the younger portions of
the workers must have been utterly demoralizing. Then
their hours of idleness were hours of mischief; in them the
old proverb of an idle brain
being the devil's workshop
was fully exemplified; bull-baiting, cock-fighting, low drinking,
and gambling were their amusements; Sunday nor
weekday did their children frequent any school, nor they
themselves any place of worship; they made no provision
for want, sickness, or death, and in times of enforced idleness
they were a terror and reproach to the country, only
kept in order by the strong arm of the law. To say that all
this is changed would be idle, but that much of it is changed
is beyond doubt. Even humble society now quickly lays its
ban upon those who would think to rule the roast
by
proficiency in vulgarity and profanity; in our large workshops
we are assured that acquirements of this nature get
less and less appreciation, nor do their exhibition often
escape rebuke. Under better and happier influences, many
of the rules and social regulations among large congregations
of workmen, such as fines and footings, which have always
offered great encouragement to idleness and intemperance,
have either been done away with or altered for good;[4]
masters not only see it to be their interest to encourage their
men where they can in habits of sobriety and prudence, but
they are now often enabled to enforce regulations tending
to this end which before they were almost powerless to
effect.[5]
The good results of such habits to the industrial classes
themselves and to all portions of society are neither few nor
doubtful. The pursuit of economy and thrift will beget, as
a matter of course, self-dependence; and as soon as men
become socially independent they also become self-relying
and self-supplying. Few men come to the parish who have
ever saved money,
said one large employer of labour before
a Committee of the House of Commons on Poor Laws.
Another never knew a man who had saved a pound out of
his earnings who had in the end become a pauper. But the
good work does not stop here. In proportion as our men
save money,
said another large employer, their morals are
improved; then they come to see that they have a stake in
the country, and behave better.
Or, as Vegetius, describing
the Roman soldier, puts it, knowing that his property is
deposited with the standards in the public chest, he never
thinks of desertion, becomes attached to his standards, and
in battle fights more bravely for them; according to the
nature of man, who has always his heart where his treasure
is.
Arrived at this stage of the upward journey, the provident
man feels the need of education, and must have it;
he must also take a part in exerting an influence among his
fellows, and even in the government of the country, and if
his reading takes a rigid-turn, higher principles of duty are
superadded; he will do his work, whatever it is, in every
sense better. I would rather have,
said another well-known
gentleman, to the Committee just referred to, a
hundred men in my employ who save money than two
hundred who spend every shilling they get; the sober,
saving man is always to be depended upon, and the one
lot in the long run will almost do as much work as the
other.
The improvement of which we have been speaking must
not blind us, however, to the darker side of the picture.
Notwithstanding the improvement which has been made,
and the inestimable good which flows from the practice and
pursuit of frugality and economy, it is still the exception
and not the rule among the bulk of our labouring population.
For the hundreds who look to the exigencies of their life,
there are thousands who are utterly careless of such considerations,
and who, in the coarse enjoyment of the present,
bury alike all thought of the past and all expectation of and
hope for the future. The stigma of improvidence has long
attached, and we fear must yet long attach, itself to the
generality of English artisans. But for this stigma there
would be no operatives in the world equal to the English
operative either in wealth, intelligence, or influence. No one
with any experience in the case, and with any care as to
accuracy, would venture to say that the English workman,
sui generis, is not industrious at his work,[6] but too many can
say that he is not provident in his home.[7] The English
artisan has been said to be at once the hardest worker and
the hardest spender in the world. He works like a horse and
spends like an ass. So foolishly, indeed, is much of this
hard-earned money spent, or misspent, that it were a charity
to withhold it, or if it could be done, to throw it into the
sea. The consequences attending this riot of expenditure
is as natural and as inevitable as any of the laws of God's
government. As one who knows them well, and one who
has done much for the intellectual culture of the better
portion of the artisan class tells us: In a time of prosperity
they feast; in a time of adversity they clem.
Any depression
of trade, be it even of the most transient nature, finds
them totally unprepared for it; those who have been accustomed
to the best wages invariably suffer the most; for,
accustomed to the greatest amount of indulgences, they can
do worst without it. It is such classes as these that must
be reached by some means. In the improvement brought
about in the social habits of the people of late years we
have a happy augury of the future.[8]
It is time that we brought these introductory remarks to
a close. We have to enter upon the consideration of helps
and accessories to the spread of prudential habits among the
working classes. We have to direct attention to the history
and working of some of those schemes which, since the
commencement of the present century, have been started to
teach men self-reliance and self-dependence, and how they
might best help themselves. Anxious not to over-estimate
the importance of the subject, we still think it not too much
to say that on our industrial classes depends very much the
continued and onward progress of the world. Let them but
be thoughtful and sober, and these classes, which are the
direct agents in our wondrous and manifold British industry,
will, not only under circumstances of huge toil and no inconsiderable
danger, continue to provide all classes with the
necessaries or comforts of life, but they will yet strike out
new paths; they will become, in the future, as they have
been in the past, the skilful inventors of new instruments
and new modes. No fact is more capable of proof than
that almost all the successful inventions that have been
given to the world to economize the strength of the human
hand have been either the productions of thoughtful and
industrious workmen, or of those who have risen from that
class. Deduct all,
says Mr. Helps, that men of the
humbler classes have done for England in the way of inventions
only, and see where she would have been but for
them.
Nor is this all. The list would be a long one of
those who have risen by their own industry and perseverance
from the lowest ranks to fill the highest positions in every
department of life. It is notorious,
says Mr. Smiles, that
many of our most successful employers, and some of our
largest capitalists, have sprung directly from the working
classes, and to use the ordinary phrase, have been 'the architects
of their own fortunes;' whilst many more have risen
from a rank scarcely a degree above them. It was the
prudent thrift and careful accumulations of working-men
that laid the foundations of the vast capital of the middle
class; and it is this capital, combined with the skilled and
energetic industry of all ranks, which renders England, in the
quantity and quality of her work, superior to any other
nation in the world.
[9] And what the humbler classes have
done for England in past times they may do, and indeed
must do in the future, if we would keep our country in the
proud position she now occupies in the world. It requires
no prophetic vision to foresee that labour must yet undergo
many transformations; and it is of paramount importance
that the labourers themselves be not only intelligent but
sober and frugal, in order that they may always compete on
at least equal terms with the skilled workmen of any other
nation.
It is far more difficult to point out what course of action
will tend most successfully to secure the fair results of
sobriety and frugality than it is to show how necessary it
is that these virtues should be cultivated. The difficulty
of doing good,
as one writer expresses it, is at least equal
to its luxury.
The task we have undertaken is far from
easy, and beset with perils, but we will endeavour to avoid
all occasion of dispute. The pointing out of safe and profitable
investments for the hard-earned savings of the frugal
and industrious need not and should not be regarded as an
invidious task. It seems to us that, as Savings Banks have
to do primarily with the foundation of the habit of saving
money, and indeed scarcely ever can be considered as competing
with any of the numerous schemes for the investing
of money, the subject should never be regarded with any
jealous feeling. The principle upon which these institutions
are founded interferes,
to use the words of one who has
written most ably on such subjects, with no individual
action, saps no individual self-reliance.
It prolongs childhood
by no proffered leading-string; it valitudinarises energy
by no hedges or walls of defence, no fetters of well-meant
paternal restriction. It encourages virtue and forethought by
no artificial excitements, but simply by providing that they
shall not be debarred from full fructification, nor defrauded
of their natural reward. It does not attempt to foster the
infant habit of saving by the unnatural addition of a penny
to every penny laid by; it contents itself with endeavouring
to secure to the poor and inexperienced that safe investment
and that reasonable return for their small economies which
is their just and scanty due.
[10] Strengthened by such testimony,
we will proceed at once to sketch the history, and, as
far as we are able, to show the benefits to be derived from
the various kinds of banks for savings established from time
to time amongst us.
| Repealed or
Reduced. | Imposed. | Diminution
or Addition. |
|---|
| £ | £ | £ |
| Customs | 12,208,604 | 3,291,820 | D. | 8,916,784 |
| Excise | 5,607,000 | 6,380,000 | A. | 773,000 |
| Property and Income Tax | 16,265,000 | 14,764,000 | D. | 1,501,000 |
| Other taxes | 2,608,800 | 600,000 | D. | 2,008,800 |
| Stamps (including succession duty) | 1,428,000 | 2,411,200 | A. | 983,000 |
| Total | £38,117,404 | 27,447,020 | D. | 10,670,384 |
ON THE ORIGIN OF SAVINGS BANKS.
It would be difficult, we fear, to convince either the people or their rulers
that the spread of Savings Banks is of far more importance, and far more
likely to increase the happiness and even the greatness of the nation, than the
most brilliant success of its arms, or the most stupendous improvements of
its trade or its agriculture. And yet we are persuaded that it is so.
—Edinburgh
Review, 1818.
Great Britain can with justice, we think, lay claim to the
original establishment of the system of Savings Banks. One
well-known writer[11] on this and cognate subjects has traced
them to Switzerland, if not to Hamburg, at a time prior to
any experiments with them in this country; but from the best
investigation we have been able to make, the institutions in
question were something very different from Savings Banks
as English people understand them, dealing, as they did, in
business more like the sale of deferred annuities. The institution
at Hamburg, which is said to have been founded in
the year 1778,—and which is interesting to readers of history
as being one of those whose coffers the First Napoleon swept
of their funds, thus giving it its death blow,—simply took
the spare cash of domestic servants and handicraftsmen, and
granted annuities on the members arriving at a certain age.
No withdrawal of money was allowed. In this country the
first proposals for a bank for savings were made in 1798 or
1799, according to the judgment of the reader as to which
of the two original schemes best deserves the name of Savings
Bank, or whether either of them is entitled to the honour.
The two persons whose names it is customary to speak of in
connexion with the earliest people's banks are those of the
well-known Priscilla Wakefield, and the Rev. Joseph Smith
of Wendover. In the mind of each of these estimable persons
we think the question of becoming the bankers for the poor
around them was at first only a subordinate measure, and
quite auxiliary to other matters deemed of greater importance.
Mrs. Wakefield's scheme arose out of a well-meant
anxiety to better the condition of the weaker and more
defenceless portions of the community, an object to which
she devoted much of her literary ability, and was first started
in 1799, for the benefit of women and children in her own
village of Tottenham, and under her immediate superintendence.
Members paying according to their age certain sums
per month became entitled to a pension after sixty years of
age; in case of sickness, four shillings a week; in case of
extraordinary misfortune a certain amount could be withdrawn;
in case of death a sum of money was allowed for
the funeral. Honorary members paid subscriptions, which
went to meet deficiencies and current expenses. In 1801
there was added, first, a fund from which loans were made to
those who had been members for six months; and second, a
regular bank for savings. The interest given in the latter
case was the same as that charged in the former, or five per
cent. The clauses relating to children were such as almost
to entitle the founders to the honour of being the originators
of Penny Banks, if nothing else; juveniles were encouraged
to deposit their penny per month, which was kept for them,
along with interest, until such a time as the accumulation
was needed for apprentice fee, clothes, or such like object.
The management of this Parent Institution, as it may well
be called, was equitably divided amongst the honorary and
the benefited
members. In 1804 the Tottenham Bank
was more regularly organized, and Mr. Eardley Wilmot, M.P.
and Mr. Spurling, were appointed Trustees.[12]
The Wendover institution, which was really started a year
before that at Tottenham, partook at first so largely of the
nature of a charity as to make it almost of the character of
a private undertaking between a rich and benevolent rector
and his poor parishioners. Still, there was here the germ of
that of which we are in search. Mr. Smith, and two of his
richer parishioners, who joined him in the work, circulated
proposals in the summer of 1798 to receive any surplus
money which any of the working population round them felt
they could spare—provided it were not less in amount than
twopence; to keep a strict account of every deposit made in
this way; and then to repay the money during the winter
season, or generally about Christmas, with the addition of
one third of the whole, which would be allowed as interest
on their deposits—or to speak, perhaps, more correctly, as a
bounty for their economy. Any depositor might receive his
money before Christmas on demand; and it was further
stipulated that, in case of sickness or loss of employment,
these fruits of his savings should not preclude him from
parish relief, if otherwise he could obtain it. A Christmas
dinner was the comfortable addition to the good round sum
which, generally, was garnered at this time, the dinner, too,
being provided by the three directors. It is rather curious
that the time chosen to receive deposits was limited to
Sunday evenings; but we suppose this would be justified by
the scriptural text, not generally applied in this fashion,
which they chose for their motto, Upon the first day of
the week, let every one of you lay by him in store, as God
hath prospered him.
For several years these benevolent
gentlemen carried on their operations, and had generally
about sixty subscribers, who deposited from five to ten
pounds every season.
In February, 1807, Mr. Whitbread introduced his Poor
Laws Amendment Bill into the House of Commons, and
went over the whole ground of the condition and the wants
and requirements of the working population in an eloquent
manner. That speech—which must have been of several
hours' duration—dealt with the past legislation on the subject,
and commented on the various steps which ought to be taken,
over and above the mere collection of poor-rates, to alleviate
the condition of the poor. After dwelling on the subject
of national education, and hinting at a mode such as was
eventually brought into operation many years afterwards,
Mr. Whitbread went on to describe the want felt by the poor of
some safe and profitable investment for their earnings; that
so few are found to make any saving may in a great degree
be accounted for by the difficulty of putting out the little
they can raise at a time.
He described the action of
Friendly Societies, and showed that at that early period they
were open to the same objections that are now being continually
raised against them. Mr. Malthus,
[13] said Mr.
Whitbread, had just proposed the establishment of county
banks, but he would go farther than Mr. Malthus, and extend
his principle.
It seemed to him that there would be less
trouble in his proposals than in the less extensive proposals
of Mr. Malthus.
Mr. Whitbread then went into the matter of his proposals
under this head, and we give his own words:[14] I beg
gentlemen not to start at what I am about to suggest, which
to many who hear me may be quite new, but to afford it
their cool and deliberate consideration. I would propose the
establishment of one great national institution, in the nature
of a bank, for the use and advantage of the labouring
classes alone; that it should be placed in the metropolis, and
be under the control and management of proper persons;
that every man who shall be certified by one Justice of the
Peace to subsist on the wages of his own labour shall be at
liberty to remit to the Accountant of the Poor's Fund (as I
would designate it) any sum from 20s. upwards, but not
exceeding 20l. in any one year, and not more than 200l. in
the whole.
He then proceeded to show how the money
might be invested in Government Stock, in the name of
commissioners to be appointed, and by this means interest
would be allowed to depositors at the highest rate possible.
The plan,
added Mr. Whitbread, will be more amply
detailed in the Bill itself, and such regulations are provided
as will, with the intervention of the Post-office, give ample
facilities to its execution. Gentlemen need not to be told
that the perfection attained in the management of that great
machine is such as to give the most easy and rapid means
of communication with the metropolis, much greater, indeed,
than usually subsists between the remote parts of any county
and its capital town.
Mr. Whitbread then went on to
say, that in addition to this form of investment, the same
machinery might be employed to give those who might wish
it an opportunity of purchasing annuities by the payment
of stated regular sums up to a certain age; and even to
insure their lives. So strong, indeed, was this feeling, that
he eventually proposed, as an addition to his bill, that under
the same management there should be an Insurance-office
for the poor, with properly-calculated tables and modes of
payment. We need not here dwell upon the miscellaneous
items which he fully went into in his admirable speech. He
finally begged the patient attention of the House and the
country to the consideration of the general outline of the
plan which he had proposed, in order to encourage the
labourer to acquire property, and to secure to them the
certain and profitable possession of it when acquired. He
had the greatest hope of a happy effect from its being put in
practice. If the poor,
said he, should be found to avail
themselves of it to any extent, the advantage to them and
the country would be incalculable, and the expense attending
it would speedily be covered.
This Bill went through
several necessary stages; there was little objection manifested
to Mr. Whitbread's plans for securing the savings of
the poor, but there was also little anxiety to forward the
measure. Mr. Whitbread in this, as in many others of his
wise proposals, was far ahead of his time, and he suffered
the matter to drop towards the end of the session.[15]
One at least of the important organs of public opinion
frowned upon Mr. Whitbread, and laughed at his scheme; an
organ whose frown and whose laugh was no joke at that date.
It has not unfrequently been a subject of remark how persistently
the Quarterly Review stood in the way of progress,
clogging the wheels of all kinds of reform. In matters of
this kind, however, it generally showed a most enlightened
policy, and was not unfrequently in the van of improvement
instead of obstruction. It was not so always with its more
powerful rival, the Edinburgh Review. It commented upon
Mr. Whitbread's strange project
of uniting the savings
banks throughout the kingdom in one national establishment,
and his minor proposals under that head, and very warmly
ridiculed all. Neither from theory nor from experience,
it concludes an article, are we able to discover any kind
or degree of good as likely to result from so vast a project;
though it is easy to see that it might be productive of infinite
confusion, trouble, and expense. In fact, every savings bank
is perfectly competent in itself to transact the whole of its
affairs, and can have no great difficulty to provide the requisite
facilities or securities without either disturbing its
neighbours, or withdrawing the attention of Government or
the Legislature from their proper concerns.
Before we come to the plans and exertions of Mr., afterwards
Dr. Henry Duncan, of Ruthwell, we ought to speak
of the original foundation of the savings bank at Bath.
The idea of establishing a bank for taking the wages of industrious
domestic servants only, and granting them interest
for their money, originated with Lady Isabella Douglas in
1808. The managers consisted of four ladies and four
gentlemen. No servant could deposit more than 50l., and
the entire amount of the funds in the bank could never
exceed 2,000l. A servant might deposit up to 50l., withdraw
the money and place it in safety, and deposit again in the
servants' bank. Interest was allowed at four per cent., and
the money could be withdrawn at will. This scheme, so far
as it proceeded, was very successful; so much so, that an
endeavour was made in 1813 to convert it into a general
savings bank, which should know no limit, either in the
amount of the deposits or in the class of people from whom
the deposits could be taken. For this purpose a committee,
highly respectable for their rank, ability, and benevolence,
met frequently at Bath; but only to find, after much
deliberation,
that these conditions were utterly impracticable.
[16]
In 1815, the Provident Institution of Bath was
projected, on very different conditions; and this time, through
the exertions of Dr. Haygarth and the Marquis of Lansdowne,
who was president, the bank was successfully floated. This
bank was essentially the first of its kind in this country, and
upon its basis have been formed almost all subsequent banks
of any note. The sums deposited were invested in the
public Funds, and each man's interest at this early period
varied according to the price of the Funds on the day when
the investment was made for him.
In November, 1815, the Provident Institution of Southampton
was established, principally through the exertions of
the Right Hon. George Rose, who was appointed president,
and who soon afterwards wrote an account of the undertaking.[17]
The exertions of Mr. Rose on behalf of savings
banks will frequently require to be spoken of in subsequent
pages. The Southampton Bank was an improvement on the
Bath institution, having copied several of the details of the
bank at Edinburgh. The average rate of interest given was
four per cent. Notice had to be given for withdrawing deposits.
One regulation, new at that period, which was a
suggestion of Mr. Rose, empowered the officiating clergyman
or other responsible person, in adjacent parishes, to receive
sums on account of the institution,
and remit them to the
treasurer at Southampton. It was stipulated, however—and
this had an ill effect upon the public, though the proviso was
by no means unreasonable in itself—that the institution
should not be answerable for the money until it absolutely
reached the office. We will here refer to two other original
English savings banks, quite equal in importance to those
of Bath or Southampton. The Exeter Savings Bank, since
better known as the Exeter and Devon Bank, was established
in 1816, principally through the exertions of Sir John Acland,
one of the county members. The rules of this bank limited
the amount which could be deposited to 50l. in the first
and second years, and 25l. in any succeeding year. The distinguishing
feature about the Exeter bank was the application,
attended with much greater success, of the Southampton
plan of rural or branch banks. In 1817, there were sixty
of these branch banks, all contributing sums to the parent
bank through village clergymen, who acted as the agents.
The plan only entailed a trifling expense for printing, postage,
&c., and even these expenses were paid out of a fund raised
by voluntary contributions. At the date of the first enactment
relating to savings banks, this bank had 946 depositors, who
had paid in 14,525l. in 1,380 deposits. The interest given
was at the rate of four per cent. Within the two years of
which we have spoken, only 984l., or about a fifteenth-part of
the deposits, were paid as withdrawals.
The original Hertford Savings Bank was a charitable
concern, after the fashion of Mr. Smith's at Wendover.
The Sunday Bank,
as it was called, was established about
the year 1808, by the vicar of the place, the Rev. Thomas
Lloyd. Sums of from sixpence to two shillings were received
by the benevolent pastor from his poorer parishioners
after morning service on Sundays, and in this way about
300l. a year was invested between 1808 and 1816. The
money did not accumulate from year to year, but was repaid
on New Year's day, with the addition of ten per cent. interest,
which the vicar was able to give by the help of some
charitable funds at his disposal.
We must now, without referring to other early banks, such
as the important institution in St. Martin's Place, London,
and other societies, turn to Dr. Duncan, whose exertions
on behalf of savings banks were much greater than those
of any other person, and which exertions, more than any
original suggestions which he may have made with regard
to them, entitle him to the foremost place in any history
of savings banks. Dr. Duncan's claim to be considered the
founder of savings banks rests on the ground of his having
originated and organized the first self-sustaining bank, and
in having succeeded in so arranging his scheme as to make
it applicable not to one locality only, but to the country
generally.[18] It remains to be seen whether the bank established
by Dr. Duncan in his own village answers the description
here given of the distinctive character attaching to
the banks of his proposing. It is very true that all the
banks established up to 1810 partook very much of the
character of eleemosynary institutions, supported in great
part by the benevolence of the rich, and therefore very unsuitable
to some localities, where the benevolent rich did not
preponderate. Dr. Duncan's great merit—merit for which
he has received neither enough credit nor praise, but which
should entitle him to a high place in the ranks of those who
have sought to do their fellow-men good service—seems to
us to lie in having deeply studied the nature and wants
of the industrial classes; in having modified existing proposals
in order to make them suitable to the general requirements;
and, finally, in having laboured with unremitting energy
to make his plans known around him, and to secure their
general adoption. A writer in the Quarterly Review of October,
1816, incidentally referring to Dr. Duncan and his proposals
for parish banks, says, It is our belief, founded on no
slight investigation, that but for this Scotch clergyman, there
would at this time have been found only a few insulated
establishments for the savings of industry, of which the intelligent
and wealthy would have had little knowledge, and
from which the lower classes in general would have derived
no advantage.
Henry Duncan, who was the son of a Dumfriesshire clergyman,
was born at Lochrutton manse, in that county, in the
year 1774. At the age of twenty-five he too was ordained
a clergyman, and appointed to the charge of the parish of
Ruthwell, a remote locality in the same county. When very
young, it is said, he showed remarkable powers of mind; and
it appears he early exercised them in writing for the young,
with whom he was an especial favourite. Before he was
thirty he had made great progress in geology, and a book he
published on the subject when he was about that age gained
him the friendship of Dr. Buckland and Mr. Sedgwick. Perhaps,
however, he showed most zeal during all the periods of his life
in the prosecution of schemes for the benefit of the poor and
distressed around him; and his manse in this way, lonely as
it was, and far from the busy haunts of men, soon became
a place of resort to much of the young and remarkable
talent to be found in that part of Scotland. David Brewster,
and James Grahame, the Sabbath bard, Dr. Chalmers, and
Dr. Andrew Johnson, were frequent visitors beneath his roof;
Robert Owen, then an amiable enthusiast in the walks of
philanthropy; Thomas Carlyle, a young man who had not
then emerged to fame; Robert McCheyne, and many others
who subsequently rose to eminence, were friends of the
village pastor, and frequently met to talk over with him
different schemes of practical benevolence. Few, indeed,
says his biographer, whose lot has been cast in a retired
spot like that of Ruthwell, have been more fortunate in
attaching the affection and good-will of so many of the best
class of their fellow men,
and the boast is neither an idle nor
a vain one. Mr. Duncan must have been no ordinary man to
have brought round him such a circle of friends. His literary
abilities were of no mean order, but gave a charm to all he
wrote. Delighting in humble usefulness, he edited, in 1809
and 1810, a number of Tracts for the instruction and moral
improvement of the lower orders,
to use the vulgar term
then in constant use. The greater part of the work seems to
have been the production of his own pen. One series of these
Tracts, called The Cottage Fireside; or, The Parish Schoolmaster,
was afterwards published separately with Duncan's
name attached, and had a very large sale at the time. In
point of genuine humour and pathos,
says a high authority
of that period,[19] we are inclined to think it fairly merits
a place by the side of 'The Cottagers of Glenburnie;' while
the knowledge it displays of Scottish manners and character
is more correct and more profound.
Whether the plans
which he laid for the benefit of the poor, and which occupied
so much of his after life, came up at any of the réunions at
his house, we have no means of knowing. However it was,
we have Mr. Duncan's own statements to show that they
were originated in his mind by the frequent discussion at
that time of the question of poor-rates, and the endeavours
on the part of many of his friends to prevent their introduction
into Scotland. It is also clear, that though Mr. Whitbread's
name is never mentioned, the parish minister had
heard of his scheme, and had been much struck with it.
The result of Mr. Duncan's reflections on the subject were
given in the Dumfries Courier, with which paper he seems to
have had some literary connexion. A discussion ensued in
the columns of this paper, in the course of which some books
and pamphlets on cognate subjects were forwarded to Mr.
Duncan by Mr. Erskine, afterwards Earl of Mar. Among
the pamphlets he found a very curious and ingenious paper
by John Bone, the originator of a charitable institution in
London, the plan of which was there sketched. The Society
was called by the whimsical title of Tranquillity, or an
institution for encouraging and enabling industrious and
prudent individuals to provide for themselves, and thus effecting
the gradual abolition of the Poor's Rate.
This pamphlet,
which we have carefully examined, contains, among much
matter of a visionary and impractical kind, many proposals
for the safe keeping of the savings of the poor similar to
those acted upon in the case of the charitable bank at
Tottenham. These subordinate provisions attracted the
notice of Mr. Duncan, as he himself admits, and he thought
that if he could in any way reduce them to a regular scheme,
the result would be beneficial to the working classes, wherever
they might be adopted. He resolved to form some such
scheme and give it a fair trial in his own parish, when, if
successful, he would endeavour to get it introduced elsewhere.
With this object he published a paper, as a sequel to the
discussion he had commenced in its pages, in the Dumfries
Courier, in which paper he directly proposed to the gentlemen
of the county the establishment of a Bank for Savings
in all the different parishes of the district. The only way,
said Mr. Duncan in making these proposals, it appears to me,
by which the higher ranks can give aid to the lower in their
temporal concerns, without running the risk of aiding them
to their ruin, is by affording every possible encouragement
to industry and virtue; by inducing them to provide
for their own support and comfort; by cherishing in them
that spirit of independence which is the parent of so many
virtues; and by judiciously rewarding extraordinary efforts
of economy, and extraordinary instances of good conduct.
Friendly Societies, excellent as they are in their way, do not
in every respect appear to be calculated for this intended
effect; advantages are held out which cannot always be
realized, but in simple Parish Banks there can be no objection
of this sort.
Mr. Duncan met with little response
to his appeals from the gentlemen of the neighbourhood, but
he resolved to make the attempt single-handed. The fact that an
institution of the kind contemplated could possibly be carried
out by a single individual, however benevolently disposed,
is evidence enough of that person's sagacity and perseverance;
but the ordinary difficulties were greatly increased by the
circumstances in which this particular parish where Mr.
Duncan was located was placed. Few parishes, we are told,
presented so many and such unusual obstacles to the progress
of a scheme of this kind. Almost every adult member
of the parish belonged to some Friendly society, and many
of these found it extremely difficult to fulfil their engagements
to the established societies. Again, there were few,
if any, resident heritors or proprietors of the land to whom
Mr. Duncan could look in any difficulty that might arise, or to
whom he could look for any assistance of a pecuniary kind.
Nevertheless, he resolved to commence. He had arrived at
that experience of human kind which made him understand
that, in even the poorest family, there are odds and ends
of income which are only too likely to get frittered away in
thoughtless extravagance.
Could he but induce the mass
of the people to comprehend the value of the savings which
might by a reasonable economy be gathered from this source
alone, and could he succeed in supplying the means of investing
these savings securely, affording them at the same time
the prospect of a fair rate of interest, not from charity, but
from the resources of trade, he was confident the hopes he
cherished would be realized.[20] The scheme was started in
May, 1810, and savings to the amount of 151l. were deposited
under the stipulated conditions during the first year. In the
two succeeding years they rose to 176l. 241l. and in 1814
to 922l.
Mr. Duncan's work was far from completed when even his
most sanguine expectations were realized in the progress
of the Ruthwell Bank. His advice and assistance was now
continually sought in aid of the formation of similar institutions,
both in Scotland and England. In 1813, the Edinburgh
Society for the Suppression of Beggars
conceived the
idea of adding to their already extensive operations a Savings
Bank on some similar principle to his. A neighbour of Mr.
Duncan's, who was also a member of the Edinburgh society,
communicated a full account of the Ruthwell Bank, and all
the accounts of it which had up to that time been published.
The opening of the Edinburgh Bank, of which we shall
presently speak more at length, took place in 1814. In 1814,
Mr. Duncan paid a long promised visit to Kelso, in order to
forward the proposals for a Savings Bank at that place.
Mr. Duncan relates[21] that during his journey to Kelso he
passed through the town of Hawick, and was much gratified
to find that his scheme was freely talked of there. In the
shop of one of the booksellers of the town he found a large
number of copies of an account of the Ruthwell Bank wet
from the press, which had been taken from the pages of the
Dumfries Courier and supplied by himself. These handbills,
which likewise gave a copy of the Rules of the Parish Bank,
had been printed by order of the magistrates of the county
at their ordinary meeting. Finding that his scheme had
many favourers in Hawick, he promised to call on his
journey home and assist them in the formation of a bank.
On his arrival at Kelso an important meeting was held,
with the Duke of Roxburgh in the chair, when Mr. Duncan
addressed the meeting; the Kelso Savings Bank, one of the
most important of the Scotch institutions, being the direct
result. The number of letters which Mr. Duncan received
and wrote per day is described as something enormous; they
arrived by every post, not only from his own and the sister
country, but even from Ireland. Not only did these letters
contain requests for information and advice; but they frequently
were of a controversial nature, and generally from
such people, ardent friends of the poor, as required consideration
and some reply. That Duncan was an agreeable and
clever correspondent is evident from his published letters;
that this correspondence was voluminous we can well believe.
With a view of lessening the amount of his labours in this
respect, he was induced to publish a full account of his
scheme, together with all the rules and regulations for its
working; and this pamphlet, which came out in 1814, went
through three editions very rapidly. Even at this date
Duncan's Essay on the Nature and Advantages of Parish
Banks
will well repay perusal, and besides, its intrinsic
worth as a literary production is interesting as the first
published pamphlet on a subject which will always possess
attractions to the philanthropist, if to none else. We have
the clearest evidence that Mr. Duncan laboured with uncommon
zeal to spread a knowledge of the plans he proposed,
and to help to their general introduction; and it is a matter
of wonder to us, that, whilst many names are familiar to the
world who did not do a tithe of the real hard work he did
to benefit the poor around him, Duncan's name should be
for all essential purposes really unknown, and that but for
the filial regard of his son, scarcely an account of his
existence should have survived him.[22] Speaking during his
life time, the Quarterly Review warmly noticed his labours
of love: Justice leads us to say that we have seldom heard
of a private individual in a retired sphere, with numerous
avocations and a narrow income, who has sacrificed so much
ease, expense, and time, for an object purely disinterested, as
Mr. Duncan has done.
Some years before his death, in
1846, Mr. Duncan attained to the honorary degree of Doctor
of Divinity, and he was for one year chosen Moderator of the
Assembly of the church to which he belonged. The Duncan
Institution at Dumfries, one of the few mementos of the man
who did so much for Savings Banks, serves the purposes
of a Savings Bank in the principal town of his native
county, a statue of Dr. Duncan being very appropriately
placed in front of it.
Not long after the establishment of the Edinburgh
Savings Bank, there was great contention as to whether
that bank or Dr. Duncan's at Ruthwell had the priority of
merit on the score of general advantage. Pamphlets were
written on the subject, not always without bitterness, and
even the great Reviews interfered. The dispute was scarcely
called for at that early period, seeing that posterity is best
able to judge of such matters, and there was nothing
dependent upon an earlier settlement. The Edinburgh bank
followed the village bank by three and a half years, so it was
not a claim for priority of establishment. The question as to
which of the two possessed the materials best fitting it to be
a model for all subsequent banks would not be so easily
settled; and, in fact, this was the point in dispute. Seeing
the question was one of considerable importance for many
years, and is so still in an archaic point of view, we cannot
do better than attempt to give some idea of the difference
between them, as gathered from the two accounts now before
us.[23] Unquestionably the arrangements of Mr. Duncan suffer
considerably by a comparison of points, and though we
admire the character and arduous labours of the man, there
is not the slightest need that we should abstain from hostile
criticism of his measures. For example, Mr. Duncan laid
great stress on the fact of his bank being the first self-sustaining
bank, and the first not partaking to any extent of
the nature of a charity. It will be seen how far this was
absolutely true. The Ruthwell institution consisted of ordinary,
extraordinary, and honorary members. The ordinary
members were the poor who deposited their savings; the
extraordinary, those who paid to an auxiliary fund an
annuity
of 5s., or a single donation of 2l.; and honorary
members were those who paid to the same fund an annuity
of 1l., or a single donation of 5l. The general business of
the society was transacted by a Court of Directors, consisting
of a Governor, five Directors, a Treasurer, and one or
more Trustees, to be chosen from the honorary and extraordinary
members. The court acted under the superintendence
and control of a Standing Committee, which consisted
of fifteen persons chosen from the self-same kind of members.
Both these bodies were subordinate again to the General
Meeting, composed of all the members of the two courts
mentioned, and all the ordinary members of six months'
standing. We scarcely think there could be any possible
necessity for such elaborate machinery. In circumstances
such as the rural population of Ruthwell, were cast, one
would have supposed that rules as little stringent as
possible, hampered with conditions as few as possible,
would be needed, to induce that population to save the
trifles they could spare. Inducements were held out to
encourage and reward the frugal and attentive; and so far
admirable: but the system of fines inflicted upon those who
did not deposit a certain sum each year was a questionable
proviso. Mr. Duncan put the case very plausibly in his
Essay, where he said the chief defect of the scheme was,
originally, the want of some strong motive for regular payments;
and, as what we have no pressing motive to do at a
particular time we are apt to delay till it is beyond our
power to do it at all,
he decided to fix a small sum as penalty,
should not a certain moderate amount be deposited each
year, a decision which we think was neither proper nor wise.
The regulations acted upon in the case of a proposed new
member were, we think, equally uncalled for, and likely to
scare the well-disposed away, rather than induce them to join.
Before a person's first deposit could be received, the elaborate
machinery of management commenced to make inquiries into
the age, the family affairs, and moral conduct of the proposed
contributor, and according to the report which followed, it
was considered whether his deposits would be admitted at
all, or if admitted, what rate of interest it would be proper to
allow. The society lodged its money with the British Linen
Company, and got five per cent. interest for it. Four per
cent. was the usual interest allowed to depositors; to those,
however, of three years' standing whose deposits reached 5l.,
an indulgence of the higher rate of 5 per cent. was made,
provided the depositor wanted to get married; in case of
his having arrived at the age of fifty-six; to his friends in
case of his death; or, fourthly, in case the possession of the
money should appear to the Court of Directors, after due
inquiry, to be advantageous to the depositor or his family.[24]
To put a climax, as it were, upon this charitable disposition
of a man's own hard-earned savings, we would merely recite
the fifth statute, which directs that when the depositor shall
have become incapable of maintaining himself, from sickness
or otherwise, a weekly allowance may be made to him, at the
option of the Court of Directors, out of the money he has
deposited.
The auxiliary fund, to which the honorary and extraordinary
directors were required to contribute, was employed
in awarding premiums to those who were most regular with
their deposits, especially to those regular depositors who
should have exhibited proofs of superior industry or virtue.
It may well be thought that, in such delicate matters as were
thus dealt with, differences of opinion would arise, so it was
wisely provided, that any aggrieved member should have the
power of appeal from the Court of Directors to the Standing
Committee, and from the Standing Committee to a General
Meeting, whose decision should be final. The example set
by Dr. Duncan at Ruthwell,
says Mr. Smiles,[25] was shortly
followed in many other parishes in Scotland, and in most of
the principal towns in England,
and, so far, we have seen this
is true. What follows is certainly open to question: In
every instance, the model of the Ruthwell Bank was followed,
and the vital, self-sustaining principle was adopted. The
Savings Banks were not eleemosynary institutions, nor dependent
upon anybody's charity or patronage; but their success
rested entirely with the depositors.
Our readers may judge
from the details of management which we have given how
far this is borne out by the facts of the case; for ourselves,
we are slow to take from the merit which undoubtedly should
attach to Dr. Duncan. There were, doubtless, many circumstances
connected with the minister's own parish which
made the arrangements to which we have referred more
excusable; but there must have been many districts where
the poor would never suffer themselves to be patronized,
petted, or provoked in the same manner. Hence the inapplicability
of the details to the country generally. Real, honest,
independent workmen have always had a great dislike to be
experimented upon, raised,
or elevated,
in the sense that
some men use the terms; what was felt to be required at this
early period was, that there should be afforded some facility
for the depositing, without any unnecessary trouble or
annoyance, such small sums as the poor might have to spare,
and wish to save; and that this money should not only
be safe, but produce interest according to its value in the
market, and neither more nor less. That arrangements made
with this laudable object should be accompanied with others
which should have the tendency, however remote, to disgust
and repel the poor, was unfortunate, to say the least. Any
interference with, or superintendence over the family affairs
or the private conduct of members, was likely to be, it seems
to us, most irksome, and no less to the poor than to the rich.
The arrangement by which various rates of interest were
given to different classes of depositors, according to their
good or indifferent characters, was eminently arbitrary, if not
unfair.
We have already alluded to the Edinburgh Savings Bank,
instituted after the parent bank at Ruthwell, and to some
extent upon its model; the offspring, however, in many
points presented a happy contrast to the Ruthwell Bank, in
the simplicity and greater fairness with which its affairs were
managed. As it is now a matter beyond doubt that many
banks formed subsequently were started on the model of the
Edinburgh institution, a few words of description of its principal
new features may not be out of place. All depositors
were paid the same rate of interest; they deposited their
savings without any preliminary investigation of any sort;
and whilst the management was not left, even in part, to the
classes it was designed to benefit, contributors had nothing to
do but pay in such sums as suited them, and withdraw at
pleasure, altogether as the classes above them would deal in
the ordinary bank. From the pamphlet published in the
same year as that of Dr. Duncan's, and to which we have
already alluded, we are enabled to give some account of the
plan of working in the Edinburgh Bank; and it is very
interesting at this distant period to see how nearly identical
with the modern Savings Bank this early one was, or rather,
we think we ought to say, how closely the example of the
Edinburgh Bank has been followed. The bank, we find, was
open every Monday morning between nine and ten o'clock.
No less sum than one shilling could be received. The uniform
interest paid was at the rate of four per cent.[26] The
money might be paid back at any time on a mere demand
and production by the depositor of his deposit sheet. Each
depositor was furnished, on making his deposit, with a duplicate
of the leaf of the ledger in which his account was kept;
on each succeeding visit he brought the duplicate with him,
and each separate transaction was entered in the ledger and
on the duplicate at the same time. This arrangement, as might
have been expected, soon gave place to the more convenient
bank-book at present in use. It will be observed that up to
this time, and some years subsequently, the Savings Banks
had no connexion with Government, and the funds realized
were accordingly deposited with some banking company, and,
as a rule, the interest received was at a higher rate than has
since obtained. One feature in the Edinburgh Bank, as in
other Scotch banks of the period, is unknown at present.
When the deposits of any one person amounted to ten pounds
(the minimum sum received by an ordinary bank), he was
presented with an interest-note upon any banking firm he chose
to name for the amount. Henceforth he held an account with
the bank in question, receiving a higher rate of interest, and
a strengthened security for his money. The Savings Bank,
however,—and this is noteworthy,—was still open to him as a
bank for his small accumulations as before, and until they
again amounted to the sum of ten pounds. The Edinburgh
Bank, thus restricted to such small sums and simple operations,
was able to get through its work with little trouble
and a minimum of expense. Perhaps here the endeavour to
save expense proceeded to too great an extent, and resulted
in more gratuitous service than the depositing classes at any
time have cared to see. No honest man would object to
have the legitimate expenses of a careful management
deducted from the interest of his savings. In recommending
the system to others, the penurious style in which it was
thought not improper to do the business is manifest in the
language adopted. It can scarcely be doubted,
says the
author of the pamphlet, that in every parish and district
there will be found persons benevolent enough to perform the
office of attending to this work, viz. one hour per week,
gratuitously, by turns; and it will be easy to procure a room
rent free. Thus the only expense of management will be
the purchase of stationery; and for this purpose the saving
already described (a small difference between the interest
paid and the interest given) will be amply sufficient, without
lowering the rate of interest allowed to the contributors. It
may be supposed, indeed, that some expense may be incurred
for transmitting to the great house (the banking company
chosen) the money deposited in the Savings Bank.
But
we are persuaded,
adds this man of cheap expedients, that
in every case a safe and free conveyance will be furnished by
the principal proprietors or inhabitants of the parish.
The
growth of Savings Banks, and the progress of banking
generally, soon left out of view all such minor considerations
as these. Such was the excellent institution at Edinburgh,
and it deserved all the success it obtained. At first it was
thought that its connexion with the Society for the Suppression
of Beggars retarded its progress; and it was not at
all wonderful that this was the case.
Perseverance, and the laborious exertions of its originators,
especially the efforts and high character of Mr. (afterwards
Sir William) Forbes, soon made up what the bank may have
lost by this connexion, and in five years from its formation
was in every respect a decided success. Without ostentation,
and without trenching in any respect on the independence
of those who needed their assistance, the originators
of this bank went on, not only in Edinburgh, but in other
Scotch towns to which their influence extended, and with
which the metropolis has always some connexion, and their
endeavours to cope with the improvidence and carelessness
of that period resulted, in a few years, in a complete spread
of the principle. What society owes to the men who at this
early date laboured with such zeal and devotion in behalf of
their fellows, little thought has ever been given; the names
of many of them have not even been preserved. It ought to
have been far otherwise. It would be difficult, we fear,
says Francis Jeffrey in an early number of the Edinburgh
Review, to convince, either the people or their rulers that the
spread of Savings Banks is of far more importance, and far
more likely to increase the happiness, and even the greatness
of the nation, than the most brilliant success of its arms, or
the most stupendous improvements of its trade or its agriculture.
And yet we are persuaded that it is so.
[27]
Before we close this notice of original Savings Banks, we
would refer to their establishment in Ireland. The first
Savings Bank in the sister country of which record is made
was one established at Stillorgan in 1815, and was called the
Parochial Bank.
The Rev. John Reade, the parish minister
of that place, was not only the founder of this bank, but also
of the second venture of the kind; for, on removing to
Clondalkin, he would seem to have taken his benevolent
disposition with him, and to have repeated the process among
the poor of his new charge. A peculiar arrangement existed
in these early Irish banks, of which no trace is found elsewhere.
The deposits of each subscriber were kept separately,
and open to the inspection of the owner when he brought
any fresh deposit, on which occasion he might count his
money if he chose. So soon as the deposits of any person had
reached 1l. the money was invested in Stock, and produced
interest, but not till then. Both banks eventually formed
the nuclei for ordinary Savings Banks after the act relating
to Irish banks was passed in 1817. The Belfast Savings
Bank, opened in 1810, was the first formed after the ordinary
model, and has always been very successful.
EARLY LEGISLATION ON SAVINGS BANKS—1817 TO 1844.
The promotion of economical habits amongst the people is so much a
matter of national concern, that we cannot conceive any direction in which
the powers of Government would be more beneficially directed than in giving
effect to schemes calculated to produce such valuable social results among the
humbler classes of the people.
—Mr. Smiles.
It was not till Savings Banks had been regularly organised
in this country, and not before they had achieved some considerable
success, that the Legislature interfered in any way
with regard to them. That the ruling classes, however, were
not slow to encourage these undertakings is sufficiently
manifest, when it is remembered that the first legislation on
the subject dates from 1817, or only seven years after Dr.
Duncan had organised his parish bank; and further, that
the purport and effect of the bill then introduced was not to
embarrass and hamper the new institutions, as was too often
the case with new and partially-tried measures, but to offer
them protection and encouragement. Prior to 1817, Savings
Banks were simply voluntary associations, established, as we
have already seen, by some benevolent gentlemen, who took
a sort of leading part in the affairs of their respective neighbourhoods,
and who were actuated in doing so by their desire
to afford to their poorer neighbours help and inducement
to save money. Up to this time the confidence entertained
by the poor in the integrity and well-meaning of the rich
was the only security they had that their money was in
safe keeping; and it is only fair to add, that, so long as
Savings Banks were promoted and kept up in this semi-paternal
fashion, that confidence was seldom, if ever, misplaced.
Savings Banks were soon seen, however, to possess
germs of national good which would require greater means
of development to be brought to bear upon them; and it was
quite as plainly apparent that the more they extended, the
greater the necessity became that they should be legally
recognised and protected. The first mention of the new institution
in Parliament was made by the Right Hon. George
Rose, who was at the time Treasurer of the Navy, and one of
the Committee of Council for the affairs of Trade and Foreign
Plantations, and who, at the close of the session of 1815,
and again in April, 1816, asked leave to bring in a bill, to
afford protection to Banks for Savings.
Mr. Rose, for the
next two years, took a leading part in all discussions on the
subject, as indeed he did on all kindred subjects.[28] He had
written on Poor Laws and Benefit Societies; and, on account
of his having, towards the close of the last century, carried
through Parliament a bill legalizing Friendly Societies, was
generally looked upon as an authority on such subjects.
The first speech of the hon. gentleman on Savings Banks
was remarkably able: he referred to the immense good which
such banks as those of Edinburgh and Bath had done, and
were capable of doing. The instances which had come before
him of persons who before the establishment of Savings
Banks had never saved a penny, but who then had made
ample provision for a rainy day, were cheering in the extreme.
He proceeded to give particulars of several instances of the
kind, mentioning them, as he put it, to induce hon. gentlemen
to exert themselves, and that they might not sit with
their hands before them, believing that nothing could be
done.
The moral good to be expected from these banks
was great and obvious. He hoped and expected that they
would gradually tend to revive in the lower classes that
decent spirit of independence, now almost extinct, which
shrinks from accepting parochial relief; the poor man would
learn to regard his own industry and labour as the source
whence he was to derive temporary aid in the hour of sickness,
or permanent support when the approaches of age
should unfit him for active exertions. Not that this matter
was applicable only to the poor; a consideration of the subject
in all its bearings might well be given to it by the rich
on their own account; he thoroughly believed that the poor-rates
of the country would diminish in proportion to the
spread of Savings Banks among the masses. Mr. Thompson,
a Yorkshire member, expressed his warmest approbation of
the proposed bill. In Yorkshire, he knew there was a great
desire to establish Savings Banks of this sort, but the better
classes were afraid of doing so, on account of their apparent
complexity, and because they had not received up to this
time the sanction or countenance of the Legislature. He
hoped the provisions of the proposed bill would be as simple
as possible, and afterwards that the bill and its clauses would
be made as public as possible. Hundreds of working men,
to his knowledge, might easily save ten shillings a week,
whereas they did not then save a penny; nor could they be
blamed to any great extent so long as they were without the
requisite machinery for acting differently. Establish these
banks, and place their working under proper Acts of Parliament,
and he should then say that many who were accustomed
in times of scarcity to solicit parochial relief would
have no excuse for their conduct; if they did not avail themselves
of the opportunity of becoming independent he would
rather punish than assist them. Thus early were our legislators
alive to the maxim that the only true secret of assisting
the poor is to make them agents in bettering their own
condition.
The Chancellor of the Exchequer (Mr. Vansittart)
believed that nothing tended more to the independence of the
poor than their learning to support themselves by their own
exertions. He thought the object of the proposed bill would
be congenial to the feelings of the whole House. On the part
of the Government, he was ready to offer his best assistance
on behalf of an institution such as the Savings Bank, where
rich and poor might meet together and mutually combine in
promoting, under Divine protection, their natural rights.
There, forgetful of those petty distinctions which temporary
circumstances had created, they met as brethren, each
to do his duty to his neighbour.
After an Irish member
had expressed his wish that the same bill might be extended
to Ireland, where, he truly said, such habits as these banks
inculcated were most urgently needed, even more so than in
England, this one-sided debate was closed.[29] The bill was
read a first time on the 15th of May, 1816. It provided, that
any number of individuals might enrol themselves as Trustees
of a Provident Institution or Savings Bank at the Quarter
Sessions. It was not meant by this to give any power to
Justices of the Peace, but simply that the act of enrolment
might thus be made in as public a manner as possible. It
was further arranged, that the Rules proposed for the management
of the new Savings Banks should in like manner be
left with the Clerk of the Peace for the respective counties.
The bill authorised the Trustees or Managers to appoint such
officers as were likely to be needed, and required that in all
cases where the persons were to be entrusted with money,
they should give reasonable security. It was only further
provided, that depositors should not be prevented from applying
for parish relief, but that, if any dispute arose on
this point, the decision in the matter should be left with the
magistrates in Quarter Sessions. The session being near its
close, and several members having expressed their sense of
the importance of the subject and the necessity of producing
a well-considered bill to regulate these banks, the bill was
withdrawn till the next session. On the 15th of February,
1817, Mr. Rose again returned to the subject, and got leave
to re-introduce his bill. He did not on this occasion enter
minutely into the consideration of Savings Banks, further
than to express a conviction he had, which daily became
stronger,
that these institutions, if properly directed, would
have a very direct influence on the vexed question of Poor
Law relief. He contended, that, if they became generally
introduced through the length and breadth of the country,
they would gradually mitigate, and then do away with,
the evils attending the system of the English Poor Law;
and he very reasonably urged that any measure which
would tend, even remotely, to such a desirable object, was
deserving of, and ought to have, the hearty support and
countenance of the Legislature. Mr. Curwen, an authority
on this phase of the subject, held that there could be only
one opinion as to the utility of the banks, but he was satisfied
it was an error to imagine they would essentially contribute
to the alleviation of the present distressing situation
of affairs.
Nothing short of a measure which in its nature
might have a compulsory influence over the minds of the
people, to teach the poor and the peasantry that the means
of relief, of content and happiness, were within the reach of
their own exertions and industrious application, would be
effectual. After a little further opposition, during which another
member said that the bill would do more harm than
good—that Savings Banks were going on extremely well
without any Act of Parliament, Mr. Wilberforce, ready at
all times to forward any measure which seemed likely to
benefit the poorer and more defenceless portions of society,
congratulated his friend on his proposals, and said that the
system of Savings Banks pleased him most because it was so
eminently adapted to teach the poor how much they might do
for themselves by their own self-denying exertions. This was
one of the class of things for which he, the House, and the
country ought to be extremely indebted to all who had been
instrumental in originating it and bringing it to greater
perfection. Whatever difference of opinion,
continued Mr.
Wilberforce, there might exist as to the Poor Laws, it was
of all things desirable to countenance and foster so sanative a
principle as that on which Savings Banks were founded.
The
second and principal reading of the bill took place on the 15th
of May, 1817, on which night many petitions were presented
in its favour, and only three—viz., from Norwich, Hertford,
and St. Paul's, Covent Garden—against it. All opposition,
however, to the bill resolved itself into simply contesting
one or two of its clauses. An attempt was made to throw
out the clause which obliged the Trustees of Savings Banks
to vest all moneys received by them in the Public Funds,
several members contending that at any rate some of the
money might be much better employed on mortgage, to the
relief of many different interests in the immediate neighbourhood,
and to the greater productiveness of the money
so lent. The arguments used on this occasion were very
similar to those occasionally used now in relation to the
same subject, and they were then as unavailing as they have
been subsequently: the preponderating opinion was that the
safety of the investments was, and ought to be, the first
and greatest consideration. The clause, however, which proposed
the giving of premiums out of the parish funds to
those contributors who had done best in the way of saving
money, fared worse, being rejected in committee almost
unanimously. The growth of such principles could not be
forced, and, if they grew at all, they would do better without
the crutches of eleemosynary aid. At the third reading, a
spirited contest arose about the proviso that depositors in
Savings Banks should not be disqualified from receiving
parochial relief. Mr. Rose contended that anything, which
would have a tendency to make the poor think that the
richer classes were legislating with ulterior objects in view,
such as to get rid of poor-rates, would throw obstacles in
the way of Savings Banks. There would be no need to
think of such considerations in a few years, when Savings
Banks were more firmly fixed amongst the institutions of the
country; it was highly expedient, however, that they should
now be allowed to have their weight. In a few years,
argued he, the poor will have formed habits of saving, and so
they will have become independent, and be above throwing
themselves on the parish, at any rate with impunity. Mr.
Wilberforce held and expressed the same view, which Lord
Milton and others opposed; the clause was retained, notwithstanding,
by a majority of thirty-three in a House of
eighty-seven members. With this discussion the bill passed,
and became law in August, 1817. As this bill[30] is the beginning
of legislation on the subject of Savings Banks, we
would here state in outline the principal objects with which
it dealt. A sort of Supplementary Act, cap. 105, was passed
to apply more particularly to Ireland, to suit the Irish
members, who, when the matter was under discussion, argued
that the same Act would not deal so well with Ireland, and
who, therefore, wished the two countries treated separately.
Both the acts required that the Rules of the proposed Bank
for Savings should be deposited with the Clerk of the Peace
of the county in which the bank should be situated, though
no discretionary power was left with the magistrates in the
matter. The Trustees and Managers were prohibited from
receiving any profit from any transactions in these banks, and
were empowered to pay over the moneys they received into
the Bank of England, or Ireland (as the case might be), to
the account of the Commissioners for the Reduction of the
National Debt, the latter being instructed and empowered to
invest them in Three per Cent. Bank Annuities. Interest on
money thus deposited in the hands of Government was
guaranteed to the Trustees of Savings Banks at the rate of
3d. per cent. per day, or 4l. 11s. 3d. per annum. The Act
restricted the amount which any one depositor could place
in a Savings Bank in England to 100l. in the first year, and
50l. in any subsequent year. In Ireland the limitation was
50l. in any year, though why this distinction was agreed
upon does not appear.
It was not long before it was seen that the Act just
described was defective in many particulars, and further
legislation rendered necessary. During the year which
elapsed after the passing of the Savings Bank Act, the
progress of these institutions, in so far as the number and
amount of their deposits were concerned, was great beyond
all expectation. In nine months from the date of the bill
of 1817, the large sum of 657,000l. had been deposited. The
largest amount received at the National Debt Office during
that period from any one bank was 32,000l., remitted from the
flourishing Exeter bank; the smallest was received from a
new bank just then opened at St. John's, Wapping, for the
benefit of sailors living in that locality. By the middle of
the year 1818, or less than twelve months after the passing of
the first bill, there were no fewer than 227 banks established in
England and Wales, and about an equal number in Ireland and
Scotland. That the encouragement which the bill had given
was real is evident from the fact that more than half the
entire number of English banks were first opened in 1817-18.
So rapid indeed had been the development of the measure,
that it was soon apparent that the increase of deposits was
in a ratio far beyond any possible increase in the amount of
wages or profit from which small savings could have been
made. No doubt that now, for the first time, many hoarded
savings saw the light, and began to bring in to their owners
a return; but even this does not account for such an increase
of business. Towards the close of 1817, 20,000l. was
deposited in one day, in a town in the North of England
where a bank had just been opened, and it was known that
very little of this money belonged to the industrial classes.
The interest given for the investment made, it appeared,
was attracting a much higher class of depositors than it was
ever sought to encourage, or than the Act was intended to
benefit. The interest guaranteed by Government has already
been stated. In amount, it was at least 11s. 3d. more than
the interest yielded by any other Government security, while
Consols did not bring in more than 3l. 5s. per cent. Many,
we believe, in the first instance put their money into the
Savings Banks to afford encouragement to their poorer neighbours
or dependents, and in order to inspire them with
confidence: and it will be well understood how necessary
this was at the outset, seeing that at that time there were few
means of inculcating sound political knowledge, or, indeed,
information of any sort, among the great mass of the people,
who too often were swayed hither and thither at the mere
whim of some noisy and ignorant demagogue. Whether
or not this sufficiently accounts for the fact of the better
classes contributing to the early Savings Banks, it is clear
that all classes soon found out that it was not possible to
do better with their money, and hence allowed it to remain
where it was. Several banks were very careful to exclude by
their rules all but mechanics, servants, and persons in similar
ranks of life, but the rest either had no such rules, or were
very careless about enforcing them. One gentleman, possessed
of 40,000l. was known to have deposited large sums of money
in one Savings Bank in the names of his six children. On
the 17th of March, 1818, the Chancellor of the Exchequer,
influenced by such abuses as these, asked leave to bring in
a bill to amend the Act passed last year. No trace of the
proceedings of Parliament with regard to this little bill remains,
but it seems only to have been meant as a temporary
measure of relief till the whole subject could be more
effectually grappled with. It simply provided for some alterations
in the forms of debenture, gave power to Justices of
the Peace to reject, for a sufficient reason, any Rules deposited
with their clerks, and prohibited the arrangement by which
a person might invest in a Savings Bank by means of a
ticket or number, and without disclosing his or her name.
Shortly after this period, in the year 1819, a question was
put to the Chancellor of the Exchequer in the House, which
seems to have raised some merriment among the members.
Ridiculous as it might seem, it only reflected the spirit in
which many people spoke of the measures which had recently
been passed with regard to the compulsory investments with
Government of the money placed in the banks. In Lancashire,
aided and stimulated by Mr. Cobbett, who all along
sneered at the bubble
of Savings Banks, the people got
up an absurd cry, and long kept it up. Mr. Wilbraham, a
Lancashire member, asked Mr. Vansittart if there was any
tittle of truth
in the reports that were so prevalent that
Government was about to seize the funds of the Friendly
Societies and Savings Banks, and apply them to the payment
of the National Debt. This report,
said the hon. member,
had been caught up by persons little conversant in political
matters, and had actually caused the breaking up of Friendly
Societies, to the great loss of those who had claims upon
them.
He had no doubt the course of legislation had led
to this report being circulated by designing persons, and
though quite aware that it was impossible for the Government
to touch any of these funds, he would like to hear a
declaration on the subject from the authority which in that
House was alone competent to give it. The Chancellor of
the Exchequer said, that even after much experience of the
extent to which malignity and absurdity could go in the
propagation of reports injurious to the Ministry, he had not
been prepared for such a rumour as this. It was utterly
groundless; there was not the smallest foundation for it,
either in fact or possibility. Under the authority of Parliament,
the money belonging to the institutions in question
was kept entirely apart from the public money, and even if
the Treasury were base enough, they had not the power to
misappropriate these funds.
[31] Mr. Brougham observed that
this was not the first time that such reports had been circulated,
and such absurd cries raised. When the Education
Committee was sitting, it was asserted that its intention was
to seize all charitable funds, and to turn the two Universities
into charity schools. In such cases as these facts or reason
on such reports were very ineffectual, but he hoped that in
this particular instance they would be of some avail.
Before we notice the further progress of legislation in respect
to Savings Banks, it would be well to refer to their progress
and operation in Scotland. None of the Acts passed up
to this time in any way related to the Scotch banks. When
Mr. Rose's bill was before Parliament, its application to
Scotland was successfully opposed; a separate bill was introduced
by Mr. Douglas, the member for the Dumfries burghs,
in 1818, but this did not pass. The failure to obtain this
act was said to be owing exclusively to the necessity for
legislative interference not being felt in Scotland; it seems
now much more likely that the failure was owing to the want
of unanimity among the Scotch promoters of Savings Banks,
Mr. Duncan taking a decided stand with the member whom
he had influenced so far as to get him to bring in a bill, and
the promoters of the Edinburgh bank, on the other hand, who
kept up in this way the long-standing dispute which they
had always had with the Father of Savings Banks.
[32]
There was certainly some reason why the same legislation
was unnecessary for the two countries. There were many
circumstances which rendered interference on the part of the
Legislature necessary, or at least expedient, in the case of
the English banks, and these circumstances scarcely in any
way applied to Scotland. The chief of these were the Poor
Laws, and the want of secure places of deposit for small
sums to bear interest, and be payable on demand; the
English bankers did not usually allow interest on money
lodged with them, whereas in Scotland they gave a liberal
return for it. The general dispute was at its height in 1819,
when the Edinburgh Society published a report against any
State interference, and when Mr. Duncan, who, as we have
already said, was a strong advocate for parliamentary encouragement
and protection, replied in a lengthy and able
letter,[33] in which he clearly showed that difficulties and discouragements
would surely be felt in the progress of Savings
Banks, if they were not arranged according to law. The
radical difference observable in the two classes of banks—and
there were at this time 182 Savings Banks in Scotland with
7,000 depositors, and deposits to the amount of 30,000l.—was
the difference between the Parish Bank at Ruthwell, and the
Savings Bank at Edinburgh, for on one or other of these
models all the Scotch banks were with very few variations
formed. Mr. Duncan placed, or intended to do so, the
management of his bank in the hands of the whole body of
depositors; the Edinburgh bank excluded all popular interference
in its management, and left every one to deal with it
or not, at their pleasure. The Ruthwell bank confessedly,
and as we have seen, partook of the nature of a Friendly
Society; the Edinburgh bank as nearly as possible approached
to the character of a commercial undertaking. The founder
of the former was thus an advocate for minute regulations,
while the patrons of the latter wished to be left at liberty
to manage their affairs in their own way, and only to call in
the help of the Legislature when real grievances needed
redressing.
With the exception of a short Act[34] passed in 1820, by
which it was provided that charitable institutions might deposit
a whole or a portion of their funds with the Commissioners,
no further legislation on Savings Banks was attempted
till 1824. In this year the Chancellor of the Exchequer
(Mr. Robinson) took up the matter where Mr. Vansittart had
left it, and carried a Bill through Parliament still further
to amend the law.[35] With a view to remedy still more completely
the evil of classes, other than the industrious ones,
investing their money in Savings Banks, this Act provided
that the sum which could be deposited during the first year
should be limited to 50l. and should stand at 30l. for any
succeeding year. To provide against anything like evasion
of these regulations, a form of declaration was introduced,—which
we scarcely need say has existed up to the present
time,—stating that the subscriber to it had not contributed
to any other bank than the one at which he made the
declaration. The Chancellor of the Exchequer endeavoured
to carry a clause which required that this declaration should
be subscribed by the proposed depositor in his own name,
and own handwriting,
in place of a mark or initials, but
this was wisely discarded. This absurd proviso would have
put an educational test in the way of those very classes
whom, to the exclusion of all others, it was desirable to
attract to Savings Banks. Another important clause succeeded
better, and was plainly proper to the object meant
to be served by it. No depositor could by this further
clause invest more than 200l. excluding interest, in any
Savings Bank. The case of the funds of Friendly Societies
was the subject of another clause. It was only four years
since these societies, as we have seen, were allowed to deposit
their funds through the medium of Savings Banks; but the
Act of 1820 had given rise to so much abuse, or to so much
that seemed like abuse, that some alteration was necessary. The
high rate of interest which had been guaranteed by law to
these banks induced, not only individuals of rank and property,
but large charities to place their funds in them: the
result was a great burthen to the public, inasmuch as the
excess over the ordinary rate of interest for public securities
was thrown in by the Legislature with the object of increasing
the provident disposition of the poor. As it was
seen that, if this state of things continued, the original object
of State assistance and countenance to Savings Banks would
be defeated and the public in some degree prejudiced, it was
proposed that no friendly society or charitable institution
of any kind should deposit their funds in any bank. If the
alterations now proposed did not suffice to preserve Savings
Banks from the inroads of the rich, the Chancellor of the
Exchequer saw no other means of meeting the evil than
by reducing the interest given. He should feel most reluctant
to weaken the confidence which the public reposed
in these banks, and which rendered them one of the greatest
blessings ever conferred upon the country;
but the evil
must be met in one way or the other, or with the loss of
their normal character they would lose their efficiency.
The Act of Amendment then went on to deal with
the responsibility of Trustees, the giant difficulty of Savings
Banks from that time until now. The same arguments
were used at this early period as at different times subsequently.
Those who placed money in Savings Banks ought
to have some security that that money was not made away
with by some one through whose hands it would pass;
and the Trustees, who had the sole control over the affairs
of the banks, and appointed all the subordinate officers, were
the persons who ought to give some security. On the other
hand, enforce to the full the liability of Trustees, and the
most able persons would be deterred from accepting so much
responsibility, and would give up the connexion which they
had already voluntarily assumed. It was now therefore
settled that the Trustees should deposit all the money they
received with the National Debt Commissioners, and that
they should be held liable in case of default only to a certain
amount. A legally and efficiently constituted bank should
consist of twelve Trustees, each liable for 50l., or 600l. in the
aggregate. This Act, it was also decided, should refer to
Ireland equally as to England.
Early in February, 1828, Mr. Joseph Hume—who had not
then been many years in Parliament, but who had already
commenced that course of conduct in connexion with the
public expenditure which, at first, gained him little but ridicule
and derision, and subsequently the respect of friend and
foe and the confidence of the entire nation—took up the
question of Savings Banks, or more especially that part
of it which related to the question of expense to the
Government. Mr. Hume had already asked for returns
of the progress of Savings Banks; but on the 6th of this
month he required the production of an account, showing
the amount of interest that had been allowed to them since
they had become connected with the State in 1817. He
tried to disabuse the mind of the members of the House as
to his having any prejudice against Savings Banks. He told
how he had been one of the earliest friends of these institutions
and heartily wished well to them. When he found,
however, that they had already cost the country half a
million sterling, and were likely to cost still more as their
numbers and efficiency increased, he thought it was high
time to have the matter inquired into, and this expenditure
stopped. Mr. Hume said that his original notion about
Savings Banks,—which was likewise that of all he knew who
had endeavoured to establish them,—was that each bank might,
and therefore ought to maintain itself, and, whilst it enabled
the poor to invest safely their 10l. or 20l. as cheaply and as
profitably as the rich could their larger amounts, it should
neither be a burthen on the charity of the benevolent nor
an incubus on the State. Mr. Hume stated that he believed
it would be found that up to January, 1827, the amount paid
to Trustees, over and above what the money remitted to the
National Debt Commissioners had produced, was 452,000l.
By the arrangement of the Act of 1817, which ordered that
a separate account should be kept of the moneys deposited
with Government on behalf of Savings Banks, he was enabled
to tell exactly how affairs stood. He found that Government
had obtained interest on the Savings Bank Fund to the
extent, in round numbers, of 2,250,000l. and had paid to
depositors for the same 2,703,000l. Hence the loss[36] above
given, which he had no doubt by the time the accounts were
finally made up for the financial year ending in March would
be half a million sterling. Mr. Hume went on to state that,
if honourable members thought it proper after an inquiry
to pay 40,000l. or 50,000l. a year, as a means of encouraging
these banks, let them do so; perhaps he would not make any
more appeals about it; at any rate, however, in this case, and
if this state of things continued, he thought it would be only
fair that Government, and not separate directors, should have
the management and control of these banks. There was no
possible uniformity among them; some paid one rate of interest,
and some another; some charged much higher for
paid assistance than others, and yet, with unvarying uniformity,
he might have said, the executive granted the same
high rate of interest to all, irrespective of how they disposed
of it. The Returns were ordered nem. con. The Statement
which Mr. Hume more particularly referred to is in its proper
place among the Accounts and Papers
for that year, and
is as follows:—
| Years. | Dividends on Stock
Received by
Commissioners |
Interest Paid
Trustees. | Difference. |
|---|
| £ s. d. | £ s. d. | £ s. d. |
| 1817-18 | 32,071 1 5 | 44,909 5 1 | 12,838 3 8 |
| 1819 | 92,865 13 7 | 106,963 4 9 | 14,097 11 2 |
| 1820 | 124,278 8 2 | 141,488 1 3 | 17,209 13 1 |
| 1821 | 163,631 1 1 | 182,649 13 3 | 19,018 12 2 |
| 1822 | 225,252 6 1 | 253,629 4 11 | 28,376 18 10 |
| 1823 | 298,270 10 1 | 340,757 0 2 | 42,486 10 1 |
| 1824 | 379,411 6 7 | 468,261 12 1 | 88,850 5 6 |
| 1825 | 450,027 13 0 | 562,759 0 4 | 112,731 13 4 |
| 1826 | 478,286 5 3 | 592,390 18 11 | 114,104 13 8 |
| 1827 | 480,851 13 0 | 615,516 1 7 | 134,664 8 7 |
| 1828 | 515,569 9 4 | 675,753 16 7 | 160,184 7 3 |
A month afterwards, the Returns having been furnished,
Mr. Hume returned to the charge. The accounts had more
than borne him out in all particulars. He now again asked
if the daily loss ought to be suffered in the financial state the
country was in. The Act regulating Savings Banks ought to
be repealed, and another passed in its place. His opinion
was, decidedly, that Government should just give the interest
which it realized by the Savings Bank money, and not add
a farthing to it. At a change in the price of Stock,
added
the reformer, Government might very possibly lose three or
four millions, and yet the depositors would not suffer the loss
of a penny.
Much as he wished for the progress and
advancement of the poorer classes—and few, we think,
worked harder to obtain it for them,—he contended that
these classes ought to be placed precisely in the same situation
as other people who had capital to invest. Another point
which Mr. Hume dwelt upon was the surplus money which
managers of Savings Banks had in their possession untouched,
after paying their depositors all the interest that
was allowed them. At that time Mr. Hume stated that the
surplus in the Newcastle Savings Bank, after paying the
expenses of management, amounted to 4,810l. and in the
Exeter and Devon Bank to a still larger sum; and this money
which had been paid by Government and saved after the
Trustees had given a liberal interest to depositors, was now
turned into an invincible argument for some change in the
law. Mr. Hume concluded with expressing a hope that
Government would bring in a bill to amend the law relating
to Savings Banks, or at any rate not throw any obstacles in
the way of some private member doing it. The Secretary
of the Treasury said, in reply, that Mr. Hume had stated the
case fairly and correctly; and that the Chancellor of the
Exchequer fully intended during the present session to bring
in a bill with which he hoped to satisfy all classes.[37] The
vicissitudes of party prevented this high Government functionary
from carrying out his laudable, but very impossible
design. In a few weeks the Chancellor is on the other side
of the House, and another occupies his place. A bill, however,
was introduced on the 5th of June, 1828, by Mr.
Pallmer, which, supported by the new Administration, was
passed through Parliament, and became law in the same
year.[38] In introducing this bill, Mr. Pallmer said it was
quite obvious that the laws which affected Savings Banks
ought to be as clear and as distinct as possible. Savings
Banks were now very important institutions, and the welfare
of thousands was connected with them. At that time there
were no less than five Acts of Parliament regulating Savings
Banks, and these Acts, which contained 150 clauses, involved
an enormous amount of confusion and perplexity. He
would in the place of these five Acts, propose an Act, simple
and consolidated, of thirty or forty clauses. He would endeavour
to deal with all the questions of interest allowed,
surplus money, responsibility of trustees, and to make the
necessary restrictions towards carrying on the banks safely.
And leave was quickly given to proceed with the bill. Nothing
transpired in the passage of the bill through Parliament
of much moment: so little hold were questions of this
nature supposed to have on the public mind, that it is barely
alluded to in the pages of Hansard. It seems never to have
occurred to the reporters of the day, that posterity might
wish for a detailed account of the steps by which institutions,
such as these we are considering, arrived at some important
position, and so important indeed as to make every step of
that progress interesting after the lapse of years. Two or
three little incidents have survived this neglect. Mr. Lewis,
for example, during the second reading of the bill, proposed
a clause for preventing the National Debt Commissioners
from taking more than 20,000,000l. from the Savings Bank
Trustees, and ordering that, when that amount had been
invested, the funds should be declared full. The answer
which Mr. Goulburn, the new Chancellor of the Exchequer,
gave to the hon. member was, that he would take a day
or two for consideration, after which he should be able to
say better whether such a clause ought, or ought not, to be
agreed to.
Two or three days before there had appeared
in the Times newspaper a well-written lampoon on the new
Ministry, over which, it will be remembered the Duke of
Wellington presided as Premier, and one verse ran—
"To rest from toil our Great Untaught,
And soothe the pangs his warlike brain
Must suffer when, unused to thought,
It tries to think, and—tries in vain."
