ON PROPOSALS FOR GOVERNMENT SAVINGS BANKS.
"I do not imagine that there can be any more important end
and object of a State than to encourage frugality, and the
investment of the savings of the poor, and nothing in
which I should be more tempted to step out of my way to
encourage, if I were a legislator; but I think the great
test and object of whatever investment I provide specially
for them, must be extreme and perfect certainty, and great
facility of conversion.... Increase in amount of interest
or profit, is as nothing compared to security."--MR. H.
BELLENDEN KER.
For reasons which we have adduced at great length in the last chapter,
the feeling grew that a sweeping change would require to be made in
the institution of Savings Banks. Supplementary banks of different
kinds were established, and they met in great part the object for
which they were designed; meanwhile, the great majority of Savings
Banks took no steps to provide more conveniences for the public, or
they were powerless to effect them.[152] When reasonable changes were
resisted between 1850 and 1860, it occurred to several that agencies
might be contrived to do the same work after a different fashion, and
that this project should be carried out, even were the ultimate result
to diminish the usefulness of most of the older banks, or gradually to
set them aside. It is to proposals having the former object in view
that we must now turn.
It is not a little curious that long before Savings Banks were
legalized by Act of Parliament, and even before Dr. Duncan began his
earnest and self-denying efforts to establish them on a safe footing,
at least two different efforts were made to promote the growth of
provident habits by a system of Savings Banks which should extend
throughout the entire country. We refer to Jeremy Bentham's scheme of
"Frugality Banks," and Mr. Whitbread's "Poor Fund and Assurance
Office."
The plan of the former is detailed in Bentham's works; the latter
scheme, partly described in an earlier portion of this volume (pages
23-4) was submitted to Parliament in 1807, and a bill,--a full
Abstract of which will be found in the _Appendix_,--founded upon it,
actually passed the House in some of its earlier stages. Some of the
provisions of this bill were admirable; and some, owing to the state
of the Post Office of that time, would not have been so easily worked
through that department as was intended. As it was, the country
preferred the class of banks just then rising into notice; and in 1817
the Legislature forgetting Mr. Whitbread's scheme, gave its sanction
and countenance to the banks which had been established on purely
benevolent principles, and which were totally independent of each
other. In the course of years, that system having been tried in every
possible way without producing the safety and convenience so much
desired in institutions of this sort, the principle of a uniform plan
of banks in connexion with the Post Office advocated by Mr. Whitbread
again came up, the story of the proposals for and the introduction of
which we are about to tell.
Previously, however, we ought not to omit, for several reasons, to
give the outline of the scheme proposed by Bentham even before Mr.
Whitbread's proposals. The reader will perceive how thoroughly
conversant the philosopher was with the every-day habits of the poor,
and how completely he understood their wants and requirements, and
sought to provide for them. It is only necessary to add that Bentham
advocated this plan as one of many measures of pauper management; that
the scheme was to be generally applied throughout the country, and to
be taken up and worked by means of a company; the place where the
banks should be held to be called "'Industry Houses,' in
contradistinction to the 'Public Houses' of friendly Societies."
"Should this not be enough," says Bentham, "the vestry room of each
place of worship presents an office as near, and the clerk an officer
or sub-agent as suitable, as can be desired."[153] After fully going
into the hindrances to the spread of saving habits among the poor
around him, and the difficulties incident to the laying up and
improvement of their surplus moneys,--hindrances and difficulties
which had not yet all been surmounted,--he gives the following
comprehensive and exhaustive list, which shows how thoroughly he would
have mastered the obstacles of a more recent period:--
"Properties to be wished for in a system of Frugality
Banks, commensurate to the whole population of the
self-maintaining poor: viz.
"1. _Fund_, solid and secure:--proof against the
several causes of failure.
"2. _Plan of Provision_, all _comprehensive_:
comprehensive, as far as may be, of all sorts of
exigencies, and at all time, as well as of all
persons, in the character of customers: thence the
amount of the deposits transferable from exigency
to exigency, at the will of the customer, at any
time.
"3. _Scale of Dealing_, commensurate to the peculiar
faculties of each customer: _i.e._ on each
occasion as large as or as small as his
convenience can require.
"4. _Terms of Dealing_ sufficiently advantageous to
the customer: (the more so, of course the better),
regard being had, in the necessary degree to
solidity.
"5. _Places_ of transacting business _suitable_:
adapted in point of _vicinity_, as well as in
other respect, to the conveniency of the customer.
"6. _Mode_ of transacting business _accommodating_:
suited to the circumstances of the customer in
respect of times of receipt and payment, and
_quantam_ of receipt and payment at each time.
"7. _Mode of operation, prompt_, consuming as little
of the customer's time in attendance as may be.
"8. Mode of book-keeping, clear and satisfactory."
There can be little doubt from the above extract, that if Bentham did
not make a very practical proposal, he had an excellent idea of the
description of agency required.
Another proposal which shared the same fate as did those of Bentham
and Whitbread was ventilated in the _Quarterly Review_ for 1827, in an
article on "The Substitution of Savings Banks for Poor Laws." This was
no new scheme, though the agency by which the scheme was sought to be
carried out certainly was original. During the eighteenth century the
plan of masters compulsorily deducting payments from the wages they
were expected to pay to their servants, in order that the money might
form a fund for a time of need, was frequently recommended, and even
proposed to Parliament. De Foe, in his "Giving Alms no Charity," tells
us how at his own period attempts were made to effect a legislative
substitution of savings for poors' rates, and to pass Acts of
Parliament which "shall make drunkards take care of wife and children;
spendthrifts lay up for a wet day; lazy fellows diligent; and
thoughtless, sottish men careful and provident." But all the plans, as
might be expected, came to nothing. In 1827, however, the Savings Bank
principle having become recognised, and the Post Office machinery
tolerably efficient it was said that the scheme might be made to work.
The writer advocated the establishment of a National Savings Bank, to
which the Savings Banks in the country might contribute; "and
perhaps," said the _Quarterly Reviewer_, as if recognising the fact of
the insufficient distribution of banks, "the remittances to be made
might, especially in rural districts, be allowed to be paid into the
nearest Post Office, and remitted with its own money to the General
Post Office, by whom it might be paid over to the Commissioners of the
National Debt." This scheme attracted little or no attention at the
time, and nothing came of it. In more than one respect, however, it
contained the germ of a plan subsequently carried out, and it is not
impossible that some of the numerous claimants for the honour of
having originally proposed Savings Banks in connexion with the Post
Office may have carefully studied the details.
And this brings us to the early history of Post Office Savings Banks,
and to the numerous suggestions which at one time or another seem to
have been made with regard to them. No less in respect to the place
which these banks are designed to occupy as important public
institutions--the people's principal purse--(and that their position
in the country will at no distant period be a commanding one there
cannot be a reasonable doubt) than for their present attained position
and intrinsic value, the question of their early history is a matter
for most careful investigation, and one which must not be lightly
passed over. The matter of the authorship of the scheme was the
subject of considerable discussion at an early stage in its history;
and that discussion was not without its value in elucidating some
points of considerable importance, and as affording materials for more
deliberately investigating many claims which have been put forward. It
naturally forms part of our plan, not only to offer a description of
the working of the new class of banks--as will be done in a subsequent
chapter--but to show, as we propose to do here, in a strictly
impartial manner, to whom the country is indebted for the agency now
in operation.[154]
Confining ourselves at present to the origination of the _principle_
of Post Office Banks, without reference to the wonderfully simple and
efficacious scheme afterwards organized, we find that several
different gentlemen had between the years 1850 and 1860, and acting
entirely unknown to each other, matured plans, and in one way or
another actually proposed them, to remedy the deficiencies of the
existing banks, on some such principle as that eventually adopted. To
Mr. Sikes, of Huddersfield, however,--of whose previous labours in the
cause of Savings Bank reform we have already spoken,--belongs the
undoubted merit and honour of having independently originated and
matured a plan of operation more or less equal to the object in view;
of having persevered in the object of bringing the matter prominently
before the public; and of being so fortunate as to have proposed his
scheme at a period when the country possessed in Mr. Gladstone a
statesman of extraordinary versatility and power at the head of its
financial operations, and who has given abundant evidence of his
willingness to grapple with uncommon difficulties where a need is
proved and the principles of a measure are shown to be sound. As we
shall show presently, the same propositions, only differing as to
details, were submitted once, if not twice, to Sir Charles Wood when
Chancellor of the Exchequer, and once more, by a totally different
individual, to Sir George C. Lewis when he held that office. How much,
therefore, the measures subsequently carried are primarily due to Mr.
