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 12,000_l._, and
then made off; Mr. Hoare, the eminent brewer, paying down no less a
sum than 7,000_l._ to atone for his neglect, and the other trustees
making up the amount by subscriptions of 1,000_l._ and 500_l._ 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 60_l._ 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 2,000_l._ 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 30_l._, 15_l._, and 27_l._ in one day, without any
assistance or supervision from trustee or manager. These amounts he
entered in his books as 3_l._, 5_l._, and 7_l._ 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 57_l_. 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 36,000_l._, 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, 36,000_l_. of the
hard-earned savings of the poorest classes around him. His estate at
the time of his apprehension was worth something like 3,000_l_.; 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 5,000_l_.
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 16,000_l_. 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 16,000_l_., 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 20,000_l._: the entire liabilities of the
Killarney bank were 36,000_l._, but the money in hand and the property
of the actuary, who decamped, which was calculated to realize about
5000_l._, reduced the loss to the former sum. As the average amount
due to each person was 45_l._ 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 20_s_. in the pound, whereas those coming after that year only got
3_s_. 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 10_l_. 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 1,500_l_. to his own use.
The liabilities of the bank were 4,300_l_., whilst the available
assets only realized 2,774_l_. 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 150_l_. 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 100,403_l._, that the total assets
were calculated to realize 28,686_l._, and that the deficiency
amounted to the enormous sum of 71,715_l._ 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 17,000_l._ was
readily subscribed among the trustees and their friends; another sum
of 17,000_l._ was realized out of Haworth's estate, and ultimately the
managers were enabled to give a dividend to depositors of 12_s._ 6_d._
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 manoeuvre 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 30_l._, 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 30_l._ had withdrawn 130_l._" 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 3,000_l._
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 1,000_l._ 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
4,000_l._, 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
100_l._ 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 100_l._ 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 3,000_l._, and this, with 600_l._ 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 30,000_l._ 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, 1,000_l._ was dropped in one
place, 1,000_l._ in another, in the capital column, and 20_l._ here
and 30_l._ 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
700_l._ 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 8,840_l._ 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 234_l._ On looking at the books for
that day, he found it should have been 334_l._, therefore 100_l._ had
been abstracted on that day [cries of 'Shame,' and sensation]. On the
8th of January, he found the payments were set down at 174_l._,
whereas they had only been 74_l._, thus showing that the treasurer had
put another 100_l._ in his pocket that week. In the return dated
January 29, the receipts were set down at 183_l._, and the payments at
148_l._, whereas the former ought to have been 283_l._, and the latter
48_l._, thus taking to himself 200_l._ [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 40_l._ 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 200_l._
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 9,300_l._ 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 3,500_l._, was applied to meet the case; the actuary gave
up property to the value of 1,700_l._; a gentleman who was his surety
for 400_l._ was called upon to pay that sum, and the remainder, about
3,000_l._, 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 150,000_l._, 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 | Defaulters. | Depositors |
| | Defalcations.| | 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 179,280_l._; 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 17,600_l._ a year; or, taking the banks mentioned
in the Returns, upwards of 7,900_l._ for each involved. Doing the same
with the total loss to depositors, or 117,732_l._, we find the average
loss for each bank to be nearly 5,000_l._
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.
[114] "In the case of a fraudulent actuary, especially if the bank
is carried on at the man's own house, there is no limit to the
fraud which he may commit."--_Evidence of Mr. Tidd Pratt before
the Committee of 1848._
[115] That Lynch, was no ordinary man there is abundant evidence.
The following address to the inhabitants of Tralee--which from
anybody else would be considered well meant and well expressed
advice, simply completes the burlesque in his case:--
1. "Money, as the means of procuring the necessaries
and comforts of life, is a blessing; and to be
careful of it is a duty incumbent on all."
2. "To lay by in the time of youth, and whilst we
enjoy good health, a portion of the fruits of
industry in store for future wants, is a mark of
wisdom; and considering that all are liable to
infirmities, a provision to alleviate them is of the
greatest importance."
3. "Some men by hard labour, and others by superior
skill, earn high wages; yet for want of proper
management they have nothing to reserve. Many might
be disposed to save a part of their earnings if they
knew how to set about it, _or where to place it with
safety_; whilst others who have occasionally
practiced saving, have lost what they had laid up,
_by trusting it in unsafe hands_."