Sir Joseph Yorke embraced the opportunity to compliment
the Chancellor, amidst great laughter, on being such a
valuable auxiliary of the 'Great Untaught.' The right
hon. gentleman evidently was not one who spoke on the
strength of two bottles of wine: his eloquence was certainly
not of a fiery description;
and more banter of the like
description. Mr. Lewis, however, withdrew his amendment,
as did also Mr. Hume, who, when the amount of interest
which should be given was discussed, had proposed that, in
place of a reduction from 3d. to 2½d. per diem, the interest
on deposits should only be at the rate of 2d. per diem. The
bill was only further opposed in some trifling particulars
and, when finally carried, was ordered to come into operation
in the November of the same year. The statute was entitled,
An Act to consolidate and amend the Laws relating
to Savings Banks,
and repealed all other Acts previously in
force. From this circumstance, the clauses of the bill of
1828 are generally known as the Governing Statutes
relating to Savings Banks. As the great majority of these
clauses are still in force, it will suffice, when we come to give
the present Act, to simply mark those which were originally
passed in 1828, and so distinguish them from the clauses
passed in 1863. We will here give the principal items and
arrangements of the new bill. The Act provided that the
rules of every Savings Bank should be entered in a book,
which book should be deposited with the Clerk of the Peace:
the Clerk of the Peace was directed to submit this book to
a barrister, who, under the terms of the Act, would be
appointed by the National Debt Commissioners.[39] The duty
of the barrister would be to certify that the Rules of the
proposed bank were strictly according to law, and this certification,
after it had been made, was to be laid before the
Justices of the Peace in Quarter Sessions, who were empowered
under certain circumstances to reject the same, or
any part thereof. If admitted, as they most commonly
would be, after certification, the Rules became binding on
depositors and officers. The interest to be given to depositors,
as we have already stated, was reduced by this Act
from 4l. 11s. 3d. per cent. per annum, to 3l. 16s. 0-½d. per
annum. It was provided that savings of Minors might be
invested, and that deposits might be made by married
Women. Charitable Societies were again authorized to invest
sums not exceeding 100l. per year, or 300l. in the whole.
Friendly Societies were also authorized to subscribe any
portion of their funds into Savings Banks, but a Friendly
Society enrolled after the date of the bill could not invest
more than 300l. principal and interest included. Trustees
were not to receive from any one depositor more than
30l. in any one year, nor more than 150l. in the whole
and, when the deposit and interest amounted to 200l.
interest was to cease. Depositors might withdraw their
money and again subscribe, providing they did not do it to
a greater extent than 30l. in any one year. Deposits might
be withdrawn from one Savings Bank and placed in another.
Should a depositor die leaving any sum exceeding 50l. the
same was not to be paid without probate or letters of administration.
Administration bonds for effects under 50l. were
exempt from stamp duty. Section nine exacted that no
Trustee or Manager should be responsible except for his own
wilful neglect or default; and finally, and a matter of considerable
importance, the bill provided that once in each year
the Trustees of every Savings Bank should make a Return to
the National Debt Office, in which a full Financial Statement
should be made of the condition of the bank; and a minor
clause enacted that depositors should be entitled, on payment
of one penny, to a printed copy of this Annual Statement.
For several years after the thorough change which we have
just described, the institution of Savings Banks increased and
prospered wonderfully; up to the year 1833, we find that no
steps were taken, nor agitation of any sort got up, to alter
the law with regard to them. In this year, some further
changes took place; but if we except a slight modification
which was made in the arrangements under which depositors
could withdraw their money,—a longer notice being thought
necessary,—nothing was done which did not place additional
powers in the hands of Trustees.
In April, 1833, Lord Althorp, Chancellor of the Exchequer
in the Government of Earl Grey, influenced, by a suggestion
of Mr. Woodrow, introduced a bill to grant immediate and deferred
annuities through the medium of Savings Banks, and to
grant them on so small a scale as to place them within reach of
the humblest classes. Something of this sort was undoubtedly
required, and the necessity became more and more felt on
account of the action of Friendly Societies. The poorer classes,
it would seem, had scarcely any means of investing in pensions
for their old age: although nearly 5,000 Friendly Societies
had up to this time proposed to make some provision of
the kind, all but thirty-nine had in 1833 entirely relinquished
this class of business. It may be said that Friendly Societies
gave up this business because so few availed themselves of
the provision that was made. From the very constitution of
these societies, however, the poor had little confidence that
any one of them would last so long as to give them those
benefits in their old age for which they would have to
subscribe for a long term of years. Benefit Societies might
be broken up at any time by two-thirds of their number; this
sort of thing was constantly occurring, generally leaving the
oldest members in the lurch. An attempt, to which we have
not yet alluded, was made even before Savings Banks were
established, to give the industrial classes a chance of providing
for their old age, and preventing them from being left
destitute of other support than parish pay, or a home in the
workhouse. Baron Mazeres, so early as 1773, who published
a work on Annuities, succeeded in getting a bill introduced
and passed through the House of Commons—though unfortunately
it was lost in the House of Lords—which would
have made the legislation of 1833 less necessary. Lord
Althorp now stated that the object he had in view was
simply and solely to benefit the working classes. The lowest
sum which could be granted as a Government Annuity was
30l. a-year. He would propose to make the sum 20l. The
annuity should not be assignable, or transferable, except in
cases of bankruptcy or insolvency; and in the case of the
purchaser, either through necessity or choice making default
in the annual payments, or dying before the annuity commenced,
the whole of the money subscribed should be paid to
him or his executors. The tables would be calculated at the
rate of 3l. 15s. per cent. and this rate being less than the
ordinary Savings Bank rate, would enable the Government to
introduce the clause for returning deposits. To no class, it
was thought, would these proposals be of more service than
to members of Benefit Societies, who would thus be enabled to
secure superannuation on Government security, and confine
the objects of the society in which they might be members
to relief in cases of sickness or death. Lord Althorp calculated
that a person at the age of twenty-five, paying six
shillings a month as a deposit into the Savings Bank, would
be entitled at the age of sixty to an annuity of 20l. a-year.
He contended, that, from the calculations which had been
made, Government could not lose by these arrangements, and
he thought the principal feature of deferred annuities for a
small amount, with money returnable in the cases above
stated, might be made,—if the working classes would only
avail themselves of the measure,—to tend greatly to their
worldly comfort and advantage. Mr. Thomas Attwood, the
member for Birmingham, who made some remarkable speeches
in the House on matters of finance, but especially with regard
to Savings Banks, objected not only to this proposal, but to
legislation of any sort with regard to them. The money
deposited in Savings Banks might as well be put into the
country banks, for the average amount of each deposit, he
was sure, was over 10l. and 10l. was the minimum sum which
country banks would take. He did not believe in paying so
much to keep up such establishments, especially when they
were not wanted.
To such lengths will intelligent men go,
and to such an extent will they shut their eyes! Mr. Attwood
put his views before the House quite mildly in this instance,
as compared with subsequent speeches. Mr. Brotherton, a
member greatly respected in the House, who had once
belonged to the ranks of the people, and who might therefore
be supposed better to understand their requirements, felt sure
that Savings Banks had been productive of great national
good, and could not be too numerous. Mr. Pease, the Quaker
member for South Durham, hoped that nothing would be
done to induce the working classes to try country banks
in preference to Savings Banks. In his own county 700,000l.
or 800,000l. had been lost in country banks, and therefore it
would be highly dangerous to advise the poor to lodge their
money there. Mr. Pease's position, as a large employer of
labour, gave his remarks weight, when he trusted that the
clause in the bill of 1828, which provided that Accounts of
Savings Banks should annually be laid before the Government,
would be carried out in its entirety; there was little
hope of Savings Banks turning out uniformly profitable to the
industrious classes, except Government maintained a strict
superintending control over them.
The Chancellor of the
Exchequer said this was done, and in two or three instances
since he took office, where the Trustees had neglected to furnish
proper returns, the Commissioners had exercised the
power which the law gave them, and had closed the banks
till the Accounts were sent up.[40] In May the bill was
carried through Parliament unaltered, but, as usual, opposed
by two or three fractious members. Mr. Thomas Attwood
again expressed his disapprobation of Savings Banks; and we
allude to his speech with a view solely of enlivening our
pages, which may over this ground of legislative enactments
be dull to some readers. This gentleman stated his belief
on the third reading of the Savings Bank Annuities Bill, that
Savings Banks were instituted by the late Lord Liverpool
and his Government, not for the good of the people, but for
three different purposes.
The first was to draw capital to
London, in order to bolster up the Funds; the second was to
give the Government the power of putting their hands into
the pockets of the people; and the third, to enable them to
scourge the people.[41] On the House showing manifest signs of
disapprobation, Mr. Attwood said, Hon. members might
express disapprobation as much as they pleased, and the
noble lord (Althorp) might laugh, but he firmly believed that
Lord Liverpool's great object in getting up these banks was
to get his claw in the people.
Lord Althorp replied with
the straightforward understanding, and quiet, manly good
sense which always characterized this eminent statesman.
He wondered that Mr. Attwood had not imputed to Government
another motive, that being, to realize profit by Savings
Banks, which he need not say they had scarcely yet done.
He might have smiled, but it was entirely on account of the
originality of the hon. member's ideas on the subject:
seriously, it was astonishing that such arguments should be
used by reasoning men. So far from being an injury to
the people, he believed these banks conferred on them the
greatest advantages; and so far from affording the Government
the means of trampling upon them, they would have
an exactly contrary effect.
And there can be no question
that Lord Althorp was right. The evident effect of Savings
Banks, from their commencement, had been to make people
independent; and surely persons of this description would be
the very last that any Government would attempt to ill-use.
Another member spoke a word for Mr. Attwood: he believed
him to have the kindest intentions towards the poor; only,
he must add, that he took the strangest way of showing these
good intentions, when he strove to prejudice the poor against
institutions which were capable of rendering them independent
and comfortable sooner than any other organization
whatever. Mr. Slaney thought the people showed great good
sense in preferring Government security to the allurements
of country bankers. As for the member for Birmingham, he
ought to be reminded of Franklin's story about the two
sacks, where the empty sack fell to the ground, whilst the
full sack stood bolt upright. The fuller the sacks, the more
likely were the people to be independent, and the less likely
were they to be trampled upon. Mr. Slaney was glad to find,
that though the crisis of last session had had a bad effect on
the deposits of Savings Banks, they were now daily increasing.
With this discussion, so far as any record is left, the bill
became law.
An act passed in 1835[42] extended the bill for consolidating
and amending the law with respect to Savings Banks to
Scotland, and of course the bill of 1833, which we have just
described, became at the same time applicable to Scotland.
Nothing further was done in the way of legislation for
Savings Banks till 1844, so we will close this chapter by
referring to another attempt made by Mr. Hume, in 1838, to
reduce the interest given to Savings Banks, and to introduce
other changes into their organization. And here we cannot
forbear to state our belief, that, though many thought very
differently at that time, Savings Banks, the working classes,
and the country generally, had not a better friend than
Mr. Joseph Hume. He saw a lavish expenditure going on in
connexion with Savings Banks, and he endeavoured to stop
it; with what success remains to be seen. He saw that
in consequence of this expenditure, or the inducements which
it gave, legislative enactments were openly set at defiance by
well-to-do people, who, besides their own deposits, made
fraudulent investments in the names of the various members
of their families, or their friends; and that the action of
the Legislature was in this way an attempt to cultivate
good habits amongst one portion of the community, at the
expense of promoting bad habits amongst another. Mr. Hume
on this occasion reminded the House that he was one of the
original founders of Saving Banks, and had always taken a
deep interest in them. It was far from him to do anything
to interfere with their usefulness in the country, only the
country ought not to be put to large and increasing expense
over them. He compared the rate of interest given before
and after 1828, and now stated that on this latter rate the
country lost from ten shillings to fifteen shillings per cent. on
the entire amount of deposits. The average annual loss to
the public up to the time he was speaking, and from 1818,
had been 75,000l. If this money went to the provident poor
he would not so much care; but if all was paid to depositors,
that might not be the case. Of the 500 Savings Banks
in existence in 1837, to whom the Commissioners paid
3l. 16s. 0-½d. per cent. interest, 412 of them paid to the
depositors only 3l. 6s. 8d., and 88 of them paid 3l. 8s.
leaving of course a large surplus, after every expense had
been paid, in the hands of both sets of trustees. Hon.
gentlemen might say that this surplus money was required
by law to be invested in the Surplus Fund account at the
National Debt Office; but the act, in leaving it to the trustees
to say what they themselves deemed surplus,
defeated its
own ends, and without doubt had opened a door to fraud.
Mr. Hume made a motion that the House at its rising should
go into committee on the 9th Geo. IV. c. 93, which fixes the
rate of interest to be given, and to permit the Chancellor of
the Exchequer to reduce that rate to an equality with that
which is received in the public funds. He thoroughly
believed that the security afforded by Savings Banks was a
matter of far greater importance than the amount of interest
which was paid. Mr. Hume then referred to a subject which
was made matter for great discussion, and which a committee
of the House of Commons treated at great length some years
subsequently. This was the power which was supposed to
rest with the National Debt Commissioners, of using Savings
Bank money for the exigencies of the State; the dangerous
power,
as Mr. Hume characterized it, to change the money
they had in charge from funded to unfunded debt.
He said
the Commissioners had paid thirty-five millions sterling from
1817 to 1838, for the purchase of Stock and Exchequer bills,
and had received from the sale of Stock and Exchequer bills
seventeen millions, leaving more than a similar amount then
standing in their names. He urged, that as the whole of the
deposits were by law payable in cash, and that as sums under
10,000l. could be demanded in five days, and even larger
sums at fourteen days' notice, the public might in a time of
panic, such as they had recently passed through, legally
make demands of cash, and so produce a heavy loss to the
Government, and greatly inconvenience, if not endanger,
public credit.
He gave a recent example, taking five months
of the year 1832, when the country was at its greatest height
of political ferment. The money transactions of the English
Savings Banks in
| Deposits.
£ | Withdrawals.
£ |
| March | 1832 were | 46,841 | 93,947 |
| April | " | 33,447 | 107,534 |
| May | " | 28,345 | 114,677 |
| June | " | 25,515 | 368,976 |
| July | " | 47,574 | 140,682 | [43] |
The Chancellor of the Exchequer, who at the time of which
we are speaking was Mr. Spring Rice (the late Lord Monteagle),
was quite unwilling to take the course recommended
by Mr. Hume. He was sure it would tend to shake the
security of the deposits, to which the loss which Mr. Hume
had spoken of was a mere trifle. He admitted, however, that
if Parliament could have foreseen the extent to which Savings
Banks would so soon have arrived, wiser arrangements
would undoubtedly have been made. People certainly did not
want all the inducements to save their money which it was
once thought they did require. Still, he was not for changing
the rate; Government paid more than they received as interest,
but he declined to argue the matter as a mere money
question. Mr. Hume might say that depositors cared more
for security than interest, but he (the Chancellor) said, that if
they reduced that interest, the depositors would rush to take
out their money. Nor did Mr. Rice speak without the book.
He produced a paper in which was described the effect of the
various commercial and political panics on Savings Banks, and
in distinction to this the result of the reduction of the rate of
interest in 1828. So far as it went, the Return is conclusive
and instructing.[44] In the commercial panic of 1825, the total
amount withdrawn was 361,000l.; in the political panic of
1832, 550,000l.; in 1828, when the interest was reduced by
14s. per cent., no less a sum than 1,500,000l. was withdrawn.
The Chancellor would not say that under no possible circumstances
should a reduction take place; a time might come
when it might be done wisely and discreetly, though he
believed it would never take place without creating some
degree of uncertainty and risk. The depositors in Savings
Banks were not the class to be experimented upon, and he
would not have it said of him by persons out of doors that he
had commenced reductions in the public expenditure by
cutting down the interest payable to the poorer classes, who,
after all, he believed, were the principal investors in Savings
Banks. One other little item of statistics Mr. Rice gave before
he sat down, which is very interesting, and much more convincing
than his other arguments. He gave, from a Return
which we have not been able to find, the amount of interest
which had been paid in money since the establishment of
Savings Banks and, on the other hand, the interest which had
been credited to depositors and made into principal. In the
former case it was 286,000l.; in the latter, or interest made
principal, it was 9,271,000l. Finally, the Chancellor believed,
that to pay depositors interest at the rate of the value of
money in the market would be a death-blow to Savings
Banks altogether! If Mr. Hume, in his pursuit of economy,
tried to enforce it by dividing the House on the subject, his
duty would be to resist. Mr. Goulburn, as the spokesman of
the Opposition on financial subjects, condemned the proposition
as likely to cause distrust amongst all classes connected
with Savings Banks. So far from thinking that the interest
ought to be reduced, or could be reduced, with safety—and
this remark is curious, viewed in the light of subsequent
events—it was only by great care and good management on
the part of those who superintended such banks
that
expenses could be paid. Time, however, works wonders, and
among other things, brings its revenges. The financial reformer,
who from the first had the best of the argument, had
not long to live to see a change, and to find that change
brought about under the direct auspices of one who only six
years before, in the words just quoted, had strenuously
opposed his motion. We must leave Mr. Goulburn's bill of
1844 to be described in a subsequent chapter.
ON THE PROGRESS OF SAVINGS BANKS UP TO THE
YEAR 1844.
They to whom this subject is indifferent may censure our minuteness; but
those who, like us, regard the establishment of Savings Banks as marking an
era in political economy, and as intimately connected with the external comfort
and moral improvement of mankind, will be gratified to trace the rise
and progress of one of the simplest and most efficient plans which has ever
been devised for effecting these invaluable purposes.
—Quarterly Review.
1816.
Arrived at the year 1841, when Savings Banks have had a
legislative existence for a quarter of a century, it may be well
to stop and pass the period in review; to endeavour to show
the progress made by these institutions during this time;
and to exhibit, so far as we are able, their effect upon the
general progress of the country. We have up to this point
dealt principally with the legislation on Savings Banks, and
have taken little account of what was said or done with
respect to them out of Parliament, after the year 1817. At
this early period there were frequent and warm discussions
out of the House as to their value and utility. When they
first began to attract public attention, the friends of the
working classes
were nearly equally divided between their
advocacy of them and the Friendly Societies. When Mr. Rose,
who had strongly advocated the formation of these societies,
saw the benefit that Saving Banks were calculated to render
to the poorer classes, he cordially took up their advocacy;
and although he urged that there was scope enough for all
societies which inculcated the duty and practice of providence
and frugality, he was loudly accused of leaving his first love,
and advocating the Savings Bank plan for some political
purpose. We cannot give the reader a better idea of the way
the industrial classes were beguiled, and the kind of influence
which was only too often brought to bear upon them at this
period, than by giving some extracts from a paper to which
we have previously incidentally referred. In his New
Year's Gift to old George Rose,
Cobbett reminds Mr. Rose,
that after all he had done for them, he had at length left
Friendly Societies in the lurch, and taken to the bubble of
Savings Banks.
Cobbett, however, said that he could see
through the change, and he shows the amount of his penetration
by such argument as the following:—In friendly societies
Mr. Rose found that 'the members got drunk and talked—the
naughty rogues.' Yes, and even politics too! And it might
have been added,
continues the writer and proprietor of the
Register, that they very frequently heard one of their number
read—the Register!
The object of Savings Banks, or at any
rate, parliamentary interference with them, was nothing else,
Cobbett considered, than to get the pennies of the poor together,
but to keep their owners asunder.
What a bubble!
repeats Cobbett. Then addressing Mr. Rose in the first person,
he tells him how, in his opinion, the company of projectors
who, in the reign of George the First, wanted a charter
granted to them for the purpose of making deal boards out of
sawdust, just saves you from the imputation of having, in the
Savings Bank scheme, been the patron of the most ridiculous
project that ever entered into the mind of man.
Another person
of Mr. Cobbett's stamp, though one who aspired to greater
knowledge of all questions connected with trade and currency,
and who really paid closer attention to such subjects, was
Mr. Thomas Attwood—Currency Attwood,
or Little Shilling
Attwood,
as he was variously designated in some parts of
the country. Whenever he could get an opportunity in
Parliament to speak of Savings Banks, we have seen that he
invariably clothed his ideas in a vocabulary of prejudiced
invective. And he repeated himself outside the walls of
the House whenever he had the chance. Savings Banks,
we find him saying on one occasion, besides costing the
nation so much, were a nuisance;
Savings Banks were a
sort of screw in the hands of the Government to fix down the
working classes to the system.
On these expressions, and
others of a like tendency, as texts, those minor demagogues
who went on stump,
preached for many a day. Considering
how such men treated the institution of Savings Banks, it is
wonderful that they progressed as they did. That they kept
many from using these institutions is beyond a doubt. Such
men had a surprising power over the labouring classes, and
though that power was often used for good, too often it
only excited distrust and apprehension when distrust and
fear were least needed and most dangerous. The true friends
of the poor—and there have been many such at all times—said,
in effect, We have reason to believe that much money
now spent unnecessarily might be saved for seasons of want
and old age, if the poor had the means offered them of putting
that money by easily, safely, and profitably. We have exerted
ourselves to get such places established, we give our best
exertions to have them conducted properly, and we advise all
who have money to spare to intrust it to this safe keeping.
Cobbett, on the other hand, put his printers to work to say
What a bubble! At a time when it is notorious that one
half of the whole nation are in a state little short of actual
starvation—when it is notorious that hundreds of thousands
of families do not know when they rise where they are to find
a meal during the day—when of the far greater part of the
whole people much more than half of them are paupers; at
such a time, to bring forth a project for collecting the
savings (!) of journeymen and labourers in order to be lent to
Government, and to form a fund for the support of the lenders
in sickness and old age!
[45] It would be idle to show the
fallacy of such reasoning, even admitting the facts of the case
to be as they are here stated. Suffice it to say, that in this
way did such men pander to the prejudices of the uneducated.
Many thousands of industrious workmen who had had no
training, and who could not discriminate between real and
imaginary evils, were thus too often flattered into believing
that they had more than their share of the truth, honesty, and
manliness of the age on their side, and that the upper classes
were against them on every side and in all respects. All this
is pretty well over now.[46] Just as the sun expels the mists of
the morning, so have education and a free press opened the
eyes of the people to their true interests, and shown them
which class of men have most wished for and best worked to
promote these interests.
It was not, however, only by such men as Cobbett that
Savings Banks were misinterpreted and misrepresented. Like
every other new and untried measure, it had to run the
gauntlet of an educated as well as an ignorant opposition. It
was a very usual thing to find the discussion on the utility of
Savings Banks waxing warm in the most important organs of
public opinion. For example, the Times newspaper early took
a decided stand against Savings Banks, and tried to maintain
its position, as we shall see more fully subsequently, long
after the country had given them a pretty unanimous verdict
of approval. Just after the period of which we are speaking,
a correspondent in the then, as now, leading journal, thought
himself able to trace in Savings Banks, a great source of
mischief; and that to them,
—though in what manner it is not
attempted to be proved,—may be attributed a considerable
portion of the distress which has been so long felt, and
which does not appear to diminish in most of the manufacturing
districts.
God forbid,
ejaculates this remarkable
genius, that I should desire to encourage improvidence
amongst any portion of society; but there is a wide distinction
between parsimony and extravagance, and these banks
have literally made misers, and held out a bonus for them to
become so.
But even this is not all: the same spirit,
says our authority, which actuates a man in becoming a
miser, will operate to prevent their making use of their
petty accumulations. With the habit of parsimony the
mind becomes degraded, and the workhouse or an application
to the dispensers of parochial relief lose their horrors.
It is almost useless, seeing that now few could be found to
advocate such views, to reply to them. They are based on
the assumption, which we take to be utterly erroneous, that a
poor man is less at liberty to lay out his mite at interest than
his richer neighbour; or that if he did so, the step was more
likely to lead to his becoming a miser than his wealthier
neighbour who had all his money in the funds. It is less
necessary to argue the point, inasmuch as the aim of this
nonsense is made quite apparent by the writer concluding
with an elaborate eulogium on Benefit Societies for working
men. They could there, provide,
says he, at a very trifling
expense, against sickness, want of employment, and numerous
other casualties; while, on the other hand, there would be
no need to deprive themselves of the common necessaries of
life in order to add to their hoard.
But here again the
fallacy of the argument is clearly apparent. The allowance
from a Benefit Society, then as now, in case of sickness or
distress, would be, generally speaking, quite inadequate to the
circumstances requiring it; and how could it possibly be more
likely that a person in this situation would be more independent
of parochial relief than one who had a fund of his
own to look to, or perhaps a livelihood at his command.
Such warfare as this went on uninterruptedly for several
years; the advocates of Benefit Societies running down
Savings Banks, and vice versá, not in all cases seeing that the
two might exist together, and that each was well calculated to
supply a want which the one or the other class of institutions
did not meet. There can be no doubt, however, which
institution suffered most from these discussions. The most
decisive proof of the improvement which was seen in the
condition and the habits of the labouring classes during the
first quarter of the century was the progress of Benefit Societies
from 1802 to 1820. In the former year there were 9,622 of
these societies; in the latter year there were nearly five times
that number. The people during this period had not improved
in comforts and conveniences as they did subsequently; they
progressed in the more skilful use of the same, or even
diminished means. These societies made a deep impression
upon the population, and in the same proportion the people
were recovered from the control of their appetites and passions,
and from that propensity to use without restraint those means
of immediate gratification which distinguishes all ignorant
people of whatever rank. Notwithstanding all this, the
Friendly Societies were beset with difficulties, and in the discussions
to which we have alluded their opponents made the
most of them. Perhaps the well-meaning might better have
assisted the poor in instructing them how to reform the
management of these societies, and by showing them the
principles upon which they could be most safely established.
However it was, there can be no question that, either from
their inherent defects or the comparison of the benefits to be
derived from the one as against the other institution, Savings
Banks soon took the place of Benefit Societies in the public
estimation, and progressed when, comparatively speaking, the
latter declined. In the evidence given by Mr. Lloyd, the
founder of the Hertford Sunday Bank,
before the committee
on the Poor Law previously referred to, he assigned as one of
the causes which had promoted the success of Savings Banks
the evils arising from Benefit Clubs or Friendly Societies, as
then constituted. There is always,
he said, a regulation,
that when two-thirds of the members choose to assemble and
agree to break up the club, they can; the consequence is, that
the other one-third, the old members, who ought to be
deriving an assistance during the last period of their lives
from these clubs, are deprived of it.
He had known six
clubs which had been broken up in this way. The following
extract from a report of a committee which was appointed to
investigate the rival claims of Benefit Societies and Savings
Banks so admirably sums up the whole argument, and says
so much with reference to both institutions which is no less
true now than then, that we feel confident our readers will
not object to have it reproduced here.[47] Benefit Societies
have done much good; but they are attended with some disadvantages.
In particular, the frequent meetings of the
members occasion the loss of much time, and frequently of a
good deal of money spent in entertainments.[48] The stated payments
must be regularly made; otherwise, after a certain
time, the member loses the benefit of all that he has formerly
paid. Nothing more than the stated payments can be made,
however easily the member might be able at the moment to
add a little to his store. Frequently the value of the chances
on which the societies are formed, is ill calculated; in which
case, either the contributors do not receive an equivalent for
their payments, or too large an allowance is given at first,
which brings on the bankruptcy of the institution. Frequently
the sums are embezzled by artful men, who, by
imposing on the inexperience of the members, get themselves
elected into offices of trust. The benefit is distant and contingent;
each member not having benefit from his contributions
in every case, but only in the case of his falling into
the situations of distress provided for by the society. And
the whole concern is so complicated, that many have hesitation
in embarking in it their hard-earned savings. With such
disadvantages who would not rather choose the simple, secure
mode of investment offered by the bank—free (as the banks
were at that time) from them all? But if they must have the
Benefit Society, with its contingent and distant benefits,
working men should not rest here. Thousands of the working
classes could well afford to pay their weekly sums to secure
their sick and burial money, and yet have enough to spare to
provide against the other rainy days of their life. A poor
man's savings are continually liable, while in his own custody,
not simply to professional thieves, but also—and there is far
more danger of it—to be pilfered by himself and his family.
They are often lost by being intrusted to improper hands;
they are still oftener worse than lost in the ale-house or the
gin-palace, and the money which properly taken care of might
give the means for occasional enjoyments of a harmless kind,
providing for the legitimate wants of his children, or which
might support all during the intermissions of employment to
which all are exposed, may be worse than squandered.
It was thus that the institution of Savings Banks lost, by
being cried down by the leaders of the people, and by the
discussion which continued as to their merits; and thus that
they gained, by a close comparison with the kindred institution
of Friendly Societies. The loss, however, was but temporary.
In ten years from the date of their legal formation
the deposits in Savings Banks amounted to upwards of
sixteen millions sterling, and this sum had been contributed
by no fewer than four hundred thousand persons. A writer
of the period characterizes the progress made by institutions
such as these as one of the most striking manifestations of
virtue that ever was made by any people;
and he seems to
have had some good grounds for the opinion. For persons
merged in poverty and totally deprived of education, as the
English population have heretofore so generally been, it is not
easy or common to have much of foresight, or much of that
self-command which is necessary to draw upon the gratifications
of the present for those of a future day.
And though,
as we have previously seen, the money here deposited could
not have been put there by persons exclusively of the
industrial class, yet it is clear that many of the labouring
community did possess means beyond what were needed to
procure them the necessaries of life, and that these institutions
exactly met the want which was felt in not having the means
to safely dispose of that little surplus, and to call it in when
the need arose for it. The year 1827 was the year, it will be
remembered, after one of the most terrible financial crises that
this country has ever passed through, and yet, though the
average amount of money deposited in Savings Banks in one
year before this time had only been about 1,100,000l., no less
a sum than 859,734l. was deposited in 1827, and not half of
that sum was withdrawn. These facts show the great hold
which Savings Banks had already taken upon the country.
Of what service they were during such times as those
witnessed in 1826 we shall have to speak. We are far from
anxious to trouble the reader with any statistical information
which might easily be withheld, but the progress of which we
are now speaking can be best traced by presenting first, a
tabular view, which gives that progress from year to year,
and which will likewise furnish material for remark.[49]
TABLE 1.
Showing the Amounts invested by Savings Banks with the National Debt
Commissioners from 1817 to 1841, with the Total Capital of all the Banks
at the end of each year:—
Year ending
20th Nov. |
Total amount
credited to
Trustees,
including
Interest.
£ |
Total Capital
at the close
of each year.
£ |
|---|
| 1817 | 231,028 | 231,028 |
| 1818 | 1,533,812 | 1,697,853 |
| 1819 | 1,233,684 | 2,813,023 |
| 1820 | 807,825 | 3,469,910 |
| 1821 | 1,312,800 | 4,740,188 |
| 1822 | 1,849,264 | 6,546,690 |
| 1823 | 2,205,272 | 8,684,662 |
| 1824 | 3,149,151 | 11,720,629 |
| 1825 | 1,769,988 | 13,257,708 |
| 1826 | 1,131,659 | 13,135,218 |
| 1827 | 1,475,250 | 14,188,708 |
| 1828 | 1,734,374 | 15,358,504 |
| 1829 | 960,142 | 14,791,495 |
| 1830 | 1,056,584 | 14,860,188 |
| 1831 | 1,037,629 | 14,698,635 |
| 1832 | 1,099,368 | 14,416,885 |
| 1833 | 1,448,751 | 15,324,794 |
| 1834 | 1,575,016 | 16,386,035 |
| 1835 | 1,654,896 | 17,469,617 |
| 1836 | 2,006,588 | 18,934,591 |
| 1837 | 1,649,691 | 19,711,797 |
| 1838 | 2,200,663 | 21,446,341 |
| 1839 | 2,137,502 | 22,486,553 |
| 1840 | 1,949,126 | 23,549,716 |
| 1841 | 1,950,751 | 24,536,971 |
Remembering that this table does not give the actual
business done by Savings Banks within this period,—which,
indeed, from the absence of proper returns in the earlier
years of those Banks it would be difficult to present,—many
instructive lessons may be gathered from it as to their
value and utility. In fact, however, and for all practical
purposes, the amounts remitted by the Trustees to the
National Debt Office very fully represents the progress of
Savings Banks, for they may be considered as representing
so much surplus every year, after all the claims on the banks
had been met. The variations observable in the returns are
accounted for quite easily by the state of the country at
the time. When the amount falls, it may be taken for
granted that the country is passing through a period of
exceptional suffering and trial, and that the funds which
have been patiently accumulated for times of need are thus
made available when the necessity arises for it. The country
was unusually prosperous, for example, in 1823-4, and an
enormous surplus was returned. In 1825, as if to mark the
coming storm, there is a heavy fall in deposits. In 1826,
the tables were turned, not only in a figurative, but, so far
as we are concerned, in a literal sense. The circumstance
can be only too well explained. The Quarterly Review of
that time gives a glowing account of the increased wealth
of all classes, especially those of the trading community.[50]
The increased wealth of the middle classes is so obvious,
that we can neither walk the fields, visit the shops, nor
examine the workshops and storehouses, without being
deeply impressed with the changes which a few years have
produced. In the agricultural districts we do not, indeed,
see such great strides, but we see universal advancement.
Then we have the familiar record of the exportation of gold;
of the Bank of England and provincial banks deluging the
country with notes.[51] Money became so abundant that a
terrible rage for speculation set in; joint-stock companies
with unlimited liability were projected for every imaginable
object. On the reorganization of the South American republics,
which had just then been effected, all sorts of proposals
for mines were started; the El Dorado had to be
found now, if ever.[52] In the session of 1825, 438 petitions
for private bills were presented, and 286 private acts were
passed. The King, even, was so deceived by the general
appearance of things, or was so purposely blind to their real
state, as to congratulate the country, in July, 1825, on the
prosperity everywhere pervading the country.
The time
arrives when anxious speculators begin to look out for some
return for their money; they are told that their capital cannot
possibly realize so soon; then the bankers are besieged, but,
tempted by the abundance of money, they had discounted
bills at long dates to an enormous extent, and lent money
upon securities which were presently seen to be almost worthless.
Then came the panic,—and then the crash. Commercial
houses first failed, big, substantial firms, which were supposed
to have the wealth of Crœsus at their back, came down
thunderingly. Many a firm of unimpeachable honour and
unquestionable solvency was compelled to bend before the
storm.
Then came the turn of the great banks: they had
advanced their money to the merchants, and now that the
security had failed, they also must bend before the blast.
On the 5th of December, the news spread with the wings of
the wind, that the banking house of Sir Peter Cole and Co.
had failed; next day, Williams and Co. stopped payment; and
from that time, without intermission, seventy country banks
went down within six weeks.[53] How things were restored
to their original condition, and how promptly the Government
acted during the terrible panic, we need not stay to tell.
Savings Bank deposits fell from about three millions in 1825,
to less than half that sum in 1826. More money was withdrawn
in the year of the panic than had been withdrawn
altogether since the year 1820. It is not a little curious, as
showing that depositors in Savings Banks are less inclined to
speculation than other classes, to point out, that during the
panic a sum equal to at least fourteen millions sterling must
have been safely lodged in the different provident banks of
the country; and that little money was hazarded in the
speculations of the time is evident from the fact that only
one-tenth part of the whole amount of deposits was withdrawn
to supply emergencies. In this way were those people
rewarded who preferred a safe deposit with a reasonable interest
to cent. per cent.
and unlimited risk.
Nor can we stop to describe the result of the panic on the
industrial classes. The picture of that terrible time has often
been drawn, when thousands of hungry, infuriated men, roused
by the sorest distresses, went about robbing shops, breaking
machinery, rick-burning, chased by the constabulary, and
fired upon by the soldiery. The time was a most disastrous
one, but it was full of lessons for all classes. Many of the
provident poor suffered little, and never had anything to fear,
on account of having prepared themselves for such calamities.
Those of the poor who acted less wisely, and ventured their
little surplus in some speculation or other, met with few condolences.
When a portion of them petitioned the House of
Commons for relief, they were rather roughly told that they
ought to have deposited their earnings in Savings Banks. It
was on this occasion that Sir Robert Peel replied to this
taunting, and recognised the imperfections of the existing
machinery, by asking, indignantly, how the House could
expect this to be done in cases where the Savings
Bank was perhaps twenty miles from the working man's
home.
To return again to the table. In 1827 and 1828 the
accounts show a much more healthy state of things, and it
is clear that the deposits are steadily gaining their natural
ascendancy over the withdrawals, when there is another rebound,
of a greater magnitude than ever; the withdrawals not
only exceeded the deposits of 1829, but the deposits of 1830
added thereto. There can be no question that, primarily, the
Savings Bank Act of 1828, which came into operation on the
November of that year, and under which the amount of interest
allowed on deposits was reduced by 14s. per cent., was
the cause of this exceptional and most important change.
Like all misfortunes of this nature, it had its bright side, and
was far from being an unmixed evil. As we have already
endeavoured to show, a large number of depositors up to this
period belonged to classes much above the artisan class; and
as the former looked more to the interest given, while the
industrious classes thought most of the security offered, it is
no wonder and no calamity that the connexion which the
higher classes had formed with Savings Banks was now dissolved.
Henceforth, the returns may be looked upon as
more than ever the result of habits of economy and thrift,
and as representing the surplus money of the artisan and the
lower portions of the middle classes.
The year 1830 shows that confidence was slowly returning,
when again there is a period of great depression. Two
millions of capital is withdrawn in 1831-2, over and above
the deposits of those years, to meet demands on the banks.
The political agitation of those years sufficiently accounts for
this state of things. It will require little to be said in order
to show that a time like that was likely to tell largely against
such institutions as those under consideration. The time
was one of great anxiety among all classes, and amidst the
uncertainties and anticipations which followed in rapid succession,
it would be only bold people, and those of more than
average intelligence and power of mind, that could confide,
without the smallest degree of wavering, in the stability of
the country. We had a turbulent population at home, and
amidst much agitation for their undoubted political rights,
there were many clamouring for bread, many clamouring for
work, and thousands for they knew not what: and France
offered an illustration of what might possibly happen. With
such manifest agitation everywhere, with funds falling, and
the entire political sky lowering, there cannot be much
wonder that many waited patiently for some issue before they
trusted to resources other than their own. Not only were
actual hardships endured during this great crisis in our history,
but the working classes brought hardships upon themselves.
Led by intemperate and impracticable men, many
thousands of the more ignorant beguiled themselves into
believing that the Reform Bill would do everything for them,
and they would need to do nothing; that every man would
be forced into independence and competence whether he
would or no; that taxes would be repealed; and that in this
new state of society there would no longer be any need of
that spirit of striving which is at the bottom of all true
schemes of social progress and advancement. This period
over, many illusions were dispelled, many useful lessons learnt.
Under somewhat fairer and happier auspices, society settled
down into its old ruts again, only too thankful in many cases
that the old ways were still open. After the year 1832, the
progress of Savings Banks continued to be eminently satisfactory.
There was a transitory cloud in 1837, and another
in 1839, caused by exceptionally hard times, such as a bad
harvest and scarcity of food, and distress in the manufacturing
districts caused by unusual reverses in trade, when
again the funds laid by came opportunely in aid; but, with
these exceptions, the Returns furnish no further grounds for
remark. We will therefore proceed to give a small table,
which, without giving the details of each year, shows in a
clear light the progress made by the banks at the expiration
of three quinquennial periods.
TABLE 2.
From 1825 to 1840.
| Year ended | Number of
Depositors. | Total Amount of
Deposits from
1817. | Increase. |
|---|
| £ | Depositors. | Deposits. |
|---|
| 20 Nov. 1825 | 358,160 | 13,769,988 | — | — |
| 20 Nov. 1830 | 430,166 | 15,739,907 | 72,096 | 1,969,919 |
| 20 Nov. 1835 | 587,488 | 17,705,228 | 157,322 | 1,965,321 |
| 20 Nov. 1840 | 824,162 | 22,915,940 | 236,674 | 5,200,712 |
Taking the year 1841, on account of the facilities for calculation
afforded by the census of that year, we find that up
to the 20th of November, 1841, the total number of Savings
Banks in the United Kingdom was 555, of which 428 were
in England, 23 in Wales, 76 in Ireland, and 28 in Scotland.
The smallness of the number of Scotch banks is accounted for
by the popular character of the private banks, and the fact
that until within six years of the period we have reached, or
1835, none of the acts relating to Savings Banks had any
reference to Scotland. The average amount of each deposit
in 1841 was—in England about 30l.; in Ireland 29l.; and in
Scotland 12l. The total number of depositors in England as
compared with the population of 1841, was one to every 22
inhabitants, in Wales 1 in 58, in Scotland 1 in 52, and in
Ireland 1 in 103.
One of the most positive proofs of the increase in the
provident habits of the people between 1828 and 1844 is to
be found in the increase of the number of small depositors.
In 1828 the number of depositors in Savings Banks who had
not subscribed more than 20l. was 203,604. In 1844
they had increased to 564,642, or nearly three times the
number.[54] The amount of the deposits in the first instance
was 1,473,389l.; in 1844 it reached 3,654,799l. One writer,
overlooking the fact that the increase here spoken of was a
gradual one year by year, has endeavoured to trace the
effect of the decrease in the amount of large deposits and the
increase of the number of small ones to the operations of the
Act for the Amendment of the Poor Law in 1834. There can
be no question that this act supplied motives for economy,
and operated in increasing the number of provident people;
but in view of the fact that the increase in the number of
depositors between 1833 and 1834 was exactly in proportion
to the increase between 1834 and 1835 or 1835 and 1836, it
is quite as proper, and we submit more so, to speak of
Savings Banks operating beneficially upon the Poor Law, as
that the Poor Law Amendment Act increased in this way the
efficiency of Savings Banks.[55]
What assistance these Savings Banks must have rendered
during the crises through which the people passed between
1817 and 1841 may be judged by the use made of them. But
we think we see more in Savings Banks than that they enabled
many in times of hardship by a wise foresight to escape much
that others suffered. We see in the progress of these banks undoubted
evidence of the increasing prosperity of the country,
in relation at any rate to the poorer classes; and they were
among the direct agents in creating that prosperity. Savings
Banks created and then fostered habits of economy and
frugality, and every man won over to the pursuit and practice
of these habits increased the sum of the prosperity manifest
during the period we are considering. Perhaps we can make
the position we here take up more clear from the following
table,[56] carefully compiled from the best sources of information
on such subjects, and which we think is calculated to
show the good influence of Savings Banks in a somewhat
new and striking light.
TABLE 3.
Showing the Increase in the Deposits of the Savings Banks in each English[57] county, between 1834 and 1841, and the
Decrease in the Poor Rates during the same period:—
| County. | Population
in 1841. | No. of
Depositors
in Savings
Banks in 1841. | Amounts of
Deposits
in 1841. | Increase of
Deposits
since 1834. | Expended in Relief
of the Poor. |
|---|
|
£ |
£ | in 1834.
£ | in 1841.
£ |
|---|
| Bedfordshire | 107,937 | 3,584 | 111,526 | 35,016 | 77,819 | 41,063 |
| Berkshire | 160,226 | 12,020 | 359,676 | 64,152 | 100,183 | 74,708 |
| Bucks | 155,989 | 4,657 | 128,025 | 61,140 | 124,200 | 74,007 |
| Cambridge | 164,509 | 3,831 | 121,777 | 24,423 | 96,497 | 72,158 |
| Chester | 395,300 | 15,302 | 554,400 | 89,325 | 92,640 | 77,698 |
| Cornwall | 341,269 | 12,915 | 492,013 | 101,980 | 93,037 | 85,063 |
| Cumberland | 197,912 | 7,538 | 211,741 | 65,313 | 43,067 | 36,867 |
| Derby | 272,202 | 10,099 | 321,897 | 84,964 | 72,721 | 55,238 |
| Devon | 533,731 | 49,866 | 1,492,072 | 289,154 | 210,825 | 195,402 |
| Dorset | 174,743 | 11,470 | 412,628 | 110,350 | 84,293 | 80,097 |
| Durham | 324,277 | 7,023 | 201,354 | 17,596 | 79,399 | 66,639 |
| Essex | 344,995 | 14,413 | 428,202 | 86,941 | 239,946 | 170,356 |
| Gloucester | 431,307 | 25,526 | 818,157 | 190,324 | 161,449 | 130,321 |
| Hereford | 114,438 | 8,350 | 211,251 | 41,430 | 56,683 | 43,512 |
| Hertford | 157,237 | 3,785 | 113,425 | 1,195 | 85,799 | 61,250 |
| Huntingdon | 58,699 | 1,765 | 52,001 | 13,594 | 35,884 | 25,329 |
| Kent | 548,161 | 33,392 | 945,273 | 219,416 | 343,878 | 208,786 |
| Lancaster | 1,667,064 | 65,402 | 1,980,143 | 369,473 | 253,405 | 260,227 |
| Leicester | 215,855 | 6,803 | 173,581 | 31,329 | 100,857 | 70,423 |
| Lincoln | 362,717 | 18,451 | 497,509 | 82,035 | 161,074 | 103,894 |
| Middlesex | 1,576,616 | 176,849 | 4,521,589 | 598,329 | 582,412 | 435,606 |
| Monmouth | 134,349 | 3,099 | 76,651 | 23,416 | 27,626 | 24,819 |
| Norfolk | 412,621 | 18,336 | 527,300 | 162,298 | 306,787 | 182,229 |
| Northampton | 199,061 | 8,410 | 243,600 | 29,157 | 140,179 | 86,148 |
| Northumberland | 250,268 | 12,862 | 459,390 | 69,321 | 71,983 | 64,649 |
| Nottingham | 249,773 | 15,763 | 420,345 | 13,951 | 66,030 | 57,721 |
| Oxford | 163,573 | 10,246 | 285,713 | 28,324 | 80,616 | 76,474 |
| Rutland | 21,840 | No Savings Bank. | 7,008 | 7,453 |
| Salop | 239,014 | 16,452 | 557,190 | 69,543 | 84,493 | 57,571 |
| Somerset | 436,002 | 22,019 | 679,072 | 105,153 | 176,286 | 157,022 |
| Southampton | 354,940 | 23,942 | 687,473 | 99,324 | 203,466 | 142,507 |
| Stafford | 510,206 | 15,368 | 452,306 | 84,399 | 120,512 | 95,242 |
| Suffolk | 315,129 | 11,972 | 348,176 | 89,939 | 245,509 | 138,228 |
| Surrey | 582,613 | 31,250 | 749,199 | 159,068 | 261,501 | 199,477 |
| Sussex | 299,770 | 15,709 | 420,570 | 84,190 | 246,626 | 145,013 |
| Warwick | 402,121 | 22,291 | 468,270 | 93,168 | 158,159 | 102,828 |
| Westmoreland | 56,469 | 942 | 24,719 | 1,920 | 22,283 | 17,607 |
| Wilts | 260,007 | 11,706 | 413,941 | 97,140 | 173,925 | 133,573 |
| Worcester | 223,484 | 12,218 | 401,330 | 53,978 | 81,612 | 62,958 |
| Yorkshire | 1,591,584 | 69,545 | 2,105,866 | 435,129 | 418,742 | 372,166 |
In every county, as may be seen from this table, there is a
decided increase in the number and amount of Savings Banks
deposits between the two periods; and in every instance, except
two, there is a decided decrease in the amount spent on the
relief of the poor. Not only so, but taking the two exceptional
cases, we find that in the one case, a small county, there had
not up to this time been any Savings Bank established; and
in the other instance, that of the large and populous county of
Lancaster,—which shows an increase instead of a diminution
on the two years in the amount of poor relief,—it is not less
curious that its industrial population have never patronised
the Savings Banks to the same extent, in proportion to their
number and earnings, as the same classes have done in the
country generally. Further, the three counties of Kent,
Middlesex, and Norfolk, which in 1841 had the greatest
number of depositors in Savings Banks in proportion to their
population, also exhibit the pleasing fact of the greatest diminution
in the amount spent in the relief of the poor. It may
be said that many considerations ought to enter into such calculations
as those we are making, and that at best such
statistics only prove that the same causes, such as abundance
of work, good harvests, &c., will contribute to the increase of
surplus funds, and the decrease in measures of relief. But it
must be borne in mind that prosperous trade does not necessarily
produce frugal people and provident habits, though it
often enough leads to unnecessary and vicious expenditure.
By far the greater part of the decrease in the sums given for
relief is unquestionably owing to the operations of the Poor
Law Amendment Bill already referred to, which Lord Althorp
carried through Parliament. Truly stigmatized before his time
as the great political gangrene of England,
the old Poor
Laws of this country first made paupers, and then promptly
maintained them. It is, however, the relative proportion in
which the increase of Savings Bank deposits stood to the
decrease of the sums for relief that we wish here to impress
upon the reader, leaving him to form his own conclusions.
And with all respect to those who framed the measure of
1834, which was very beneficial to the country and only
just to the independent poor, we think the results have
been rather too much magnified. From the year 1820 we can
plainly trace a manifest improvement in the condition of the
poor, and we have not scrupled to ask for a place for the
Saving Bank system among those important agencies which
have led to this improvement. Still, taking the measures of
Poor Law relief as a good criterion of their condition, we find
that the sum total paid for the ten years between 1811 and
1821 was 68,000,000l., giving a yearly average of 6,800,000l.
In the ten years ending 1832, the amount of poor rates was
62,900,000l., or a yearly average of about 6,200,000l. Thus
we have, in spite of what was considered the iniquitous system
of relief, and in spite of an increase of population amounting to
16 per cent., a clear reduction of 5,000,000l. within ten years.
The advancement is still more clear, if we take the case of
the large centres of population, but this is perhaps, unnecessary.
The Returns, however, of the Registrar General may be
supplemented by Revenue Returns for the same period, from
which the improvement in the condition of the industrial
classes may be made still more palpable. In 1814 the consumption
of tobacco was 15,000,000 lbs.; in 1832 it had increased
to 20,000,000 lbs., an augmentation of 31 per cent.,
while the population only showed an increase of 24 per cent.
during the same interval. The amount expended upon articles
which, like tobacco and intoxicating drinks, are not, to say
the least, of the first necessity, forms no incorrect measure of
the progress of the nation, and of the ability of the people to
bear the national burdens which must be imposed. In 1814
the consumption of sugar was 1,997,000 lbs.; in 1832 it
amounted to 3,655,000 lbs., an increase of 83 per cent. to be
set against the above rate of increase in the population. The
tea consumed in 1814 was 19,224,000 lbs.; in 1832 it had
increased to 31,568,000 lbs., or an increase of 65 per cent.;
and coffee increased from 6,324,000 in 1814 to 22,952,000 lbs.,
or an increase of 183 per cent., in 1832. The increased consumption
of such articles, (not forgetting reductions in price,)
was an evidence of nothing, if not of the growing prosperity
of the people. Such items show that the people, as a mass,
enjoyed a greater command over the comforts of life than
formerly. The rich man, of course, added little or nothing to
his ordinary consumption of the articles that were necessary
to his comfort or convenience, but with the poor it was very
different. For example, the amount of silk imported during
the period of which we have spoken varied but little, while
the imports on the article of cotton wool, the staple fibre
of the masses, increased from 152,000,000 lbs. in 1820 to
259,000,000 lbs. in 1832, or an increase of 70 per cent.[58]
Enough has been said, we hope, to show the gradual progress
made in these years in all that relates to the social
advancement and well-being of the people, and to what extent
Savings Banks played a part on that advancement. Because
these institutions have been proved to create frugal habits—in
much the same way that the supply of intoxicating drinks
creates in many cases a demand for them—as well as to give
them direction and encouragement, we have endeavoured to
prove their right to a foremost place among the many other
mighty engines of civilization which have made Great Britain
what it is. And now we must conclude this chapter with a
less pleasant task, and refer briefly, at present, to two foes to
Savings Banks, one without and one within, both of which
had a very powerful effect as hindrances on the progress of
these useful institutions. We refer to the doubts which began
to be cast on the utility of Savings Banks by portions of the
public press, and the serious frauds which now for the first
time began to engage public attention. In 1844, when Mr.
Goulburn's bill was under discussion and subsequently to
that, several newspapers began to dispute that Savings Banks
were either so useful or so wise as had been generally thought
up to that period. The Times newspaper, with an hostility
which Dr. Chalmers characterized as most glaring
and
likely to mislead every artisan from the path of his true
interests,
laughed at and ridiculed the system long after it
had proved its usefulness in numerous ways. That paper,
which opposed the new Poor Law of 1834 with great bitterness,
and had treated with manifest injustice other schemes for
the social amelioration of the poor, devoted several editorial
articles in 1844 to throw discredit on the institution of Savings
Banks. The articles in question were calculated to work a
mischievous practical influence on many readers, especially
on those who gave little attention to the subject of political
economy; they were meant to create a spirit of opposition to
Savings Banks, but in many cases they must have had the
opposite effect and failed to convince all who were not equally
perverse. To show the kind of argument indulged in by the
leading journal at a time when it was equally as now the
greatest newspaper power in the land, when its rebuke or
praise had a weighty effect on any important measure, and
when Cabinet Councils debated whether it should be propitiated
or defied,[59] we need only give the following extracts:—
A labourer sixty years of age has, by hook or crook, saved 500l. We know
such a case. The 500l. is the plague of his life. It would be a mercy to
swindle him out of it, except that he would probably feel a good deal at the
loss. Could he forget it, he would be both a happier and better man. To
begin with, it is a guilty possession. His father is maintained by a distant
Union; his sons and daughters are all but forbidden his cottage. He invests
it in secret.... When he dies his children will squander it, not in dissipation,
but in the mere feebleness and incontinence of ingrained poverty.
Another extract striking at the root of all habits of
providence and thrift:—
When a labourer has saved 50l. or 100l. then the greatest difficulty comes:
what is he to do with his money? He has caught a tartar. His usual course
is a very natural one, because it is the first course that offers—to open a public
house. He does so, and generally and happily loses his money. A labourer
with 200l. in his pocket has a very fair prospect of the union workhouse
before him. He is not commercial enough to open a shop, and small farms
are obsolete. He may, to be sure, shut his doors against all his kith and kin,
and buy a selfish annuity with the sum, which will just keep him while he rots
and dies. But will he, and who is to advise him to do so?
Granted that things are very different now to what they
were when these remarks were penned, and that investments
of any sort may now be made with comparative ease, it seems
to us that the argument of the Times was based throughout
on false assumptions; that it is a mistake to suppose that the
primary or sole object of Savings Banks was to build up
capitals for investiture in business or trade, and not for expenditure
on the necessaries or comforts of life; nor to make
every labourer a capitalist, in the usual acceptation of that
term, but to enable him to end his days in some sort of independence,
and in some degree of peace and comfort. Savings
Banks at their establishment were, always have been, and
still are, meant for accumulations, not to be traded with,—though,
of course, there is no prohibition,—but always have
had and still have a homelier aim. They are meant to inculcate
the habit of laying by for an evil day, for old age, the
winter of life, or as Dr. Chalmers, we believe, strikingly puts
it, for those mishaps and sicknesses which might be termed
its days of foul weather.
In such case the money will not
be traded with, but in right season spent. The answers to
some of the arguments of the Times are indeed so obvious
that it seems superfluous even to state them. Money in hand
is all the world over better than beggary. That the inculcation
of such a principle will tend to fill our towns with paupers
is monstrous absurdity. The object and design of Savings
Banks are, of course, primarily, to seek to get hold of the
surplusage of money in the hands of the poorer classes, to
rescue it from vicious or unnecessary expenditure at the best
seasons, in order to its forming a reserve for needful subsistence
or additional comfort at another period. A domestic
servant,
says another article of the Times,[60] at the age of
fifty-five or sixty, finds she is incapable of further employment.
She has saved 80l. Very creditable to her, of course, and
very stingy she must have been to her nephews and nieces to
have done so much. But what is she to do with her 80l.?...
Across the Channel such a sum would be a mine of agricultural
wealth. On this side the Channel it would be a snowball in
the sun.
This is, by the way, an extreme and unfortunate
case, and one we would hope not often, in all the particulars,
occurring. But were it frequent, surely 80l. in hand is better
than nothing and an immediate resort to the parish. To say
that the 80l. would always remain 80l. and would not melt
away like snow before the sun, would be ridiculous; but if
there be any virtue in self-reliance, and in self-dependence, it
surely would not be ridiculous to say that that which enabled
a woman to minister to her own wants in a greater or less degree,
and in the same degree to rescue herself from becoming
a burden upon other people, was, so far as it went, a solace
and a blessing to her. Once, and only once more, the Times
declared that investing money in Savings Banks was mere
hoarding,
nothing more than the creating of misers.
It is most melancholy to notice the few helps and encouragements to
thrift and husbandry which our present condition allows the labourer. We
tell him to save. We put it as the most indispensable moral duty; the great
commandment of our law. We build prisons (sic) for those whom age or
calamity have proved transgressors against it; yet, having laid this heavy
burden upon the labourer, where is the 'little finger' of help contributed by
society. We refer him to the Savings Banks and to Friendly Societies, i.e. we
tell him to hoard his money, or to secure an annuity, on the chance of old
age. There cannot be two modes of investment less interesting, less social,
less suited to the condition of the mind of a labourer. Where it is practised,
we can only say that it is an act of faith and prudence so dry, so pure, so
transcendental, as to be above humanity, especially that very form of humanity
found in the English agricultural labourer.
Here we think both arguments and facts are at fault.
There can be no question that at this time there were many
almost insuperable obstacles to the profitable investment of
small sums. These obstacles, caused by the state of society
and the tendency of legislation, especially on the distribution
of land, have since been removed, and no longer influence the
case. Why, however, the best should not be made of existing
means is at least a fair question? People must save money—hoard
it, if the term he liked better—before it can be used.
It may be uninteresting and unsocial to save money instead
of spending it, but people must do either the one thing or the
other; and if they do the former, they at least know the
value of a secure place of deposit where their money shall lie
in safe and remunerative custody till it be needed. Then as
to the facts. The acts of faith and prudence,
so dry, so
transcendental, &c.,
were at that time, as at present, more
frequent where the agricultural labourer is in strongest force
than in almost any other part of the kingdom. In Dorsetshire—poverty-stricken
Dorsetshire,
as it is called by the
Times itself—the Savings Banks return for 1843 averaged more
than 2l. a head for the entire population, while in Lancashire,
with its highly-paid manufacturing population, it only
averaged 1l. Nor is this a solitary instance. The rural
population throughout the country are by no means the least
frequent visitors to Savings Banks.[61]
Far more important, however, in their disastrous results
than those attacks from without, were the blows levelled at
Savings Banks from within. There were now developed inside
these institutions seeds of much mischief, which materially
retarded the growth of Savings Banks in subsequent years,
if not of the habits which the promoters of Savings Banks
sought to engender and foster. The subject of Savings Bank
frauds will belong to a subsequent chapter; but as one or two
cases occurred during the time treated of here, and had their
influence on subsequent legislation, we have considered it
advisable to dispose of them before proceeding to describe the
legislation of the last twenty years.
It was seen from the commencement of Savings Bank
operations that the first and most imperative element should
be complete and unquestionable security. When Government
undertook to legislate for Savings Banks it did so with a view
to their protection from those frauds which must necessarily
overtake some of a great number of semi-private undertakings.
In 1817 the Banks were rapidly increasing in number
and importance, and it was only natural to suppose and
assume that abuses would creep into the management. To
meet the probability of a misapplication of the funds, Government
agreed to take all the money deposited with the trustees
of Savings Banks, and to guarantee a certain fixed rate of
interest for it, even above that which the fund directly obtained
for itself. This was at once an encouragement to the
frugal and a perfect security for such sums as were paid to
the National Debt Commissioners. In the interval, however,
between the payment of the sums by the depositors and the
second payment by the trustees, no safeguard was provided
beyond the vigilance of the same voluntary and unpaid
trustees. Those trustees were completely irresponsible after
the year 1828. Before that time we can only assume their
responsibility, not from the ordinary reading of the enactment,
but from a decision which was given in a court of law. That
decision was to the effect that deposits are made by persons,
not on the faith of the person acting as cashier or actuary,
but upon the faith of the gentlemen who act as trustees....
If, therefore, the clerk or other person employed by them (the
trustees) is guilty of peculation, they are themselves liable for
any defalcation which may ensue.
Whether this decision was
right in law or not matters little now, inasmuch as the Act of
1828 released the trustees from any such obligation entirely,
declaring as it did that no trustee or manager should be
personally liable, except for his own acts or deeds, or for
anything done by him;
and even this was again limited to
cases where he should be guilty of wilful neglect or default.
The valueless character of the safeguards granted to those who
of all classes most needed ample security for that for which
they had pinched and economized soon began to be seen.
Having limited the period of our survey in this chapter to
the year 1844, we cannot here introduce the case of the great
frauds in Savings Banks which created such painful sensations
all over the country as one by one the most monstrous iniquities
practised on the most deserving of the poor came to
light. Our only reference here will therefore be to one such
case in Ireland, and the first instance of the kind in England.
The case of the Cuffe Street Bank in Dublin, which, so far
as we can find, was the first serious defalcation committed on
Savings Banks made public, was also one of the most ingenious
instances of an accumulation of frauds on record. The
other case occurred in connexion with the Hertford Savings
Bank in 1835. The Dublin fraud brought to light earlier
than this date deserves the first place, not only on this ground,
but because it was greater in extent and deeper in villany.
No one can read of the numerous cases of fraud which have
occurred at different times in connexion with the Irish
Savings Banks without feelings of deep indignation. The
influence, it is quite clear, is felt in Ireland to this day. The
Irish people are quite an exceptional people, with whom forethought
and self-control are not indigenous. One of the most
important organs of public opinion in Ireland, in alluding to
such topics, has said that nothing can be expected from the
Irish peasant until he learns to restrain his irregular impulses—impulses
often generous, but too often impetuous and
ill-directed—until he learns to make the gratifications of the
present yield to considerations for the future.
For many
years the Irish poor were left to themselves, and the result
was shown in their reckless and determined improvidence.
The institution of Savings Banks is described as having come
to the Irish industrial population like a ray of hope. Great
improvement took place. The Irish labourer has never been
worth so much as the English one,—the wages of many at
the period of which we are speaking being generally sixpence,
and scarcely ever more than a shilling a day,—and yet it can
be proved that this very class had managed to contribute to
the Savings Banks in Ireland, up to the year 1841, no less a
sum than 2,000,000l. out of the total of 2,800,000l. then
remaining in Irish Banks. It is impossible for pen to describe
the result of a bank failure, occasioned by the worst possible
circumstances of fraud, upon such classes as these. The
actual failures spread dismay over the entire country. The
loss they sustained was their ruin; for, so wronged, scores of
them were thrown back despairing on their former recklessness,
and referred to their treatment as full excuse for any
amount of subsequent improvidence. And men will hesitate
before they blame them.
The Cuffe Street Savings Bank at Dublin was originally
established in 1818 as the St. Peter's Parish Savings Bank.
It was started by several of the most influential gentlemen in
Dublin, who formed themselves into trustees and managers.
The then Archbishop of Dublin, Archdeacon Torrens, Judge
Johnson, and Serjeant (afterwards Lord Chief Justice) Lefroy
being among the most prominent. On the strength of the
well-known character and wealth of the trustees, this bank
from its commencement did a very large business; so much
so, that it was calculated to have received in deposits in one
year (1831, when the bank was at its best,) no less than
100,000l. The bank began on an unpretending scale enough,
to judge by the appointment and pay of its only salaried
official.[62] This person was a Mr. Dunn, who combined in 1818
the functions of sexton to the parish with which the bank
was immediately associated, with that of actuary of the bank,
at a salary of five pounds a-year. The rector of the parish
was security for Dunn; but all such considerations troubled
the trustees but little. On the strength of this person's
religious character, for he was a very correct man,
[63] he soon
became factotum. Almost from the first a boy of the name
of Ballance, whom Dunn had taken from a charity school, was
his book-keeper. This lad was also a kind of general servant
of Dunn's, living with him in his house, and soon became his
perfect tool. Without making him his confidant—for the
actuary was too cunning, as it seems, for that—he used him
exactly as if he had been one. For eight years Dunn managed
solely the affairs of the bank, giving the most perfect satisfaction
to every one, depositors as well as trustees. In 1826,
however, a Mr. Lannigan, a barrister, comes prominently upon
the scene. This gentleman was a trustee, and seems to have
been dissatisfied with being one merely in name. Mr. Lannigan
began, therefore, a little meddling,
and from the way
his interference was received, this trustee, shrewder than the
rest, began to suspect something not quite right. He then
looked narrowly into the system of keeping accounts, and was
not long in finding sufficient to awaken the strongest suspicions
of Dunn's malpractices. Dunn, however, had not
been asleep all this time. He not only with great ingenuity
kept his accounts as square as possible, but operated upon
the credulity of the other working trustees, and succeeded
in getting a party among the number to form a wall round
him. On Mr. Lannigan mentioning his suspicions to his
brother trustees, Dunn's machinations stood him in good stead:
they would not hear anything to the prejudice of this very
correct man.
Mr. Lannigan repeated his attempts with the
same effect; was considered a suspicious and troublesome
fellow, and got no little abuse for his pains.[64] For five years
it is said this unseemly contest went on, and although this
trustee succeeded so far as to get more than one sub-committee
appointed, nothing came of it: the committee were too
prejudiced in favour of their servant to go the right way to
work in investigating the matter, or they were too easily
blindfolded by him to find anything out. Mr. Lannigan,
however, persevered in his opposition, and was rewarded by
Dunn's retiring, amidst the condolences of the whole parish,
which evidently thought him a very ill-used man. Soon the
tables turned; and grief of this cheap sort gave place to bitter
indignation. Immediately after the man had resigned a
depositor applied for some money, when, on comparing his
pass-book with the ledger, the account was found to be open
in the former and closed in the latter. Hereupon the ci-devant
parish sexton absconded. With eyes at length wide open, the
trustees called for the books of other depositors, and without
as yet making any noise, soon found that Dunn had appropriated
6,000l. to his own use. The trustees then communicated
with the National Debt Commissioners, and asked their
advice in the emergency, suggesting that some one should be
sent over to inquire into the circumstances of the bank, and
to close it, if it were found necessary to do so. Mr. Foot, one
of the trustees, a Director of the Bank of Ireland, who had
been one of Dunn's strongest friends, and who was now one
of the most anxious that the position of the bank should be
retrieved, took the communication to London, and succeeded
in securing the services of Mr. Tidd Pratt. That gentleman
went to Dublin, however, not to investigate the case; but
simply to make awards, stating how far and in what cases the
trustees were liable to pay the depositors. He adjudged in
208 cases, and to the amount of 11,864l. Of this sum 7,500l.
were to be paid by the trustees out of the funds remaining in
the bank, while the rest claimed up to that time did not consist
of legal claims, as the money had been paid to Dunn out
of office hours, at his private residence, and even in the street.
Mr. Pratt found out in making his awards that almost
every legislative enactment relating to Savings Banks had
here been systematically violated; that the bank itself had
rules founded upon the Act, but that they had all been
evaded. Depositors had placed as much as 200l. in the bank
in one year, and had received interest upon all they had
deposited; the same individuals were also found to have had
two different accounts in the bank. In all cases of this kind
where a deficiency existed Mr. Pratt ruled that the depositors
could not legally recover, but he recommended in his private
capacity, that if the bank were carried on, such sums might
be paid out of the accruing yearly profits. Mr. Pratt is said
to have recommended in the same way that the bank might
go on under a fresh management, and seems to have appointed
another set of trustees for the purpose; at the same time
informing them that the National Debt Commissioners would
receive without remark the yearly statements as usual, though
those statements must of necessity for some time to come
exhibit an increase of liabilities over assets. The bank was
carried on, and against Mr. Pratt's advice the whole of the
claims were at once met, with a view,
as the trustees said,
to induce a more perfect confidence.
In 1845, the Government
observing that year by year the bank was getting into a
worse financial position,[65] made an attempt to close it; but on
the case being submitted to the Attorney and Solicitor
General, they found they could not do so unless the Annual
Returns were not sent. The Returns, worthless as they were,
had been regularly sent, and thus the Executive was powerless.
After another crisis at this period, the bank finally
went down in 1848, the liabilities amounting to the sum of
56,000l. and about 90l. to meet it. The number of depositors
who had accounts with the bank at the time was 1,900, nine-tenths
of whom were poor people. In a debate which occurred
in the House of Commons immediately after this
failure, Mr. Reynolds, the member for Dublin, commented in
strong terms on the conduct of the National Debt Commissioners,
who had known the state the bank was in for
fifteen years, and had never zealously interfered.[66] This
member also stated his intention to move for a Select Committee
to investigate the whole question. The Chancellor of
the Exchequer said he saw no objection to such a committee,
and it was subsequently appointed. The proceedings of that
committee, and the assistance which was given to the
defrauded depositors after much debate, will be referred to in
their proper place in the next chapter.
The results of this fraud in Dublin and the neighbourhood
was most disastrous; not only so, but years afterwards,
in remote parts of England as well as Ireland, this
case of fraud was referred to with considerable bitterness,
and urged as an excuse for prodigality and recklessness.
There was at the time a still more important Savings Bank,
with several branches, in Dublin; and so great was the effect
of the fraud, that nearly all the money deposited in this
bank was withdrawn within four weeks, and it was a
considerable period before it recovered its position. The
depositors in the Cuffe Street bank were of the poorest
classes, and the effect upon them when they found they had
been robbed of all they had is described as painful in the
extreme. Dealing with the case, and the details of it,
said
one influential gentleman, I have never seen anything more
calculated to excite painful feelings than this was; some of
the depositors were on the very verge of wretchedness and
destitution, without a shilling to support them.
According to
another excellent authority[67] some died of want and distress,
and many of them had to seek the shelter of the workhouse.
Before the case came on for discussion in Parliament, several
petitions were presented to the House of Commons, praying
for help, and setting the pitiable situation in which the frauds
had placed many of the depositors before the public; and one,
signed by 5,076 citizens of Dublin, with the Protestant and
Catholic Archbishops of Dublin heading the names, bore
out in full the facts to which we have just alluded.
The fraud in connexion with the Hertford Savings Bank
was one of the earliest cases that occurred in England, the
particulars of which have been made known. This bank, as
will be remembered, was one of the first formed in this
country. Like many more of the original banks, this one
was conducted on the principle of making it a Head office for
the surrounding district, with branch banks radiating from
it as from a centre. Clergymen, as has already been stated,
almost exclusively acted as the Agents for these branch banks.
The Rev. Mr. Small, a clergyman at St. Albans, acted in this
capacity in that town, and in the course of a connexion with
this bank, extending over a period of several years, contrived
to embezzle the money entrusted to him to the extent of
24,000l. This he did in two different ways. In the one
case, he received deposits and did not remit them; and in
the other, acting with due clerical discretion, he applied to
the Head bank for sums in the names of depositors for
which he had not received their warrants. The systematic
frauds of this reverend gentleman were found out when the
St. Albans Bank was detached from the parent stock under
the erroneous impression that it was strong enough to commence
business on its own account. It appears that in this
way the trustees of the principal bank were only liable for
half the amount of the defalcations; but it ought to be placed
on honourable record, that eventually, through the liberality
of the trustees, who, fortunately, were principally rich noblemen,
the poor depositors were reimbursed of their losses in
full. We have gathered the above facts from statements
made in the House of Lords in 1835, and as the question of
the liability of trustees and the security of deposits was
then largely introduced, it may be interesting to follow up
the story with a few remarks to which the case gave rise.
The Marquis of Salisbury, one of the trustees, asked the
premier, Lord Melbourne, if the law, as it then stood, could
not be altered. The liability of trustees, inculpating, as
it might, innocent men, rendered many gentlemen most
anxious to withdraw their names from such offices. This
was one horn of the dilemma. The other was, how depositors
could be made to feel secure. It was no trifling
matter. When Savings Banks were first formed, but few
individuals could ever have expected that the sums subscribed
would amount to what they now were.
[68] It was
high time that the security of these savings, and as to who
was liable for them, should be once for all distinctly settled.
Lord Salisbury was sure no one would like to remain a
trustee without knowing the amount of his liability. He
then appealed to Viscount Melbourne—who with himself
was a trustee of the Hertfordshire Bank, and would have
to pay a share of the loss—whether he would not have a
bill brought in to remedy the grievance. Lord Melbourne
thought it was not necessary. Much as he lamented, for his
own sake and that of the country, what had occurred down
in Hertfordshire, he did not think that in consequence of
this one misfortune they should interfere with the general
business of the Savings Banks in the country. Let them look
sharper after the management, and then such things would
not occur. Lord Brougham believed there had been great
carelessness in the case of this particular bank, but was
happy to find that the trustees were such undoubtedly
solvent men.
Lord Salisbury and the Duke of Richmond
were certain, if nothing had to be done, that many trustees
would at once withdraw their names, and then,
said the
latter, the body of depositors would withdraw their money.
Lord Denman reminded his noble friends that, if the trustees
acted so, their responsibility would, in all probability, follow
them into their retirement,—he was by no means sure that
their withdrawal would put an end to their responsibility.
The Earl of Wicklow hoped that nothing would be said or
done which would destroy the confidence of the public in
Savings Banks. He trusted that, in this instance, the
trustees would be found liable for the whole of the deficiency.
Lord Salisbury thanked the noble Earl for his
kind wish, but explained how it was not possible that this
could occur. An alteration in the law was eventually made,
but the consideration of this change we leave till the next
chapter.
| Counties. | Number of
Accounts
open in
1858. | No. of
Depositors to
every 100 of
Population. | Average
Deposits per
head of
Population, 1858. |
|---|
| Agricultural:— | | £ s. d. |
| Berkshire | 16,393 | 9·64 | 2 12 7 |
| Devonshire | 61,558 | 10·33 | 2 18 11 |
| Dorsetshire | 14,134 | 7·67 | 2 12 2 |
| Yorkshire, East Riding | 25,091 | 11·35 | 3 6 1 |
| Manufacturing:— |
| Lancashire | 117,927 | 5·80 | 1 12 4 |
| Yorkshire, West Riding | 63,334 | 4·77 | 1 5 6 |
LEGISLATION ON SAVINGS BANKS FROM 1844 TO THE
PRESENT TIME.
If there is any question why such importance should be ascribed to
measures of a purely economic character, the reply is, that these minor
matters insensibly build up the character of the nation; insignificant, it may
be in themselves, they mark, in the aggregate, the well-being or the suffering
of the British people.
—British Quarterly Review.