Gladstone's sharp-sightedness and energy the reader may judge.
Returning to an account of those who have been represented as
suggesting the principle of Postal Banks, we think the number may be
fairly reduced by several names. And in that number we would class Dr.
W. Neilson Hancock, of Dublin. Of Dr. Hancock's exertions in connexion
with the frauds in Savings Banks, and his description of the feeling
of insecurity which they engendered, we have already spoken; those
exertions related exclusively, so far as we can gather from his
pamphlets, to a remedy for this grievance. In a paper[155] read by Dr.
Hancock before the Dublin Statistical Society in 1852, and republished
in a pamphlet form four years afterwards, we find him saying, that
private enterprise had not had a fair trial,--if it had, and failed,
then Government should undertake the work, _as it did Money Order
business_:--
"That part of the natural business of bankers which
consists in receiving deposits from the poor might be
undertaken by some public officers appointed for the
purpose, _just as_ the granting of Money Orders, another
part of the same business, is carried on by the officers
of the Post Office. Such an institution would be called a
Savings Bank; and in it the Government would be
responsible to the depositors for the acts of the clerks.
So that the entire responsibility of management would rest
with the members of Government in charge of that
department, and the depositors would have perfect security
for any money actually paid to a clerk.... My own
impression is, that if our laws were framed with a view to
allow of small deposits and small investments, private
enterprise is quite adequate to supply a complete system
of safe investments for the poor. But whether that opinion
be sound or not, a Government institution _like the Money
Order Office_, with Government officers and Government
security for those officers, would be infinitely better
than the present system of divided responsibility and
absence of security."
In a further paper, read and published in a pamphlet form in
1855,[156] Dr. Hancock made no further proposal towards the object
immediately in our view, although he said--
"The Money Order Office of the Post Office shows that a
large part of the business of banking for the poor can be
cheaply and efficiently conducted by the officers of a
public department. The first step towards the adoption of
such measures is to produce in the public mind a
conviction of the utter instability of banks as now
constituted, and that conviction I have endeavoured to
create."
We believe Dr. Hancock went somewhat further than this, by calling the
attention of the Post Office authorities to the matter though, as he
presented no distinct scheme to their consideration, it is not very
wonderful that the question should rest where he left it. Though Dr.
Hancock does not seem ever to have gone so far as to propose "the
opening of banks for the poor in connexion with the Money Order
Office," much less to develop a plan which should have that end in
view--a construction which has been put upon his references to the
Post Office machinery,[157]--it is only fair to that gentleman to say
that he was one of the first to recognise the merits of such a measure
when it was proposed, and to urge its full adoption.
Another name, which has in our opinion been very unnecessarily and
erroneously connected with the early history of Post Office Banks, is
that of Mr. Ayrton, the member for the Tower Hamlets. To all who
remember the strong opposition which Mr. Ayrton offered, not only to
the project when before Parliament, but previously to other reasonable
reforms in the Savings Bank institution, this association of his name
with the origination of the present plan must be very amusing; and yet
this is an error into which several have fallen, though traceable,
perhaps, to one source.[158] Mr. Ayrton certainly seems to have had a
notion, though not till 1858, that the Post Office might be more
useful to Savings Banks than it was; and in the Committee of that
year, of which he was a member, he asked one of the witnesses--who was
actuary to a bank that had several branches in country places--a
series of questions, with the object of eliciting the opinion that it
would be an advantage to Savings Banks if money orders could be
procured in country places at a cheaper rate than 3_d._ and 6_d._,
when any person desired to send a Savings Bank deposit to an adjacent
town.[159] In the draft report proposed by Mr. Ayrton after the close
of the investigation (which was not carried), the following clause
appeared:--"That the Committee recommend the Postmaster-General to
afford every facility practicable for the remittance of money to
Savings Banks, but they do not deem legislation in this respect
expedient;" and in our humble view it would have been exceedingly cool
if they had! There can be no question that this simple incident has
given rise to the misapprehension to which we have just alluded.
We can now come to veritable proposals. Though it is due to Mr. Sikes
to say that the fact of prior proposals, with the same object in view,
were either forgotten or only came to light for the first time after
he had publicly made and urged his plans on the country, it seems not
to admit of question that two gentlemen had been, quite unknown to him
or the public generally, over the same ground before him, and, whether
wisely or not we will not attempt to decide, had desisted from
pressing their plans after obtaining an adverse decision with regard
to them. So far as the Post Office is concerned, it is only fair to
say that the authorities up to quite a recent period have had their
hands sufficiently full in completing the plan of Penny Postage Reform
which, for several years after the passing of the Act of 1839, was
almost held in abeyance; and that, inundated with crude and
undeveloped schemes, it was requisite that a plan in which so much was
involved should be well matured, and go weighted with the stamp of
public approval. Whether, however, the Post Office system was prepared
so early as 1851,--the date of the earliest proposal,--to undertake
Savings Bank business, is a question which, considering the transition
state in which it then was, admits of some doubt.
In 1852, the Rev. George Hans Hamilton, the Vicar of
Berwick-upon-Tweed, and now Archdeacon of Lindisfarne, proposed
through his relative, Mr. G. A. Hamilton of the Treasury, a national
system of Savings Banks to be worked by means of the Post Office,[160]
which it is but justice to say presents many, if not most, of the
features of the plan eventually produced. Mr. Hamilton met with
varying success; his proposals were not taken up warmly, but were
understood by him to present difficulties which might ultimately be
overcome. Had this gentleman persevered in the advocacy of the scheme
which he propounded, or had he had the good fortune, to have fallen on
more favourable times, with Mr. Gladstone as Chancellor of the
Exchequer, there can be little doubt that his plan would have been
cordially taken up and his name ever associated with it. As it was,
his exertions were recognised by Mr. Gladstone when he came to deal
with the matter, that gentleman referring on one occasion to the
valuable suggestions he had made. It should be added, that Mr.
Hamilton has, since the plans came into operation, urged a
modification of one of its features (to be referred to hereafter), and
it is little to say, considering the value and the shrewdness of his
original suggestions, that he is well entitled to be heard on the
point.
The other gentleman who somewhat later than Mr. Hamilton, and quite
unknown to him, made proposals to the same effect, was Mr. John
Bullar, the eminent counsel, of the Temple. Mr. Bullar himself informs
us that his attention was attracted to the subject by observing the
working of a Penny Bank at Putney, which was established in the year
1850. Being a member of the Committee of this bank, he was led to
think much over "the then existing system of Savings Banks, and how
some of the defects of the system could be remedied." After thinking
the matter well over, he drew up the memorandum which we give
_verbatim_:--
It is admitted that the present system of Savings Banks is
defective, and that a new system is much wanted.
Among the defects of the present system are:--Want of
perfect security to depositors: risk of loss to trustees
by defaulting clerks, and want of opportunities for the
labouring classes to make deposits as soon as they have
anything to deposit.
Many of the present Savings Banks are only opened for two
or three hours once a week; so that those who would
deposit in them are forced to be their own bankers during
the rest of the week, and are exposed to the constant
temptation of spending what they have in their pockets;
the particular temptation from which Savings Banks were
intended to relieve them.
In order to give perfect security to depositors, they
ought to have the security of the nation.
The establishment of Savings Banks for the whole of the
labouring classes being a matter of national importance,
they ought to be a national, and not merely a
philanthropic institution.
In order that they may confer the greatest amount of
benefit on the labouring classes, they ought to be open
during the whole of every working day.
The principle of a National Savings Bank as a National
institution is already admitted in the Savings Banks for
the Army, the Navy, and the Mercantile Marine.
