ON THE DEFICIENCIES OF THE EXISTING SYSTEM, AND THE
ESTABLISHMENT OF SUPPLEMENTARY SAVINGS BANKS.
"Were greater facilities provided for saving, and greater
encouragement given by the intelligent classes to the
formation of provident habits, we believe the habit of
economy would spring up in many quarters where at present
it is altogether unknown. The working man, though he may
not like to be patronised, likes to be helped; and those
who help to provide him with convenient places in which to
deposit his spare earnings, will not fail to be regarded
by him as among his best friends."--MR. S. SMILES.
In the fourth chapter we endeavoured to trace the progress of Savings
Banks up to the year 1841, or after they had had a legalized existence
of twenty-five years. We there tried to show that, for some years
prior to that period, a manifest improvement had set in, and was
rapidly proceeding, in all that related to the social condition of
those classes for whose benefit such institutions as Savings Banks are
mainly intended; and we think we succeeded in proving that the
progress of these banks was commensurate with the gradual national
advancement. Except in the years marked by financial or political
embarrassment, the number of Savings Banks increased in a fair and
regular proportion each year; and not only so, but the first table we
gave (page 91) showed conclusively that the amounts deposited
increased in the different years in the same proportion. We would now
take up the statistics where we left them, and present the reader with
a continuation of the same, in a slightly different form.
TABLE 4.[134]
Showing the amount of Deposits and Withdrawals, and the Capital,
of Savings Banks, at the end of each year from 1841 to 1861
inclusive.
+-------------+-----------+-------------+--------------------+
| | | | Capital of Savings |
| Year ending | Deposits. | Withdrawals.| Banks in the |
| 20th Nov. | | | United Kingdom. |
--------------+-----------+-------------+--------------------+
| | £ | £ | £ |
| 1841 | 5,694,908 | 5,487,723 | 24,536,971 |
| 1842 | 5,789,203 | 5,656,160 | 25,406,642 |
| 1843 | 6,327,125 | 5,333,015 | 27,244,266 |
| 1844 | 7,166,465 | 5,716,275 | 29,653,180 |
| 1845 | 7,153,176 | 6,697,042 | 30,950,983 |
| 1846 | 7,300,367 | 7,255,654 | 31,851,238 |
| 1847 | 6,649,008 | 9,060,075 | 30,236,632 |
| 1848 | 5,862,742 | 8,653,108 | 28,114,136 |
| 1849 | 6,196,883 | 6,522,760 | 28,537,010 |
| 1850 | 6,363,690 | 6,760,328 | 28,930,982 |
| 1851 | 6,782,059 | 6,305,566 | 30,277,654 |
| 1852 | 7,281,177 | 6,684,906 | 31,754,261 |
| 1853 | 7,653,520 | 7,116,330 | 33,362,260 |
| 1854 | 7,400,141 | 7,956,347 | 33,736,080 |
| 1855 | 7,188,211 | 7,654,133 | 34,263,135 |
| 1856 | 7,741,453 | 8,023,583 | 34,946,012 |
| 1857 | 7,581,415 | 8,375,095 | 35,145,567 |
| 1858 | 7,901,925 | 7,839,903 | 36,220,362 |
| 1859 | 9,021,907 | 7,335,349 | 38,995,876 |
| 1860 | 9,478,585 | 8,258,421 | 41,258,368 |
| 1861 | 8,764,870 | 9,621,539 | 41,546,475 |
+-------------+-----------+-------------+--------------------+
From the above table, many important facts may be gathered. Speaking
of the yearly proceeds, in 1847, 1848, 1849, and 1850, the withdrawals
of money exceeded the deposits by amounts respectively of
2,411,067_l._, 2,790,366_l._, 325,877_l._, and 396,638_l._ This
extraordinary state of things is partly accounted for by the panic
which set in about this time among Savings Bank depositors, owing to
the discovery of numerous frauds, and, as a matter of course, the
knowledge of the divided and defective responsibility under which the
system was worked; but more especially was it owing to the commercial
crisis of 1847-8. In the three following years, 1851-2-3, the crisis
quite over, and a general examination of Savings Bank accounts tending
to reassure the public mind, the deposits again gained their natural
ascendency, when, in 1854-5-6-7, the excess paid was at least equal to
the excess received in the three previous years. There can be little
doubt but that this result again was owing in some measure to the
Crimean war, and the scarcity of money during the period, but
principally to the agitation which generally prevailed among
depositors at the constant failures in the Legislature when attempts
were made to place Savings Banks on a proper footing; these failures
leading to repeated petitions for a Select Committee to go over the
whole subject. In 1858 there was a slight improvement; in 1859 a
considerable increase in the deposits, clearly the result of the
investigations of the Select Committee of the previous year, which
Committee, though it had done little towards a final settlement, had
certainly dispelled a cloud of misapprehensions that had gathered
round the concerns of Savings Banks. That improvement continued,
though in a less degree, in 1860; when the Returns for 1861 show
another large decrease of deposits and an increase of withdrawals,
which we would not be wrong were we to attribute to the frequent
discussions in Parliament, and in the country, relative to a new
system of Government Banks.
Having to some extent accounted for the variations observable in the
above table, let us proceed to compare the progress made during the
period of twenty years now under consideration with that shown during
the previous quarter of a century and described in a previous chapter.
Between the years 1825 and 1835 the increase in the aggregate amount
of deposits in the Savings Banks of the United Kingdom was at the rate
of exactly fifty per cent. Between the years 1835 and 1845, the
returns show an increase in deposits in this decennial period of
ninety-eight per cent. Comparing the returns for 1845 and 1855, the
progress made, if indeed progress is the right word to use here, was
at the rate of _only five per cent._
Were we to take the first five years of this last decennial period, we
should find that there had absolutely been a _decrease_ in the
business of Savings Banks to the extent of _twelve per cent._, but
this unsatisfactory result admits, as we have just shown, of partial
explanation. To continue our survey, however, up to the latest period,
viz. including the Returns for 1864, we find that the deposits for
1854 amounted to 7,400,141_l._, and the deposits for 1864 to
8,174,679_l._, showing an increase during ten of the most prosperous
years this country has known since the establishment of Savings Banks
at the rate of only about eight per cent.
It is almost unnecessary to say that as regards all the material
elements of prosperity the progress of the country between 1841 and
1861 was most marked. Taking England and Wales only, we find the
amount deposited in Savings Banks in 1841 was 4,440,379_l._; in 1861,
the amount deposited was 7,188,034_l._ Now the population of England
and Wales was in 1841 15,929,000; in 1861 it was 20,119,496. The
declared value of our exports was in 1841, 51,545,116_l._; in 1861 it
had increased to the enormous sum of 125,102,814_l._, and last year
(1865) it stood at over 165 millions sterling. What the increase in
the amount paid as _wages_ was likely to be, we leave our readers to
estimate from these sums. In nothing is the national prosperity more
manifest than in the relative number of paupers in receipt of relief.
Though the population increased during the twenty-two years in
question several millions, the total number receiving in and out-door
relief, was, in 1849 (this being the first year the return was made)
934,419; in 1861, the number was 890,423, or an actual decrease of
forty-four thousand persons. Such statistics as the above might be
multiplied indefinitely, especially those relating to the wonderful
progress of the Money Order Office at the Post-Office, but it may
suffice just to make a reference to the increase of wages during the
period.[135] Mr. David Chadwick, an eminent authority in Lancashire,
states that between 1840 and 1860 the wages of the operatives employed
in the different departments of the cotton trade had increased from 12
to 28 per cent.; in the silk trade the increase had been 10 per cent.
In the building trade the increase throughout the country had averaged
from 10 to 30 per cent.; in the iron trade from 8 to 20 per cent. It
would scarcely, therefore, be too much to say that within the period,
_and up to_ 1861, while the price of most kinds of food had decreased,
the wage for almost every description of labour had increased in at
least an equal proportion.
In view of such facts, and before we attempt to describe the different
plans which were produced in order to make these useful institutions
once more progressive ones, let us try to ascertain why more of the
money thus gained did not reach the Savings Bank. A careful
examination of the Returns of Savings Banks will show beyond the
possibility of doubt that the first and greatest check received by
these institutions was when it became apparent that they did not
possess within themselves that absolute security which they were
thought almost universally to offer. We could not well exaggerate the
result; this is the fountain from which all the ills have proceeded.