It will be remembered that in the third chapter we described
the course of Parliamentary action with regard to
Savings Banks down to the year 1844, and in that chapter
left Mr. Hume, after an unsuccessful attempt to reduce still
further the rate of interest to be given to depositors. The
year 1844 is remarkable in the annals of Savings Banks for
the carrying of a measure known as Mr. Goulburn's Act.
The bill which was introduced by that gentleman, who was
Chancellor of the Exchequer in Sir Robert Peel's administration,
was meant in great part to provide against the constantly
recurring frauds in Savings Banks, and still more
especially to allay the consternation among trustees of safe
banks, who now loudly complained of the state of the law
with respect to their liability. The discussion in the House
of Lords to which we alluded at the close of the last chapter
may be taken as showing that Savings Bank trustees were
by no means satisfied, several years before this, with the uncertain
state of the law. The great fraud on the Dublin
Bank is described as having come upon many trustees like a
thunderbolt, and, aware that they were not spared by the
judicial bench[69] in cases of the kind, they now threatened
open rebellion. Mr. Goulburn received, as he stated subsequently
before a Committee of the House of Commons, a
large number of notices from such officers that, if the law
were not modified, they would resign their trusts. Moved by
such considerations as these, which the Government seem to
have felt they could only disregard at the imminent risk of
shaking the credit of the entire Savings Bank system, Mr.
Goulburn introduced his bill (7 & 8 Victoria, chap. 83,) on
the 2d of May, 1844, to amend the laws relating to Savings
Banks.[70] The principal matter with which the bill dealt was
the liability of trustees, but this was by no means the only
one.
Second only in importance was the proposal to again reduce
the rate of interest. The remarks with which he introduced
his proposal to reduce the interest rate are curious,
to say the least, when viewed in the light of the speech to
which we have previously referred. He felt confident, he
said, that the country had no right to pay upon these investments
a higher rate of interest than could be obtained
from an investment in other securities. The Savings Banks rate
was considerably higher than any other investment of money.
Although the Act of 1828 had tended to reduce materially the
number of depositors of the better classes, and had increased—as
we have shown in the last chapter, we think quite conclusively,
so far as figures can show it—in a still greater
proportion the number of those who had deposited only small
amounts, there were still many who were attracted to Savings
Banks on account of the interest given being higher than
that obtained from the Funds. Mr. Goulburn now proposed
that the bill should contain a clause reducing the rate from
2-½d. per cent. per day, to 2d. With the same object in view,
namely, to restrict the operations of Savings Banks to the
class of provident poor, the Chancellor proposed to reduce
the amount which any one could put by in one year from
30l. to 20l. and to make the total amount which could be
deposited in any Savings Bank, 120l instead of 150l.[71]
A further proposition, which provided for another wide-spread
evil in the same direction, was one requiring that no
persons should be permitted to make deposits as trustees
without stating the names of the persons for whom they were
acting, and that no payments should be made in such cases
except under a receipt signed by all the parties interested in
the funds deposited. By means of the clauses in previous
acts relating to trust accounts, the law was regularly evaded,
and many persons had considerable sums of their own in
Savings Banks, which they represented as being held in trust
for other people, whose names even they were required not
to divulge.[72] This clause was carried without any trouble,
as it met such a palpable evil; provision was made, however,
that the law should not be applicable to trust accounts
opened before the passing of the act. Had it not been for
such an exception, those who had recourse to the stratagem
of feigning the character of a trustee might have lost much
of their money, on account of the difficulty or impossibility
of obtaining within the time the signature of the party
apparently interested. Though the clause was not made
retrospective, as some urged it should be, as a punishment
to those who had deceived the managers of Savings Banks, it
was clearly the best thing that could be done to put an end
to the practice, which entirely depended on the powers of the
so-called trustees to draw out the money alone.
Mr. Goulburn spoke next on the question of liability of
trustees. Though the topic was engaging great attention out
of doors, little was said upon the point on this occasion: the
section of the act thus passed so quietly, was, however, pregnant
with meaning, and, as it turned out, pregnant with results.
The clause provided that no trustee or manager of any
Savings Bank shall be liable to make good any deficiency
which may hereafter arise in the funds of any of these
institutions, unless these officers shall have respectively
declared, by writing under their hands, that they are willing
to be so answerable; and not only so, but it shall be lawful
for each of such persons, or for such persons collectively, to
limit his or their responsibility to such sums as shall be
specified in any such instrument.
This declaration was, of
course, to be lodged with the National Debt Commissioners.
On a trustee or manager making it, he became liable
to make good every deficiency that might arise in the bank
with which he was connected, whether through his own
carelessness, or the cupidity of those under him; if a declaration
of this sort were not made, he was liable for nothing.[73]
The above were the three most important changes made in
the law of Savings Banks under Mr. Goulburn's Act, but
there were several minor clauses introduced into the bill
which deserve mention, and which were, there can be no
doubt, equally with the more important sections, the direct
results of the systematic frauds already described. With his
eye direct on the Cuffe Street actuary, concerning whom the
Government knew more than was generally known in 1844,
the Chancellor, whilst studiously avoiding all mention of the
Dublin case, spoke of those who, ignorant of business, took
their money to improper places, and made deposits out of
office hours. The fourth section of the Act was, therefore,
designed to meet such cases, by declaring any actuary or
cashier who should so take money out of course, and not
account for it at the very first meeting, to be guilty of a misdemeanour,
and liable to be punished for fraud. Section 5
required that deposit-books should be produced at the
bank at least once every year for purposes of examination
and check. Section 17 provided that bonds of sufficient
security shall be given by every officer of a Savings Bank
trusted with the receipt and custody of money, and that these
bonds shall be placed (not with the Clerk of the Peace as
before this Act), but under the charge of the National Debt
Commissioners. The old arrangement likewise for depositing
the Rules of the bank with the Clerk of the Peace was repealed
by section 18, and in its place the next section enacted,
that when a new bank was proposed, two written or printed
copies of the Rules of such bank should be transmitted to the
Barrister for his certificate, who, on approval, was to send one
copy back to the Bank authorities, and the other forward to
the National Debt Office. It was the 7 and 8 Vict. which,
in addition, conferred extended powers on the certifying
barrister, by appointing him final Arbitrator in any disputed
case. The bill, after having been modified in one or two
respects, and contested on several points,[74] received the Royal
Assent in August, 1844, and was ordered to take effect on the
20th of November following.
It will not be supposed that the bill, of which the above is
an outline, was passed through its different stages without a
word from Mr. Hume. That member may well be forgiven
for alluding on one of these occasions to the past, and stating,
how, so far as the rate of interest was concerned, he had been
fighting for the very thing which was likely to be brought
about. This was clearly a case of patience and obstinacy
rewarded.[75] The bill, however, Mr. Hume stated, scarcely
went far enough for him, though it was in the right direction.
He still held the opinion that persons holding Government
security should be placed on the same footing, and that those
who had 20l. in the Funds should be dealt with in exactly the
same manner as those who had 1,000l. In this, however, we
cannot help thinking Mr. Hume went rather too far, and
argued on the assumption that there was no difference between
the shilling of the rich and the shilling of the poor man. Mr.
Goulburn in replying to Mr. Hume said, he knew this was
a favourite point with the member for Montrose; but he could
not concede it: a poor man with 20l. in the Funds could not
and never would be able to bear a fall in the Funds so well as
the large stockholder.
Early in 1848 a Committee of the House of Commons, consisting
of the Chancellor of the Exchequer, Mr. Goulburn,
Mr. J. A. Smith, Sir J. Y. Bullar, Mr. Shafto Adair, Mr.
Bramston, Mr. Gibson Craig, Mr. Fagan, Mr. H. Herbert, Mr.
Herries, Mr. Hume, Mr. Reynolds, Mr. Poulett Scrope, and
Mr. Ker Seymour, was appointed to inquire into the state of
the Irish banks. As already related in the last chapter, the
Cuffe Street bank soon broke up after the trustees were
enabled to take refuge under the Act of 1844. Into this
inquiry, which we have before referred to, it is unnecessary to
enter much further; it presents little else than information
relating to the flagrant breaches of faith of officers to whom
were entrusted the hard earnings of hundreds of the poorest
people living around them. The scope of the inquiry was
limited to Ireland. It seems to have been purposely intended
that a full investigation into the general Savings Bank
question should not now be made. The inquiry was not
extended in any sense to the English banks, though some of
the most prominent English managers offered to give evidence.
Doubtless the Government feared that a full exposure of the
frauds in Savings Banks, an inquiry into several matters
connected with the disposal of Savings Bank money already
beginning to be mooted, might have the effect of shaking the
confidence of the people. People were openly saying that
Government had not done its best to make the Savings
Bank a secure repository for the people; yet, rather than raise
this issue before a Committee of the House, it submitted to
have the investigation that was made designated a perfect
star-chamber business,
and the members of Government
themselves subjected to great ridicule. The Committee sat
only nine days, and made a report to the House, which
Lord George Bentinck characterized as the most extraordinary
one that ever was presented to Parliament.
It is
as remarkable for its brevity as for its vacuity—as brief as it
is worthless.
The report is certainly brief, and may here be
given without curtailment: Your Committee,
it commences,
has proceeded with the inquiry entrusted to them by the
House, but owing to the late period of the session they have
found themselves unable to bring it to a satisfactory conclusion.
They are of opinion that it is advisable that a further
inquiry should take place, either during the recess or in the
next session of Parliament, regulating the liability of trustees,
and providing for the appointment of auditors to Savings
Banks.
The Government immediately set to work to introduce a
bill. They saw that a great mistake had been made four years
before, in settling the question of the liability of trustees in
the way it was done, and now the endeavour must be, if
possible, quietly to re-enact the old law in this particular,
making trustees liable in the way they were before 1844.
The great mistake in this instance, and that which proved
fatal to the attempt, was in legislating for English as well as
Irish banks, when the inquiry upon which the bill was taken
to be founded had been limited to Ireland, and was not allowed
under any circumstances to extend to England. The debates
to which the measure of 1848 gave rise are certainly the most
animated that ever took place in the House on this subject,
and it will be interesting, as in different ways indicating
the feeling of the country, to notice the expressions of
opinion which the discussion elicited. The Chancellor of the
Exchequer, Sir Charles Wood, in moving the Bill to amend
the Law of 1844, appears[76] to have urged that the clause requiring
the trustees to voluntarily assume responsibility had
completely failed; that few trustees would take the responsibility
upon them, and that, consequently, depositors were
losing faith in the banks;[77] irregularities were increasing;
and the trustees had not even the pretence of a sufficient
inducement to make them attend to their self-imposed duties.
In place of no responsibility at all, he proposed that each
trustee should be responsible for a certain sum, which would
be large enough to ensure a reasonable amount of attention,
and so small as not to frighten them into resigning their office
altogether. This sum it was proposed to fix at a hundred
pounds. Clauses in the bill also provided for the appointment
of auditors, as suggested by the Committee of Inquiry,
and for the examination of depositors' books, that once in
each year the books of every depositor shall be produced at
the office of each Savings Bank, for the purpose of being inspected,
examined, and verified with the books of the institution
by the auditor.
More from the way in which this bill was introduced
and the circumstances attending the Committee of Inquiry,
than from any decided opposition to the Government proposals,
much agitation prevailed among Savings Bank
officials, which was ultimately made to extend to depositors.[78]
The latter were led to believe that the proposed legislation
would in some way be inimical to their interests, and
petitions were got up, praying that no further Acts should
be passed until a full inquiry was made into every part of
the Savings Bank system. Sir Henry Willoughby, who for
some years before this time, and till his death, took much
interest in this and cognate questions, again presided at a
meeting of Savings Bank managers in London about this
time, and helped them to concert measures of opposition.
Before speaking in Parliament on the introduction of the
bill under consideration, he presented two large petitions,
signed by 79,000 depositors in Savings Banks, praying that
Government would cease their interference with these institutions.
This gentleman then referred to the quietness
with which Government had introduced such an important
bill, not having given such a notice as was invariably given
even with respect to the commonest turnpike road.
And the
quietness was a mistake of no ordinary moment. Had the
details of the bill now introduced been understood by the
country, there might have been opposition from managers of
Savings Banks, but there could not well have been so much
dissatisfaction expressed by the Press, or by the body of depositors,
whose interest every clause of the bill was meant to
conserve. Sir Henry Willoughby also on this occasion gave
utterance to the feeling which was in many other minds, and
which had led to the opposition then manifested, by alluding
to the impression which had got abroad and which he
believed was perfectly true, that the money of depositors
was used for other purposes by the Government than those
that related to the Savings Banks.
Whether the money
was used advantageously or not he would not say, for that
was not the question. Colonel Thompson spoke strongly
of the erroneous impression that everybody had been in
about the Savings Banks having full Government security
for their money; so strongly, indeed, that in another place
we shall make further allusion to him. The bitterest
opponent, however, which the Chancellor met with on this
occasion was the leader of the Opposition in the House.
Lord George Bentinck felt sure that the bill was one which
its mover (Sir Charles Wood) did not understand. After
going into the details of the measure, and endeavouring to
prove that the examination of depositors' books could not
be accomplished in the larger banks every year,[79] and that
the smaller concerns could not afford to pay for auditors
out of the small surplus of interest which went to pay expenses,
Lord George added, Surely a Government which had
proposed so much and done so little, can refrain from doing
harm, since they cannot do good; and will not press this most
discreditable bill through the House at the end of August
without necessity for it, and against the opinions of those best
calculated to form a judgment.
Irish members, seeing the
turn the discussion was taking, urged that, at any rate, the
bill might apply to Ireland. It was patent to everybody that
the poor depositors in Ireland needed every protection, however
secure the same classes might feel in England. In
Ireland such a bill was really required, and was necessary,
to restore confidence in Savings Banks;[80] why not make
it apply to Ireland only? After an unsuccessful attempt on
the part of Lord George Bentinck to throw out the bill
altogether, it was decided, on the motion of Mr. Wodehouse,
and by a vote of thirty to eleven, that the words Great
Britain
should be struck out of the motion, and that the
Act should simply apply to Irish Savings Banks.
That the bill now passed was a beneficial change in the
law, and a considerable step in the right direction, no one
now doubts; had not the perverseness of Savings Bank
officials prevented the Government from making its provisions
apply to England, much subsequent suffering and
grievous loss would have been saved to many of the best
classes of our industrial population. It was a safeguard such
as was wanted in Ireland, and it answered admirably.
The bill having been made law, and new depositors secured
to a considerable extent from robbery and exaction, the
attention of the Legislature was called to those who had lost
their all by past frauds; and the records of Parliament
show that one member after another reverted to such topics
until redress was obtained. On the 29th of March, 1849,
Mr. Reynolds, the member for Dublin, moved for the appointment
of a Committee to investigate into the case of
the Cuffe Street bank in Dublin, and to ascertain who were
liable for the extensive frauds in that bank. He alluded to
the unsatisfactory result of the previous inquiry, which was,
indeed, not meant to be final. In making his motion,
Mr. Reynolds, who had access, of course, to the best sources
of information, entered into a full account of this bank,
stating, indeed, many of the facts which we have already
given. He complained most bitterly of the Government,
who had accepted the advice of a flippant barrister,
as
Mr. Pratt was designated, and who had suffered the bank
to go on when it was known to be in a state of hopeless insolvency.
He described the heartrending scenes which he
had witnessed in Dublin, owing to the failure of the bank,
and during the last eighteen months, and related some of
the cases to the House, where they had ended in insanity,
death, or suicide. That the depositors were mostly poor
persons he proved, by stating the average amount due to
each of the 1,664 persons who were creditors of the bank
to be but 27l. Mr. Reynolds added, that he had no hesitation
in saying, under the peculiar circumstances of the case,
that the Government ought to make good the loss.[81] If he
had not proved that point, he left it to a Committee of
Inquiry to take up. In the name not only of justice, but
of mercy and compassion,
he besought the House to
agree to his motion, and to save many poor persons from
utter and total ruin.
The member for Dublin University
(Mr. Napier) seconded the motion for inquiry, and discussed
many of the details of the failure from a legal point of view.
In one remark, he gave expression to a very general feeling:
the course of legislation on Savings Banks had plainly
been to reduce, for strong reasons doubtless, the responsibility
of trustees; in proportion, however, as that responsibility
was reduced, so he, Mr. Napier, thought the moral
responsibility of the commissioners increased. Precisely in
the same degree as the trustees were relieved, should the
vigilance of the other body have been awakened.
Nor
was it less unfortunate—though this is a matter which was
not alluded to—that at a time when it was thought most
fitting that the interest on deposits should be reduced, steps
should also be taken to make them less secure as well as
less remunerative.
Mr. H. A. Herbert, the member for Kerry, proposed an
amendment, extending the inquiry to this Tralee and Killarney
banks, and also to the single case of failure in Scotland,
at Auchterarder. Mr. Herbert dwelt upon the case
of these frauds in an able manner, but we reserve the consideration
of them to the next chapter. The reference to
the Scotch case doubtless called up Mr. Cowen, the member
for Edinburgh, who was sorry to hear of the necessity for
any such inquiry in Scotland; he had been accustomed
to think that they were above suspicion in Scotland with
reference to their banking matters.
Mr. Cowen said that
he regarded all discussions on Savings Banks as most momentous,
and as involving the consideration of the most
important national questions. It was of the greatest importance
that Savings Banks should be placed on a solid
foundation, and cleared of all those injurious anomalies
which now attached to them,
for he believed that they
might be made the means of aiding in a great measure to
stem that flood of pauperism which was now overflowing
the land.
Much warm discussion followed. The Chancellor
of the Exchequer alleged that the proposed inquiry would
be both a useless and an expensive one; and Mr. Goulburn,
the ex-Chancellor, who was equally committed to the same
course of legislation and the difficulties which that legislation
had brought upon the Government, rendered prompt
assistance by saying exactly the same thing. On a division,
it was carried by a majority of three in a House of 100
members, that a Committee should be appointed; and by a
majority of eight, that the inquiry should extend to the three
Irish and the Scotch defaulting bank.[82]
It was one thing, however, to carry a Committee of Inquiry
in the face of both the great parties of the House, and
another to nominate the members who should compose it;
and this Mr. Reynolds subsequently found out to his evident
chagrin and disappointment. The Government had clearly not
been sufficiently on the alert, and hence they had been beaten
in the first particular; they secured themselves however
against any further defeat. In the following April, Mr.
Reynolds proceeded according to usage to nominate his
Committee, which he wished should consist of eight English
and seven Irish members. The Chancellor of the Exchequer
objected, and wished for the reappointment of the Committee
of the preceding session. Mr. Goulburn promptly
assisted by saying, that it would be a reflection on the Committee
of last year if it was not so reappointed. In that
Committee there were only three Irish members, though
the subject then, as now, had exclusive reference to Ireland.
Mr. Reynolds, Mr. Herbert, Sir Henry Willoughby, stoutly
contested the point, which ended in the names of two additional
Irish members being proposed. The Government
saw the importance of the question, and that the inquiry
would be made in this way to turn upon the administration
of Savings Banks generally, and the responsibility of Government
in regard to them, and succeeded in resisting any
change by an adverse majority of 111 to 74. The whole
of the names not having been gone through on this occasion,
the Irish members returned to the subject again a few days
subsequently. In the names of the poor who had been
rendered paupers by laws badly administered,
one member
asked, for an impartial jury.
Some of the daily papers
had declared that the Government meant to pack the Committee
and so get a favourable decision, and this encouraged
the independent members to persevere. Mr. Herbert said,
the Government all along most consistently attempted to
quash inquiry.
He condemned in strong terms, and under
the apparent approbation of the House, the conduct of Mr.
Pratt in relation to the Irish banks. Mr. Reynolds declared
he would divide the House upon all the remaining names
offered by Sir Charles Wood. After two divisions, however,
when he was left in a minority of 42, and 59, in a House of
202 members, he desisted from carrying out his threat;
though he had a close phalanx of followers, he saw he had
no chance against the combined hosts which the leaders of
the two principal parties in the House had brought to bear.
The members ultimately appointed were the Chancellor
of the Exchequer, the ex-Chancellor, Mr. Herries, Sir George
Clerk, Mr. P. Scrope, Sir G. Y. Bullar, Mr. Ker Seymour,
Marquis of Kildare, Mr. Adair, Mr. G. Craig, Mr. W. Fagan,
Mr. Bramston, Mr. J. A. Smith, Mr. H. Herbert, Mr.
Reynolds. This Committee sat thirteen days, and examined
nine witnesses, including several officials connected with
the Cuffe Street bank, Mr. Tidd Pratt, Mr. Higham of
the National Debt Office, and Mr. Boodle of the St. Martin's
Place Savings Bank, but came to no conclusion, and recommended
nothing to the House.
On the 13th of May, 1850, the same gentlemen were
reappointed under the self-same conditions as in the previous
year: they sat eleven days, and examined some of
the same and other witnesses, and on this occasion made
a long and exhaustive report to the House.[83] This report,
for which all the members except Mr. Reynolds and Mr.
Herbert voted (each of these gentlemen having produced a
report of his own which the Committee would not accept),
went over the case of the defaulting Savings Bank in Dublin
very succinctly; exonerated National Debt Commissioners
and their officers from blame; stated that they found the
commissioners did not exercise all the powers they possessed,
but this arose partly from a misgiving as to the effect
of an exercise of their authority, and partly from an unwillingness
to run the risk of creating a discredit of these institutions;
and that if the trustees had taken the advice of
the commissioners, when in 1845 they advised them to close
the bank, the loss to the depositors would not have exceeded
five shillings in the pound. For these and similar reasons
the Committee came to the weighty conclusion, relative to
this particular case of fraud, that while they cannot admit
the existence of any legal liability on the part of Her Majesty's
Government, they recommend the case of the
depositors in the Cuffe Street bank to the favourable consideration
of the Government, with a view to the adoption
of some measure which shall at least mitigate the extent of
their loss.
With regard to the other frauds into which they
were instructed to inquire, they reported that there were
no peculiar features connected with them differing from
those of other banks which have suffered from the dishonesty
of their actuaries.
They concluded by expressing their
conviction of the unsatisfactory state and working of the
existing law; proper power did not reside with any authority
to check abuses, however indisputable;
by expressing
their opinion that the provisions of the law of 1844 had
worked in a manner obviously at variance with the intentions
of Parliament, and wound up by the following important
paragraph:—
Your Committee have observed with much satisfaction that the Chancellor
of the Exchequer has introduced a Savings Banks bill, which is calculated to
remedy several important defects in the existing law, and extends the responsibility
of Her Majesty's Government to the depositors; and they therefore
abstain from all observations on this part of the subject, further than to state
the conviction, which this inquiry has forced upon them, of the urgent necessity
for further legislation, if those institutions, which have of late years
acquired an extent and importance so little anticipated by the original founders
of Savings Banks, are to preserve their hold on the confidence of the country,
or produce the beneficial results expected from them in encouraging and
rewarding the industry and self-denial of the working classes.
This report was presented to the House on the 1st of
August, and at once referred to a Committee of the whole
House. Next day, the Chancellor of the Exchequer proposed
that a grant of 30,000l. should be made to the
defrauded depositors in the Cuffe Street bank, out of the
Consolidated Fund. Sir James Graham opposed the grant.
If this money was a matter of charity, he argued, they were
opening the door to a dangerous principle; if of justice or
equity, the claim ought to be paid in full. It was unworthy
of the British public to compromise for ten shillings in the
pound. Other members asserted that if Cuffe Street depositors
were paid, the poor creditors of other insolvent
banks would likewise have to be paid. Generally, however,
the House felt with the Committee; it was altogether an
exceptional case, the claims of the former being, as Sir Charles
Wood expressed it, something between equity, sympathy,
and charity.
Mr. Bright, a resident of Rochdale, and
Mr. Sharman Crawford, the member for that borough, whose
ears had lately rung with the tales of heartless deception
practised there, were both for paying these depositors in full;
there might be no legal claim, but there were the claims
of equity and morality.
Mr. Bright, indeed, went so far
as to say, that if Government would bring in a bill to secure
other banks in future from these dreadful calamities, he
would willingly vote that all claims from Savings Bank
failures should at once be met by the State. The House
divided on Sir Charles Wood's motion, when 118 members
voted for it, and 39 against it. We may as well say here
that several attempts were subsequently made to get the
remaining 30,000l. from Government, but without avail.[84]
It will not be difficult for the reader to understand the
position of affairs up to 1850. The law was clearly unsatisfactory;
it had been pronounced so by Committees which,
though composed of nearly the same members, had sat in
three successive years, and patiently examined into the
question in its every detail. The only difference of opinion
indeed in the Committees was, as to the persons who were
liable, and to what extent, for the defective state of the
law, and the results to which it had led. Nor is it at all
wonderful that legislation should have been needed. Savings
Banks, as it was often pointed out about the time, had
increased enormously within a short period, and beyond all
proportion to the expectations which were originally formed
with regard to them. When they were first started, many
benevolent individuals entered heartily into the work of
managing them, and asked for no return, except the
sense that they had assisted in a humane and praiseworthy
object, for the labour they underwent. Putting two considerations
together—the great increase of business, and the
no less certain decrease in the first ardour attending such
enterprises—the increase of paid officials became absolutely
necessary, and in almost a corresponding ratio did the unpaid
machinery decline. Slowly but surely the management of
Savings Banks went out of the hands of an unpaid into
those of a paid staff of officials, and every year the system
of check became more nominal than real.[85] It was apparent,
not less from the proceedings of solvent Savings Banks than
from the exposures made in the case of unsound ones, that
those who had originally taken part in the establishment of
these institutions slowly became honorary in place of active
members of the board; and of those who still continued to
take a share in the work, many had got into the habit of
leaving their duties to subordinates, in some cases signing
blank forms, and even cheques, to be filled up by the acting-manager
at his discretion.
At this stage in the history of Savings Banks, the Chancellor
of the Exchequer came forward,—as the reader has
already learnt from the Report of the Committee of 1850,—with
a bill to amend the law. This bill he introduced to the
House of Commons on the 29th of April, 1850, and it forms
part of our object to explain in detail the plan now proposed,
inasmuch as for many subsequent years the same measure,
with only trifling modifications, was offered over and over again
to the consideration of the House, and as often declined,
through the overpowering influence of the Savings Bank
interest in the country. On bringing forward his bill, the
Chancellor said he wished to avoid all reference to the past,
except in as far as the experience of the past was a guide
to future legislation. He very briefly traced the history
and progress of Savings Banks, remarking at the time that,
if he were not to do so, few could be aware of their real
nature, and how they had grown to their present dimensions.
We need not follow Sir Charles Wood through this account,
nor even repeat the reasons which actuated the Legislature
in making changes in the law from time to time up to the
year 1844. Referring to the Act of that session, he described
it as most defective,
and the bill he wished to introduce
would amend it. Speaking of the responsibility as to loss
in Savings Banks, which many persons thought should rest
with the Government, he repudiated the notion, unless
Government was allowed to have some control over the
persons who might occasion the loss. On the other hand, he
did not wish to do away with the most invaluable feature
in Savings Banks—the local management.
He thought,
however, that Government might take a medium course, and
fairly meet the case by making such arrangements as would
end in the State bearing nearly the whole responsibility as
regarded the receipt and payment of money.
What he proposed
was to alter the enactment that the treasurers of
Savings Banks should receive no emolument, and to vest
the appointment of Treasurer in the hands of the Commissioners
for the Reduction of the National Debt. The existing treasurers
might in most cases be continued, and if they wished
to work for nothing, they might still have the option; but
he insisted on the Government reappointing such officers,
and upon having a control over them. To this officer, or some
one acting for him, all payments should be made over—the
receipt and payment of money by any other person to be
declared illegal.[86] He considered that this arrangement
would guard against the possibility of fraud. The treasurer
and secretary, acting for different interests, as it were, could
scarcely be guilty of collusion, and the one would in all cases
act as a check upon the other. If this plan were agreed to,
the Government would of course be responsible for every
farthing paid to the treasurer.
This was the great and distinguishing feature of the
measure which the Government was disposed to adopt;
but there were other features in the bill of considerable
importance, which ought not to go unmentioned. Thus,
it proposed that the Act of 1844 should be repealed, and
that trustees should be responsible for their wilful neglect
or default, as in the Act of 1828. It was clear, however,
that under the appointment of treasurers the responsibility
would be little more than nominal. Another point
which the bill provided for was an efficient audit of the
accounts, the trustees of each bank to appoint an auditor,
and the pass-book of each depositor to be annually examined,
the auditor in each case comparing the book with
the ledger of the office.[87] The bill proceeded, further, to give
power to the National Debt Commissioners to send down to
any Savings Bank, should they see occasion for it, an
Inspector, to test the accuracy of the accounts of that bank:
with the other provisos already mentioned, depositors would
thus be absolutely safe. The next clause provided against
any further loss to Government. The Chancellor in introducing
this subject spoke of the different rates of interest
which had been given to Savings Banks, and said all of
them were higher than could be given without loss. But
this was not all. The loss sustained in having to pay out
a large sum of money whenever called for, no matter how
low the Funds were at the time, was equal almost to the
former. After explaining the case, and giving examples of
its working, he added that Government thus suffered a loss
on capital and a loss on interest. It had been proposed
that Government should merely act as a broker, making
depositors subject to all the fluctuations of the Funds; but,
said the honourable gentleman, from the numerous communications
I have received from all parts of the country,
depositors think much of their getting their money back as
they put it in, and looked to the amount of interest as a
secondary consideration.
He then gave a variety of statistics,
and proposed that the limit to the amount of deposits should
be fixed at 100l. and that the rate of interest should be
reduced from 3l. 5s. to 3l. for trustees, and 2l. 15s. instead
of 3l. 0s. 10d. to depositors.[88] The Chancellor of the Exchequer
concluded by expressing the wish that the bill
of which he had given the principal clauses, should be discussed
fully and temperately: it involved no party feeling,
but it involved many things intimately connected with the
welfare of the classes for which Savings Banks were established:
he said he had done his best to meet the difficulties
of the case, but difficult as it was to do, the matter ought
at once to be settled, and to be settled once for all.[89]
It, however, was not to be settled so soon. Before we refer
to any further expression of opinion on the subject in Parliament
and the ultimate decision in the case, it is only right
that we should present the other—the Savings Bank—view
of the matter, as uttered by the powerful, we had almost said
corporate, body at St. Martin's Place. The Committee of
Managers of this important London institution met, as their
custom was, to pass resolutions on any matter affecting
Savings Banks. A petition to Parliament was framed on
the resolutions come to in this as in other instances, and
similar petitions were got up and presented to Parliament
from other Savings Banks, who naturally looked to the St.
Martin's Place institution for advice and guidance. At a meeting
held at this representative bank on the 14th of May, 1850,
Lord Walsingham in the chair, the proposals of the Chancellor
of the Exchequer were gone through seriatim, and all of them,
without exception, disputed and condemned. It came to the
conclusion that (1) the proposed introduction into Savings
Banks of a Government treasurer, &c., must lead to great
confusion, and eventually to the disruption of these valuable
institutions;
(2) that the proposed reduction of the existing
rates of interest and the limit in the amount of deposits
will, besides imposing injurious restrictions on depositors, so
diminish the means of defraying the expenses of management
as to render it extremely difficult in some, and impossible
in other cases,
to engage efficient assistance; (3) that
any further reduction of the rate of interest to depositors
would only tempt them to withdraw their money from Savings
Banks and place it in more attractive, but frequently
hazardous investments;
[90] (4) that the grand principle on
which well-conducted Savings Banks have hitherto been so
efficiently managed, viz., that of having the constant superintendence
of gentlemen unconnected with the receipt or payment
of money, will be destroyed if the new bill should be
passed into a law.
We ought to add that this Committee did
not object to the abrogation of the law of 1844, which was
passed contrary to their expressed wishes and recommendations;
that, although they urged that frauds were comparatively
rare, and far less in amount and extent than in public or
mercantile establishments, and that for such reason there was
no just ground for the introduction of an entirely new system
such as was now proposed, they had no objection to a measure
adapted still further to promote the solvency and good
management of Savings Banks, only they must insist that the
necessity for such important changes should be considered
by a Select Committee, and evidence taken from men of long
experience in Savings Bank management.
The last resolution
to which this body came was, That a petition to the
House of Commons, founded upon the foregoing resolutions,
be printed and circulated for the information of other Savings
Banks.
To return to the discussion in the House of Commons on the
bill now proposed, Mr. Hume in a temperate speech supported,
on the whole, the Chancellor of the Exchequer. He held that
Government ought to undertake one of two things—either to
leave Savings Banks altogether alone, or else to ensure perfect
security to the depositors, which he saw no difficulty in doing.
Of course he agreed with the proposal to reduce the rate of
interest and the limit of the total amount of deposits, remarking
on the latter subject that he had known many cases where
Savings Banks had been taken advantage of in a way that, he
was about to say, was quite unworthy of them; but let no
man say that anything was unworthy where profit was the
object, for he found in all ranks and classes a tendency to
avail themselves of the folly of the public.
Government, he
thought, could not do better than try to encourage among the
labouring classes the habit of saving; for the moment a man
had a nest-egg he desired to add to it, and thus were habits
of economy and prudence fostered among the mass of the
people.
Sir Henry Willoughby opposed the bill; he thought
the proposal to reduce the rate of interest would be an extremely
disagreeable measure.
He referred, however, on this
occasion principally to the management of Savings Bank
funds, and expressed his opinion that what was required was
that the management of the affairs of Savings Banks should
be taken out of the hands of the Commissioners of the National
Debt, and a separate commission appointed for the purpose.
Few members questioned the wisdom of the proposals at
this time, but many expressed themselves dissatisfied that the
bill would have no reference to the past, and that the Chancellor
had not alluded in any way to the depositors who had
lost their all by the bank failures and by the action of the
bill of 1844. Mr. Crawford spoke of the Rochdale depositors,
Mr. Fagan of the Killarney depositors, and Mr. Herbert of
the Dublin and Tralee depositors. Mr. Slaney thanked the
Chancellor of the Exchequer for the amount of attention which
he had bestowed on the bill, which he deliberately thought
would interest more persons than any other measure that would
be introduced this session.
He thought the security now
promised would be real, though he was sorry the Chancellor
meant to make the people pay for it. His opinion (and he had
considered the subject of industrial investments very largely)
was that neither the amount of, nor the interest on, deposits
should be reduced; he would be most willing to pay a small
bonus to tempt the savings of these poor people.
We are
glad, however, to say that this view of the case did not meet
with much approval. After several more appeals from such
members as Mr. Bankes and Colonel Thompson, that Government
would come to the rescue of the defrauded depositors
who had, in their ignorance it might be, looked to the country
for security, the bill was ordered to be brought in by the
Chancellor and Mr. Attorney-General. On the motion made
to read the bill a second time on the 8th of August, 1850, Mr.
Hume and Sir Henry Willoughby importuned the Chancellor
of the Exchequer to defer the consideration of the bill to the
next session; the former urging that honourable members
might study the reports of the Committees of 1849-50, during
the interim, and the latter that time might be given to allow
of a consolidation of all the statutes relating to Savings Banks,
and an inquiry into the whole subject.
The Chancellor
replied, that after the agitation which had been got up among
the managers of Savings Banks, and the considerable misunderstanding
which prevailed relative to the provisions of
the bill, he reluctantly consented to withdraw it.[91] Several
members took the opportunity to urge that the Chancellor
should bring the matter forward the first thing in next
session; but the Savings Bank interest proved still stronger
in 1851, and again Sir Charles Wood got nothing done, and
never heartily took up the question again.
In 1853 an Act was passed to Amend and Consolidate
the Law relating to the Purchase of Government Annuities.
The bill was introduced and carried through by the Chancellor
of the Exchequer. This Act continued the same powers to the
Commissioners as were given in 1833, and the clauses relating
to the purchase of annuities, deferred and immediate, were
continued. It further empowered them, however, to grant
deferred annuities for a sum to be paid down at once, and
not returnable, and also to grant annuities otherwise than
through Savings Banks. It was said that the reason why the
Act of 1833 had been practically inoperative was the want of
such a clause: that the fact of only being able to buy a deferred
annuity on the condition of money being returnable, not only
caused many lapses, but made the tables heavier than they
ought to be. Under the fresh clause better things were
augured; any one purchasing such an annuity, it was argued,
takes the chance of his not living to receive it, just as the
member of a benefit society takes his chance of never being
ill, and therefore never needing what he pays to secure if his
health should fail. The benefit in return for this risk is,
however, proportionally increased, inasmuch as the contributions
of those who do not live to the term when the
annuities commence, go to swell the contributions of those
who may,—the purchase-money, in the case of money being
returnable, being of course much larger than in the other, where
more risk is run. We give the argument for what it is worth;
but it is certainly curious that at a more recent date, when
again the law regulating the purchase of annuities underwent
alteration and amendment, a great outcry was raised,
because the tables of rates, with money returnable,
were
temporarily kept back; one respectable organ of public opinion
going so far as to say that the changes would be inoperative
till these tables were produced. An opposition was got up
during the progress of the measure in Parliament, owing to
the clause empowering the Government to grant life assurance
policies to those who should likewise buy annuities. It
was said now, just as it was urged, though much more strongly,
subsequently, that there were great objections to the Government
becoming a trading community, or doing anything which
could be carried out by a private company. The system of
life assurance,
said a well-known Scotch member, was at
present carried on so successfully and so judiciously by the
ordinary life assurance societies, that it would be most unwise
to interfere with them.
Another member argued that the
annuities scheme had so lacked success that no amount of
tinkering would make it applicable to the country. The
Secretary of the Treasury explained that Government were
not anxious about doing the business of insurance offices, but
only desired to give facilities, which the law did not then
allow, for the conversion of Savings Bank deposits into
a satisfactory provision for want or old age. The bill was
read a third time, with a majority of 28 in a House of 56
members, and soon afterwards passed without any further
difficulty, and received the Royal Assent. Such a measure,
whatever the poorer classes might think of it, was well calculated
to spread the spirit of independence amongst them.
The State did well to offer the opportunity of increased
facilities; and if those for whose benefit such schemes were
intended did not avail themselves of them to secure, by a very
small amount of temporary sacrifice in seasons of health and
prosperity, a provision against those risks to which all the
poorer classes are liable, of falling through unexpected contingencies
into poverty and pauperism, the blame would rest
elsewhere than with the State.
As we have already said, the session of 1851 passed without
any attempt at legislation, and in the beginning of 1852, there
being still no sign of action on the part of the Executive,
the late Mr. Herbert, so well known in connexion with the
Irish banks, proposed a resolution to the effect—
That this House has observed with regret the continued neglect of Her
Majesty's Government to fulfil their promise of introducing a bill for
the regulation of Savings Banks, by which those important institutions
may be enabled to preserve their hold on the confidence of the country,
and a due encouragement be thus given to the industry and providence
of the working classes.
There was every reason to believe that this resolution would
have passed, until the Chancellor of the Exchequer rose. Sir
Charles Wood admitted that the bill had been far too long
delayed; but this was no fault of his. It was thrown out
in 1850; he could not get it introduced in 1851: it was
ready, however, and it should be brought forward this session.
He had not given notice of it, because he had been engaged
in consultation with several members in so preparing the
measure as to ensure its passage through the House. His firm
conviction was, that the delay in the present instance had
tended not only to improve the bill, but to diminish the
chances of opposition to it when introduced. During the last
four years the greatest pains had been taken to frame such a
measure as should effectually remove the evils that had been
complained of; and within the past few months they had had
the assistance of a new Comptroller of the National Debt
Office, who had devoted himself with great diligence to the
subject.
[92] He submitted, in conclusion, that he was not
deserving of the censure of the House, especially as it had
been settled to try the measure again during the present
session. Mr. Disraeli agreed with Sir Charles Wood, though
the resolution before the House was apparently justified by
the circumstances, it would not be becoming in them to divide
the House after what had been promised. The question was
surrounded with difficulties, but notwithstanding these difficulties
it was the paramount duty of the Legislature to grapple
with it; and an opportunity would be soon afforded. Mr.
Disraeli at this time did not know how soon he was to be in
a position to grapple with the subject himself. Sir Charles
Wood's pledge was not kept. All such measures as those we
are considering have suffered greatly from the vicissitudes of
administrations, and it was so in this instance. Towards the
end of 1852 Mr. Disraeli succeeded Sir Charles Wood as Chancellor
of the Exchequer in Lord Derby's first Ministry; but
he had scarcely time, supposing him to have had the disposition,
to take up the matter where it had been left. When the
Derby Administration gave place to the coalition Ministry of
Lord Aberdeen, and Mr. Gladstone took the place of chief
financial minister, there was soon a better prospect of some
settlement. Even under his auspices, however, matters at
first went on very slowly; so multiform were the questions
and interests involved, that even Mr. Gladstone's powers were
severely tried to clear the ground of the incumbrances which
time and prejudice had reared. When Mr. Gladstone left
office and was succeeded by Sir George Lewis much had been
done; the necessary preliminary measure of a full investigation
into the Savings Bank question by a Committee of the
House of Commons had been decided; the real nature of the
connexion existing between the Government and the Savings
Banks was better understood: and when after a lapse of two
or three years he returned to his old position, he took the
matter up where it had been left, and carried the subject, by
his unapproachable eloquence and energy to an easy and final
solution. Mr. Gladstone's name will go down to posterity
covered with honourable trophies of his great powers; but we
question whether among the great schemes he has carried
any will be remembered longer than those meant to increase
among the lower classes the habits of prudence and frugality.
Early in 1853, and when he had but just succeeded to
the office of Chancellor of the Exchequer, Mr. Gladstone
gave notice that the subject must be taken up, and
if possible settled. A bill[93] was allowed to pass the second
reading without discussion; but when the subject came up
before Committee in July of that year, Mr. Gladstone, compelled
to succumb to the wish that Parliament should be prorogued,
asked that this and other bills might be deferred till
the next meeting of Parliament. He said he had made great
progress with the bill since it was first introduced; he had
sought to get the opinion of the different Savings Bank
managers upon it, and he believed he had acquired a pretty
accurate knowledge of the state of feeling in the country
on the subject.[94] All this was favourable to the prospects of
the bill; but now, as the House had lasted since November
1852, he feared that if it was pushed forward it might fail to
pass. He should have liked to have got the question settled,
but he now thought his object would be more speedily
obtained by the delay proposed. Here the sagacious Minister
was mistaken; the old adage of no time being better than the
time present could often be well applied to proposals to defer
desirable matters of legislation to a future session. No mention
was made of the subject for nearly eighteen months; the
country had more pressing, and, for the time, much more
serious matters to consider, which it will be quite unnecessary
to particularize.
On the 20th of December, 1854, Mr. Gladstone moved for
and obtained leave to bring in two bills during the session of
1855: the one to create a charge on the Consolidated Fund
of the money due on behalf of the depositors in Savings Banks,
and the other, the bill for the management of Savings Banks
which was withdrawn in 1853. In the former important proposal
the Chancellor of the Exchequer desired to make the
law more perfect as to the relation between the depositor and
the State, by giving the latter a better title to the money
invested with the State. He wished, in his own language, to
reduce the obligation and the contract of the State with the
depositor to that simple form which is adopted by every
banker.
He would propose, as respects the bulk of the
funds received from Savings Bank depositors, that they should
be held in this country as they are held in other countries,
and not in the complicated form of Stock and other public
securities. Mr. Gladstone's view, more than once expressed
in strong terms, with respect to the State using the money
belonging to Savings Banks, was that it was no matter to
anybody what was done with the money,[95] providing it were
ready at call and the stipulated interest were given,—the
stability of the country being surely a sufficient guarantee for
its safety. Savings Bank authorities, on the other hand, disputed
the right of the Chancellor to use the money; would
prefer to use it themselves in other investments, if the funds
were applied otherwise than under statute in the purchase of
Bank Annuities; and referred to the uncertain title in law
which depositors had for the money according to the governing
statute. Mr. Gladstone's bill proposed to give this title to
every penny so deposited with the State, by throwing the
burden of any deficiency arising on the Consolidated Fund,
and so silence at any rate the last objection.[96]
Early in the session of 1857 the then Chancellor of the
Exchequer (the late Sir George Lewis) was several times
asked if the subject of Savings Banks had not to be brought
forward and concluded. These questions led to his promising
to bring in the Government measure which, often brought
forward and as often withdrawn, was still waiting for a tide of
popular favour to carry it into law. On the 27th of February
in this year he gave notice of this intention, and earnestly
trusted that the House would allow it to pass. In a short
speech, the points of which we need not recapitulate—for it
dealt with the same facts and came to the same conclusion as
those speeches of previous Chancellors already described,—he
proposed the first reading. Then came the dissolution of Parliament,
and its forcible postponement for one more session.[97]
In a fortnight from the meeting of the new Parliament
Sir G. Lewis, true to his promise, moved that the House go
into Committee on the Savings Bank Bill, which had even
then reached that stage. His motion was, That it is expedient
to amend the laws relating to Savings Banks, and to
provide for the establishment of Savings Banks with the
security of the Government.
The Chancellor said that almost
everybody was agreed as to the principles of the bill, though
it was true that the managers of many Savings Banks contested
some of the details. The greatest objection to the bill
when last introduced being the provision to limit the total
amount of deposits to 100l., he would now propose, as it did
not affect the bill at all materially, to drop that clause; the
law to remain as it then stood. This was the only material
difference; there were minor points, but they were not worth
pointing out. He then went over the changes which the bill
proposed to make in the law; the ample security he wished
to give to all who deposited money in Savings Banks, at the
same time taking no superfluous securities and imposing no
unnecessary restrictions in order to guard the interest of the
public. Should the local authorities of Savings Banks still be
found unwilling to part with their own control, or admit any
interference on the part of the Government, there was only
one course left to him—namely, to abandon the bill,
to
leave things in their present position, and continue a system
by which the depositors are left entirely to the security of
the local officers; while at the same time Government is left
wholly irresponsible, except for the amounts actually lodged in
its hands. I trust, however, that the plan will be considered
a reasonable plan,
said the Chancellor, in conclusion, that it
will be found not to impose upon the local authorities any
shackles of which they can reasonably complain, and that no
securities are demanded on behalf of the public beyond what are
absolutely necessary.
[98] Sir Henry Willoughby held that the
law needed consolidating before any new Act was passed. It
was not long since 200 petitions were presented to the House
for a consolidation of existing statutes, and an inquiry into
the entire system. Let the House take this step first. After
speaking warmly on the subject of the disposal of Savings Bank
money, he appealed to the Chancellor to refer the whole subject
to a Select Committee, who should recommend a clear and
well-defined legislative enactment. Mr. Sotheron Estcourt and
Viscount Goderich took the same view; the former gentleman,
however, warmly approved of the Government bill, which
had happily been re-introduced,
and thought that most of
the alterations made were improvements.
As a trustee of a
Savings Bank he would consider his position infinitely improved
by the bill. If, however, the feeling of the House was
for a committee, this course could not prejudice the bill,
though it would delay it. Mr. Thomas Baring thought the
matter should go before a Select Committee; so did Mr.
Henley. The Irish members, Mr. Slaney and others, were for
passing the bill, and not deferring legislation any longer on
any pretence. The Chancellor of the Exchequer opposed any
further delay; the adoption of any other resolution would
simply tend to shelve the bill for another session. If honourable
gentlemen really wished to reject the bill, let them resort
to the direct and fair course of doing so. He also was for
consolidating the laws relating to Savings Banks; but till
that could be done he thought it by far the best plan to
introduce a few more clauses into the law to remedy grievances
which could not wait to be redressed. The motion was
then agreed to. The second reading came off on the 8th of
June. Mr. Ayrton, in a long and animated speech, during which
he said that the greater number of Savings Banks were now
most efficiently managed on a principle which was most conducive
in binding the humbler to the more influential classes,
and that he could conceive nothing more calculated to destroy
that sympathy than the present proposals—felt inclined to
move that the bill be read a second time that day six months.
The result of the proposals would be a step in the direction
of the system which obtained on the Continent, where every
function of the community was usurped by what was called
the civil service of the country.
Amidst cries of Divide,
Mr. Ayrton said he was strenuously opposed to any such
system. Mr. McCann said the whole body of the people were
unanimous in applauding the measure of the Chancellor of
the Exchequer. Sir Harry Verney approved of the principle
of the bill, but said he would like to see the subject referred
to a Select Committee. Mr. Barrow opposed the bill and the
Select Committee also. Mr. Estcourt again, in an admirable
and temperate speech, during which he showed an excellent
knowledge of the subject in all its bearings, assisted the
Government in their proposals. To give the reader a proper
idea of the ground taken by Mr. Estcourt, who, when the committee
was eventually appointed, was made chairman of it,
we need only give the concluding part of his speech on this
occasion:—
He earnestly wished that this session would not pass without a Government
Savings Bank bill becoming law, and he hoped the honourable gentleman
would persevere with this bill; but even should the bill pass, he joined
his voice with that of others in entreating the Government, after giving the
poor man the guarantee which he did not now possess, to give to the public
generally more accurate information on the whole subject, a clearer account
of how the money was applied, and how the deficit spoken of had arisen.
That information ought to be given, if only for the purpose of showing the
groundlessness of the suspicious observations made against this bill; and
therefore, though he heartily concurred in giving his voice for the second
reading, he joined with other gentlemen in entreating the Government to give
them a Select Committee, not in order to shelve the bill for the session, but,
next year, for the purpose of assisting the Government, and giving the public
that information which they ought to have.
Mr. Glyn and Mr. Maguire approved the bill without
reference to a Committee, one of these gentlemen submitting
that the Committee could sit on the general subject after the
bill had passed into law. In reply, Sir George Lewis took
the latter view, and said he would be glad to give every
facility to the Committee in that case.[99] After demolishing
the man of straw which Mr. Ayrton had set up, the bill was
carried without a division. So far things went on prosperously,
but the opposition gathered in strength; Savings Bank
managers again took the matter up, and urged, by petition
and otherwise, that nothing should be done till a Committee
inquired into the matter, and a bill be founded on the result
of their investigation. The Chancellor of the Exchequer
appointed several nights on which to proceed with the bill,
but each night there were so many notices given of motions
with regard to the subject—generally twenty or thirty—that the
Government were compelled by the pressure of other business
again and again to defer the consideration of it, and ultimately
to withdraw it. In reply to Mr. G. A. Hamilton, the Chancellor
said, on the 21st of August, 1857, that he had come to this
latter conclusion mainly from the considerable misunderstanding
existing among the local administrators of Savings
Banks. He thought his proposals had not received the approbation
which he conceived their merits justified.[100] He would
offer no pledge for the future, however, further than this,
that if the House next session appeared to wish for a Select
Committee, he would agree to the appointment of one.
The House of Commons met in the November of the same
year, when the question being again raised, Sir George Lewis
gave notice that immediately after the holidays, he would
propose a Committee of Inquiry, who should be instructed
to go into the entire subject. The Committee which was
appointed on the 9th of February, 1858, to inquire into the
Acts relating to Savings Banks and the operation thereof,
consisted of the following members:—Mr. Sotheron Estcourt
(Chairman), Mr. Bouverie, Mr. Ayrton, Viscount Goderich,
Sir Henry Willoughby, Mr. Bonham Carter, Mr. E. Egerton,
Mr. Fagan, Mr. Cowan, Mr. Grogan, Mr. J. A. Turner, Mr.
Henley, Mr. Whitbread, Mr. Bramstone, Mr. Adderley, Mr.
Gregson, and Mr. Thomas Baring. They sat twenty-one days,
and examined Sir Alexander Spearman, Mr. Tidd Pratt,
Lord Monteagle, Mr. C. W. Sikes, Mr. John Craig; and the
following eminent actuaries or other officials of the principal
Savings Banks in the kingdom:—Mr. Edward Boodle, of the
St. Martin's Place bank; Mr. Shopland, Exeter; Mr. Wortley,
Finsbury bank; Mr. Saintsbury, Moorfields bank; Mr. J.
Hope Nield, Manchester; Mr. Maitland, Edinburgh; Mr.
Meikle, Glasgow; Mr. Sturrock, jun., Dundee; Mr. Jameson,
Perth; Mr. D. Finney, Marylebone bank; Mr. Hatton,
Brighton; Mr. Deaker, Dublin. Mr. W. H. Grey, a Government
actuary, and Mr. Edward Taylor, of Rochdale, attended
to give evidence on the subject of Savings Bank frauds. The
Committee, as might be expected, from this imposing array
of names, collected a most interesting and important body
of evidence, and presented, pretty unanimously, an extremely
exhaustive and important report to the House.
Upon the report of this Committee we shall have to
draw pretty largely in more than one succeeding chapter,
and will therefore content ourselves with describing briefly
the general nature of the evidence, and with giving a summary
of the Report presented with that evidence to the House.
Further on in the present chapter we propose to attempt some
account of the arguments used in the Committee with regard
to the investment of Savings Bank money, when, two years
later, a bill founded on the recommendation of the Committee
was brought before the House of Commons, where
the subject was warmly discussed. In this way, all the important
conclusions come to by the Savings Bank Committee
will at one time or another be fairly noticed. The evidence
itself may be classified as follows. Mr. Tidd Pratt came on
first, and gave information of the course of legislation on the
subject, and in other ways the results of his long experience
in such matters. Sir A. Spearman gave a full account,
in an examination lasting over four days, of the mode in
which investments were made at his office, and of the
principal financial operations connected with these investments.
Lord Monteagle, by permission of the House of
Lords, attended and gave the Committee the benefit of his
long and intimate acquaintance with such financial subjects.
Mr. Boodle, who took the lead of the actuaries, and who, while
falling into several inaccuracies, showed perhaps the greatest
practical acquaintance with the subject in all its different
bearings, described not only the manner of conducting the
St. Martin's Place bank, but conveyed to the Committee the
prevailing impressions of Savings Bank officials on the subject
of the investment of their capital. Mr. Craig, of the
Bank of Ireland, explained at length his system of book-keeping,
and humorously described its introduction into
the Cork Savings Bank. The other actuaries described
the peculiarities of the different banks they represented;
described frauds, and spoke of checks which had been
devised for preventing their recurrence; and gave their
opinion, which will be seen subsequently to have been
anything but unanimous, on such disputed points as the
limits of deposits, the rate of interest, making the audit, and
regulating the expenditure. Few of the witnesses left the
box without offering some practical suggestion, or recommending
something of value. All the gentlemen agreed as to
the necessity of doing something. Most of them thought
an independent Commission should be appointed to manage
the affairs of Savings Banks. Every witness expressed his
opinion that the one thing needful was a Government
guarantee for the absolute safety of all deposits; and although
Mr. Craig and others thought that this should be
supplemented by a staff of Government inspectors, regarded
the change as imperatively required.[101] It is impossible, however,
that we can at any greater length give the recommendations
which were made on this and other important
matters of which the witnesses spoke. Nor indeed can we
do more than condense into the fewest possible words the
full and voluminous Report which the Committee made on the
occasion. Seeing that the demand for this Committee was
so great, that so much pains were taken to arrive at a just
conclusion, and that the Report itself was not without its
effect on the institution of Savings Banks, we doubt not
that we shall be readily excused for giving prominence to
it, and for presenting the resolutions in which the principal
points of recommendation are embodied.[102]
1. That the laws relating to Savings Banks in the United Kingdom require
to be amended, and to be consolidated in one Act.
2. That it is expedient to place the superintendence and management of
the general funds of the Savings Banks in a Commission consisting of five
members.
3. That it is desirable that this Commission be constituted of the
Chancellor of the Exchequer, the Governor of the Bank of England, and
three other persons appointed by the Crown, all of whom shall be paid.
4. That all expenses of the Commission be paid out of the moneys of
Savings Banks; that the surplus fund shall be invested in public securities,
and the interest carried to the account of the surplus fund, out of which such
expenses shall be defrayed.
5. That the powers and duties of the Commission shall be defined by Act
of Parliament; that provision be made for the summoning and holding,
at stated intervals, the meetings of the Commission; that three shall be a
quorum; and the minutes of each meeting duly recorded and signed by the
Chairman.
6. That the Rules and Regulations relating to the receipt and payment of
all moneys, and to the purchases and sales of stocks and all securities, be
passed at meetings of the Commission specially convened for that purpose,
and shall be subject to the approval of the Lords Commissioners of Her
Majesty's Treasury.
7. That the annual accounts of the Commission, containing the receipts and
payments of all moneys, and every detail as to the sales and purchases of stocks
and other securities belonging to the Savings Banks, within the year ending
on November 20, in each year, be audited by the Commissioners of Her
Majesty's Audit.
8. That monthly accounts of the receipts and payments of all moneys, and
of sales and purchases of stocks and other securities, be prepared by the Commissioners,
and copies of the monthly accounts shall be forwarded to the
Lords Commissioners of Her Majesty's Treasury, and to the Governor of the
Bank of England, within one week of the following month.
9. That the annual accounts, containing the receipts and payments of all
moneys, and every detail as to the sales and purchases of stock, and of other
securities of the Savings Banks, be laid before both Houses of Parliament in
the first week of February, if Parliament is sitting; and, if Parliament is not
sitting, then within ten days next after the first sitting of Parliament.
10. That no sales, purchases, or exchanges of stocks or securities held by
the Commission shall be made, except as required for the purposes of the
Savings Banks, and that no funding of Exchequer bills held by the Commission
shall in future be made without the special authority of an Act of
Parliament.
11. That the Commission should be empowered by Parliament to invest
a portion of such funds, not exceeding one-third of the whole, in other
securities than those now authorized to be purchased with those funds;
those securities being such as are created or guaranteed under an Act of
Parliament.
12. That it is inexpedient that any existing deficiency of the funds should be
made the ground of reducing the present rate of interest allowed to the banks,
but the whole subject of the estimated deficiency be referred to the consideration
of Parliament.
13. That any future surplus income of the Board shall be carried to the
credit of a guarantee fund, to meet any casual charges, losses, or deficiency
of income; but if there shall be no surplus to meet such deficiency of income,
the rate of interest allowed to Savings Banks shall be proportionately
diminished.
14. That the Commission shall have power to frame regulations respecting
the accounts to be kept, and the audit thereof, and respecting the receipt and
payment of deposits, on the adoption whereof by any Savings Bank such
bank shall acquire security for the deposits therein guaranteed by Parliament,
and that such Savings Bank shall have a special title.
15. That the Commission may appoint such officers as may be requisite for
the proper audit and inspection of such accounts, and for obtaining due compliance
with such regulations.
16. That no banking concerns should be permitted to assume the name of
Savings Banks, except such as have had their rules duly certified.
17. The rules of every Savings Bank shall be in force only after they have
been certified by the Barrister, to whom no fee shall be payable.
18. That the responsibility of trustees be enacted in the same terms as in
the Act 9 Geo. IV. c. 92.
19. That the present limits of yearly and total amounts of deposits payable
on demand be maintained.
20, and last. That whenever any deposit shall amount to 150l., the Commissioners
may, with the consent of the depositor, invest a portion of that
deposit in the purchase for the depositor of 100l. stock, the interest on
which shall be received by the Commissioners and placed to the depositor's
account.
Arrived at this point, and in order that the general reader
may properly understand the next attempt made at legislation
on behalf of Savings Banks, we ought to say something in
the way of explanation as to the disposition of the funds of
Savings Banks after they reach the hands of Government.
By the 57 Geo. III. c. 105, the money paid in on Savings
Banks account was to be invested in Three-and-a-half per
Cent. Bank Annuities.[103] Subsequently, the law was altered,
by which the money might be invested in Bank Annuities
or Exchequer bills. The purchases of Stock are made upon
the order of the Comptroller-General by the Government
broker; but no Exchequer bills are bought, except under the
special direction of the Chancellor of the Exchequer. The
practice is, when the balance at the bank appears to be larger
than is necessary, gradually to apply it to the purchase of
Stock at the price of the day. It appears that between
1828 and 1844 Stock was sold to the amount of 8,166,511l.,
and purchased to the amount of 8,816,400l.; Exchequer bills
were bought to the amount of 19,888,100l., and sold to the
extent of 13,041,500l. Sir Alexander Spearman stated that
he had, on his own authority, bought Stock from time to
time, as the state of the balance required it; he contended
that he had legally such authority by virtue of his office,
and he did not hold himself responsible to give any explanation
of his proceedings to the trustees or managers
of banks.[104] This was just what Savings Bank managers and
trustees did not agree with, and it was an interpretation put
upon the statute which even experienced statesmen disputed.
Mr. Wortley told the Committee of 1858 he considered
the system of mixing up the Savings Bank funds with the
Government money very injurious to Savings Banks. Mr.
Boodle strongly objected to the practice of dealing in Stock
and Exchequer bills, and of exchanging one for the other.
He said Mr. Goulburn had been induced to discontinue the
practice, and to publish an account of the different transactions,
but that the practice had been revived in 1853, had
continued ever since, and in a worse form than ever. Lord
Monteagle, who spoke very strongly on these points, stated
that the present use of Savings Bank money was entirely
at variance with the original design; that the Commissioners
had no power to change the securities, and thus become
active agents in the Stock Market.[105] Lord Monteagle expressed
strong objections also to the power of funding
Exchequer bills bought for the Savings Banks at the price
of the quarter at which they were bought. Sir A. Spearman,
who was somewhat unfairly left to bear all the brunt of
every attack of this kind, on account of the Committee
neglecting to call upon any of those five members of the
House who were or had been Chancellors,[106] stated that the
Savings Bank fund on the 20th of November, 1857, was
34,399,082l. Stock; whereas, if there had been no investment
in Exchequer bills or bonds since 1853, the amount would
only have been 34,207,371l. Stock.[107] Mr. Boodle dwelt upon
the reputed losses which the country had sustained through
the Savings Banks, and declared that if there had been any
loss, it had been occasioned by the State not treating the
funds exclusively as Trust Funds. In this matter, Mr.
Boodle undoubtedly had the best of it. Whenever any bill
is introduced into Parliament on Savings Banks,
said this
gentleman, this loss is thrown in the teeth of Savings
Banks, and used as an argument, sometimes for reducing the
rate of interest, at other times for reducing the limits of
deposits, either annual or in gross. Therefore, it acts most
detrimentally to the depositors; and it has gone out that the
Savings Banks are an enormous expense, whereas we are
perfectly satisfied that, if this money were properly administered,
there would be no expense whatever.[108]
That Savings Bank money was not only used for financial
purposes, but turned to extremely profitable use, there
can be no doubt: hence complaints of loss could only be
made by persons but partially acquainted with the facts.
Mr. Hume indeed, had he been cognizant of the profitable
way the funds were used, could scarcely have complained
about the loss to the State so often as he did. Mr. Gladstone
at this time, and subsequently, never missed an opportunity
of putting the matter on the proper footing, and to set it forth
that, instead of a loss, the funds had been a source of considerable
gain to the State. In 1834, when Lord Althorp was
Chancellor of the Exchequer, and Lord Monteagle himself (as
Mr. Spring Rice) Secretary of the Treasury, they determined
to reduce the interest on the Four per Cents. Those who
held money in the Funds and were dissatisfied with the
reduction were paid off out of the Savings Bank money
(without which, indeed, the reduction could not have been
earned through), and a saving to the country of 53,000l.
a year was the result. Mr. Goulburn, using the power he
had in the same way, or with the money of Savings Banks
to fall back upon in case of need, effected a saving of
750,000l. a year in reducing the rate of interest from four to
three and a half, then to three and a quarter, and eventually
to three, per cent. Not less useful were the funds of Savings
Banks in the time of the Crimean War. By means of Ways
and Means bills, the Chancellor of the Exchequer raised the
necessary funds to meet the heavy demands, and thus effected
an enormous saving of money, which would have been sunk
in transacting a loan.
We have already made the reader acquainted with Mr.
Gladstone's opinion on the right of the State to use the money
entrusted to it for safe keeping; nothing could be more vigorous
than his language already quoted. Mr. Gladstone endeavoured
to carry a change in the law relating to the investment of
Savings Bank moneys in 1855. He now, in the session of
1860, came forward and offered a bill to remedy some of the
grievances complained of in the Committee. His proposals
were now substantially the same as those of 1855. He
voluntarily proposed to be shorn of his strength as Chancellor
by the House agreeing to cancel Savings Bank Stock to the
amount of thirty-one millions of pounds; and to open a new
account for this money, to be called State Deposit Account,
No. 1,
virtually giving the money the fullest security of the
State, and placing it entirely beyond the reach of his operations.
The remaining amount, then about ten millions, Mr.
Gladstone proposed should be allowed to be invested at the
pleasure of the finance minister as heretofore. One would
have thought that at any rate this bill would have been
allowed to pass quietly; but it was not to be. The bill
proposed was based on two of the recommendations of the
Committee of 1858,—namely, those which suggested that the
power of funding Deficiency and other bills should be done
away, and that the dealings in the stocks should be under
the review of the House; but members complained that a
bill had not been prepared to embrace all the recommendations.
Sir H. Willoughby and Mr. Estcourt took this
view. In long speeches they both upheld the decision of
the Committee, and asked for a bill dealing with the entire
subject; the latter gentleman said that the barren discussions
in Parliament were acting to the prejudice rather
than to the support of the excellent institutions with which
they dealt. There were not above 600 of these useful institutions
in the whole kingdom, whereas they ought to
ramify through every parish and every village of the kingdom.
Mr. Malins and Colonel Sykes followed, and complained
that Government should have neglected to deal
with the entire subject. Mr. Gladstone made up for the lack
of supporters by a long and able speech. He admitted that
it was most desirable to have a bill for the management of
Savings Banks, but the general subject had no relation to the
mode in which the money of Savings Banks was invested.
Better at the end of a session carry one or two points, and
put an end to grievances which had been loudly complained
about, than bring in a measure only to withdraw it again.
He had been charged with ignoring the labours of the Committee.
He had not done so, for the bill was founded on
part of their labours; he had considered the report, but
consideration does not necessarily involve adoption.
He
was compelled to decline many of the suggestions of the
Committee. Where, however, he agreed with them, he had
lost no time in taking action: hence the proposed bill.
From speeches of honourable gentlemen,
concluded Mr.
Gladstone, it might be supposed that a dreadful bill had
been introduced, giving exorbitant powers to the Chancellor
of the Exchequer. The fact is, however, that there is not
a power given which he does not already possess, and in
one or two respects the surrender of powers is very large.
It is impossible that Savings Bank funds can now be
used by Government as a trust; they must be reserved for
the discretion of the House.
The bill for the first time
gives a positive title in law to the deposits in Savings Banks,
and it will further provide a true account,—for nobody has
ever yet seen a true account,
—of the National Debt; and for
these reasons Mr. Gladstone hoped it would be allowed to
pass into law. Mr. Thomas Baring, and Mr. Ayrton, unconvinced
by the Chancellor's arguments, opposed the bill; and
Mr. T. Collins contented himself, as usual, with dividing
the House on his motion to throw it out. The motion was
negatived by a majority of twenty-four, and there was a
similar majority on a motion for adjournment made by Sir
Henry Willoughby. On the 20th of July, 1860, the bill
was considered in Committee, and the discussion was taken
on the first clause—the existing stock to be cancelled—when
Mr. Hubbard approved of the measure. By the bill the
greater part of the money of Savings Banks, viz., that treated
as a book debt, would be placed beyond the reach of jobbery.
Sir Francis Baring spoke in favour of, and Sir H.
Willoughby, Mr. Hankey, and Colonel Sykes again opposed,
the clause. The opposition to the measure had gathered
strength since the last occasion;[109] and on a division, the
Savings Bank managers once more triumphed by a majority
of 38, in a morning sitting and a House of 192
members.
A few days afterwards the Chancellor of the Exchequer
proposed the fourth clause of the defeated bill, or that which
gave the Commissioners an uniform power of holding
and dealing with all stocks under Parliamentary guarantee,
and stocks and securities, under whatever name, that constituted
the National Debt. At present, Mr. Gladstone stated
the Commissioners had power to hold Terminable Annuities,
but no power to sell them. There ought to be a uniformity
of power with regard to these securities, and this bill, which
was founded on the fourth clause, gave it. He had only been
induced to take the matter up again by finding an unanimous
feeling in the House for this proposition. Mr. Estcourt, in
speaking for the clause, hoped the Chancellor would soon
bring in a measure on the general subject. So he did, soon
afterwards, but not the kind of measure Mr. Estcourt desiderated.
When this bill reached the Lords, it was rather
violently opposed by Lords Monteagle and Redesdale; and
on a division the voting was found to be equal. According
to usage, the bill was thrown out. The Government, however,
re-introduced the measure, as a matter of urgency;
and
though there was an outcry in the Lords against it, no less
than in the Commons, for interference with what was considered
a Money Bill, the clause passed, and received the Royal
Assent on the last day of Parliament.
Mr. Gladstone, thwarted in all his attempts, except in the
last insignificant case, to bring about a better state of things
in connexion with the management of Savings Banks, determined
upon another course of action altogether. He, and
other statesmen who had preceded him in his office, had tried
their best to improve the existing banks, but they had been
persistently hindered and obstructed by the force which Savings
Bank officials could bring to bear. For some time now Mr.
Gladstone must have had under his eye several proposals
which went to the very root of the matter upon which so
many difficulties had from time to time arisen, and which
promised a thorough and substantial reform. He bent his
great energies in this direction; saw his way, not only out of
a dilemma, but to the origination of a simpler and more perfect
system; and may be said henceforth to have left the
friends and partisans of the old Savings Banks to look after
their own interests. With the legislation relative to the
scheme of Post Office Savings Banks, with which Mr. Gladstone's
name will always be prominently associated, we shall
deal in a special chapter, and will therefore hasten to describe
the remaining steps which the Legislature has taken with
regard to Savings Banks proper up to the present time.
Left to themselves, the leading Savings Bank authorities
in the House—viz., Mr. Estcourt, Sir H. Willoughby, and
Mr. Ayrton—obtained leave, on the 11th of March, 1862, to
bring in a bill to Amend the Laws relating to the Security
and Management of Savings Banks.
[110] The points sought by
the bill were, briefly, (1) to enforce upon all local banks the
regulations of the well-managed ones; (2) to repeal the Act
of 1844; (3) to force an auditor upon every bank and define
his duties; and, lastly, to provide for the security of the
depositors, by enacting that no transactions should take place
except at the office, during office hours, and in the presence
and with the signature of more than one person. Mr. Estcourt,
who briefly explained the drift of the bill, intimated that they
were not desirous of altering the relation in which Government
stood to Savings Banks, or of interfering in any way as
to the disposition of the money. Mr. Gladstone, after stating
how completely Government had been baffled in their attempts
to alter the law regulating Savings Banks, expressed approval
of the bill, though he reserved the right of Government to
take any steps they chose at any subsequent stage.[111] On the
20th of May this bill shared the fate of all preceding attempts
to place these institutions on a sound basis, by being withdrawn.
Savings Bank managers had again interfered, and this
time they went against their devoted friends. Mr. Estcourt,
on withdrawing the bill, said he had received numerous representations
from managers that his measure was inapplicable
to them; and only that day an influential body of managers
of great experience, and fully to be depended upon,
had waited
upon him, requesting him to withdraw it; and if he would
consent to this course, they would endeavour to devise some
scheme which should meet the requirements of the various
establishments. Mr. Estcourt's measure was unquestionably a
good one, but it involved too much trouble and risk to trustees:
hence its defeat. Mr. Gladstone thought it was high time that
those gentlemen should take their turn in devising a scheme.
If they proposed a real improvement, Government would make
no objection. Referring to the Post Office Banks, Mr. Gladstone
said: Undoubtedly, however, the main question had
been disposed of; they were now able to say to the people of
England who were disposed to lay by their savings, with a
moderate interest and with a perfect security, the Government
had provided some 3,000 places where these savings
would be received.
Mr. Henley was much discouraged with
the difficulties everybody found in the way of legislation. He
was disposed to think that the well-managed banks might
go on as usual,
but rather than tinker
at the others, the
very small banks under the old system, which would not
afford the proper machinery for perfect management, ought to
be urged to hand over their business to the Post Office Banks.
Mr. D. Griffith for once agreed with the Chancellor of the
Exchequer;
he was glad to hear the Post Office Banks were
working so well, and expressed his opinion that they would
ultimately swallow up all the old banks.
[112]
In March, 1863, Mr. Gladstone brought forward once more
his propositions relating to the investment of Savings Bank
money. He moved—
That it is expedient to amend the laws relating to the investment
of the moneys of Saving Banks, and to create a charge for such
Savings Banks upon the Consolidated Fund, in place of certain perpetual
annuities now standing in the names of the Commissioners of
the National Debt; to give the power for converting certain other
amounts of such perpetual annuities into certain other annuities, and
to provide for the due payment out of the Consolidated Fund of any
deficiency which may arise from insufficiency of the securities to meet
the legal claims of the trustees of such Savings Banks.
After considerable discussion, the bill (26 and 27 Vict. c. 25)
was sent up to the Lords under the charge of Lord Stanley of
Alderley, and received the Royal Assent on the 8th of June,
1863.
We come now to the last item of legislation on the subject
of Savings Banks. On the 14th of April, 1863, Sir H. Willoughby
and Mr. Ayrton obtained leave to introduce the bill
which, according to promise, had been prepared by a convention
of Savings Bank managers. To a great extent this
measure to Consolidate and Amend the Laws relating to
Savings Banks,
was identical with the one which Mr. Estcourt
introduced and withdrew during the previous session.
The managers had met during the recess, and had consolidated
into one the eight Acts, or parts of Acts, which then
governed their establishments. Mr. Tidd Pratt, on being
consulted in the matter, certified that the new Act would
constitute a fair and just measure of improvement.
Mr.