The principle of Government acting as Banker for the
Nation is already admitted in the Money Order department
of the Post Office.
That department is, in fact, a National Bank. It receives
money from all comers; it retains the money for divers
periods, from four-and-twenty hours to several weeks; and
it pays the money to those who are entitled to demand it.
It would be a mere extension in point of detail if that
department received more money from more comers, retained
the money for longer periods, and paid it out with the
addition of interest upon it.
It is therefore suggested that the Money Order department
of the Post Office should be made a National Savings Bank,
investing the deposits in Government securities, paying a
moderate rate of interest (say two and a half per cent.)
and paying interest only on round pounds deposited for not
less than a quarter of a year.
The trustees of existing Savings Banks should be
authorized (except so far as any depositors might object)
to transfer their deposits to the department.
In all probability the deposits with the department would
amount to at least thirty millions in the course of a year
or so; and at the present price of Consols, this would
give to the Post Office about 200,000_l._ beyond the
interest which they would have to pay to the depositors.
If this would not meet the expenses, the rate of interest
might be 2_l._ per cent., giving to the department an
additional 150,000_l._ a year.
The principle being admitted, there would be no
insuperable difficulty in arranging the details.
JOHN BULLAR.
_Temple, November 8, 1856._
This memorandum was written in November, 1856. Mr. Bullar describes
that at that period he was too much occupied to enter into the matter
so fully as was necessary, or to agitate by means of the press for
some such scheme; but Mr. Bullar's friend, Mr. Joseph Burnley Hume
(eldest son of the late Mr. Joseph Hume, M.P.), who had some leisure
at command, and perhaps some of his father's desire to achieve an
amendment of the Savings Bank system, undertook to bring the matter
forward in the proper official quarters. He early saw Mr. Frederic
Hill, who was in charge of the Money Order department of the Post
Office, and learned from him that the same scheme had already been
suggested to the Post Office, and rejected after full consideration. A
month afterwards Mr. Hume saw the Duke of Argyll, who was then
Postmaster-General, and received a courteous hearing from him. The
Duke also said that the Post Office had had the question, or something
like it, before them, and that he thought the Chancellor of the
Exchequer still had something of the kind under consideration; but
gave no definite reply. Subsequently he saw Sir Alexander Spearman,
the Comptroller of the National Debt Office, and Mr. Tidd Pratt. "He
gathered from them," to use Mr. Bullar's own words, "that they were
with him in principle, but regarded the proposed Money Order
department as visionary, and that the Government had under
consideration a different scheme, which they preferred."[161] Having
in this way met with enough discouragement to hinder them--or any
other person who might be cognizant of the proceedings that had been
taken--from going further, they dropped any further steps to bring
about this desirable change.
Happily, however,--for happy, in one sense, it was,--these schemes and
the hitherto abortive attempts to carry them into execution, did not
reach the public ear, or others might have desisted from entertaining
similar plans. As it was, it was still open to any one else to take up
the matter _de novo_; and this is what actually did happen. We can
well believe, without the assurance with which he has favoured us,
that the next adventurer in these apparently difficult seas had no
notion that they had been previously navigated. This circumstance does
not take from his merit; but it certainly increased his difficulties.
How the matter was eventually brought about in the face of the adverse
decisions which we have just given, though somewhat better known, is
within our province to tell.
In the hands of Mr. Sikes, of Huddersfield, any matter once taken up
was not likely to fail for want of thorough ventilation and earnest
advocacy. This gentleman had for years interested himself in the
extension of Savings Banks. We have already spoken of the fruits of
his industrious pen; and now he was once more to propose in a similar
manner, and with his accustomed eagerness, another new scheme which he
had carefully thought over and developed in his own mind. Once sure of
it himself, he resolved to devote himself to its advocacy; to bring it
not only before the proper authorities, "but before the public, at the
proper time." Mr. Sikes evidently did not dally with the matter. As he
made no sort of mention of the Post Office in his evidence before the
Savings Bank Committee of 1858, we may fairly assume that at that time
the idea of using the Post Office had not occurred to him. He himself
states, that, occupied with a favourite idea which he had long
cherished, of bringing a Savings Bank "within less than an hour's walk
of the fireside of every working man in the kingdom," the organization
of the Post Office suddenly occurred to him, and he dwelt upon it till
he had struck upon some scheme for applying the one to the other.
As in the case of the other proposals, the leading principle of Mr.
Sikes's plan was to employ the machinery of the Money Order Office to
collect and forward deposits to a central bank which he proposed
should be established in London. Among the principal details of the
plan were--the opening in every town, not previously supplied with a
Savings Bank, of a Money Order Office, for the reception of Savings
Bank deposits; that the money should be remitted to London in the form
of Money Orders; that the deposits should be in sums of not less than
a pound; and that in return for these deposits or remittances, Savings
Bank "Interest Notes" should be issued in London; and that the
interest on these notes should be at the rate of 2-1/2 per cent. per
annum. That Mr. Sikes did not proceed boldly enough, and that there
were some defects and omissions in his scheme, we shall have to show
further on; here it is sufficient to indicate in what his plan
consisted.
On the reasons for a large and comprehensive reform of this kind, Mr.
Sikes was most full and explicit; as, however, we have already been
over this ground, and also said much in connexion with the name of
this energetic Savings Bank reformer, it is quite unnecessary to
repeat here his well-arranged statistics and his generally conclusive
observations as they are given in the pamphlet before us.[162] Suffice
it to say, that he adduced abundant evidence to show that additional
facilities were required, and that if they were given, a proportionate
increase of business would be the result; that the existing banks were
totally inadequate to meet the requirements of the provident poor,
much less to stimulate and increase the number of provident people;
and that if his plan, or something like it, were carried out, both
objects would be gained. Mr. Sikes argued that in a case of this sort,
as in many others, increased facilities would bring increased
business, and, in support, he adduced as an instance the Money Order
Office itself. Quoting from the Postmaster-General's report for 1856,
he gave an extract accounting for the increase of business in that
office by the fact of the large additions that had been made to the
number of Offices, and to further relaxations in the regulations
regarding the issue and payment of Money Orders. "The establishment of
a Post Office," said Mr. Sikes, with very great truth, "has unfailing
influence in developing the correspondence; and of the Money Order
Office, the remittances of a district." Mr. Sikes then instituted a
comparison which, though not always to the point (for reasons quite
obvious), was scarcely an unfair one, of the relative progress of
Savings Banks with their small improvement as to facilities, and the
Money Order Offices, with their increased facilities. Within the years
1846 and 1858, the former had progressed at the rate of seven and a
half per cent.; the business of the latter had increased at the rate
of seventy-nine per cent. He then asked if the stagnation in the
business of Savings Banks was not to be traced to the non-increase of
their number, their absence in many very populous localities, the
slight accommodation given, and the arbitrary routine, and
restrictions imposed. If Savings Banks were worth anything, were they
not worth improving? And would not those supplementary banks do much
themselves, and very probably cause an improvement in existing ones?
Having matured his plan in June, 1859, Mr. Sikes communicated it to
Mr. Edward Baines, the member for Leeds, in the form of a printed
Letter; and this gentleman, well known for his wide sympathy with the
industrious classes, after studying its details, expressed his warm
approval of the project, and engaged to bring it under the notice of
Sir (then Mr.) Rowland Hill, the Secretary of the Post Office. That
there was now no indisposition--if ever there was--on the part of the
authorities to such a measure is evident from the reception it met
with at their hands, as shown by the letter below.[163] Encouraged to
persevere, Mr. Baines and Mr. Sikes had an interview with the
Secretary and some of the principal heads of departments at the Post
Office, when the draft of a plan was read to them for working such a
measure, the official gentlemen concerned assuring them that this
might be done "with great ease and simplicity."