The evil did not confine itself to the banks where the depredations
had been carried on; it was not confined to the banks already
established; but it extended to quarters where before there had been a
manifest disposition to increase the facilities and to meet the wants
of an advancing population, and this feeling was destroyed. The first
effect of the frauds was, of course, to stop the deposit of money; in
a smaller degree and among less educated people they even tended, as
we have seen, to destroy the habit of laying by any money at all; but
among all they produced a decided conviction that the financial
arrangements of the system, especially with reference to the anomalous
connexion between Savings Banks and the Government, were unsound.
We have several times referred to the state of the law as to the exact
nature of this connexion, but it is necessary to return to it again as
entering very largely into the consideration of the slow progress of
Savings Banks. There can be no question that the great bulk of the
British people, and not simply the lower and middle classes,
imagined--up at least to the time of the great frauds of 1845-48--that
Government was fully responsible for all the money placed in Savings
Banks. In 1851 we find Mr. Bright saying in Parliament: "Nine out of
every ten depositors believed that they had the security of Government
for whatever money they invested, and that in placing that money in
the local Savings Bank they were securing it better than if they
lodged it in the hands of the wealthiest private banks in the
country."[136] Mr. Hume said the same on several occasions. Mr. H. A.
Herbert, an Irish member, whose name deserves to be associated very
intimately with legislative attempts to put Savings Banks on a proper
footing, testified over and over again to this impression being the
prevailing and universal belief. General Thompson told the House in
1848 that he "was struck with profound astonishment to learn that
Savings Banks were not what in common parlance was called 'as good as
the bank.'" He had advised servants on numerous occasions to put their
money into such banks in the belief that they had complete Government
security for their money. Such expressions of opinion from men who,
though they had never penetrated into the mysteries of official life,
could scarcely be thought ignorant in financial questions of this
kind, show how wide-spread must have been the misapprehension, and are
of themselves almost a sufficient justification of the ignorance of
the bulk of the poorer classes.
Nor were there wanting excellent and numerous authorities who must
have contributed to this improper impression. Mr. Scratchley, in his
_Practical Treatise on Savings Banks_, pp. 72-4, has taken great
pains[137] to string together a formidable list of those whom he finds
inculcating the same view as that already expressed by prominent
members of Parliament during debate. Suffice it to say, that when such
books as McCulloch's _Commercial Dictionary_, Porter's _Progress of
the Nation_, _The Quarterly Review_, _Chambers's Information for the
People_, _Chambers's Magazine_, _The Penny Magazine_, and the Irish
school books, laid it down that depositors had perfect security from
Government for the money paid into Savings Banks, those of the class
which relies to such a great extent on the intelligence of those above
them may well be excused for falling into error, and may well be
pitied when called upon to bear loss. Government took up the subject
of Savings Banks at an early stage in their history, with the object
of "protecting" them,[138] and to that end they made it an imperative
duty on the part of the trustees of these banks to deposit their money
with the State; unfortunately, however, no steps were taken to enforce
this provision. Here lay the fatal mistake, and the source of all the
trouble. "The whole success of Savings Banks," says Mr. McCulloch in
his _Statistics of the British Empire_, "depends upon the security the
depositors have for their money. No one was accustomed to speak of
Savings Banks without commenting on the increase in the stability of
the country by giving the poorer classes a direct interest in the
preservation of public credit; but it requires no great amount of
penetration to see that so much entirely depends upon the fact that
faith is kept with such depositors." To all intents and purposes
proper faith was _not_ kept by the banks, and a proper knowledge of
the real amount of risk the poor were running was wrongly withheld
from them: hence the undoing of a great part of the good work
accomplished in the first quarter of the present century by the
establishment of Savings Banks. "What was the use," indignantly asked
a member of the House of Commons of the Government in 1851, "of
preaching to the poor the duty of being honest, industrious, and
self-dependent, if the fruits of their hard earnings were thus to be
swept away?"
Ten years afterwards a more powerful voice than Mr. Herbert's asked
the same question, and appealed to the country for a reply. "If ever,"
said the _Times_ newspaper, speaking of Savings Bank money in a
leading article, 17th January, 1862, "there was a sacred fund, this is
one; if ever there was a class and a fund which deserved the
protection of wise laws and stringent responsibilities, surely this is
the class and this the fund." Says an objector: "Irregularities will
creep into the management of the best of funds, and frauds are as old
as the world." Says the _Times_: "How can people treat such cases as a
matter of course! How can we look on while the poor commit their all
to such institutions as these! It is useless to tell us that nine out
of ten, or ninety-nine out of a hundred of these Savings Banks, are
conducted with scrupulous care and constant supervision." Referring,
then, to the recent case at Bilston, it continued, "How can the
depositors of a few hoarded shillings know where the Fletchers hold
sway, and where the managers do their duty? The only sound advice to
give the working classes under such circumstances is, to have nothing
to do with institutions _where such things can occur_." The argument
was irrefutable; nor was the advice given hastily. The Postal Banks
had then been introduced to the country, and the article thus winds
up: "This advice would have been difficult to give some years ago; it
is not so now. The Post Office Savings Banks offer an escape from
danger, and at the same time remove the necessity of taxing the time
and attention of philanthropic men in offices where negligence may
occasion such wide-spread ruin. We confess that, in the face of such
occurrences as those of Bilston, we hope the day will speedily arrive
when these 531 fallible Savings Banks will all cease to exist."[139]
We have said that the frauds in some of the Savings Banks led not only
to their stoppage, but to the closing of others in the neighbourhood.
Nothing can be clearer on this point than a reference to Ireland. In
1846, there were 74 Savings Banks in Ireland; in 1851, no fewer than
21 of them had ceased to exist. In 1846 there were eight in county
Down; in 1851 only two remained. In county Kerry there were almost an
equal number; in 1851 not one remained. Doubtless other causes besides
the breaking of faith with the people led to this, partly and
indirectly,--such, for example, as the failure of crops,--though still
there was the fact, significant enough, that in the districts least
visited by famine, and where the people were most industrious and
frugal, there had been the greatest diminution of these banks. Bearing
in mind such facts, and also that it can be proved that the frauds to
which Savings Banks have been so liable have led directly or
indirectly to the breaking up of no less than fifty of these
institutions in the United Kingdom, let us proceed to some inquiries
as to how far the banks, uncertain and insecure as they were in 1861,
met the requirements of the country in other respects.
Before 1861 there were in the United Kingdom 638 Savings Banks; of
which 498 were in England, 33 in Wales, 51 in Scotland, 54 in Ireland,
and 2 in the Channel Islands. Computing from the census of that year,
there was one Savings Bank to every 43,000 inhabitants. In England,
though the 498 banks were distributed through every county except one,
there were many populous districts and numbers of large towns not
supplied with them. Rutlandshire with its 22,983 inhabitants was the
exceptional county in England: but in Scotland there were nine, and in
Ireland four counties, entirely without Savings Bank accommodation.
The following is a list of those thirteen counties:--
SCOTLAND.
Ayr, with a population of 189,858
Clackmannan " " " 22,951
Haddington " " " 36,386
Kinross " " " 8,924
Linlithgow " " " 30,135
Orkney & Shetland " " " 62,533
Peebles " " " 10,738
Sutherland " " " 25,793
Wigtown " " " 43,389
IRELAND.
Carlow, with a population of 68,078
Kerry " " " 238,254
Leitrim " " " 111,897
Longford " " " 82,348
One of the Channel Islands, Alderney, and the Isle of Man with its
three or four market towns, had likewise no Savings Bank. Thus
fourteen counties and the above islands, containing an aggregate
population of at least a million persons, could not count upon a
single Savings Bank to assist those of that great number who were
inclined to provident habits, or those who might have become so had
these facilities been within reach.
So much for the counties in the length and breadth of which no bank
for savings could be found. Applying the same test to towns and
villages already applied to counties, we find that of places above the
position of hamlets there were, in 1861, no less than 3,500 without
banks; and not only so, but 150 of this number were towns of more than
10,000 inhabitants, and 500 of the places which had no Savings Bank
accommodation had each one or more private or joint-stock banks.