Gladstone, too, it seems, had been furnished with a copy, had
suggested some trifling emendations, which had been frankly
adopted and embodied, and was therefore disposed to offer no
captious opposition to it. Not only so, but he thought it
creditable to the gentlemen who had it in charge, and, so far
as it went, likely to be effectual. Several clauses were altered,
struck out, or inserted, and the bill, known as the Consolidation
Act,
received the Royal Assent on the 28th of July,
1863. Of this Act (26 and 27 Vict. c. 87, a full description
of which will be found in the Appendix)[113] we shall speak in a
subsequent chapter, when we come to consider the law at
present regulating Savings Banks.
A CHAPTER ON SAVINGS BANK FRAUDS.
There is such a powerful element of failure in all human affairs, that
a shrewd man is always saying to himself, 'What shall I do, if that which
I count upon does not come out as I expect?' This foresight dwarfs and
crushes all but men of great resolution.
—Companions of my Solitude.
In this chapter it is our intention to describe with more or
less minuteness the principal cases of frauds in Savings Banks
pretty much in the order of their occurrence, and also to speak
to some extent of the results which followed from them.
How the progress of legislation was affected by these frauds
has been already shown; and with the object of making more
clear the legislation of 1844 and 1848, we have already entered
into the details of the notorious Cuffe Street Bank failure, and
one occurring in England prior to those dates. So far as we
have been able to ascertain, the first case of fraud in a Savings
Bank occurred at Carnarvon in the year 1824. In this case
the actuary received deposits to a large extent for which he
in no way accounted. Up to 1848 no less than ten cases,
other than those already referred to, occurred, in all of which
the trustees promptly paid the claims. These cases include
the frauds which took place in Carmarthenshire, Northamptonshire,
and Cumberland, one at Mildenhall in Suffolk, and
another at Mitcham in the same county. In the latter case
the secretary managed to embezzle a sum amounting to near
12,000l., and then made off; Mr. Hoare, the eminent brewer,
paying down no less a sum than 7,000l. to atone for his
neglect, and the other trustees making up the amount by subscriptions
of 1,000l. and 500l. each. Into any further particulars
of the above cases it is impossible to enter, inasmuch
as they have never been allowed to transpire,—precautions
which, so long as there were no efficient remedies at hand,
were both wise and magnanimous. The catalogue, however,
can be made black enough and full enough without such
cases; and it is to others which have been exposed in all the
fulness of their iniquity down to the minutest details that
we will now turn. Claiming priority in all respects was the
fraud on the County of Kerry Savings Bank at Tralee.
The Tralee Savings Bank was established in 1823, many
of the noblemen and leading gentlemen of the neighbourhood
taking part in its formation. The secretary from the commencement
was Mr. John Lynch, who was appointed by a
majority of the trustees at a salary of 60l. per annum. From
the commencement the bank was held at the house of the
secretary, and was open from two till four every Monday.[114]
Among the directors there were five clergymen, and the rest
were highly respectable gentlemen of Tralee. The same might
be said of the twenty managers, nearly half of whom were
clergymen. The Rev. A. B. Rowan was treasurer of the
bank. In the pass-books were abstracts of the Rules and
Regulations of the bank, and these were headed by the
following motto:—
"For age and want save while you may,
No morning sun lasts a whole day."
Other useful injunctions were given in sober prose, such as
Examine your pass-book, and see that the entry is correct.
If you lose this book, give immediate notice at the bank,
otherwise you may be defrauded.
[115] With what feelings the
pages of the books containing this sage advice would be
turned subsequently, we leave the reader to judge after he
has learnt more. Of course, Lynch was highly respected in
the town: one witness describes him as, from the first of
his connexion with the bank till the exposure, a man above
suspicion; and Mr. Rowan, the treasurer, told the Committee
of 1848, that he believed the public generally had more
confidence in Mr. Lynch than they had in many, or any, of the
trustees themselves.
(839.) That he was clever, as well as
correct,
is manifest from the fact that he succeeded for
sixteen years in carrying on, unsuspected by anybody, a complete
system of frauds of different kinds, by which he appropriated
to his own use during that time no less than an
average of 2,000l. a year. He seems to have commenced his
dishonest practices soon after the formation of the bank; but
until 1832 his peculations were of small amount. From 1832
to 1847 he practised every possible description of fraud, and
though some of them might have been detected by a rigid
system of check, nearly all of them were remarkable for the
ingenuity they displayed: The contrivance and adroitness
with which he managed these frauds,
says one who subsequently
went over the accounts of the bank, were so ingenious
as almost to defy detection.
One of his practices was to
account for a less sum than he received from a depositor, and
this description of fraud he managed as follows (and this is a
case which actually occurred): He received for lodgment
three sums of 30l., 15l., and 27l. in one day, without any
assistance or supervision from trustee or manager. These
amounts he entered in his books as 3l., 5l., and 7l. respectively,
and pocketed the difference. The manager at the close
of the day, in examining and certifying the business done,
marked the three entries as correct, as he found that they tallied
exactly with the amount of money received into the bank.
No sooner, however, was the bank closed and the acting
manager left, than Lynch completed the case he had commenced
by securing himself against exposure in the event of
the depositor seeking to withdraw any of the sums named.
The burden of the fraud was made to fall upon the funds of
the bank by the actuary now altering the bank books to
make them agree with the money actually deposited; and
this he did in the cases in question by putting an 0 after the
figure 3, the figure 1 before the 5, and 2 before the 7. In this
way Lynch netted, with little or no risk of detection, a matter
of 57l. in one day. This was only one mode adopted. He
likewise received money out of office hours, which he never
entered in any day-book or accounted for to the manager. To
preserve himself, however, as in the previous case, he never
forgot to post the amount in the ledger, so that whenever
it might be claimed it would appear to the debit of the bank
and at once be paid. Of course, there was here the absence
of everything like check or audit.[116] Other descriptions of
fraud may be left to be given in the culprit's own words.
Lynch held uninterrupted sway of the Tralee bank for
a long series of years, contriving to make away during the
time with many thousands of pounds; but retribution, though
long in coming, arrived at last. The mill of God grinds
late,
says the Spanish proverb, but it grinds to powder,
and the proverb meets with its exemplification here. A
trifling incident, as has often been the case before, led the way
to the full exposure. Lynch fell ill, to an extent which, though
the bank was held at his own house, precluded him from giving
those precise instructions which are eminently necessary in
dealing with such fragile machinery as that with which he
had managed to work so long. It was usual, it seems, to make
weekly requisitions to the treasurer of the bank for money to
meet the demands upon its funds, and the subordinate on the
occasion in question asked for more money from that functionary
than had been credited to him altogether. The
treasurer, the Rev. A. Rowan, like the rest, had unbounded
confidence in the secretary, and had given himself little
trouble over the affairs of the bank. At a time when it must
have been evident to all that several thousand pounds sterling
stood to the credit of depositors, Mr. Rowan was satisfied to
think that two or three thousand pounds formed the capital
of the bank. It is on record that he several times spoke
of the small amount of money in the bank, and innocently
pointed to the fact as a sign of the depressed state of the
country.
[117] How this illusion was at length dispelled we leave
Mr. Rowan, himself to tell.[118] As I knew that the requisition
of April 3d was for more money than there was in the bank,
I went to Mr. Lynch, and said there must be some mistake
somewhere, and told them to stop taking in any more money
till it was cleared up. The next day Mr. Lynch being ill in
bed, sent for me, and made a confession that he had committed
frauds; but he stated no amount. I then seized his
books and papers and everything I found connected with the
bank, and swore information as to the facts.
The books were
then subjected to a thorough examination, and frauds of
every possible character,
to the extent of 36,000l., were
found to have been committed. At the trial which ensued,
Lynch pleaded guilty, and was sentenced to fourteen years'
transportation.
The other modes of enriching himself to which we have
not yet referred may be given in Lynch's own words. Soon
after his apprehension he made a confession of his malpractices,
in order to exonerate a clerk of the bank who had
been arrested at the same time, and who was at first thought
to be an accomplice, and we take the man's own account of
his ingenious trafficking in forged pass-books as the most lucid
one that could possibly be given. A depositor lodged money
with me,
said the actuary; I entered it in the pass-book,
but not in the receipt-book. He subsequently lodged more, say
with Mr. Fitzgerald, and it was duly entered in the pass-book
and the receipt-book. For these depositors there necessarily
was no account to be found in the bank books, and the party
paying him upon notice given would thus be presumptively
implicated.
He proceeded to give another instance of his
artifice: I frequently took an old pass-book and tore out the
bonâ fide deposit leaf; I made an entry therein in a fictitious
name, and a quasi deposit, as if it were some years antecedent.
During bank hours I used to hand in those books to whoever
might be in the bank, directing notice to be given for the
amount, as though the depositor had left it with me for that
purpose, as it were, some days antecedently. The manager
entering such notice was thus presumptively implicated; and
as the course of the bank unfortunately was to 'keep' and
not relodge sums 'noticed for,' the manager of the day
marked it as 'kept,' which meant, given to me to give to the
quasi depositor.
Kept!
What a fund of irony there is in
that one word so applied! In one or other of the modes
described, this actuary, respected by all who knew him,
contrived to keep,
and, what is worse, to spend, 36,000l. of
the hard-earned savings of the poorest classes around him. His
estate at the time of his apprehension was worth something
like 3,000l.; this property Lynch offered to give up in full,
leaving not even a bed for his daughter;
but on Mr. Pratt's
being applied to for advice, that gentleman recommended the
treasurer not to fall in with the offer, inasmuch as it would
be a compounding of the felony.
(825.)[119] Mr. Pratt had
arrived by this time at Tralee, and was engaged in the investigation
of the affairs of the bank, and in making his awards in
the case. That investigation showed the most culpable neglect
on the part of the managers and trustees: Lynch had been
engaged in his nefarious practices for fifteen years, and yet
till the day he made his confession a breath of suspicion never
reached one of them. The confidence of the trustees in the man
was so unbounded, that one trustee would sign anything he
wished; and the other, who generally acted, signed because
he saw the name of his fellow-trustee. Mr. Pratt ascertained
that here, as at Cuffe Street, the law had been systematically
violated; depositors had put in money to any extent; they
had deposited their money at all times, and under all kinds of
circumstances; charitable institutions deposited their funds
without any limitation, one fund having at one time had as
much as 5,000l. in the bank. Mr. Pratt, in making his awards,
had to take all these facts into consideration, giving satisfaction
so far as it was in his power to those who had made their deposits
legally, and refusing it in all other cases. In this way
he made awards on the trustees of the bank to the sum of over
16,000l. The trustees disputed their liability on the strength
of the Act of 1844, and when the case was brought before the
Court of Queen's Bench the decision of the barrister was set
aside. To this day, we believe, the unfortunate depositors in
the Tralee Bank have in no sense, either by private benevolence
or Government aid, been recompensed for their loss.
When the blow first fell with all its crushing weight upon
the people, they are described as having borne it with
wonderful patience;
then this state of things was followed
by a period of stolid indifference to all the ordinary maxims
of thrift and prudence, as if their treatment had destroyed
the growth of provident habits. So much is evident from
the statements of a respectable solicitor at Tralee who was
examined before the Committee of 1848:—
Can you state (Mr. Herbert to Mr. Justin Supple, 872), from your own
knowledge, what class of persons the depositors are, generally speaking?—Generally
speaking, they are composed of servants, artisans, mechanics,
and small shopkeepers. There are a few of a higher class, but they are
very few indeed. I have pass-books with me amounting to about 16,000l.,
and I assure the Committee that there is not a case in which I could not
point out a more or less considerable degree of hardship.
He then stated
several cases.
(878) Can you state from the general feeling of the country, what
evil consequence will be the result of the failure?—Taking the failure,
says the witness, in connexion with the years of famine, I think the consequence
will be to drive the classes which have been hitherto industrious
and economical in their habits, to vice and wickedness, because the dissipated
characters who have saved nothing, or did not take the trouble of saving,
now look upon the poor industrious creature who has been cheated, laugh
at him, and tell him that they have spent their own money, while the
industrious man has had somebody else to spend his for him.
* * * * *
The agitation was at its height in Tralee when news came
that the neighbouring Savings Bank at Killarney had stopped
payment. Mr. Pratt had not even finished his awards in the one
case before he was required to investigate this fresh iniquity.
It would seem that the exposure of the one actuary had led to
closer investigation on the part of the trustees of the Killarney
bank, and the earlier development of the fraudulent proceedings
of the other official. Here again the frauds were found
to be of an ingenious character, and might have been continued
over an indefinite period, but that the trustees were
compelled by the force of public opinion in the neighbourhood
to do the work they had taken upon themselves. As it was,
the deficiency was found to amount to 20,000l.: the entire
liabilities of the Killarney bank were 36,000l., but the money
in hand and the property of the actuary, who decamped, which
was calculated to realize about 5000l., reduced the loss to the
former sum. As the average amount due to each person was
45l. we may well conclude that the majority of the depositors
were of the poorer classes. Though the real loss was less
than in the case of the Tralee Bank, the bank at Killarney
was found to have been managed with greater carelessness;
the trustees and managers professed to make a yearly audit of
accounts, but this to all intents and purposes meant nothing
more than taking the actuary's word for everything. The
details of this fraud have never, so far as we can find, been
made the subject of a searching public investigation, so that
little more is known than that the frauds in question were of
the usual character. Mr. Pratt, in a short report which he
presented to the Lords of the Treasury after he had visited
the place, said that he found the one case to be very similar
to the other (Tralee), both as regards the actuary and the
managers. In both cases the accounts of the treasurer were
correct, and in both had the trustees grossly neglected their
duties. Here again he made awards against the bank to a
large amount, and in one respect these awards were much
called in question. This public officer received much blame,
both in and out of Parliament, for the character of his decision,
whereas it seems quite evident now that he simply endeavoured
to carry out the regulations of a most imperfect law.
The law of 1844, there can be no doubt, was unjust in the
case of one class of depositors at Killarney. On the clauses of
this Act, Mr. Pratt was compelled to award to those depositors
who had contributed their money after 1844, only the surplus
money which was left after the depositors who had made legal
deposits[120] before 1844 had been paid their claims in full.
This decision was, of course, come to on the ground that the
trustees had not assumed the responsibility provided by
Mr. Goulburn's Act. In this way the depositors before
1844 got 20s. in the pound, whereas those coming after
that year only got 3s. in the pound, and a further small
instalment afterwards when the actuary's property was
realized. The decision might be right in the eyes of the
law, but the law was most unjust that rendered such a
decision possible, or proper.
The next Savings Bank failure in the order of its occurrence,
which has been made the subject of any investigation,
was that at Auchterarder, in Scotland, in 1848. The
Committee of 1849 were appointed to inquire into the case, as
well as the Irish cases already spoken of, but we do not find
that any evidence was taken on the failure in question. It
seems, however, that the Auchterarder Savings Bank was a
branch of the important institution at Perth: notwithstanding
this, it was locally managed, the local trustees, furthermore,
being held responsible for any irregularity. This small bank
was originally established in 1841, the principal landed proprietors
and ministers of various denominations taking part
in its organization. In seven years the number of depositors
had reached to 2,000, and as the total amount standing to
the credit of each person was less than the average of 10l. they
must have consisted of the very poorest part of the population
of this rural district. The number of managers amounted in
all to forty; but the ruling power was John Findlay, cashier
and parochial schoolmaster, and the sole paid officer of the
bank. In December, 1848, a trifling inaccuracy was found
out in his accounts, when he lost no time in absconding. It
was then seen that he had within seven years appropriated
1,500l. to his own use. The liabilities of the bank were
4,300l., whilst the available assets only realized 2,774l. The
dividend, given out of this money, a subscription entered
into by the trustees and their friends, and the sale of the
defaulting actuary's small estate, ultimately reached to eighteen
shillings in the pound. What benefit it was to the poor people
at Auchterarder to be connected, as one of several branches,
with the flourishing concern in the neighbouring county town,
we are at a loss to understand. This connexion did not preserve
the accounts from being tampered with; it seems to
have afforded no check: and when a paltry sum of 150l. was
needed to reimburse this deserving population in full, the Perth
institution came forward with—nothing better than advice![121]
It surely cannot be a matter of surprise that the bank was
never re-opened,
and that no private gentlemen could be
found to undertake the trouble or risk for the future.
We have hitherto been concerned almost entirely with Irish
Bank frauds; henceforth we shall have to deal exclusively
with English ones. Not only on account of the date of its
occurrence, but from its magnitude and enormity, the fraud
on the Rochdale Savings Bank deserves the first place. It
is not too much to say that no Savings Bank defalcation
equalled this one in the depth of its iniquity and cunning,
and in the disastrous effects which followed, affecting as they
did the growth of provident habits not merely in that particular
locality, but throughout the entire kingdom.
The Rochdale Savings Bank was commenced in 1818, or
immediately after those institutions were recognised by the
State. It seems to have been started in the usual way, and to
have progressed with great rapidity,—the community about
Rochdale forming a very favourable specimen of the Lancashire
people. In 1822, George Haworth, a young man of
twenty-one, succeeded his father, John Haworth, who had
been actuary of the bank since its commencement. As the
son remained with the bank almost till its affairs were wound
up in 1849, he may be said to have been associated with
it through its whole course of thirty years. When very young,
this man appears to have shown extraordinary energy and
talent for business, and each year he not only added to his
engagements, but seemed to accomplish all he undertook with
equal readiness. In addition to his duties at the bank, he
first took an agency for the sale of wool, then, as now, the
staple trade of the town; then he obtained an agency for the
sale of porter, both from a Dublin and a London house.
Latterly, however, he had advanced himself to the dignity of
cotton spinner, and was occupier of a large factory; was at
the same time a land agent, estate agent for several gentlemen
who possessed large properties in the neighbourhood, an
insurance agent, and valuer and receiver of rents for the
Lancashire and Yorkshire Railway Company. Not less on
account of his more private character than from those multifarious
matters with which he was connected, Mr. Haworth
was a man of mark in the place. He was a member of the
Society of Friends, and this of itself was a password to the
trust and confidence of many men.[122] Whenever anybody
wanted a chairman, or sought a little patronage for anything
literary, scientific, or charitable, resort was had to Friend
Haworth;
he always patronised such things as far as he
could;
and who could do more, especially one who was not
himself a particularly talented man?
[123] Talented
he might
not be in the ordinary acceptation of the term, nor indeed
need he have been, to do this much; but never was there a
man more talented in the art of deception. He deceived
everybody by an appearance of wealth.
He lived handsomely,
though scarcely with any particular extravagance;
he was above mere gig respectability,
and rode in his carriage.
For the reputation of honesty, probity, and wealth,
said Mr. Taylor, there was no man in Rochdale who stood
higher;
and so far did he disguise his real character, that his
most intimate friends were those who were most deceived by
him. He was not only,
says a friend of ours, who himself
suffered by his frauds, never suspected of doing wrong, but
he was regarded as above suspicion and uncommonly safe.
It is true that some persons now and then expressed their
surprise that George Haworth should act as actuary to a
Savings Bank, and moreover attend so closely to his duties
there when his hands were otherwise so full; but Haworth
deceived even these people by putting his connexion with the
bank on the ground of charity, and an anxious desire to promote
the happiness of his poor fellow-tradesmen,—for whom
indeed he was each day laying up increased stores of untold
misery. Clever to the last, but supposed by some—of course
wise after the event—to have gradually failed in heart and
strength after losing his father-in-law, who it now seems was
his confidential assistant and accomplice, he escaped his
justly-merited punishment in this world, and by an inscrutable
Providence was allowed to die unmolested on the 19th
of November, 1849. Deluded to the last, his fellow-townsmen
considered his loss irreparable; it was a general feeling that
this man should have a public funeral, and it was nearly
being so concluded when the relatives of the deceased stepped
in and wisely put their veto upon it. Strange to say, but only
in keeping with the unnatural strangeness of the whole affair,
suspicion never entered into the heads of any one, high or low,
in connexion with the bank, till this man was far beyond
the reach either of earthly anger or law. The trustees and
managers were called together after the funeral; and so ignorant
were they of the real state of the case and the true nature
of their late actuary, that they thought they were met simply
to elect his successor, and were actually prepared with different
nominations, and not to hear from the dead man's
attorney that the wealthy and respected man
had been for
twenty years trading on the falsest of false pretences, and
fattening on the hardly-earned scrapings of the poor whom he
had so patronized.
Haworth's solicitor told the unwelcome story of a deficiency.
Enough was said to make the trustees at once decide to call in
the depositors' books, and in the course of a few days it was
ascertained—though it took a much longer time to credit it—that
the liabilities of the bank amounted to 100,403l., that
the total assets were calculated to realize 28,686l., and that
the deficiency amounted to the enormous sum of 71,715l.
In the course of two or three weeks the trustees made the
announcement of the defalcations to the public, with what
result may be better imagined than described. At first the
depositors took the matter very calmly—a feeling in which
was mingled incredulity; and a disbelief that they would be
allowed to lose so much money got possession of the people's
mind. The general opinion was, till undeceived, that the
Government would have to stand to the loss.[124] Of course this
made it all the more deplorable when the real facts became
known. One of the witnesses who was examined before Mr.
Slaney's Committee on the savings of the middle and working
classes (1850), gave the following evidence of the feeling in
Rochdale at the time:—I was in Lancashire some time ago,
meeting with large bodies of working men at the time of the
failure, and I shall not soon forget some remarks that were
made about the Government. One man said, 'Dr. McDowall
came here, and told us that the Government was a set of
robbers, and that they did not care about the property of the
working men.' He said, 'I did not believe Mr. McDowall
then; but when I see there is no security for the savings of
the working men in the Savings Bank, and we supposed
Government had them under their protection, I believe now
that Mr. McDowall was right, and that Government cares
nothing about either the poor man or his savings.'
Of
course we give this extract simply to show the effects of the
fraud on the minds of the poorer classes, for nothing could be
more unfair than such conclusions. Soon the depositors came
to look the loss fairly in the face; they elected a committee of
their number to act for the rest, and Mr. Taylor, the witness
before the Committee of 1858, was appointed chairman; they
agreed to avoid litigation if possible, and relied on private
benevolence and the possibility of a grant from Government
to make up the deficiency. The sum of 17,000l. was readily
subscribed among the trustees and their friends; another
sum of 17,000l. was realized out of Haworth's estate, and
ultimately the managers were enabled to give a dividend to
depositors of 12s. 6d. in the pound.
Thanks to Mr. Taylor's intelligent evidence, we have not
only gleaned the above particulars, but we are enabled to give
some account of the way the Rochdale frauds, which entailed
so much misery and so much loss, were accomplished. As
the first question likely to arise in the mind of the reader
would be, doubtless, to ask where were the trustees, it would
be wise to dispose of it first. Haworth was exceedingly respected,
and everybody had faith in him,
says Mr. Taylor,
naïvely; but from what we discovered, he must have been
exceedingly designing for many years.
In no instance that
has come within our notice were the trustees, who ought to
have been this man's master, so completely his tools. Haworth
was so much the factotum of the bank that he really appointed
the trustees; and so designing
was he, that when he got
some one appointed who was likely to attend to his duties, or
be otherwise troublesome, he took care to keep the knowledge
of the appointment to himself. Mr. Taylor gave his own case
in corroboration. This gentleman found out afterwards, that
he had been appointed a manager in 1838, and never was
aware of the interesting fact till the bank failed in 1849. I
never was at any meeting; I never was called upon to attend
any meeting; and I can name several others in the same way.
Of course Haworth took care to make a show of having
trustees. When the same witness was asked (qu. 3,175), if
any attended, he said that one or two attended occasionally;
one very old man indeed, who was Haworth's tailor, really
was a trustee, and he attended, I dare say, once or twice a
month, and sat in the bank; but he was a very imbecile old
man, and would do whatever George Haworth told him to
do.
Sometimes Haworth had to manœuvre a little in order
to get his returns signed, and then he would resort to the
trustees whom he in a manner kept in stock. A case in
point is recorded. A gentleman named Chadwick was passing
the bank during one of Haworth's times of need, and the
actuary called him in, and asked him to be kind enough to
sign a return. Mr. Chadwick naturally hesitated, as having
nothing to do with the bank. But thou art a manager,
said Haworth, showing him his name, for the first time,
in a printed list; and Mr. Chadwick, thinking that he had
perhaps just received this mark of the actuary's esteem,
at once fell in with his request, and signed the return.
Haworth knew better than neglect to make out and
send the proper returns;
the expedients, however, by
which he contrived to get them, false and true, signed, were
wonderful for their cunning and daring rascality. It is
impossible to spare space to describe them in detail. Is it
your belief,
said Mr. Sotheron Estcourt to the Rochdale
witness, that the returns were always properly furnished?
I should say so,
said Mr. Taylor; Mr. Haworth was
exceedingly exact!
When asked why the managers and
trustees did not look at the papers to which they put
their names, Mr. Taylor said, in justice to these men, that
George Haworth's power of deception was very great, and
they were deceived by him.
When it suited him he would
deceive a gentleman into taking office, and then constantly
deceive him in the execution of the duty allotted to him.
He went to one gentleman and asked him to become a
trustee; the person excused himself on account of his
business occupations and the risk; Haworth said that the responsibility
was with Government, and showed him a draft
bill which had never been passed into law! Satisfied on
this point, the person then inquired as to his duties. The
arrant rogue said he wanted his name to act as a check on
the managers, and sign orders for money which they had
audited; for the managers manage the bank.
When Haworth
had obtained the names of gentlemen to act as trustees, &c.,
on some false pretence or other, he had the audacity to trade
upon their names. If any poor person, on becoming a depositor,
began to express any doubt about security, Haworth, who
was much looked up to in the town by the poor,
made
answer: Thou seest the names of these gentlemen; what
dost thou think of them?
Having succeeded so thoroughly
in beguiling those persons who ought to have acted as a check
upon him, all the rest was comparatively easy to a clever and
shrewd person like Haworth. Him task was far easier, indeed,
than that of some of the Irish actuaries; and once the ascendency
gained over the trustees, nothing but close attention and
a vigilant confidant were required. The first defalcation was
traced back to 1837, and consisted of his forging the receipt
of different persons whom he represented as having received
certain sums of money. The great bulk of the fraudulent
transactions was accomplished, however, by the actuary
keeping two sets of books, one of which, marked, H,
were his
private books, and the other the public ones. In his private
book were found the accounts of nearly a thousand depositors,
who, it seems, had been carefully chosen as having the largest
sums in the bank, and who generally were bringing additions
to their store, and seldom drawing upon it: these moneys he
accounted for, for he was exceedingly exact,
—but only in
his private books; he never entered them in the regular bank
books, and they were never acknowledged by any one but himself.
Under any sort of supervision or audit from a disinterested
second party, the discrepancies must have been found
out; the trustees, however, as we have seen, did just as they
were ordered, without ever thinking of questioning anything;
and the yearly audit, which this exact
man insisted upon—he
made himself! The following is another instance,
to quote
from a little pamphlet published at the time, of Haworth's
cunning and duplicity:—A friendly society of Ploughboys
deposited on a given day 30l., which was properly entered in
the book, and laid before the trustees. Shortly afterwards the
actuary must have erased the word 'deposited' and substituted
'withdrawn,' at the same time placing the figure 1 before the
30, thus making it appear that the society, instead of depositing
30l. had withdrawn 130l.
With this last instance
of his villany in his raid on the Ploughboys' money, we leave
George Haworth to the deliberate judgment of posterity, in
the hope that this case may always be the blackest page in the
catalogue of such crimes.
The effect of this fraud, when the depositors found that no
help was coming, was most disastrous; some of those who had
lost considerable sums of money took to hard drinking, declaring
that they would spend their own money themselves:
the feeling found expression in such phrases as, We will
spend our money rather than a George Haworth shall have it.
If the moral influence associated with such habits as those of
economy and forethought were not annihilated, they seemed
to be, and the lessons as well as the savings of years lay
buried in this bad man's grave. The Rochdale bank was
never re-opened; the bank at Heywood, a small town about
four miles distant, was entirely closed by the shock which
followed after Haworth's decease; and in many towns in the
North of England, but especially in Lancashire and Yorkshire,
the case exerted an evil influence for many years on the
spread of provident habits, and is still bitterly remembered.
* * * * *
Among the details of several cases of fraud in Savings
Banks that were presented to the Committee of 1848, we find
some particulars of the defalcations at Reading and Brighton,
which we mention together, inasmuch as the same actuary
related them in brief, and in fact was connected with both
investigations to which they led.[125] In 1842 a fraud was discovered
in the Reading bank through one of the clerks there
noticing that a depositor's book did not agree with the ledger
account. The books of all the depositors were called in, and
great numbers were found not to correspond. Ultimately
the frauds were found to have extended over several years,
and to amount in all to 3,000l. They were easily traced to
the secretary of the bank, who was also the accountant. It
seems he took sums of money from depositors, entered them
in their books, but not in the ledger of the office; and hoped
by constant attention to the work to be present whenever any
of the books that had been tampered with were brought to
the office. So culpable in this case did the trustees feel themselves
to be, that the secretary was allowed to refund the
money he had taken, so long as his private funds lasted, and
was then quietly dismissed. Being before the year 1844, the
trustees were liable to the whole extent of the defalcation,
and proceeded to pay off all depositors by means of a subscription
amongst themselves, one of them giving 1,000l.
Mr. Hatton, then a clerk in the Reading bank, was employed
to investigate the fraud and bring matters to a settlement;
and this he did so ably, that he was appointed actuary.
* * * * *
In seven years from this time, Mr. Hatton was engaged
upon an equally unfortunate business in connexion with the
Savings Bank at Brighton. A deficiency was found out in
this bank in 1849, to the extent of nearly 4,000l., and was
proved to have arisen from falsifications in the accounts of
Mr. Buckoll, who for many years had been actuary of the
bank. The first suspicion of anything being wrong was felt
by one of the managers, who, somewhat shrewder than the
rest, went carefully through the balance-sheet of the year
1848, under the impression that the amount of profits ought
to have been larger. He was unable to do more, however,
than confide his suspicions to the actuary of the Reading
bank, and to request his opinion. After Mr. Hatton had
examined into the amount of business done, and compared
the business with the capital and the various items presented
to him, he expressed his opinion that the profits on the year
should have been at least 100l. more than they appeared to
be. Strengthened in his opinion by this advice from an
experienced actuary, the manager in question, at the annual
meeting held immediately afterwards, got up and said that
he did not feel satisfied with the balance-sheet, and moved
that the meeting should adjourn for a short time for some
investigation to be made. A close examination of the accounts
was so little to Mr. Buckoll's mind that he decamped,
leaving a letter for the managers, in which he stated how
unworthy he had been of the position he had filled, having
committed frauds on the funds of the bank to a considerable
extent. A warrant was immediately issued for his apprehension,
with a view to criminal proceedings, but he got clear
away; and up to within a few years ago had never been heard
of. Mr. Hatton, who succeeded eventually to the situation
which Buckoll filled, was called in to pursue the investigation
into the case, and it is from his evidence before the Committee,
already so often alluded to, that we are enabled to extract
some account of the way in which the frauds were accomplished.
The actuary, it seems, made false entries in depositors'
books, false entries in the ledgers, and forged the
initials of managers, who were required to certify to each
entry in the latter. If he wished to draw 100l. from the
funds of the bank, his plan was to get hold of a pass-book,—a
new one, if he could not find an old one readily,—forge
entries in that book as well as corresponding entries in the
ledger; this book he would present to the managers in attendance,
who readily paid the amount. In some cases the money
was left with Buckoll to pay over to the quasi depositor, as was
then too much the custom all over the country. Afraid, however,
to do too much of this sort of work himself, he arranged
in several cases to have the money paid on what is known as a
power of attorney, or an order for payment to a second party.
Thus he went among his friends, and represented that some
poor person or other had applied to him to withdraw a sum
of money standing to his credit; but as he could not act as
his agent in the matter, and the party could not himself
attend at the bank, would Mr. So-and-so oblige him by simply
going and receiving the money? These persons, who in all
cases were proved to have been innocent agents in the transaction,
relied on the character of Buckoll, who of course was
highly respected in the town, and would then hand the money
over to him according to agreement. Another mode by which,
towards the end of his course as actuary, he contrived to appropriate
to his own use several large sums of money, was by
taking deposits out of course (as in the case of the Dublin
actuary, even in the street), and never in any way accounting
for them to the bank. What the trustees were doing during
all the years these frauds lasted, how the accounts were made
to square, and where the system of check was, does not appear.
Mr. Hatton, in justice to the trustees, said they were as
efficient as trustees and managers are found to be;
but this
kind of evidence is simply a reflection on the general body of
such officers, and scarcely any exculpation of the individuals
in question. The system of check was clearly inefficient.
It is pleasing to add, that in this case the depositors
suffered nothing from the frauds. The bank had money in
the separate surplus fund
to the extent of 3,000l., and this,
with 600l. which an unfortunate Guarantee Company had to
pay for the defaulting actuary, paid nearly all claims.
* * * * *
From 1851 to 1861 there were numerous instances of frauds
in Savings Banks, all which cases will he found included in a
list at the end of this chapter, though not described at any
length. It is the less necessary to do so, as nearly all of them
are fully described in reports made by Mr. W. H. Grey, a professional
actuary, who had long been experienced in Savings
Bank matters, and who had been sent down by the National
Debt Commissioners to investigate such cases as they arose.
It would appear from his reports that most of them were
imitations on a small scale of the gigantic frauds already
described in detail. The common feature of almost every
case was extreme laxity of book-keeping;[126] nothing like a
proper audit; and signatures given by responsible persons
without even a cursory examination. Thus in the Isle of
Wight Savings Bank at Newport, Mr. Grey's testimony is, that
he found that fictitious documents, purporting to be signed by
depositors, giving notice of their intention to withdraw a part
or the whole of their deposits, have been produced by the
secretary, on the faith of which cheques have been signed by
the attending manager without seeing the pass-book, and
without ascertaining whether such sums were really standing
in the ledger or not. These cheques have been entrusted to
the secretary for delivery to the depositors at any time they
might call for them, instead of insisting on personal attendance
during bank hours.
The actuary of the Rugby bank committed
his frauds in the same way. Again: In some cases,
fictitious accounts had been raised in the ledgers, and closed
again immediately fraudulent repayments had been made;
and in other cases in which the amounts had been previously
withdrawn, the dates of the real withdrawals had been altered
into those of the fraudulent ones.
No comparison, it seems,
was ever instituted between the cash-book and the ledger, and
the system pursued had practically left the whole control of
the receipt and payment of about 30,000l. a-year to one
individual. The secretary, indeed, William Wheeler Yelf,
was generally much respected in the island,
was distributor
of stamps, did a large business on week days, and was
employed as a Wesleyan preacher on Sundays; but we have
seen how much all this, and more, avails where the man is
thrown amongst overwhelming temptations and has no principles
to guide him. We have already spoken of many of the
results of the Rochdale fraud; the case of the Isle of Wight
bank shows that that fraud affected other banks. It was
suggested after the failure of the Rochdale bank that the
trustees of every other institution should at once set about a
rigid comparison of the depositors' books with the books of
their respective banks. The Newport trustees at once acted
upon the suggestion of the National Debt Commissioners.
They established the practice of having the balance-book containing
a list of the balances due to depositors always on the
table when the bank was open, and of comparing this with
the depositors' books brought to the bank. Had not Yelf been
a clever swindler, or had the trustees carried the plan to a fair
conclusion, he would now have been found out. Mr. Grey
thus explains the new deception adopted to conceal the deficiency:
At the annual examination both ledger and balance-book
were duly placed in the hands of the managers; but
when they had satisfied themselves that all the balances had
been correctly transferred, they shrank from the laborious task
of adding together two or three thousand accounts, trusting to
the secretary's addition.
This labour was just what Yelf
wanted. In point of fact,
continues Mr. Grey, the addition
of each page was correct, but the total of each page was
brought into a summary page at the end; and in doing so,
1,000l. was dropped in one place, 1,000l. in another, in the
capital column, and 20l. here and 30l. there in the interest
column, with some odd money to make up the required deficiency.
Well might the Government actuary add, From
these practices it will be perceived how imperfect a system
has been pursued, and how little it was calculated to prevent
or discover fraud!
We come now to a comparatively recent date, and to two
frauds in Savings Banks which must be fresh in the memory
of every reader. We refer, of course, to the aggravated case
at Bilston, and the late case at Canterbury. A witness before
the Committee of 1858 expressed his opinion that from that
time henceforth the country had done with extensive fraudulent
proceedings in any large Savings Bank. It unhappily
comes, however, within the province of history to chronicle
one such case occurring so late as 1862, and another the facts
of which transpired even after the passing of the Consolidation
Act of 1863.
The Bilston Savings Bank was established in 1838. Nothing
unusual marks its early history, except the fact that the man
who ultimately managed all its affairs and so largely embezzled
its funds was prominently active in its establishment, and
was one of the original trustees. To show the estimation in
which the Rev. Horatio S. Fletcher was held by his fellow
townsmen in 1838, we need only state that in that year, being
before simply perpetual curate of the parish, he was presented
by them with the incumbency of St. Leonard's, Bilston, worth
700l. a year. That he should take a large share of honorary
employment after this was only what might have been expected.
Whether expected or not, he did undertake many
offices. In 1839, Mr. Fletcher, in addition to being a trustee, was
made secretary to the Bilston bank. In 1849, he also became
treasurer. Not content with this monopoly of offices, he soon
afterwards took upon himself—for there is no record of his
having been appointed to the office—the work of actuary. The
whole of these offices, and the entire system of check which
they are properly supposed to give to each other, Mr. Fletcher
held till 1861. And why not? The man was universally
known for his charity and benevolence: as the principal
clergyman of the place, did he not teach mercy and charity;
and, as a magistrate, did he not uphold the majesty and
dignity of the law? Since the way in which trust is reposed
in individuals can never be fully explained nor made the
subject of rigid rule, who could better be relied on than the
Rev. H. S. Fletcher, Incumbent of the parish, and Justice of
the Peace? Nothing can be more easy than to say now, that
it was consummate folly to allow one man to hold the important
offices he did; but who would think of saying so
much then? Suffice it to say, that this man, like so many
more of whom we have had to speak, contrived to ingratiate
himself into the good will of all around him, and had that
peculiar kind of cleverness which succeeds in getting his
application and zeal laid to the credit of his disinterestedness
and charitable disposition. Since the subsequent facts
make it impossible to put a kinder construction upon them,
all the rest follows in this case simply as a matter of course.
On the 3d of January, 1862, the announcement was made
in the Times newspaper that the Bilston bank had come to a
sad end, and that defalcations to the amount of 8,840l. had
been found out in the accounts of the treasurer of that bank.
How these frauds, which extended over several years, were
accomplished, and how they were found out, remains to be
seen. We will reverse this order, and speak of the exposure
first. In the spring of 1861, Mr. Tidd Pratt, the energetic
Registrar of Friendly Societies—whose name indeed seems
almost synonymous with such subjects—visited Bilston, and
delivered a lecture on Benefit Societies.
In the course of
that lecture Mr. Pratt alluded to the cognate topic of Savings
Banks, and spoke of the necessity for regular accounts and
regular returns in connexion with them. He then took the
opportunity to refer to the very irregular manner
in which
the accounts of the bank in their own town were kept. Now,
it must not be supposed that Mr. Fletcher had forgotten his
returns; he was far too careful for that; he knew the penalties
attaching to such neglect. It seems that both weekly and
annual returns, although they were habitually and carefully
cooked,
were regularly forwarded to the National Debt
Office. The Returns
to which Mr. Pratt appears to have
pointed, were those called for annually by the House of
Commons, with the object of improving the law of Savings
Banks; and these returns, from 1855 to 1861 the factotum of
the Bilston bank had constantly neglected to send. Mr. Pratt,
in continuation of his statement afterwards, confessed he
knew nothing of the circumstances of the bank, further than
that his suspicions were always aroused in cases where he
found any accounts were not properly rendered.
There can
be no doubt about it, that this reference roused the reverend
defaulter
to a sense of his danger; for it subsequently
transpired that not a penny was abstracted unlawfully from
the bank after the week of Mr. Pratt's visit and lecture.
Furthermore, not only was the culprit aroused, but the trustees
were awakened to some sense of their responsibility, and
very soon afterwards there was a movement amongst them for
a change in the management and an overhauling of the books
of the bank. In a very few weeks after Mr. Pratt's visit a
new set of managers and trustees were proposed, and Mr.
Fletcher was deputed to see them, and endeavour to get them
to act. In July the appointments were legally made, including
that of Mr. Hawkesford to the post of actuary. Then
quickly followed the disclosure which indeed, sooner or later,
was now inevitable. The new actuary got the books from the
parsonage—the bank being held in the school-room of the
church—and was not long in finding out some of the discrepancies
with which they abounded. On first discovering
the frauds the actuary spoke to the treasurer, who promised
to confer with him about them; on finding out the magnitude
of the defalcations, he again mentioned the matter, choosing
an extraordinary time, not however without its significance—of
a Sunday after the usual service. The clerical delinquent
acknowledged his guilt, and said, He was very sorry, but
never intended to defraud the depositors of a shilling.
It
will be seen, however, that the fraudulent transactions were
of such a nature as not to admit of any extenuation, and to
render condonation of any sort impossible. The feeling produced
by the disclosure was painful in the extreme, and the
country spoke out with vigour on this extraordinary and
merciless breach of trust. The local magnates, indeed, and
the body of trustees who had allowed these frauds to run
on, spoke with bated breath of the deficiencies
of the
Bilston treasurer; the Times, on the other hand, spoke far
more in accord the with the general feeling of the country,
when it characterised this man Fletcher
as the meanest,
the most cowardly, and the most cruel of swindlers.
[127] Under
his manipulations, the Bilston bank was a Savings Bank in
nothing but the name; there were trustees, but they were
tools; rules, properly certified, but never obeyed; accounts
made out and cooked,
but never checked or audited. The
trustees did just what they were bid, and the real operator at
the bank did just what he chose. This clergyman and magistrate
was a swindler, his books a heap of lies, his balance-sheets
pure fiction.
Mr. Pratt was sent for to examine into the state of the
bank immediately after its condition became known, and
it is to the account which he himself subsequently gave to
the depositors that we are indebted for most of the particulars
which elucidate Mr. Fletcher's mode of operation, when in
the thick of his guilt. Mr. Pratt stated, that from 1848 to
January, 1861, there did not appear to have been any meeting
either of the trustees or managers, for the purpose, according to
the rules, of auditing or settling the weekly accounts. The
Rev. R. J. Heafield, a trustee and manager of the bank, confessed
at the trial of Mr. Fletcher, at the Staffordshire Lent
Assizes, 1862, his own culpable negligence in the following
words:—The weekly returns signed by me were prepared by
Mr. Fletcher. When I signed them, I never in any way compared
them with the books. They were presented to me either
by Mr. or Mrs. Fletcher, and I took no measures to verify their
accuracy.
[128] What might not a designing man do with such
a tool as this? Having subdued his trustees in this way, the
rest was, as we shall see, quite easy. The books at the bank
were, it is only fair to say, kept quite correctly; so were the
depositors' books. According to the evidence of Mr. Pratt:
In the day-book everything was entered with scrupulous
correctness; and 1200 depositors out of 1400 had brought
in their books, and he did not believe an error had been discovered.
Mr. Fletcher chose a somewhat simpler course of
action, which we will describe. His duty as actuary of the
bank required that he should furnish weekly returns of the
transactions to the National Debt Commissioners: the correctness
of these returns were to be checked by the treasurer,
which office he of course filled himself. All that was necessary
to the perpetration of fraud was that this actuary-treasurer
should be on easy terms with his conscience, and this unfortunately
was the sad state of the case. Deceive the Commissioners
by falsified returns, and any amount of money, under
the peculiar arrangements of this bank, might be pocketed
without fear. In order to help himself to a full solution of
the case, Mr. Pratt brought these returns down from London,
and compared them with the bank accounts, with the following
result:[129]—The whole of the Returns he held in his hand were
signed by Mr. Fletcher, as actuary and manager. In the
statement dated January 1, 1859, the amount received was
returned at 234l. On looking at the books for that day, he
found it should have been 334l., therefore 100l. had been
abstracted on that day [cries of 'Shame,' and sensation].
On the 8th of January, he found the payments were set down
at 174l., whereas they had only been 74l., thus showing that
the treasurer had put another 100l. in his pocket that week.
In the return dated January 29, the receipts were set down
at 183l., and the payments at 148l., whereas the former ought
to have been 283l., and the latter 48l., thus taking to himself
200l. [renewed sensation].
So on through almost all the
weekly accounts of three or four years. There seems to have
been no other fraudulent transactions than those of this
simple but abominable kind; the whole defalcation had
taken place in this way, and it was made manifest that no
one but the treasurer had participated in it. It is fortunate
for the depositors that the frauds were found out when they
were; but for the negligence in sending the required returns
ordered by the House they might have been continued for an
indefinite period. As it was, the assets of the bank realized
in the first instance ten shillings in the pound; towards the
close of 1862, another dividend of half-a-crown in the pound
was paid, and since that time a third small amount has
accrued to the depositors, who are never likely to be completely
reimbursed of their loss. In 1862, Mr. Fletcher was
tried before Baron Channell, and found guilty of appropriating
money with intent to defraud.
His counsel, however,
having made an able defence, characterised by the judge as
being as subtle as it was ingenious, the point as to whether
the prisoner was a trustee
at the time of appropriating the
money—this being one of the facts upon which the indictment
was based—was reserved, and he was released on heavy
bail. Into the further history of this man, the sequestration
of his living by the Bishop of Lichfield for the behoof of
the depositors, the repeated failures of justice in his case, his
eventual imprisonment for two years, it is not befitting that
we should enter, these being items of almost current police
intelligence.
We can only spare a few words to tell how similar results
followed in this as in previous frauds. Men declared
they would put it out of the power of mortal man to deceive
them in this way again. In many cases a degree of recklessness
was induced in those who had been cruelly wronged,
which could only have been considered excusable if they
had lost their all. It is not at all unnatural, that, from
what cannot but be considered a defective education, men
should so act, and be so ill prepared and disinclined to look
evil consequences fairly in the face: still such facts only
prove the truth of what we have before urged, that the extent
of money loss, through such dishonest transactions as Savings
Bank frauds, is but a trifling part of the aggregate misfortune
they entail upon the country. Other depositors, it is but fair
to say, acted far more wisely. Induced by the counsel and
persuasion of those whom they could trust in a time of need,
many depositors in other banks withdrew their money, and
placed it where alone they could get that security which they
so much needed, and several of the Bilston depositors did the
same with the sums they obtained. It was represented to
them truly, that not only would Government suffer by a run
upon the old banks, but, what was of far more importance,
they would themselves suffer, and their second period of
suffering be worse than their first. Nothing can be so
palpably true as that money, completely withdrawn at such
times, is oftener wasted than kept, and frugal habits rewarded
after this fashion far oftener discontinued than resumed.
And here, it seems to us,—and we mention it, though we
are somewhat anticipating the subject—the country is greatly
advantaged in having the new system of Savings Banks to
point to. What was much wanted in previous cases was
some safe place, where timid depositors might resort with
their savings, and defrauded depositors go with what they
had saved from the wreck.[130] In the Bilston case this privilege
was largely used. The Post Office Banks broke many a fall,
and they set many on their feet again who otherwise would
have been hopelessly overcome by the shock. Two years
before it would have been sheer mockery to have told depositors,
under such circumstances as those to which we are
alluding, not to make a run upon Savings Banks; they had
no alternative till, in 1861, that alternative was provided. It
would seem, from a memorandum before us, that the authorities
of the Postal Banks, without in any way seeking to prejudice
the interests of the old banks, did all that was fairly possible
towards reducing the disasters which have invariably and
inevitably followed previous cases of Savings Bank failures.
They instructed their agents, in all cases where, owing to the
depredations at Bilston, Savings Bank depositors applied for
advice about withdrawing their money, to recommend continued
confidence in these institutions; if, however, such
depositors were bent upon withdrawing their money, then to
advise that it should not be asked for in cash, but by means
of a transfer certificate, which would make them depositors
under the Crown. The strict fairness of these instructions
may be judged by the closing injunction: Although you
may fairly inform those depositors who are alarmed at this
failure, that the depositors in Post Office Savings Banks have
absolute and direct Government security for their money, you
must on no account do or say anything to weaken their trust
in the old Savings Banks.
The last case[131] in the catalogue of this peculiar description
of crimes is that which occurred at Canterbury during the
year 1865. This case is indeed so recent that any lengthy
description of it would scarcely be tolerated. We may well
spare ourselves the trouble, for the Canterbury fraud was
little else than a repetition, on a smaller scale, of the one
perpetrated at Rochdale, to which we have given so much
space. Nor is it a little singular that the actuary in the
Rochdale case was in many respects the prototype of the
Canterbury actuary: in the estimation in which both were
held in their respective spheres, in their character and
occupation, there are several points of close resemblance
between them. In the Canterbury case we have the old
story of misplaced confidence, want of check, and a constant
embezzlement of considerable sums of money extending over
a long series of years. The actuary and secretary of the
Canterbury bank, Mr. Samuel Greaves, was for many years
almost the sole responsible official; of course he bore the
highest possible character for probity and honesty
: nor will
it surprise any of our readers to be told that it came afterwards
to be said of this man, from his many professions
he was thought incapable of such conduct as that which
was proved against him.
The Canterbury bank was
established in 1816. Greaves's connexion with the institution
dates from 1830, when he was appointed actuary
at a salary of 40l. per annum. The salary, however, was
increased from year to year, up to the time of the exposure,
when it stood at the respectable figure of 200l. Originally
a hoyman,
the actuary of course, and necessarily, engaged
in other pursuits than those connected with the bank;
and this circumstance, in the same way that it occurred
in almost every other fraud of the kind, led to the malappropriation
of the money of the bank. It was another case
of partial service and partial pay, and an almost unlimited
command of money, when among many other business engagements
it was always possible that money might be urgently
needed. Like Haworth of Rochdale, Mr. Greaves undertook
several agencies, among them those for the sale of coal and
porter. In 1840, it seemed, from the statements of his counsel,
he began to lose money in his business, and was then, to put
it in the mild form chosen at his trial, induced to abstract
some of the funds of the bank to meet his pressing difficulties.
Once on the downward road, he never turned
back; it was impossible to manage it. It was the old story,
told with plainness by his own advocate. He took the
money, with the full intention of repaying it on an early
date; difficulties gathered fast around him, and still the man
went on, foolishly trusting to some turn of fortune's wheel
to replace him in his old position. He tried speculation, but
he lost still more irretrievably; his lucky day never arrived:
and at length the weight of anxiety under which the man
must have laboured for twenty-five years brought him down,
and with the lack of his usual vigilance came detection and
exposure.
This detection was effected by a Mr. Abrams, the clerk
of the bank, and it is from his evidence at the trial of his
superior officer that we learn the actuary's mode of operation.
All the cases of fraud, it seems, were identical in character,
and were effected by means of claims for withdrawals only.
Every deposit reaching the bank was properly received and
properly accounted for. Like Haworth at Rochdale, the
Canterbury actuary carefully noted those who were generally
putting money into the bank, and seldom taking any out.
In the case of many of these depositors he had provided himself
with forged pass-books, with the deposit column always
correct, but the withdrawal side manipulated according as he
himself wanted money. Suppose any of the depositors came
to the bank, to deposit or withdraw a sum of money; they
presented themselves to the actuary, who entered in their
proper bock the proper sum, but immediately substituted
a forged pass-book for the purposes of the bank. The ledger
clerk received a book from the actuary to copy into the
ledger, and in this way the books of the bank came to tally
with the forged depositors' books. All that was necessary
to carry on the frauds was that the actuary should keep
a strict eye on the real pass-books of the depositors, for the
discrepancies would be patent, as it eventually transpired, the
moment the true books were seen. Sometimes the money was
obtained with less trouble. Greaves would occasionally give
himself notice that a depositor wished to withdraw a certain
sum of money (and this occurred several times in connexion
with a person who had deposited considerably, but never
withdrawn any sum), and represented that the money was
entrusted to him to keep.
After the quasi notice had been
acted upon, he would draw a cheque for the money, and the
amount would be entered in a false pass-book and copied into
the ledger; the luckless depositor, with her book safely by her,
being in entire ignorance of the whole transaction. The utter
absence of any control on the part of the managers and
trustees, as exemplified in such a mode of procedure, especially
considering that it came after the case of Bilston, the agitation
of the last few years, and the passing of the Act of 1863,
reflected the greatest discredit upon the honorary officials
of the bank, though their conduct subsequently went far to
atone for their past neglect.
The case is described as having excited the most painful
interest in the city of Canterbury. The actuary, an old man
of seventy, was tried at the city quarter sessions in October,
1865; the trustees of the bank prosecuting him on the
charge of felony. The transactions were again described,
but only in brief, inasmuch as the prisoner pleaded guilty.
A strong memorial was presented, signed by many clergymen
and tradesmen, which, instead of asking for a mitigation
of sentence solely on account of his age and infirmity, put
forward the following extraordinary motive for interference:
The memorialists wish so far to relieve his character from
any undue opprobrium that may attach to it, by declaring
that the various business transactions they individually have
had with him, have always been conducted in an honourable
and satisfactory manner.
At any rate, this questionable
memorial may at least serve to show the estimation in which
he was held by his fellow-townsmen. The prisoner was
sentenced to six years' penal servitude,—six years for each
of the two indictments; but, on account of his age, the years
to run concurrently together.
The entire deficiency, when at length the whole of the
accounts of the bank were made up, was found to be 9,300l.
Happily the depositors, whom, so far as he knew, the actuary
was mercilessly robbing, were ultimately secured against loss.
The surplus fund of the bank, amounting to 3,500l., was
applied to meet the case; the actuary gave up property to
the value of 1,700l.; a gentleman who was his surety for
400l. was called upon to pay that sum, and the remainder,
about 3,000l., was subscribed by the trustees and their friends.
The bank was of course stopped on the defalcations coming
to light, the books were called in, and the trustees sought the
advice of the Government officials, as to transferring the
business to the Post Office. The stipulation in this case was,
we believe, that the trustees should make good the deficiency,
and that then the business of the bank, which was a large
one, the deposits amounting to 150,000l., should be handed
over to the new establishment. Every effort was made by
the Post Office, in the way we have shown in the Bilston case,
to stem the tide of improvidence which generally sets in at
such a time, and in this case with great success.
The frauds above described have, of course, formed the
principal cases,—cases which from their flagrancy and extent
have either been made the subject of parliamentary investigation,
or have so occupied the attention of the press as
to have become grave subjects of public discussion. Besides
those leading cases, there have been, as we have before
hinted, a certain number that have been concealed from the
public from motives which, though they may have been open
to question, we cannot characterise as wholly bad or unwise.
From two Returns issued at different times on motions made
in the House of Commons, we are enabled to compile a complete
list of those frauds that have been officially reported
to the National Debt Office. The first Return embraces the
period between 1844 and 1852, and the second, 1852 to 1857.
The numerous frauds of which we have already spoken, or
to which we have referred, occurring before 1844, and the
important ones perpetrated since 1857, are not included in
the following list. The gross amount of loss would have
been considerably swelled had a perfect list been possible.
As it is, the following table gives the name of the Bank, the
amount of the Fraud, and the amount of the Loss to depositors,
so far as it can be correctly ascertained:—
| Name of Bank. | Total
Defalcations.
£ | Defaulters. | Depositors'
Loss.
£ |
|---|
England. |
| Bradford, Wilts | 400 | Actuary | — |
| Bromley | 932 | Actuary | — |
| Dunmow | 16 | — | — |
| Highgate | 700 | Secretary | — |
| Newport, Isle of Wight | 8,156 | Secretary | 7,850 |
| Leicester | 689 | Clerk employed
by Secretary. | — |
| Mitcham | 10,000 | Actuary | — |
| Newtown | 180 | — | 180 |
| Ongar | 497 | Actuary | — |
| Poole | 6,221 | Secretary | 5,663 |
| Reeth | 230 | — | 147 |
| Rochdale | 71,715 | Actuary | 37,433 |
| Rugby | 1,438 | Secretary | — |
| Runcorn | 98 | Actuary | — |
| St. Helen's | 12,932 | Secretary | 6,680 |
| Southport | 200 | Actuary | — |
| Spilsby | 3,213 | Actuary | 2,436 |
| Upper Albany Street | 250 | — | — |
| West London | 1,106 | Actuary | — |
| Yoxall and Barton | 200 | Secretary | — |
Scotland. |
| Auchterarder | 1,400 | Actuary | 430 |
| Monquhitter | 336 | — | — |
Ireland. |
| Kilkeel | 976 | Actuary | 976 |
| Tralee | 36,000 | Actuary | 36,000 |
| Killarney | 20,370 | Actuary | 19,105 |
| Nenagh | 832 | — | 832 |
| Mallow | No returns. |
| Castle Townsend | No returns. |
The frauds at Hertford, Brighton, Reading, Cuffe Street,
Bilston, and Canterbury, where the amounts of the defalcations
are known, are left out of consideration. Thus the
total amount of the frauds enumerated in the Returns, extending
over thirteen years, was 179,280l.; or if we include
the Cuffe Street bank fraud, to make up for those Irish
banks which sent no returns, and errors of computation, and
spread the total over all the thirteen years, the average
amount of defalcation was at the rate of 17,600l. a year;
or, taking the banks mentioned in the Returns, upwards of
7,900l. for each involved. Doing the same with the total
loss to depositors, or 117,732l., we find the average loss for
each bank to be nearly 5,000l.
The reader who may have followed us through this
chapter, and remembers the classes to which the cheated
depositors generally belonged,[132] will have some idea how much
pain and suffering the amount of money so treacherously
wrested out of their hands really represents. But the evil,
Mr. Gladstone well said several years ago when speaking on
this very point, that is done, is, unfortunately, not to be
measured by the actual amount of money loss; there is an
amount of evil such as figures can convey no idea of; and it
is impossible that the public confidence in these institutions
can be that which it ought to be, while these losses are liable
to occur at all.
This was a deficiency which Mr. Gladstone
set himself to remedy immediately afterwards, and, though
unable to do so at the time through the opposition of Savings
Bank managers, it was not long before another system was
provided which struck for ever at the root of this grievance;
and for all practical purposes, and so far as it was now
possible, repaired the injury which the industrious classes
had suffered through the action of defective legislation, and
the moral obliquity of those who had been trusted with their
earnings.[133] After entering still more fully in the next chapter
into the defects of the Savings Bank institution, considered
purely as a system, and the attempts made from time to time
to remedy its deficiencies, it will be time to describe how the
above beneficial result was brought about.
ON THE DEFICIENCIES OF THE EXISTING SYSTEM, AND THE
ESTABLISHMENT OF SUPPLEMENTARY SAVINGS BANKS.
Were greater facilities provided for saving, and greater encouragement
given by the intelligent classes to the formation of provident habits, we believe
the habit of economy would spring up in many quarters where at present it
is altogether unknown. The working man, though he may not like to be
patronised, likes to be helped; and those who help to provide him with convenient
places in which to deposit his spare earnings, will not fail to be
regarded by him as among his best friends.
—Mr. S. Smiles.
In the fourth chapter we endeavoured to trace the progress
of Savings Banks up to the year 1841, or after they had had
a legalized existence of twenty-five years. We there tried to
show that, for some years prior to that period, a manifest
improvement had set in, and was rapidly proceeding, in all
that related to the social condition of those classes for whose
benefit such institutions as Savings Banks are mainly intended;
and we think we succeeded in proving that the
progress of these banks was commensurate with the gradual
national advancement. Except in the years marked by
financial or political embarrassment, the number of Savings
Banks increased in a fair and regular proportion each year;
and not only so, but the first table we gave (page 91) showed
conclusively that the amounts deposited increased in the
different years in the same proportion. We would now take
up the statistics where we left them, and present the reader
with a continuation of the same, in a slightly different
form.
TABLE 4.[134]
Showing the amount of Deposits and Withdrawals, and the Capital, of Savings
Banks, at the end of each year from 1841 to 1861 inclusive.
Year ending
20th Nov. |
Deposits.
£ |
Withdrawals.
£ | Capital of Savings
Banks in the
United Kingdom.
£ |
|---|
| 1841 | 5,694,908 | 5,487,723 | 24,536,971 |
| 1842 | 5,789,203 | 5,656,160 | 25,406,642 |
| 1843 | 6,327,125 | 5,333,015 | 27,244,266 |
| 1844 | 7,166,465 | 5,716,275 | 29,653,180 |
| 1845 | 7,153,176 | 6,697,042 | 30,950,983 |
| 1846 | 7,300,367 | 7,255,654 | 31,851,238 |
| 1847 | 6,649,008 | 9,060,075 | 30,236,632 |
| 1848 | 5,862,742 | 8,653,108 | 28,114,136 |
| 1849 | 6,196,883 | 6,522,760 | 28,537,010 |
| 1850 | 6,363,690 | 6,760,328 | 28,930,982 |
| 1851 | 6,782,059 | 6,305,566 | 30,277,654 |
| 1852 | 7,281,177 | 6,684,906 | 31,754,261 |
| 1853 | 7,653,520 | 7,116,330 | 33,362,260 |
| 1854 | 7,400,141 | 7,956,347 | 33,736,080 |
| 1855 | 7,188,211 | 7,654,133 | 34,263,135 |
| 1856 | 7,741,453 | 8,023,583 | 34,946,012 |
| 1857 | 7,581,415 | 8,375,095 | 35,145,567 |
| 1858 | 7,901,925 | 7,839,903 | 36,220,362 |
| 1859 | 9,021,907 | 7,335,349 | 38,995,876 |
| 1860 | 9,478,585 | 8,258,421 | 41,258,368 |
| 1861 | 8,764,870 | 9,621,539 | 41,546,475 |
From the above table, many important facts may
be gathered. Speaking of the yearly proceeds, in 1847,
1848, 1849, and 1850, the withdrawals of money exceeded
the deposits by amounts respectively of 2,411,067l.,
2,790,366l., 325,877l., and 396,638l. This extraordinary
state of things is partly accounted for by the panic which
set in about this time among Savings Bank depositors, owing
to the discovery of numerous frauds, and, as a matter of
course, the knowledge of the divided and defective responsibility
under which the system was worked; but more
especially was it owing to the commercial crisis of 1847-8.
In the three following years, 1851-2-3, the crisis quite over,
and a general examination of Savings Bank accounts tending
to reassure the public mind, the deposits again gained their
natural ascendency, when, in 1854-5-6-7, the excess paid
was at least equal to the excess received in the three previous
years. There can be little doubt but that this result
again was owing in some measure to the Crimean war, and
the scarcity of money during the period, but principally to
the agitation which generally prevailed among depositors at
the constant failures in the Legislature when attempts were
made to place Savings Banks on a proper footing; these
failures leading to repeated petitions for a Select Committee
to go over the whole subject. In 1858 there was a slight
improvement; in 1859 a considerable increase in the deposits,
clearly the result of the investigations of the Select Committee
of the previous year, which Committee, though it had
done little towards a final settlement, had certainly dispelled
a cloud of misapprehensions that had gathered round the
concerns of Savings Banks. That improvement continued,
though in a less degree, in 1860; when the Returns for 1861
show another large decrease of deposits and an increase of
withdrawals, which we would not be wrong were we to
attribute to the frequent discussions in Parliament, and in the
country, relative to a new system of Government Banks.
Having to some extent accounted for the variations observable
in the above table, let us proceed to compare the progress
made during the period of twenty years now under consideration
with that shown during the previous quarter of a century
and described in a previous chapter. Between the years 1825
and 1835 the increase in the aggregate amount of deposits in
the Savings Banks of the United Kingdom was at the rate
of exactly fifty per cent. Between the years 1835 and 1845,
the returns show an increase in deposits in this decennial
period of ninety-eight per cent. Comparing the returns for
1845 and 1855, the progress made, if indeed progress is the
right word to use here, was at the rate of only five per cent.
Were we to take the first five years of this last decennial
period, we should find that there had absolutely been a decrease
in the business of Savings Banks to the extent of
twelve per cent., but this unsatisfactory result admits, as we
have just shown, of partial explanation. To continue our
survey, however, up to the latest period, viz. including the
Returns for 1864, we find that the deposits for 1854 amounted
to 7,400,141l., and the deposits for 1864 to 8,174,679l.,
showing an increase during ten of the most prosperous years
this country has known since the establishment of Savings
Banks at the rate of only about eight per cent.
It is almost unnecessary to say that as regards all the
material elements of prosperity the progress of the country
between 1841 and 1861 was most marked. Taking England
and Wales only, we find the amount deposited in Savings
Banks in 1841 was 4,440,379l.; in 1861, the amount deposited
was 7,188,034l. Now the population of England and Wales
was in 1841 15,929,000; in 1861 it was 20,119,496. The
declared value of our exports was in 1841, 51,545,116l.; in
1861 it had increased to the enormous sum of 125,102,814l.,
and last year (1865) it stood at over 165 millions sterling.
What the increase in the amount paid as wages was likely to
be, we leave our readers to estimate from these sums. In
nothing is the national prosperity more manifest than in the
relative number of paupers in receipt of relief. Though the
population increased during the twenty-two years in question
several millions, the total number receiving in and out-door
relief, was, in 1849 (this being the first year the return was
made) 934,419; in 1861, the number was 890,423, or an
actual decrease of forty-four thousand persons. Such statistics
as the above might be multiplied indefinitely, especially
those relating to the wonderful progress of the Money Order
Office at the Post-Office, but it may suffice just to make a
reference to the increase of wages during the period.[135] Mr.
David Chadwick, an eminent authority in Lancashire, states
that between 1840 and 1860 the wages of the operatives employed
in the different departments of the cotton trade had
increased from 12 to 28 per cent.; in the silk trade the increase
had been 10 per cent. In the building trade the increase
throughout the country had averaged from 10 to 30 per cent.;
in the iron trade from 8 to 20 per cent. It would scarcely,
therefore, be too much to say that within the period, and up
to 1861, while the price of most kinds of food had decreased,
the wage for almost every description of labour had increased
in at least an equal proportion.
In view of such facts, and before we attempt to describe
the different plans which were produced in order to make
these useful institutions once more progressive ones, let us try
to ascertain why more of the money thus gained did not
reach the Savings Bank. A careful examination of the
Returns of Savings Banks will show beyond the possibility of
doubt that the first and greatest check received by these
institutions was when it became apparent that they did not
possess within themselves that absolute security which they
were thought almost universally to offer. We could not well
exaggerate the result; this is the fountain from which all
the ills have proceeded. The evil did not confine itself to the
banks where the depredations had been carried on; it was
not confined to the banks already established; but it extended
to quarters where before there had been a manifest disposition
to increase the facilities and to meet the wants of an
advancing population, and this feeling was destroyed. The
first effect of the frauds was, of course, to stop the deposit of
money; in a smaller degree and among less educated people
they even tended, as we have seen, to destroy the habit of
laying by any money at all; but among all they produced a
decided conviction that the financial arrangements of the
system, especially with reference to the anomalous connexion
between Savings Banks and the Government, were unsound.
We have several times referred to the state of the law
as to the exact nature of this connexion, but it is necessary
to return to it again as entering very largely into the
consideration of the slow progress of Savings Banks. There
can be no question that the great bulk of the British people,
and not simply the lower and middle classes, imagined—up
at least to the time of the great frauds of 1845-48—that
Government was fully responsible for all the money placed in
Savings Banks. In 1851 we find Mr. Bright saying in Parliament:
Nine out of every ten depositors believed that they
had the security of Government for whatever money they
invested, and that in placing that money in the local Savings
Bank they were securing it better than if they lodged it in
the hands of the wealthiest private banks in the country.
[136]
Mr. Hume said the same on several occasions. Mr. H. A.
Herbert, an Irish member, whose name deserves to be associated
very intimately with legislative attempts to put Savings
Banks on a proper footing, testified over and over again to
this impression being the prevailing and universal belief.
General Thompson told the House in 1848 that he was
struck with profound astonishment to learn that Savings
Banks were not what in common parlance was called 'as
good as the bank.'
He had advised servants on numerous
occasions to put their money into such banks in the belief
that they had complete Government security for their money.
Such expressions of opinion from men who, though they had
never penetrated into the mysteries of official life, could
scarcely be thought ignorant in financial questions of this
kind, show how wide-spread must have been the misapprehension,
and are of themselves almost a sufficient justification
of the ignorance of the bulk of the poorer classes.
Nor were there wanting excellent and numerous authorities
who must have contributed to this improper impression.
Mr. Scratchley, in his Practical Treatise on Savings
Banks, pp. 72-4, has taken great pains[137] to string together a
formidable list of those whom he finds inculcating the same
view as that already expressed by prominent members of
Parliament during debate. Suffice it to say, that when such
books as McCulloch's Commercial Dictionary, Porter's Progress
of the Nation, The Quarterly Review, Chambers's Information
for the People, Chambers's Magazine, The Penny Magazine, and
the Irish school books, laid it down that depositors had
perfect security from Government for the money paid into
Savings Banks, those of the class which relies to such a great
extent on the intelligence of those above them may well be
excused for falling into error, and may well be pitied when
called upon to bear loss. Government took up the subject of
Savings Banks at an early stage in their history, with the
object of protecting
them,[138] and to that end they made it an
imperative duty on the part of the trustees of these banks to
deposit their money with the State; unfortunately, however,
no steps were taken to enforce this provision. Here lay the
fatal mistake, and the source of all the trouble. The whole
success of Savings Banks,
says Mr. McCulloch in his
Statistics of the British Empire, depends upon the security
the depositors have for their money. No one was accustomed
to speak of Savings Banks without commenting on the
increase in the stability of the country by giving the poorer
classes a direct interest in the preservation of public credit;
but it requires no great amount of penetration to see that so
much entirely depends upon the fact that faith is kept with
such depositors.
To all intents and purposes proper faith
was not kept by the banks, and a proper knowledge of the
real amount of risk the poor were running was wrongly withheld
from them: hence the undoing of a great part of the
good work accomplished in the first quarter of the present
century by the establishment of Savings Banks. What was
the use,
indignantly asked a member of the House of Commons
of the Government in 1851, of preaching to the poor
the duty of being honest, industrious, and self-dependent, if
the fruits of their hard earnings were thus to be swept away?
Ten years afterwards a more powerful voice than Mr. Herbert's
asked the same question, and appealed to the country
for a reply. If ever,
said the Times newspaper, speaking
of Savings Bank money in a leading article, 17th January,
1862, there was a sacred fund, this is one; if ever there was
a class and a fund which deserved the protection of wise laws
and stringent responsibilities, surely this is the class and this
the fund.
Says an objector: Irregularities will creep into
the management of the best of funds, and frauds are as old as
the world.
Says the Times: How can people treat such
cases as a matter of course! How can we look on while the
poor commit their all to such institutions as these! It is
useless to tell us that nine out of ten, or ninety-nine out of a
hundred of these Savings Banks, are conducted with scrupulous
care and constant supervision.
Referring, then, to the recent
case at Bilston, it continued, How can the depositors of a
few hoarded shillings know where the Fletchers hold sway,
and where the managers do their duty? The only sound
advice to give the working classes under such circumstances
is, to have nothing to do with institutions where such things
can occur.
The argument was irrefutable; nor was the
advice given hastily. The Postal Banks had then been introduced
to the country, and the article thus winds up: This
advice would have been difficult to give some years ago; it is
not so now. The Post Office Savings Banks offer an escape
from danger, and at the same time remove the necessity of
taxing the time and attention of philanthropic men in offices
where negligence may occasion such wide-spread ruin. We
confess that, in the face of such occurrences as those of
Bilston, we hope the day will speedily arrive when these 531
fallible Savings Banks will all cease to exist.
[139]
We have said that the frauds in some of the Savings
Banks led not only to their stoppage, but to the closing of
others in the neighbourhood. Nothing can be clearer on this
point than a reference to Ireland. In 1846, there were 74
Savings Banks in Ireland; in 1851, no fewer than 21 of them
had ceased to exist. In 1846 there were eight in county
Down; in 1851 only two remained. In county Kerry there
were almost an equal number; in 1851 not one remained.
Doubtless other causes besides the breaking of faith with the
people led to this, partly and indirectly,—such, for example,
as the failure of crops,—though still there was the fact, significant
enough, that in the districts least visited by famine, and
where the people were most industrious and frugal, there had
been the greatest diminution of these banks. Bearing in
mind such facts, and also that it can be proved that the
frauds to which Savings Banks have been so liable have led
directly or indirectly to the breaking up of no less than fifty
of these institutions in the United Kingdom, let us proceed
to some inquiries as to how far the banks, uncertain and
insecure as they were in 1861, met the requirements of the
country in other respects.
Before 1861 there were in the United Kingdom 638 Savings
Banks; of which 498 were in England, 33 in Wales, 51 in
Scotland, 54 in Ireland, and 2 in the Channel Islands. Computing
from the census of that year, there was one Savings
Bank to every 43,000 inhabitants. In England, though the
498 banks were distributed through every county except one,
there were many populous districts and numbers of large
towns not supplied with them. Rutlandshire with its 22,983
inhabitants was the exceptional county in England: but in
Scotland there were nine, and in Ireland four counties, entirely
without Savings Bank accommodation. The following is a
list of those thirteen counties:—
| SCOTLAND. |
|---|
| Ayr, | with a population of | 189,858 |
| Clackmannan | " " " | 22,951 |
| Haddington | " " " | 36,386 |
| Kinross | " " " | 8,924 |
| Linlithgow | " " " | 30,135 |
| Orkney & Shetland | " " " | 62,533 |
| Peebles | " " " | 10,738 |
| Sutherland | " " " | 25,793 |
| Wigtown | " " " | 43,389 |
| IRELAND. |
|---|
| Carlow, | with a population of | 68,078 |
| Kerry | " " " | 238,254 |
| Leitrim | " " " | 111,897 |
| Longford | " " " | 82,348 |
One of the Channel Islands, Alderney, and the Isle of Man
with its three or four market towns, had likewise no Savings
Bank. Thus fourteen counties and the above islands, containing
an aggregate population of at least a million persons,
could not count upon a single Savings Bank to assist those of
that great number who were inclined to provident habits, or
those who might have become so had these facilities been
within reach.