The next step which Mr. Sikes took was to place himself in
communication with the Chancellor of the Exchequer; and as a
preparatory step, he printed his scheme afresh, extending it somewhat,
in the form of a Letter to Mr. Gladstone. The communication was met by
a cordial acknowledgment, in which that right hon. gentleman promised
his best attention in examining the scheme, not only on account of the
interest attaching to the subject, but "of the authority with which it
was invested," in proceeding from the quarter whence it did. The
letter was then given to the public, and immediately attracted general
attention, and warm expressions of approval. It was read before the
Social Science Association which met in Bradford in the autumn of that
year, Lord Brougham having also mentioned the matter in his inaugural
address. For a few weeks it was a common subject of discussion, public
opinion being somewhat divided as to its advisability as well as
practicability. Several Liberal newspapers, however, went warmly into
an advocacy of the principles of the measure, if not of the measure
itself; and in the early part of November, 1859, the members of the
Huddersfield Chamber of Commerce strengthened the hands of their
townsman, by passing an unanimous sentence of commendation upon it;
and not only so, but they resolved to send Mr. Sikes's tract to all
the Chambers of Commerce in the kingdom, recommending them to support
the plan, which several of them eventually did.
During the interval, when the ball was kept rolling in this manner,
Mr. Gladstone had amply fulfilled his promise to give the subject his
best attention, as sufficiently appears from a letter which, belonging
now to the history of Post Office Savings Banks, we append below.[164]
Expressions of opinion on the advantage of some such scheme still
continued to be sent to Mr. Gladstone and Mr. Sikes, which must have
encouraged them both to persevere, and which made it very apparent
that the public had made up its mind not to allow the matter to
drop--at any rate, quietly.
The most important petitions sent to the Chancellor of the Exchequer
emanated from Liverpool, Leeds, and York; but a resolution passed by
the Dublin Statistical Society, presided over by Dr. Whately, the late
Archbishop of Dublin, and signed by Dr. W. Neilson Hancock as
secretary, deserves special notice, were it only for the weight
attaching to Dr. Hancock's own name.[165] In answer to these and
similar memorials, Mr. Gladstone seems to have generally replied that
the matter was under his most careful consideration; "that he received
with cordial satisfaction this expression of opinion, proceeding from
persons well qualified to judge, and that he earnestly hoped it may be
practicable to frame a plan by which the objects in view may be
extensively attained."
And now the curtain may be said to have fallen upon the scheme, and
for fully twelve months it is beyond the public gaze, and entirely
beyond public criticism. We find that now and then Mr. Sikes was busy
during the period in answering objections to his plan, with as much
energy and good sense as he had previously displayed in his advocacy
of it, before he had the good fortune to enlist the services of Mr.
Gladstone in its behalf. Now, however, it may be said to have passed
out of his hands, and to have fallen into those of others, who, no way
averse or unfriendly to his project, saw that it would be necessary
largely to remodel it, in order to make it fit into the machinery, (of
the working of which Mr. Sikes was necessarily ignorant,) upon which
it would have to be engrafted. Furthermore, among much approving
criticism of the scheme, there had been not a little feeling exhibited
among influential organs of the public press, that Mr. Sikes had not
gone far enough in his proposals, and that on some points the details
were not nearly so liberal as they ought to be made. As an ardent
friend to the Savings Bank system, Mr. Sikes had doubtless well
considered the objections which Savings Bank managers were likely to
urge; and, to stave off opposition on the part of many of his friends,
had apparently sacrificed a detail here and there in a matter where
boldness of action was most essential to success. If one thing is more
clear than another in the history of our great reforms, it is that the
projector who plunged right into the stream was always surer of
ultimate success than he who paddled about in the shallows, or kept as
close as possible to the brink. In this way, therefore, it seems to
have come about that not only must modifications be made, but steps
must be taken to perfect the plan, and present it in such a shape as a
measure of reform as should silence cavil and complaint. Twelve months
for such a work might seem long--might, indeed, be unnecessary; but
few will say that the scheme,--so much remodelled as fairly to be
considered a new one, did not amply atone for the delay.
The task of adopting Mr. Sikes's proposals just as they originally
stood, and which proposals the Post Office authorities had generally
acquiesced in, seems to have been abandoned on account of the
practical difficulties which stood in the way; one of which Mr.
Gladstone indicated in the letter we have already given. The object
now, therefore, was to originate a mode of working altogether
independent of Mr. Sikes's plan, in which the desirable modifications
to be made in Mr. Sikes's scheme should also be introduced. Before,
however, we show how this was eventually accomplished, it is necessary
to say in what these important modifications consisted.
1. Mr. Sikes's scheme was proposed to be worked by a
Commission who should preside over a central bank and
employ the agency of the Post Office. Such a division of
authority would have been unprecedented, and must have led
to confusion and great expense, if even it could have been
so arranged.
2. The Commissioners were to have been empowered to
receive Money Orders as deposits and acknowledge them in
the form of an expensive description of "Interest Notes."
The Money Orders and the "Notes" themselves would have
required all the surplus interest to have been expended
upon them, and there would have been little chance of the
scheme turning out self-supporting.
3. Mr. Sikes proposed to open only 1,527 Money Order
Offices as Savings Banks. He proved at great length that
the system he proposed was not only the best, but the
cheapest; yet at the solicitation, we believe, of several
Savings Bank actuaries, he did not go the length of
including any town where provision had been made for
provident people. This, of course, restricted the
inhabitants of 600 towns to the dearer mode of operation,
though the cheaper one was shown to hold out anticipations
of producing by far the best article. Such considerations
could not, we should imagine, weigh with the Post Office
when once the matter was taken in hand, and no arbitrary
test of the above nature could ever have been entertained.
4. Most unsatisfactory, however, was the proposal to make
1_l._ the minimum sum that could be received. There were
thousands of depositors in the ordinary banks whose
average deposits were not half that sum. Moreover, the
plan was designed to meet the wants of the poorest; to
encourage and foster the habit of small savings among
those who had not yet begun to save. No provision,
therefore, could have been more unfortunate; and it is
well that Mr. Sikes's fears--such as, that if a less sum
were taken the measure would not pay--were soon shown to
be groundless.
It is not our intention to trouble the reader with much detail as to
what passed during the preparation, or, we may call it, the
organization of this interesting and beneficent measure. It is,
perhaps, sufficient to say, that differences of opinion rose upon
it--that some of the authorities of the Post Office thought Mr.
Sikes's scheme, with many important modifications, might be worked;
while others of them held that no amount of alteration would enable
the department to work it by means of Money Orders. In this way
several months passed in discussion, and it is scarcely too much to
say, that but for the unceasing vigilance of Mr. Gladstone, who
continued to urge further efforts to overcome the natural obstacles
that presented themselves, the temporary fate of many a good measure
might have been the fate of this.
It was when matters were in this state of abeyance, and when the
difficulties in the way fairly threatened to overwhelm the scheme
altogether, that a gentleman, since prominently connected with all
that relates to Post Office Banks, was induced to turn his attention
to the subject. Mr. Chetwynd, one of the staff officers of the Money
Order Office, took up the matter of applying the Post Office machinery
to Savings Banks; and, discarding all the other plans for working then
in dispute, addressed the Postmaster-General in November, 1860, and
proposed a plan which he thought would, notwithstanding all the
difficulties that had been experienced, meet all the reasonable
requirements of the case. Mr. Chetwynd's scheme was based on the
principle that Savings Bank business might be done "through the
various Money Order Offices in a much more economical manner than by
the issue and payment of Money Orders;" and that the plan should be so
comprehensive as not to need the restriction which had been previously
put upon it that sums under 1_l._ could not be received,--that sum, as
Mr. Chetwynd truly said, being "so large as seriously to reduce the
value of the benefit proposed to be conferred on the provident portion
of the public."
The following outline, necessarily brief, gives all the material
points of the plan proposed, and which has in its integrity been since
carried out, and forms the basis of existing arrangements:--
1. That every holder of a Money Order Office shall act as
an agent of a Central Savings Bank, and shall receive
deposits of any amount within the limit fixed by statute.
2. That he shall enter each deposit in a numbered
depositor's book, to be kept by the depositor, and in an
account to be forwarded to London daily with his Money
Order account. That on the occasion of a first payment,
the depositor shall make the declaration prescribed by
statute, and also sign his name in his depositor's book.
3. That the holder of the Money Order Office shall charge
himself in his Money Order account with the total of the
deposits thus received.