But we have another consideration to urge here; and that is, the
insufficiency in the number of Savings Banks in many counties where
their extent and population required them. No one will say that
Berkshire, Dorsetshire, and Cheshire required as many banks as did
Middlesex, Lancashire, and Yorkshire--the vast centres of population
and the busy hives of industry--and yet the facilities of which we are
speaking happened to a great extent to be so arranged. In 1861 we find
the relative number of the population and the depositors in Savings
Banks in our English counties to vary very considerably--a difference
ranging from one in eight to one in thirty-six. In the county of
Berks, there was one Savings Bank for every 17,000 persons; in
Dorsetshire one for 18,500 of the population. On the other hand, to
take the rich and thriving county of Lancashire, which had the lowest
relative number of banks, we find there was only one to every 68,000
persons, and in the West Riding of Yorkshire only one to every 66,000
persons. From a careful calculation which we have made from these and
similar facts, it would appear that of the two and a half millions of
persons for whom Savings Banks were specially designed, and who in
1861 were not depositors, at least half of them were the breadth of an
English county distant from any place where they could place their
money had they been desirous to save it, and the rest were distant
from six to twenty miles from any such repository.
Nor were those who were much nearer these banks, _i.e._ the denizens
of our large towns, much better circumstanced. Of the existing
establishments in 1861 there was a large proportion of them open for
so short a time, and at such inconvenient hours, as practically to
make them closed banks to our working population. That they did little
business is not to be wondered at; though we think our readers must be
astonished to know that of the entire number of Savings Banks much
more than half of them only received, on the average, a dozen deposits
a week! Astonishing as this is, all wonder may well cease when it is
found that of the whole 638 Savings Banks of the United Kingdom only
twenty were open daily, while 355 were open once a week, and
fifty-four but _once a fortnight_, and ten but _once a month_! Of the
remainder a considerable number were open two and three times a week,
and the rest did business at various periods. Investigating the matter
a little more closely still, we find that, in 1861, fifty Savings
Banks were open but _four hours monthly_; 124 were open only _one hour
each week_; and 150 open _but two hours per week_. In England the 498
banks were open in the aggregate 1,988 hours a week, giving an average
of about four hours per week for each bank, or, if we leave the
metropolitan banks out of the consideration, an average of about two
hours and a half per week. Further, taking three English counties,
solely chosen on account of their alphabetical order, Bedfordshire,
with five Savings Banks, had seventeen and a half hours per week of
Saving Bank accommodation; Berkshire, with _ten banks_, had only
twenty-one hours; and Buckinghamshire, with six banks, but an
aggregate of eight hours each week, during which its population could
resort to the banks with their savings. After these facts, let no one
wonder that the odd savings of the poor burnt holes in their pockets,
and led them to resort to the "house of call" open within a
stone's-throw almost at all hours.
A statement was made before the Committee of 1858, that twenty-five
out of every hundred persons properly designated as of the industrial
classes were debarred from saving their money, even if inclined to do
so, from the want of convenient places of deposit; and the reader may,
we think, with the help of the above statistics, judge whether that
statement was at all an exaggerated one. "Is nothing to be said of the
inherent disposition of so many of the poorer classes to spend their
money, and the utter repugnance they feel to habits of frugality?"
says a doubting reader. Certainly. But how do the facts bear on this
matter? Let us take the returns of the four different counties already
alluded to as containing relatively the largest and the smallest
number of Savings Banks. In Berkshire, for every thousand persons an
amount equal to 2,479_l._ was accumulated in 1856; in Dorsetshire the
amount was 2,550_l._: on the other hand, in Lancashire, which we
described as most insufficiently served with banks, the amount per
thousand persons was only 1,562_l._, and in the West Riding of
Yorkshire but 1,266_l._ But we will take the case of a single bank to
show that the want of facilities was a most important element in the
want of progress; and to make the fact still plainer, we will go to
Lancashire itself. The Manchester Savings Bank has for long been one
of the best managed institutions in the kingdom, whilst elsewhere
there had been, as we have seen, the slowest growth, if not complete
stagnation in Savings Banks generally. The depositors in the
Manchester bank were nearly quadrupled in the twenty years now under
consideration, and no better test is required that these depositors
were of the right sort than the fact that, in 1860, 200,000_l._ lodged
at Manchester belonged to persons who could not even sign their
names.[140] These facts did not fail to strike the members of the
Committee of 1858, and Mr. J. Hope Nield, the eminent actuary of the
Manchester Savings Bank, was asked how he accounted for the fact of
this bank advancing so much more rapidly than any other. Mr. Nield
succinctly replied, "Only from the constantly increasing facilities
which it has been our constant endeavour to give." Mr. Nield
afterwards explained the facilities to which he referred. In many
banks, depositors had only a very short time for business, and then
perhaps they were restricted to one kind of business for one day,
another kind of business for another day. In the Manchester bank
depositors could go and do any kind of business whenever it was open.
There lay the distinction between "free" banks, and what were known as
banks on the "restrictive principle." In a restrictive principle bank,
of which there were an enormous number, withdrawals were made on one
day, deposits on another; new accounts could only be opened on a
certain day, additions could only be made to accounts on another
certain day. Then there was the notice to be given for withdrawing
money. The more "free" the bank, the less notice: generally a week was
required; more often a fortnight was wanted; in many cases a month's
notice had to be given. "Whenever," said Mr. Nield, "a free bank could
be pitted against one on the restrictive principle, the increase in
the number of depositors in the former case would be found to be four
or five times as much as in the latter." This was shown in a clear
light by a striking illustration--also a somewhat amusing one: "Up to
1847," said Mr. Nield, "the late Venerable Archdeacon Brooks, of
Liverpool, would insist to the day of his death upon paying everything
himself in the Liverpool Savings Bank, and, as a consequence, the bank
was only open two days a month for the repayment of money. Deposits
were completely stationary there for many years, and cases were known
where persons went to the Manchester bank to open an account there,
and remitted money by post."
Whilst speaking of the Committee of 1858, we may here give the opinion
on this point of another gentleman, of whose career as an ardent and
laborious Savings Bank reformer we shall presently speak. Referring to
the absence of what he considered reasonable facilities in Savings
Banks, Mr. Charles William Sikes, of Huddersfield, expressed his
decided conviction that the present system "was inadequate to meet the
wants and wishes of the working classes of this country." When asked
(2,715) if he had made any calculation as to the extent to which the
savings of the working classes might reasonably be expected to amount
if the Savings Banks were thoroughly popular with them and were felt
to be perfectly safe, Mr. Sikes answered: "I think that if a knowledge
of Savings Banks becomes widely diffused (and the process is going
on), and if the reorganization of them receives the confidence of the
country, the average annual deposit, which now amounts to seven
millions, is so small a proportion of the aggregate income of the
working classes of this country, that instead of being, as it had
been, stationary, _with scarcely a fluctuation of two per cent. for
twenty years_, there will be a probable increase in the course of
three or four years, or perhaps a longer time than that, of two,
three, or five millions of money;--in other words, that the annual
deposit, instead of being seven millions, will get to eight, nine, or
eleven millions, in ten years. The income of the working classes is
fully 200 millions a year, and, with anything like provident and
sensible habits, thirty millions a year might be deposited in Savings
Banks."
* * * * *
And now that we have at considerable length described the defects and
inequalities of the Savings Bank system, we cannot perhaps do better
than offer some account, first, of different banks of a supplemental
character which have been started within recent years, and afterwards
speak of some of the various proposals made, out of Parliament, to
render the general system more efficient.
For many years prior to their actual establishment it was felt by
those best conversant with the habits and feelings of our British
soldiers, that the Savings Bank institution did not meet their wants
and requirements, and that supplementary banks were needed. This
project was frequently urged,[141] and in 1842 Lord Hill gave his
consent to the plan of Military Savings Banks proposed by Sir James
McGregor and approved by Lord Howick, the then Secretary-at-War. An
Act of Parliament was obtained (5 and 6 Vict. c. 71), and immediately
afterwards the authorities at the different barracks commenced
operations, under regulations made by the Secretary for War. In 1847
this Act was amended. In 1849 the Regimental Benefit Societies were
dissolved, and incorporated with the Military Savings Banks by a new
Act; and in 1859 the whole of the Acts relating to the Savings Banks
of the soldiers were consolidated into one (22 and 23 Vict. c. 20).