So much for the counties in the length and breadth of which
no bank for savings could be found. Applying the same test
to towns and villages already applied to counties, we find that
of places above the position of hamlets there were, in 1861,
no less than 3,500 without banks; and not only so, but 150
of this number were towns of more than 10,000 inhabitants,
and 500 of the places which had no Savings Bank accommodation
had each one or more private or joint-stock banks.
But we have another consideration to urge here; and that
is, the insufficiency in the number of Savings Banks in many
counties where their extent and population required them.
No one will say that Berkshire, Dorsetshire, and Cheshire
required as many banks as did Middlesex, Lancashire, and
Yorkshire—the vast centres of population and the busy
hives of industry—and yet the facilities of which we are
speaking happened to a great extent to be so arranged. In
1861 we find the relative number of the population and the
depositors in Savings Banks in our English counties to
vary very considerably—a difference ranging from one in
eight to one in thirty-six. In the county of Berks, there was
one Savings Bank for every 17,000 persons; in Dorsetshire
one for 18,500 of the population. On the other hand,
to take the rich and thriving county of Lancashire, which had
the lowest relative number of banks, we find there was only
one to every 68,000 persons, and in the West Riding of
Yorkshire only one to every 66,000 persons. From a careful
calculation which we have made from these and similar facts,
it would appear that of the two and a half millions of persons
for whom Savings Banks were specially designed, and who in
1861 were not depositors, at least half of them were the
breadth of an English county distant from any place where
they could place their money had they been desirous to save
it, and the rest were distant from six to twenty miles from
any such repository.
Nor were those who were much nearer these banks, i.e.
the denizens of our large towns, much better circumstanced.
Of the existing establishments in 1861 there was a large
proportion of them open for so short a time, and at such
inconvenient hours, as practically to make them closed banks
to our working population. That they did little business is
not to be wondered at; though we think our readers must
be astonished to know that of the entire number of Savings
Banks much more than half of them only received, on the
average, a dozen deposits a week! Astonishing as this is, all
wonder may well cease when it is found that of the whole
638 Savings Banks of the United Kingdom only twenty were
open daily, while 355 were open once a week, and fifty-four
but once a fortnight, and ten but once a month! Of the remainder
a considerable number were open two and three times
a week, and the rest did business at various periods. Investigating
the matter a little more closely still, we find that, in
1861, fifty Savings Banks were open but four hours monthly;
124 were open only one hour each week; and 150 open but two
hours per week. In England the 498 banks were open in the
aggregate 1,988 hours a week, giving an average of about
four hours per week for each bank, or, if we leave the metropolitan
banks out of the consideration, an average of about two
hours and a half per week. Further, taking three English
counties, solely chosen on account of their alphabetical order,
Bedfordshire, with five Savings Banks, had seventeen and a
half hours per week of Saving Bank accommodation; Berkshire,
with ten banks, had only twenty-one hours; and Buckinghamshire,
with six banks, but an aggregate of eight hours
each week, during which its population could resort to the
banks with their savings. After these facts, let no one wonder
that the odd savings of the poor burnt holes in their pockets,
and led them to resort to the house of call
open within
a stone's-throw almost at all hours.
A statement was made before the Committee of 1858, that
twenty-five out of every hundred persons properly designated
as of the industrial classes were debarred from saving their
money, even if inclined to do so, from the want of convenient
places of deposit; and the reader may, we think, with
the help of the above statistics, judge whether that statement
was at all an exaggerated one. Is nothing to be said of the
inherent disposition of so many of the poorer classes to spend
their money, and the utter repugnance they feel to habits
of frugality?
says a doubting reader. Certainly. But how
do the facts bear on this matter? Let us take the returns of
the four different counties already alluded to as containing
relatively the largest and the smallest number of Savings
Banks. In Berkshire, for every thousand persons an amount
equal to 2,479l. was accumulated in 1856; in Dorsetshire the
amount was 2,550l.: on the other hand, in Lancashire, which
we described as most insufficiently served with banks, the
amount per thousand persons was only 1,562l., and in the
West Riding of Yorkshire but 1,266l. But we will take the
case of a single bank to show that the want of facilities was
a most important element in the want of progress; and to
make the fact still plainer, we will go to Lancashire itself.
The Manchester Savings Bank has for long been one of the
best managed institutions in the kingdom, whilst elsewhere
there had been, as we have seen, the slowest growth, if not
complete stagnation in Savings Banks generally. The depositors
in the Manchester bank were nearly quadrupled in
the twenty years now under consideration, and no better test
is required that these depositors were of the right sort than
the fact that, in 1860, 200,000l. lodged at Manchester belonged
to persons who could not even sign their names.[140] These
facts did not fail to strike the members of the Committee of
1858, and Mr. J. Hope Nield, the eminent actuary of the
Manchester Savings Bank, was asked how he accounted for
the fact of this bank advancing so much more rapidly than
any other. Mr. Nield succinctly replied, Only from the
constantly increasing facilities which it has been our constant
endeavour to give.
Mr. Nield afterwards explained
the facilities to which he referred. In many banks, depositors
had only a very short time for business, and then
perhaps they were restricted to one kind of business for one
day, another kind of business for another day. In the Manchester
bank depositors could go and do any kind of business
whenever it was open. There lay the distinction between
free
banks, and what were known as banks on the restrictive
principle.
In a restrictive principle bank, of which
there were an enormous number, withdrawals were made
on one day, deposits on another; new accounts could only
be opened on a certain day, additions could only be made
to accounts on another certain day. Then there was the
notice to be given for withdrawing money. The more free
the bank, the less notice: generally a week was required;
more often a fortnight was wanted; in many cases a month's
notice had to be given. Whenever,
said Mr. Nield, a
free bank could be pitted against one on the restrictive principle,
the increase in the number of depositors in the former
case would be found to be four or five times as much as
in the latter.
This was shown in a clear light by a striking
illustration—also a somewhat amusing one: Up to 1847,
said Mr. Nield, the late Venerable Archdeacon Brooks, of
Liverpool, would insist to the day of his death upon paying
everything himself in the Liverpool Savings Bank, and, as a
consequence, the bank was only open two days a month
for the repayment of money. Deposits were completely
stationary there for many years, and cases were known
where persons went to the Manchester bank to open an
account there, and remitted money by post.
Whilst speaking of the Committee of 1858, we may here
give the opinion on this point of another gentleman, of whose
career as an ardent and laborious Savings Bank reformer we
shall presently speak. Referring to the absence of what he
considered reasonable facilities in Savings Banks, Mr. Charles
William Sikes, of Huddersfield, expressed his decided conviction
that the present system was inadequate to meet the
wants and wishes of the working classes of this country.
When asked (2,715) if he had made any calculation as to
the extent to which the savings of the working classes might
reasonably be expected to amount if the Savings Banks were
thoroughly popular with them and were felt to be perfectly
safe, Mr. Sikes answered: I think that if a knowledge of
Savings Banks becomes widely diffused (and the process is
going on), and if the reorganization of them receives the
confidence of the country, the average annual deposit, which
now amounts to seven millions, is so small a proportion of
the aggregate income of the working classes of this country,
that instead of being, as it had been, stationary, with
scarcely a fluctuation of two per cent. for twenty years, there
will be a probable increase in the course of three or four
years, or perhaps a longer time than that, of two, three, or
five millions of money;—in other words, that the annual deposit,
instead of being seven millions, will get to eight, nine,
or eleven millions, in ten years. The income of the working
classes is fully 200 millions a year, and, with anything like
provident and sensible habits, thirty millions a year might be
deposited in Savings Banks.
* * * * *
And now that we have at considerable length described the
defects and inequalities of the Savings Bank system, we
cannot perhaps do better than offer some account, first, of
different banks of a supplemental character which have been
started within recent years, and afterwards speak of some
of the various proposals made, out of Parliament, to render
the general system more efficient.
For many years prior to their actual establishment it was
felt by those best conversant with the habits and feelings
of our British soldiers, that the Savings Bank institution
did not meet their wants and requirements, and that supplementary
banks were needed. This project was frequently
urged,[141] and in 1842 Lord Hill gave his consent to the plan
of Military Savings Banks proposed by Sir James McGregor
and approved by Lord Howick, the then Secretary-at-War.
An Act of Parliament was obtained (5 and 6 Vict. c. 71), and
immediately afterwards the authorities at the different barracks
commenced operations, under regulations made by the
Secretary for War. In 1847 this Act was amended. In 1849
the Regimental Benefit Societies were dissolved, and incorporated
with the Military Savings Banks by a new Act;
and in 1859 the whole of the Acts relating to the Savings
Banks of the soldiers were consolidated into one (22 and 23
Vict. c. 20). The amount which any one in the service
can deposit is unlimited, though interest is not allowed on
any excess over 30l. in one year, except in the case of gratuities
given for good conduct. When the sum of 200l. is
reached, no further interest is paid. The interest allowed
must not exceed 3l. 15s. per cent. The whole of the money
raised in Regimental Savings Banks is remitted to the War
Secretary, who holds an account with the National Debt Commissioners,
which is kept separately from other Savings Bank
accounts, being entitled The Fund for the Military Savings
Banks.
Returns of all transactions made in these banks are
laid annually before Parliament. The Returns almost from
their commencement have been most satisfactory, and produce
sufficient evidence that these supplementary banks
were required. The total amount up to this time (1865),
standing to the credit of our soldiers in Military Banks alone,
exceeds the sum of a quarter of a million sterling, and
amounts on the average to nearly 20l. for each depositor.
This sum, however, though large and eminently satisfactory,
as indicative of providence and forethought among a class
which cannot be called highly paid, does not represent the
whole of their savings. It is well known that many go
beyond their barracks to deposit such sums as they can spare,
acting on the feeling, which may be well understood, that it
is not always advisable that the authorities should know the
extent of their savings.
* * * * *
What was done for soldiers in 1842 was accomplished for
seamen, another class whose interests everybody cares for, in
1854. The Act 19 and 20 Vict. c. 41, regulates Seamen's
Savings Banks, established at all our principal seaports under
the direction of the Board of Trade. According to this Act the
Board of Trade has power to constitute any shipping office
established under the Merchants' Shipping Act (1854) a
branch bank under its control, and to require any shipping
master belonging to that office to act as agent. The money
invested in these banks is paid through the Board of Trade
to the National Debt Office; and interest similar to that
given by the ordinary Savings Banks is paid to those who
so invest their money. As in ordinary Savings Bank management,
the expenses incurred in carrying on the business
through the Board of Trade (a department of which is constituted
as a sort of central bank) and the shipping offices
are paid by the surplus interest obtained from Government,
with whom the funds are invested. As in the case of Military
Banks, an annual account must be rendered to both
Houses of Parliament of all transactions; but we are sorry
to say that these transactions have never been large. Some
forty thousand pounds represent the entire capital of the
Supplementary Seamen's Banks.[142] All who know what
Jack is ashore—and who does not?—will wonder little at
this result; he is universally pointed to as an embodiment
of Improvidence itself: but when it is known that the machinery
in question is applicable to married sailors, their
wives and families, the picture of want of thrift and inclination
to save presents several deplorable aspects.
* * * * *
Still more useful and interesting has been the Penny Bank
movement, and some account, which must necessarily be
brief, will not be out of place here. Before the year 1850,
there seem to have been at least four Penny Banks established
with a view to attract a poorer class of depositors, or it might
be a younger class, than the existing Savings Banks had
reached; and, as stepping-stones to greater things,
Penny
Banks succeeded admirably from the very first. The first
bank was started, with this very laudable object, in Greenock,
in 1857, by a Mr. Scott of that town. The Greenock Savings
Bank having, like all the other Savings Banks, restricted the
amount which could be received to a shilling, and very few
of them receiving that amount pleasantly, Mr. Scott thought
that the very poor had no safe place in which to deposit their
little surplus earnings. Poor people were often enough urged
to take care of the pence, and the pounds would take care of
themselves;
but little had been done to help them to care for
their pennies, which proverbially and very quickly burnt
holes in their pockets when they were compelled to keep
them in their own possession. A bank for such sums was
started in this town; and to show how much it was needed,
and how ready the poor were to avail themselves of advantages
when they were placed within their reach, we have only to
state that 5,000 depositors in the first year of the existence of
the Greenock Penny Bank, placed the sum of 1,580l. in it.
The success of this bank soon began to tell all around;
many private establishments and charitable institutions
were not long in following the example that had here
been set. In the following year Mr. Queckett, a benevolent
and painstaking clergyman, in the east of London,
established a Penny Bank in connexion with Christ's Church,
St. George's in the East, and the success attending the venture
was still more encouraging and remarkable; nearly 15,000 deposits
were made in this parish Penny Bank in the first year of
its existence. It seems that the number of depositors, for some
reason or other—probably because that number was enough
for one person to control; the whole of the repayments, at any
rate, passed through Mr. Queckett's own hands—was limited
to 2,000; and so great was the demand, that there were always
several applicants for any vacancy that might occur among
the favoured two thousand. Two Penny Banks
were next
established about the same period—one at Hull, in August,
1849, and the other at Selby, in the East Riding of Yorkshire,
in July of the same year. The clergymen and gentry
of both towns joined together to form an institution, which
should create and foster habits of regularity and frugal
economy among the poorest people, and which should afford
an opportunity for the deposit and safe keeping of the smallest
sums of money, repayable with interest when required.
The
Birmingham Penny Bank was established in 1851, and in six
years from its commencement had received the enormous
sum of 52,354l. in amounts from one penny to one pound.
Many of our readers will be aware of the unfortunate end of
this bank, under circumstances which, deeply to be regretted,
have had a prejudicial effect on the usefulness of other banks
of the same description. Were it not that a new class of
banks, since established, offers considerable inducements to
the poorest classes, and thus supersedes, though only to a
limited extent, the necessity even for Penny Banks, such an
effect could not but have been considered irremediable, as
well as most deplorable. Of the remaining Penny Banks, the
principal ones in England are those of York,[143] established in
1854, and excellently managed throughout, and very successful
in attracting depositors; the Halifax bank, commenced
in 1856, and equally successful; the Derby bank, established
in 1857, under the auspices of the Rev. J. E. Clarke, one of
the most earnest of the promoters of the principles of Penny
Banks; and the Southampton and Plymouth banks, established
in 1858. There are no means of obtaining statistics as to
the number of Penny Banks in existence, but there cannot be
less than eighty or ninety in English towns alone. Over and
above the regular public Penny Banks, however, there are an
enormous number connected with and doing an incalculable
amount of good in private establishments, ragged and other
schools, and different religious bodies.
In Scotland the movement has progressed even more
rapidly than in England. Dr. Chalmers always held, and
often urged during his lifetime, that far too little was done
to tempt the poor, and especially the families of working
people, to save their little surplus cash: in commencing his
Territorial Savings Banks,
as he called them, in Edinburgh,
he was actuated by exactly the same view and the same spirit
which afterwards influenced the promoters of Penny Banks.
The Penny Bank system flourishes in Glasgow to an extent
unknown in any other neighbourhood. In and around that
city there were, at the close of 1864, no fewer than sixty-eight
Penny Banks in active operation, all of which deposited with
the Savings Bank of that place. The total amount of deposits
in these sixty-eight banks during the year 1864 was
9,386l., and withdrawals to about half that amount. The
number of depositors exceeds, at the present time, 24,000.
That these auxiliary banks are effecting a great amount of
good can well be believed. The saving of pence,
says the
report from which these extremely interesting facts are taken,
proves a training to habits whereby ultimately larger sums
are saved, and the virtues of industry and providence are cultivated
and confirmed,
and there cannot exist a doubt on the
matter. The principles upon which they and all other banks
of the kind were started, and have been throughout conducted,
make them peculiarly institutions of a preliminary character
for the poorer class of workmen; emphatically they are, as
they have been called, the poor man's purse.
In their
operations they are so simple, that few could possibly get perplexed
in dealing with them; and they are best adapted to
working populations, because they are open at such hours,
generally on Saturday nights, as are known to suit these
classes. As the most salutary change is made in a man's
habit, perhaps in his character, when he begins to save, the
Penny Bank deserves every countenance and encouragement.[144]
It only remains to add, that the Legislature took the matter
up in August, 1859, when it passed the Act 22 and 23 Vict.
c. 53, legalizing, as it were, these institutions, by enabling
them to invest the whole of their proceeds in Savings Banks.
* * * * *
Much that remains to be told of Savings Bank reforms, and
of other proposals to supplement the system by fresh provisions,
may be told in connexion with the life of a gentleman
to whom reference has already been made. Amongst those who
have devoted much time and immense labour to bring about
a better state of things in Savings Banks, the foremost place
is undoubtedly due to Mr. Charles William Sikes, of Huddersfield.
Mr. Sikes, the son of a private banker of that town,
was born in 1818. We will pass over his early years, only
remarking that he received a commercial education, and, in
1833, entered the employ of the Huddersfield Banking
Company, the third or fourth joint stock bank established in
this country. Subsequently cashier, Mr. Sikes now holds the
position of deputy manager of the bank in question. We
mention this, because it has an immediate bearing on the
subject: it was while Mr. Sikes was cashier of this bank,—which,
like other private banks, received deposits above 10l.,
and allowed interest at the current rate,—that his attention
was arrested to the question of banks for the people. He
witnessed a considerable number of instances of workmen,
who, beginning with a few pounds, had silently amassed what
was to them a little fortune, of one, two, and even three
hundred pounds; and he became deeply impressed, as he
himself informs us, not only with the idea that the number of
these provident working people was far less than it ought to
be, or might be, but that the social and domestic results for
good that would ensue would be absolutely incalculable, if
bank depositors among the working classes became the rule,
instead of the rare exception. About this time—the era of
the Free Trade agitation—there was great distress in the
manufacturing districts, and Huddersfield, like the rest of the
West Riding towns, was heavily visited. In the neighbourhood
where Mr. Sikes resided, the population was chiefly
engaged in the weaving of fancy waistcoatings, and that trade
was almost suspended. Privation and suffering,
says Mr.
Sikes, prevailed on every hand, and was frequently borne
with silent and noble heroism.
He seems to have entered
freely into discussion with working men as to the various
remedies for such a state of things, and in this practical way
to have penetrated into their thoughts, and to have got at
their wants, wishes, and feelings. And for such objects as
Mr. Sikes had in view, the end amply justified the means.
There seemed to him only one remedy, to which they might
possibly be assisted, but which they themselves must adopt;
whatever was suggested, Mr. Sikes's thoughts would always
recur to the comparative comfort of those who had to some
extent lived for the future—who had had the wisdom in their
better times to remember that rainy days must come at some
time or other; that
"Into each life some rain must fall,
Some days must be dark and dreary;"
and that the difference between those who had a little store
laid by and those who had none, was the difference between
hopeful expectancy and comfort, and helpless misery and want.
Mr. Sikes tells us that he had already begun to feel, that
though much might be done for the working classes by
kindly and temperate advice, the greatest share of the work
of their social elevation would have to be achieved by their
own individual efforts; this feeling, moreover, was strongly
confirmed by reading a passage in the late Bishop of Chester's
(Archbishop Sumner's) Records of Creation: The only true
secret of assisting the poor is to make them agents in bettering
their own condition;
and on this maxim, as a principle,
he resolved solely to act. Mr. Sikes came to the conclusion
that his work might well lay in endeavouring to stimulate
the poor to more provident habits; and that, if there was anything
in the constitution of such societies as were formed
expressly to foster these habits which stood in the way of the
poor man, the obstacles ought either to be quickly removed,
or some new organization must be planned to effect this
purpose. Though Mr. Sikes never seems to have had anything
to do with the Huddersfield Savings Bank—having
abstained, through motives of delicacy, owing to his connexion
with an ordinary bank in the same town—he was
thoroughly conversant with the system, and therefore fully
appreciated the difficulties in the way. He was not long in
finding out how utterly impossible it was to adapt the system,
as it then stood, to the well-known wants and requirements
of the workman; and he early turned his attention to some
auxiliary machinery which he thought would meet the case
of the younger people, if of no other. He truly held, that if
he could do anything to inculcate the growth of frugality in
young people, their habits would increase with their years
and grow, in spite of the many inconveniences, amounting as
they did to absolute discouragements, which they might meet
with afterwards in their connexion with the majority of the
old class of Savings Banks.
With this end in view, Mr. Sikes addressed a long letter
to the editor of the Leeds Mercury, in 1850, which was
subsequently republished in the form of a pamphlet, and
widely circulated, recommending the formation of what he
called Preliminary Savings Banks.
There was nothing
particularly new in the character of the banks proposed;
the novelty was in their adaptation to the machinery of
Mechanics' Institutions. Mr. Sikes took up the Penny Bank
movement, and showed, with an energy and devotion to the
subject which made his exertions quite impressive, how, by
the already existing institute, that useful scheme for saving
small sums might be propagated far and wide. His proposal,
to give it in brief, was, that a few leading members of each
Mechanics' Institute should form themselves into a Savings
Bank Committee,
attending, say, an evening weekly, in one
of the class-rooms, to receive the trifling deposits of any
member who should choose to transact a little business
with them. They would only have to appoint a treasurer,
provide a few inexpensive books, and with the exercise of
just a little patience and self-denial they might succeed in
bringing many round to saving habits. The excellent
organisation, especially in Lancashire and Yorkshire, of
Mechanics' Institutes, would thus wonderfully augment the
number of agencies for receiving the savings of the people,
and they would thus augment the number most where more
facilities were most needed. The Preliminary
banks were
meant to be merely feeders to the larger banks: so soon as
the money of any one depositor reached a guinea, or two
guineas, the sum was to be paid into the nearest Government
bank, as often as necessary. If the committee of each
institution,
concluded Mr. Sikes, in his very interesting
letter, were to adopt this course, taking an interest in
their humble circumstances, and in a sympathising and
friendly spirit, suggest, invite, nay win them over, not
only to reading the lesson, but forming the habit of true
economy and self-reliance, how cheering would be the
result! Once established in better habits, their feet firmly
set in the path of self-reliance, how generally would young
men grow up with the practical conviction that to their
own advancing intelligence and virtues must they mainly
look to work out their own social welfare!
It is very
satisfactory to find that this advice and such considerations
had their proper weight with the committees of many of
these institutions: Penny Banks were added to their other
educational and social schemes; and Mr. Sikes was further
encouraged by the Committee of the Yorkshire Union of
Mechanics' Institutes, who more than once alluded to his
proposals, and expressed their cordial approval of his plan,
and their pleasure that it had been adopted in several
places included in their sphere of operations. In the
country generally the proposals attracted for some time
considerable attention, and led to Mr. Sikes being largely
consulted by gentlemen who were desirous of establishing
feeders
to the existing Savings Banks, either in the form
of the Penny Bank, or the Mechanics' Institute Preliminary
bank. He soon came to be regarded as an authority on the
subject, and justly so; many different banks were at this
early stage formed as the results of his advice and assistance,
and Mr. Sikes seems to have had many gratifying assurances
that his labours have been far from fruitless, a result in which
the philanthropist finds his best reward.[145]
Mr. Sikes's next exertion on behalf of the working population
around him was to help them to a proper estimate
of the value of provident habits, by the publication, in 1854,
of a pamphlet entitled Good Times; or, the Savings Bank
and the Fireside;[146] an admirable little manual for the class
for which it was written, and which deservedly obtained a
large sale. Mr. Sikes himself described how he was led
to write his pamphlet by hearing, in an extensive intercourse
with working men, the most crude ideas as to the utility and
virtue of habits of economy and frugality; and we know no
better corrective than a perusal of this little compendium
of practical wisdom
now before us.
Up to this time we find that Mr. Sikes laboured very
earnestly to spread the knowledge of Savings Banks among
the people, and to obtain more appreciation for these institutions.
He also, as we have seen, proposed his Preliminary
Banks
on the principle that, as the existing institution did
not sufficiently recognise the small attempts at saving habits,
this supplementary class of banks would supply the deficiency.
He seems, however, to have carefully abstained from saying
anything that would tend to lessen the influence or usefulness
of the existing Savings Banks; but in 1855, the
time would appear to have arrived when it became necessary
to attempt some reforms in their constitution and management.
It is not at all difficult to comprehend the steps by
which Mr. Sikes, with his practical knowledge of Savings
Bank business, would arrive at the conclusion that if these
banks were to continue to be in any sense the depositories
of the money of the poor, they must undergo almost a
transformation, and further, that reform must come from
within. That this was the conclusion to which he came
is evident from the able and exhaustive letter which Mr.
Sikes addressed, in 1856, to the Chancellor of the Exchequer,
the late Sir G. Cornewall Lewis, on Savings Bank Reforms.
Mr. Sikes first sought an interview with Sir George C. Lewis,
and obtained one, in company with Mr. Wickham, M.P.; and
the letter which followed was the result of a request on the
part of the Chancellor of the Exchequer, that the different
points should be fully and clearly set before him. So far
as we have been able to find, Mr. Sikes deserves the credit
of having been the first to point out the inherent defects
in all parts of the Savings Bank system, and the first to
suggest an entirely fresh form of management.[147] Almost
all the previous brochures relating to Savings Banks had
exclusive reference to the matter of the frauds which had
occurred, and the security which depositors possessed in
such cases. On this subject, Dr. Hancock, of Dublin, had
published two very able pamphlets, which had originally been
read as papers before the Dublin Statistical Society, of
which Dr. Hancock was secretary. Mr. Edward Taylor of
Rochdale had, at a still prior period, written a pamphlet
on the same subject. Mr. Sikes, in the Letter we are now
considering, adverted at length to the same point, but by
no means confined his attention to it. He, on the contrary,
dwelt on the dormant state into which many of the banks
had sunk; the extremely unequal way in which they were
furnished to the people; the limited time for which the
majority of banks were open; the various rates of interest
allowed; the inequalities in the contributions to the
separate surplus fund;
the non-establishment, for many
years, of new Savings Banks; and generally, the unsatisfactory
state of the law with regard to them.
Mr. Sikes, after thus recapitulating in his able pamphlet
the imperfections in the organization and management of
Savings Banks, advocated the following improvements,
viz.:—That the State should give a perfect guarantee; that
there should be a central bank in London to control the
whole system, in the same way that the central Money
Order Office controlled all money-order operations at the Post
Office; that there should be a vigilant and general audit
of all accounts; that there should be a great extension
of the hours during which Savings Banks were open;
a great increase in the number of such banks—the services
of private and joint-stock banks to be called into requisition
in cases where such arrangement was likely to prove
economical and advantageous; that there should be an
increase in the facilities for the deposit and withdrawal of
money; that one-fourth of the capital of Savings Banks
should be employed in first-class landed securities and
railway mortgage bonds, yielding four per cent. Mr. Sikes
further proposed that the rate of interest on sums up to 100l.
should be three per cent., and two and a half per cent. on all
sums beyond. Mr. Sikes felt the difficulty of providing that
essential Government guarantee for every deposit, without
which any reform in Savings Banks was scarcely worth
the name; but he strongly insisted on the point that if a
Savings Bank department was established in London, which
should, on its part, insist upon weekly returns, a good and
uniform system of book-keeping, and a liability to unapprised
visits by inspectors from the London office, the entire
staff of Savings Bank officials in the country might, to a
great extent, be kept honest. Bearing in mind, however,
that errors and losses would occur to the best regulated
department, he further proposed that the treasury might
be made safe by the establishment of a General Guarantee
Fund,
[148] to which contributions should be made from the
Separate Surplus Fund.
These suggestions, if carried out,
Mr. Sikes believed would help to form the basis of a system
that would restore Savings Banks to the estimation in which
they were held during the first twenty years of their existence;
and there can be no doubt of it. The difficulty was, however,
in getting such recommendations adopted—either
because the then Chancellor of the Exchequer (Sir G. C.
Lewis) did not bring his extraordinary powers to bear upon
the subject, or else there was still something lacking to give
a more practical turn to the questions at issue. As subsequent
events have proved, it is more likely to have been
for the latter reason that the matter was not persevered in.
Everything that an ingenious marshalling of figures,
an array of argument, and even eloquence could do, Mr.
Sikes did; but all appears to have been equally unavailing.
The Chancellor of the Exchequer made attempts, as we
have before seen, in the House of Commons, to improve
the organization of Savings Banks, but without success.
When the Committee on Savings Banks was appointed,
in 1858, Mr. Sikes was called as a witness. He again described
the plans which he had suggested in 1856, and which
had undergone little or no modification since that time, and
urged the adoption of some of them,—with what success
is already known. And here it will be best to dispose of
the Committee of 1858, and to show how little it effected,
and how little it was calculated to effect. So far as the
providing of additional and much required facilities was
concerned, it is necessary to describe with minuteness the
Committee's deliberations. The Report itself, to which the
Committee put their names, has been given. It provided,
as our readers will remember, for a new Government management
of Savings Banks, advised that increased power
should be given to the Commission, and provided actual
security for the deposits. This Report was not acted upon;
but even had it been, the reform would only have been
partial. So far as relates to the increase of facilities, it
left the question almost untouched. Indeed, with the conflicting
evidence given, the Committee acted wisely in confining
their labours to the rectification of existing abuses,
and in making as perfect as possible, without increasing,
the existing accommodation. The witnesses examined
before the Committee were by far the most prominent
authorities on Savings Bank management in the kingdom,
and yet on no single point could they all agree. This is,
we think, no unimportant phase of the subject; on the
contrary, it is highly important, as showing how very little
could be effected for the body of Savings Banks in the
absence of any thing like unanimity amongst those who
best understood the subject. On the question of Government
security and Government supervision, we have already
spoken. With regard to the necessity for a uniform system
of management, and of course a uniform system of accounts,
there was certainly an appearance of general agreement;
but little attempt to bring it about. Mr. Hope Nield
thought it would be very advisable to assimilate the
practice of the different banks more than at present exists
(1,895).
Mr. Maitland and Mr. Wortley would like uniformity,
and would give the Commissioners power to enforce
it; nothing less would remedy the loose system of so
many of the banks.
The system of keeping the books,
said Mr. Craig, of Cork, in some of the country banks, is
most abominable. I speak of the vast majority of banks;
some are exceedingly well managed; but I say, that from
the way they make out their accounts for the National
Debt Office, not one in ten is honestly or fairly made out
(3,759).
Had the Committee deliberated upon a uniform
system, which they did not, for all the banks, and had
they decided—(a very difficult matter, seeing that each of
the seven largest banks in the kingdom had different
systems of book-keeping)—to recommend some one system,
the difficulty would only be half over. Each Savings Bank
was independent, and completely irresponsible to any one
in such matters as these; but supposing, which was very
unlikely, that the trustees could be got to look upon the
matter with favour, all would not yet be smooth sailing.
The difficulty of introducing real improvements into Saving
Bank management was more than once spoken of and
illustrated. Thus, Mr. Boodle told how he encountered
great opposition from his own subordinates, in introducing
something new into the excellent establishment at St.
Martin's Lane. For six months after he started a new
system of book-keeping, a conspiracy lasted among the clerks
to prevent any change; wilful mistakes were constantly made,
to show that the work under any new system could not be
done; and this continued till a great number of clerks were
dismissed, and new officials appointed in their place. Much
to the same point was the evidence of Mr. Craig, who
described in a vigorous and amusing way, which must
have done much to relieve the tedium and heaviness of the
investigation, the introduction of his system into the Cork
bank, and the necessity for it:—
I saw at once,
said he, that there was nothing for it but sweeping
every book out of the bank, and I did so. They (the trustees) gave me
authority to do what I liked, and I did. It was all done by me without
any interference; and I managed it in such a way that if the clerks stuck in
the middle of it they would have lost their salaries; they had either to go on
with it, or stick fast. I went there myself, with a Mr. Ballard on the opposite
side of me, and a manager with each, determined to start them fairly.
I remained there for a month. I saw that the clerks were very anxious that
it should miscarry. I immediately saw what they were about; I observed
that all the books were coming to my side, and few to the other; they thought
to smother me with books. The moment I saw this, I said to little Mr. Abel
(who is now dead), 'Do not chatter; work away; they are playing a trick upon
us.' We dashed through the work; and, one of the book-keepers coming
down after he thought he had well supplied us with a wheelbarrowful of
books, expecting to find them all in arrear, I said to him: 'Why the deuce
don't you send us books!' When they found they were all done, that stopped
all further opposition; and thus I taught them to do it, just as you would
teach a puppy to swim—if you tumble him into the water, never fear that he
will get out.
Granting that Savings Bank clerks may be subdued after
Mr. Craig's or some other fashion, it would still appear that
the indispensable requisites to a complete uniformity of
accounts must be something like uniformity in the distinctive
principles and practices of Savings Banks. We refer to
such matters as the limitation in the amount of deposits, the
rate of interest, notices of withdrawal, &c. The question of
the limit of deposits was discussed before the Committee.
Mr. Meikle and Mr. Sturrock objected to any alteration in the
limit of deposits which for many years had stood at 30l. for
any one year, and 150l. in all. Mr. Boodle thought the annual
limit should be increased to 50l., and the total deposits to 250l.
Mr. Finney wished it to be at 50l. and 200l. respectively. Mr.
Saintsbury and Mr. Maitland agreed with Mr. Boodle, provided
the rate of interest were reduced, and there were ready access
to the public funds. Then as to the rate of interest itself,
Mr. Maitland said that the highest rate of interest that can
safely be offered should be given for small savings, though,
he said, lowering the rate would bring Savings Banks back
more to what they were intended to be.
He also thought
the rate should vary according to the market rate of interest.
Mr. Boodle objected to a fluctuating rate. Mr. Meikle was of
opinion that a fixed rate of three per cent. should be given.
Mr. Craig said a rate of 2l. 17s. or 2l. 18s. was satisfactory
to depositors. Mr. Wortley thought three per cent. a fair rate
of interest. Mr. C. W. Sikes suggested that the interest to depositors
should be three per cent. on sums up to 100l., and two per
cent. over that sum. He thought a low rate of interest would
not deter the working man from Savings Banks. If we turn
from this theorizing to what was the practice of different
Savings Banks in this and other particulars, we shall find
diversities of operation which not only account for so much
difference of opinion, but which rendered unanimity of action
almost impossible. It was then, and is still, a very popular
notion, that the Savings Banks proper pay a uniform rate of
interest of three per cent. per annum; nothing can be more mistaken.
When the enactment was passed establishing the still
existing rate, it was generally considered in Parliament that
five shillings per cent. was ample enough to pay all expenses
of management; but the fact is, double that amount has not
sufficed in some cases. In 1857 there were, according to a
Parliamentary Return, no less than thirty-two different rates
of interest paid by Savings Banks managers, and had the
Return embraced a much more recent period the same diversity
would have been shown. Thus, in that year—
| £ s. d. |
|---|
| 31 | banks paid interest to depositors | at the maxm rate of | 3 0 10 | per cent. |
| 107 | " | at the rate of | 3 0 0 | " |
| 215 | " | " | 2 18 4 | " |
| 11 | " | " | 2 13 6 | " |
| 24 | " | " | 2 17 1 | " |
| 12 | " | " | 2 16 8 | " |
| 78 | " | " | 2 15 6½ | " |
| 35 | " | " | 2 15 0 | " |
| 2 | " | " | 2 10 0 | " |
added to which smaller numbers paid other rates, making
thirty-two separate rates.[149] In accordance with the above table
the average cost of management per cent. was, in 1857,—in
Scotland 7s. 8d., in Ireland 9s., and in England 6s. 7d.; in
Middlesex, however, it was as much as 9s. 2d. Confining
ourselves to individual banks, we find that the Manchester
Savings Bank cost at the same period, in expenses, an average
sum of 1s. 3¾d. per account, the Bloomfield bank 1s. 9d., the
St. Martin's Place 2s. 0-½d., the Liverpool bank 2s. 5¼d., and
the Cork bank 3s. 2d. per account.
The greatest expense was shown to be incurred in those
banks which dealt largely in small accounts; hence some of
the actuaries openly sought to discourage the taking of small
sums. Mr. Meikle thought it was the interest of the banks
rather to discourage small depositors and encourage large ones.
Mr. Finney showed that they were discouraged at the Marylebone
bank, where a less interest was given to small amounts.
Mr. Craig, however, went to great lengths on this point, and
grounded his opinions on such facts as the following (3,752):—The
average cost of a transaction that enters a bank is more
than a shilling; there is not a transaction entered in any
Savings Bank that does not cost a shilling and a fraction.
Now, if you allow a man to deposit a shilling, which costs
the bank a shilling, it comes to this, that the manager might
as well say to him, 'There is a shilling for you; pray do not
come here again.' The Committee are about seeing whether
Government can or not safely undertake to make itself responsible
for the transactions of 600 Savings Banks scattered all
over the country. If so, they must only take such sums and
in such ways as will be safe for the public. It will not do to
allow people's sympathies to run away with them by the mere
clap-trap of saying, 'We will take a shilling.' I say that to
take these small sums, instead of being a benefit to the people,
is merely encouraging them to waste their time.
We need
not here go out of our way to expose the fallacy of such an
argument, further than to point out how entirely Mr. Craig
overlooked the fact that he had previously advocated a system
of uniformity of accounts, which would have made this and
other reforms practicable. What was required of the Committee
before which he gave evidence, was, the suggestion
of such a change in the nature of the institution as that
this shilling's worth of thrift should not be sent about its
business in the very summary manner so graphically described
by this gentleman. That the Savings Banks should give such
rude discouragements to the budding of provident habits was
nothing short of a defect; that it was perfectly possible as
well as expedient to offer encouragements to the poorest classes
has since been abundantly proved, as we shall soon have to
show.
We have referred to the varying notices for the withdrawal
of money required by different banks; some required a week,
some a month, while in the great majority of banks a fortnight
was required. Mr. Meikle expressed himself strongly opposed
to the English system of giving notice: he said, the Scotch
banks required no notice at all, though they held a discretionary
power in certain instances. Mr. Saintsbury urged
a reasonable period.
Mr. Wortley thought the notice was
a protection against Savings Banks being used for other purposes
than for accumulating savings. Mr. Sikes strongly
recommended that deposits should not be repayable except
after sufficient notice,
the extent of which neither he nor
Mr. Saintsbury ventured to state.
Once more the attention of the Committee was called to
the necessity of opening out new banks in localities not well
supplied with them. No one, however, was prepared with
any scheme for giving extra facilities of this kind, and those
hints which were thrown out by members of the Committee
themselves were either not taken up, or if noticed, only in
such a way as to attest the difficulty, rather than the ease or
expediency with which any movement towards this end would
be attended. Mr. Wortley said small banks were exceedingly
unsafe; branch banks under the cognizance of a head office
might answer. Mr. Meikle agreed, and said that at first new
banks were seldom self-supporting. Mr. Nield said it would
be impossible that the agency system of Exeter (the only
scheme recommended) could be introduced into Lancashire;
the branch banks under the Manchester Savings Bank could
not support themselves except they had gratuitous service.
Finally, we think the difference of opinion and the diversities
of operation in the larger and best managed banks[150] of
the kingdom could not be better shown than by the following
Return.[151] If anything could demonstrate the want of some
uniform and inexpensive system of Savings Banks, we think
a careful examination of the inequalities of every sort shown
there might have that effect.
Thus we have, we hope, succeeded in showing that at the
stage to which we have arrived (and, indeed, much later,) the
existing Savings Bank system, as a system, laboured under
three or four essential and almost incurable and irremoveable
defects: 1, They professed and were expected to give a Government
guarantee for all the money deposited with them, and
yet they did not. The real distinction in the matter, to which
we need only allude, was and is well enough understood by
educated people; but it was not, we may almost say cannot,
be mastered by the poor who were depositors. A depositor
paying in his money to the Savings Bank had no means of
knowing what was done with it. 2, The country was most
inadequately and most disproportionately supplied with banks,
and the facilities given by existing banks were also most
inadequate and disproportionate. Farther, and most important,
the number could not be increased on the same footing,
and no attempt was made to increase the number. Such
increase presupposed a certain amount of local philanthropy
and even assuming that this sort of philanthropy is an unmixed
good, an adequate provision of Savings Banks presupposes
an equal amount of philanthropic zeal in every
quarter of the country. And 3, Savings Banks were a
serious loss to the country. Taking the average price,
said
Sir A. Spearman, of Government Securities for each year
since 1817, the only years in which prices appear to have
been such as to produce a rate of interest equal to that paid
were 1847 and 1848.
Government, in relation to Savings
Bank money, had necessarily to invest when money was most
plentiful, and therefore when securities were dear, and to sell
out when they were cheap. To make up for such loss, it is
true, Government took to using Savings Bank money to aid it
in its own financial operations, to save borrowing or to postpone
borrowing; but though care was always had to keep a
sufficient banking reserve in an available shape, this set-off
was not allowed, as we have already seen, without many complaints
on the part of the managers of Savings Banks.
Return relating to the Ten principal Savings Banks of the Country. (1861.)
| Annual Expenses. |
|---|
| Name of Bank | Total Amount
owing to
Depositors. | Number of Depositors. | Per Account. | Per Cent. of Capital. | Total. |
|---|
| £ | | s. d. | s. d. | £ |
| St. Martin's Place | 1,780,725 | 61,736 | 1 5½ | 5 11 | 5,380 |
| Manchester | 1,306,329 | 50,231 | 1 3 | 5 3 | 3,206 |
| Exeter | 1,087,773 | 40,776 | 1 6 | 4 11 | 2,702 |
| Bishopsgate | 1,032,513 | 53,737 | 1 6 | 7 4 | 3,830 |
| Glasgow | 927,427 | 42,122 | 1 2 | 5 6 | 2,595 |
| Liverpool | 872,253 | 29,123 | 2 2 | 5 3 | 2,359 |
| Bloomsbury | 583,453 | 23,524 | 1 11 | 7 9 | 2,283 |
| Edinburgh | 566,076 | 30,426 | 1 8 | 9 0 | 2,558 |
| Birmingham | 563,870 | 31,238 | 1 3 | 6 8 | 1,908 |
| Marylebone | 395,561 | 23,024 | 1 9 | 11 1 | 2,212 |
| Average Amount
of Deposit. | Rate of
Interest paid
to Depositor. |
| £ s. d. | £ s. d. |
| St. Martin's Place | 6 2 1 | 2 18 1 |
| Manchester | 4 5 5 | 3 0 0 |
| Exeter | 5 1 9 | 3 0 0 |
| Bishopsgate | 4 3 8 | 2 17 6 |
| Glasgow | 3 3 1 | 3 0 0 |
| Liverpool | 9 4 7 | 3 0 0 |
| Bloomsbury | 4 6 9 | 2 18 4 |
| Edinburgh | 3 5 5 | 2 17 9 |
| Birmingham | 4 0 3 | 3 0 0 |
| 2 17 4 |
| Marylebone | 4 0 3 | ⎨ |
| 2 15 0 |
| In 1861 | were | £17,112, | and withdrawals | £12,681 |
| 1862 | " | 17,089 | " " | 15,343 |
| 1863 | " | 17,098 | " " | 14,090 |
ON PROPOSALS FOR GOVERNMENT SAVINGS BANKS.
I do not imagine that there can be any more important end and object of
a State than to encourage frugality, and the investment of the savings of the
poor, and nothing in which I should be more tempted to step out of my way
to encourage, if I were a legislator; but I think the great test and object
of whatever investment I provide specially for them, must be extreme and
perfect certainty, and great facility of conversion.... Increase in amount of
interest or profit, is as nothing compared to security.
—Mr. H. Bellenden
Ker.
For reasons which we have adduced at great length in the
last chapter, the feeling grew that a sweeping change would
require to be made in the institution of Savings Banks. Supplementary
banks of different kinds were established, and they
met in great part the object for which they were designed;
meanwhile, the great majority of Savings Banks took no steps
to provide more conveniences for the public, or they were
powerless to effect them.[152] When reasonable changes were
resisted between 1850 and 1860, it occurred to several that
agencies might be contrived to do the same work after a different
fashion, and that this project should be carried out, even
were the ultimate result to diminish the usefulness of most of
the older banks, or gradually to set them aside. It is to proposals
having the former object in view that we must now turn.
It is not a little curious that long before Savings Banks were
legalized by Act of Parliament, and even before Dr. Duncan
began his earnest and self-denying efforts to establish them on
a safe footing, at least two different efforts were made to promote
the growth of provident habits by a system of Savings
Banks which should extend throughout the entire country.
We refer to Jeremy Bentham's scheme of Frugality Banks,
and Mr. Whitbread's Poor Fund and Assurance Office.
The plan of the former is detailed in Bentham's works;
the latter scheme, partly described in an earlier portion of
this volume (pages 23-4) was submitted to Parliament in
1807, and a bill,—a full Abstract of which will be found in
the Appendix,—founded upon it, actually passed the House
in some of its earlier stages. Some of the provisions of this
bill were admirable; and some, owing to the state of the
Post Office of that time, would not have been so easily worked
through that department as was intended. As it was, the
country preferred the class of banks just then rising into
notice; and in 1817 the Legislature forgetting Mr. Whitbread's
scheme, gave its sanction and countenance to the
banks which had been established on purely benevolent principles,
and which were totally independent of each other. In
the course of years, that system having been tried in every
possible way without producing the safety and convenience so
much desired in institutions of this sort, the principle of a
uniform plan of banks in connexion with the Post Office
advocated by Mr. Whitbread again came up, the story of the
proposals for and the introduction of which we are about to tell.
Previously, however, we ought not to omit, for several
reasons, to give the outline of the scheme proposed by
Bentham even before Mr. Whitbread's proposals. The reader
will perceive how thoroughly conversant the philosopher was
with the every-day habits of the poor, and how completely he
understood their wants and requirements, and sought to provide
for them. It is only necessary to add that Bentham advocated
this plan as one of many measures of pauper management;
that the scheme was to be generally applied throughout
the country, and to be taken up and worked by means of
a company; the place where the banks should be held to be
called 'Industry Houses,' in contradistinction to the 'Public
Houses' of friendly Societies.
Should this not be enough,
says Bentham, the vestry room of each place of worship presents
an office as near, and the clerk an officer or sub-agent as
suitable, as can be desired.
[153] After fully going into the
hindrances to the spread of saving habits among the poor
around him, and the difficulties incident to the laying up and
improvement of their surplus moneys,—hindrances and difficulties
which had not yet all been surmounted,—he gives the
following comprehensive and exhaustive list, which shows how
thoroughly he would have mastered the obstacles of a more
recent period:—
"Properties to be wished for in a system of Frugality Banks, commensurate
to the whole population of the self-maintaining poor: viz.
"1. Fund, solid and secure:—proof against the several causes of
failure.
"2. Plan of Provision, all comprehensive: comprehensive, as far as
may be, of all sorts of exigencies, and at all time, as well as
of all persons, in the character of customers: thence the amount
of the deposits transferable from exigency to exigency, at the
will of the customer, at any time.
"3. Scale of Dealing, commensurate to the peculiar faculties of each
customer: i.e. on each occasion as large as or as small as his convenience
can require.
"4. Terms of Dealing sufficiently advantageous to the customer: (the
more so, of course the better), regard being had, in the necessary
degree to solidity.
"5. Places of transacting business suitable: adapted in point of
vicinity, as well as in other respect, to the conveniency of the
customer.
"6. Mode of transacting business accommodating: suited to the circumstances
of the customer in respect of times of receipt and
payment, and quantam of receipt and payment at each time.
"7. Mode of operation, prompt, consuming as little of the customer's
time in attendance as may be.
"8. Mode of book-keeping, clear and satisfactory."
There can be little doubt from the above extract, that if
Bentham did not make a very practical proposal, he had an
excellent idea of the description of agency required.
Another proposal which shared the same fate as did those
of Bentham and Whitbread was ventilated in the Quarterly
Review for 1827, in an article on The Substitution of Savings
Banks for Poor Laws.
This was no new scheme, though the
agency by which the scheme was sought to be carried out
certainly was original. During the eighteenth century the
plan of masters compulsorily deducting payments from the
wages they were expected to pay to their servants, in order
that the money might form a fund for a time of need, was
frequently recommended, and even proposed to Parliament.
De Foe, in his Giving Alms no Charity,
tells us how at
his own period attempts were made to effect a legislative
substitution of savings for poors' rates, and to pass Acts of
Parliament which shall make drunkards take care of wife
and children; spendthrifts lay up for a wet day; lazy fellows
diligent; and thoughtless, sottish men careful and provident.
But all the plans, as might be expected, came to nothing. In
1827, however, the Savings Bank principle having become
recognised, and the Post Office machinery tolerably efficient
it was said that the scheme might be made to work. The
writer advocated the establishment of a National Savings
Bank, to which the Savings Banks in the country might contribute;
and perhaps,
said the Quarterly Reviewer, as if
recognising the fact of the insufficient distribution of banks,
the remittances to be made might, especially in rural districts,
be allowed to be paid into the nearest Post Office, and
remitted with its own money to the General Post Office, by
whom it might be paid over to the Commissioners of the
National Debt.
This scheme attracted little or no attention
at the time, and nothing came of it. In more than one respect,
however, it contained the germ of a plan subsequently
carried out, and it is not impossible that some of the numerous
claimants for the honour of having originally proposed Savings
Banks in connexion with the Post Office may have carefully
studied the details.
And this brings us to the early history of Post Office
Savings Banks, and to the numerous suggestions which at one
time or another seem to have been made with regard to them.
No less in respect to the place which these banks are designed
to occupy as important public institutions—the people's principal
purse—(and that their position in the country will at no
distant period be a commanding one there cannot be a reasonable
doubt) than for their present attained position and intrinsic
value, the question of their early history is a matter for most
careful investigation, and one which must not be lightly passed
over. The matter of the authorship of the scheme was the
subject of considerable discussion at an early stage in its
history; and that discussion was not without its value in
elucidating some points of considerable importance, and as
affording materials for more deliberately investigating many
claims which have been put forward. It naturally forms part
of our plan, not only to offer a description of the working of
the new class of banks—as will be done in a subsequent
chapter—but to show, as we propose to do here, in a strictly
impartial manner, to whom the country is indebted for the
agency now in operation.[154]
Confining ourselves at present to the origination of the
principle of Post Office Banks, without reference to the wonderfully
simple and efficacious scheme afterwards organized,
we find that several different gentlemen had between the
years 1850 and 1860, and acting entirely unknown to each
other, matured plans, and in one way or another actually proposed
them, to remedy the deficiencies of the existing banks,
on some such principle as that eventually adopted. To Mr.
Sikes, of Huddersfield, however,—of whose previous labours in
the cause of Savings Bank reform we have already spoken,—belongs
the undoubted merit and honour of having independently
originated and matured a plan of operation more or less
equal to the object in view; of having persevered in the object
of bringing the matter prominently before the public; and of
being so fortunate as to have proposed his scheme at a period
when the country possessed in Mr. Gladstone a statesman of
extraordinary versatility and power at the head of its financial
operations, and who has given abundant evidence of his willingness
to grapple with uncommon difficulties where a need is
proved and the principles of a measure are shown to be sound.
As we shall show presently, the same propositions, only differing
as to details, were submitted once, if not twice, to Sir
Charles Wood when Chancellor of the Exchequer, and once
more, by a totally different individual, to Sir George C. Lewis
when he held that office. How much, therefore, the measures
subsequently carried are primarily due to Mr. Gladstone's
sharp-sightedness and energy the reader may judge.
Returning to an account of those who have been represented
as suggesting the principle of Postal Banks, we think the
number may be fairly reduced by several names. And in that
number we would class Dr. W. Neilson Hancock, of Dublin.
Of Dr. Hancock's exertions in connexion with the frauds in
Savings Banks, and his description of the feeling of insecurity
which they engendered, we have already spoken; those exertions
related exclusively, so far as we can gather from his
pamphlets, to a remedy for this grievance. In a paper[155] read
by Dr. Hancock before the Dublin Statistical Society in 1852,
and republished in a pamphlet form four years afterwards, we
find him saying, that private enterprise had not had a fair
trial,—if it had, and failed, then Government should undertake
the work, as it did Money Order business:—
That part of the natural business of bankers which consists in receiving
deposits from the poor might be undertaken by some public officers appointed
for the purpose, just as the granting of Money Orders, another part of the same
business, is carried on by the officers of the Post Office. Such an institution
would be called a Savings Bank; and in it the Government would be responsible
to the depositors for the acts of the clerks. So that the entire responsibility
of management would rest with the members of Government in charge of that
department, and the depositors would have perfect security for any money
actually paid to a clerk.... My own impression is, that if our laws were
framed with a view to allow of small deposits and small investments, private
enterprise is quite adequate to supply a complete system of safe investments
for the poor. But whether that opinion be sound or not, a Government
institution like the Money Order Office, with Government officers and Government
security for those officers, would be infinitely better than the present
system of divided responsibility and absence of security.
In a further paper, read and published in a pamphlet
form in 1855,[156] Dr. Hancock made no further proposal towards
the object immediately in our view, although he
said—
The Money Order Office of the Post Office shows that a large part of the
business of banking for the poor can be cheaply and efficiently conducted by
the officers of a public department. The first step towards the adoption of
such measures is to produce in the public mind a conviction of the utter
instability of banks as now constituted, and that conviction I have endeavoured
to create.
We believe Dr. Hancock went somewhat further than this,
by calling the attention of the Post Office authorities to the
matter though, as he presented no distinct scheme to their
consideration, it is not very wonderful that the question
should rest where he left it. Though Dr. Hancock does not
seem ever to have gone so far as to propose the opening
of banks for the poor in connexion with the Money Order
Office,
much less to develop a plan which should have that
end in view—a construction which has been put upon his
references to the Post Office machinery,[157]—it is only fair to
that gentleman to say that he was one of the first to recognise
the merits of such a measure when it was proposed, and to
urge its full adoption.
Another name, which has in our opinion been very unnecessarily
and erroneously connected with the early history of
Post Office Banks, is that of Mr. Ayrton, the member for the
Tower Hamlets. To all who remember the strong opposition
which Mr. Ayrton offered, not only to the project when
before Parliament, but previously to other reasonable reforms
in the Savings Bank institution, this association of his name
with the origination of the present plan must be very
amusing; and yet this is an error into which several have
fallen, though traceable, perhaps, to one source.[158] Mr. Ayrton
certainly seems to have had a notion, though not till 1858,
that the Post Office might be more useful to Savings Banks
than it was; and in the Committee of that year, of which he
was a member, he asked one of the witnesses—who was
actuary to a bank that had several branches in country
places—a series of questions, with the object of eliciting the
opinion that it would be an advantage to Savings Banks if
money orders could be procured in country places at a cheaper
rate than 3d. and 6d., when any person desired to send a
Savings Bank deposit to an adjacent town.[159] In the draft report
proposed by Mr. Ayrton after the close of the investigation
(which was not carried), the following clause appeared:—That
the Committee recommend the Postmaster-General to afford
every facility practicable for the remittance of money to Savings
Banks, but they do not deem legislation in this respect expedient;
and in our humble view it would have been
exceedingly cool if they had! There can be no question
that this simple incident has given rise to the misapprehension
to which we have just alluded.
We can now come to veritable proposals. Though it is
due to Mr. Sikes to say that the fact of prior proposals, with
the same object in view, were either forgotten or only came to
light for the first time after he had publicly made and urged
his plans on the country, it seems not to admit of question
that two gentlemen had been, quite unknown to him or the
public generally, over the same ground before him, and,
whether wisely or not we will not attempt to decide, had
desisted from pressing their plans after obtaining an adverse
decision with regard to them. So far as the Post Office is
concerned, it is only fair to say that the authorities up to
quite a recent period have had their hands sufficiently full in
completing the plan of Penny Postage Reform which, for
several years after the passing of the Act of 1839, was almost
held in abeyance; and that, inundated with crude and undeveloped
schemes, it was requisite that a plan in which so
much was involved should be well matured, and go weighted
with the stamp of public approval. Whether, however, the
Post Office system was prepared so early as 1851,—the date
of the earliest proposal,—to undertake Savings Bank business,
is a question which, considering the transition state in which
it then was, admits of some doubt.
In 1852, the Rev. George Hans Hamilton, the Vicar of
Berwick-upon-Tweed, and now Archdeacon of Lindisfarne,
proposed through his relative, Mr. G. A. Hamilton of the
Treasury, a national system of Savings Banks to be worked
by means of the Post Office,[160] which it is but justice to say
presents many, if not most, of the features of the plan
eventually produced. Mr. Hamilton met with varying success;
his proposals were not taken up warmly, but were
understood by him to present difficulties which might ultimately
be overcome. Had this gentleman persevered in the
advocacy of the scheme which he propounded, or had he had
the good fortune, to have fallen on more favourable times, with
Mr. Gladstone as Chancellor of the Exchequer, there can be
little doubt that his plan would have been cordially taken up
and his name ever associated with it. As it was, his exertions
were recognised by Mr. Gladstone when he came to deal
with the matter, that gentleman referring on one occasion to
the valuable suggestions he had made. It should be added,
that Mr. Hamilton has, since the plans came into operation,
urged a modification of one of its features (to be referred to
hereafter), and it is little to say, considering the value and
the shrewdness of his original suggestions, that he is well
entitled to be heard on the point.
The other gentleman who somewhat later than Mr. Hamilton,
and quite unknown to him, made proposals to the same
effect, was Mr. John Bullar, the eminent counsel, of the
Temple. Mr. Bullar himself informs us that his attention was
attracted to the subject by observing the working of a Penny
Bank at Putney, which was established in the year 1850.
Being a member of the Committee of this bank, he was led to
think much over the then existing system of Savings Banks,
and how some of the defects of the system could be remedied.
After thinking the matter well over, he drew up the memorandum
which we give verbatim:—
It is admitted that the present system of Savings Banks is defective,
and that a new system is much wanted.
Among the defects of the present system are:—Want of perfect security
to depositors: risk of loss to trustees by defaulting clerks, and want of
opportunities for the labouring classes to make deposits as soon as they have
anything to deposit.
Many of the present Savings Banks are only opened for two or three hours
once a week; so that those who would deposit in them are forced to be their
own bankers during the rest of the week, and are exposed to the constant
temptation of spending what they have in their pockets; the particular
temptation from which Savings Banks were intended to relieve them.
In order to give perfect security to depositors, they ought to have the
security of the nation.
The establishment of Savings Banks for the whole of the labouring classes
being a matter of national importance, they ought to be a national, and not
merely a philanthropic institution.
In order that they may confer the greatest amount of benefit on
the labouring classes, they ought to be open during the whole of every
working day.
The principle of a National Savings Bank as a National institution is
already admitted in the Savings Banks for the Army, the Navy, and the
Mercantile Marine.
The principle of Government acting as Banker for the Nation is already
admitted in the Money Order department of the Post Office.
That department is, in fact, a National Bank. It receives money from
all comers; it retains the money for divers periods, from four-and-twenty
hours to several weeks; and it pays the money to those who are entitled to
demand it.
It would be a mere extension in point of detail if that department received
more money from more comers, retained the money for longer periods, and
paid it out with the addition of interest upon it.
It is therefore suggested that the Money Order department of the Post
Office should be made a National Savings Bank, investing the deposits in
Government securities, paying a moderate rate of interest (say two and a half
per cent.) and paying interest only on round pounds deposited for not less
than a quarter of a year.
The trustees of existing Savings Banks should be authorized (except
so far as any depositors might object) to transfer their deposits to the
department.
In all probability the deposits with the department would amount to
at least thirty millions in the course of a year or so; and at the present price
of Consols, this would give to the Post Office about 200,000l. beyond the
interest which they would have to pay to the depositors.
If this would not meet the expenses, the rate of interest might be 2l. per
cent., giving to the department an additional 150,000l. a year.
The principle being admitted, there would be no insuperable difficulty in
arranging the details.
John Bullar.
Temple, November 8, 1856.
This memorandum was written in November, 1856. Mr.
Bullar describes that at that period he was too much occupied
to enter into the matter so fully as was necessary, or to
agitate by means of the press for some such scheme; but
Mr. Bullar's friend, Mr. Joseph Burnley Hume (eldest son
of the late Mr. Joseph Hume, M.P.), who had some leisure at
command, and perhaps some of his father's desire to achieve
an amendment of the Savings Bank system, undertook to
bring the matter forward in the proper official quarters. He
early saw Mr. Frederic Hill, who was in charge of the Money
Order department of the Post Office, and learned from him
that the same scheme had already been suggested to the Post
Office, and rejected after full consideration. A month afterwards
Mr. Hume saw the Duke of Argyll, who was then
Postmaster-General, and received a courteous hearing from
him. The Duke also said that the Post Office had had the
question, or something like it, before them, and that he thought
the Chancellor of the Exchequer still had something of the
kind under consideration; but gave no definite reply. Subsequently
he saw Sir Alexander Spearman, the Comptroller of
the National Debt Office, and Mr. Tidd Pratt. He gathered
from them,
to use Mr. Bullar's own words, that they were
with him in principle, but regarded the proposed Money
Order department as visionary, and that the Government had
under consideration a different scheme, which they preferred.
[161]
Having in this way met with enough discouragement
to hinder them—or any other person who might be cognizant
of the proceedings that had been taken—from going further,
they dropped any further steps to bring about this desirable
change.
Happily, however,—for happy, in one sense, it was,—these
schemes and the hitherto abortive attempts to carry them into
execution, did not reach the public ear, or others might have
desisted from entertaining similar plans. As it was, it was
still open to any one else to take up the matter de novo;
and this is what actually did happen. We can well believe,
without the assurance with which he has favoured us, that
the next adventurer in these apparently difficult seas had no
notion that they had been previously navigated. This circumstance
does not take from his merit; but it certainly
increased his difficulties. How the matter was eventually
brought about in the face of the adverse decisions which we
have just given, though somewhat better known, is within
our province to tell.
In the hands of Mr. Sikes, of Huddersfield, any matter
once taken up was not likely to fail for want of thorough
ventilation and earnest advocacy. This gentleman had for
years interested himself in the extension of Savings Banks.
We have already spoken of the fruits of his industrious pen;
and now he was once more to propose in a similar manner,
and with his accustomed eagerness, another new scheme
which he had carefully thought over and developed in his
own mind. Once sure of it himself, he resolved to devote
himself to its advocacy; to bring it not only before the
proper authorities, but before the public, at the proper time.
Mr. Sikes evidently did not dally with the matter. As he
made no sort of mention of the Post Office in his evidence
before the Savings Bank Committee of 1858, we may fairly
assume that at that time the idea of using the Post Office
had not occurred to him. He himself states, that, occupied
with a favourite idea which he had long cherished, of bringing
a Savings Bank within less than an hour's walk of the fireside
of every working man in the kingdom,
the organization of the
Post Office suddenly occurred to him, and he dwelt upon it
till he had struck upon some scheme for applying the one to
the other.
As in the case of the other proposals, the leading principle
of Mr. Sikes's plan was to employ the machinery of the Money
Order Office to collect and forward deposits to a central bank
which he proposed should be established in London. Among
the principal details of the plan were—the opening in every
town, not previously supplied with a Savings Bank, of a
Money Order Office, for the reception of Savings Bank deposits;
that the money should be remitted to London in the
form of Money Orders; that the deposits should be in sums of
not less than a pound; and that in return for these deposits
or remittances, Savings Bank Interest Notes
should be
issued in London; and that the interest on these notes should
be at the rate of 2½ per cent. per annum. That Mr. Sikes did
not proceed boldly enough, and that there were some defects
and omissions in his scheme, we shall have to show further
on; here it is sufficient to indicate in what his plan consisted.
On the reasons for a large and comprehensive reform of
this kind, Mr. Sikes was most full and explicit; as, however,
we have already been over this ground, and also said much
in connexion with the name of this energetic Savings Bank
reformer, it is quite unnecessary to repeat here his well-arranged
statistics and his generally conclusive observations
as they are given in the pamphlet before us.[162] Suffice it
to say, that he adduced abundant evidence to show that
additional facilities were required, and that if they were
given, a proportionate increase of business would be the
result; that the existing banks were totally inadequate to
meet the requirements of the provident poor, much less to
stimulate and increase the number of provident people; and
that if his plan, or something like it, were carried out, both
objects would be gained. Mr. Sikes argued that in a case
of this sort, as in many others, increased facilities would
bring increased business, and, in support, he adduced as an
instance the Money Order Office itself. Quoting from the
Postmaster-General's report for 1856, he gave an extract
accounting for the increase of business in that office by
the fact of the large additions that had been made to the
number of Offices, and to further relaxations in the regulations
regarding the issue and payment of Money Orders.
The establishment of a Post Office,
said Mr. Sikes, with
very great truth, has unfailing influence in developing the
correspondence; and of the Money Order Office, the remittances
of a district.
Mr. Sikes then instituted a comparison
which, though not always to the point (for reasons
quite obvious), was scarcely an unfair one, of the relative
progress of Savings Banks with their small improvement
as to facilities, and the Money Order Offices, with their
increased facilities. Within the years 1846 and 1858, the
former had progressed at the rate of seven and a half per
cent.; the business of the latter had increased at the rate
of seventy-nine per cent. He then asked if the stagnation
in the business of Savings Banks was not to be traced to
the non-increase of their number, their absence in many
very populous localities, the slight accommodation given,
and the arbitrary routine, and restrictions imposed. If
Savings Banks were worth anything, were they not worth
improving? And would not those supplementary banks do
much themselves, and very probably cause an improvement
in existing ones?
Having matured his plan in June, 1859, Mr. Sikes communicated
it to Mr. Edward Baines, the member for Leeds,
in the form of a printed Letter; and this gentleman, well
known for his wide sympathy with the industrious classes,
after studying its details, expressed his warm approval of
the project, and engaged to bring it under the notice of
Sir (then Mr.) Rowland Hill, the Secretary of the Post
Office. That there was now no indisposition—if ever
there was—on the part of the authorities to such a measure
is evident from the reception it met with at their hands, as
shown by the letter below.[163] Encouraged to persevere, Mr.
Baines and Mr. Sikes had an interview with the Secretary
and some of the principal heads of departments at the
Post Office, when the draft of a plan was read to them
for working such a measure, the official gentlemen concerned
assuring them that this might be done with great
ease and simplicity.
The next step which Mr. Sikes took was to place himself
in communication with the Chancellor of the Exchequer;
and as a preparatory step, he printed his scheme afresh,
extending it somewhat, in the form of a Letter to Mr.
Gladstone. The communication was met by a cordial
acknowledgment, in which that right hon. gentleman promised
his best attention in examining the scheme, not only
on account of the interest attaching to the subject, but of
the authority with which it was invested,
in proceeding
from the quarter whence it did. The letter was then given
to the public, and immediately attracted general attention,
and warm expressions of approval. It was read before the
Social Science Association which met in Bradford in the
autumn of that year, Lord Brougham having also mentioned
the matter in his inaugural address. For a few weeks it was
a common subject of discussion, public opinion being somewhat
divided as to its advisability as well as practicability.
Several Liberal newspapers, however, went warmly into an
advocacy of the principles of the measure, if not of the
measure itself; and in the early part of November, 1859,
the members of the Huddersfield Chamber of Commerce
strengthened the hands of their townsman, by passing an
unanimous sentence of commendation upon it; and not
only so, but they resolved to send Mr. Sikes's tract to all
the Chambers of Commerce in the kingdom, recommending
them to support the plan, which several of them eventually
did.
During the interval, when the ball was kept rolling in
this manner, Mr. Gladstone had amply fulfilled his promise
to give the subject his best attention, as sufficiently appears
from a letter which, belonging now to the history of Post
Office Savings Banks, we append below.[164] Expressions of
opinion on the advantage of some such scheme still continued
to be sent to Mr. Gladstone and Mr. Sikes, which
must have encouraged them both to persevere, and which
made it very apparent that the public had made up its
mind not to allow the matter to drop—at any rate, quietly.
The most important petitions sent to the Chancellor of the
Exchequer emanated from Liverpool, Leeds, and York; but
a resolution passed by the Dublin Statistical Society, presided
over by Dr. Whately, the late Archbishop of Dublin,
and signed by Dr. W. Neilson Hancock as secretary, deserves
special notice, were it only for the weight attaching to Dr.
Hancock's own name.[165] In answer to these and similar
memorials, Mr. Gladstone seems to have generally replied
that the matter was under his most careful consideration;
that he received with cordial satisfaction this expression
of opinion, proceeding from persons well qualified to judge,
and that he earnestly hoped it may be practicable to frame
a plan by which the objects in view may be extensively
attained.
And now the curtain may be said to have fallen
upon the scheme, and for fully twelve months it is beyond
the public gaze, and entirely beyond public criticism. We
find that now and then Mr. Sikes was busy during the
period in answering objections to his plan, with as much
energy and good sense as he had previously displayed in
his advocacy of it, before he had the good fortune to enlist
the services of Mr. Gladstone in its behalf. Now, however,
it may be said to have passed out of his hands, and to have
fallen into those of others, who, no way averse or unfriendly
to his project, saw that it would be necessary largely to remodel
it, in order to make it fit into the machinery, (of the
working of which Mr. Sikes was necessarily ignorant,) upon
which it would have to be engrafted. Furthermore, among
much approving criticism of the scheme, there had been
not a little feeling exhibited among influential organs of
the public press, that Mr. Sikes had not gone far enough
in his proposals, and that on some points the details were
not nearly so liberal as they ought to be made. As an
ardent friend to the Savings Bank system, Mr. Sikes had
doubtless well considered the objections which Savings Bank
managers were likely to urge; and, to stave off opposition on
the part of many of his friends, had apparently sacrificed a
detail here and there in a matter where boldness of action
was most essential to success. If one thing is more clear
than another in the history of our great reforms, it is that
the projector who plunged right into the stream was always
surer of ultimate success than he who paddled about in the
shallows, or kept as close as possible to the brink. In this
way, therefore, it seems to have come about that not only
must modifications be made, but steps must be taken to
perfect the plan, and present it in such a shape as a
measure of reform as should silence cavil and complaint.
Twelve months for such a work might seem long—might,
indeed, be unnecessary; but few will say that the scheme,—so
much remodelled as fairly to be considered a new one,
did not amply atone for the delay.
The task of adopting Mr. Sikes's proposals just as they
originally stood, and which proposals the Post Office authorities
had generally acquiesced in, seems to have been
abandoned on account of the practical difficulties which
stood in the way; one of which Mr. Gladstone indicated
in the letter we have already given. The object now,
therefore, was to originate a mode of working altogether
independent of Mr. Sikes's plan, in which the desirable
modifications to be made in Mr. Sikes's scheme should also
be introduced. Before, however, we show how this was
eventually accomplished, it is necessary to say in what
these important modifications consisted.
1. Mr. Sikes's scheme was proposed to be worked by a Commission who
should preside over a central bank and employ the agency of the Post Office.
Such a division of authority would have been unprecedented, and must have
led to confusion and great expense, if even it could have been so arranged.
2. The Commissioners were to have been empowered to receive Money
Orders as deposits and acknowledge them in the form of an expensive description
of Interest Notes.
The Money Orders and the Notes
themselves
would have required all the surplus interest to have been expended upon
them, and there would have been little chance of the scheme turning out
self-supporting.
3. Mr. Sikes proposed to open only 1,527 Money Order Offices as Savings
Banks. He proved at great length that the system he proposed was not only
the best, but the cheapest; yet at the solicitation, we believe, of several
Savings Bank actuaries, he did not go the length of including any town where
provision had been made for provident people. This, of course, restricted
the inhabitants of 600 towns to the dearer mode of operation, though the
cheaper one was shown to hold out anticipations of producing by far the best
article. Such considerations could not, we should imagine, weigh with the
Post Office when once the matter was taken in hand, and no arbitrary test of
the above nature could ever have been entertained.
4. Most unsatisfactory, however, was the proposal to make 1l. the minimum
sum that could be received. There were thousands of depositors in the ordinary
banks whose average deposits were not half that sum. Moreover, the
plan was designed to meet the wants of the poorest; to encourage and foster
the habit of small savings among those who had not yet begun to save. No
provision, therefore, could have been more unfortunate; and it is well that
Mr. Sikes's fears—such as, that if a less sum were taken the measure would
not pay—were soon shown to be groundless.
It is not our intention to trouble the reader with much
detail as to what passed during the preparation, or, we may
call it, the organization of this interesting and beneficent measure.
It is, perhaps, sufficient to say, that differences of opinion
rose upon it—that some of the authorities of the Post Office
thought Mr. Sikes's scheme, with many important modifications,
might be worked; while others of them held that no amount
of alteration would enable the department to work it by means
of Money Orders. In this way several months passed in discussion,
and it is scarcely too much to say, that but for the
unceasing vigilance of Mr. Gladstone, who continued to urge
further efforts to overcome the natural obstacles that presented
themselves, the temporary fate of many a good measure might
have been the fate of this.
