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 1,100,000_l._, no less a sum than 859,734_l._ 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 | Total amount | Total Capital at |
| 20th Nov. | credited to Trustees, | the close of each |
| | including Interest. | 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 Croesus
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 14_s._ 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.
+--------------+-------------+--------------+-------------------------+
| | Number of | Total Amount | Increase. |
| Year ended | Depositors. | of Deposits +------------+------------+
| | | from 1817. | 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 30_l._; in Ireland 29_l._; and in Scotland
12_l._ 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 20_l._
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 1,473,389_l._; in 1844 it reached 3,654,799_l._ 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:--
+--------------+----------+----------+---------+--------+-------------------+
| | | No. of | |Increase| Expended in |
| County. |Population|Depositors| Amounts | of |Relief of the Poor.|
| | in |in Savings| of |Deposits+---------+---------+
| | 1841. | Banks in | Deposits| since | in | in |
| | | 1841. | in 1841.| 1834. | 1834. | 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 68,000,000_l._, giving a yearly average of
6,800,000_l._ In the ten years ending 1832, the amount of poor rates
was 62,900,000_l_., or a yearly average of about 6,200,000_l._ 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 5,000,000_l_. 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 500_l._ We know such a case. The 500_l._ 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 50_l._ or 100_l._ 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 200_l._ 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 80_l._ 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 80_l._?... 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 80_l._
in hand is better than nothing and an immediate resort to the parish.
To say that the 80_l._ would always remain 80_l._ 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 be 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
2_l._ a head for the entire population, while in Lancashire, with its
highly-paid manufacturing population, it only averaged 1_l._ 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 2,000,000_l._ out of the total
of 2,800,000_l._ 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 100,000_l._ 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 6,000_l._ 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 11,864_l._ Of this sum 7,500_l._ 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
200_l._ 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 56,000_l._ and about 90_l._ 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 24,000_l._ 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.
[45] _Cobbett's Register._ January, 1817.
[46] Nearly, but not quite. Injury is still done by false and
mischievous teachers of working men; and the latter resent what
they consider their wrongs and grievances in ways which are
equally unjustifiable, if not exactly similar to those adopted by
their fathers. Those who would do real service to the working
classes are those who take up and expose the fallacies of living
demagogues, by which the latter are misguided and led to injure
themselves by strikes, combinations, and hostility to capital and
machinery. And educational reformers will do the State good
service in endeavouring to get lessons taught in political economy
to those who will be at some future day our mechanics and
artisans, and who from continued ignorance of the inevitable laws
of supply and demand, of the value, even to them, of the security
of property, of the laws which regulate the operations of the
market, may possibly fall into the errors and the mistakes of
their predecessors.
[47] _Report of the Committee appointed by the Highland Society of
Scotland to consider what is the best mode of forming institutions
of the nature of Savings Banks, for receiving the deposits of
labourers and others._ Edinburgh, 1815.
[48] Nine-tenths of the existing Benefit Societies are still held
at public houses. This arrangement must always be, so long as it
exists, a theme for reprobation. There cannot be many greater
anomalies than this of the association of the club and the cup,
the bane and the antidote, saving and wasting. Speaking on this
point, the Rev. J. B. Owen justly remarks that the strange
association "together verify the old pagan fable of the tub of
Danaus full of holes, whose daughters were condemned to be
perpetually filling it, while all that was so laboriously poured
in as wastefully and hopelessly ran out." Or, as some one else has
put it who has employed the same figure more strikingly:--
"Like Danaus' tub
Is the public house club:
Their customers' mouths are the holes;
Ill spared is the 'chink'
That's wasted in drink,
To the bane of their bodies and souls."
[49] See next page.
[50] _Quarterly Review_, vol. xxxii. p. 189.
[51] "Many a man in that year," (1825), says Miss Martineau, "set
up for a banker who would, at another time, have as soon thought
of setting up for a king."--_History of the Thirty Years' Peace._
Lord Liverpool complained afterwards of the system "which allowed
any petty tradesman, any cobbler or cheesemonger, to usurp the
royal prerogative, and issue money without check or control."