The amount which any one in the service can deposit is unlimited,
though interest is not allowed on any excess over 30_l._ in one year,
except in the case of gratuities given for good conduct. When the sum
of 200_l._ is reached, no further interest is paid. The interest
allowed must not exceed 3_l._ 15_s._ per cent. The whole of the money
raised in Regimental Savings Banks is remitted to the War Secretary,
who holds an account with the National Debt Commissioners, which is
kept separately from other Savings Bank accounts, being entitled "The
Fund for the Military Savings Banks." Returns of all transactions made
in these banks are laid annually before Parliament. The Returns almost
from their commencement have been most satisfactory, and produce
sufficient evidence that these supplementary banks were required. The
total amount up to this time (1865), standing to the credit of our
soldiers in Military Banks alone, exceeds the sum of a quarter of a
million sterling, and amounts on the average to nearly 20_l._ for each
depositor. This sum, however, though large and eminently satisfactory,
as indicative of providence and forethought among a class which cannot
be called highly paid, does not represent the whole of their savings.
It is well known that many go beyond their barracks to deposit such
sums as they can spare, acting on the feeling, which may be well
understood, that it is not always advisable that the authorities
_should know the extent_ of their savings.
* * * * *
What was done for soldiers in 1842 was accomplished for seamen,
another class whose interests everybody cares for, in 1854. The Act 19
and 20 Vict. c. 41, regulates Seamen's Savings Banks, established at
all our principal seaports under the direction of the Board of Trade.
According to this Act the Board of Trade has power to constitute any
shipping office established under the Merchants' Shipping Act (1854) a
branch bank under its control, and to require any shipping master
belonging to that office to act as agent. The money invested in these
banks is paid through the Board of Trade to the National Debt Office;
and interest similar to that given by the ordinary Savings Banks is
paid to those who so invest their money. As in ordinary Savings Bank
management, the expenses incurred in carrying on the business through
the Board of Trade (a department of which is constituted as a sort of
central bank) and the shipping offices are paid by the surplus
interest obtained from Government, with whom the funds are invested.
As in the case of Military Banks, an annual account must be rendered
to both Houses of Parliament of all transactions; but we are sorry to
say that these transactions have never been large. Some forty thousand
pounds represent the entire capital of the Supplementary Seamen's
Banks.[142] All who know what Jack is ashore--and who does not?--will
wonder little at this result; he is universally pointed to as an
embodiment of Improvidence itself: but when it is known that the
machinery in question is applicable to married sailors, their wives
and families, the picture of want of thrift and inclination to save
presents several deplorable aspects.
* * * * *
Still more useful and interesting has been the Penny Bank movement,
and some account, which must necessarily be brief, will not be out of
place here. Before the year 1850, there seem to have been at least
four Penny Banks established with a view to attract a poorer class of
depositors, or it might be a _younger_ class, than the existing
Savings Banks had reached; and, as "stepping-stones to greater
things," Penny Banks succeeded admirably from the very first. The
first bank was started, with this very laudable object, in Greenock,
in 1857, by a Mr. Scott of that town. The Greenock Savings Bank
having, like all the other Savings Banks, restricted the amount which
could be received to a shilling, and very few of them receiving that
amount pleasantly, Mr. Scott thought that the very poor had no safe
place in which to deposit their little surplus earnings. Poor people
were often enough urged to "take care of the pence, and the pounds
would take care of themselves;" but little had been done to help them
to care for their pennies, which proverbially and very quickly burnt
holes in their pockets when they were compelled to keep them in their
own possession. A bank for such sums was started in this town; and to
show how much it was needed, and how ready the poor were to avail
themselves of advantages when they were placed within their reach, we
have only to state that 5,000 depositors in the first year of the
existence of the Greenock Penny Bank, placed the sum of 1,580_l._ in
it.
The success of this bank soon began to tell all around; many private
establishments and charitable institutions were not long in following
the example that had here been set. In the following year Mr.
Queckett, a benevolent and painstaking clergyman, in the east of
London, established a Penny Bank in connexion with Christ's Church,
St. George's in the East, and the success attending the venture was
still more encouraging and remarkable; nearly 15,000 deposits
were made in this parish Penny Bank in the first year of its
existence. It seems that the number of depositors, for some reason
or other--probably because that number was enough for one person to
control; the whole of the repayments, at any rate, passed through Mr.
Queckett's own hands--was limited to 2,000; and so great was the
demand, that there were always several applicants for any vacancy that
might occur among the favoured two thousand. Two "Penny Banks" were
next established about the same period--one at Hull, in August, 1849,
and the other at Selby, in the East Riding of Yorkshire, in July of
the same year. The clergymen and gentry of both towns joined together
to form an institution, "which should create and foster habits of
regularity and frugal economy among the poorest people, and which
should afford an opportunity for the deposit and safe keeping of the
smallest sums of money, repayable with interest when required." The
Birmingham Penny Bank was established in 1851, and in six years from
its commencement had received the enormous sum of 52,354_l._ in
amounts from one penny to one pound. Many of our readers will be aware
of the unfortunate end of this bank, under circumstances which, deeply
to be regretted, have had a prejudicial effect on the usefulness of
other banks of the same description. Were it not that a new class of
banks, since established, offers considerable inducements to the
poorest classes, and thus supersedes, though only to a limited extent,
the necessity even for Penny Banks, such an effect could not but have
been considered irremediable, as well as most deplorable. Of the
remaining Penny Banks, the principal ones in England are those of
York,[143] established in 1854, and excellently managed throughout,
and very successful in attracting depositors; the Halifax bank,
commenced in 1856, and equally successful; the Derby bank, established
in 1857, under the auspices of the Rev. J. E. Clarke, one of the most
earnest of the promoters of the principles of Penny Banks; and the
Southampton and Plymouth banks, established in 1858. There are no
means of obtaining statistics as to the number of Penny Banks in
existence, but there cannot be less than eighty or ninety in English
towns alone. Over and above the regular public Penny Banks, however,
there are an enormous number connected with and doing an incalculable
amount of good in private establishments, ragged and other schools,
and different religious bodies.
In Scotland the movement has progressed even more rapidly than in
England. Dr. Chalmers always held, and often urged during his
lifetime, that far too little was done to tempt the poor, and
especially the families of working people, to save their little
surplus cash: in commencing his "Territorial Savings Banks," as he
called them, in Edinburgh, he was actuated by exactly the same view
and the same spirit which afterwards influenced the promoters of Penny
Banks. The Penny Bank system flourishes in Glasgow to an extent
unknown in any other neighbourhood. In and around that city there
were, at the close of 1864, no fewer than sixty-eight Penny Banks in
active operation, all of which deposited with the Savings Bank of that
place. The total amount of deposits in these sixty-eight banks during
the year 1864 was 9,386_l._, and withdrawals to about half that
amount. The number of depositors exceeds, at the present time, 24,000.
That these auxiliary banks are effecting a great amount of good can
well be believed. "The saving of pence," says the report from which
these extremely interesting facts are taken, "proves a training to
habits whereby ultimately larger sums are saved, and the virtues of
industry and providence are cultivated and confirmed," and there
cannot exist a doubt on the matter. The principles upon which they and
all other banks of the kind were started, and have been throughout
conducted, make them peculiarly institutions of a preliminary
character for the poorer class of workmen; emphatically they are, as
they have been called, "the poor man's purse." In their operations
they are so simple, that few could possibly get perplexed in dealing
with them; and they are best adapted to working populations, because
they are open at such hours, generally on Saturday nights, as are
known to suit these classes. As the most salutary change is made in a
man's habit, perhaps in his character, when he _begins_ to save, the
Penny Bank deserves every countenance and encouragement.[144]
It only remains to add, that the Legislature took the matter up in
August, 1859, when it passed the Act 22 and 23 Vict. c. 53,
legalizing, as it were, these institutions, by enabling them to invest
the whole of their proceeds in Savings Banks.