It was when matters were in this state of abeyance, and
when the difficulties in the way fairly threatened to overwhelm
the scheme altogether, that a gentleman, since prominently
connected with all that relates to Post Office Banks,
was induced to turn his attention to the subject. Mr. Chetwynd,
one of the staff officers of the Money Order Office, took
up the matter of applying the Post Office machinery to Savings
Banks; and, discarding all the other plans for working then
in dispute, addressed the Postmaster-General in November,
1860, and proposed a plan which he thought would, notwithstanding
all the difficulties that had been experienced, meet
all the reasonable requirements of the case. Mr. Chetwynd's
scheme was based on the principle that Savings Bank business
might be done through the various Money Order Offices in
a much more economical manner than by the issue and payment
of Money Orders;
and that the plan should be so comprehensive
as not to need the restriction which had been
previously put upon it that sums under 1l. could not be
received,—that sum, as Mr. Chetwynd truly said, being so
large as seriously to reduce the value of the benefit proposed
to be conferred on the provident portion of the public.
The following outline, necessarily brief, gives all the material
points of the plan proposed, and which has in its
integrity been since carried out, and forms the basis of existing
arrangements:—
1. That every holder of a Money Order Office shall act as an agent of a
Central Savings Bank, and shall receive deposits of any amount within the
limit fixed by statute.
2. That he shall enter each deposit in a numbered depositor's book, to be
kept by the depositor, and in an account to be forwarded to London daily
with his Money Order account. That on the occasion of a first payment, the
depositor shall make the declaration prescribed by statute, and also sign his
name in his depositor's book.
3. That the holder of the Money Order Office shall charge himself in his
Money Order account with the total of the deposits thus received.
4. That this account should, on arrival in London, be regularly examined
by the examiner of the Money Order accounts; and that when this has been
done the daily schedule shall be forwarded to the Central Savings Bank.
5. That the Central Savings Bank shall immediately send an acknowledgment
for every deposit direct to the depositor through the Post Office.
6. That a depositor who may wish to withdraw money, shall give notice
in writing[166] to the Central Savings Bank, and shall receive therefrom a
warrant for the required amount, payable at the nearest Money Order Office.
7. That in presenting this warrant for payment, the depositor must also
present his depositor's book.
8. That the holder of the Money Order Office shall enter withdrawals in the
depositor's book, and shall account for the money he shall pay, in the same
manner as already described in the case of deposits, and shall be credited with
the sums daily.
9. That the depositors' books shall be forwarded to London annually, in
order that they may be compared with the ledgers in the Central Savings
Bank, and in order that the interest due may be inserted in them.
The first step which appears to have been taken in regard
to the scheme of Mr. Chetwynd was to refer it to Mr. Scudamore,
who then filled the office of Receiver and Accountant-General,—an
office the holder of which is at the head of
the financial operations of the Post Office. After going carefully
over the plan which had been submitted to him, he
came to the conclusion that it was the best of those which
had as yet been framed; that it will be productive of very
great advantages to the working classes, and that it will be
self-supporting.
He also characterised it as exceedingly
simple, and thought, that if the execution of the plan were
difficult, that difficulty would be due to the amount rather
than to the nature of the business to be transacted. In conjunction
with the projector, Mr. Scudamore then proposed
some important modifications and additions to the plan,[167] and
proceeded to enter fully into arguments and calculations to
show that it would offer the largest amount of convenience to
the public, and be at the same time the least expensive mode
of operations so far as the State was concerned. Into these
and other purely technical matters there is no need that we
should further enter, beyond saying that, so recommended,
the scheme was warmly approved by the Postmaster-General;
and in a month from the date of Mr. Scudamore's report, it
fell into the hands of Mr. Gladstone, and became, as it were,
the property of the nation. How the Legislature dealt with
it will fittingly bring this chapter to a close.
On the 9th of February, 1861, Mr. Gladstone took the first
step towards bringing the subject forward in Parliament, by
moving a resolution in the House, of which he had previously
given notice:—That it is expedient to charge upon the Consolidated
Fund of the United Kingdom of Great Britain and
Ireland the deficiency, if any such should arise, in the sums
which may be held on account of Post Office Savings Banks,
to meet the lawful demand of depositors in such banks, in the
event of their being established by law.
This, which was
according to the usage of the House the first necessary preliminary,
provided that the burden of the measure should be
thrown upon the State. Mr. Gladstone stated[168] that in submitting
this resolution he did not wish to pledge members
either to the principle or the details of the bill which he
intended to found upon it. His sole object was to afford new
facilities for the deposit of small savings to those who did not
possess them, or possessed them imperfectly. He would not
only like to do this, but also to improve materially the existing
facilities, so as to enable many more to take advantage of
them; but this was a more difficult problem,—an object often
attempted, yet little accomplished. The main difficulty, the
responsibility of trustees, had baffled all attempts to deal with
it. How true this was, the reader who has followed us in
our account of the legislation on the subject will readily
believe. In this difficulty he had been led to see if they could
not avail themselves of another description of machinery altogether,
recommended by its incomparable convenience,
for
the purpose of carrying out the same objects for which Savings
Banks were originally set on foot. He then went fully into
such statistics of the number and conveniences of existing
banks as those which we have already furnished, and compared
that machinery with the Money Order system at the
Post Office and its ramifications all over the country. Not
only were the Money Order Offices open every day for a considerable
number of hours, but the Postmasters were open and
adequate to the transaction of increased business. Mr. Gladstone
then dwelt on the want of facilities, which, he said,
exercised an important influence on the amount of the savings
of the poor; the experience of this winter, 1860-61, must
have demonstrated to anybody who thought upon the subject,
that the resources of this class had not of late years increased
in proportion to the rate of wages and the improvement in
their standard of living.
A smaller portion of their gross
income was, he thought, laid by at that moment than was
laid by twenty years before. He was sanguine enough to
expect that, if readier means were afforded than of laying by
in a season of prosperity, their ability to cope with the distress
of the future must be largely increased. Now, the banks
which he intended to propose would afford these means; and
not only so, but under the arrangements of the measure, he
would answer for it that the Post Office machinery should be
applied carefully and gradually—the most neglected districts
to be supplied first. Mr. Gladstone then went into the object
and details of the measure. His proposal was that the Post
Office should receive and return deposits, with interest, in the
same way as Money Orders were dealt with, charging merely
a fair remunerative price for the work performed. In one
respect the principle upon which the new banks would be
founded would be essentially different from that of the old
ones. The latter had been established with the notion that
the State might very fairly offer to the labouring classes
a certain premium by way of inducing them to make
deposits; but while he was far from desiring to cast any
censure upon the principle, he did not deem it right in the
present case to hold out to depositors the expectation of
obtaining any high rate of interest. He proposed to give a
rate of interest 10s. less than that given by the ordinary banks,
with a proviso that it might be increased to that rate, if found
necessary, and within certain limits.
Mr. Gladstone provided an ample set-off against a less
remunerative return for the money, in the security which he
now proposed to give for its safe custody. The responsibility
of the State, on account of Savings Bank money had always
been a subject of the greatest difficulty; he argued on this
occasion with perfect reasonableness, as many of his predecessors
in office had argued before, that the State could
only be responsible for the acts of its own officers; and as up
to this time no plan had been devised by which the State
could participate in all the proceedings of Savings Banks, it
was impossible to carry out the principle of a perfect Government
guarantee. What, however, could not be done with the
old banks, might and should be done with the new. In his
proposals there was something so essentially different from
anything they had been accustomed to, that a Government
guarantee was an easy and a possible thing. The money
would be received by Government officials: it would be invested
by these servants in Government securities; and it would
be inexcusable to refuse a Government guarantee for the full
amount. Hence the motion which he had made. The only
effective form which this guarantee could take was the technical
one, to pass a resolution providing that if any difficulty arose
in the means of meeting the lawful demands of lawful depositors,
that difficulty might be met by a charge on the Consolidated
Fund. Mr. Gladstone, in concluding, hoped honourable
gentlemen would not be alarmed at his resolution, as he
would expressly state then that the great basis of this new
arrangement was that it should be self-supporting.[169]
Mr. Francis Crossley (now Sir Francis) went over the
ground of the very deficient means of investment for the
surplus cash of the poor, producing statistics of a kind with
which our readers are now sufficiently familiar, and stated
that it was impossible to over-estimate the advantages which
must accrue to certain classes in the country from the
carrying out of the proposals which had been submitted
to them. A great deal of fault,
said Mr. Crossley, had
been found with the improvidence of the working people in
not saving money, but let them first see what the Government
had done to help them. The State provided beer-shops in
every street for working men to spend their money in as fast
as they earned it; but hitherto he did not think it had been
sufficiently forward in giving them facilities for saving their
money.
He then alluded to the fear which working men had
of the ordinary banks, from their masters being connected with
them, and who from that connexion would be able to see what
they were able to save. Under the Postmasters, this would,
or should be, different.
The country was indebted to Mr.
Gladstone for the amount of attention he had bestowed on
the proposals of Mr. Sikes. Mr. Crossley concluded: He
did not think Government ought to seek to make a profit on
the new business; nor did he think they ought to lose by it.
The working classes of the country did not want charity, they
only wanted a fair field and no favour, and it seemed that at
length they were about to get it. If at any time the rate of
interest could be raised without loss or inconvenience, he
hoped it would be done.
Colonel Sykes said that no praise
could be too high for anything of this sort, which tended to
induce the working classes to lay by against a bad time. He
contented himself with referring to two or three subjects connected
with the mode of working the scheme. Mr. Arthur
Kinnaird thought the scheme simple and practical. He
heartily congratulated the Chancellor of the Exchequer on
having at last succeeded in one of the fondest hopes of his heart—that
of creating a two and a half per cent. stock.
Mr. Gladstone
at once demurred to this, and stated that he had no notion
of establishing a national bank. The money which came
into the hands of Government by means of the bill would
simply be applied as under the existing Savings Bank law.
Mr. Gladstone, in closing the debate, took the opportunity of
referring to Mr. Sikes, who had devoted a great amount of
labour to the subject. He felt greatly indebted to him. At
the same time, the bill was not intended to embody altogether
Mr. Sikes's plan, though this was a matter of detail into which
he would not then enter.
Three days after this discussion the Post Office Savings
Banks bill was introduced into the House of Commons pro
formá by Mr. Massey, the Chancellor of the Exchequer, and
Mr. F. Peel. Mr. Sotheron Estcourt on this occasion commented
on the importance of the bill, and objected to a first
reading without an explanation of its provisions; all that was
known of it being that the Government were about to frame
on its provisions banks of deposit on a gigantic scale, and
thus by a merely formal proceeding were about to lay the
foundation for very important consequences.
The Chancellor of the Exchequer moved the second and
principal reading of the bill on the 18th of March, 1861.
Mr. Estcourt, whose intimate acquaintance with such subjects
made his remarks carry considerable weight, made a long
speech. He first expressed his doubts whether the persons
employed by the Post Office would ever be able to perform
the additional and important duties which would be assigned
to them. Government were undertaking a great risk. No
doubt the plan would become popular, for several reasons;
the Post Office Banks would absorb not only all future
deposits, but also a great part, if not all, of those which
had been made in the existing banks themselves.
[170] It would
be for the House to decide whether this result would be good
or bad, or what could be done that the two kinds of banks
need not come into collision. Mr. Estcourt threw out several
hints as to how this might be done. They might, for example,
limit the sum to be received at post offices, so that the
new might not come into competition with the old class; or
they might dovetail the new system into the old, by making
the Post Office Banks auxiliary and subsidiary to the existing
banks. Much had been done in the way of trying to
amend the constitution of the old class of banks, without
effect; and he thought that, looking to the probable result of
the new arrangement, it would be far better to look the evil
fairly in the face, and supersede at once the old by the new
kind of banks, or at least say which of the two ought to be
retained. This speaker further apprehended that the Post
Office Banks would not take root in the villages, where they
were most wanted, and would be almost exclusively confined to
the towns where they were least needed, and where they would
overthrow the existing Savings Banks by drawing away their
deposits. Though Mr. Estcourt seemed to feel strongly on
the different points touched upon by him, he concluded by
stating that he should not oppose the second reading of the
bill. Mr. W. E. Forster said, in his opinion the scheme would
provide good Savings Banks where none now existed, and, a
very desirable matter, safe banks where they did exist. He
thought it was not possible that the one class of banks could
dovetail into the other; and if it was, it was not desirable.
Where Government took the responsibility, it ought to have
the control. Mr. Thompson Hankey hoped that the proposed
scheme, if found practicable, would entirely supersede
the existing banks, and the sooner the better. Mr. Baines
followed in the same strain; he would not regret if the new
banks superseded the old, inasmuch as that result could only
be brought about by the proved superiority of the new system.
The member for Leeds said, he had been assured by Sir
Rowland Hill, and all the gentlemen whose departments at
the Post Office would be charged with the carrying out of
the plan, that it would work exceedingly well;
and he
could state that, though it differed materially from his plan,
Mr. Sikes of Huddersfield was a hearty supporter
of the
scheme which the Post Office had adopted.[171]
Mr. Gladstone could not say whether the old would suffer
from the new banks; if they did, it would only be because
the latter were the safest and the best. Whether or no, the
object of the bill was not competition with the old banks.
He wanted to supply facilities which at present did not exist,
and the first duty of the Postmaster-General would be to
look to the establishment of Savings Banks in those places
where no banks existed, or where the accommodation was
very narrow. As to their application to the Money Order
Offices of the country, it would be gradual and slow, and so as
not in any way to endanger the machinery of the Post Office;
the Postmaster-General would select at first a moderate number
to be opened, and extend them in proportion as he found
occasion, the test and index of the occasion being the demand
for such banks by the public. Mr. Gladstone then referred
to the rate of interest which would be allowed, and said
that in this respect the Post Office Banks would have somewhat
less attraction; the present banks were established on
the principle of giving a bonus; the new system must be
strictly self-supporting.
He would not feed them at the
expense of the Post Office, or any other revenue, and in that
case the rate of interest must be such as can be safely paid.
With regard to the forebodings of Mr. Estcourt relating to
the risks which Government would run, Mr. Gladstone stated
that the system of Savings Banks had been established for forty-five
years, during which time they had had every description
of speculation, the severity of a commercial crisis, the pressure
of a dreadful famine, and almost every trial that could
befal a new system; and although the Government was always
holding a great amount of money at call, there had been but
a small pecuniary loss, in comparison with which loss the
establishment and progress of such a system was immeasurably
of greater value. After stating that he thought the
Post Office machinery admirably suited for the purposes of
the new measure,
the bill passed the second reading.
The bill was introduced into Committee on the 8th of
April, 1861,[172] where trifling alterations were made in several
of its clauses. Mr. Slaney, who had paid great attention to
subjects of this nature, hoped that the deposits would not be
restrained, as under the old system, he thought no limit
should be placed upon the providence of the labouring classes.
Mr. Vance, an Irish member, alluded, as he did on subsequent
occasions, to what he considered the centralizing tendencies
of the scheme. He thought Dublin ought to be the centre of
operations for Ireland as under the Money Order system. The
principal opponent of the measure on this occasion was Mr.
Ayrton, the member for the Tower Hamlets, who in some
quarters has been credited with the advocacy of the scheme
before this period. In a long speech, Mr. Ayrton took exception
to most of the details of the measure as they were
now proposed, and to the principles of the measure as a
whole. Mr. Ayrton held that data enough had not been
presented to enable members to form an opinion as to
whether the scheme would pay or not. It was all very
well to talk of subjects being self-sustaining, and even
economical, but under such statements our expenses had
gone on continually increasing.
He adduced at length the
case of the County Courts bill, and the Government Superannuation
Allowances bill, which he said were introduced
and passed under some such pretences. It would be the
same with the Savings Banks; the Government would never be
able to keep to the two and a half per cent., but would have to
be guided by the rate allowed to other bankers. The scheme
of a national bank,
continued the honourable member,
however plausible it might look at the outset, would lead to
the most serious consequences.
The Committee which sat
on the subject, and of which he, the speaker, was a member,
came to the decided and unanimous conclusion that it was
desirable to separate the operation of banking for the people
from the National Treasury. It was thought that these
national banks would act as a powerful inducement to the
working men to entrust their money to the Government rather
than to their own Benefit Societies, which were regarded as
too much associated with Trade Societies. In his opinion
Benefit Societies and Trade Societies had been the means of
regenerating the people, and were eminently conservative;
and it was not expedient to discourage these societies by
means of the proposed banks. Nor was this all. It was
desirable that the country gentlemen should take an interest
in the welfare of the working people surrounding them; and
to supersede their exertions by mere stipendiaries of the
State would weaken that social system on which the liberties
of the people were mainly founded. Mr. Alderman Sidney,
as one conversant with figures,
ventured to say, that if the
scheme were carried out, our national establishment must be
greatly augmented; and if it proved successful, the establishment
that would be required would be of the same gigantic
proportions as the Bank of England!
It was absurd to
think that depositors would be satisfied with less interest
than the national creditor. The scheme, he believed, was
founded upon error; it would interfere with the self-working
of existing establishments, and would entail a large expense
upon the country at large. The Chancellor of the Exchequer
replied, especially aiming his powerful shafts at Mr. Ayrton.
He said he would not follow that gentleman through his speech,
as that was a task beyond his powers. Mr. Ayrton often gave
the House notable examples of his discursive powers; but he
(Mr. Gladstone) never knew an occasion on which the honourable
gentleman had more signally distinguished himself than
on the present occasion. When he rose into the air on eagle
wing, he passed over the limits of time and space, and was
not subject to any of the conditions that bound the efforts
of ordinary mortals.
However, to confine himself to just
that which bore on the subject before the Committee, he was
strongly opposed to the principle of making the working
classes pensioners on the Exchequer; he would do his best
to provide against such a result. He did not know, and
could not tell, what amount of business the banks would
attract; he expected it would be gradual, and the development
of the agency would be gradual. The extension of the
system would be in precise proportion to the demand; and
the expense would be throughout proportionate to the extension.
The opinion of the Post Office authorities was, generally,
that the work would be done much cheaper than in the
ordinary banks; for sixpence or sevenpence against one shilling
for each transaction. Some even thought that the work might
be done cheaper than the work in the Money Order Office.
Once started, any tendency to excess would, of course, be
corrected; but it was impossible to argue on any assumed
number of deposits. He had a sanguine hope that every
statement he had made would be verified, and that the
measure would entail no charge upon the public.
Again and again the question was asked and argued,
whether it was meant that the new banks should be subversive
or auxiliary to the old. To this question, which was
asked on this occasion, Mr. Gladstone gave it as his opinion
that the one class of depositors who preferred perfect security
would patronize the new banks; whilst another class who
wished to act under the immediate view of their local superiors,
would prefer the existing banks. In reply to Mr.
Briscoe, he said he would not limit the establishment of the
new banks to those places where no other sort of banks existed,—though,
of course, the Post Office would commence operations
there first. Such an arrangement would exclude the
great centres of trade and population,—our large towns—which
were not sufficiently served with banks. An important
discussion took place on the 10th clause of the Act relating
to the investment of the fund deposited in the Post Office
Banks. Sir H. Willoughby, as he so often did before, condemned
the system of operating on the Stock-market with
this money. Mr. Gladstone replied, that the loss which was
so often dwelt upon in connexion with the old banks was
nothing like loss; the money so deposited with Government
had enabled successive administrations to effect an
economy in the management of the public money transcending
ten times over the charge the State had been put to.
He saw no reason whatever to alter the arrangements in this
particular. The amendment which Sir H. Willoughby proposed
was then negatived without a division. Three days
afterwards the bill passed the third reading and was sent up
to the Lords.
No time was lost in bringing the bill forward in the
House of Lords. It was read a first time on the 15th of
April, and a second time on that day week. The conduct
of the bill in the Lords was naturally committed to the
Postmaster-General, Lord Stanley of Alderley. On this occasion
his lordship went over[173] the ground covered by the bill—the
insufficiency in number, and the inadequacy of accommodation
of existing banks, and the insecurity as regards
repayment until the money had actually reached the hands
of the National Debt Commissioners. Lord Stanley added
that Savings Banks had by no means increased in number
in proportion to the population, or to the increase of the
money circulating among the working classes. He adduced
several facts and a quantity of statistics on this head
similar to those which we have already given to the
reader. From these facts it was obvious, that when a
working man formed a good intention to invest his small
savings, there was a great danger that he would spend his
money, if there were no means of his depositing it, or if
he could not do it comparatively easily. He then spoke
of the losses caused by the failures of Savings Banks.
Referring to Mr. Whitbread's proposals in 1807, Lord
Stanley stated that this measure was very like the scheme
then proposed, which actually passed through the House
of Commons in that year; that Mr. Sikes had originally
proposed something similar in an admirable letter to Mr.
Gladstone; and that the Government, with the assistance
of two able gentlemen in the Post Office department, had
matured the present plan, which he proceeded very clearly
to describe. Lord Stanley, in concluding, said it was somewhat
remarkable that nine-tenths of the depositors in Savings
Banks were domestic servants and clerks, and that only one-tenth
belonged to what are usually known as the working
classes;
yet large numbers of these latter are in receipt
of wages far exceeding the incomes of many who possessed
Savings Bank accounts.[174] He hoped that working men,
when they received their wages, would be induced, before
going home, to invest a portion of them at the receiving
houses they would pass; if so, the result to them and the
country could not but be highly beneficial. The banks must
be looked upon as an experiment. If an extension should
be demanded, it could only be by reason of the greater
security and greater facilities they would offer.
Lord Colchester, an ex-Postmaster-General, admitted the
merits of the plan, but doubted the ability of the Post Office
officials to carry on the work in every town. Among the
Lords, however, the strongest and bitterest opponent of the
measure was Lord Monteagle of Brandon (once Chancellor
of the Exchequer as Mr. Spring Rice).[175] He made a long
speech on this occasion. He thought it was wrong to
establish new banks, or to make them rest on the deficiencies
of the old ones, inasmuch as it was easy to
improve the latter. He went into the history of Savings
Banks, and endeavoured to show that their progress up to
1850, (a fact which no one disputed,) had been far from
slow. As, however, it was the period principally between
1850 and 1860 when they were most stationary, this was
the time with which he should have dealt. He expressed
an opinion that the Post Office would not be equal to the
work. He strongly urged the inexpediency of giving increased
funds to the Chancellor of the Exchequer, with
which to speculate. And this measure would tend to
destroy the healthy feeling which was growing up between
the higher and the lower classes, through the medium of
Savings Banks. Not only did the higher classes give their
time and energy to the work of Savings Banks, but they
gave their money too; and Lord Monteagle was unlucky
enough to cite the case of several noble lords who paid a
thousand pounds each to atone for their neglect in connexion
with a Hertfordshire Savings Bank, and the fraud
there, which we have previously described at length. Such
was the spirit,
triumphantly exclaimed the noble lord,
which this bill proposed to crush.
Not less unfortunate
was Lord Monteagle, as the result has proved, in his endeavour
to be amusing and prophetic. The only comfort,
said he,
which I have derived from the speech of the noble lord
who moved the second reading, was his assurance that the
measure was to be of an experimental character.
Under
such circumstances he would not trouble the House with a
division, as he would await without much anxiety the result
of the experiment!
Next year, they would see whether
the working of the new system would compare with that
which for nearly half a century had been the glory of
England, and had served as a model for all Europe.
Lord
Redesdale also strongly opposed the bill, but he did not
bring to its consideration much of the practical knowledge
of the preceding speaker. He frankly owned
that, from what he understood would be the manner of
keeping the accounts, they would soon get into a state of
confusion, out of which extrication would be almost impossible.
From the confusion of the above sentence, it is
not impossible that the attempt to understand the mode of
keeping the accounts had confused the speaker. Curiously,
too, the same speaker objected to one of the most convenient
clauses of the bill. He called the proposed mode of transfer
of deposits from one bank to another, an unnecessary arrangement,
saying it would be much better that the parties themselves
should take it out of the one, and put it into the
other bank. Acquaintance with the habits and wants of
the poorer classes would have convinced Lord Redesdale to
the contrary. Lord Redesdale said, in concluding, that
he was afraid the scheme would produce much disappointment
to the public, and a great loss to the nation.
The Marquis of Clanricarde gave a very qualified and
hesitating adhesion to the bill. Lord Stanley of Alderley
satisfactorily replied to the arguments that had been adduced,
and the bill was then referred to a Committee of the whole
House.
On the 25th of April the bill passed the Committee.
Four days afterwards, Lord Monteagle again opposed it,
saying that he saw, with great alarm and regret,
what
seemed to him to be meant to produce a break-up of existing
Savings Banks, and the substitution of the action of
a salaried Government department for what he might call a
great public charity, directed by benevolent persons acting
gratuitously in their own neighbourhood. He went over
the ground he had taken only a few days before, but in a
spirit very much more subdued and less confident; and
when the bill passed, he entered a long and laboured protest
against it (vide Hansard, vol. clxii. page 1213, where
many more of Lord Monteagle's protests
may be found).
The Post Office Savings Bank Act, which we give in extenso,[176]
received the Royal Assent on the 17th of May, 1861.
Geo. Hans Hamilton.
Rowland Hill.
W. Neilson Hancock.
ON THE DEVELOPMENT OF THE POST OFFICE SAVINGS BANK
SYSTEM.
Should the Post Office Savings Bank bill become law, and should it also
answer, we shall then possess an institution the convenience and value of
which it will be impossible to over-estimate, and this author will deserve the
thanks of the country. The country will recognise at once the universal boon
of a bank maintained at the public expense, secured by the public responsibility,
with the whole empire for its capital, with a branch in every town,
open at almost all hours, and, more than all, giving a fair amount of interest.
—Times,
March 20, 1861.
I have been asked,
says Mr. Edwin Chadwick, by several M.P.'s and
others, what I thought of Post Office Savings Banks. I have answered them,
that I know no measure of late years affecting the condition of the working
and the lower middle classes which appeared to me so excellent in principle.
I am disposed to say, as Sir Robert Peel said with reference to the Encumbered
Estates Act, that it is 'so thoroughly good a measure, he wondered how ever
it passed.'
We have already seen that the Post Office Savings Bank
bill was rapidly and successfully passed through Parliament,
and did become the law of the land. The Act to grant
additional facilities for the depositing small savings at interest
with the security of Government for the due repayment
thereof,
received the Royal Assent on the 17th of May,
1861. The author of the bill has the best claims on the
thanks and gratitude of the country. The press and the
people of this land have, almost with one accord, been loud
in their praise; and the three-quarters of a million of depositors,
most of them attracted to saving habits by the
facilities he then for the first time offered them, joined in
silent thanks. The scheme for working this measure,
organized in the Post Office after repeated requests from
Mr. Gladstone, accomplished to a great extent under his
oversight, and then carried through Parliament by his
administrative ability and convincing eloquence, will ever
cause his name to be most prominently associated with the
new system; and among the many triumphs of his skill,
this one will stand out with distinct prominence on the
page of history.
The Post Office Savings Banks have not only answered,
to use the phraseology of the leading journal,
but they
have attained a marked position, and have been, in every
respect, an eminent success. Not nearly so much, however,
with regard to their present condition, as to their manifest and
inevitable destiny in the future, the Postal Banks are entitled
to a high place amongst the social institutions of the country.
In every department of labour, the new banks have become,
and must yet become to a far greater extent, most effective
agents in the social and moral improvement of the people,
and will give tenfold effect to the endeavours which have
been made, in so many directions, to better the condition
of the masses. Next, perhaps, to the repeal of the Corn
Laws, this is the greatest boon ever conferred on the working
classes of this country; and next to the scheme of Penny
Postage itself, the scheme of Post Office Banks is the greatest
and most important work ever undertaken by the Government
for the benefit of the nation. Whatever differences of
opinion may exist as to the claims of the present Ministry
to public gratitude, there can, we should imagine, be but
one opinion now as to the vast advantages conferred upon
the bulk of the people by the measure of 1861.
The success of the Post Office Banks has been of the
most complete kind. Whether we consider, as we shall
now proceed to do in proper order, the amount of the
business done; the nature of the business done; the influence
of these banks on the provident habits of the
community; the results upon those small banks which
more especially have partaken of the character of eleemosynary
institutions; and the manner in which the
business of the Postal Banks has been organized and performed,
the scheme has far more than realized the anticipations
under which it came into existence.
As to the Amount of Business done. The interval between
the passing of the Act and the 16th of September, 1861,
was occupied, it appears, in completing the arrangements
for the conduct of the measure, including the appointment
of Mr. Chetwynd to control the scheme he had originated,
and a staff of superior and subordinate officers with which
to begin the business; and on that date operations were
commenced by the opening, in England and Wales, of 301
Money Order Offices as Savings Banks. The grounds upon
which the first places were chosen were unquestionably the
best that could have been adopted to test the feeling of the
country with regard to the scheme itself. They were, (1)
Avoidance of all collision with existing banks which supplied
a fair amount of accommodation; (2) The selection
of important and thickly-populated districts, making that
selection embrace the widest possible area, and leaving no
inconsiderable tract of country without the required accommodation;
(3) To meet the wishes of the public, so far as
these wishes were indicated by memorials or requisitions to
the authorities; and (4) To take care that the postmasters
of selected places were trustworthy, and capable of transacting
the business efficiently. Had the scheme failed under
such conditions as thus seem to have been imposed, little
hope could have been held out that it would ever have been
successful: as it happened, however, the banks were found
at once to supply a great public want. The authorities seem
to have been so far encouraged, that in six weeks an enormous
addition was made to the number of banks. 254 were
opened in the month of October following, 338 in November,
and 784 in December, making the entire number of 1,629
new banks open to the public at the end of the year.
On the 3rd of February, 1862, the benefits of the measure
were extended to Ireland, by the opening of 300 banks; on
the 17th of the same month, 299 banks were opened in
Scotland; and by the end of six months from the original
commencement of the plan, there were in the United
Kingdom no fewer than 2,532 Post Office Banks in existence.
400 additional banks were opened in 1863; and at the end
of 1864 the total number of banks was increased to 3,219.
Up to the present time (March, 1866), the number of Post
Office Banks is 3,369, of which,
| 2,469 | are in England and Wales, |
| 525 | are in Ireland, and |
| 375 | are in Scotland. |
There is now a Government Savings Bank not only in every
town in the United Kingdom, but in every large village;[177]
and over and above this already ubiquitous and comprehensive
arrangement, the large towns of the country have
each a number of new depositories for savings proportionate
to their size and population. Thus, in the metropolis, at the
present moment of writing (April, 1866), there have been
provided the extraordinary number of 452 Post Office Banks;
in Manchester, there are 26; in Liverpool, 25; in Birmingham,
22; in Edinburgh, 18; in Glasgow, 18; in
Dublin, 15.
In the three months of 1861 during which the 1,600 banks
were in operation for portions of the period, 25,729 persons
opened accounts with them, and deposited money to the
extent of 167,530l. in deposits of the average amount of
3l. 11s. 10d. At the end of the next year (1862) 180,199
persons had opened accounts in these banks, depositing
1,947,139l., and withdrawing less than a quarter of that sum.
Year by year, up to the present time, as appears by the accompanying
table, the increase of deposits, and the increasing
number of new accounts, are far more than proportionate to the
increase of facilities; and, as showing the firmer hold that these
banks have taken on the community, this fact is most satisfactory
and gratifying. Equally so, and a most convincing
proof of their success, is the account of the total amount of
business shown to have been transacted up to the 31st of
December last. Up to that date these banks have received
from no less than 857,701 depositors, in 3,895,135 deposits, a
sum of money amounting to 11,834,896l.;[178] the withdrawals
during the same period of four years numbering 1,011,379,
and amounting to 5,619,251l. There were in December last,
611,819 open accounts, the amount standing to the credit of
these accounts being 6,526,400l.
Table showing the Amount and Nature of the Business done in the Post Office Savings Banks
from their opening in September, 1861, to December, 1865.
| Date. | Number
of
Deposits. | Amount
of
Deposits. | Average amount
of each Deposit
during the period.
| Number
of With-
drawals. | Amount
of With-
drawal. | Average amount
standing to
the credit of
each Account. |
|---|
| £ | £ | £ s. d. | | £ | £ s. d. |
From 16 Sept. to
31 Dec. 1861. | 46,643 | 167,530 | 3 11 10 | 1,702 | 6,759 | 6 9 9 |
| Year 1862 | 592,573 | 1,947,139 | 3 5 9 | 95,592 | 431,878 | 9 10 3 |
| Year 1863 | 842,848 | 2,651,209 | 3 2 11 | 197,431 | 1,027,154 | 10 11 4 |
| Year 1864 | 1,110,762 | 3,350,000 | 3 0 3 | 309,242 | 1,834,849 | 10 12 1 |
| Year 1865 | 1,302,309 | 3,719,018 | 2 17 1 | 407,412 | 2,318,611 | 10 13 4 |
| Total | 3,895,135 | 11,834,896 | 3 0 9 | 1,011,379 | 5,619,251 | 9 11 4 |
In the ten years ending November, 1861, the annual
average increase in the total number of Savings Bank depositors
was at the rate of 3⅘ per cent. In one year from
this date the increase in the number of depositors—taking
the depositors of the old banks and the Post Office Banks
together—was at the rate of 6¾ per cent. That this increase
was altogether owing to the introduction of the new system,
scarcely requires proof: a few of the old Savings Banks,
Edinburgh, Glasgow, Liverpool, and Birmingham for example,
increased their business during 1862; but the aggregate of
the old Savings Banks lost more business than the few gained.
Again, in all cases, the gain of the Post Office Banks was far
greater than the loss of the old banks.[179] Throughout the
entire kingdom the old banks lost 55,000, and the Post
Office Banks gained 160,000 depositors.
The rate of increase shown in the first year has been continued
with inconsiderable variations up to the present time,
and, in his last Report, the Postmaster-General, in view of all
the facts of the case, states: On the whole, it seems reasonable
to expect that the annual increase in the business of the
Post Office Banks will for some time be from 130,000 to
140,000 in the number of depositors, and from 1,400,000l.
to 1,500,000l. in the capital of depositors.
[180] The correctness
of these calculations will not depend to any appreciable extent
on the increase of facilities, such as the opening of new
banks: the Post Office Banks have already been so widely
established that little additional accommodation will be
required for some time to come. It is made to depend, we
should imagine, on the principles of Post Office Banks becoming
more and more widely known, and their facilities
more and more appreciated. This has clearly been the
experience of the last two years. In 1864, 161 new banks
were opened, and the increase of depositors was at the rate
of 42 per cent.; in 1865, only 73 new banks were opened,
and yet the increase in the number of depositors was at the
rate of 40 per cent.
As to the Nature of the business done. Some idea of the
nature of the increased business done may be gathered in
several ways. First and foremost the number of Post Office
Savings Bank depositors represents an enormous number of
accessions to the list of frugal people who have perhaps for
the first time begun to save, and of those who, more prudent
and less confiding in their fellows, seek the security of the
State for the safe custody and prompt repayment of their
savings. It is a somewhat remarkable fact, that of the
total amount which had up to the end of last year been
deposited in Post Office Banks, not much more than a
million and a half (allowing for money transferred otherwise
than by means of the regular transfer certificate) had
been withdrawn from the old Savings Banks. Moreover,
out of this large sum more than half seems to have come
to the Post Office Banks through the voluntary closing of
Savings Banks on the old principle,—the Birmingham
Savings Bank contributing a third of the whole amount.
From these facts, it seems quite clear that the business
acquired by the Post Office Banks, at any rate up to this
time, is almost entirely newly-created business, and that
the older Savings Banks have only been interfered with to
a trifling extent. Besides the amount already referred to,
other sums might undoubtedly have been placed with the
older institutions, had there been no competition; but by
far the greatest proportion is plainly derived from sources
hitherto unreached, and consists of money which no amount
of persuasion could divert from the hundred forms of indulgence
to the older channels of economic hoarding.
The Post Office Banks, further, seem not only to have
attracted a public of their own, but to have created, as it
were, a fresh race of provident people. All kinds of Savings
Banks have been established to give, in some form or other,
facilities for the deposit of small savings. When the new
banks commenced, the average amount of a single deposit
in the existing banks was, and had been for some time,
4l. 6s. 5d.; during the first year of the existence of the Post
Office Banks, the average amount was only 3l. 1s. 9d. But
this average has been still further reduced. The Post Office
authorities, describing more recent operations,[181] state, that as
the nature and advantages of these banks became known to
the poorer classes, and as new banks were opened from time
to time in rural districts, and densely populated portions of
our large towns inhabited by those classes, a gradual reduction
in the average amount of each deposit has taken
place, and that that amount has for some time ranged between
2l. and 3l., whilst the average amount of each sum deposited
in the old Savings Banks has not undergone any marked
alteration. The conclusion which has been arrived at is
the only one possible, viz., either that the Post Office Banks
have reached a poorer class of depositors than the old banks
have been able to attract, or that in increasing so many
fold, as we shall have to describe, the facilities for the more
frequent deposit of small sums, they have at the same time,
and proportionately, increased the inducements to frugality,
and removed the temptations to wastefulness.
Still dealing with the peculiar nature of the new business,
it is very important that one fact should not be lost sight of.
In our opinion, it completes the evidence as to further accommodation
being urgently required by the poorer classes.
In those towns and districts which before 1861 were considered
to be well supplied with sufficient and well-managed
institutions, the success of the Post Office Banks has been
most marked. Thus in Edinburgh, the rate of increase in
the number of depositors rose in one year from 3½ to 5¾
per cent.; in Dublin, from 4½ to 7 per cent.; whilst in the
county of Middlesex, where, before the Post Office Banks
were established, there were forty-one prosperous and excellently
managed banks, which seemed to hold out all
needful inducements to prudence and frugality,
no less
than 30,000 persons were added to the roll of Savings
Bank depositors in the year following the introduction of
the new banks into that county. The rate of increase
before 1861 was 2½ per cent.; in 1861 and 1862, it was
at the rate of 10 per cent.
The average amount standing to the credit of each depositor
in the Post Office Banks has for some time ranged
between 10l. and 11l., and is not expected to exceed that
sum for some time to come. Of the whole number of
depositors, about four per cent. have balances due to them of
50l. and upwards. A general idea of the mass of depositors
may be gathered from the above facts, and they may be
supplemented by the following table, which, though only
the result of an estimate, is near enough for our purpose.
In March, 1865, a certain proportion of the open accounts
in the Post Office Banks was examined, in order that some
idea might be obtained of the occupation of the entire
number,—from which it seemed probable that the 524,340
depositors were made up pretty much as follows:—
| Females, Male Minors, and Trustees | 285,769 |
Mechanics and Artisans, Domestic and Farm
Servants, Porters, Policemen, Labourers,
Boatmen, Fishermen and Seamen | 140,518 |
Tradesmen and their Male Assistants, Farmers
and Clerks of all kinds except those
mentioned below | 53,756 |
Males of no stated occupation, Professional Men
and their Clerks or Assistants | 31,353 |
| Males engaged in education | 5,692 |
| Persons in the Army and Navy | 4,682 |
| Persons employed in the Revenue Departments | 2,570 |
| Total | 524,340 |
Of the entire number of Post Office Savings Banks, ninety-one
out of the 3,369 have failed to obtain depositors. Of
this number,
| 23 | are in England and Wales, |
| 5 | are in Scotland, and |
| 63 | are in Ireland. |
It is impossible satisfactorily to account for the failure in
so many cases, or, in the absence of information as to the
particular localities to which facilities have been offered
in vain, to say whether there may not be some special
reasons, other than indisposition to save, which may have
operated against the transaction of business. Among the
great number of banks established in England, there must
unquestionably be some poor and sparsely populated districts
to which they have penetrated; whilst in Ireland, which
contributes nearly three-fourths of the non-effective banks,
these districts must be still more numerous, and the population
still less able to save. Add to this, the fact that in
more than one large district in the sister country the
grievous frauds in the old class of banks have left an
indelible impression on the minds of the people,—if they
have not, as one authority states, destroyed all thoughts of
provident habits,—and that this impression is not likely to
be effaced in the chronic agitation which has for so long prevailed
in Ireland, and the only wonder is, that more of its
525 Post Office Banks are not non-effective.
As to the Results of the New Banks on the Old ones. Before
the Post Office Banks were established, 638 ordinary Savings
Banks were open in the United Kingdom for the receipt of
small savings. Of their distribution throughout the country
and the accommodation which they gave, including the
number of hours the bulk of them were open, we have
already spoken in a previous chapter. The Post Office
Banks were no sooner established and business fairly commenced
than two very important results followed in banks
on the old establishment. The first was, that some of the
more important Savings Banks increased their accommodation
to the public,—the duration and frequency of the
time allowed for doing business being extended: the second
was, that the trustees of many of the old banks came to the
resolution to close their institutions, on the ground that their
time and benevolence were misspent in competing with the
new banks, which enormously increased the accommodation
they had been powerless to afford.
The best possible test, not only of the influence of the
new banks, but of their marked superiority and adaptability
to the wants of the country, is found in the fact, that since
1861, no Savings Bank on the old principle has been established.
If it be not desirable to establish new banks, it
cannot be a matter of much concern to the country how soon
the bulk of the existing banks on that principle give up their
charitable business. We say bulk advisedly, for many of
these banks do not partake, in the ordinary sense of the
word, of the character of charitable institutions. From a
careful and impartial view of the whole subject, it seems
to us, that no measure short of the abolition of the Post
Office Banks can keep alive those of the old Savings Banks
which cannot compete with the former in the quality and
the amount of their accommodation. On the other hand,
no one who has at heart the interests of those classes
which Savings Banks seek to benefit would wish to see
the existence of any institution shortened, which, while
profitably ministering to a great public want, is neither
subsidized by the State, nor conducted so as to leave an
impression on the depositor's mind that it is charitably
ministering to his necessities. Those which cannot give the
necessary facilities, must succumb sooner or later; those
which answer to the latter requirements, may still have a
long course of honour and usefulness before them. Before
1861, there might be no option or alternative to the existing
order of things; the institution of Post Office Banks has
supplied both.
Twelve months after the organization of the Post Office
Banks the trustees of thirty-five of the old Savings Banks
had closed their banks. Up to the present period (March,
1866), sixty additional banks have followed the example
thus set them; this making a total of—exclusive of Penny
Banks—ninety-five banks which have transferred their
business to the Post Office. The least important of these
institutions was that of Dumbarton, established in 1846,
and which had but 83l. of capital. The most important
bank on the list is Birmingham, originally established in
1827, and which had, on the 20th of November preceding
the date of closing, a capital of 583,461l. The fact of the
Birmingham Savings Bank coming over, formed the one
necessary assurance that the new system had obtained, not
only the confidence of the country, but the tacit acquiescence
of those who managed large businesses of the same nature.
It was very properly argued at the time, that if a majority of
such trustees as those of Birmingham could come to the
conclusion to hand over their well-managed and flourishing
bank to the Government, any bank might do so.[182]
The following Return, which has been carefully compiled,
is of sufficient interest and importance to occupy the prominent
place we assign it.[183]
Return containing the Names of Savings Banks Closed during the years 1861 to
1865 inclusive, together with the Date of Establishment, the Number of Hours
open per Week, and the Capital on the 20th November preceding the date of
closing of each Bank.
| Name of Bank. | Date of
Establishment. | Number of
Hours open
per Week. | Capital on
20th Nov.
preceding the
date of closing. | Remarks. |
|---|
| England. | | £ |
|---|
| Ambleside | 1857 | 1 | 2,503 |
| Andover | 1827 | 2 | 4,121 |
| Baldock | 1816 | 4 | 17,573 |
| Bermondsey | 1856 | 1 | 3,131 |
| Biggleswade | 1816 | 7 | 10,496 |
| Billericay | 1860 | 1 | 2,290 |
| Birmingham | 1827 | 12 | 583,461 | This Bank ranked |
| Bishop's Castle | 1861 | 1 | 1,988 | fifth or sixth |
| Blackpool | 1859 | 1 | 2,197 | in the Empire. |
| Bodmin | 1839 | 2½ | 54,638 |
| Bowdon & Altrincham | 1823 | 4 | 49,183 |
| Braintree | 1859 | 1 | 7,510 |
| Brixton | 1860 | 1½ | 2,300 |
| Bromley | 1816 | 2 to 3 | 22,496 |
| Buntingford | 1845 | 2 monthly | 5,127 |
| Burford | 1826 | 1 | 11,100 |
| Canterbury | 1816 | 8 | 149,572 | Closed on account |
| Carshalton | 1817 | 1½ | 11,198 | of the fraud |
| Chesham | 1854 | 1 | 3,379 | previously spoken of. |
| Cheshunt | 1850 | 2 | 1,535 |
| Chipping Norton | 1860 | 5 | 5,694 | 20 Nov. 1863. |
| Chipping Ongar | 1858 | 2 fortnightly | 3,476 |
| Clapham | 1816 | 1 to 2 | 28,411 |
| Clayton West | 1861 | 1 | 494 |
| Cleobury Mortimer | 1859 | 1 | 2,580 |
| Coddenham | 1818 | 4 | 15,729 |
| Covent Garden | 1816 | 2 | 18,125 |
| Cuckfield | 1836 | 1 | 7,191 |
| Dartford | 1816 | 2 | 26,549 |
| Deptford | 1816 | 2 | 30,712
|
| East Dereham | 1854 | 1 | 8,840 |
| Enfield | 1839 | 1 | 132 |
| Epping | 1817 | 3 monthly | 16,023 |
| Evesham | 1839 | 2 | 24,516 |
| Finchley | 1859 | 3 | 1,428 |
| Fleetwood | 1852 | 1 | 5,033 |
| Halstead | 1816 | 1 | 20,742 |
| Hartlepool | 1844 | 2 | 6,617 |
| Holloway | 1856 | 1½ | 10,632 |
| Holt | 1861 | 1 | 1,448 |
| Hornsey | 1819 | 1 | 101 |
| Hoxton | 1843 | 8 | 494 | This was the first |
| [184] | | Bank which |
| Kirby Stephen | 1846 | 1 | 6,957 | transferred its |
| Leatherhead | 1860 | 1 | 592 | business to the |
| Lechlade | 1844 | 1 | 4,636 | Post Office. |
| Lutterworth | 1822 | 6 | 36,332 |
| Lymington | 1818 | 2 | 1,394 |
| Mansfield | 1818 | 5 | 64,671 |
| Market Harboro' | 1838 | 1 | 24,659 |
| Melbourne | 1855 | 1 | 2,552 |
| Old Kent Road | 1859 | 2 | 3,538 |
| Over Darwen | 1860 | 2 | 1,071 |
| Pimlico | 1860 | 5 | 1,900 |
| Poulton-le-Fylde | 1822 | 1 | 30,822 |
| Rawtenstall | 1836 | 2 | 240 |
| Rochford | 1818 | 2 | 9,887 |
| Romsey, New Hall | 1859 | 1 | 408 |
| Rugby | 1818 | 2 | 46,839 |
| Saddleworth | 1824 | 4 | 6,601 |
| St. Alban's | 1859 | 1 | 4,140 |
| Sedbergh | 1859 | 3 monthly | 856 |
| Sheerness | 1818 | 1 | 4,128 |
| Shiffnal | 1819 | 11 monthly | 15,851
|
| Southwold | 1858 | 2 monthly | 1,248 |
| Stavely | 1854 | 1 | 1,457 |
| Tredegar | 1855 | 2 | 1,726 |
| Wallasey | 1843 | 1 | 3,229 |
| Walsall | 1825 | 2 | 48,492 |
| Wandsworth | 1816 | 1 | 1,269 |
| Watford | 1817 | 4 fortnightly | 38,968 |
| West Bromwich | 1846 | 7 | 27,491 |
| West Ham | 1819 | 2 | 17,739 |
| Weston-super-Mare | 1830 | 3½ | 3,644 |
| Wales. |
|---|
| Bala | 1849 | 1 | 14,386 |
| Carnarvon | 1854 | 2 | 159 |
| Dolgelley | 1819 | 36 to 48 | 30,291 |
| Llangollen | 1852 | 6 monthly | 3,841 |
| Machynlleth | 1834 | 36 | 10,166 |
| Merthyr Tydvil | 1853 | 2 | 3,745 |
| Narberth | 1857 | 2 | 2,242 |
| Newtown | 1856 | 1 | 2,960 |
| Portmadoc | 1846 | 11 | 2,732 |
| Scotland. |
|---|
| Dumbarton | 1846 | 10 | 83 |
| Fort William | 1859 | 6 | 2,023 |
| Glencoe | 1859 | 2 | 396 |
| Leith | 195 | Date and hours not |
| Oban | 1840 | 12 | 106 | given in Return |
| Stranraer | 1860 | 4 | 1,533 | for 1861. |
| Ireland. |
|---|
| Ballymena | 1860 | 2 | 1,455 |
| Bray | 1819 | 2 | 4,512 |
| Carndonagh | 1860 | 4 | 906 |
| Gorey | 1822 | 1 | 2,550 |
| Lisbur | 1838 | 2 | 2,674 |
| Strabane | 1821 | 2 | 16,081 |
It ought to be stated that the Act of 1863, for amending the
Post Office Savings Bank bill, offered considerable inducements
to the winding up of the then existing banks. Its principal
objects were to relieve those trustees who were desirous to
close, from liability with regard to the accounts of depositors
who had not applied for repayment of their money, or for
certificates to enable them to transfer their deposits to Post
Office Banks, and also to make the transfer of the accounts
of minors compulsory on the authorities of either class of banks
on the application of the proper parties concerned. More important
than either, however, was an addition made to the bill
before it was allowed to pass. This addition consisted of a
clause empowering the trustees of any old Savings Bank who
should desire to close their bank, to compensate their paid
officers out of the Separate Surplus Fund. This was a welcome
and very proper addition to the bill, and tended materially to
mitigate the inconveniences likely to arise from the officials,
perhaps of many years' standing, being thrown out of employment.
The Birmingham Bank, when it transferred its business,
took advantage of this clause to compensate its officers
accordingly; and this course has subsequently been followed
by other banks.
* * * * *
We have left ourselves little space to describe what remains
to be told of the manner in which the business has been organized
and performed. Happily, however, those parts of the system
with which the public have more especially to do, have not
wanted numerous and faithful exponents; by means of the
newspaper press, shoals of official and non-official tractates,
handy-books, magazine articles, and public lectures, the public
have been made fully aware of all the practical details of a
scheme which is at once so simple and so satisfactory in its
working, and which is at the same time as capable of indefinite
expansion as it is of infinite power for good. It is
indispensable, notwithstanding that these details are now so
well known,[185] that we should rapidly glance at some of them,
prior to speaking of the special advantages which these
arrangements have made possible.
With regard to Depositing Money. By the Post Office
Savings Bank bill any person who will subscribe the requisite
declaration that he is not a depositor in any other
Savings Bank may now, on every working day of from six to
ten hours' duration, deposit any sum not less than one shilling,
and not more than 30l. in one year, in any of the 3,300
places in the United Kingdom where the Post Office has
been opened as a Savings Bank; also, that for every pound
so deposited for a month or more, interest at the rate of
2l. 10s. per cent. per annum shall be paid, and that while
the money remains in the hands of the Post Office the credit
of the British Government shall be staked for its due repayment
when asked for.
Any person wishing to become a depositor in a Post Office
Bank has only to go to that Money Order Office which is most
convenient to him, subscribe the statutory declaration, and
pay in to the postmaster or receiver the amount he wishes to
deposit, and a bank book will be handed to him, properly
numbered, and on which his name, address, and occupation
will be written. The amount handed to the postmaster will be
found entered as a first deposit in the proper column of the
book, and this entry will be attested by the signature of the
postmaster, and stamped with the official stamp of his office.
From the moment the depositor gets his book handed to him
he possesses, for all practical purposes, a sufficient guarantee
for the absolute safety of his money.
This is, however, not the only security he has; and to
explain the further process it is necessary to follow the money
after it leaves the depositor's hands. The postmaster before
giving up the book is required to enter the full particulars of
the transaction in a single line on a Form of daily Savings
Bank account supplied to him for the purpose. At the close
of each day the local postmaster adds up the total amount
received by him during that day on Savings Bank account,
and, adding that sum to the account of Money Orders
issued during the same day, sends the entire account to the
chief Money Order Office in London. On its arrival at this
office the account undergoes a primary check, and is then
sent to the Savings Bank department, where it is thoroughly
examined in all its details. In the first place, an acknowledgment
is filled up and addressed[186] to every depositor named in
the account. The account is then sent to the ledger branch,
where its particulars are copied into the books of the department;
and subsequently, but on the same day, to ensure
accuracy and afford a check, each acknowledgment is compared
by different officers with the entries made in the ledgers,
and then despatched by the same night's post to the address
furnished by the depositor.[187]
The receipt of this acknowledgment completes the depositor's
parliamentary title to repayment in full of principal
and interest. Should the depositor not receive his acknowledgment
within ten days of making the deposit, application
must be made (and it may always be made free of postage)
to the Postmaster-General for it. Experience has shown that
no depositor has been put to the trouble to write twice for
an acknowledgment, and but a very small modicum indeed
have written at all. Practically three days would suffice for
the operations required in England, and four for the greater
part of Ireland and Scotland; but in some few cases the
longer period of ten days is necessary. Were it not for the
check, moreover, which the department thus obtains upon
its own officials, and the confidence which the arrangement
gives to depositors, the acknowledgment might perhaps be
dispensed with, inasmuch as the postmaster's entry in the depositor's
book is not bad evidence that the money has reached
the hands of a Government official,—a fact which, if it could
not be disputed, would not, we should imagine, be set aside.
In every subsequent case where a person adds to his first
deposit, exactly the same routine is followed. He may, however,
if he desires it, or requires it, continue his deposits in
another bank from that in which he originally opened his
account; nay, if he chooses, he need not make two deposits
in any one bank, but may take a tour throughout the country,
or, if he lives in London, may go all round the metropolis to
the 450 banks there, and see which he likes best, and no one
will interfere with his freedom of choice. And though a
depositor of this curious description would give additional
trouble, the routine of the work is so simple that he would not
embarrass the department in any way.[188]
With regard to Withdrawing Money. A person having once
run up a score in the Post Office Banks, may withdraw it
with great readiness and with extraordinary and unexampled
facilities. A depositor who requires some, or all, of his money,
has only to go to whichever Post Office Bank he likes best, in
whatever part of the country he may happen to be at the
time, and ask for the usual printed Form. He must fill up
this Form with the number of his deposit-book, the name of
the office where he commenced to make his deposits, the
amount he wants, and the place where he wants it paid, and
adding his name, address, and occupation, send the Form
(which needs not to be post-paid, is addressed on the back,
and provided with an adhesive seal,) to the Postmaster-General
and wait the result.
Following the fortunes of this notice, we find that it arrives
in proper course at the chief Savings Bank. The signature
attached to it is there compared with the signature of the
original declaration, and if, on comparison, there be no grounds
for suspecting anything amiss, the notice is sent to the ledger
keeper in charge of the account of the particular depositor.
If it be found that he has a proper balance in the bank to
meet his claim upon it, a warrant for payment is at once prepared.
This warrant is an order to the postmaster named to
pay the amount wanted; and after the amount of the warrant
has been entered in the ledger, and checked by a superior officer,
who certifies its correctness, it is at once sent off by post to
the address furnished by the person withdrawing. At the
same time, and by an admirable system of manifold writing,—suggested
by Mr. West of the Mail Office for the use of other
branches of the Post Office, and which has been with great
advantage applied to Savings Bank operations,—the postmaster
himself is furnished in fac-simile with a copy of the
warrant sent to him in the nature of an advice.
When the postmaster is applied to for the money in question
he carefully compares the warrant with the advice to pay, in
the same way as he deals with the familiar money order; he
also compares the signature to the receipt on the warrant with
the signature in the depositor's book; and if he be satisfied
with the scrutiny, he pays the money, entering the transaction
in the withdrawal part of the depositor's book, and signing
and stamping the book accordingly.[189] When the paid warrants
are returned to the chief office, and when the postmaster
sends up an account of the day's transactions, the accounts
and entries are checked in the chief Money Order Office and
the chief Savings Bank, in much the same way as described
in the case of deposits; the whole being arranged to provide
an admirable system of check in which two branches of
the Post Office,—viz., the chief Money Order Office and the
Receiver and Accountant-General's Office,—as well as the chief
Savings Bank, are immediately concerned.[190]
When the Post Office Savings Bank bill was introduced
into the House of Commons, the proviso that the scheme
to be founded upon it should be self-supporting, formed an
important consideration in the statements of the Chancellor
of the Exchequer, and was strongly urged by other members.
It appears that from the first the operations have not only
been self-supporting, but exhibit each year an additional
amount of assets over liabilities, as the balance-sheet for last
year (given in the Appendix) will show. According to the
Parliamentary Paper No. 523, it was estimated that the cost
of each transaction in the Post Office Banks would be 7d.;
the actual average cost of each transaction up to the present
time has been 6⅞d. We have no doubt, as bearing on the
point of the cost of the Postal Banks, the following estimate
(which, as proved by the actual result, has been so accurate)
will possess an interest to the general reader. It is an
estimate of the cost of One Hundred Thousand transactions
under the Post Office Savings Bank bill, assuming the proportion
of deposits to withdrawals and of transactions to
accounts to be the same in the Post Office Banks as in the
existing Savings Banks, when the former shall be in full
operation:—
| £ s. d. |
| Estimated cost of receipts and payments by Postmasters | 210 0 0 |
| Estimated cost of transmission to central office, including
check on receipts and payments, &c. | 690 0 0 |
| Estimated cost of keeping accounts with depositors,
including calculation and entry of interest, periodical
comparison of depositors' books, check on withdrawals,
preparation of general accounts, stationery,
and other miscellaneous items and general management | 1,750 0 0 |
| 2,650 0 0 |
| To which may be added, 10 per cent. as a margin for
omissions or errors of computation | 265 0 0 |
| Total cost of 100,000 transactions | £2,915 0 0 |
We will now conclude this chapter with a rapid survey of
the peculiar advantages of the system of Post Office Banks,
with some remarks on what may be called the deficiencies of
the system.
The system of Government banks seems exactly to meet
the points most required by those whom the older kind of
banks had no power to attract, as well as of that considerable
class who, rather than not save at all, would save under inconveniences
which they were powerless to remove. For years it
was impossible to provide the conditions and meet the wants
of the poor in these respects, but there can be no doubt that
they have now been met. These conditions, these wants, were
absolute and unquestioned security for their money; despatch,
both as to depositing and withdrawing money; and secrecy
in the transactions in which they should engage.
With regard to Security. The Post Office Banks being
part of the machinery of Government itself, offer the highest
possible security,—the whole credit and solvency of the
British Government being guarantee for the perfect safety of
the deposits.[191]
As to Despatch. To the poorer classes, as much, and perhaps
more than to any others, time is money. Their time is not their
own, and now a few minutes may be stolen from the dinner-hour,
or an opportunity may be snatched as the labourer
passes to and from his work, to do that which before was no
ordinary or agreeable task to him. The unparalleled convenience
which attends the transaction of his business contributes
to this despatch and this saving of his time. Should
misfortune overtake him, he may withdraw the whole of his
deposits within two or three days; should his occupation
compel him, or his tastes incline him, to move frequently
about from place to place, he has only to carry his bank-book
about with him, and he may withdraw sums at his convenience
at any Money Order Office in the kingdom; and thus, though
he may have originally deposited his money at the Land's
End, he may draw it out when at John o'Groat's, or in some
remote nook of Ireland. This arrangement is, we understand,
taken advantage of to a large extent. The advantages offered
in the quick withdrawal of money is also a most important
feature. Enormous sums of money are wasted by the poor in
borrowing for an emergency; there can be no doubt that much
money has been and is wasted even in waiting till the time
arrives to get the money out of the ordinary Savings Bank.
If a poor person,
says an intelligent writer, wants 4l.
immediately, he would give 25 per cent. for it.
Few could
lose in having to wait a couple of days for their money.[192]
Then as to secrecy. None are more jealous of their little
savings being known than the poorer classes: a large number
of operatives have cogent reasons for secrecy, or, at any rate,
privacy. Indeed, it seems to have been agreed upon that, if
these classes cannot keep their savings quiet, many will not
save at all. The wage-receiving class are naturally and
properly averse to bringing their savings under the notice
of their masters or their masters' friends. Savings Bank
managers, even when not masters of workmen themselves, are
generally local dignitaries well known to such.[193] In the Postal
Banks there is, or need be, no occasion for particular observation;
the officials are required to conciliate confidence; to
observe the strictest secrecy; and it is our conviction, gathered
after no inconsiderable experience, that nowhere so much as in
Government offices is the work conducted without distinctions
of class.
Next to the advantages of which we have just spoken, is
that secured by the arrangement to undertake the receipt and
accumulation of small sums. A working man may now take
his shilling to the Savings Bank as readily as his master
may take his pounds, and the former will have no occasion to
feel that he is made the object of a charitable clause. In
seeking to bring a working man to put by a shilling in its
bank, the Government hopes to induce a habit of saving, and
may fairly expect to take his larger sums when saving habits
have been induced. Mr. Gladstone's decision to take sums as
low as a shilling was almost universally accepted as a wise
one. Mr. Gladstone had long interested himself in the condition
of the workman, and no one knew better than he that
the labouring classes are not suddenly masters of whole
pounds, and that, when they are in the act of accumulating it,
the temptations to break in upon the little stock laid by are
ever present, and are often too strong to resist.
So far the principles of this important measure are admirable
ones, scarcely admitting of question, almost beyond criticism:
they have rendered the action of the banks simple,
facile, all-comprehensive, and ubiquitous. The rate of interest
given is, however, perhaps on the border-land, as it were,
between unquestionable and questionable policy. The interest
given to depositors in Post Office Banks is at the rate of two
pounds ten shillings per cent. per annum, or one halfpenny
per pound per month. That this rate is satisfactory to a large
section of the people of this country, or that the other attractions
of the Post Office Banks amply counterbalance the
disadvantage of the low rate, is evident from the enormous
sum—twelve millions sterling—deposited in those banks
in little more than four years; at a time, too, when the old
Savings Banks, which are enabled to pay ten shillings per
cent. more than the others, have put forth their best efforts to
keep the business in their hands, when all kinds of allurements
have been held out to those who have surplus funds
to dispose of, and when the rate of interest ruling in the
Money-market has been, as it still is, exceptionally high.
These facts ought perhaps to close the case, and make the
interest rate, if not one of the recommendations of the
measure, at any rate a part of the scheme which does not
detract from its merits as a whole. As, however, this is a
point upon which some little soreness is felt and expressed
in different quarters, we may be excused for here urging a
consideration or two.
This soreness has originated, to no little extent, from the
consideration of the inequality of the rate allowed in the ordinary
Savings Banks and the Post Office Banks; this feeling
is kept up by the consideration of the fact, that that inequality
still exists and is likely to exist. The old Savings Banks
deposit their funds with Government, and are allowed interest
on their money at the rate of 3l. 5s. per cent.; the Post Office
Banks, of course, deposit their money with Government, and
are allowed interest at the rate of 2l. 10s. per cent. Out of
the fifteen shillings per cent. difference between the two rates,
an average of half of it is given by the old banks to their
depositors. Now it is well known that the average cost of
each transaction in the Post Office Banks is little more than
half the average cost of a transaction in the ordinary Savings
Banks. If Government can still afford to pay the old
Savings Banks the higher rate of interest, it might afford, at
the lowest computation, to give ten shillings per cent. more to
depositors in the Post Office Banks. If Government cannot
afford to pay the higher rate, it ought to discontinue its charity,
which, like all other charitable doles, excites discontent
amongst those who think they have, and really have, the right
de facto, if not de jure, to share it. That the rate should be
equalized in one way or the other admits, we think, of little
question; but that the Government should pay no more than
it can pay without loss admits of less.
Reverting to the consideration of the actual Post Office
Bank rate, it is perhaps unlikely that the small tradesmen
class—except where such persons lodge their money at the
Post Office merely for security—feels satisfied with it. Happily,
however, this is a class which does not need to be
considered, and which scarcely will be considered. The
Government offers no factitious allurements or inducements
to any class of the population; and if it did, would be
certain to confine the inducements to those portions of the
poorer classes who stand most in need of encouragement.
And as for the rest, the Post Office Banks do not in any way
interfere, as Mr. Gladstone has recently said, with the
labouring man's liberty of choice, or the liberty of choice
enjoyed by anybody else; if he thinks he can do better with
his money than by carrying it to the Government Savings
Bank, by all means let him do better with it.
A low rate of
interest is given for the principal deposited; but then that
principal is guarded with uncommon security, and can be
moved, added to, or withdrawn from, with the greatest possible
convenience. And these terms, theoretically and practically,
suit the industrious classes, whoever else they do not suit.
Practically they meet the wants and satisfy the demands of a
large section of depositors, or the banks would not have shown
such an extraordinary amount of success. Nor are we in want
of authorities who assumed, theoretically, that this would be so.
If Government give security,
said a shrewd witness before
the Savings Bank Committee of 1858, they should pay less
interest, on the principle that Chubb's locks cost more than
the ordinary ones.
Dr. Chalmers took great interest, as our readers must
already know, in Savings Banks. His argument was, that the
ready receipt and payment of small sums together with safe
custody was everything, and the rate of interest quite unimportant;
he more than once said, that the result of high
interest had been to swamp our Savings Banks as a national
system.
This question of interest was largely discussed in
Mr. Slaney's Committee of 1850. In that Committee Mr.
John Stuart Mill was asked whether perfect security or a
high rate of profit was most sought after by the industrious
classes; to which he replied: In the case of the working
classes no doubt security is the main object, and it is so
in the case of all whose savings are small.
In the same
Committee, Mr. J. M. Ludlow, an eminent barrister, gave it as
his opinion that the poorer a man is, the more important to
him is the safety of his investment, independently of the
question of profits;
and in answer to a similar question
addressed to him, the secretary of a working man's building
society said, that the certainty of security is the most
powerful inducement to investments among the working
population.
Thus, while it doubtless admits of question more than the
other details, no serious fault need be found with that clause
which provides the rate of interest to be given. Equalization
in the rate of interest of all Savings Banks connected with
the Government is far more necessary than that the standard
of the one should be raised to the standard of the other. The
days have gone by when any dole of charity should be held
out to working men as an inducement to save: it is more
than questionable whether those days should ever have
arrived. The working classes do not want charity at the
hands of the public; they long wanted security and reasonable
facilities: and when these were provided, as they have
been, they were willing that the rest should be left to themselves.
All interest given more than the money actually
produces or may fairly earn, is repugnant to them; or if it is
not, it ought to be made repugnant to them.
The deficiencies, if we may so call them, of the Post Office
Savings Bank system, to which we promised to allude in
closing this chapter, are those features which have been
inherited from the parent system, and consist, of restrictions
which, we think, are now as unnecessary and undesirable as
they are hampering and vexatious. By section 14 of the
Post Office Savings Bank bill it was ordered that All the
provisions of the Acts now in force relating to Savings Banks
as to matters for which no other provision is made by this
Act, shall be deemed applicable to this Act so far as the same
are not repugnant thereto.
Under this legislation all the
restrictions which were thought—especially during the earlier
history of Savings Banks—to be necessary to confine these
institutions to the poorer classes, have been continued down
to the present time. The principal regulations to which we
refer are, the Declaration which is required from any one opening
an account, and the limitation of deposits to 30l. in any
one year, and 150l. in all; and that when deposit and interest
together reach 200l. all further interest shall cease. The reader
who may have followed us through our account will be aware
of the reasons which actuated the Legislature in making these
arrangements.[194] These reasons do not now obtain. No steps
are taken (and we have never heard that it is intended ever
to take such steps) to confine the benefits of the Post Office
Banks to the labouring classes. Why, therefore, these classes,
or any other class allowed to deposit in these banks, should be
restricted to any amount—or, at any rate, such a small one—it
is difficult to understand. To the poor this restriction forms
a barrier to saving habits; with regard to any other class, the
amount might be as unlimited as it is in the Funds. As a set-off
against the unremunerative character, to say the least, of
small deposits, no limit should be placed on large ones. It is
obvious, that the larger the sums invested the greater will be
the success and the profits of the scheme, the more remote
will be any prospect of loss, and the more certain will be the
creation of a permanent marketable stock of Two and a Half
Per Cents.
We are glad to find that this restriction has not escaped the
notice of many who are entitled to be heard on the subject.
The Rev. G. H. Hamilton, who made, perhaps, the earliest
modern proposals for Post Office Banks, suggested that the
limit should be from one shilling to ten pounds per day;
and since the passing of the Act he has made exertions,
hitherto without success, to get the limitation extended to
include those sums. Mr. Bullar, also equally entitled to
respectful attention, has likewise made subsequent proposals
having in view, to some extent, the granting of facilities for
investing larger sums.
It is interesting to find that the Post Office Savings Bank
system has just been introduced into our Australian colonies
and not a little curious and instructive to find that some of
the provisions go much further than we have yet ventured at
home. The main feature of the Post Office Statute, 1865,
is an echo of the English Act, but in several of its provisions
its scope far exceeds the latter in liberality. No declaration
is needed; instead of 30l. in any one year, the colonial
depositor in Victoria is only debarred from exceeding 50l. in a
fortnight, and the interest given, which is at the rate of four per
cent., is not withheld to any deposited amount under 1,000l.
Liberal as are the colonial authorities in Victoria, those at
Queensland far surpass them. In the Post Office Banks at
Queensland there is no limit whatever to the amount which
may be deposited; interest is allowed at the rate of five per
cent.; and this rate of interest is paid on all deposits without
limitation of any sort. Making all due allowances with respect
to the relative position of our colonial possessions at
the antipodes and the mother country, it seems clear that the
former have advantages over us in the matter of their Government
Banks, and we commend the example of the Victorian
Legislature to our own, and trust that the only marked defect
in our Act may soon be remedied.
ON GOVERNMENT INSURANCE AND GOVERNMENT LIFE
ANNUITIES.
It is difficult to estimate too highly the importance of the tendency of the
people to save their earnings, or the duty of removing every obstacle and
affording every facility to its operation. It is a matter of deep interest to the
State; for the man who has invested a portion of his earnings in securities,—to
the permanence and safety of which the peace and good order of society
are essential,—must be a tranquil and conservative citizen.
—W. Rathbone
Greg.
"Ah! who can tell how many a soul sublime
Has felt the influence of malignant star,
And waged with fortune an eternal war!
Checked by the scoff of pride and envy's frown,
Or poverty's unconquerable bar,
In life's low vale remote, has pined alone
And dropt into the grave unpitied and unknown."—Beattie.
Proposals for a Government Insurance Office, like those
for National Savings Banks, are not, as many have been led
to think, the product of the thought of the last few years.
In 1807, for example, Mr. Whitbread, in bringing forward his
Bill for Poor Law Reform, earnestly advocated, that, together
with his plan for the investing of their savings, some means
should be provided for the poorer classes by which they might
insure their lives under the responsibility of Government.
Both as regards his plan of Savings Banks and his plan for
Government Insurance, Mr. Whitbread was fully half a century
before his age. The different schemes for the purchase
of Government Annuities and the Acts under which they
were carried out are already familiar to the reader. The Act
of 1834 we may repeat, however, was the beginning of
legislation on the subject. The principal emendation[195] in the
Act 16 and 17 Victoria, c. 45, passed in 1853, was supposed
to be in the introduction of a clause providing that a person
buying a Government Annuity could also insure the payment
of a sum of money at death. Notwithstanding this amendment,
the Act was not nearly so productive of good as might
have been expected. In the matter of Insurances effected
under the arrangements of 1853, the Act has been for all
practical purposes quite inoperative; and from 1834 to 1864
the whole of the annual payments in respect to Annuities
did not reach 200,000l. In the latter year 6,500 annuities
were in force, the amount represented by this number being
140,000l. This is, in brief, an account of how matters stood
in 1864; and it is little wonder that it should now begin to
be felt that some fresh steps were required; that there should
be an entirely new organization for the work; and the abolition
of all unnecessary restrictions, especially that which
required that a person must deal perforce both in insurances
and annuities. The institution of Post Office Banks, which
had been rendered possible by the superior organization consequent
on the introduction of postage reform, had already
demonstrated how the Post Office machinery could reach every
part of the country, and how well it could bear the additional
weight put upon it. Nor was this all. From the experience
of two or three years, those who were best able to judge of the
burden this machinery could bear without difficulty were
those who now proposed to add fresh wheels and contrivances
to be worked by the already existing motive power.
A few words will suffice to show how the further proposals
which we have to describe in this chapter were originated.
Government Annuities at this time were, under the authority
of an Act spoken of in a previous chapter, allowed to be
granted either directly through the National Debt Office or
through the medium of the ordinary Savings Banks. To a
certain extent many of the Savings Banks had availed themselves
of this Act, and granted both Immediate and Deferred
Annuities. Among the banks which, as we have already
shown, transferred their business to the Post Office Savings
Banks soon after the establishment of the latter, were some
which had done a little of this business; the question thereupon
arose whether the Post Office Banks should not take up
the duty which devolved on the old banks, and receive the
payments for the Annuities as they fell due. The result of
this was, that the gentlemen who in the Post Office had organized
and so far directed the machinery of the Postal Banks
not only proposed to carry on the business which others had
in this way begun, but they advised that the operations themselves
should be extended, and that this extension would be a
legitimate offshoot of their original scheme. Mr. Scudamore
and Mr. Chetwynd, the gentlemen in question, held that if the
Post Office Banks were to become agencies for the purchase
and payment of Annuities, there would be a considerable
increase in the number purchased. They then proceeded to
sketch the outline of a plan on which it would be possible to
undertake the work, and showed how the course of the business
in respect to the Annuities would be easy, simple, and
comparatively inexpensive. The most important feature of the
plan was, that the purchase and payment on account of Government
Annuities should have no immediate connexion
with the Post Office Savings Banks; and that the purchasers
of the former should not necessarily be depositors in the latter.