[52] One prospectus of this date sets forth that, in the district
proposed for a mine there was "a vein of tin ore at its bottom, as
pure and as solid as a tin flagon." Another, "Where lumps of pure
gold, weighing from ten to fifty pounds, were lying totally
neglected," the quantity of gold in the mine "being considerably
more than was necessary for the supply of the whole world." Mr.
Canning, in reference to the companies projected, said soon
afterwards, "They fixed the public gaze, and excited the public
avidity so as to cover us, in the eyes of foreign nations, if not
with disgrace, at least with ridicule. They sprang up after the
dawn of the morning, and had passed away before the dews of the
evening descended. They came over the land like a cloud; they rose
like bubbles of vapour towards the heavens, and destroyed by the
puncture of a pin, they sank to the earth and were seen no more."
[53] _Annual Register_, 1826.
[54] _Progress of Savings Banks._ A series of tabular views, 1829
to 1841, by Mr. J. Tidd Pratt. London. 1845.
[55] _Companion to the Almanac_, 1839, p. 131.
[56] See next page.
[57] We give the statistics as relating to England only. Scotland
is out of the question, not merely on account of the slow progress
of Savings Banks there, but more especially because of there being
nothing analogous in Scotland to our English system of Poor Law
relief.
[58] The mortality at the commencement of the present century was
1 in 40; in 1831 it was 1 in 58; and in 1841, 1 in 62; showing
conclusively that the masses of the people were better housed,
better clad, and, best of all, better fed.
[59] Miss Martineau's _History of the Thirty Years' Peace_, vol.
ii. p. 88.
[60] _Times_, September, 1844.
[61] To make this statement more clear, we append a later Return,
which, on other grounds, is interesting, as showing which classes
of the community resort most frequently to Savings Banks. It
speaks volumes as to the culpability of the higher paid English
operative, that the agricultural labourer, with ten or twelve
shillings a week, contrives to save more, relatively, than he does.
+----------------------+---------+--------------+----------------+
| |Number of| No. of |Average Deposits|
| Counties. | Accounts|Depositors to | per head of |
| | open in | every 100 of | Population, |
| | 1858. | 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 |
+----------------------+---------+--------------+----------------+
Something of this result can of course be traced to the varying
facilities, such as the number of banks, which were not always
established in the most populous localities.
[62] _Vide Report of the Select Committee appointed to Inquire
into and Report upon the circumstances connected with the failure
of the Cuffe Street Savings Bank_, 1849, from which our account is
derived.
[63] "I am certain," said a reverend witness, "that he was a very
correct man until the temptation of such an enormous quantity and
overflow of money got into his hands."--_Report_ (36).
[64] One of the questions asked, by the Chairman of the Committee
just quoted from, of Mr. Fox, curate of St. Peter's, Dublin, was
(32): "Do I understand you to say, that Mr. Lannigan communicated
his suspicions regarding Mr. Dunn to the Board of Trustees?"
"Yes," answered the reverend gentleman, "and we used to have
_extremely warm contests_ there on that account, because he was
not a man very capable of explaining his meaning."
[65] The whole of Dunn's defalcations, which were found ultimately
to amount to about 40,000_l._ were not found out till this year.
[66] Great attempts were made to show, at this time, that the
Government had grievously neglected its duties, and that the
Arbitrator exceeded his. From the anomalous and unsatisfactory
state of the law, which occasionally placed the Commissioners and
the Certifying Barrister in embarrassing positions, a colour was
often lent to these allegations. It is very clear that flagrant
mistakes were palmed upon the National Debt Office, and never
found out, and not less certain that, at this early period, Mr.
Pratt was often hampered by uncertain and incomplete powers.
[67] Dr. Hancock, in a pamphlet entitled, _Duties of the Public
with respect to Charitable Savings Banks_. Dublin, 1856.
[68] About sixteen millions sterling.