* * * * *
Much that remains to be told of Savings Bank reforms, and of other
proposals to supplement the system by fresh provisions, may be told in
connexion with the life of a gentleman to whom reference has already
been made. Amongst those who have devoted much time and immense labour
to bring about a better state of things in Savings Banks, the foremost
place is undoubtedly due to Mr. Charles William Sikes, of
Huddersfield. Mr. Sikes, the son of a private banker of that town, was
born in 1818. We will pass over his early years, only remarking that
he received a commercial education, and, in 1833, entered the employ
of the Huddersfield Banking Company, the third or fourth joint stock
bank established in this country. Subsequently cashier, Mr. Sikes now
holds the position of deputy manager of the bank in question. We
mention this, because it has an immediate bearing on the subject: it
was while Mr. Sikes was cashier of this bank,--which, like other
private banks, received deposits above 10_l._, and allowed interest at
the current rate,--that his attention was arrested to the question of
banks for the people. He witnessed a considerable number of instances
of workmen, who, beginning with a few pounds, had silently amassed
what was to them a little fortune, of one, two, and even three hundred
pounds; and he became deeply impressed, as he himself informs us, not
only with the idea that the number of these provident working people
was far less than it ought to be, or might be, but that the social and
domestic results for good that would ensue would be absolutely
incalculable, if bank depositors among the working classes became the
rule, instead of the rare exception. About this time--the era of the
Free Trade agitation--there was great distress in the manufacturing
districts, and Huddersfield, like the rest of the West Riding towns,
was heavily visited. In the neighbourhood where Mr. Sikes resided, the
population was chiefly engaged in the weaving of fancy waistcoatings,
and that trade was almost suspended. "Privation and suffering," says
Mr. Sikes, "prevailed on every hand, and was frequently borne with
silent and noble heroism." He seems to have entered freely into
discussion with working men as to the various remedies for such a
state of things, and in this practical way to have penetrated into
their thoughts, and to have got at their wants, wishes, and feelings.
And for such objects as Mr. Sikes had in view, the end amply justified
the means. There seemed to him only one remedy, to which they might
possibly be assisted, but which they themselves must adopt; whatever
was suggested, Mr. Sikes's thoughts would always recur to the
comparative comfort of those who had to some extent lived for the
future--who had had the wisdom in their better times to remember that
rainy days must come at some time or other; that
"Into each life some rain must fall,
Some days must be dark and dreary;"
and that the difference between those who had a little store laid by
and those who had none, was the difference between hopeful expectancy
and comfort, and helpless misery and want.
Mr. Sikes tells us that he had already begun to feel, that though much
might be done for the working classes by kindly and temperate advice,
the greatest share of the work of their social elevation would have to
be achieved by their own individual efforts; this feeling, moreover,
was strongly confirmed by reading a passage in the late Bishop of
Chester's (Archbishop Sumner's) _Records of Creation_: "The only true
secret of assisting the poor is to make them agents in bettering their
own condition;" and on this maxim, as a principle, he resolved solely
to act. Mr. Sikes came to the conclusion that his work might well lay
in endeavouring to stimulate the poor to more provident habits; and
that, if there was anything in the constitution of such societies as
were formed expressly to foster these habits which stood in the way of
the poor man, the obstacles ought either to be quickly removed, or
some new organization must be planned to effect this purpose. Though
Mr. Sikes never seems to have had anything to do with the Huddersfield
Savings Bank--having abstained, through motives of delicacy, owing to
his connexion with an ordinary bank in the same town--he was
thoroughly conversant with the system, and therefore fully appreciated
the difficulties in the way. He was not long in finding out how
utterly impossible it was to adapt the system, as it then stood, to
the well-known wants and requirements of the workman; and he early
turned his attention to some auxiliary machinery which he thought
would meet the case of the younger people, if of no other. He truly
held, that if he could do anything to inculcate the growth of
frugality in young people, their habits would increase with their
years and grow, in spite of the many inconveniences, amounting as
they did to absolute discouragements, which they might meet with
afterwards in their connexion with the majority of the old class of
Savings Banks.
With this end in view, Mr. Sikes addressed a long letter to the editor
of the _Leeds Mercury_, in 1850, which was subsequently republished in
the form of a pamphlet, and widely circulated, recommending the
formation of what he called "Preliminary Savings Banks." There was
nothing particularly new in the character of the banks proposed; the
novelty was in their adaptation to the machinery of Mechanics'
Institutions. Mr. Sikes took up the Penny Bank movement, and showed,
with an energy and devotion to the subject which made his exertions
quite impressive, how, by the already existing institute, that useful
scheme for saving small sums might be propagated far and wide. His
proposal, to give it in brief, was, that a few leading members of each
Mechanics' Institute should form themselves into a "Savings Bank
Committee," attending, say, an evening weekly, in one of the
class-rooms, to receive the trifling deposits of any member who should
choose to "transact a little business" with them. They would only have
to appoint a treasurer, provide a few inexpensive books, and with the
exercise of just a little patience and self-denial they might succeed
in bringing many round to saving habits. The excellent organisation,
especially in Lancashire and Yorkshire, of Mechanics' Institutes,
would thus wonderfully augment the number of agencies for receiving
the savings of the people, and they would thus augment the number most
where more facilities were most needed. The "Preliminary" banks were
meant to be merely feeders to the larger banks: so soon as the money
of any one depositor reached a guinea, or two guineas, the sum was to
be paid into the nearest Government bank, as often as necessary. "If
the committee of each institution," concluded Mr. Sikes, in his very
interesting letter, "were to adopt this course, taking an interest in
their humble circumstances, and in a sympathising and friendly spirit,
suggest, invite, nay win them over, not only to reading the lesson,
but forming the habit of true economy and self-reliance, how cheering
would be the result! Once established in better habits, their feet
firmly set in the path of self-reliance, how generally would young men
grow up with the practical conviction that to their own advancing
intelligence and virtues must they mainly look to work out their own
social welfare!" It is very satisfactory to find that this advice and
such considerations had their proper weight with the committees of
many of these institutions: Penny Banks were added to their other
educational and social schemes; and Mr. Sikes was further encouraged
by the Committee of the Yorkshire Union of Mechanics' Institutes, who
more than once alluded to his proposals, and expressed their cordial
approval of his plan, and their pleasure that it had been adopted in
several places included in their sphere of operations. In the country
generally the proposals attracted for some time considerable
attention, and led to Mr. Sikes being largely consulted by gentlemen
who were desirous of establishing "feeders" to the existing Savings
Banks, either in the form of the Penny Bank, or the Mechanics'
Institute "Preliminary" bank. He soon came to be regarded as an
authority on the subject, and justly so; many different banks were at
this early stage formed as the results of his advice and assistance,
and Mr. Sikes seems to have had many gratifying assurances that his
labours have been far from fruitless, a result in which the
philanthropist finds his best reward.[145]
Mr. Sikes's next exertion on behalf of the working population around
him was to help them to a proper estimate of the value of provident
habits, by the publication, in 1854, of a pamphlet entitled _Good
Times; or, the Savings Bank and the Fireside_;[146] an admirable
little manual for the class for which it was written, and which
deservedly obtained a large sale. Mr. Sikes himself described how he
was led to write his pamphlet by hearing, in an extensive intercourse
with working men, the most crude ideas as to the utility and virtue of
habits of economy and frugality; and we know no better corrective than
a perusal of this little "compendium of practical wisdom" now before
us.
Up to this time we find that Mr. Sikes laboured very earnestly to
spread the knowledge of Savings Banks among the people, and to obtain
more appreciation for these institutions. He also, as we have seen,
proposed his "Preliminary Banks" on the principle that, as the
existing institution did not sufficiently recognise the small attempts
at saving habits, this supplementary class of banks would supply the
deficiency. He seems, however, to have carefully abstained from saying
anything that would tend to lessen the influence or usefulness of the
existing Savings Banks; but in 1855, the time would appear to have
arrived when it became necessary to attempt some reforms in their
constitution and management. It is not at all difficult to comprehend
the steps by which Mr. Sikes, with his practical knowledge of Savings
Bank business, would arrive at the conclusion that if these banks were
to continue to be in any sense the depositories of the money of the
poor, they must undergo almost a transformation, and further, that
reform must come from within. That this was the conclusion to which he
came is evident from the able and exhaustive letter which Mr. Sikes
addressed, in 1856, to the Chancellor of the Exchequer, the late Sir
G. Cornewall Lewis, on "Savings Bank Reforms."
Mr. Sikes first sought an interview with Sir George C. Lewis, and
obtained one, in company with Mr. Wickham, M.P.; and the letter which
followed was the result of a request on the part of the Chancellor of
the Exchequer, that the different points should be fully and clearly
set before him. So far as we have been able to find, Mr. Sikes
deserves the credit of having been the first to point out the inherent
defects in all parts of the Savings Bank system, and the first to
suggest an entirely fresh form of management.[147] Almost all the
previous _brochures_ relating to Savings Banks had exclusive reference
to the matter of the frauds which had occurred, and the security which
depositors possessed in such cases. On this subject, Dr. Hancock, of
Dublin, had published two very able pamphlets, which had originally
been read as papers before the Dublin Statistical Society, of which
Dr. Hancock was secretary. Mr. Edward Taylor of Rochdale had, at a
still prior period, written a pamphlet on the same subject. Mr. Sikes,
in the _Letter_ we are now considering, adverted at length to the same
point, but by no means confined his attention to it. He, on the
contrary, dwelt on the dormant state into which many of the banks had
sunk; the extremely unequal way in which they were furnished to the
people; the limited time for which the majority of banks were open;
the various rates of interest allowed; the inequalities in the
contributions to the "separate surplus fund;" the non-establishment,
for many years, of new Savings Banks; and generally, the
unsatisfactory state of the law with regard to them.