4. "The promoters of this institution are aware that
several of their neighbours, from various causes, are
unable to procure many of the comforts, if not the
necessaries of life; they are, nevertheless, fully
persuaded that many others who have the advantage of
constant employment, and are favoured with the
enjoyment of health and strength, might, by
practising laudable economy, reserve a portion of
their earnings to meet the demands which a future
pressure of bad times, sickness, old age, or an
increase of family, may bring upon them, and thereby
avoid the calamities under which so many of them
suffer."
5. "It is a great mistake to suppose that small sums
are not worth saving. By the habit of saving in
little matters, riches are acquired; farthings saved
would soon accumulate to shillings, and those to
pounds," &c. &c. &c.
[116] A Mr. Fitzgerald was the manager who generally attended and
did the current work of his office. His statement after the frauds
had come to light was, that he made the best inspection he could
of the ledgers of the bank. When asked why he never compared the
ledgers with the daily cash books, he confessed he never thought
of it, "there was the omission," "that was where the link of
investigation broke," "that was the omission which concealed the
fraud so long," and other similarly shiftless remarks.
[117] _Report of the Select Committee of 1848_.
[118] _Ibid._ (Qu. 674).
[119] Mr. Pratt's idea was to make the trustees liable in a great
measure for the deficiency, as guilty of wilful neglect or
default. The advice given as to Lynch's property was of very
questionable propriety, and very questionable, as it afterwards
appeared, in law. The money, however, was lost to the depositors
completely, and went to Lynch's relations.
[120] As usual, many persons had been allowed to deposit illegal
sums on which they had no claim. One man was shown to have taken
out 420_l_. from the Provincial Bank of Ireland, and to deposit it
all in the Killarney bank in one day.
[121] _Vide Select Committee on Savings Banks_, 1858. Evidence of
Mr. Jameson, actuary of the Perth Bank. (Qu. 2,906.)
[122] An estimable sect of Christians, they are not better known
for the zeal with which they contrive to amass and keep in their
immediate circle vast stores of wealth, than for the uprightness
and conscientiousness they generally display in the conduct of
their business. The transactions of Haworth, and another of their
black sheep who about the same time committed, or attempted to
commit murder, whilst assuming their character, is described to us
as having spread consternation and dismay through their ranks. The
way in which the Society of Friends has, as a body, taken up the
management of Savings Banks is most commendable.
[123] A great part of our information relative to the Rochdale
bank fraud is gathered from the evidence of Mr. Edward Taylor, a
worthy and intelligent tradesman of Rochdale, who was examined
before the Committee of 1858 in reference to the transactions in
question; and no one is better able to speak of them.
[124] So prevalent was this impression, that for several weeks
17_s._ 6_d._ in the pound was freely offered for Savings Bank
books in Rochdale.
[125] Evidence of Mr. Hatton, actuary of the Brighton Savings
Bank.
[126] It almost passes the bounds of credibility, and yet it
cannot be denied, that in two separate banks, where the accounts
were thus overhauled, items of money to a large amount were
repeatedly found entered in the books with nothing but a pencil!
[127] _Times_, January 17, 1862.
[128] _Midland Counties Express_, March 16, 1862.
[129] Report of the depositors' meeting, _Birmingham Daily Post_,
January 16, 1862.
[130] Or, as it was far better illustrated at the time, "It is not
enough to bring a man who has been tossed about in an unseaworthy
bark within sight of _terra firma_. We must heave him a rope, or,
if possible, run out a plank between the quay and his crazy ship's
side, on which he may safely walk across."
[131] No attempt is here made to catalogue and describe frauds not
occurring in Savings Banks proper: a chapter itself might be
written on banks for the people established and carried on under a
system of complete deception and villany. Nor have we entered into
the case of frauds in Penny Banks, such as the unfortunate case at
Birmingham.
[132] Of the Rochdale depositors, for example, 1,245 were women,
722 unmarried factory operatives, 292 married, and 231 young
girls; there were besides, 953 miners, 539 labourers, and 191
members of sick clubs.
[133] Since the above pages were in type, a deficiency has been
made public in the accounts of the Worcester Savings Bank, the
cashier, Benjamin B. Wilkins, having committed frauds to the
extent of between 4,000_l._ and 5,000_l._ On the frauds coming to
light last August the cashier decamped, and, as it now appears,
found his way to America. The trustees, having heard of him
through some channel, put the matter into the hands of the police,
who have succeeded in apprehending him, and bringing him back to
this country, and he will shortly be brought to justice.