4. That this account should, on arrival in London, be
regularly examined by the examiner of the Money Order
accounts; and that when this has been done the daily
schedule shall be forwarded to the Central Savings Bank.
5. That the Central Savings Bank shall immediately send an
acknowledgment for every deposit direct to the depositor
through the Post Office.
6. That a depositor who may wish to withdraw money, shall
give notice in writing[166] to the Central Savings Bank,
and shall receive therefrom a warrant for the required
amount, payable at the nearest Money Order Office.
7. That in presenting this warrant for payment, the
depositor must also present his depositor's book.
8. That the holder of the Money Order Office shall enter
withdrawals in the depositor's book, and shall account for
the money he shall pay, in the same manner as already
described in the case of deposits, and shall be credited
with the sums daily.
9. That the depositors' books shall be forwarded to London
annually, in order that they may be compared with the
ledgers in the Central Savings Bank, and in order that the
interest due may be inserted in them.
The first step which appears to have been taken in regard to the
scheme of Mr. Chetwynd was to refer it to Mr. Scudamore, who then
filled the office of Receiver and Accountant-General,--an office the
holder of which is at the head of the financial operations of the Post
Office. After going carefully over the plan which had been submitted
to him, he came to the conclusion that it was the best of those which
had as yet been framed; "that it will be productive of very great
advantages to the working classes, and that it will be self-supporting."
He also characterised it as exceedingly simple, and thought, that if
the execution of the plan were difficult, that difficulty would be due
to the amount rather than to the nature of the business to be
transacted. In conjunction with the projector, Mr. Scudamore then
proposed some important modifications and additions to the plan,[167]
and proceeded to enter fully into arguments and calculations to show
that it would offer the largest amount of convenience to the public,
and be at the same time the least expensive mode of operations so far
as the State was concerned. Into these and other purely technical
matters there is no need that we should further enter, beyond saying
that, so recommended, the scheme was warmly approved by the
Postmaster-General; and in a month from the date of Mr. Scudamore's
report, it fell into the hands of Mr. Gladstone, and became, as it
were, the property of the nation. How the Legislature dealt with it
will fittingly bring this chapter to a close.
On the 9th of February, 1861, _Mr. Gladstone_ took the first step
towards bringing the subject forward in Parliament, by moving a
resolution in the House, of which he had previously given
notice:--"That it is expedient to charge upon the Consolidated Fund of
the United Kingdom of Great Britain and Ireland the deficiency, if any
such should arise, in the sums which may be held on account of Post
Office Savings Banks, to meet the lawful demand of depositors in such
banks, in the event of their being established by law." This, which
was according to the usage of the House the first necessary
preliminary, provided that the burden of the measure should be thrown
upon the State. Mr. Gladstone stated[168] that in submitting this
resolution he did not wish to pledge members either to the principle
or the details of the bill which he intended to found upon it. His
sole object was to afford new facilities for the deposit of small
savings to those who did not possess them, or possessed them
imperfectly. He would not only like to do this, but also to improve
materially the existing facilities, so as to enable many more to take
advantage of them; but this was a more difficult problem,--an object
often attempted, yet little accomplished. The main difficulty, the
responsibility of trustees, had baffled all attempts to deal with it.
How true this was, the reader who has followed us in our account of
the legislation on the subject will readily believe. In this
difficulty he had been led to see if they could not avail themselves
of another description of machinery altogether, "recommended by its
incomparable convenience," for the purpose of carrying out the same
objects for which Savings Banks were originally set on foot. He then
went fully into such statistics of the number and conveniences of
existing banks as those which we have already furnished, and compared
that machinery with the Money Order system at the Post Office and its
ramifications all over the country. Not only were the Money Order
Offices open every day for a considerable number of hours, but the
Postmasters were open and adequate to the transaction of increased
business. Mr. Gladstone then dwelt on the want of facilities, which,
he said, exercised an important influence on the amount of the savings
of the poor; "the experience of this winter, 1860-61, must have
demonstrated to anybody who thought upon the subject, that the
resources of this class had not of late years increased in proportion
to the rate of wages and the improvement in their standard of living."
A smaller portion of their gross income was, he thought, laid by at
that moment than was laid by twenty years before. He was sanguine
enough to expect that, if readier means were afforded than of laying
by in a season of prosperity, their ability to cope with the distress
of the future must be largely increased. Now, the banks which he
intended to propose would afford these means; and not only so, but
under the arrangements of the measure, he would answer for it that the
Post Office machinery should be applied carefully and gradually--the
most neglected districts to be supplied first. Mr. Gladstone then went
into the object and details of the measure. His proposal was that the
Post Office should receive and return deposits, with interest, in the
same way as Money Orders were dealt with, charging merely a fair
remunerative price for the work performed. In one respect the
principle upon which the new banks would be founded would be
essentially different from that of the old ones. The latter had been
established with the notion that the State might very fairly offer to
the labouring classes a certain premium by way of inducing them to
make deposits; but while he was far from desiring to cast any censure
upon the principle, he did not deem it right in the present case to
hold out to depositors the expectation of obtaining any high rate of
interest. He proposed to give a rate of interest 10_s._ less than that
given by the ordinary banks, with a proviso that it might be increased
to that rate, if found necessary, "and within certain limits."
Mr. Gladstone provided an ample set-off against a less remunerative
return for the money, in the security which he now proposed to give
for its safe custody. The responsibility of the State, on account of
Savings Bank money had always been a subject of the greatest
difficulty; he argued on this occasion with perfect reasonableness, as
many of his predecessors in office had argued before, that the State
could only be responsible for the acts of its own officers; and as up
to this time no plan had been devised by which the State could
participate in all the proceedings of Savings Banks, it was impossible
to carry out the principle of a perfect Government guarantee. What,
however, could not be done with the old banks, might and should be
done with the new. In his proposals there was something so essentially
different from anything they had been accustomed to, that a Government
guarantee was an easy and a possible thing. The money would be
received by Government officials: it would be invested by these
servants in Government securities; and it would be inexcusable to
refuse a Government guarantee for the full amount. Hence the motion
which he had made. The only effective form which this guarantee could
take was the technical one, to pass a resolution providing that if any
difficulty arose in the means of meeting the lawful demands of lawful
depositors, that difficulty might be met by a charge on the
Consolidated Fund. Mr. Gladstone, in concluding, hoped honourable
gentlemen would not be alarmed at his resolution, as he would
expressly state then that the great basis of this new arrangement was
that it should be self-supporting.[169]
_Mr. Francis Crossley_ (now Sir Francis) went over the ground of the
very deficient means of investment for the surplus cash of the poor,
producing statistics of a kind with which our readers are now
sufficiently familiar, and stated that it was impossible to
over-estimate the advantages which must accrue to certain classes in
the country from the carrying out of the proposals which had been
submitted to them. "A great deal of fault," said Mr. Crossley, "had
been found with the improvidence of the working people in not saving
money, but let them first see what the Government had done to help
them. The State provided beer-shops in every street for working men to
spend their money in as fast as they earned it; but hitherto he did
not think it had been sufficiently forward in giving them facilities
for saving their money." He then alluded to the fear which working men
had of the ordinary banks, from their masters being connected with
them, and who from that connexion would be able to see what they were
able to save. "Under the Postmasters, this would, or should be,
different." The country was indebted to Mr. Gladstone for the amount
of attention he had bestowed on the proposals of Mr. Sikes. Mr.
Crossley concluded: He "did not think Government ought to seek to make
a profit on the new business; nor did he think they ought to lose by
it. The working classes of the country did not want charity, they only
wanted a fair field and no favour, and it seemed that at length they
were about to get it. If at any time the rate of interest could be
raised without loss or inconvenience, he hoped it would be done."
_Colonel Sykes_ said that no praise could be too high for anything of
this sort, which tended to induce the working classes to lay by
against a bad time. He contented himself with referring to two or
three subjects connected with the mode of working the scheme. _Mr.