Mr. Sikes, after thus recapitulating in his able pamphlet the
imperfections in the organization and management of Savings Banks,
advocated the following improvements, viz.:--That the State should
give a perfect guarantee; that there should be a central bank in
London to control the whole system, in the same way that the central
Money Order Office controlled all money-order operations at the Post
Office; that there should be a vigilant and general audit of all
accounts; that there should be a great extension of the hours during
which Savings Banks were open; a great increase in the number of such
banks--the services of private and joint-stock banks to be called into
requisition in cases where such arrangement was likely to prove
economical and advantageous; that there should be an increase in the
facilities for the deposit and withdrawal of money; that one-fourth of
the capital of Savings Banks should be employed in first-class landed
securities and railway mortgage bonds, yielding four per cent. Mr.
Sikes further proposed that the rate of interest on sums up to 100_l._
should be three per cent., and two and a half per cent. on all sums
beyond. Mr. Sikes felt the difficulty of providing that essential
Government guarantee for every deposit, without which any reform in
Savings Banks was scarcely worth the name; but he strongly insisted on
the point that if a Savings Bank department was established in London,
which should, on its part, insist upon weekly returns, a good and
uniform system of book-keeping, and a liability to unapprised visits
by inspectors from the London office, the entire staff of Savings Bank
officials in the country might, to a great extent, be kept honest.
Bearing in mind, however, that errors and losses would occur to the
best regulated department, he further proposed that the treasury might
be made safe by the establishment of a "General Guarantee Fund,"[148]
to which contributions should be made from the "Separate Surplus
Fund." These suggestions, if carried out, Mr. Sikes believed would
help to form the basis of a system that would restore Savings Banks to
the estimation in which they were held during the first twenty years
of their existence; and there can be no doubt of it. The difficulty
was, however, in getting such recommendations adopted--either because
the then Chancellor of the Exchequer (Sir G. C. Lewis) did not bring
his extraordinary powers to bear upon the subject, or else there was
still something lacking to give a more practical turn to the questions
at issue. As subsequent events have proved, it is more likely to have
been for the latter reason that the matter was not persevered in.
Everything that an ingenious marshalling of figures, an array of
argument, and even eloquence could do, Mr. Sikes did; but all appears
to have been equally unavailing. The Chancellor of the Exchequer made
attempts, as we have before seen, in the House of Commons, to improve
the organization of Savings Banks, but without success.
When the Committee on Savings Banks was appointed, in 1858, Mr. Sikes
was called as a witness. He again described the plans which he had
suggested in 1856, and which had undergone little or no modification
since that time, and urged the adoption of some of them,--with what
success is already known. And here it will be best to dispose of the
Committee of 1858, and to show how little it effected, and how little
it was calculated to effect. So far as the providing of additional and
much required facilities was concerned, it is necessary to describe
with minuteness the Committee's deliberations. The Report itself, to
which the Committee put their names, has been given. It provided, as
our readers will remember, for a new Government management of Savings
Banks, advised that increased power should be given to the Commission,
and provided actual security for the deposits. This Report was not
acted upon; but even had it been, the reform would only have been
partial. So far as relates to the increase of facilities, it left the
question almost untouched. Indeed, with the conflicting evidence
given, the Committee acted wisely in confining their labours to the
rectification of existing abuses, and in making as perfect as
possible, without increasing, the existing accommodation. The
witnesses examined before the Committee were by far the most prominent
authorities on Savings Bank management in the kingdom, and yet on no
single point could they all agree. This is, we think, no unimportant
phase of the subject; on the contrary, it is highly important, as
showing how very little could be effected for the body of Savings
Banks in the absence of any thing like unanimity amongst those who
best understood the subject. On the question of Government security
and Government supervision, we have already spoken. With regard to the
necessity for a uniform system of management, and of course a uniform
system of accounts, there was certainly an appearance of general
agreement; but little attempt to bring it about. _Mr. Hope Nield_
"thought it would be very advisable to assimilate the practice of the
different banks more than at present exists (1,895)." _Mr. Maitland_
and _Mr. Wortley_ would like uniformity, and would give the
Commissioners power to enforce it; "nothing less would remedy the
loose system of so many of the banks." "The system of keeping the
books," said _Mr. Craig_, of Cork, "in some of the country banks, is
most abominable. I speak of the vast majority of banks; some are
exceedingly well managed; but I say, that from the way they make out
their accounts for the National Debt Office, not one in ten is
honestly or fairly made out (3,759)." Had the Committee deliberated
upon a uniform system, which they did not, for all the banks, and had
they decided--(a very difficult matter, seeing that each of the seven
largest banks in the kingdom had different systems of book-keeping)--to
recommend some one system, the difficulty would only be half over.
Each Savings Bank was independent, and completely irresponsible to any
one in such matters as these; but supposing, which was very unlikely,
that the trustees could be got to look upon the matter with favour,
all would not yet be smooth sailing. The difficulty of introducing
real improvements into Saving Bank management was more than once
spoken of and illustrated. Thus, _Mr. Boodle_ told how he encountered
great opposition from his own subordinates, in introducing something
new into the excellent establishment at St. Martin's Lane. For six
months after he started a new system of book-keeping, a conspiracy
lasted among the clerks to prevent any change; wilful mistakes were
constantly made, to show that the work under any new system could not
be done; and this continued till a great number of clerks were
dismissed, and new officials appointed in their place. Much to the
same point was the evidence of _Mr. Craig_, who described in a
vigorous and amusing way, which must have done much to relieve the
tedium and heaviness of the investigation, the introduction of his
system into the Cork bank, and the necessity for it:--
"I saw at once," said he, "that there was nothing for it
but sweeping every book out of the bank, and I did so.
They (the trustees) gave me authority to do what I liked,
and I did. It was all done by me without any interference;
and I managed it in such a way that if the clerks stuck in
the middle of it they would have lost their salaries; they
had either to go on with it, or stick fast. I went there
myself, with a Mr. Ballard on the opposite side of me, and
a manager with each, determined to start them fairly. I
remained there for a month. I saw that the clerks were
very anxious that it should miscarry. I immediately saw
what they were about; I observed that all the books were
coming to my side, and few to the other; they thought to
smother me with books. The moment I saw this, I said to
little Mr. Abel (who is now dead), 'Do not chatter; work
away; they are playing a trick upon us.' We dashed through
the work; and, one of the book-keepers coming down after
he thought he had well supplied us with a wheelbarrowful
of books, expecting to find them all in arrear, I said to
him: 'Why the deuce don't you send us books!' When they
found they were all done, that stopped all further
opposition; and thus I taught them to do it, just as you
would teach a puppy to swim--if you tumble him into the
water, never fear that he will get out."
Granting that Savings Bank clerks may be subdued after Mr. Craig's or
some other fashion, it would still appear that the indispensable
requisites to a complete uniformity of accounts must be something like
uniformity in the distinctive principles and practices of Savings
Banks. We refer to such matters as the limitation in the amount of
deposits, the rate of interest, notices of withdrawal, &c. The
question of the limit of deposits was discussed before the Committee.
_Mr. Meikle_ and _Mr. Sturrock_ objected to any alteration in the
limit of deposits which for many years had stood at 30_l._ for any one
year, and 150_l._ in all. _Mr. Boodle_ thought the annual limit should
be increased to 50_l._, and the total deposits to 250_l._ _Mr. Finney_
wished it to be at 50_l._ and 200_l._ respectively. _Mr. Saintsbury_
and _Mr. Maitland_ agreed with Mr. Boodle, provided the rate of
interest were reduced, and there were ready access to the public
funds. Then as to the rate of interest itself, _Mr. Maitland_ said
that the highest rate of interest that can safely be offered should be
given for small savings, "though," he said, "_lowering_ the rate would
bring Savings Banks back more to what they were intended to be." He
also thought the rate should vary according to the market rate of
interest. _Mr. Boodle_ objected to a fluctuating rate. _Mr. Meikle_
was of opinion that a fixed rate of three per cent. should be given.