With regard to Insurances, the following sentence occurs in
a report which, referring to Mr. Whitbread's proposals, the
same gentlemen presented. We believe that the time may
come when the propriety of attaching to the Post Office
Savings Banks a scheme of Life Assurance will again be
seriously considered by the Legislature. The frequent appearance
and disappearance of bubble insurance companies, which
have been productive of very disastrous consequences during
the last few years, may probably induce a serious consideration
of the subject at no very distant date.
When the Commissioners of the National Debt came to
speak of the former of these proposals, they reported that in
their judgment, the greater the extent to which the system of
annuities can be carried, the greater will be the amount of
benefit conferred on that class of the community on whose
behalf and for whose security it was the pleasure of Parliament
to authorize the grant of such Annuities through Savings
Banks and by this department. The machinery of the Post
Office will give the opportunity to Lord Stanley largely to
extend these benefits, and the Commissioners will gladly unite
with him in doing so.
On the 11th of February, 1864, Mr. Gladstone took up this
further scheme—the matter of Insurances and Annuities
having been combined in the plan of operations prepared,
during the interval. He then moved for leave to bring in a
Bill to amend the laws relating to the purchase of Government
Annuities through the medium of Savings Banks.
The Chancellor of the Exchequer briefly explained his object
in bringing about the new measure. He wished, without any
unnecessary interference with private establishments, to assist
in offering increased facilities for the extension of frugal
habits among the industrial population. This had been the
principle upon which Postal Banks had been founded, and
now this new scheme might be regarded as an extension of
the principle. Mr. Gladstone wished, under the altered
circumstances of the times and the improved machinery at
command, to further other measures intimately connected in
their ultimate object with the Savings Banks themselves.
Sums, he explained, could at present be received both for the
purchase of annuities, and even for the granting of life
insurance policies, but the arrangements were hampered by
restrictions so as to render the law almost inoperative. Thus,
Deferred Annuities could only be purchased in large amounts,
and Insurances could only be effected where the persons had
previously purchased these Annuities. He thought it quite
possible to alter the system so that small sums at frequent
intervals might be received; and not only so, but the restriction
as to effecting an Insurance, which was not only inconvenient,
but unreasonable in itself, might be done away with.
The person who wanted an Insurance was not the most likely
person to want an Annuity also; they were, indeed, generally
people of different classes, or at any rate different habits of
mind. The Chancellor of the Exchequer, after stating that he
would give these increased facilities and remove this unnecessary
restriction, obtained leave to proceed with the measure.[196]
His simple statement of the scheme was not long in securing
ample criticism; some of it was friendly, much more of it
adverse. Then a certain class of Insurance Offices and the
principal Friendly Society organizations believing their institutions
menaced, set to work to get up an agitation. The
measure was represented by one class of persons as embodying
the very questionable principle of Government interference
with private enterprise, and taking as it were the bread out of
the mouth of institutions specially got up for such purposes.
Others pretended to criticize the proposals disinterestedly;
they dwelt on the difficulty the Post Office would find in
attempting to do the work, and that, if officers of higher
attainments were obtained, they would require proportionately
higher remuneration. Savings Bank deposits might be managed,
though that was not thought likely three years before; but how
all the details of Life Insurance proposals and the intricate
calculations necessary to the Annuities business could be got
through, was above comprehension! It was represented by
leading articles in influential papers that there would be but
a poor security against fraud; little supervision, and probably
that little would not be exerted; and everybody would conspire
to defraud the Government. As it is intended,
said one
respectable organ, to assure the lives of the poorer classes
chiefly, all payers of poor-rates and officers of the Poor Law
Unions would have a bias, to say the least, in getting those
persons assured who would otherwise be likely to leave their
families a burden upon the parochial funds.
It cannot be
denied that a few isolated instances of bad faith have occurred
among insurance companies, yet as a class there is none to
excel them for high and honourable dealing, and there is no
pretence for interfering with their operations or invading their
privileges. Why should not Government open a drapery or a
dry-goods store?
This latter effusion, which appeared in a
letter to the Times, was prominently printed, and headed,
A New Instance of Proposed Paternal Legislation.
[197] A
more organized opposition soon, however, showed its face.
The actuaries of some of the Insurance Companies met and
discussed the measure, and came to the conclusion that, as it
might only be the thin end of the wedge, the measure ought
to be opposed. The smaller Insurance Companies eagerly
fell in with this conclusion. During March petitions were
got up in great numbers from Insurance Companies and
Benefit Societies, and when they were presented to the
House of Commons several voices were raised in support of
their prayer.
On the 4th of March, Mr. Gladstone moved the committal
of the bill. Mr. Turner, Mr. Powell, Mr. T. Hankey, Sir
Minto Farquhar, and several other members, protested against
going on with the bill without an opportunity for full discussion,
and most of them expressing great dissatisfaction
with the Government proposals relating to Life Insurance,
the Chancellor endeavoured to separate the bill into two
parts, to pass that having reference to Annuities, and to
defer the consideration of the clauses relating to Insurances
to a subsequent period. The debate was adjourned.
Three days afterwards Mr. Gladstone made a long and
elaborate speech in defence of his proposals, and addressed
himself with great earnestness and power to the task of
disabusing the public mind of the many erroneous impressions
which within a very short time had taken possession
of it. The history of his proposals was a short and simple
one. In the autumn of the previous year the Registrar of
Friendly Societies, in his Report for 1862, had recorded an
unusual number of very gross abuses and violations of trust
on the part of those Societies. The Report was in fact full
of a multitude of complaints from persons in all parts of the
country, who called for redress. So important had the facts
been regarded that at least two important journals[198] had
published several articles calling attention to the scandalous
condition of these institutions. It had been suggested to
him (Mr. Gladstone) that the subject of small life assurances,
having already received in principle the sanction of Parliament,
ought, under these circumstances, and the fact of an
excellent machinery in connexion with the Post Office being
ready for use, to be again considered by the Government.
He agreed with this view of the case, and had now proposed
to take action upon it. It is almost impossible to give an
account in detail of the speech which followed; next to
the Budget speech, it was the longest which Mr. Gladstone
made in the session of 1864. We can, however, and ought
to describe its principal points. Mr. Gladstone observed that
no one considered Savings Banks, Annuities, or Insurances
to be, abstractedly, matters desirable for the Government to
deal with. But the Post Office Savings Banks which that
House had legalized, though interfering distinctly with other
interests, had produced great and lasting results; so likewise
had the Factory Acts, though they likewise had greatly interfered
with the liberty of private action. This bill, however,
prohibited nothing whatever. I do not deny that it is Government
interference, or that it requires justification or apology;
but I do deny that we are to be frightened and terrified by
clamours respecting centralization, or respecting undue assumptions
of power by the Executive.
All that is requisite in such
a case is to show that what the Government proposes it can do
safely, and likewise that what it proposes it can do justly.
Well, this bill, which was represented as entirely novel in principle,
simply offered to such members of the community as chose
to avail themselves thereof, certain facilities for self-help. It
had not grown out of any consideration of the case of Assurance
Societies, but from a consideration of Friendly Societies,
and of the wholesale deception, fraud, and swindling perpetrated
upon a helpless and defenceless portion of the community.
Mr. Gladstone then referred to some deputations of the
largest Friendly Societies that had waited upon him, and
begged him not to interfere with private trade and private
enterprise;
and answered that these very societies were virtually
and substantially subsidized by the Government. After showing
that they were exempted from different duties, and received,
like Savings Banks, more interest from the money invested
with Government than the money realized, Mr. Gladstone
held that nothing could be more plain than that Parliament
was justified in looking to their circumstances. The
country was overrun with them, and it was necessary to
inquire if they were safe. Instead of finding them safe, he
found them promising to pay amounts of interest which it was
impossible to pay under fair and honest management. Such
were the reasons which had induced him to interfere. He
had, however, chosen a very mild form of intervention, and, he
thought, a proper time for the remedy. The remedy, indeed,
in this case was precisely analogous to that adopted in the
case of the Post Office Banks.
In the case of the Post Office Savings Banks,
said the right hon. gentleman,
we had to deal with Loan Societies offering the most attractive terms
to the public, promising them a rate of interest which could not possibly be
paid under any sound and honest management, and then ending in disappointment
or ruin. We did not attempt the foolish task of prescribing laws by
which all Loan Societies should be regulated, and under which alone the
poorer classes of the community should be permitted to lend their money.
That was utterly impossible. You could not possibly defend the poor man
against the abuses and dangers into which he might choose to run head foremost
with his eyes open; but what you did was this:—you said, 'It is but
just to them, and it is expedient and politic in the highest sense, in discharge
of the most sacred duty of the Legislature, that we should give to the poor
man, to the owner of small savings, the advantage of a scheme which will
possess no meretricious attractions, which will not promise a high rate of
interest—on the contrary, the rate will be a low one—but which will offer an
absolutely certain security.' That is precisely the basis of the scheme now
before the House.
After describing the success of the Postal Banks, and speaking
of those who had taken the principal part in carrying the
measure into practical operation, and arguing from their success,
their ability, and their judgment, that the same persons
were entitled to the confidence of Parliament, Mr. Gladstone
went on to rebut many of the objections and arguments which
had been advanced against the plan. He showed that the
Post Office could, equally with the great majority of existing
Insurance Societies, attend to the selection of good lives; that
the attitude of the leading Societies in regard to his proposals
was either that of neutrality or favour. He said that the
smaller Societies had protested loud enough; but, he asked,
what cause had they to be afraid of Government competition?
We cannot possibly offer such terms as they can; on the
contrary, we must exact such conditions as few private
Societies ask.
He offered, however, perfect security; and if
that was a thing valued by the people, there was no reason
why it should be withheld. Besides, however, this perfect
security, Mr. Gladstone pointed to two other considerable advantages
which the Government would offer, viz., more favourable
terms on the dropping in of policies, and facilities for the
migratory portion of the population, similar to those we have
seen depositors possess in the case of the Post Office Banks.
After speaking of the steps which would have to be taken
to guard the Government against loss, and to make the measure
entirely self-supporting; after referring to what he called
the fugitive character
of many insurance companies, and
eloquently denouncing their proceedings; to the failure of
numerous Friendly Societies,[199] and the ruin and disappointment
entailed on thousands thereby, Mr. Gladstone brought
his long and remarkable speech to a conclusion by summing
up as follows:[200]—
I have endeavoured to prove that Parliament by legislation is seriously
compromised and responsible for the present state of things, and is bound to
do what it believes to be best to mitigate the evils of that state of things. I
have endeavoured to show that the plan which I propose, if it does compete
with sound institutions, must so compete with them at a disadvantage from
the essential conditions under which it is right and proper we must work. I
have endeavoured to show that the wide field of the labouring classes is not
occupied by sound institutions—nay, that it is not fully occupied even by
sound and unsound institutions, such is the enormous breadth of the subject.
I have shown, I think, that the present condition of many of these Friendly
Societies—indeed, I might go further, and, speaking generally, might say that
the present condition of these Societies is more or less unsatisfactory. Some
of them we cannot call merely unsatisfactory, but must term them either
rotten or fraudulent. It is impossible for the State to assume the direction
and regulation of these Societies so as to secure in the management of their
affairs a safe method of assurance; and what we propose is, I believe, the
most prudent, the safest, and the most satisfactory mode of proceeding that
can be adopted. I make my appeal not to any one class, or to any party. I
forget that I am a member of the Government, except so far as regards my
responsibility as such. I recollect the sacred trust we have in hand, and I
entreat honourable members to keep in view the serious nature of that trust,
the importance of the object, and the consequences involved; and I am certain
they will not be prevented by any sentiment of political or party feeling, or
of hostility to the Government, from giving their careful consideration to this
question, and from determining in their own minds and hearts how the British
Legislature can best acquit itself of this important part of its obligations to
the mass of the British people.
Mr. Sheridan, after replying vehemently to what he called
a personal attack on himself on the part of the Chancellor of
the Exchequer when dealing with unsound societies, disputed
the need for the measure no less than the principle upon which
it was founded. As the spokesman of Insurance Offices and
Friendly Societies, Mr. Sheridan further contended that the
Post Office would never be able to manage all the details of
the business, and that, even if it did, the Government must
eventually be losers. They might shut their eyes for a time,
said the member for Dudley, but Government would ultimately
have to come to that House with shame, and with
something like humiliation, to confess that their experiment
in commerce had failed, and that the result had been to saddle
the shareholders with a loss—those shareholders being the
already overburdened taxpayers of the country.
Lord Stanley avowed his approval of the principles of the
bill. He thought it a great experiment, but an experiment
which might very possibly result in a reduction of pauperism.
He urged the fullest discussion; said it would do the bill no
harm, but might on the contrary tend to perfect its provisions.
The speech of Mr. Gladstone too, he thought, was a reason
why the matter should not be hurried. Mr. Gladstone had
made statements which, however true they might be—and
I am afraid that there is a good deal of truth in them—I wish
I did not think so,
—might require to be answered, and to
give an opportunity to answer them would only be fair play.
After pointing out one or two defects in the provisions, Lord
Stanley promised his valuable aid by saying, that he should be
prepared to go into Committee on the bill with a very sincere
hope that it would pass, and that they might find it, or make
it, a workable scheme. Mr. Hibbert and Mr. Roebuck both
warned the House against suffering a Constitutional Government
to be converted into what was termed a Paternal
Government.
In a characteristic speech, the latter gentleman
held that whatever concerned the individual was best
left to be done by the individual himself; that the Government
was sure to fail, as it had failed before, in interfering in
matters of this kind; and that the effect of such measures
would be to make the people a set of helpless imbeciles totally
incapable of attending to their own interests. Mr. Newdegate
and Mr. W. E. Forster approved the measure, but urged full
consideration of it. Mr. Bovill spoke very strongly in favour.
He believed, from the facts which had come within his own
knowledge and had been elicited in courts of law, that Mr.
Gladstone had rather understated than overstated the delinquencies
of Friendly Societies and Insurances Companies.
One of the effects of the Chancellor's speech, he thought,
would be that a cloud of error and prejudice which had been
raised against the bill would be dispelled. On the other hand,
Sir Minto Farquhar, Mr. Ayrton, Mr. Urquhart, Mr. Henley,
Mr. Baines and others, either expressed strong objections to
the bill as a whole, or else took exceptions to some of its
provisions. The debate was then adjourned.
During the interval, and when the bill was under discussion
in the House, a great meeting of the working classes was
called in London, and held in Exeter Hall, Mr. Ayrton presiding.
The object of the gathering was to petition against
the measure; but independent working men—by which is
meant those who had no interested motives in opposing the
scheme—mustered so strongly on the other side, that the
Chairman could not decide on which side the majority lay.
There were other public meetings held, some in favour, others
in opposition; and although hundreds of petitions were presented
from members of Friendly Societies, most of which were
got up on one form, there were many others of a far more
important character emanating from Corporations and Boards
of Guardians, who expressed a hope that the House would not
withhold so great a boon to the working classes.
On the 17th of March, Sir Minto Farquhar, in a long speech,
moved that the bill should be referred to a Select Committee.
Mr. Horsfall seconded the motion. Both members replied to
Mr. Gladstone's attack on Friendly Societies, though with
little effect. Several members warmly supported Mr. Gladstone,
and thought no cause had been shown for delay. Mr.
Estcourt, while approving the principles of the measure, saw
great difficulties about it, and thought it ought to be referred
to a Committee. Mr. Göschen, in an able speech, which showed
that he had mastered the subject in all its bearings, answered
the objections which had been raised to the bill, and said that
though he represented in that House more insurance managers
and directors than any other member, he was not afraid to
say that the opposition to the bill was entirely owing to the
efforts of those who fancied it would deal a blow at their
private interests. He was convinced of the wisdom and policy
of the measure, which was well worthy of the character of the
right honourable gentleman who had proposed it, and which
would without doubt leave a mark on the history of the
session. The debate was again adjourned.
A month afterwards the debate was resumed by Mr. Ayrton
in a very long speech, during which he attacked the Post
Office Savings Bank system; stated that just when they were
most prosperous, 1859 and 1860, Government had brought
out their scheme, which was working and would continue to
work with telling effect upon the old banks. So with the present
proposals; they would interfere with safe private agencies.
The Government would pursue a much better plan,
continued
Mr. Ayrton, if they were to encourage the establishment
of associations among the people themselves; for it was
through the exercise of local administration that a nation
became most fitted for the enjoyment of political rights.
In
place of this, they proposed to place a stipendiary of the
Crown in every parish and hamlet to institute an examination
into the private affairs of individuals.
Mr. Hubbard thought
the proposed measure one which they ought and might very
well entertain. He looked upon it simply as an extension of
the principle of the Post Office Savings Banks, which had now
received the sanction of the entire country.
Mr. Gladstone then replied. After referring to some of the
objections that had been made to the measure itself, he said he
would not object to submit it to a Select Committee; but he
could not consent to refer the whole subject-matter to a Committee,
as that would indefinitely postpone legislation on it.
He believed that the public were growing more and more in
favour of the plan, and that this feeling would be increased as
its objects and provisions became better understood. He also
stated that, during his long public life, he himself had never
received so many letters as he had upon this measure from all
classes of the community, and all expressing approval and
gratitude for it. A few days afterwards a Committee was
appointed, to consist of Mr. Gladstone, Mr. S. Estcourt, Mr. M.
Gibson, Mr. Henley, Sir M. Farquhar, Sir S. Northcote, Mr.
Horsfall, Mr. Göschen, Mr. Charles Turner, Mr. H. Herbert,
Mr. Hubbard, Mr. Sheridan, Mr. Ayrton, Mr. Hodgkinson, and
Mr. Paget.[201] After an ineffectual attempt to enlarge the scope
of the inquiry, which partook of the nature almost of a party
struggle,—104 members voting with Sir M. Farquhar, and 127
with the Government—the Committee commenced its sittings.
The bill as amended by the Committee was passed on the
20th of June. On this occasion many of its members described
the benefit which the bill had received from the inquiry, and
none now complained of the limited nature of that inquiry.
It originally consisted of three clauses; it came out with
seventeen, sixteen of which were new. It provided that no
policy of Life Assurance should be granted for more than 100l.;
and, not to interfere unnecessarily with Friendly Societies, that
none should be granted for less than 20l. Mr. Estcourt, especially,
warmly espoused the measure. No one now more
desired to see it passed than he did. If a master or employer
wished to make a provision by way of annuity for a faithful
servant in his old age, he could do so with perfect security
under the bill.
He also thought, that if the working classes
of this country did not derive great advantage from the measure,
it would be their own fault.
Sir M. Farquhar was
equally hearty in his praise of the scheme, and speaking of
Mr. Gladstone said, The country had every reason to thank
him.
Mr. Gladstone observed, that it was a matter of great
satisfaction to him that as the bill entered the House in peace
and quietness, so it was likely to quit it with general expressions
of good will.
The bill was carried through the Lords under the charge of
Lord Stanley of Alderley, and, passing through its several
stages without discussion, received the Royal Assent July 14,
1864, and arrangements were ordered to be made to carry its
various clauses into practical operation.
During the long recess the Tables were prepared under the
eye of the Commissioners for the Reduction of the National
Debt; and, working in harmony with the Commissioners and
with a common purpose, the Post Office authorities at the same
time arranged the Regulations under which, and the organization
by means of which, the whole of the plans should be
carried out. The Regulations themselves were, we understand,
arranged under the immediate superintendence of Mr. Scudamore,
one of the two gentlemen who organized the Post Office
Banks; the machinery chosen for the purpose was that of the
Receiver and Accountant-General's department. At the
commencement of the session of 1865 both the Tables and
the Regulations were laid before Parliament and received the
proper sanction. The Tables, like all ordinary Insurance
Tables, show the various kinds of benefit which Government
can now offer to the community, and the price at which these
benefits may be purchased. The Regulations, on the other
hand, describe the means to be used to obtain these benefits,
and give in full the conditions under which any kind of
purchase may be made.[202]
The principal features of the new measures taken together
may be stated, simply, to consist in a person now being able
to insure his life for any sum between 20l. and 100l.; that
he does this on Government security; that he may do it
without buying an annuity; that he may pay his premiums
of insurance in almost any amount, and at almost any period
that will best suit his convenience; and lastly, that, attended
with the same facilities and advantages which only an
institution like the Post Office can offer, a person may now
purchase a Government Annuity, either immediate or deferred,
of not more than 50l. a year, either with or without the
proviso of money being returnable
in the event of death
before the annuity falls due.
* * * * *
It only remains for us to seek to draw the attention of our
readers to the special inducements which the Government
now holds out to the practice of a wise economy and frugality,
prefacing our account with the remark that a careful study
of the Regulations
from which we glean it, will well repay
any time or thought which the masters of workmen, as well
as working men themselves, may give to them.
And first as to Insurances. In the course of a short period,—for
the offices for the transaction of both kinds of business
are being opened rapidly,—every one of the three thousand
and odd money-order offices of the United Kingdom, embracing,
as is well known, every large village as well as the
numerous receiving offices of our large towns, will be formed
into an Insurance Agency. When this is the case,—and to a
great extent it is so already,—any person, whether male or
female, and both if man and wife, of not less than sixteen
years of age and not more than sixty, will be able to propose
for an insurance on his or her life in a sum of not less than
20l. and not more than 100l. The steps which a person proposing
to insure must take in those places already on the
list, and the steps which must universally be taken when the
whole of the agencies are arranged, may be easily comprehended,
and need but few words. If he wants to insure on
the security of Government, he must go to the nearest Post
Office and apply for the proper printed form. With this form,
to which is attached every necessary instruction for his
guidance, almost all his trouble begins and ends. It is true
that the questions propounded are many, and that they are
most minute, and may be thought by the poorer classes who
are unused to this sort of thing unnecessarily precise and
tantalizing. Any one, however, familiar with the routine of
the ordinary Insurance Societies, will not fail to see that the
Government are scarcely more rigid than they are, and that, if
there are more questions to be answered, it is simply because
of the varied modes and unique facilities now first offered to
the choice of the insurer. The insurer must fill up this form,
and must further produce certificates of age or baptism, and
furnish the names and addresses of two householders who
know him and can speak as to his identity. What follows,
and indeed a great part of the foregoing, is simply the course
followed by all well-managed Insurance Offices in the kingdom.
The proposal is forwarded to London, the referees are corresponded
with, and, if all seems right and straightforward, the
person seeking an insurance policy is desired to present
himself before the appointed medical referee in order to go
through the indispensable examination. The doctor examines
the proposer, questions him to the extent he thinks proper,
takes down his answers, and then gets the person to sign his
name to what may be called his deposition. If nothing
unsatisfactory occurs, the policy is made out in the way the
proposer originally desired.
The contract being duly drawn up, the insurer may pay his
recurring premiums at any of the Offices which have been
opened, or which may be opened, as shall at any time be
most convenient to him. As in the case of Savings Bank
depositors, the life insurer will be furnished with a Premium
Receipt-book,
and whenever he makes a payment he must
produce this book, when the clerk or postmaster will enter
the amount, sign his name in the way of receipt for the payment,
and stamp the date of the transaction and the place
of payment with the ordinary official dated stamp. With
regard to the time at which the insured must pay his premiums
as agreed upon, whether yearly, quarterly, monthly, or
fortnightly, the arrangements are necessarily strict; but every
means will be, or at least ought to be taken, to make him
understand his agreement. If he should fail, say through
forgetfulness, to make his payment, he will not be hardly
dealt with; for, on an application that the contract may be
renewed and the production of evidence of good health, the
Postmaster-General will renew the contract, only fining the
person in the sum of four shillings if he is insured for 60l.,
and eight shillings if he is insured for more than that sum.
Once more: should the insured wish to surrender his policy,
he will be allowed to do so after the expiration of five years
from the date of it, and will receive at least one-third of all
the sums he may have paid during the time he has held it.
The authorities have not as yet, we believe, stated exactly
how much they will be able to offer for surrender policies;
but this is scarcely a matter which can be considered pressing,
as no policy will acquire a surrender value till 1870.
Then there are the kinds of payment under which a person
may now purchase the benefits of Life Insurance through the
medium of the Post Office. And certainly the most important
arrangement, associated as it is with several novel
features, is that of paying down the premium in one sum. Not
that this need be the whole transaction of a proposed insurer.
He may make his policy, if we may employ such a term,
cumulative. Thus, if a person doubts whether he will be
able to pay regular premiums for a number of years, he may
perhaps be able to effect a small insurance, say of the lowest
sum allowable, 20l., by the payment of a single premium.
He may afterwards find himself able at subsequent periods to
effect another small insurance,—and this he will be allowed
to do, even if it only be to the extent of five pounds,—and
may thus, whenever he has the money to spare, at regular or
irregular intervals, go on increasing the original amount in
transactions which, while complete in themselves, continually
augment the sum to be received at death.[203] We are not
informed in Plain Rules whether the insurer will in each
case have to pass a medical examination, or produce certificates
of health; but there can scarcely be a doubt that he
will be required to do one or the other. The proof of age,
however, and other particulars which the insurer furnished in
the first instance, will doubtless suffice for all subsequent
negotiations.
The principal objection to insurance effected by a single
payment, at any rate among the poorer classes, is apparent.
It is not that they can make better use of their money; as a
security against an early death or reduced circumstances no
better investment could be found for a working man who is
in possession of a sufficient sum with no pressing need for it.
The real difficulty is the one of keeping his savings until
they amount to a sum sufficient for any object of this kind.
Here, however, the institution of Post Office Savings Banks
may be of service; and this has not been lost sight of by the
authorities, who offer them as a medium for the collection and
keeping of such fugitive sums as may be most easily spared
with a view to taking a Life Insurance premium. Thus, all a
workman has to do is to put his savings into the Post Office
Banks in such amounts and at such times as will best suit
him; and when he has saved a sufficient sum for the purpose,
the Postmaster-General will direct that the transfer of the
amount shall be made from the Bank to the Insurance Office
without the necessity of the depositor seeing the money. Of
the general plan of paying the premium in one sum we cannot
speak too highly. Those whose wages or salaries are not
fixed and regular, or those who are liable to be thrown out of
work—and few are not—could not do better than employ their
savings in securing such a provision; and the younger the
better, seeing how young and old are alike taken in the grip
of the Destroyer. Not the least of the advantages following
from this kind of insurance are the absolute freedom from all
risk of lapses, from either carelessness or more serious causes,
and the fact that the policies on this principle will have the
highest surrender value.
Should the person wishing to insure not like, or liking
not be able, to take out a policy after this fashion, he may
choose one of several other methods. If he thinks he can
more conveniently pay a small premium every year, he is at
liberty to do this in different ways. If at thirty years of age
he will pay a pound a year, he may secure for his friends forty-three
pounds at his death; if he prefers to pay two shillings
a month, he will secure forty-six pounds; and for an annual
payment of two pounds six and sevenpence, he may secure
payment of 100l. to his nearest relatives, immediately on proof
of death. Again, if a person thinks, as many do think, that
his payments should cease at a certain age, he may insure on
that principle. Commencing at thirty years of age, and
paying two pounds thirteen and tenpence a year till he is
sixty, he may secure 100l.; by paying two shillings a month,
between the ages of thirty and sixty, he may effect an insurance
of forty pounds at death. It will be understood that
these are only a few specimens of the working of these Tables,
given more especially to show the characteristic features of
the plan. By consulting the Tables themselves, any person
may plainly see how it will affect him to insure by any of
the above methods; and he may calculate his payments
either at the times we have given, or at other times, such
as half-yearly, quarterly, fortnightly, or weekly, with great
nicety.
We will only refer at any length to another very important
provision made for the carrying out of this useful
and important public measure. It has to do, as indeed almost
all the provisions have, to a great extent, with the wants and
necessities of working men, especially such as must pay
their premiums by small and frequent instalments. Seeing
that working men are proverbially slow to look the distant
future in the face, we urge, in the strongest terms, the
claims of the provision in question on the attention and
study of all large employers of labour. In no way could
masters better fulfil the heavy moral responsibilities under
which they lie to the less educated portions of society whose
energies they employ, than by co-operating with them in the
way of advice and assistance, in such a plan as that which
remains to be described. The arrangement in question has
doubtless been suggested by a scheme which, for several
years, has been in full and excellent working order in the
Post Office itself. We think it was in 1859 that Mr.
Scudamore of the Post Office devised a plan, which was
approved by the then Postmaster-General, by means of
which and the concurrence of a large number of first-class
Insurance Companies a considerable number of Post Office
employés were enabled to make suitable provision for their
families. In connexion with this plan, substantial assistance
was given, to those who took this rational and necessary step,
out of the Void Money-order Account. Under the arrangements
then made, the Insurance Companies give the required
policies to any officer of the Post Office, without any direct
or preliminary payment, looking to the Post Office authorities
entirely for the collection of the premiums as they become
due; the latter, on their part, deducting the payments at
such times as are agreed upon from the regular salary or
wages of the assured persons. Thousands of Post Office
officials, from the highest to the lowest grades, have insured
their lives on this principle; they are not only assisted to
do so, but secured from all risk of default, while the deductions
are so small as to be scarcely perceptible.[204] The
success of the plan has led to its partial adoption by the
proprietors of large private mercantile establishments, where it
works well; and this again has doubtless led to the extension
of the plan, by means of the Act and the machinery we are
considering.
It is now perfectly easy for any of the other Government
departments, for railway companies, merchants, manufacturers,
and other large employers of labour, to make arrangements
under the 32d clause of the Regulations, to do for their
workmen (and we are at a loss to understand why this
has not been done before) what the Post Office authorities
have done for their servants. The clause to which we
have alluded provides, that if boards of management or
masters of workmen will undertake to collect the sums
by means of deductions from the wages of their officers
or servants, with a view to paying the premiums over
to the officers of the Postmaster-General, then the latter
shall, if he think fit, make arrangements with the said
employers for such purpose, and shall constitute the departments,
offices, or places of business of such employers,
offices for the receipt of proposals, and for the receipt of
premiums and instalments; and shall pay to such employers
such remuneration for the work done by them, or their
officers or servants, as shall be agreed upon between him
and them.
Surely, with all such facilities, and with such inducements
to the workman to make provision for those who are nearest
and dearest to him,—this provision to be payable at once, on the
security of the nation, when he is no longer able to contribute
to their support,—little persuasion should be needed to make
him do that which is now one of the first duties of a man
who has a wife or family dependent upon his exertions. It
is only too true that workmen and the less educated portions
of the lower middle classes may be blinded and cajoled into
believing that those institutions will serve their interests best
which, depending upon all kinds of meretricious attractions,
promise immediate benefits for little payment, but only end
in disappointing, if not in swindling them. It seems to us,
however, that those who, like the majority of large employers,
have both the capacity and the opportunity for directing
these classes aright, are not only warranted, but, in all fairness,
are expected to attempt to do so.
We must now speak of the Regulations for the purchase
of Government Annuities. It is well to make provision for
our families after we have left them; it is no less wise to
make some provision for old age, or for the misfortunes of
life. Many a working man, taking the expression in its
widest significance, sees little before him in the future but
a life of hard, unyielding work. There is a time, however,
after which bodily strength must rapidly fail, even supposing
that nothing has occurred during his years of toil to break
him down prematurely: many a hard worker lives on long
after the grasshopper has become a burden, and is little cared
for, it may be, if he has never cared for himself. Let
philosophers inveigh as they will on the selfishness of such
conduct, that man has acted wisely who, under some such
circumstances, has taken care to relieve himself of thought
and much anxiety by having something in the shape of an
Annuity to look forward to in his declining years. Most
men, as old age comes on, find themselves every year less
and less able to procure by their labour those comforts
which every year become more and more necessary to
them. A man, by paying small sums out of his earnings
while he is strong and active and in full work, may purchase
an Annuity to commence as old age comes on him, and which
will take the place of his salary or wages when he can no
longer earn a livelihood.
In these words the Postmaster-General
introduces his new Annuities' scheme, and offers to
sell these Annuities through his department to any one who
will comply with the Regulations.
The commencement of an Annuity transaction must be
exactly similar to that described in connexion with an
Insurance. After obtaining a form of application, the
person must reply to the questions which it is deemed
necessary to ask, and then return the paper to the Post
Office for transmission to the Postmaster-General. For
obvious reasons, he will not be required to say anything
about his health, nor to pass any medical examination.
The Government must take care, in insuring a person, that
he is in good health; on buying an Annuity, the person
himself should take care that he is not in bad health, or
otherwise he might rush into a bad bargain. Almost the
only preliminaries gone through in the case of Annuities
are, a satisfactory proof of age, and answers necessary to
identification. If the authorities in London are satisfied
with the answers and the references given, a policy or
contract is entered into by the Post Office on behalf of
the Commissioners of the National Debt, setting forth,
that, in consideration of certain payments made at certain
periods, the payment of a certain sum is guaranteed to him
as an Annuity on the security of Government.
As in the case of Insurances, the person seeking to purchase
an Annuity has the choice of several kinds of annuity, and
of annuities of any amount up to 50l. a year. He may
purchase an Immediate Annuity, though in this case the
purchase-money must always be paid in one sum. Thus,
if he be twenty years of age and will pay down the sum
of 198l. 3s. 4d., he can begin to receive an Annuity of ten
pounds a year for life, however long that life may extend.
Women, we must add, seeing that they are usually longer
livers than men, must pay more than men. He may purchase
also a Deferred Annuity; that is, an annuity payable
after a given term of years from the commencement of the
purchase. This Deferred Annuity may either be purchased
in one sum, or by a yearly payment over that given term.
If the former, it may be for any amount between one pound
and fifty pounds per annum, to begin at a certain period; in
the latter case, the amount may range between four pounds
and fifty pounds, to begin immediately after he has completed
his payments. Deferred Annuities may also be purchased
gradually, or on the same cumulative principle spoken
of in connexion with Assurances, and just according as a
person finds himself able to spare the money; or they may
be purchased by annual payments in the same manner, beginning
on a small annuity, and increasing it from time
to time as he finds himself able to increase his annual
payments. Once more, by making payments half-yearly,
quarterly, monthly, fortnightly, or weekly, during a certain
number of years, he may purchase a monthly allowance of
any amount from four shillings to four pounds a month,
immediately after that term of years.
The first Tables which were ready in time for the operations
for the purchase of Deferred Annuities were those known
as the Non-returnable Tables,
under which money paid
was not returnable in the event of premature death, but
altogether sunk and lost.
Soon afterwards, however, the
Returnable Tables,
which had been under preparation from
the first, were brought out. Now, therefore, if the annuitant
chooses, he may purchase a Deferred Annuity with the proviso,
that if death occurs before he should have reaped any benefit
all the premiums shall be returned to his representatives;
and also, that, at any time during his life before his Annuity
is due, he may have his payments returned to him, subject
of course to some deductions should he choose to close his
account.
In all the above cases it is difficult to explain the method
of working without giving examples; but the interested
reader may receive, as he will doubtless seek, every information
from the popular Abstract which will be presented
to him free, on application, and from the Official Tables
which may be seen at any Post Office. It only remains
to add, as regards the payment of Annuities or Monthly
Allowances, that they will be made half-yearly or monthly,
as the case may be, at any of the offices opened for this
business, i.e. eventually every Money Order Office; and
that if a person be prevented by age, infirmity, or illness,
from going to a Post Office to receive this allowance, it will
be taken to him by an officer of the department.
As the operations of the Government Insurance and
Annuity Office have only extended over a few months,
and as the scheme is only in process of introduction into
many localities, it is manifestly impossible to get exact
information respecting the amount of business done, or
tell how far the prediction, freely hazarded soon after the
measure became law, as to its importance and utility, is
likely to be realized. In the Report of the Post Office
recently issued, the Postmaster-General states that this
information will be supplied, in proper course, in his Report
for 1865. Meanwhile, the following facts, which have been
ascertained by the examination of some hundreds of proposals,
will probably interest some of our readers.
The average age of the persons who make Life Insurance
proposals to the Government is thirty-five years; the sum
for which they propose to insure is, on the average, 76l.
Out of the whole number of persons,—
| 40 | per cent. propose to pay their premiums | annually. |
| 25 | " " " " | monthly. |
| 22 | " " " " | quarterly. |
| 6 | " " " " | half-yearly. |
| 6 | " " " " | weekly. |
One proposer in each hundred proposes to pay his premium
in one sum; and twenty-three per cent. wish the
payment of their premiums to cease on their attaining the
age of sixty.
The proposals come from all classes of the community;
thus—
| per cent |
| Clerks in public and private offices contribute | 32 |
| Porters, messengers, letter-carriers, and labourers | 22 |
| Mechanics, artisans, and skilled labourers | 18 |
| Tradesmen | 17 |
| Clergymen, and professional men generally | 6 |
| Women | 6 |
Of those who make proposals for the purchase of
Annuities, 56 per cent. are men, and 44 per cent. are women;
and the amount of Annuity which they propose to purchase
is, on the average, 26l. The average age of the proposers for
the purchase of Annuities is fifty-eight years.[205]
A longer time will doubtless be necessary to develop this
further measure into the same successful operation which
has followed the adoption of the scheme out of which it
sprang. It is more elaborate than the Post Office Bank
scheme; it will appeal, as has been properly said, to a
higher class of men, to a higher quality of prudence. Time,
perhaps, more than anything else, must mature it into
success. It rests entirely with the public,—especially with
employers of labour, and the more intelligent portions of
the working and small tradesmen class,—whether or not
the unique and comprehensive facilities which we have been
engaged in discussing shall have been framed and offered in
vain, or whether or not a new era has dawned on those who
are desirous of making small, sure, and safe investments for
their own old age, or provision for those they may leave behind.
We wait, as it were pen in hand, to chronicle the result. Meanwhile,
those who have the interests of the humbler and more
defenceless portions of the community at heart could not
do better than endeavour, at any rate, to spread a knowledge
of a scheme which, while benefiting the people individually,
must also, by giving to each a stake and an interest in the
prosperity of the country, tend to increase the stability of
existing institutions.
In justice to Mr. Gladstone and the Legislature, it ought
to be widely known and remembered that these measures
have not been originated to be a source of profit to the
revenue of the country; that, however successful they may
eventually be, they will bring no gain to the National
Exchequer. The Tables of working, and the mode of
working, have been prepared with great care; the former
by eminent actuaries, and the latter by equally eminent
official men: and although some of this care and attention
have had for their object the security of the Government
against loss, the premiums are intended to cover the liabilities
and working expenses, and no more. If, therefore,
those classes who can do it will not now secure themselves
against misfortune and disaster, it is plainly no one's fault
but their own.
CONCLUDING CHAPTER.
And when I shall go to my account, and the great Questioner whose
judgments err not, shall say to me, 'What didst thou with the lent talent?'
I can truly answer, 'Lord, it is here; and with it all that I could add to it—doing
my best to make little much.'
—Ebenezer Elliott.
The above words of the brave Corn Law Rhymer refer of
course to far higher duties than any with which we have
dealt in this volume. That application may be made of them
even to our present subject is nevertheless clear, and we leave
the thoughtful reader to make it. Real economy and frugality
are virtues, and as such are inculcated in the Christian
code; neglect of them is condemned both by the moral and
the religious code. Christ expressed the very spirit of
economy, care of little things, a prudent thrift, and avoidance
of all waste, when after miraculously feeding the multitude
in the desert He instructed His disciples to gather up the
fragments that remain, that nothing be lost:
and it is
at least noteworthy, that this injunction immediately followed
another, wherein He warned the same men against the
greed of life, telling them that a man's riches did not consist
in the abundance of his possessions.
This may be perhaps a very fitting opportunity to say that
a great deal depends upon the motive and the object for
which such virtues are cultivated; that it is very possible to
attach far too great an importance to mere habits of saving:
the motive for saving may at times be vicious, and the purpose
for which and the manner how the hoards once scraped
together may be applied, more vicious still. This is so palpable
that we need not dwell upon the subject. Not less
so is the wise medium course to be followed. The difference
between those who cultivate and those who neglect frugal
and economical habits may be expressed simply in the former
having bread enough and to spare, and the latter having
bread for to-day—and not always that—but none for to-morrow.
It is by the capacity of looking forward in the
present moment to the possibilities of to-morrow that the
civilized man is distinguished from the savage; it is by the
readiness with which provision is made for possible emergencies
that the wise man is distinguished from the fool. Real
economy, aided by prudence, is a virtue. Cicero says that
the best source of wealth is economy;
but it is also the best
source of comfort, self-respect, and independence. Prudence
thinks of an adverse season amidst the prosperity of a good
one; and Economy arranges for the bad time. Prudence thinks
of two very possible and one certain contingency in the life
of every human being; and Economy weighs the chances well
and provides for the worst—it provides for the incidence of
failing health, and for the chances of losing, through one of
the many eventualities of life, worldly position, or the means
of breadwinning; and it also does something to provide for
that time when the anxieties, the joys, and the sorrows of
life shall be hushed in death.
It is well, therefore, and it is almost indispensable, that
these habits should be cultivated; it is well also, and quite
indispensable, that means and provisions should be used to
this end. The first stone which the learned Wotton refers to
in the motto on the first page of this volume, is without
doubt the first act in the habit of economy; and we have
been endeavouring throughout the course of this history to
point out with some approach to accuracy the exact spot
where a person may lay this indispensable first stone,
where he may probably best lay the second or third, and
how possibly he may commence with the superstructure.
Savings Banks and the other provident measures of which
we have spoken are principally to be regarded as preliminary
means, the first or stepping-stones to higher things. When a
man has become, for example, a depositor in any of the
numerous kinds of Savings Banks, he has only taken, as
it were, the first step on the road to competence; but one step
leads to another.[206] A very slight knowledge of human
nature will show that when once a man gets his foot upon
the round of the social ladder, and keeps it there till he
is secure of his footing, he is soon ambitious of taking the
next step. So true is this regarded, that in common parlance
many kinds of journeymen are said to have made their
fortune when they have saved their first pound. When
George Stephenson's wages were raised to twelve shillings
a week, he declared he was now a made man for life;
when he had saved his first guinea, he proudly said to one
of his mates, that he was now a rich man.
And in one
sense he was right; he had taken the first step; and further,
The man who,
says Mr. Smiles, after satisfying his
wants, has something to spare, is no longer poor.
We have said that Savings Banks are preliminary means.
We think, however, that they are the safest initiatory steps
that could be taken by those of the labouring classes who
wish to rise from small beginnings to those higher things
spoken of.[207] Thousands of people of small means are content
with them; with the Savings Bank they begin, continue,
and end, and many of them have had reason to congratulate
themselves upon having taken such a course: they have
been saved endless trouble and disaster, have in the great
majority of instances felt that their earnings were safe, that
the profits were not going up and down like those of their
neighbours, but were always steady, always to be relied upon,
and always calculable to a penny. That these returns are
really not so insignificant as many suppose, and that if small
earnings are allowed to accumulate at compound interest
they must make a decent provision against the winter of life,
the following case will demonstrate.[208] The late Mr. Thomas
Allen of Gledholt, Huddersfield, on the 28th of March, 1818,
gave to each of his seven servants a sovereign to become
depositors on the opening of the Huddersfield Savings Bank.
On that day Esther Sykes became a depositor to the extent
of 1l.
| £ s. d. |
| She continued to deposit the Savings from her wages from that time to the 21st of July, 1828, amounting to | 119 11 0 |
| Interest accruing from 1818 to 1828 | 30 9 0 |
| 150 0 0 |
| This sum of £150 being allowed to accumulate by interest
until 1836 became | 200 0 0 |
| From 1836 interest on this sum had to be withdrawn
half-yearly, which from 1836 to 1863 amounted to | 160 9 8 |
| Esther Sykes died March, 1863, aged 78, and her
executors received from the Bank the sum of | 200 0 0 |
Thus in this interesting case the cash deposited at different
times amounted to 119l. and the total amount of interest on
that sum was 240l., of which 160l. was paid to the depositor
herself during her lifetime, and 200l. to her executors. It
is not a little curious, nor is it surprising, that five of the
relatives and legatees of this Esther Sykes should have gone
to the Huddersfield Savings Bank to deposit the money left
to them.
Of the other promising provident measures adapted to the
requirements of the industrious classes, the most important,
but at the same time a somewhat hazardous one, is that of co-operative
societies. These societies, though beset with difficulties,
are doing a good work in many localities. The stronghold
of the system, be it remembered, is in a town where, owing to
the cupidity of the manager of the Savings Bank, the savings
of years were swallowed up, and, in consequence, habits of
accumulation in this form were rooted out from among the
people. The co-operative principle can be directly traced
to the wide-spread distrust created by this gigantic and far-reaching
fraud. It remains now to be seen whether a higher
intelligence and a greater power of self-government than is
generally found in large associations of working men will not
be indispensable to the progress of these societies. Personally,
we have little hesitation in affirming that the real
progress of these classes will be safer, and not only safer but
quicker, if the bulk of them will leave combined enterprises
of this nature to those of their fellows who have already
saved money enough to enable them not only to enter into
such business, but to lose in the venture. Once a man has
run up an account in any of the people's banks—whether
the old or the new banks does not make much difference—he
might, and perhaps ought to risk a proportion in such
societies, which, where properly and prudently managed, are
very beneficial to all connected with them.[209]
The same remarks apply to Building Societies to a great
extent; though here perhaps there is little of the risk which
besets all kinds of large and small joint-stock companies.
Unfortunately, however, the working-class element, which
was prominent at the origination of building clubs, is being
rapidly eliminated from them in most localities, and almost
everywhere the tradesman class predominates.[210] The working
classes, if they have not been saving their earnings for years,
cannot command and pay, with that regularity necessary in
such enterprises, the instalments due; and hence they either
do not venture to join at all (except where the club is on
a very small scale), or if they do, they ultimately withdraw
from them.[211]
Fifty other different objects might be mentioned for which
the working classes require the means of accumulating the
trifles they can save with the object of employing some of the
money on higher kinds of investments when it has amounted
to a good round sum; the purchase of a cottage, of an annuity,
of a life insurance policy, are only a few of them. In this
way the Savings Bank not only assists the industrious classes
by offering machinery expressly fitted for their present advantage,
but does an equally beneficial work in leading them
on safely to higher and more important investments.
Let it be granted that Savings Banks fulfil all, or most,
of the conditions which we have assigned them and ask for
them, what then remains to be done to make their advantages
better known, and to bring them still more within the reach
of those classes for which they are specially designed, and
to which they are specially applicable? It may indeed be
questioned whether, having provided the facilities, society
should not now leave the matter where it is, to the operation
of advancing intelligence, to the growth of economical knowledge,
and to the increase in the experience of the poorer
classes. Working men are tired, and to our own knowledge
have long been, of hearing of societies and organizations for
their elevation;[212] they know perfectly well that their elevation
—for
which no doubt too few of them care—must
begin, continue, and end in themselves. The better class of
workmen laugh at many schemes designed for their benefit;
and although there may be odd instances of men who seem
not to be above being turned into an object,
it is simply
repellant to the great bulk of them.[213]
A working man, though he may not like to be raised,
may like to be advised how he can best help himself: and
such advice is quite necessary and legitimate under certain
conditions and in certain circumstances. It altogether depends,
it appears to us, upon the person who does it and the
manner in which it is done. First and foremost it seems to
be not only necessary but right that masters of workmen
should endeavour to influence those under them; that they
should—
"Relinquishing their several 'vantage posts
Of wealthy ease and honourable toil"—
do something to direct aright those energies from which they
have benefited, and which if rightly developed may also in
time lead their possessors to comfort, to reputation, even to
wealth. A master's duty to his workmen, as we remember
to have seen it expressed somewhere, scarcely ends when he
pays them their wages. The men may be thoroughly independent,
and after accomplishing their stipulated work may
be, and feel that they are, their own masters: but there are
nevertheless divers opportunities for masters, without claiming
or assuming superiority, to benefit those employed under
them. The master is pretty generally under the pressing
responsibility of superior knowledge and greater experience;
and he who sees how the worldly position of his men can
be safely improved, and does not at least attempt to suggest
or help to this improvement, can scarcely be said to fulfil the
duties of his position. An employer may, indeed, be too
conscious of his dignity, and, standing on the lofty pedestal
reared for him or which he has reared for himself, throw
down with a lavish hand bounties upon his men; and they
will not be accepted, and perhaps ought not to be: but
let him show a personal interest in them, prudently advise
them, show a wisdom that shall bridge the gulf
that
separates the two, and he will not only do much to destroy
the feeling, which has become almost instinctive among workmen,
that the master is somehow selfishly acting for his own
ultimate benefit, but he will awaken a confidence, become the
object of the men's esteem, and wield an enormous influence
over them.
Let so much as this be granted, or even let part of it
be granted, employers of labour may not only turn their
thoughts to such schemes for savings as we have been
engaged upon, but they may easily arrange, in conjunction
with the proper authorities, branch schemes such as described
in the last two chapters, to be suited to the varying
circumstances of the case. If they are convinced of the
benefits of the one, let them advise; if they wish to give
reasonable help, let them act.
Without reference, however, to the Government schemes
just referred to, the State sets an admirable example to all
large employers in the provident arrangements which have
been made for public officers; and we think there must be
much in the provisions in question which might be turned
to good account in, and be made applicable to, large private
concerns. Few Government employés should ever come to
beggary; if they have not been prematurely cast aside, either
by wilful misconduct or gross carelessness on their own part,
they cannot come to the parish: further, great numbers of
them are assisted to make provision for their families at their
death. Nearly all Government servants may be said to have
bargained with their masters at the time they entered the
service, not only for a fair day's wage for a fair day's work,
but for nearly all the provisions of a Friendly Society during
sickness; for a Deferred Annuity when they are past work,
or after a certain age; and in some instances—it ought to be
in all—for assistance towards insuring their lives for the
benefit of their family. It were idle to say that none of
these considerations enter into the original contract, and
have had no influence on the scale of remuneration paid
for actual work; it were far more to the point to say that
departments of Government compel their servants to be
provident and to prepare; for sickness, old age, and death,
and make it involuntary in the case of sickness and old
age, by taking the necessary payments upon themselves.
Of the scheme of Life Insurance at present in force in the
Post Office, for example, we spoke in the previous chapter.
With regard to sickness, a certain time is allowed for full
pay; another definite period for half-pay. In respect to
Superannuation Allowances, which we have termed the Deferred
Annuities, it is true that at one time civil servants
were required to pay towards it out of their salaries; but
this has been discontinued by Act of Parliament, and the
present arrangement may simply be considered as a small
rise in the rate of wages—the deduction being compulsory
on all classes alike.
Why should not a similar plan, or at any rate the
principle of it, be urged upon private employers? Spite of
some of the difficulties which would at once present themselves,
we believe that there is little impracticable about it,
and little that might not be surmounted. Even if it should
be found impossible to apply such arrangements to many
concerns, there is still the admirable machinery designed
in connexion with the Annuities Act of 1864; and we again
commend the plan to the attention and candour of large
employers.
We think that to a very large extent the influence which
masters must exercise over their workmen, or which they
could not fail to exercise if they were to show a proper
degree of interest in their subordinates, has never yet been
exercised. If reason, persuasion, entreaty of a certain kind,
alike fail—as they may often have done—to induce saving
habits and due provident provision for themselves and
families, we confess a difficult problem presents itself. This
difficulty has been felt for years. Forty years ago the
Quarterly Review, in an able article, said that Savings
Banks ought to have formed a sinking fund before that
time for the abolition of poor rates: If the present state
of things continues,
says the writer, it should become a
question whether the master ought not to deposit in the
Savings Bank at least a shilling in the pound of all wages
paid by him, to be placed to the account of the individuals
whom he employs.
Several times since this was written,
the Quarterly Review has returned to the charge. For many
years our system of Poor Laws has rigidly assessed property
for the relief of poverty, and secured the necessaries of life
for all the destitute, no matter how largely they themselves
may have been answerable for their destitute condition.
With some beneficial changes the law stands the same, and
is scrupulously enforced.
It is very clear that many men's wages are so high in
good times, that, if they worked steadily and lived with
moderation, they might easily reserve out of them a fund
of supply against times of want, which would carry them
through till their trade revived. The immense power in the
hands of the working classes to promote their own self-dependence
is illustrated by the enormous sums spent by
these classes alone in mere indulgence; and it is shown
again, in the immense funds raised amongst them to support
combinations and strikes. That thousands will not use the
means they have is proved by their excesses, their prodigality,
the recklessness of their expenditure, the division
of the days of the week into days of work and days of
gross and obstinate idleness; and in much of this—regarding
the result which follows to themselves, their wives and
families, if they have the misfortune to have them—there
is perhaps more real delinquency than in many of the crimes
for which penal statutes have been framed.
The question is at any rate admissible, whether the same
power which can order a compulsory payment of rates to
support the poor, might not, and ought not, to restrict the
means by which men are made and kept in poverty; or
whether the same laws which make the frugal support
the improvident should not also compel the improvident
to do something to support themselves. This principle is
indeed recognised by Government, as we have already shown,
in the arrangements made for its own servants; it is therefore
not a question so much of principle as of degree, and
whether the Government should insist on a measure of
coercive contribution applying to others beyond their control.
I have often thought,
said the late Mr. J. Silk Buckingham,
in a letter now before us, it would be perfectly wise and just
to pass a law compelling all employers of labour of every
class, age, and sex, to deduct five per cent. from the wages
or salaries of all in their employ, to be invested in the
Government funds for a Deferred Annuity after sixty years
of age, giving power to the labourers themselves to make
further additions as they saw fit on the voluntary principle.
If it should be said that no Government has a right to make
people provide for themselves by force of law, I am sure they
have as great a right to do this as to make the honest, sober,
and industrious part of the people pay in poor rates and taxes
for maintaining paupers and criminals, who have become so
chiefly through want of prudential conduct in youth.
[214]
Finally, it is upon those who will not, and cannot by any
available means, be brought to apply the remedy of provident
investments during the heyday of life for themselves, that we
think some such arrangement as that upon which the Government
insists on employing civil servants, should be brought
to bear, and that, only as a dernier ressort, our Legislature
should consider whether it were not possible, and within its
province, to apply a more complete and direct remedy by
force of law. Formidable obstacles, we repeat, may be
imagined, and actually would be experienced, in either case;
but they could easily be smoothed by the fifty years'
experience which the country has had of Savings Bank
management and the conduct of provident schemes generally,
and they may very possibly be entirely removed by
the far-reaching, simple, ancillary measures of the last four
years.
An Abstract of the Provisions of Mr. Whitbread's Bill, as amended
by Committee, for establishing a Fund and Assurance Office for
Investing the Savings of the Poor.
(1807.)[215]
This Bill provided that the Office of the Poor's Fund should be
under the management and direction of so many Commissioners as
his Majesty should see fit to appoint under his royal sign manual;
that they should subscribe an oath to execute their powers and
trusts faithfully and honestly; that any two of them might together
execute the duties of the Office; and further, that the said Commissioners
might, with the approbation of the Lords of the Treasury,
appoint some person properly qualified to conduct the business,
under the title of Accountant, and also such cashiers, clerks, and
servants as they should find necessary.
It provided, that any person who should subsist wholly or principally
by the wages of his or her labours should be entitled to
the benefits and advantages of this Office, under and subject to the
following
Rules and Regulations of the Office of the Poor's Fund.
1. That any proper person may so pay to the Accountant, or
remit through the Post Office, any sum not exceeding five pounds.
2. That no person remit or pay more than 20l. in any one year,
nor more than 200l. in the whole.
3. That when any sum is remitted through the Post Office, the
Postmaster of the place from which the money is sent shall keep a
proper record of each transaction, and adopt such measures as the
Postmaster-General shall from time to time direct; and that each
Postmaster shall receive for his trouble, from the person paying in
the money, one penny in the pound upon the value thereof.
4. That cash accounts with each person shall be opened in the
principal office in London, and that the money which may be paid
or remitted shall be laid out each week in the purchase of perpetual
annuities, the annuities so purchased to stand in the name of the
Commissioners of the Poor's Fund.
5. That, after such purchase, the proportion of each person, from
the amount contributed, shall be credited in a stock account, he or
she being debited in the cash account for the sum expended.
6. That the dividends as they become due be likewise carried to
the credit of the said persons; and on the sums amounting to ten
shillings, the same shall be payable to him or her.
7. That the dividends may be allowed to accumulate, but principal
and dividends must not exceed 20l. in any one year, nor 200l.
in all.
8. That any person entitled to the annuities purchased in this
manner who may wish to sell the whole or part, will be allowed to
do so on signifying the desire personally, or in writing. In either
case the person shall be furnished with a form of request for the
purpose, and, when properly filled up and attested, the annuities
shall be sold.
9. That the sale of all annuities desired in one week shall be
made on some one day in the next.
10. That after the sale the proportion due to each person shall
be carried to his or her cash account, and the money be payable
forthwith.
11. That the Accountant shall make out and sign a warrant for
the sums called for, the person giving a receipt on the warrant when
it is paid.
12. That persons entitled to the money may authorize in writing
any other person to receive the warrant, and after signing the
warrant the money may be paid to such other person.
13. That any person residing beyond the limits of the two-penny
post (London) may have such warrant transmitted through
the Post Office.
14. That when a sum is paid to the cashier or other officer for
the purchase of annuities, a proper receipt shall be given; that
when a sum is transmitted through the post, the receipt shall be
at once sent through the post; and that when the money has been
laid out in such purchases as were ordered to be made, the certificates
of such purchases, with their amount and denomination, shall
be sent to the purchasers, or such other persons as they shall
appoint.
15. Provides for the investment of small surpluses, and the
payment of the dividends upon them.
16. Provides that no payment, gratuity, or reward shall be
allowed to be made to any person employed in the Office of the
Poor's Fund over and above the regular salaries determined upon.
* * * * *
Other clauses of the Act provided that the expenses of the
Office should be defrayed by such sums as were secured by the
dividend, interest, and accumulations of the surplus arising from
unclaimed dividends, the remainder of the expenses being borne on
the Consolidated Fund.
* * * * *
With regard to The Poor's Assurance Office, the Bill provided for
the appointment of the principal conductor, who should be called
the Actuary,
in the same manner in which the office of Accountant
was to be created for the former business.
It provided for the calculation of Tables, which Tables should
produce sufficient funds to answer the payments to be assured, as
well as the charges and expenses of the establishment and management
of such Assurance Office;
that these Tables should be varied;
that they should be approved by the Lords of the Treasury, who
should make them public in such manner as they saw fit.
The persons who were entitled to the benefits of the Poor's
Fund should also be entitled to the benefits of Assurance Office
under the following
Rules and Regulations of the Poor's Assurance Office.
1. That any person desirous of insuring his life shall deliver or
send the usual particulars to the Assurance Office.
2. That in every case proof of age and proof of sound health
should be produced; the affidavits in each case to be sworn to
before a Justice of the Peace.
3. That, in the case of any misrepresentation being proved in the
original proposals, the sums paid shall be forfeited.
4. That the Actuary may require any persons proposing to insure
to attend personally at the Assurance Office, providing they live
within the limits of the London two-penny post.
5. That no payment for any assurance, whether annually, half-yearly
or quarterly, shall be less than ten shillings.
6. That no annual payment, nor the entire yearly amount of
payments, shall exceed five pounds; that no assurance shall be
made for more than 200l.; or if a gross sum and an annuity shall
both be assured to the same person, the whole shall not exceed the
value of 200l.
7. Provides for fines for arrears according to the time which has
elapsed, and for renewing a policy which may have become void.
8. That all money received shall be vested in transferable annuities,
as in the case of the Poor's Fund.
9. Provides for payment on proof of death—the affidavit to be
sworn to before a Justice of the Peace.
10. That the rules for the management of the Assurance Office,
and the remuneration to be paid to its officers, shall be settled on the
same basis as those for the Poor's Fund.
* * * * *
The Act then goes on to provide that the Commissioners shall be
empowered to frame rules for the guidance of the officers of each
Office; that the Commissioners to be appointed shall deliver to the
Governor and Company of the Bank of England a true and
attested copy of their commission of appointment; that this shall
be their authority for transacting business with the Bank, and shall
be received and admitted as evidence in all courts of law and equity,
and before all judges and magistrates, of the due and legal appointment
of the Commissioners, and authorizing them to exercise all
the powers and authorities granted to them under the Act.
The Act then further provides that all dividends, &c., shall be
exempted from the tax on property, and from the stamp duty on
probates and letters of administration.
That the policies and other instruments shall be exempt from
stamp duties.
That all letters and packets shall be sent by or through the Post
Office, to or from either of the two departments, exempt from the
payment of all postage.
The Act concludes by making provision for the punishment of
forgery and perjury.
An Abstract of the Provisions of the Consolidated Act of 1863, entitled An
Act to Consolidate and Amend the Laws relating to Savings Banks.
(26 & 27 Vict. cap. 87.—28th July 1863.)
Sec. 1. Provides for the Repeal of previous Acts and parts of Acts, as set
forth in the following Schedule:—
| Date of Act. | Title. | Extent of Repeal. |
|---|
| 9 Geo. IV. c. 92. | An Act to consolidate and amend the Laws relating to Savings Banks. | The whole. |
| 3 Will. IV. c. 14. | An Act to enable Depositors in Savings Banks and others to purchase Government Annuities through the medium of Savings Banks, and to amend an Act of the Ninth Year of His late Majesty to consolidate and amend the Laws relating to Savings Banks. | Sections 21, 22, 25, 28, 29, 30, 31, 32, 33, 34, and 35. |
| 5 & 6 Will. IV. c. 57. | An Act to extend to Scotland certain Provisions of an Act of the Ninth Year of His late Majesty to consolidate and amend the Laws relating to Savings Banks, and to consolidate and amend the Laws relating to Savings Banks in Scotland. | The whole. |
| 7 & 8 Vict. c. 83. | An Act to amend the Laws relating to Savings Banks, and to the Purchase of Government Annuities through the medium of Savings Banks. | The whole. |
| 11 & 12 Vict. c. 133. | An Act to amend the Laws relating to Savings Banks in Ireland. | The whole. |
| 17 & 18 Vict. c. 50. | An Act to continue an Act of the Twelfth Year of Her present Majesty for amending the Laws relating to Savings Banks in Ireland, and to authorize Friendly Societies to invest the whole of their Funds in Savings Banks. | Section 2. |
| 22 & 23 Vict. c. 53. | An Act to enable Charitable and Provident Societies and Penny Savings Banks to invest all their Proceeds in Savings Banks. | The whole. |
| 23 & 24 Vict. c. 137. | An Act to make further Provision with respect to Moneys received from Savings Banks and Friendly Societies. | The whole. |
Sec.[216] 2. Provides that persons who may have formed or shall
form any society or institution of the nature of a bank to receive
deposits of money for the benefit of persons depositing the same,
accumulating at compound interest, and repayable when required,
but, after the necessary expenses have been met, deriving no benefit
from such money, shall have the benefit of this Act if they wish it.
The conditions annexed are, that such persons shall cause the rules
and regulations for the conduct of the business to be entered,
deposited, and filed, as shall be afterwards directed.
Further, that no bank, the rules of which shall not be sanctioned
and approved by the National Debt Commissioners, shall be entitled
to the provisions of this Act. (a)
Sec. 3. Savings Banks under the Act shall keep a book in which
shall be entered the rules of each bank, and these books shall be
open at all reasonable times to the inspection of depositors. When
any of the rules are altered, such alterations to be entered in
the book. The rules not to be in force till such alteration is
made. (a)
Sec. 4. Two written or printed copies of rules shall be sent by
Savings Bank trustees to the certifying barrister, who must certify
that they are according to law; the certificate of the barrister to be
paid for by a fee not to exceed one guinea; and the barrister, after
certifying the rules, to return one copy to the trustees and transmit
the other copy to the National Debt Commissioners. (a)
Sec. 5. Every Savings Bank certified under the provisions of this
Act to bear the title of Savings Bank certified under the Act of
1863;
any other bank, company, or person adopting this title, to
be declared guilty of a misdemeanour, and punishable accordingly.
Sec. 6. Requires that the following regulations shall be adopted
and enrolled among the rules of all Savings Banks:—
(1) The treasurer, trustees, or managers shall not derive any
benefit from deposits, nor directly or indirectly have any
salary, allowance, profit, or benefit whatsoever beyond
their actual expenses for the purposes of the bank. The
expenses of management, including the remuneration to
paid officers, does not come within the meaning of this
clause. (a)
(2) That not less than two persons, being trustees, managers,
or paid officers employed for this specific purpose, shall be
present on all occasions of public business, and be parties
to every transaction of deposit and repayment, so as to
form a double check of every such transaction.
(3) The depositor's pass book to be compared with the ledger
on every transaction of repayment and on its first production
after the 20th of November in each year.
(4) The depositor to produce his book at least once in each
year for this examination.
(5) No receipt to be taken or money paid except at the bank
and during the hours of public business.
(6) A public accountant or auditor, not of their own body, to
examine the books of the bank, and to report the result,
not less than once in every half-year, and to report to the
committee of management the correct amount of the
liabilities and assets of the bank.
(7) That a book containing an extracted list of each depositor's
balance, omitting the name, but giving the distinctive
number and separate amount of each, checked and audited
as above, be open during the hours of public business for
the inspection of any depositor.
(8) The trustees or committee of management to hold meetings
at least every half-year, and keep minutes of their
proceedings in a book to be provided for the purpose.
(9) In the case of banks having branch agencies, the rules to
provide for the due receipt and accounting of all moneys
received; for the presence of a second party to every
transaction; and for a periodical examination of the
depositor's book.
Sec. 7. Provides that the trustees of every Savings Bank shall
transmit weekly returns to the National Debt Office, giving such
particulars as the Commissioners shall direct, showing the week's
transactions and the cash balances remaining in the treasurer's
hands.
Sec. 8. The treasurer, actuary, or cashier, and every paid officer
of a Savings Bank entrusted with the receipt of money, to give
security by means of bond or bonds, with one or more sureties, to
the Comptroller-General of the National Debt Office. (c)
Sec. 9. Provides that any officer receiving deposits and not
paying them over to the managers shall be guilty of a misdemeanour. (c)
Sec. 10. The moneys, goods, chattels, and effects of all Savings
Banks to be invested in the trustees for the time being. (a)
Sec. 11. No trustee or manager of Savings Banks in Great
Britain shall be personally liable except—
(1) For moneys actually received by him on account of said
banks and not paid over in the usual manner.
(2) For neglect or omission to comply with the above recited
regulations as to the maintenance of checks, the audit of
accounts, the holding of meetings and the keeping of the
minutes of the same;
(3) Or for neglect in taking security from his subordinate
officers.
Sec. 12. Trustees or managers in Ireland may limit the amount of
their responsibility by declaring in writing that they are willing to
be answerable for a specific amount only, which shall not be less,
however, than 100l. At the same time Irish trustees, &c., to be
liable for amounts actually received by them and not accounted
for. (d) and (e)
Sec. 13. Provides that the treasurer or any trustee may be
required, on a demand from not less than two trustees and three
managers, or from a meeting of trustee and managers, to pay over
all the moneys remaining in his or their hands, and assign and
transfer or deliver all securities and effects, books, papers or other
property, to such persons as may be appointed to receive them;
proceedings to be taken in case of any neglect or refusal to comply
with the demand. (a)
Sec. 14. Provides that executors, &c., of officers of Savings Banks
shall pay money due to Savings Banks, in case of death, bankruptcy
or insolvency, before any other debts whatsoever. (b)
See. 15. The trustees of Savings Banks shall invest all the
money received by them in the Banks of England or Ireland; and no
sum or sums shall be paid or laid out by trustees in any other manner
or upon any other security whatever, except only such sums of money
as from time to time must remain in the hands of the treasurers of
such banks to answer the exigencies thereof. This provision not
to prevent any depositor withdrawing his money from a Savings
Bank and investing the same in any other securities. (a)
Sec. 16. Provides that trustees of Savings Banks may receive
money from depositors and apply it for their benefit in any other
manner agreed upon. (a)
Sec. 17. Provides that central banks may invest the money of
branch banks in the manner already described. (a)
Sec. 18. Provides penalties for false declarations for the purpose
of paying money into the Banks of England or Ireland. (a)
Sec. 19. The Commissioners of the National Debt to invest the
money paid into the bank in the purchase of bank annuities,
Exchequer-bills, or parliamentary securities of whatsoever kind
created or issued, or any stock or debenture guaranteed by authority
of Parliament; the interest arising from the money so invested to
be in like manner invested as above. (a)
Sec. 20. Makes it lawful for any three or more National Debt
Commissioners to execute and to do all matters and things required
by the operations of this Act. (b)
Sec. 21. Money invested with the Commissioners to be allowed
interest at the rate of three pounds five shillings per cent. per
annum. (c)
Sec. 22. Interest due from the Commissioners to be calculated
half-yearly up to Nov. 20 and May 20, and carried to the account
of Savings Bank additional principal. No interest to be allowed on
any fractional part of a pound. (a)
Sec. 23. Interest arising to depositors may be calculated yearly, or
twice a year, and carried to the principal. Interest to depositors
not to exceed three pounds and tenpence per cent. per annum. (c)
Sec. 24. Trustees of Saving Banks to appoint an agent who
shall be authorized to receive money from the Commissioners
for repayment to depositors. The agreement for the appointment
of this agent, signed by two trustees, shall be deposited
with the Commissioners; but it may be revoked and another
appointment made.
Sec. 25. Trustees may draw for the whole or any part of the sum
placed in the hands of Government by drafts on Commissioners;
interest to be added by the cashiers of the bank. (a)
Sec. 26. Drafts exceeding 5,000l. must be signed by four trustees,
and their signature must be attested by separate witnesses, who may
be managers or other creditable persons. Drafts for 10,000l. not to
be paid before fourteen days after the receipt of such drafts. (a)
Sec. 27. Repayment of more than one draft of 10,000l. to any
one bank not to be made in any one day. (a)
Sec. 28. Trustees may receive in person, instead of through the
usual agent, payment of drafts properly executed. (a)
Sec. 29. The surplus after paying necessary expenses of banks to
be paid over to the Commissioners for investment in a separate
account; and trustees may draw upon such surplus fund for the
purposes of the Savings Bank by certificate. (a)
Sec. 30. Deposits of minors may be taken, and repayment may
be made before the person has attained the age of twenty-one. (a)
Sec. 31. Repayment to be made to a married woman who may have
deposited money, unless the husband of such woman shall give
notice in writing that he requires payment to be made to him. (c)
Sec. 32. The funds of charitable societies, penny banks, &c.,
may be deposited in Savings Banks; if with the approval of the
Commissioners, without any restriction as to the amount; and
without that approval, to the extent of 100l. per annum, or 300l.
in this whole. (e)
Sec. 33. The funds of any friendly society, legally enrolled and
certified, may be invested without any restriction as to amount,
provided a copy of the rules of such society is deposited with the
Savings Bank. (d)
Sec. 34. The receipt of the treasurer, trustee, or other officer of
any such charitable institution, penny bank, or friendly society,
shall be deemed a sufficient discharge for any money deposited and
withdrawn from the Saving Bank. (a)
Sec. 35. Members of friendly societies, penny banks, &c., may
also subscribe to any Savings Bank. (a)
Sec. 36. No sum to be taken in a Savings Bank without the
depositor discloses his name, profession, business, and residence;
these particulars to be entered in the books of the office. (a)
Sec. 37. Persons allowed to deposit as trustees on behalf of
others; but repayment can only be made with the receipt of the
trustee and also the person or persons for whom the trust account
has been held.
Sec. 38. Provides that it shall not be lawful for depositors in any
one Savings Bank to deposit in any other Savings Bank. A declaration
to this effect must be made at the time of the first deposit.
The penalty on a false declaration to be forfeiture to the sinking
fund of all deposits. The declarations to be filed, and a copy with
the penalty attached thereto to be annexed to, or printed in, the
deposit book. (a) and (c)
Sec. 39. Deposits of more than 30l. cannot be received in any
one year, nor more than 150l. in the whole; and when principal
and interest together amount to 200l., interest shall cease till it is
brought below that sum. (a) This prohibition not to extend to
accounts opened before July 1828. A depositor may close his
account and make further deposits as a new depositor.
Sec. 40. Depositors may transfer their accounts to any other
Savings Bank by means of transfer certificates, the form of which
is presented in Appendix (C).
Sec. 41. In the case of a depositor dying and leaving any sum
exceeding 50l. the money must not be paid except upon the probate
of the will of the deceased depositor, or letters of administration
of his or her estate and effects. No duty to be paid on
probate when the estate is under 50l., provided the person claiming
such probate or letters of administration produce a certificate of
the amount of the depositor's interest in the bank at the time of
his death. (a)
Sec. 42. Administration bonds, &c., for effects not exceeding 50l.
sterling shall be exempted from stamp duty. (a)
Secs. 43, 44, 45. Make provision for payment when depositors die
without a will, to those who appear to be next of kin, &c. (a)
Sec. 46. Makes provision for payment on the death of an illegitimate
depositor according to the statute of limitations.
Sec. 47. Adapts the provisions of the Act as to intestate depositors
to the law of Scotland. (b)
Sec. 48. Provides that any dispute arising between the trustees
of Savings Banks and any individual depositor or his representatives,
the matter in question shall be referred to the barrister
appointed by the Act, and whatever award, order, or determination
shall be made by the barrister shall be binding and conclusive on
all parties, and shall be final to all intents and purposes without
any appeal.