Arthur Kinnaird_ thought the scheme simple and practical. He "heartily
congratulated the Chancellor of the Exchequer on having at last
succeeded in one of the fondest hopes of his heart--that of creating a
two and a half per cent. stock." Mr. Gladstone at once demurred to
this, and stated that he had no notion of establishing a national
bank. The money which came into the hands of Government by means of
the bill would simply be applied as under the existing Savings Bank
law. Mr. Gladstone, in closing the debate, took the opportunity of
referring to Mr. Sikes, "who had devoted a great amount of labour to
the subject. He felt greatly indebted to him. At the same time, the
bill was not intended to embody altogether Mr. Sikes's plan, though
this was a matter of detail into which he would not then enter."
Three days after this discussion the Post Office Savings Banks bill
was introduced into the House of Commons _pro formá_ by Mr. Massey,
the Chancellor of the Exchequer, and Mr. F. Peel. Mr. Sotheron
Estcourt on this occasion commented on the importance of the bill, and
objected to a first reading without an explanation of its provisions;
all that was known of it being that the Government were about to frame
on its provisions banks of deposit on a gigantic scale, and thus by a
merely formal proceeding were about to lay the foundation for very
important consequences.
The Chancellor of the Exchequer moved the second and principal reading
of the bill on the 18th of March, 1861. _Mr. Estcourt_, whose intimate
acquaintance with such subjects made his remarks carry considerable
weight, made a long speech. He first expressed his doubts whether the
persons employed by the Post Office would ever be able to perform the
additional and important duties which would be assigned to them.
Government were undertaking a great risk. "No doubt the plan would
become popular, for several reasons; the Post Office Banks would
absorb not only all future deposits, but also a great part, if not
all, of those which had been made in the existing banks
themselves."[170] It would be for the House to decide whether this
result would be good or bad, or what could be done that the two kinds
of banks need not come into collision. Mr. Estcourt threw out several
hints as to how this might be done. They might, for example, limit the
sum to be received at post offices, so that the new might not come
into competition with the old class; or they might dovetail the new
system into the old, by making the Post Office Banks auxiliary and
subsidiary to the existing banks. Much had been done in the way of
trying to amend the constitution of the old class of banks, without
effect; and he thought that, looking to the probable result of the new
arrangement, it would be far better to look the evil fairly in the
face, and supersede at once the old by the new kind of banks, or at
least say which of the two ought to be retained. This speaker further
apprehended that the Post Office Banks would not take root in the
villages, where they were most wanted, and would be almost exclusively
confined to the towns where they were least needed, and where they
would overthrow the existing Savings Banks by drawing away their
deposits. Though Mr. Estcourt seemed to feel strongly on the different
points touched upon by him, he concluded by stating that he should not
oppose the second reading of the bill. _Mr. W. E. Forster_ said, in
his opinion the scheme would provide good Savings Banks where none now
existed, and, a very desirable matter, _safe_ banks where they did
exist. He thought it was not possible that the one class of banks
could dovetail into the other; and if it was, it was not desirable.
Where Government took the responsibility, it ought to have the
control. _Mr. Thompson Hankey_ hoped that the proposed scheme, if
found practicable, would entirely supersede the existing banks, and
the sooner the better. _Mr. Baines_ followed in the same strain; he
would not regret if the new banks superseded the old, inasmuch as that
result could only be brought about by the proved superiority of the
new system. The member for Leeds said, "he had been assured by Sir
Rowland Hill, and all the gentlemen whose departments at the Post
Office would be charged with the carrying out of the plan, that it
would work exceedingly well;" and he could state that, though it
differed materially from his plan, Mr. Sikes of Huddersfield was a
"hearty supporter" of the scheme which the Post Office had
adopted.[171]
_Mr. Gladstone_ could not say whether the old would suffer from the
new banks; if they did, it would only be because the latter were the
safest and the best. Whether or no, the object of the bill was not
competition with the old banks. He wanted to supply facilities which
at present did not exist, and the first duty of the Postmaster-General
would be to look to the establishment of Savings Banks in those places
where no banks existed, or where the accommodation was very narrow. As
to their application to the Money Order Offices of the country, it
would be gradual and slow, and so as not in any way to endanger the
machinery of the Post Office; the Postmaster-General would select at
first a moderate number to be opened, and extend them in proportion as
he found occasion, the test and index of the occasion being the demand
for such banks by the public. Mr. Gladstone then referred to the rate
of interest which would be allowed, and said that in this respect the
Post Office Banks would have somewhat less attraction; "the present
banks were established on the principle of giving a bonus; the new
system must be strictly self-supporting." He would not feed them at
the expense of the Post Office, or any other revenue, and in that case
the rate of interest must be such as can be safely paid. With regard
to the forebodings of Mr. Estcourt relating to the risks which
Government would run, Mr. Gladstone stated that the system of Savings
Banks had been established for forty-five years, during which time
they had had every description of speculation, the severity of a
commercial crisis, the pressure of a dreadful famine, and almost every
trial that could befal a new system; and although the Government was
always holding a great amount of money at call, there had been but a
small pecuniary loss, in comparison with which loss the establishment
and progress of such a system was immeasurably of greater value. After
stating that he thought "the Post Office machinery admirably suited
for the purposes of the new measure," the bill passed the second
reading.
The bill was introduced into Committee on the 8th of April, 1861,[172]
where trifling alterations were made in several of its clauses. _Mr.
Slaney_, who had paid great attention to subjects of this nature,
hoped that the deposits would not be restrained, as under the old
system, he thought no limit should be placed upon the providence of
the labouring classes. _Mr. Vance_, an Irish member, alluded, as he
did on subsequent occasions, to what he considered the centralizing
tendencies of the scheme. He thought Dublin ought to be the centre of
operations for Ireland as under the Money Order system. The principal
opponent of the measure on this occasion was _Mr. Ayrton_, the member
for the Tower Hamlets, who in some quarters has been credited with the
advocacy of the scheme before this period. In a long speech, Mr.
Ayrton took exception to most of the details of the measure as they
were now proposed, and to the principles of the measure as a whole.
Mr. Ayrton held that data enough had not been presented to enable
members to form an opinion as to whether the scheme would pay or not.
"It was all very well to talk of subjects being self-sustaining, and
even economical, but under such statements our expenses had gone on
continually increasing." He adduced at length the case of the County
Courts bill, and the Government Superannuation Allowances bill, which
he said were introduced and passed under some such pretences. It would
be the same with the Savings Banks; the Government would never be able
to keep to the two and a half per cent., but would have to be guided
by the rate allowed to other bankers. "The scheme of a national bank,"
continued the honourable member, "_however plausible_ it might look at
the outset, would lead to the most serious consequences." The
Committee which sat on the subject, and of which he, the speaker, was
a member, came to the decided and unanimous conclusion that it was
desirable to separate the operation of banking for the people from the
National Treasury. It was thought that these national banks would act
as a powerful inducement to the working men to entrust their money to
the Government rather than to their own Benefit Societies, which were
regarded as too much associated with Trade Societies. In his opinion
Benefit Societies and Trade Societies had been the means of
regenerating the people, and were eminently conservative; and it was
not expedient to discourage these societies by means of the proposed
banks. Nor was this all. It was desirable that the country gentlemen
should take an interest in the welfare of the working people
surrounding them; and to supersede their exertions by mere
stipendiaries of the State would weaken that social system on which
the liberties of the people were mainly founded. _Mr. Alderman
Sidney_, "as one conversant with figures," ventured to say, that if
the scheme were carried out, our national establishment must be
greatly augmented; and if it proved successful, "the establishment
that would be required would be of the same gigantic proportions as
the Bank of England!" It was absurd to think that depositors would be
satisfied with less interest than the national creditor. The scheme,
he believed, was founded upon error; it would interfere with the
self-working of existing establishments, and would entail a large
expense upon the country at large. _The Chancellor of the Exchequer_
replied, especially aiming his powerful shafts at Mr. Ayrton. He said
he would not follow that gentleman through his speech, as that was a
task beyond his powers. Mr. Ayrton often gave the House notable
examples of his discursive powers; but he (Mr. Gladstone) never knew
an occasion on which the honourable gentleman had more signally
distinguished himself than on the present occasion. "When he rose into
the air on eagle wing, he passed over the limits of time and space,
and was not subject to any of the conditions that bound the efforts of
ordinary mortals." However, to confine himself to just that which bore
on the subject before the Committee, he was strongly opposed to the
principle of making the working classes pensioners on the Exchequer;
he would do his best to provide against such a result. He did not
know, and could not tell, what amount of business the banks would
attract; he expected it would be gradual, and the development of the
agency would be gradual. The extension of the system would be in
precise proportion to the demand; and the expense would be throughout
proportionate to the extension. The opinion of the Post Office
authorities was, generally, that the work would be done much cheaper
than in the ordinary banks; _for sixpence or sevenpence against one
shilling for each transaction_. Some even thought that the work might
be done cheaper than the work in the Money Order Office. Once started,
any tendency to excess would, of course, be corrected; but it was
impossible to argue on any assumed number of deposits. He had a
sanguine hope that every statement he had made would be verified, and
that the measure would entail no charge upon the public.