_Mr. Craig_ said a rate of 2_l._ 17_s._ or 2_l._ 18_s._ was
satisfactory to depositors. _Mr. Wortley_ thought three per cent. a
fair rate of interest. _Mr. C. W. Sikes_ suggested that the interest
to depositors should be three per cent. on sums up to 100_l._, and two
per cent. over that sum. He thought a low rate of interest would not
deter the working man from Savings Banks. If we turn from this
theorizing to what was the practice of different Savings Banks in this
and other particulars, we shall find diversities of operation which
not only account for so much difference of opinion, but which rendered
unanimity of action almost impossible. It was then, and is still, a
very popular notion, that the Savings Banks proper pay a uniform rate
of interest of three per cent. per annum; nothing can be more
mistaken. When the enactment was passed establishing the still
existing rate, it was generally considered in Parliament that five
shillings per cent. was ample enough to pay all expenses of
management; but the fact is, double that amount has not sufficed in
some cases. In 1857 there were, according to a Parliamentary Return,
no less than thirty-two different rates of interest paid by Savings
Banks managers, and had the Return embraced a much more recent period
the same diversity would have been shown. Thus, in that year--
banks £ s. d.
31 paid interest to depositors at the maxm rate of 3 0 10 per cent.
107 " at the rate of 3 0 0 "
215 " " 2 18 4 "
11 " " 2 13 6 "
24 " " 2 17 1 "
12 " " 2 16 8 "
78 " " 2 15 6-1/2 "
35 " " 2 15 0 "
2 " " 2 10 0 "
added to which smaller numbers paid other rates, making thirty-two
separate rates.[149] In accordance with the above table the average
cost of management per cent. was, in 1857,--in Scotland 7_s._ 8_d._,
in Ireland 9_s._, and in England 6_s._ 7_d._; in Middlesex, however,
it was as much as 9_s._ 2_d._ Confining ourselves to individual banks,
we find that the Manchester Savings Bank cost at the same period, in
expenses, an average sum of 1_s._ 3-3/4_d._ per account, the
Bloomfield bank 1_s._ 9_d._, the St. Martin's Place 2_s._ 0-1/2_d._,
the Liverpool bank 2_s._ 5-1/4_d._, and the Cork bank 3_s._ 2_d._ per
account.
The greatest expense was shown to be incurred in those banks which
dealt largely in small accounts; hence some of the actuaries openly
sought to discourage the taking of small sums. _Mr. Meikle_ thought it
was the interest of the banks rather to discourage small depositors
and encourage large ones. _Mr. Finney_ showed that they _were_
discouraged at the Marylebone bank, where a less interest was given to
small amounts. _Mr. Craig_, however, went to great lengths on this
point, and grounded his opinions on such facts as the following
(3,752):--"The average cost of a transaction that enters a bank is
more than a shilling; there is not a transaction entered in any
Savings Bank that does not cost a shilling and a fraction. Now, if you
allow a man to deposit a shilling, which costs the bank a shilling, it
comes to this, that the manager might as well say to him, 'There is a
shilling for you; pray do not come here again.' The Committee are
about seeing whether Government can or not safely undertake to make
itself responsible for the transactions of 600 Savings Banks scattered
all over the country. If so, they must only take such sums and in such
ways as will be safe for the public. It will not do to allow people's
sympathies to run away with them by the mere clap-trap of saying, 'We
will take a shilling.' I say that to take these small sums, instead of
being a benefit to the people, is merely encouraging them to waste
their time." We need not here go out of our way to expose the fallacy
of such an argument, further than to point out how entirely Mr. Craig
overlooked the fact that he had previously advocated a system of
uniformity of accounts, which would have made this and other reforms
practicable. What was required of the Committee before which he gave
evidence, was, the suggestion of such a change in the nature of the
institution as that this shilling's worth of thrift should not be sent
about its business in the very summary manner so graphically described
by this gentleman. That the Savings Banks should give such rude
discouragements to the budding of provident habits was nothing short
of a defect; that it was perfectly possible as well as expedient to
offer encouragements to the poorest classes has since been abundantly
proved, as we shall soon have to show.
We have referred to the varying notices for the withdrawal of money
required by different banks; some required a week, some a month, while
in the great majority of banks a fortnight was required. _Mr. Meikle_
expressed himself strongly opposed to the English system of giving
notice: he said, the Scotch banks required no notice at all, though
they held a discretionary power in certain instances. _Mr. Saintsbury_
urged "a reasonable period." _Mr. Wortley_ thought the notice was a
protection against Savings Banks being used for other purposes than
for accumulating savings. _Mr. Sikes_ strongly recommended that
deposits should not be repayable "except after sufficient notice," the
extent of which neither he nor Mr. Saintsbury ventured to state.
Once more the attention of the Committee was called to the necessity
of opening out new banks in localities not well supplied with them. No
one, however, was prepared with any scheme for giving extra facilities
of this kind, and those hints which were thrown out by members of the
Committee themselves were either not taken up, or if noticed, only in
such a way as to attest the difficulty, rather than the ease or
expediency with which any movement towards this end would be attended.
_Mr. Wortley_ said small banks were exceedingly unsafe; branch banks
under the cognizance of a head office _might_ answer. _Mr. Meikle_
agreed, and said that at first new banks were seldom self-supporting.
_Mr. Nield_ said it would be impossible that the agency system of
Exeter (the only scheme recommended) could be introduced into
Lancashire; the branch banks under the Manchester Savings Bank could
not support themselves except they had gratuitous service.
Finally, we think the difference of opinion and the diversities of
operation in the larger and best managed banks[150] of the kingdom
could not be better shown than by the following Return.[151] If
anything could demonstrate the want of some uniform and inexpensive
system of Savings Banks, we think a careful examination of the
inequalities of every sort shown there might have that effect.
Thus we have, we hope, succeeded in showing that at the stage to which
we have arrived (and, indeed, much later,) the existing Savings Bank
system, as a system, laboured under three or four essential and almost
incurable and irremoveable defects: 1, They professed and were
expected to give a Government guarantee for all the money deposited
with them, and yet they did not. The real distinction in the matter,
to which we need only allude, was and is well enough understood by
educated people; but it was not, we may almost say cannot, be mastered
by the poor who were depositors. A depositor paying in his money to
the Savings Bank had no means of knowing what was done with it. 2, The
country was most inadequately and most disproportionately supplied
with banks, and the facilities given by existing banks were also most
inadequate and disproportionate. Farther, and most important, the
number could not be increased on the same footing, and no attempt was
made to increase the number. Such increase presupposed a certain
amount of local philanthropy and even assuming that this sort of
philanthropy is an unmixed good, an adequate provision of Savings
Banks presupposes an equal amount of philanthropic zeal in every
quarter of the country. And 3, Savings Banks were a serious loss to
the country. "Taking the average price," said Sir A. Spearman, "of
Government Securities for each year since 1817, the only years in
which prices appear to have been such as to produce a rate of interest
equal to that paid were 1847 and 1848." Government, in relation to
Savings Bank money, had necessarily to invest when money was most
plentiful, and therefore when securities were dear, and to sell out
when they were cheap. To make up for such loss, it is true, Government
took to using Savings Bank money to aid it in its own financial
operations, to save borrowing or to postpone borrowing; but though
care was always had to keep a sufficient banking reserve in an
available shape, this set-off was not allowed, as we have already
seen, without many complaints on the part of the managers of Savings
Banks.
RETURN relating to the Ten principal Savings Banks of the Country. (1861.)