(c)
Sec. 49. On being referred to, the barrister may inspect any book
or books belonging to the bank in question, and may administer
oaths to witnesses; false evidence to be perjury, and the offender
prosecuted and punished accordingly. (c)
Sec. 50. No powers of attorney given by trustees or depositors,
no drafts or orders, no instrument of appointment or instrument
for the revocation of any appointment, no determination or order
of the revising barrister, nor any other instrument whatever required
to be given, issued, signed, made, or produced in pursuance
of this Act, to be subject to or charged with any stamp duty or
duties whatsoever. (a)
Sec. 51. Provides for the appointment of auditors in Ireland,
whose names shall be sent up to the National Debt Office without
delay. (d)
Sec. 52. Every depositor in Ireland to be furnished with a
deposit-book which shall contain the rules of the bank printed at
length. A duplicate copy of the rules, and also of every annual
statement, shall also be exhibited from time to time in each Irish
bank, and shall be open to the inspection of every depositor. (d)
Sec. 53. Provides for the regular inspection of the books of Irish
depositors, not less than twice every year. (d)
Sec. 54. Commissioners may close accounts with Savings Banks in
Ireland which do not comply with their instructions, and re-open
them if they think fit. (c) In each case the Commissioners shall
forthwith publish a notification of the account being closed, or of
the account being re-opened, in the Dublin Gazette, and also in
some newspaper published in the county in which the said bank is
established. (d)
Sec. 55. For the more effectually ascertaining from time to time
the actual and progressive state of all Savings Banks enrolled under
this Act, the trustees of every bank shall annually cause a general
statement of the funds of their bank to be prepared up to the 20th
November in each year, showing the balance or principal sum due
to all the depositors, a statement of the expenses incurred, stating
in whose hands such balance is then remaining. Such annual
statement shall be attested by two managers or trustees, or one
manager and one trustee, and countersigned by the secretary or
actuary of such bank, and shall be transmitted to the National
Debt Office in London or Dublin (as the case may be) within nine
weeks from the date above given. If trustees neglect to transmit
this account, or refuse to obey the other orders or directions of the
Commissioners, then it shall be lawful for the Commissioners to
close the accounts of such trustees who thus transgress, and also
lawful to re-open them if they see occasion. (a)
Sec. 56. If the accounts are not prepared and transmitted within
the prescribed time, it shall be lawful for the Commissioners to
forthwith publish in the London Gazette, and a newspaper published
in the county where the bank is situated, the name of such
defaulting bank. (b)
Sec. 57. The Commissioners are empowered to call for a detailed
statement of all the expenses incurred in the management of any
Savings Bank. (b)
Sec. 58. The treasurer of a Savings Bank must sign the annual
statement, where it is shown by that statement that any sum of
money belonging to the bank is in his hands. (b)
Sec. 59. A duplicate of every such annual statement, accompanied
by a list of the trustees and managers for the time being, shall be
publicly affixed and exhibited in some conspicuous part of each
Savings Bank for the information of all depositing therein; and
every depositor shall be entitled to receive from the Savings
Bank a private copy of the annual statement on payment of one
penny. (a)
Sec. 60. The National Debt Commissioners shall, once in each
year, render the fullest account of all their dealings with Savings
Banks to the Lords of the Treasury, and copies of all such accounts
shall be laid before both Houses of Parliament.
Sec. 61. A distinct account to be rendered in the same way,
showing the aggregate amount of the Separate Surplus Fund.
Sec. 62. Savings Banks to compute interest on the 20th of
May and the 20th of November in each year. (a)
Sec. 63. The Commissioners may keep a balance in the Bank of
Ireland under the title of The Fund for the Banks for Savings,
to meet the drafts which may be drawn on account of Savings
Banks in Ireland. (a)
Sec. 64. All receipts, orders, certificates, endorsements, accounts,
and returns required for carrying out this Act, shall be made in
such manner as shall be approved by the Commissioners.
Sec. 65. This Act shall be a full and sufficient indemnity and
discharge to the Commissioners, and to the Governor of the Bank,
&c. for all things to be done or required to be done in pursuance of
this Act. (a)
Sec. 66. Commissioners may employ a barrister and such officers
as may be necessary to the carrying out of the provisions of this
Act, and the Treasury shall pay them their remuneration, and meet
incidental expenses. (a)
Sec. 67. This Act to apply to all Savings Banks (except those
mentioned in the next section) established or hereafter to be established
in England, Scotland, Ireland, or Wales; Berwick-on-Tweed,
the Islands of Guernsey and Jersey, and the Isle of Man.
Sec. 68. This Act must not be held to repeal Acts relating to
Post Office Savings Banks, or any of the powers granted to the
Commissioners for the Reduction of the National Debt.[217]
Form of Certificate for Transfer from one Savings Bank to another,
or to any other description of Savings Bank.
Savings Bank at_______________, in the county of_______________.
Whereas _______________ of _______________, a depositor in the
above-named Savings Bank, is desirous of closing his [or her]
account with the said bank for the purpose of transferring his
[or her] deposits to the Savings Bank at _______________, in the
county of _______________; and to enable him [or her] so to do,
the said depositor has applied for a certificate of the whole amount
due to him [or her], pursuant to the Act (26 and 27 Vict. c. 87):
we hereby certify that the sum due to the said depositor for money
deposited by him [or her] in this Savings Bank, inclusive of all
interest due to him [or her] at this date, amounts to the sum of
[state the amount in words], of which the sum of [state the amount,
if any, in words] has been deposited since the twentieth of November
last; and we further certify, that his [or her] account with
this Savings Bank has been closed by the issue of this certificate.
Witness our hands this _________ day of _________, 18____.
______________ ⎫ Two of the Trustees or Managers [appointed
⎬ for this object, by the Trustees] of the
______________ ⎭ above-named Savings Bank.
Examined _________________
the Actuary or Secretary of the above-named
Savings Bank.
An Abstract of the Act To make further provision for the Establishment
of Savings Banks for Seamen.
(19 and 20 Vict. c. 41.—7th
July, 1856.)
Preamble. Whereas by the Merchant Shipping Act, 1854,
certain powers were given to the Commissioners for the Reduction
of the National Debt for the purpose of establishing Savings
Banks for Seamen; and whereas it has since been found to be
expedient that the immediate management and control of such
Savings Banks should be placed in the hands of the Board of
Trade. Be it enacted, &c.
Sec. 1. That the Board of Trade may establish in London a
central Savings Bank for seamen, and branch banks at such ports
or places as they may deem expedient; and that they may receive
deposits from or on account of seamen, or their wives and children;
and that the total amount standing in the name of any one depositor
shall not exceed 200l.
Sec. 2. The Board of Trade may appoint shipping offices branch
Savings Banks under this Act, and shipping masters agents of the
said board to conduct this business.
Sec. 3. The Commissioners of the National Debt shall receive
the moneys deposited in these banks on the request of the Board
of Trade; shall invest these moneys in the same way as they do
the moneys of other banks; and shall pay, together with interest,
the sums received on a request signified in the like manner.
Sec. 4. Provides that the Board of Trade may make any
alterations which they think fit with respect to the persons
entitled to become depositors, the making and withdrawal of
deposits, the rate and payment of interest, or any other matter
connected with these banks; such regulations to be binding
upon all.
Sec. 5. Provides that all sums of money due to any deceased
depositor, shall be paid and applied subject to the conditions of
the provisions of the Merchant Shipping Act.
Sec. 6. Provides that any person forging a document, or making
false representations in order to obtain deposits or interest, shall
be punishable with penal servitude or imprisonment.
Sec. 7. The Board of Trade to pay all expenses in carrying out
this Act out of the interest received from the National Debt
Commissioners.
Sec. 8. An annual account of all deposits and repayments shall
be laid before both Houses of Parliament, as also a copy of all
regulations made for carrying out this Act.
Sec. 9. All criminal proceedings under this Act to be carried on
as under the Merchant Shipping Act of 1854.[218]
An Abstract of the Act To Amend and Consolidate the Laws relating
to Military Savings Banks.
(22 and 23 Vict. c. 20.—13th
August, 1859.)
Sec. 1. Repeals the 5 and 6 Vict. c. 71, and the 8 and 9 Vict.
c. 27, amending it, and the 12 and 13 Vict. c. 71, and amends and
consolidates the said Acts. It also provides that deposits made
under these Acts shall not be affected by their repealment.
Sec. 2. Makes it lawful for her Majesty to establish or continue
military or regimental Savings Banks, for the purpose of receiving
sums of money from non-commissioned officers and soldiers employed
in her service in the United Kingdom and foreign stations
(India alone excepted), and for the purpose of receiving moneys or
funds raised or paid for objects or purpose connected with these
officers and soldiers which her Majesty may think fit to authorize
to be deposited in these banks.
Sec. 3. Provides that the Secretary at War, with the concurrence
of the Commander-in-Chief and the Lords of the Treasury, may
make regulations for the conduct of these banks; and that when
these regulations shall be signed by her Majesty and laid before
Parliament they shall be binding on all concerned.
Sec. 4. These regulations shall determine the rate of interest
(which must not exceed three pounds fifteen shillings per cent. per
annum), and all the minor points connected therewith; the circumstances
under which deposits shall be forfeited to the public; the
payment of the money of deceased depositors: may make provision
for the deposit of money created for charitable purposes, and
may make it obligatory on commanding officers to so deposit such
funds; shall make provision for the withdrawal of money; and
shall provide for the keeping of proper accounts, and generally for
all such matters as relate to Savings Banks.
Sec. 5. The receipt of infants and married women shall be a
sufficient discharge for what shall be deemed a valid payment made
to them.
Sec. 6. The moneys received in these banks may be applied by
the persons receiving them to the payment of such ordinary army
services as it may be their duty to pay; and sums payable to
depositors shall be paid out of the grants by Parliament for these
services.
Sec. 7. Provides that the Secretary at War may direct payment
out of the moneys so granted to be made to the account of the
National Debt Commissioners, and carried to the account of the
Fund for the Military Savings Banks.
Sec. 8. The Commissioners of the National Debt to invest the
surplus money in the purchase of bank annuities; the interest
arising also to be so applied; and such interest or dividends shall
not be subject to any taxes, charges, or impositions whatever.
Sec. 9. The Secretary at War may direct, at fourteen days' notice,
the moneys invested in annuities to be transferred to the account of
the Paymaster-General at the Bank of England.
Sec. 10. Empowers the National Debt Commissioners to sell the
annuities.
Sec. 11. The money arising from the dissolution of certain Regimental
Benefit Societies, which was placed in the Savings Banks in
the name of each member to accumulate until his discharge, by
the Act (12 and 13 Vict. c. 71) may be withdrawn under certain
conditions.
Sec. 12. The officers of Regimental Savings Banks shall not be
personally liable except for their own wilful neglect or default.
Sec. 13. Provides that full accounts of all transactions in these
banks shall be laid before both Houses of Parliament before the 1st
of April in each year.
Sec. 14. Military Savings Banks not to be within the provisions
of the Acts relating to Savings Banks proper.
Sec. 15. Refers to the construction of the word India.
Sec. 16. Provides that the Act shall take effect immediately after
the regulations have been framed.
An Act[219] to grant Additional Facilities for depositing Small Savings
at Interest, with the Security of the Government for due repayment
thereof.
(24 Vict. c. 14.—17th May, 1861.)
Postmaster-General may direct Officers in Post Office to receive
Deposits.
1. It shall be lawful for the Postmaster-General, with the consent
of the Commissioners of Her Majesty's Treasury, to authorize
and direct such of his officers as he shall think fit, to receive
deposits for remittance to the principal office, and to repay the
same, under such regulations as he, with the concurrence of the
Commissioners of Her Majesty's Treasury, may prescribe in that
respect.
Legal Title of Depositor to Repayment.
2. Every deposit received by any officer of the Postmaster-General
appointed for that purpose shall be entered by him at the
time in the depositor's book, and the entry shall be attested by him
and by the dated stamp of his office; and the amount of such
deposit shall, upon the day of such receipt, be reported by such
officer to the Postmaster-General, and the acknowledgment of the
Postmaster-General, signified by the officer whom he shall appoint
for the purpose, shall be forthwith transmitted to the depositor; and
the said acknowledgment shall be conclusive evidence of his claim
to the repayment thereof, with the interest thereon, upon demand
made by him on the Postmaster-General; and, in order to allow a
reasonable time for the receipt of the said acknowledgment, the
entry by the proper officer in the depositor's book shall also be conclusive
evidence of title for ten days from the lodgment of the
deposit; and if the said acknowledgment shall not have been
received by the depositor through the post within ten days, and he
shall, before or upon the expiry thereof, demand the said acknowledgment
from the Postmaster-General, then the entry in his book
shall be conclusive evidence of title during another term of ten
days, and toties quoties; provided always that such deposits shall
not be of less amount than one shilling, nor of any sum not a
multiple thereof.
Depositors entitled to Repayments not later than Ten Days after
Demand made.
3. On demand of the depositor, or party legally authorized to
claim on account of a depositor, made in such form as shall be prescribed
in that behalf, for repayment of any deposit, or any part
thereof, the authority of the Postmaster-General for such repayment
shall be transmitted to the depositor forthwith; and the depositor
shall be absolutely entitled to repayment of any sum or sums that
may be due to him within ten days at farthest after his demand
shall be made at any Post Office where deposits are received or
paid.
Names of Depositors, &c., not to be disclosed.
4. The officers of the Postmaster-General engaged in the receipt
or payment of deposits shall not disclose the name of any depositor,
nor the amount deposited or withdrawn, except to the Postmaster-General,
or to such of his officers as may be appointed to
assist in carrying this Act into operation.
Money to be paid to Commissioners for the Reduction of the National
Debt, and repaid to Depositors through Post Office.
5. All moneys so deposited with the Postmaster-General shall
forthwith be paid over to the Commissioners for the Reduction of
the National Debt; and all sums withdrawn by depositors, or by
parties legally authorized to claim on account of depositors, shall be
repaid to them out of the said moneys, through the office of Her
Majesty's Postmaster-General.
Additional Security to Depositor.
6. If at any time the fund to be created under the authority of
this Act by the investment of the deposits shall be insufficient to
meet the lawful claims of all depositors, it shall be lawful for the
Commissioners of Her Majesty's Treasury, upon being duly informed
thereof by the Commissioners for the Reduction of the
National Debt, to issue the amount of such deficiency out of the
Consolidated Fund of the United Kingdom, or out of the growing
produce thereof; and the said Commissioners of Her Majesty's
Treasury shall certify such deficiency to Parliament.
Rate of Interest payable to Depositors.
7. The interest payable to the parties making such deposits shall
be at the rate of two pounds ten shillings per centum per annum;
but such interest shall not be calculated on any amount less than
one pound, or some multiple thereof, and not commence until the
first day of the calendar month next following the day of deposit,
and shall cease on the first day of the calendar month in which such
deposit is withdrawn.
Interest, how calculated.
8. Interest on deposits shall be calculated to the thirty-first day
of December in every year, and shall be added to and become part
of the principal money.
Investment of Funds received under this Act.
9. The moneys remitted to the Commissioners for the Reduction
of the National Debt, under the authority of this Act, shall be
invested in some or in all of the securities in which the funds of
Savings Banks established under the existing laws may be invested;
and a separate and distinct account shall be kept by the said Commissioners
of all receipts, investments, sales, and repayments; and
a balance sheet of such account, from the first of January to the
thirty-first of December in every year, shall be laid before both
Houses of Parliament not later than the thirty-first of March in
every year.
Depositors desiring to Transfer their Deposits.
10. If any depositor making deposit under this Act shall desire
to transfer the amount of such deposit to a Savings Bank established
under the Acts relating to Savings Banks, he shall, upon application
to the chief office of the Postmaster-General, be furnished with a
certificate stating the whole amount which may be due to him, with
interest, and thereupon his account under this Act shall be closed;
and, upon delivery of such certificate to the trustees or managers of
the Savings Bank to which it is proposed by the depositor to transfer
such deposit, they shall, if they think fit, open an account for the
amount stated in such certificate for such depositor, who shall thereupon
be subject to the rules of such Savings Bank; and the amount
so transferred shall, upon such certificate being forwarded to the
Commissioners for the Reduction of the National Debt, be written
off in the books of the said Commissioners from the amount of
moneys received under the authority of this Act, and shall be
carried to the account of the Savings Bank to which such transfer
shall have been made; and, in like manner, if any depositor in a
Savings Bank, established under the Savings Bank Acts, shall desire
to transfer the amount due to him, with interest, from such Savings
Bank to the Postmaster-General, for deposit under the provisions of
this Act, the trustees or managers of such Savings Bank shall, upon
his request, furnish such depositor with a certificate, in a form to be
approved by the Commissioners for the Reduction of the National
Debt, signed by two trustees of such Savings Bank, and thereupon
his account with such Savings Bank shall be closed, which certificate
the depositor may deliver to any officer of the Postmaster-General
authorized to receive deposits under this Act, and such
certificate shall for the amount therein set forth be considered to be
a deposit made under the authority of this Act, and being forwarded
to the said Commissioners, the said amount shall then be transferred
in the books of the said Commissioners from the account of the
said Savings Bank to the credit of the account of moneys deposited
under the authority of this Act. Provided always, that nothing
contained in this Act respecting Savings Banks shall render it
necessary to have the rules and regulations of any Savings Bank
again certified if the same have been before certified according
to law.
Postmaster-General, with consent of Treasury, to make Regulations,
copies of which to be laid before Parliament.
11. The Postmaster-General, with the consent of the Commissioners
of Her Majesty's Treasury, may make, and from time to
time, as he shall see occasion, alter regulations for superintending,
inspecting, and regulating, the mode of keeping and examining the
accounts of depositors, and with respect to the making of deposits
and to the withdrawal of deposits and interest, and all other matters
incidental to the carrying this Act into execution, in his department;
and all regulations so made shall be binding on the parties interested
in the subject-matter thereof, to the same extent as if such regulations
formed part of this Act; and copies of all regulations issued
under the authority of this Act shall be laid before both Houses of
Parliament within fourteen days from the date thereof, if Parliament
shall be then sitting, and, if not, then within fourteen days
from the next re-assembling of Parliament.
Accounts to be laid before Parliament.
12. An annual account of all deposits received and paid under
the authority of this Act, and of the expenses incurred during the
year ended the thirty-first of December, together with a statement
of the total amount due at the close of the year to all depositors,
shall be laid by the Postmaster-General before both Houses of
Parliament not later than the thirty-first of March in every year.
Accounts to be examined by Commissioners of Audit.
13. The annual accounts of the Postmaster General, and of the
Commissioners for the Reduction of the National Debt, to the
thirty-first of December in each year, in respect to all moneys
deposited or invested under the authority of this Act, shall annually,
prior to the thirty-first of March, in each year, be submitted for
examination and audit to the Commissioners for auditing public
accounts.
Provisions of Savings Banks Acts applicable to this Act.
14. All the provisions of the Acts now in force relating to
Savings Banks, as to matters for which no other provision is made
by this Act, shall be deemed applicable to this Act, so far as the
same are not repugnant thereto.
Expenses of Act.
15. All expenses incurred in the execution of this Act shall be
paid out of the moneys received under the authority of this Act.
Abstracts of Minor Acts of Parliament relating to
Savings Banks.
26 Victoria, c. 14, entitled An Act to Amend the Laws relating to
Post Office Savings Banks,
(4th May, 1863,) provides:—
Sec. 1. For the transfer of the accounts of minors.
Sec. 2. For the funds of a Savings Bank closing its business to
be paid over to the National Debt Commissioners, the money
arising from the sale of property to be carried to the separate
surplus fund; the receipt of the trustees on the sale of property to
be a sufficient discharge to the purchaser. The trustees of Savings
Banks about to close to have power to compensate their officers out
of the separate surplus fund.
Sec. 3. The information necessary as to the steps to be taken
when the trustees of any bank have determined to close.
Sec. 4. For the conversion of perpetual Government annuities at
three per cent. into capital stock at two pounds ten shillings
per cent.
Sec. 5. Power to trustees to appoint managers to sign transfer
certificates.
Sec. 6. That the warrants for converting annuities into capital
stock shall be laid before Parliament.
26 Victoria, c. 25, entitled An Act to make further Provision for
the Investment of the Moneys received by the Commissioners for the
Reduction of the National Debt from the Trustees of Savings Banks
established under the Act 9 Geo. IV. c. 92,
(8th June, 1863,)
provides:—
Sec. 1. For the cancelling of 24,000,000l. of capital stock of
annuities, and the creation of a charge on the Consolidated Fund
for that amount.
Sec. 2. That the Treasury may cancel an additional amount of
stock not exceeding 5,000,000l. creating equivalent terminable
annuities chargeable upon the Consolidated Fund.
Sec. 3. That the Commissioners may invest the interest payable
on the securities created under this Act, and other moneys remitted
to them, in the purchase of parliamentary securities, or in any stock
or debentures or other securities the interest for which is guaranteed
by Parliament.
Sec. 4. That issues in money may be made out of the Consolidated
Fund on Savings Bank account on certificate from the National
Debt Commissioners.
Sec. 5. That at least one half of the whole amount of securities
held for Savings Banks, exclusive of the amount of the charge on
the Consolidated Fund (Section 1), shall be parliamentary securities.
Sec. 6. That every year the National Debt Commissioners shall
prepare a balance sheet giving the assets and liabilities in respect to
Savings Banks, to the credit of which shall be placed the amount
of the charge upon the Consolidated Fund for twenty-four millions
and all other moneys and securities of every kind; and that a copy
of this balance sheet be laid before Parliament each year.
Sec. 7. That the deficiency shown shall be a charge upon the
Consolidated Fund.
Sec. 8. That the powers of investment granted to the Commissioners
by other Acts, in so far as they are not varied by this Act,
shall continue in force.
* * * * *
The Savings Bank Investment Act,
which has just received the
Royal Assent (20th March, 1866), empowers the Treasury to substitute
terminable annuities for capital stock standing to the account
of Savings Banks and Post Office Savings Banks, and empowers
the Treasury to make rules as to payments to the National Debt
Commissioners. The Treasury is likewise empowered to cancel
capital stocks of annuities, and to substitute terminable annuities.
The warrants issued by the Treasury to the Bank of England to be
a sufficient authority for the cancelling of the stock.
Financial Returns, giving the most recent information relating to Savings Banks, Post Office Savings Banks, and
Military Banks, including the entire Amount of Deposits placed in each kind of Bank from their commencement.
SAVINGS BANKS AND FRIENDLY SOCIETIES.
An Account of the Gross Amount of all Sums Received and Paid by the National Debt Commissioners on account of Savings Banks
and Friendly Societies in Great Britain and Ireland from their commencement (August, 1817) to the 20th of November, 1865, inclusive.
[Transcriber's Note: Column headers for table, below:]
A. From August, 1817, to 20th November 1865.
B. Gross Amount of all Sums received from Trustees, including Interest up to 20th Nov. 1865.
C. Gross Amount of all Sums paid to Trustees, including Interest.
D. Amount of Money, Principal and Interest, due to the Trustees (Nov. 1865), including £302,030 8s.5d. due on account of the separate Surplus Fund.
E. Value of the Securities held by the Commissioners (Nov. 1865), at the Prices of that day, to provide for the Money due to Trustees.
| A. | B. | C. | D. | E. |
|---|
|
£ s. d. |
£ s. d. |
£ s. d. |
£ s. d. |
Savings Banks.
Great Britain
& Ireland. |
90,179,614 18 9 |
51,142,506 15 0 |
39,037,108 3 9 |
36,010,477 4 7 |
Friendly Societies.
Great Britain
& Ireland. |
5,509,975 4 3 |
3,594,271 4 11 |
1,915,703 19 4 |
1,071,198 3 6 |
Total.
Savings Banks and
Friendly Societies. |
95,689,590 3 0 |
4,736,777 19 11 |
40,952,812 3 1 |
37,081,675 8 1 |
|
Balance Deficient |
3,871,136 15 0 |
| £40,952,812 3 1 |
POST OFFICE SAVINGS BANKS.
An Account of the Sums due to all Depositors in Post Office Savings Banks throughout
the United Kingdom on the 31st March, 1865; of the Expenses of Management of the
Post Office Savings Banks to the same date; of the Amount standing to the Credit of
the Post Office Savings Banks, on the same date, in the books of the Commissioners
for the Reduction of the National Debt; of the Balance in the hands of the Postmaster-General
at the same date; and of the Amount of any Loss sustained by the Post Office
Savings Banks from the Frauds committed in the Transmission of Deposits, or otherwise.
|
| Liabilities. |
|---|
|
| £ s. d. |
£ s. d. |
| Total amount of deposits, from 16th September,
1861, to 31st March, 1865, of the interest
allowed and added to principal on 31st
December, 1861, 31st December, 1862, 31st
December, 1863, and 31st December, 1864, and
of the interest allowed and paid on closed
accounts up to 31st March, 1865 | 9,217,809 8 7 |
| Deduct— |
| Repayments to depositors, from 16th September,
1861, to 31st March, 1866 | 3,851,889 14 6 |
|
|
| Total sum due to all depositors in the Post Office Savings
Bank in the Savings Banks in the United Kingdom on the
31st March, 1865 | 5,365,925 14 1 |
| Surplus of assets over liabilities | 41,000 2 1 |
| 5,406,925 16 2 |
|
| Assets. |
|---|
|
| £ s. d. |
£ s. d. |
£ s. d. |
| Total amount of the sums paid by
the Postmaster-General to the
National Debt Commissioners for
investment, and of the interest
received on such investments,
from 16th September, 1861, to
31st March, 1865 | 5,487,728 6 10 |
| Deduct— |
| Amount which has been repaid by
the Commissioners for the
Reduction of the National Debt,
on account of 108,506l. 12s
11d,[220] being the amount
paid for the expenses of
management of the Post Office
Savings Banks from 16th
September, 1861, to 31st March,
1865 | 91,848 7 4 |
| Amount of sums transferred from
Post Office Savings Banks to
Savings Banks | 5,255 19 5 |
| 97,104 6 9 |
| 5,390,624 0 0 |
| Balance remaining in the hands
of the Postmaster-General to
be paid over for investment | 29,147 15 9 |
| Deduct— |
| Amount of loss through the
defalcations of a former
postmaster of Beverley | 1,093 14 1 |
| Amount of loss by the frauds
committed by J. W. Thorne | 94 0 0 |
| Amount of expenses of
management paid by the
Postmaster-General during the
quarter ended 31st March,
1865; not recovered from the
Post Office Savings Bank Fund
at that date | 11,658 5 7 |
| 12,845 19 8 |
| 16,301 16 1 |
| 5,406,925 16 2 |
|
MILITARY SAVINGS BANKS.
An Account of the Gross Amount of all Moneys Received and Paid by the Commissioners for the Reduction of the National Debt, and of the Gross
Amount of Stock Bought and Sold by and Transferred To the Said Commissioners on account of The Fund for the Military Savings Banks,
Pursuant
To Act 8 & 9 Vict. C. 27, S 5, From the 19th September, 1845, To the 5th January, 1866.
| Consolidated
£3 per Cents. |
Reduced £3 per Cents. | New £3 per Cents. | TOTAL STOCK. |
|---|
| £ s. d. |
£ s. d. |
£ s. d. |
£ s. d. |
| Transferred to the Commissioners by the Paymaster-General |
15,062 18 8 | |
15,062 18 8 |
| Purchased with Money received from the Paymaster-General, and with the Amount of accumulated Dividends received |
104,394 17 7 |
91,979 8 11 |
237,877 10 4 |
434,251 16 10 |
| Total Stock bought and transferred |
119,457 16 3 |
91,979 8 11 |
237,877 10 4 |
449,314 15 6 |
| Total Stock sold by order of Secretary of State for War |
78,118 5 10 |
|
6,118 0 8 |
94,236 6 6 |
Total Stock at the Account of The Fund for the Military Savings Banks at 5th January, 1866 |
41,339 10 5 |
91,979 8 11 |
221,759 9 8 |
355,078 9 0 |
| CASH RECEIVED. |
| £ s. d. |
| Total Sum received and applied by the Commissioners to the Purchase of 434,251l. 16s. 10d. £3 per Cent. Stock, as above |
407,511 14 10 |
| Deduct the Value received for 94,236l. 6s. 6d. £3 per Cent. Stock, sold by order of Secretary of State for War |
88,458 8 5 |
| 319,053 6 5 |
W. E. GLADSTONE, C. of E. ⎫-Commissioners.
H. L. HOLLAND, Gov. ⎬ Commissioners.
THOS. N. HUNT, Dep. Gov. ⎭-Commissioners.
National Debt Office,
15 February, 1866.
A. Y. Spearman,
Comptroller-General.
POST OFFICE SAVINGS BANKS.
An Account of all Deposits Received and Paid under the Authority of the Act 24 Vict. c. 14, during the Year ended 31st
December, 1865, and of the Expenses incurred from the Commencement of Business, on 16th September, 1861, to 31st
December, 1865, together with a Statement of the Total Amount due at the Close of the year 1865 to all Depositors.
(a.)
Account of all Deposits Received and Paid from 1st January to 31st December, 1865.
|
| £ s. d. |
| £ s. d. |
| Balance brought forward | 4,993,123 11 7 | By Repayments from 1st January to 31st December, 1865, viz.— |
| To Cash received from Depositors from 1st Jan. to 31st December, 1865 |
3,719,017 13 4 | |
£ s. d. |
|
| Cash paid | 2,303,525 2 10 |
| 8,712,141 4 11 |
Warrants issued, but not cashed to date |
15,085 11 7 |
|
| 2,318,610 14 5 |
| To Interest thereon up to 31st December, 1865, computed according to 7th and 8th sections of the
above-cited Act, and added to the Principal Money of the said Depositors |
132,869 13 7 |
Balance due at the close of the year 1865 to all Depositors, inclusive of interest to 31st December, 1865 |
6,526,400 4 1 |
| 8,845,010 18 6 |
| 8,845,010 18 6 |
(b.)
Explanation of Balance.
|
| £ s. d. |
| Balance due at the close of the year to all Depositors |
6,526,400 4 1 |
| Moneys remitted to the Commissioners for the Reduction of the National Debt, |
£ s. d. |
| from 16th September, 1861, to 31st December, 1864 | 4,800,900 11 8 |
| 1st January to 31st December, 1865 | 1,402,789 16 2 |
| Deduct:— | £ s. d. | 6,203,690 7 10 |
| Amount transferred from Post
Office Savings Banks, and
which has been written off
the account of Post Office
Savings Banks, at the
National Debt Office,
during the period from
16th September, 1861,
to 31st December, 1864 | 4,210 1 4 |
| Ditto . . . ditto . . . during the
year ended 31st
December, 1865 | 2,698 17 11 |
| 6,908 19 3 |
| Net Amount lodged with the Commissioners for
the Reduction of the National Debt for
investment | 6,196,781 8 7 |
| Add:— |
| Interest accruing to Depositors up to 31st
December, 1865, including the Interest
which accrued up to 31st December, 1864 | 310,755 16 9 |
| Amount advanced on account of
Charges of Management, not
recovered until after
31st December, 1865 | 14,535 10 11 |
| Balance remaining on 31st
December, 1865, to be
paid over for investment | 4,327 7 10 |
| 18,862 18 9 |
| 6,526,400 4 1 |
(c.)
Account of Charges of Management and of Expenses incurred for Post Office Savings Banks, from their
Establishment on the 16th September, 1861, to the 31st December, 1865.
|
| £ s. d. |
| Charges and Expenses for the period from
16th September, 1861, to the 31st December, 1864 | 91,848 7 4 |
| Charges and Expenses for the year ended
31st December, 1865 | 49,526 13 10 |
| [221]141,375 1 2 |
| The sum standing to the credit of the Post Office
Savings Banks Fund on the 31st Dec. 1865, at
the National Debt Office, was | 6,582,329 11 7 |
| And on the same day there was in the hands of
the Postmaster-General a balance of | 4,327 7 10 |
| Making in all | 6,586,656 19 5 |
| To meet a liability of | £6,526,400 4 0 |
General Post Office,
March, 1866.
Stanley of Alderley,
Postmaster-General.
George Chetwind,
Receiver and Accountant General.
A. C. Thomson,
Assistant-Controller of Post Office Savings Banks.
As the last sheet of this work was passing through the press, the
Postmaster-General's Report for 1865, to which reference has already
been made, has been printed. The information therein given respecting
the progress of some of the measures which we have had
under consideration is so important in itself, as well as illustrative
and corroborative of our text, as to justify us in making the
following extracts. These extracts, which are here given in his
Lordship's own words, plainly show the deep interest he takes
in those schemes, which have all been commenced during his term
of office, and carried out under his immediate oversight and
direction.
Post Office Savings Banks.
The depositors in Post Office Savings Banks increased in number
during 1865 at the rate of 29 per cent.; the total sum deposited
increased at the rate of 30 per cent. During the first part of the
present year the business has increased in a still greater proportion.
In the first nine weeks of 1865, the number of deposits was
258,917, and 48,777 new accounts were opened; in the first nine
weeks of 1866, 331,027 deposits were made, and 58,472 new accounts
were opened. It is evident, therefore,
says Lord Stanley
of Alderley, that great as had been the progress of the Post Office
Banks up to the close of last year, there are good grounds for expecting
a greater progress hereafter. And I am happy in being
able to state, that the Scheme which was framed for the conduct
of the Post Office Savings Banks, before any one of them was
established, has been found to work well in each and all of its
parts, and to admit of any expansion of business, no matter how
great or how sudden that expansion of business may be. The
officers by whom this Scheme was framed calculated, as a matter
of course, upon a large and constant growth of business; but
sudden augmentations, arising from causes which could not be
foreseen, have been by no means unfrequent. In the first week
of the present year, for instance, no less than 10,000 new depositors
entered the banks; but even under such sudden and
unexpected augmentations of business the scheme of operations
has been found to work well.
The following is a comprehensive Statement of the Business of Post Office Savings Banks from their commencement to the close of the
Year 1865, of the Cost of that Business, and of the Funds in hand at the close of each Year.
| Period. |
|---|
| From 16th Sept. 1861, to 31st Dec. 1862. |
From 31st Dec. 1862, to 31st Dec. 1863. |
From 31st Dec. 1863, to 31st Dec. 1864. |
From 31st Dec. 1864, to 31st Dec. 1865. |
From 31st Dec. 1861, to 31st Dec. 1865. |
|---|
| 1 | Number of Post Office Savings Banks at close of Period. |
2,535 | 2,991 | 3,081 | 3,321 | 3,321 |
| 2 | Number of Deposits received during Period. |
639,216 | 842,848 | 1,110,762 | 1,302,309 | 3,895,135 |
| 3 | Total Amount of Deposits received during Period. |
£
2,114,669 | £
2,651,209 |
£
3,350,084 | £
3,719,017 |
£
11,834,979 |
| 4 | Average Amount of each Deposit received during Period. |
£ s. d.
3 6 2 |
£ s. d.
8 2 11 |
£ s. d.
3 0 3 |
£ s. d.
2 17 1 |
£ s. d.
3 0 9 |
| 5 | Number of Withdrawals during Period. |
97,294 | 197,431 |
309,242 | 407,412 |
1,011,379 |
| 6 | Total Amount of Withdrawals during Period. |
£
438,637 |
£
1,027,154 |
£
1,834,849 |
£
2,318,610 |
£
5,619,250 |
| 7 | Average Amount of each Withdrawal during Period. |
£ s. d.
4 10 2 |
£ s. d.
5 4 0 |
£ s. d.
5 18 8 |
£ s. d.
5 13 9 |
£ s. d.
5 11 1 |
| 8 | Charges of Management during Period. |
£
20,591 | £
25,401 |
£
45,856 | £
49,627 |
£
141,375 |
| 9 | Average Cost of each Transaction, viz. of each Deposit or Withdrawal.[222] |
d.
6-7⁄10 |
d.
5-8⁄10 |
d.
7-7⁄10 |
d.
6-9⁄10 |
d.
6-9⁄10 |
| 10 | Number of Accounts opened during Period. |
205,928 | 185,934 |
226,153 | 239,686 |
857,701 |
| 11 | Number of Accounts closed during Period. |
27,433 | 44,760 |
74,964 | 98,725 |
245,882 |
| 12 | Number of Accounts remaining open at close of Period. |
178,496 | 319,669 |
470,858 | 611,819 |
611,819 |
| 13 | Total Amount standing to credit of all open Accounts, inclusive of Interest, to close of Period. |
£
1,698,221 | £
3,377,481 |
£
4,993,163 | £
6,526,400 |
£
6,526,400 |
| 14 | Average Amount standing to credit, of each open Account at close of Period. |
£ s. d.
9 10 3 |
£ s. d.
10 11 4 |
£ s. d.
10 12 1 |
£ s. d.
10 13 4 |
£ s. d.
10 13 4 |
| 15 | Total Sum standing to credit of Post Office Savings Banks on Books of National Debt Commissioners at close of Period.[223] |
£
1,659,032 | £
3,328,182 |
£
4,995,663 | £
6,582,329 |
£
6,582,329 |
| 16 | Balance in hands of Postmaster-General, after allowing for Charges of Management, at close of Period. |
£
35,692 | £
44,413 |
£
5,522 | £
4,327 |
£
4,327 |
| 17 | Total Balance in hand, applicable to payment of Depositors, at close of Period.[224] |
£
1,694,724 | £
3,372,595 |
£
5,001,185 | £
6,586,656 |
£
6,586,656 |
| 18 | Number of Old Savings Banks and Post Office Banks combined, at close of Period. |
3,157 | 3,594 |
3,659 | 3,822 |
3,822 |
| 19 | Number of Depositors in Old Savings Banks and Post Office Banks combined, at close of Period. |
1,732,556 | 1,876,389 |
1,967,663 | 2,078,346 |
2,078,346 |
Insurances
"Of the whole number of persons whose proposals have been
accepted:—
| 501 | decided to pay their premiums | - annually. |
| 20 | " " | - half-yearly. |
| 81 | " " | - quarterly. |
| 5 | " " | - six times a year. |
| 181 | " " | - monthly. |
| 3 | " " | - fortnightly. |
| and |
| 18 | have paid their premiums in one sum |
"Of the whole number of persons who have commenced to pay
premiums, 8 have allowed their policies to lapse by default, and
14, having defaulted, have on application been re-admitted. In
no case, however, have I found it necessary to impose the prescribed
fine for default.
"The total sum insured at the present time is 60,874l., and the
gross annual premium income, exclusive of the sums received in
single payments, is 1,924l.
"Of the whole number of proposers, 866 have been males, and
68 females. In a very few cases it has been necessary to charge
an extra premium for extra risk, arising out of somewhat defective
health; and in the case of a few married women, who were pregnant
at the date of the insurance, it has been thought right to
add to the first premium, but only to the first premium, a
special premium of 10s. per 100l. to cover the risk attendant
on confinements.
No deaths have occurred up to the present time amongst the persons
insured.
Annuities.
"Since the commencement of business, 238 proposals for the
purchase of Annuities have been received; of these, 4 have been
dropped, 4 are under consideration, and 230 have been accepted.
Of the proposals which have been accepted, 150 have been for the
purchase of Immediate Annuities, the amount of annuity purchased
being 3,430l., and the purchase money being 39,774l. Of
the remainder, 15 were for the purchase, by immediate payments,
of Deferred Annuities, the amount of deferred annuity purchased
being 232l., and the amount of purchase money paid down being
1,543l. The remainder, 65, were for the purchase of Deferred
Annuities by annual or more frequent payments, the amount in
course of purchase being 1,368l., and the amount of purchase
money annually payable being 759l. Of the 238 intending annuitants,
103 were males and 129 were females. The remaining six
proposals were for insurances on joint male and female lives.
"While the Government Insurance and Annuity Act was under
consideration by the Legislature, an opinion was expressed that
Friendly Societies which had undertaken to provide, in return for
a single subscription, sick pay, old age pay, and death pay, would
do well to make arrangements for the transfer of their old age
and death risks to the Government, by payment, of course, of
a proper consideration, and to confine themselves to dealing with the
liabilities contingent on sickness. I have recently received a proposal
from a large Friendly Society for the transfer of its old age
risks to the Government, and the terms of the arrangement are
now under consideration. I am informed, moreover, that other
proposals of this kind are likely shortly to be made.
On the whole, I am able to conclude my observations on this
subject by stating, that the Scheme framed for the conduct of
Insurance and Annuity business has worked smoothly and well;
that the checks established for the protection of the Government
have hitherto proved sufficient for their purpose; that the advantages
of the measure are gradually becoming known to the
classes for whose benefit it was devised, and that, looking to all
the circumstances of the case, and the steady and continued growth
of the business, the success of the measure may be regarded as
established.
An Account showing the Number and Amount of Sums received and paid, and the Number
and Amount of Contracts granted by Her Majesty's Postmaster-General, under authority
of the Act 27 & 28 Vict. c. 43, from the Commencement of Business on the 17th April,
1865, to the 31st December, 1865. together with the Number and Amount of Contracts in
existence on the 31st December, 1865, and the Amount paid for Charges of Management.
(I.)
An Account showing the Number and Amount of Sums received and paid on Account of
Government Annuity and Insurance Contracts from the Commencement of Business on
the 17th April, 1865, to the 31st December, 1865.
|
| Receipts | | Payments |
|---|
|
| |
|
| No. | Amount | | No. | Amount |
|---|
|
| £ s d | | £ s d |
| To Cash received for the purchase of Annuities, viz.:— |
| By Cash paid to the Commissioners for the Reduction of the National Debt for
Investment on Account of Sums received for the purchase of Annuities. |
23,046 8 9 |
| No. | Amount
£ s d |
| By Cash paid to Annuitants, viz.:— |
| For Immediate Annuities | 87 | 22,738 9 9 |
| £ s d |
| For Deferred Annuities, Money not returnable | 27 |
845 7 10 | | Cash paid | 423 13 4 |
| Ditto, Money returnable | 40 | 497 7 6 |
154 | 24,081 5 1 |
Warrants issued, but not cashed at date | 5 10 0 |
33 | 429 8 4 |
|
| |
|
| To Cash received for Fees on Annuity Contracts |
139 14 0 |
By Cash paid to the Commissioners for the Reduction of the National Debt for Investment
on account of Premiums received on Contracts for Sums payable at Death |
984 0 0 |
| To Cash received from the Commissioners for the Reduction of the National Debt for payment to Annuitants:— |
| By Balance remaining to be paid to the Commissioners for the Reduction of the National Debt on the 31st December, 1865, viz.:— |
Gross | £ s d
430 5 0 |
| On account of Annuity Contracts, including Fees |
£ s d
1,174 10 4 |
| Less Income Tax | 0 16 8 |
429 8 4 |
| To Cash received on account of Contracts for the payment of Sums at Death |
1,076 | 1,165 13 1 |
On Account of Contracts for Sums payable at Death |
181 13 1 | 1,356 3 5 |
|
| |
| |
|
| £ | 25,816 8 6 |
£ | 25,816 6 |
|
(II.)
An Account showing the Number and Amount of Contracts entered into by Her Majesty's
Postmaster-General from the Commencement of Business on the 17th April, 1865, to the
31st December, 1865, and the Number and Amount of Contracts in existence on the 31st
December, 1865.
|
| Contracts. |
|---|
|
|
| No. | Amount. |
|---|
|
| Contracts for Annuities granted from the commencement of
business on the 17th April, 1865, to the 31st of December, 1865, viz.:— |
£ s. d. |
|
|
| £ s. d. |
| | Immediate Annuities |
87 | 2,100 0 0 |
| | Deferred Annuities, Money not returnable |
20 | 438 4 0 |
| | Deferred Annuities, Money returnable |
25 | 511 10 0 |
132 | 3,049 14 0 |
|
|
| Contracts for Sums payable at Death granted from the
commencement of business on the 17th April, 1865, to
the 31st December, 1865 | 547 | 40,649 2 4 |
| Contracts for Annuities in existence on the 31st
December, 1865, viz.:— |
|
|
| £ s. d. |
| | Immediate Annuities |
87 | 2,100 0 0 |
| | Deferred Annuities, Money not returnable |
20 | 436 4 0 |
| | Deferred Annuities, Money returnable |
25 | 511 10 0 |
132 | 3,049 14 0 |
|
|
| Contracts for Sums payable at Death in existence on the
31st December, 1865 | 544 | 40,349 2 4 |
|
(III.)
An Account showing the Amount paid for the Charges of Management from the Commencement
of Business on the 17th April, 1865 to the 31st December, 1865.
| £ s. d. |
| Salaries of Officers | 159 0 10 |
| Stamps on Policies | 32 10 0 |
| Fees to Medical Officers | 13 7 6 |
| Incidental disbursements, including Travelling Charges | 7 3 8 |
| Postage | 123 4 5 |
| £ | 335 6 6 |
A.
- Acknowledgement of deposits in Post Office Banks, 329-331.
- Acts of Parliament relating to Savings Banks, Post Office Banks, Government Annuities, &c. See Appendix.
- Althorp, Lord, moves for a bill to grant Annuities through the medium of Saving Banks, 69;
- replies to Mr. Attwood, 73.
- Annuities, Government: first proposals for, 69; 347;
- alteration of the law relating to, 152;
- a new scheme is proposed in 1864, 348 et seq.;
- Mr. Gladstone introduces a bill into Parliament concerning, 350;
- is discussed and carried, 353-362;
- regulations for working the measure, 362;
- how to purchase, 372-4;
- progress of the new measure of, 375-7.
- Attwood, Mr. Thomas, M.P. opposes legislation for Savings Banks, 71;
- speaks against Savings Banks, 72; 82.
- Auchterarder Savings Bank, failure of the, 137;
- particulars of this fraud, 193.
- Auditors, Government proposals for, 146.
- Australian Government Banks, 344.
- Ayrton, Mr., M.P. on Savings Banks, 162;
- assists in bringing in a bill to regulate Savings Banks, 179;
- assists in bringing in the Consolidation Act, 182;
- respecting his connexion with Government banks, 277;
- strongly opposes the Post Office Bank Bill in Committee, 303;
- presides at a working man's meeting in London in opposition to the Government Annuities Bill, 359;
- opposes it in the House, 360.
B.
- Baines, Mr. E., M.P. advocates Mr. Sikes's proposals for Post Office Banks, 286;
- Bath, the Provident Institution of, origin of, 25.
- Benefit Societies: compared with Savings Banks, 85; 86;
- disadvantages of, 37;
- unsound character of many of them, 353-5;
- oppose the Government Annuities Bill, 354, 356;
- on compulsory payment to, 391 note.
- Bentham, Jeremy, proposes
Frugality Banks,
271;
- provisions of his scheme, 271—2.
- Bentinck, Lord George, speaks on Savings Banks, 134.
- Bilston Savings Bank, frauds in, 208 et seq.;
- the Times on this fraud, 235.
- Birmingham Savings Bank, 324.
- Boodle, Mr., represents Savings Bank managers, 166;
- again, 173;
- gives evidence before the Committee of 1858, 173 note;
- on systems of book-keeping, 261;
- on confidence in trustee's names, 385 note.
- Book-keeping, different systems of, 260;
- difficulty of effecting changes in systems of, 261.
- Branch Banks, not in favour with Savings Bank managers, 286.
- Bright, Mr., M.P. in favor of Government paying defrauded depositors, 142;
- on Government security, 232.
- Brighton Bank fraud, 204 et seq..
- Buckingham, Mr. J. Silk, on compulsory savings, 390-1.
- Building Societies compared with Savings Banks, 382-3.
- Bullar, Mr. John, proposes Postal Banks, 280 et seq.; 343.
- Business done in Post Office Banks, amount of, 313 et seq.;
C.
- Canterbury Bank fraud, 218 et seq..
- Chadwick, Mr. Edwin, on Post Office Banks, 311.
- Chalmers, Dr., on Savings Banks, 105;
- on the Interest Rate, 341.
- Chetwynd, Mr., proposes a scheme for applying Savings Banks to the Post Office machinery, 292;
- the scheme is recommended by Mr. Scudamore, 293;
- adopted in full, 294;
- is appointed Controller of the Post Office Banks, 313;
- on the Government Annuities scheme, 349.
- Clubs at Public Houses, 37.
- Cobbett, William, M.P. on Mr. Rose, 46, 81;
- speaks of the bubble of Savings Banks, 81.
- Committees on Savings Banks: one is appointed on Irish Banks in 1849, 130;
- reappointed in 1850, 135;
- one is appointed to go over the whole subject in 1858, 164;
- report of proceedings of Committee on 1858, 165 et seq.;
- recommendations of the same, 169-170;
- one is appointed on the Annuities scheme, 361.
- Compensation to Savings Bank officials, 328.
- Compulsory enactments to secure frugality, 50, 389 et seq..
- Consolidation Act of 1863, 182;
- clauses of the Act, Appendix (B) 400 et seq.
- Co-operative Societies and Savings Banks, 382-3.
- Corporation Savings Banks, Appendix, 410.
- Cost of transactions in Post Office Banks, 305; 334-5.
- Craig, Mr., of Cork, on systems of book-keeping, 260-1;
- objects to the taking of small deposits, 264.
- Crossley, Sir Francis, advocates Mr. Sikes's plan, 298.
- Cuffe Street Bank fraud: early history of this bank, 133;
- discovery of the actuary's defalcations, 115;
- subsequent management of the bank, 116;
- closing and its results, 118;
- a Committee is appointed concerning, 129-30;
- reappointed, 135;
- depositors are compensated by Government, 142.
D.
- Declaration, origin of the subscribing of the Savings Banks, 59;
- is an unnecessary limitation, 342.
- Defects of Savings Bank system, 266-8;
- of the Post Office Bank system, 342-4.
- Deposits: limit of the amount of, 53;
- altered in 1824, 59;
- average amount of, in Post Office Banks, 320;
- acknowledgment of, in Post Office Banks, 330-1;
- limit of the total amount of, in Post Office Banks unnecessary, 342-3;
- may be made available for paying premiums on Government Life Insurances, 367.
- Depositors: defrauded, several members speak in behalf of, 150;
- number of, in Post Office Banks, 315;
- character of, in the same, 319;
- analysis of, in the same, 321;
- increase of, in the same, 320;
- number of Post Office Banks failing to obtain, 321;
- how they must proceed in Post Office Banks, 329 et seq.
- Disraeli, Mr. M.P. speaks of Savings Bank legislation, 155.
- Distribution of Savings Banks, the irregular, 236.
- Douglas, Mr. M.P. introduces a bill to regulate Scotch Savings Banks, 57.
- Duncan, Dr. Henry, of Ruthwell: Founder of Savings Banks, 28;
- early life, 29;
- literary pursuits, 30;
- proposes Parish Banks, 32;
- establishes the Ruthwell Bank, 33;
- assists in the establishment of other banks, 33-4;
- writes an Essay on Savings Banks, 34;
- his death, 57;
- advises Government encouragement and protection, 57;
- corresponds with Mr. Douglas on the subject, 58.
E.
Edinburgh Review,
1807, on Mr. Whitbread's proposals, 24;
- on Savings Banks, 28, 380.
- Edinburgh Savings Bank, the original 40-43; many banks are formed
- Education, improvement in systems of, 6.
- Employers of labour: recommended to consider a scheme of Life Insurance at work at the Post Office, 369;
- how they may assist their workmen in the same way, 370-1;
- their duty to their workmen, 386;
- their influence, 389-90.
- Equalization of interest in different banks, 339-40.
- Estcourt, Mr. Sotheron, and Savings Banks, 162-3;
- is appointed Chairman of Committee of 1858, 164;
- speaks on failures in legislation, 176;
- assists in bringing in a bill, 179;
- opposes Post Office Banks, 300;
- on Government Annuities scheme, 359; 361-2.
- Exeter Savings Bank, establishment of, 26.
- Expenses of different banks, 264.
F.
- Facilities, absence of, in Savings Banks, 239;
- not proportioned according to population, 240;
- increase of, 371.
- Farquhar, Sir Minto, on the Government Annuities Bill, 359; 362.
- Financial crisis of 1826: description of, 92;
- consequences of the, 93, 94.
- Fletcher, Rev. H. S. and his frauds at Bilston, 208 et seq..
- Frauds in Savings Banks: Cuffe Street, 111 et seq.;
- Hertford Bank, 118;
- Tralee Bank, 184 et seq.;
- Killarney Bank, 191 et seq.;
- Auchterarder Bank, 193-4;
- Rochdale Bank, 203-4;
- Brighton Bank, 204 et seq.;
- Mr. W. H. Grey on, 207-8;
- at Newport, Isle of Wight, 208;
- Bilston Bank, 208 et seq.;
- Canterbury Bank, 218 et seq.;
- return of, 223;
- Worcester Savings Bank, 225 note;
- the remedy for, 225;
- the result of, 231.
- Friendly Societies: benefits of, compared with those from Savings Banks, 69; 85-6;
- disputes between, 80;
- oppose the Government Insurance measures, 351;
- unsound societies, 353;
- Mr. Gladstone on, 354-5;
- failure of, 356;
- defended by Mr. Sheridan, 357.
- Frugality Banks proposed by Bentham, 271-2.
G.
- Gladstone, Mr., his connexion with the subject, 156;
- introduces a bill into Parliament in 1853, 157;
- withdraws it, 158;
- obtains leave to introduce further measures in the session of 1855, 158;
- speaks on the Government use of Savings Bank money, 159;
- introduces a bill relating to the investment of the same, 175;
- the bill is lost, 177;
- re-introduced and carried, 181;
- his connexion with Post Office Savings Banks, 179-80;
- considers Mr. Sikes's proposals, 288;
- urges the preparation of some such plan on the Post Office authorities, 291-2;
- brings in a bill to establish Post Office Banks, 294 et seq.;
- speaks on the second reading, 301;
- again, in Committee, 304;
- answers objections to and questions concerning the bill, 305-6;
- as author of the bill, 312;
- on the interest given in Post Office Banks, 340;
- introduces his Annuities and Insurance scheme, 350;
- defends his plans in a long speech, 353-7;
- consents to the appointment of a Select Committee, 361;
- carries his measure through the House, 362.
- Göschen, Mr., M.P., on the Government Annuities Bill, 360, 361.
- Goulburn, Mr., incident in connexion with his official life, 66;
- opposes the reduction of the interest rate, 78;
- brings in a bill to amend the law, in 1844, 122;
- proposes a reduction of the interest rate, 124;
- assists the whigs in evading a full inquiry, 137;
- on Savings Bank money, 172.
- Government Banks, proposals for, chap. VIII. 269 et seq..
- Government and Savings Banks—its loss from Savings Banks, 74, 146;
- its gain from the use of Savings Bank money, 174; 268;
- makes good the loss from fraud, in one case, 141.
- Government employés and provident habits, 387-8.
- Greaves, Samuel, and the Canterbury Bank fraud, 218 et seq..
- Guarantee Fund, first proposed by Mr. Sikes, 258.
H.
- Habits of workmen, improvements in, 10; 385;
- still need improvement, 390.
- Hamburg, Savings Banks in, 18.
- Hamilton, Rev. G. H. proposes Postal Banks, in 1852, 278;
- proposes that the Limitation clause be extended, 343.
- Hancock, Dr., writes on Savings Banks, 235;
- referred to in connexion with, 256-7;
- his connexion with Postal Banks, 275-6;
- approves Mr. Sikes' plan, 288.
- Hatton, Mr., a witness before the Committee of 1858, 165;
- investigates the Reading and Brighton frauds, 204; 206.
- Haworth, George, and the Rochdale frauds, 195 et seq..
- Herbert, Mr. H. A., M.P., speaks upon Irish Bank frauds, 157-9;
- moves a resolution disapproving the conduct of the Government in relation to Savings Banks, 154.
- Hertford Savings Bank: origin of the, 27;
- defalcations in, 118;
- account of the fraud, 119;
- discussion in the House of Lords concerning the fraud, 120;
- again, 310.
- Hill, Sir Rowland, on Mr. Sikes's plan, 286; 301.
- Hindrances to the usefulness of Savings Banks, 105;
- frauds in Savings Banks, chap. VI. p. 183 et seq..
- Hume, Mr. Joseph: his first speech on Savings Banks, 61;
- calls for a return, 63;
- speaks of the Government loss from Savings Banks, 62, 76;
- on the Surplus Fund, 64;
- speaks on the rate of interest, 74; 129;
- anecdote of, in connexion with Sir R. Peel, 129;
- speaks in favour of Sir Charles Wood's bill of 1850, 149-50.
I. J. K.
- Improvement in the social habits of the working classes, 10; 385.
- Improvidence of many classes, 13; 390.
- Increase of Savings Bank business, 1825 to 1840, 97;
- of depositors and deposits in Post Office Banks, 315-7.
- Inspection of depositors' books, 146.
- Insurance, Government: early objections to the plan of, 153;
- later objections to, 351;
- bill to regulate, 349 et seq.;
- carried, 362;
- features of, and details of the measure, 362;
- special advantages of, 363 et seq..
- Interest given by Savings Banks: first rate of, 53;
- attracts the richer classes, 54;
- proposals to reduce the rate, 60; 75-6;
- the Westminster Review on, 76;
- Mr. Spring Rice on, 77;
- the consequences of the reduction of 1828, 95;
- fresh proposals to reduce the rate, 147;
- Savings Bank managers, differ on the question, 262;
- in Post Office Banks, 338 et seq.;
- Dr. Chalmers on, 341;
- Mr. Mill on, 341;
- shown by an interesting example, 381-2;
- interest given by Post Office Banks, 338-340.
- Investment of Savings Bank money: an early dispute concerning the, 53;
- the mode of, is explained to the Committee of 1858, 170-1;
- Savings Bank managers object to the mode, 173;
- benefits to the Government of present arrangements, 174.
- Irish Savings Banks: early banks, 44;
- at first beneficial to the country, 112;
- disastrous effects of the frauds in, 112; 118;
- Committees of Inquiry respecting, 130; 136;
- a bill is passed to amend the law relating to, 151;
- the frauds cause a breaking up of Irish banks, 236;
- number of Post Office Banks failing to obtain depositors in Ireland, 322.
- Killarney Bank fraud, 191 et seq..
L.
- Legislation on Savings Banks: early measures of, 45 et seq.;
- Savings Bank Acts are consolidated, in 1828, 65;
- Mr. Goulburn's bill, 123;
- amendment is proposed, in 1848, 133-4;
- Act is made to apply to Ireland only, 135;
- Sir Charles Wood introduces the Amendment Act of 1850, 139-40;
- shown to be much required, 141;
- is withdrawn, 151;
- an Act is passed to amend the law on Government Annuities, 153;
- Sir G. Lewis introduces the Government bill, 160;
- withdraws it, 164;
- a Committee of Inquiry is appointed, in 1858, 164-5;
- finding of the Committee, 168-9;
- Mr. Gladstone introduces a bill to provide for the investment of Savings Bank money, 175;
- withdrawn, 177;
- re-introduced and carried, 182;
- the Consolidation Act is introduced and carried, 182;
- Mr. Gladstone brings in and carries his bill to establish Post Office Banks, 294 et seq..
- Lewis, Sir G. C., re-introduces the Government bill, 159;
- replies to objections, 163;
- withdraws it, 164;
- sees Mr. Sikes on Savings Bank reforms, 256.
- Limit of Deposits: is altered, 53;
- again altered, 59;
- proposals to alter, 124;
- fresh proposals to alter, 147;
- in Post Office Banks, 342-3.
M.
- Maitland, Mr., of Edinburgh, 258 note.
- Managers of Savings Bank: combine to oppose Mr. Goulburn's Act, 128;
- meet in London to oppose Sir C. Wood's scheme, 147-9;
- are examined before the Committee of 1858, 165;
- object to Government using their money, 173;
- differences of opinion amongst, 260-2;
- many object to take small deposits, 264;
- differ as to notices of withdrawal &c., 265.
- Manchester Savings Bank, 240-1;
- compared with the Liverpool Savings Bank, 242.
- Masters of Workmen: deducting part of the wages of their operatives for investment in Savings Banks, 272;
- their attention directed to the regulations for Government Annuities and Insurance, 363;
- their duties, 385;
- how they may assist their workmen, 387-8.
- Mechanics' Institutes, and Savings Banks, 253.
- Military Savings Banks, 243 et seq.;
- Acts regulation, 414 et seq.
- Money Order Office: great progress of the, 285;
- assists in the business of Post Office Banks, 330; 333;
- all the offices to be Post Office Banks and agencies for the Annuities and Insurance business, 313; 375.
- Money of Savings Banks: security of, 56;
- Mr. Gladstone speaks of the Government use of, 158;
- benefits derived from the use of, 174.
- Monteagle, Lord, of Brandon examined before the Committee of 1858, 167;
- opposes the Post Office Bank bill, 303;
- makes a
protest
against it, 310.
N.
- National Debt Office, 155;
- mode of proceeding in, with reference to Savings Bank matters, 170.
- Naval Savings Banks: proposals for, Appendix, 413.
- Neild, Mr. J. H., of Manchester, examined before the Committee of 1858, 165;
- speaks as to increased facilities causing increased business, 241;
- instances the Liverpool Savings Bank, 242.
- Newport, Isle of Wight, fraud in Savings Bank, 208-9.
- Nineteenth Century, the century of the working man, 23.
- Number of Savings Banks inadequate, 238;
- of hours during which they were open in 1861, 239;
- of Post Office Banks, 314;
- of old banks which have transferred their business to the new banks, 325 et seq..
O.
- Officials of Savings Banks, the change from paid to unpaid, and
results, 143;
- compensation to, on the breaking up of institutions, 328.
- Opposition to Government measures by Savings Bank managers, 128; 141-9; 163-4; 177-80;
- by Insurance Societies and Benefit Societies, 352; 360.
P. Q.
- Pallmer, Mr., M.P., proposes the first Savings Bank Consolidation Act, 65.
- Parochial relief to Savings Bank depositors, 52;
- depositors compared with the number of persons in receipt of, 230.
- Pease, Mr. Joseph, M.P., on Savings Banks, 71.
- Penny Savings Banks, 246 et seq.;
- Poor Laws and Savings Banks, 49-50;
- the result of Savings Banks on, 98;
- shown by Table, 100-1;
- the Amendment Act of 1834, 102; 389.
- Post Office and Life Insurance, 369-70;
- employés of, provided for by other provident measures, 387-8.
- Post Office Savings Banks: in relation to the frauds in ordinary Savings Banks, 216-17; 222;
- their present and future position, 273;
- Handy Book on, 274 note;
- origination of the principle of, 274;
- persons wrongly credited with the origination of, 275-7;
- banks in connexion with the Money Order Office first proposed by Rev. G. H. Hamilton in 1852, 278;
- next by Mr. Bullar of the Temple, 280 et seq.;
- Mr. Sikes, of Huddersfield, proposes Post Office Banks, 284;
- the nature of his proposals, 284-5;
- addresses Mr. Gladstone in a printed letter, 287;
- Mr. Gladstone's reply, 288;
- the proposals are referred to the Post Office, 289;
- important objections to them, 291;
- Mr. Chetwynd proposes an entirely new scheme, 292;
- is recommended by Mr. Scudamore, 293;
- adopted by Lord Stanley of Alderley, 294;
- Mr. Gladstone carries a bill through the House of Commons to establish the banks, 294 et seq.;
- Lord Stanley of Alderley carries it through the Lords, 306 et seq.;
- receives the Royal Assent, 310;
- the benefit of the banks to the country, 312;
- their success, 313;
- their introduction into the country, 313;
- the amount of business done in, 313 et seq.;
- nature of the business done in, 318 et seq.;
- number of, at different times, 314-15;
- statistics relating to, 315 et seq.;
- increase in the number of depositors in, 317;
- have a special public, 319;
- their progress where they were not supposed to be wanted, 320;
- character of the new depositors in, 321;
- result of, on old banks, 322 et seq.;
- return of old banks which have transferred their business to, 325 et seq.;
- mode of transacting business in, 328 et seq.;
- information on the subject of, where obtainable, 329 note;
- as to depositing money in, 329-32;
- as to withdrawing money out of, 333;
- internal arrangements of chief Savings Bank, 333-4 note;
- cost of transactions in, 334-5;
- the peculiar advantages of, 335 et seq.;
- how affected by frauds, 336;
- security, 335;
- despatch, 336;
- secrecy, 337;
- engage to take small sums, 338;
- rate of interest in, 338 et seq.;
- Government Annuities scheme, an offshoot of, 350; 360;
- assist depositors in the matter of Government Annuities and Insurance, 367;
- Act regulating, Appendix 416 et seq.;
- further progress of, Appendix 430.
- Pratt, Mr. John Tidd: appointed certifying barrister, &c. of Savings Banks, 67;
- his connexion with the Cuffe Street bank, 117;
- urges the reduction in the limit of deposits, 124;
- his powers are enlarged, 125;
- is blamed on account of Irish banks, 136; 139;
- exonerated by a Committee of Inquiry, 140;
- gives evidence before the Committee of 1858, 165;
- is consulted as to the Consolidation Act, 182;
- makes awards in the Tralee bank frauds, 191;
- in the Killarney case, 193;
- attends at Bilston on account of the frauds there, and explains them, 213-15.
- Preliminary Savings Banks, 253-4.
- Progress of Savings Banks: in their []earlier stages, 89;
- shown by Table, 91;
- shown by Table, 97;
- shown by Table, 227;
- rate of, at different periods, 229;
- of Post Office Banks, 313 et seq.;
- progress of the additional measures, 375-7.
- Progress of the country, between 1824 and 1840, shown by statistics, 103;
- shown again by statistics, 230-1.
- Provident habits, increase of, 99;
- importance of cultivating, 378-80;
- masters of workmen should help to cultivate, 386-7;
- want of among large numbers, 390.
- Provisions of the first legislative enactment on Saving Banks, 52-3;
- of the first Consolidation Act, 67-8;
- of the first bill to grant Annuities, 70;
- of Mr. Goulburn's Act of 1844, 127;
- of Sir Charles Wood's bill of 1850, 145 et seq.;
- of the Government Annuities and Insurance scheme, 364, et seq.;
- of the Acts at present in force with regard to Savings Banks, Post Office Banks, Annuities, and Government Insurance, Appendix.
- Quarterly Review, on Dr. Duncan, 30-31;
- on the prosperity of the country in 1826, 92;
- on the progress of Savings Banks, 80;
- makes proposals for a system of banks, 273-4;
- on compulsory investment of workmen's earnings, 389;
- on Co-operative Societies, 383 note.
R.
- Rates of Interest: proposals to reduce the, 60; 75-6; 147;
- difference of opinion on the question, 262;
- different in different banks, 263;
- in Post Office Banks, 338 et seq.; equalization of, 340.
- Reading Bank fraud, 203-4.
- Reform, agitation of 1831 & 2, 96;
- its consequences on Savings Banks, 98.
- Reynolds, Mr., M.P., speaks on the Dublin Bank fraud, 136;
- proposes and carries a Committee of Investigation in 1849, 138.
- Rice, Mr. Spring, defends the rate of interest given, 77;
- opposes Mr. Hume, 78;
- gives some interesting statistics on the matter of Savings Banks, 78. (See Lord Monteagle).
- Rochdale bank fraud, 195, et seq..
- Roebuck, Mr., M.P., on the Government Annuities bill, 385.
- Rose, Right Hon. George, establishes the Southampton Savings Bank, 26;
- Cobbett's attack upon him, 46-7;
- introduces the first Savings Bank bill, 47;
- re-introduces it the year after, 49.
- Rural districts, Savings Banks in, 109.
- Ruthwell Bank: established by Dr. Duncan, 31 et seq.;
- rules, &c. of the, 37-40;
- character of the, 58.
S.
- Savings Banks: not an object of controversy, 16;
- the founder of, 28;
- the first bill for regulating, 65;
- compared with Friendly Societies, 85-6;
- their results on the general progress of the country, 1824 to 1840, 104;
- their merits disputed, 106-7;
- frauds in, Chapter VI. p. 183 et seq.;
- progress of, 227;
- list of counties without, 237;
- number of, in 1860, 236;
- absence of facilities in, 239;
- number of hours they were open in 1860, 239-40;
- return relating to the ten principal, 267;
- the principal defects of the Savings Bank system, 266-8;
- results of Post Office Banks on, 322 et seq.;
- list of those transferred to Post Office system, 325 et seq.;
- and Government Annuities, 348;
- are preliminary means, 380;
- are safe and productive, 381-2;
- Abstracts of Acts relating to, Appendix, 400 et seq..
- Scotch Savings Banks: early Acts relating to, 57-8;
- the Consolidation Act of 1828 extended to, 74.
- Scudamore, Mr., reports on Mr. Chetwynd's plan of Post Office Banks, 293;
- on a scheme for working Government Annuities, 349;
- superintends the arrangements for introducing the measure, 362;
- devises a plan for assisting Post Office employés to insure their lives, 369.
- Seamen's Savings Banks, 245-6;
- Secrecy in connexion with Post Office Banks, 337.
- Security of Savings, the most important consideration, 51;
- erroneous impression as to Government security, 133;
- in Post Office Banks, 335.
- Sharman, Mr., Handy Book, 274; 276; 329 note.
- Sheridan, Mr., M.P., on Friendly Societies, 357.
- Sikes, Mr. C. W., of Huddersfield;
- is a witness before the Committee of 1858, 164;
- his evidence, 167 note; 174 note;
- on the increase of facilities, 242;
- some particulars of his life, 250 et seq.;
- proposes Preliminary Banks, 253;
- writes a pamphlet called
Good Times,
255;
- addresses Sir G. C. Lewis on Savings Bank reforms, 256;
- his recommendations, 257-8;
- Government Banks, 274;
- proposes Post Office Savings Banks, 283 et seq.;
- addresses Mr. Gladstone on the subject, 287;
- defects of Mr. Sikes's plan, 291;
- supports the Government scheme, 301.
- Slaney, Mr., M.P., on Savings Banks, 73; 151.
- Smith, Rev. Thomas, of Wendover, establishes one of the first Savings Banks, 20-21.
- Southampton Savings Bank, origin of, 26.
- Spearman, Sir Alexander Y., 155;
- gives evidence before the Committee of 1858, 166-7;
- explains the mode of investing Savings Bank money, 170-71;
- on the Government loss, 268.
- Stanley, Lord, of Alderley, takes charge of the Savings Bank Money bill in the House of Lords, 181;
- introduces and carries through the House the Post Office Savings Bank bill, 306 et seq.;
- carries the Government Annuities bill through the Lords, 362; 431.
- Statistics, relating to Savings Banks, 91; 227;
- to Post Office Savings Banks, 315 et seq.;
- to Savings Banks, Post Office Banks, Government Annuities, &c. Appendix, 424 et seq.
- Stillorgan Bank, the first Savings Bank in Ireland, 44.
- Sunday Bank, the, at Hertford, 27.
- Surplus Fund of Savings Banks, 64;
- Mr. Hume on, 75;
- can be applied to compensate Savings Bank officials, 328.
T. U. V.
- Taxation, removal of, 4.
- Taylor, Mr. E. of Rochdale, is examined before the Committee of 1858, 196; 199;
- writes a pamphlet arising out of the Rochdale frauds, 233;
- on Government security, 257.
- Times, The: on early Savings Banks, 84;
- commences hostile criticism on Savings Banks, 105-8;
- on frauds on Savings Banks, 235;
- on Post Office Banks, 311;
- on Government insurance, 352.
- Tottenham, an early Savings Bank at, 20.
- Tralee Bank fraud, 184 et seq.
- Transfer certificates, copy of, &c. Appendix 417.
- Treasurers, Government proposals for, 145.
- Trust accounts, legislation on, 125.
- Trustees, Liability of: 60-61;
- unsatisfactory state of the law regarding, 111;
- mentioned in connexion with the Hertford Bank fraud, 120;
- legal decision on, 123;
- Sir C. Wood attempts to regulate the, 132.
- Vansittart, Mr., M.P., on Savings Banks, 48;
- speaks of the safety of Savings Bank money, 56.
W.
- Wages, increase in the rate of, 230.
- Wakefield, Mrs. Priscilla, establishes a bank in 1799, 19.
- Wellington, Duke of, on military banks, 243 note.
- Wendover, and early bank at, 20.
- Whitbread, Mr., M.P., introduces his Poor Law bill, 21;
- proposes a Poor's Fund and Poor's Insurance Office, 23;
- further reference to his proposals, 270; 346;
- provisions of his measures. (See Appendix A).
- Wilberforce, Mr., on Savings Banks, 50.
- Willoughby, Sir Henry: opposes Sir C. Wood's bill of 1850, 150; 177;
- is a member of the Committee of 1858, 164;
- speaks in the House on the subject, 176;
- assists in bringing in a bill to remedy the defects of the law, 179; 182;
- opposes the Post Office Bank bill, 306.
- Withdrawals, notices of: a subject of dispute, 265;
- concerning, in Post Office Banks, 232-3.
- Wood, Sir Charles: proposes to amend the law of Savings Banks, in 1848, 131;
- opposes the motion for a Committee on Irish Banks, 137;
- proposes compensation to the Cuffe Street depositors, 141;
- brings in an important measure in 1850, 144;
- explains its provisions, 145-7;
- withdraws it, 151;
- replies to a vote of censure moved by Mr. H. A. Herbert, 155.
- Worcester Savings Bank fraud, 225 note.
- Working classes, improvements in the condition of, 10;
- do not need charity, 324; 385;
- like to be advised, 386;
- duty of employers to, 386-8.
THE END.
LONDON: PRINTED BY R. CLAY, SON, AND TAYLOR
Missing letters were added to incompletely printed words.
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Other changes:
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two instances of i. e.
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a) 'Rotherdam' to 'Rotherham'
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d) 'pamphet' to 'pamphlet'
e) 'gnee' to 'gone'
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