Again and again the question was asked and argued, whether it was
meant that the new banks should be subversive or auxiliary to the old.
To this question, which was asked on this occasion, Mr. Gladstone gave
it as his opinion that the one class of depositors who preferred
perfect security would patronize the new banks; whilst another class
who wished to act under the immediate view of their local superiors,
would prefer the existing banks. In reply to Mr. Briscoe, he said he
would not limit the establishment of the new banks to those places
where no other sort of banks existed,--though, of course, the Post
Office would commence operations there first. Such an arrangement
would exclude the great centres of trade and population,--our large
towns--which were not sufficiently served with banks. An important
discussion took place on the 10th clause of the Act relating to the
investment of the fund deposited in the Post Office Banks. _Sir H.
Willoughby_, as he so often did before, condemned the system of
operating on the Stock-market with this money. Mr. Gladstone replied,
that the loss which was so often dwelt upon in connexion with the old
banks was nothing like loss; "the money so deposited with Government
had enabled successive administrations to effect an economy in the
management of the public money transcending ten times over the charge
the State had been put to." He saw no reason whatever to alter the
arrangements in this particular. The amendment which Sir H. Willoughby
proposed was then negatived without a division. Three days afterwards
the bill passed the third reading and was sent up to the Lords.
No time was lost in bringing the bill forward in the House of Lords.
It was read a first time on the 15th of April, and a second time on
that day week. The conduct of the bill in the Lords was naturally
committed to the Postmaster-General, Lord Stanley of Alderley. On this
occasion his lordship went over[173] the ground covered by the
bill--the insufficiency in number, and the inadequacy of accommodation
of existing banks, and the insecurity as regards repayment until the
money had actually reached the hands of the National Debt
Commissioners. Lord Stanley added that Savings Banks had by no means
increased in number in proportion to the population, or to the
increase of the money circulating among the working classes. He
adduced several facts and a quantity of statistics on this head
similar to those which we have already given to the reader. From these
facts it was obvious, that when a working man formed a good intention
to invest his small savings, there was a great danger that he would
spend his money, if there were no means of his depositing it, or if he
could not do it comparatively easily. He then spoke of the losses
caused by the failures of Savings Banks. Referring to Mr. Whitbread's
proposals in 1807, Lord Stanley stated that this measure was very like
the scheme then proposed, which actually passed through the House of
Commons in that year; that Mr. Sikes had originally proposed something
similar in an admirable letter to Mr. Gladstone; and that the
Government, with the assistance of two able gentlemen in the Post
Office department, had matured the present plan, which he proceeded
very clearly to describe. Lord Stanley, in concluding, said it was
somewhat remarkable that nine-tenths of the depositors in Savings
Banks were domestic servants and clerks, and that only one-tenth
belonged to what are usually known as the "working classes;" yet large
numbers of these latter are in receipt of wages far exceeding the
incomes of many who possessed Savings Bank accounts.[174] He hoped
that working men, when they received their wages, would be induced,
before going home, to invest a portion of them at the receiving houses
they would pass; if so, the result to them and the country could not
but be highly beneficial. The banks must be looked upon as an
experiment. If an extension should be demanded, it could only be by
reason of the greater security and greater facilities they would
offer.
Lord Colchester, an ex-Postmaster-General, admitted the merits of the
plan, but doubted the ability of the Post Office officials to carry on
the work in every town. Among the Lords, however, the strongest and
bitterest opponent of the measure was Lord Monteagle of Brandon (once
Chancellor of the Exchequer as Mr. Spring Rice).[175] He made a long
speech on this occasion. He thought it was wrong to establish new
banks, or to make them rest on the deficiencies of the old ones,
inasmuch as it was easy to improve the latter. He went into the
history of Savings Banks, and endeavoured to show that their progress
up to 1850, (a fact which no one disputed,) had been far from slow.
As, however, it was the period principally between 1850 and 1860 when
they were most stationary, this was the time with which he should have
dealt. He expressed an opinion that the Post Office would not be equal
to the work. He strongly urged the inexpediency of giving increased
funds to the Chancellor of the Exchequer, with which to speculate. And
this measure would tend to destroy the healthy feeling which was
growing up between the higher and the lower classes, through the
medium of Savings Banks. Not only did the higher classes give their
time and energy to the work of Savings Banks, but they gave their
money too; and Lord Monteagle was unlucky enough to cite the case of
several noble lords who paid a thousand pounds each to atone for their
neglect in connexion with a Hertfordshire Savings Bank, and the fraud
there, which we have previously described at length. "Such was the
spirit," triumphantly exclaimed the noble lord, "which this bill
proposed to crush." Not less unfortunate was Lord Monteagle, as the
result has proved, in his endeavour to be amusing and prophetic. "The
only comfort," said he, "which I have derived from the speech of the
noble lord who moved the second reading, was his assurance that the
measure was to be of an _experimental_ character." Under such
circumstances he would not trouble the House with a division, as he
would await without much anxiety the result of the "experiment!" Next
year, they would see whether the working of the new system would
compare with that "which for nearly half a century had been the glory
of England, and had served as a model for all Europe." Lord Redesdale
also strongly opposed the bill, but he did not bring to its
consideration much of the practical knowledge of the preceding
speaker. He "frankly owned" that, from what he understood "would be
the manner of keeping the accounts, they would soon get into a state
of confusion, out of which extrication would be almost impossible."
From the confusion of the above sentence, it is not impossible that
the attempt to understand the mode of keeping the accounts had
confused the speaker. Curiously, too, the same speaker objected to one
of the most convenient clauses of the bill. He called the proposed
mode of transfer of deposits from one bank to another, an unnecessary
arrangement, saying it would be _much better_ that the parties
themselves should take it out of the one, and put it into the other
bank. Acquaintance with the habits and wants of the poorer classes
would have convinced Lord Redesdale to the contrary. Lord Redesdale
said, in concluding, that "he was afraid the scheme would produce much
disappointment to the public, and a great loss to the nation." _The
Marquis of Clanricarde_ gave a very qualified and hesitating adhesion
to the bill. Lord Stanley of Alderley satisfactorily replied to the
arguments that had been adduced, and the bill was then referred to a
Committee of the whole House.
On the 25th of April the bill passed the Committee. Four days
afterwards, Lord Monteagle again opposed it, saying that he saw, "with
great alarm and regret," what seemed to him to be meant to produce a
break-up of existing Savings Banks, and the substitution of the action
of a salaried Government department for what he might call a great
public charity, directed by benevolent persons acting gratuitously in
their own neighbourhood. He went over the ground he had taken only a
few days before, but in a spirit very much more subdued and less
confident; and when the bill passed, he entered a long and laboured
"protest" against it (_vide_ _Hansard_, vol. clxii. page 1213, where
many more of Lord Monteagle's "protests" may be found). The Post
Office Savings Bank Act, which we give _in extenso_,[176] received the
Royal Assent on the 17th of May, 1861.
[152] From this statement the ten or twelve principal banks in the
country, many of which are open every day, and all in a
flourishing financial condition, are of course excepted.