+-------------------+------------+-----------+------------+------------+
| | | | | |
| | | + | Rate of |
| Name of Bank |Total Amount| Number of | Average | Interest |
| | owing to |Depositors.| Amount of | paid to |
| | Depositors.| | Deposit. | Depositor. |
| | | | | |
+-------------------+------------+-----------+------------+------------+
| | £ | | £ _s._ _d._| £ _s._ _d._|
|St. Martin's Place | 1,780,725 | 61,736 | 6 2 1 | 2 18 1 |
|Manchester | 1,306,329 | 50,231 | 4 5 5 | 3 0 0 |
|Exeter | 1,087,773 | 40,776 | 5 1 9 | 3 0 0 |
|Bishopsgate | 1,032,513 | 53,737 | 4 3 8 | 2 17 6 |
|Glasgow | 927,427 | 42,122 | 3 3 1 | 3 0 0 |
|Liverpool | 872,253 | 29,123 | 9 4 7 | 3 0 0 |
|Bloomsbury | 583,453 | 23,524 | 4 6 9 | 2 18 4 |
|Edinburgh | 566,076 | 30,426 | 3 5 5 | 2 17 9 |
|Birmingham | 563,870 | 31,238 | 4 0 3 | 3 0 0 |
|Marylebone | 395,561 | 23,024 | 4 0 3 |{2 17 4 |
| | | | |{2 15 0 |
+-------------------+------------+-----------+------------+------------+
+-------------------+---------------------------------+
| | ANNUAL EXPENSES. |
| |------------+------------+-------+
| Name of Bank | | | |
| |Per Account.|Per Cent. of| TOTAL.|
| | | Capital. | |
| | | | |
+-------------------+------------+------------+-------+
| | _s._ _d._ | _s._ _d._ | £ |
|St. Martin's Place | 1 5-1/2| 5 11 | 5,380 |
|Manchester | 1 3 | 5 3 | 3,206 |
|Exeter | 1 6 | 4 11 | 2,702 |
|Bishopsgate | 1 6 | 7 4 | 3,830 |
|Glasgow | 1 2 | 5 6 | 2,595 |
|Liverpool | 2 2 | 5 3 | 2,359 |
|Bloomsbury | 1 11 | 7 9 | 2,283 |
|Edinburgh | 1 8 | 9 0 | 2,558 |
|Birmingham | 1 3 | 6 8 | 1,908 |
|Marylebone | 1 9 | 11 1 | 2,212 |
| | | | |
+-------------------+------------+------------+-------+
[134] Compiled from Returns presented by the Statistical
Department of the Board of Trade.
[135] It is very difficult to obtain correct and complete
statistics on this subject. It is to be regretted that a valuable
suggestion which Dr. Farr made before the last Census was not
acted upon. He recommended that facts connected with the rate of
wages should be collected during the Census. Had it been attended
to, much might have been stated here with precision which will
only admit of approximation.
[136] Subsequently Mr. Bright went the length of saying, that
Savings Banks were "nothing less than traps for the people who
subscribed to them. There was a universal belief that Government
was responsible."
[137] Since writing the above, it is only fair to say, that we
find this writer has taken no pains at all over the matter, but
has simply benefited by the industry of another, without in any
way acknowledging his obligations. Mr. Edward Taylor of Rochdale,
in a pamphlet now before us, published several years before Mr.
Scratchley's book, entitled "Savings Bank: ought Government to
make good past losses in Savings Banks?" supplies the whole of the
quotations given, and even the setting for them.
[138] The preamble of the first Act (Act 57 George III. c. 130,
1817) runs thus: "Whereas certain Provident Institutions or Banks
for Savings have been established in England, for the safe custody
and increase of small savings belonging to the industrious
classes; and it is expedient _to give protection to such
institutions, and the funds established thereby_," &c. &c. The
preamble of the Act of 1828 runs exactly to the same effect.
[139] Much to the same purpose a well-known writer in the _London
Review_ says: "As long as Savings Banks are Savings Banks, based,
on the one hand, on the confidence of the poor, and, on the other,
on the benevolence of the local clergy and gentry, acting as
trustees and managers without fee and reward, and therefore
without such bounden obligations as men can be called to account
upon, so long will frauds periodically arise, opening up great
gulfs of deficits, strewing thorns upon the pillows of the poor,
and driving sharp pangs of despair into their hearts." Dr.
Hancock, in one of his admirable pamphlets, alluding to the system
of checks relied on by the managers of many banks, says: "It is
impossible, in the nature of things, to devise a perfect system of
checks. So long as the work has to be done by human agency there
must always be some risk. To secure the performance of actions by
human agents, three forces commonly operate: 1, A morel sense of
duty; 2, A fear of large pecuniary loss from liability, in case of
the non-performance of duty; and 3, A fear of judicial punishment,
if non-performance be made a penal offence. The limit placed on
the liability of the managers effectually took away or reduced to
a minimum the fear of loss and of punishment, and the divided
responsibility there has always been between Government and the
trustees, by weakening the sense of duty, did the rest."
[140] The case of the Edinburgh Savings Bank, another excellently
managed institution, is still more to the point, where unusual
facilities produced an unusual amount of depositors and deposits.
[141] According to an excellent authority, Mr. Smiles, to whose
admirable article in the _Quarterly Review_ (Oct. 1859) we are
indebted for some of our particulars of the history of this
movement, it would appear that the first proposal for Regimental
Savings Banks was made in 1816 by Paymaster Fairfowl, but allowed
to drop; it was taken up again in 1827, when Colonel Oglander,
commanding a regiment of Cameronians, brought the project under
the notice of the Duke of Wellington. The Duke could not see any
benefit to be derived from the proposal, and wrote the following
characteristic memorandum upon the papers: "There is nothing that
I know of to prevent a soldier, equally with others of his
Majesty's subjects, from investing his money in Savings Banks. If
there be any impediment, it should be taken away; but I doubt the
expediency of going further." He added something further, however,
which, also eminently characteristic, opened up a new feature in
the case, and closed the door to such proposals till after the
Duke had left the service. "Has a soldier," continued he, "more
pay than he requires? If he has, it should be lowered, not to
those now in the service, but to those enlisted hereafter."
Colonel Oglander had no idea that the soldier should have less
than his "thirteen pence a day, and a penny beer money," and
therefore suffered his proposals to be simply negatived.
[142] The deposits in Seamen's Savings Banks--
In 1861 were £17,112, and withdrawals £12,681
1862 " 17,089 " " 15,343
1863 " 17,098 " " 14,090
[143] To the Honorary Secretary of this bank, Mr. W. W. Morrell,
we are greatly indebted for much information on the Penny Bank
movement; and, as an ardent Savings Bank reformer, for much
information on our subject generally.
[144] Any of our readers who may desire fuller information on the
subject of Penny Banks, or particulars as to their
management--information which we should have been glad to have
furnished, had our space permitted--could not do better than get
an admirable little pamphlet on "Penny Banks," by the Rev. J. E.
Clarke, of Derby. (Bell and Daldy, 1859.) Mr. Smiles, in his
_Workmen's Earnings, Strikes, and Savings_, also devotes a short
chapter to describing, in his usually effective way, their results
on the provident poor.
[145] The first Preliminary Savings Bank in Scotland was started
at Annan, in Dumfriesshire, and Mr. Sikes was consulted about it.
A correspondent writing to Mr. Sikes a few years ago, says: "It
may gratify you to know that I some time since met with the Rev.
James Mackenzie of Dunfermline, formerly of Annan, who told me
that he had ten Penny Banks at work at Dunfermline! I believe the
Annan one was father to them all, and you to the Annan one, so
that your family is spreading rapidly, and becoming a great
multitude throughout the entire kingdom!"
[146] Groombridge & Co. London.
[147] Reference is due to another gentleman, Mr. Maitland, actuary
and subsequently treasurer of the Edinburgh Savings Bank, who now
seems to have urged, even before Mr. Sikes did so, English Savings
Bank managers to give to depositors more of the facilities granted
by Savings Banks in Scotland. Speaking of 1843-5, Mr. Maitland
says, "I met with no sympathy when I urged the duty of cultivating
the small deposits of the _really_ labouring classes. I was
bitterly opposed in my advocacy of giving more hours weekly to the
public, and was deemed almost _mad_ when I insisted that we should
all pay on demand, _at all events_ sums under 10_l._"--_Letter
from Mr. Maitland to Mr. Sikes_, February, 1857.
[148] This proposition was revised in 1862 by Mr. Scratchley in
the last edition of his _Practical Treatise_, but without in any
way mentioning the name of Mr. Sikes as the original suggestor of
the plan.
[149] The Marylebone bank up to 1860 only allowed two per cent. on
sums below 30_l._, but this arrangement has since been modified.
[150] So well managed indeed, that we hope it may be long before
they are superseded, however desirable it may be that bulk of the
existing Savings Banks should become merged in a better system.
[151] See next page.