[153] _Tracts on Poor Laws and Pauper Management_, included in the
_Works of Jeremy Bentham_, edited by Sir John Bowring, vol. viii.
edit. 1843, page 408. The punctuation and the italics of the above
extract are Bentham's own.
[154] A little _Handy Book_ on the subject, published in 1861, by
Mr. H. Riseborough Sharman, one of the Editors of the _Insurance
Gazette_, and which deservedly had a large sale, went over very
ably, though in a way which produced considerable acrimony from
some portion of the public press, some of this ground. Though it
is open to question whether at so early a date it was not
premature, and, whether in the peculiar form of a manual for
intending depositors, it was wise to enter upon a discussion of
these points, it is certain that by means of this pamphlet and
other advocacy, Mr. Sharman laboured very hard and very zealously
to prepare the public mind for the adoption of the scheme of
Postal Banks, and to spread a knowledge of their benefits after
the measure had become law.
[155] _Duties of the Public with respect to Charitable Savings
Banks._ Dublin 1852.
[156] _On the present State of the Savings Bank Question._ Dublin,
1855.
[157] Mr. Sharman's _Handy Book_, p. 10, 2d edit.
[158] Mr. Sharman's _Handy Book_, p. 11, 2d edit.
[159] It is pretty generally known, that no profit whatever
accrues to the Post Office on orders for which threepence only is
charged; yet in spite, as it were, of this fact, we find that Mr.
Scratchley, in his _Practical Treatise_, takes up Mr. Ayrton's
proposals, and "recommends" that "Money Order officials receive
deposits on behalf of the nearest Savings Bank," and "that this
should be done at a cost to the depositor of one penny for any sum
not exceeding 5_l._" "It is also," adds Mr. Scratchley, "very
desirable that the valuable privilege of freedom from postage
recommended by Mr. Whitbread should be granted for the books and
documents required to be transmitted on behalf of Savings Banks."
Mr. Whitbread, it will remembered, made this one of the conditions
of his scheme of National Banks; and it is quite evident that none
but National institutions could obtain such a provision. "The
valuable privilege of freedom from postage," would, we should
think, be considered very desirable by a variety of different
societies and interests, if only they could obtain it!
[160] The following were the details of the reverend gentleman's
scheme, of the authenticity of which we have fully convinced
ourselves:--
1. That deposits from 1_s._ to 10_l._ be received
daily at every Post Office in the United Kingdom
at which Post Office Orders are now issued, and
the amount forwarded _daily_ to the National
Savings Bank, London.
2. That the Postmaster, upon receiving a deposit, do
issue a document of acknowledgment to the
depositor, with printed instructions attached
thereto, directing the depositor to write to the
London office, if a receipt be not received by
him through the Post from the London office
within ---- days.
The following advantages would follow:--
1. _Universality of operation_, by which the Savings
Bank system would be forthwith placed within the
reach of every member of the community.
2. _Cheapness of management._--All rents for offices,
and annual salaries to clerks, avoided.
Postmasters who are now enabled to issue Post
Office Orders, are already admitted to have
character sufficient to be entrusted with the
receipt of money, which by this system would
never exceed one day's deposits.
3. The only expenses of management would be, (1) the
London office, which ought to be as near the
General Post Office as possible; and (2) some
small payment to Postmasters upon each deposit. In
large towns, it may in time be necessary to employ
an additional clerk in the Post Office, but in
these cases the payment on each deposit would
suffice to enable the Postmaster to keep such
clerk.
4. It would not interfere with the existing Savings
Banks,--leaving it to the public to adopt either
the old or the new system as they please. By this
means the old system would probably be superseded
by slow degrees, and without hardship or
inconvenience to any one.
GEO. HANS HAMILTON.
[161] Like Mr. Hamilton, Mr. Bullar has subsequently proposed a
plan for giving increased facilities in one direction to
depositors, which will be referred to at the proper place.
[162] _Letter to the Chancellor of the Exchequer_, 1859.
[163] Mr. Rowland Hill to Mr. Baines, M.P., 2d August, 1859.
"MY DEAR SIR,--With modifications which could readily be
introduced, Mr. Sikes's plan is, in my opinion, practicable
so far as the Post Office is concerned.
"The plan also appears to me to be practicable in its other
parts; but on these I would suggest the expediency of taking
the opinion of some one thoroughly conversant with ordinary
banking business, and who is acquainted also with Savings
Banks.
"I need not add, that if carried into effect, the plan would
in my opinion prove highly useful to the public, and in some
degree advantageous to the revenue.
"I shall be most happy, when the time arrives for doing so,
to submit it for the approval of the Postmaster-General.
"Faithfully yours,
"ROWLAND HILL."
[164] Mr. Gladstone to Mr. Sikes, 30th November, 1859.
"DEAR SIR,--I have read with much interest your tract on Post
Office Savings Banks, and have discussed the subject with Sir
A. Spearman, who has also had some communication with the
Post Office authorities.
"The difficulties are very serious, chiefly in connexion with
the question of interest and the mode of account for it.
"At the same time there is so much of promise in the plan on
the face of it, that we are unwilling to let it drop without
a most careful examination.
"If you are likely to be in London, or were disposed to come
hither, personal communication on details might be of
advantage. Sir A. Spearman would be most ready to see you for
the purpose of entering into them fully, and I should be very
desirous myself to give any aid in my power at the proper
time."
[165] "The Council of the Statistical Society of Dublin having had
under their consideration the plan of Post Office Savings Banks
proposed by Mr. C. W. Sikes of Huddersfield, desire to record
their entire approval of the principles of his plan, and consider
it to be specially applicable to Ireland, where a well-founded
feeling of distrust in Savings Banks as now constituted has been
produced by its being demonstrated that the depositors have not
Government security for their money. That the Council believe that
Post Office Savings Banks with perfect Government security would
be very successful in Ireland, and could be readily managed with a
central Savings Bank in Dublin, as Government Stock is
transferable in the Bank of Ireland. That the Council direct the
Secretary to bring these resolutions under the consideration of
the Chief Secretary for Ireland, with a view to their being
transmitted by him to the Chancellor of the Exchequer. By order,
"W. NEILSON HANCOCK."
At the same meeting the Council elected Mr. Sikes a Corresponding
Member of the Society.
[166] Forms for doing so were immediately afterwards provided.
[167] Such, for example, as the extraordinary facilities now
enjoyed for the depositing and withdrawal of money--of which we
shall speak in the proper place. Suffice it to say here, that
these facilities had never been dreamt of for a moment outside the
Post Office; that they were such facilities as no agency but the
post-office ever attempted to give, and, more than that, could not
possibly have given.
[168] His speech on the occasion has not been reported _verbatim_,
or we would never have ventured to have given it in the third
person.
[169] _Hansard_, vol. clxi. p. 262; and _Times_ newspaper, 1861.
[170] _Hansard_, vol. clxi. p. 2190; and _Times_, 1861.
[171] That this was the case appears further from the circular
which Mr. Sikes addressed to every member of the House before the
second reading, in which he expressed his cordial approval of the
bill, and craved the support of members in carrying it through
Parliament.
[172] _Hansard_, vol. clxii. 1861.
[173] _Hansard_, vol. clxii. p. 880; and _Times_, April 23, 1861.
[174] The phrase "working classes," applied to the industrial
population, seems as inaccurate as the phrase "lower orders,"
applied generally fifty years ago, is obnoxious. The distinction
does not lie in this class being "working" while others are "idle"
people. Something very different indeed is the fact. The tendency
of late years has been that professional people should work
harder, and "working" people less, and very few men who live by
their profession work fewer hours than the handicraftsmen of our
towns. Lord Stanley might have gone even further in his comments
on the earnings of the industrial classes. Even putting aside the
important consideration of how much the professional man spends of
time and money in preparing himself to work at all, a great and
ever increasing number of the wage-receiving class have now as
good incomes as many hundreds of the less successful classes above
them, while their expected or necessary expenditure is in almost
all cases very much smaller.
[175] News of this able nobleman's death has just reached us; but,
though bearing in mind the spirit of the well-known maxim, we see
no reason to alter our text.
[176] See Appendix (F.)